Friday, November 30, 2012

Tyler Cowen v. Ben Goldacre

Tyler Cowen reviews Ben Goldacre:
Goldacre’s policy recommendations would in general raise the costs of research and development, although they would  likely improve the accuracy of research results and reduce over-prescription and overuse of drugs.  It is quite possible they would lower the rate of return to pharmaceutical innovation, likely I would say.  These trade-offs are neglected, and, much as I admire many features of this book, I cannot help but, alas with trepidation, call some of its central features “Bad Science.”  Bad Economic Science.  The morality of the narrative and the Platonism of his vision distracts him from presenting the policy trade-offs clearly.

And Goldacre responds (in the comments):

The key argument of the book is that the results of clinical trials should not be withheld from doctors and patients. Industry spokespeople continue to deny that this happens at all, in the face of overwhelming evidence, in a testament to how easy they have found it to evade serious public discussion.
Sharing all trial results would not cost any more money, since the cost in a trial is in conducting it, rather than dissemination. The risk to industry is that doctors and providers of healthcare services would have a clearer picture of the absolute benefits of drugs, and of which is best, or most cost effective. So the downside would perhaps be that drugs might become more like commodities, as purchasers got better information.

I haven't read the book yet (though it's on my shortlist), but, for once, I think Goldacre has a stronger argument than Tyler here.  I'm sure that Goldacre probably could have moderated his tone a little bit, but if his book is, as he says, mostly about calling for greater transparency in pharmaceutical studies, then Tyler's response seems a bit weak.  Tyler basically seems to be saying that pharma companies should not have to publish their studies because they make a lot of money selling mediocre (but often unnecessary) drugs and the profits from these drugs allow them to create more drugs.  This seems akin to saying that it's okay for pharma companies to defraud the public because it's in the greater good.  It also seems to skew the incentives.  If a pharma company can turn a profit with either a mediocre product or a good one, there's not a whole lot of incentive to work extra hard to produce a good product. 

And as for Tyler's criticisms about tone, if your goal is to stir up public sentiment to push for reform, I'm not sure that moderation is the goal.  There is a place for moderate criticism and a place for outrage, and this book may fit the latter.  

Where is the best place to be born in 2013?

A View From The Cave has some thoughts about the Economist's index on where the best country to be born in 2013: 
According to the latest index from The Economist the answer is Switzerland followed by Australia, Norway, Sweden and Denmark. For those of you looking for the United States (16) and Britain (27) in the top ten
Of interest: 
Libertarian think tank the Cato Institute released its annual Economic Freedom of the World report which includes an index of countries ranked by economic freedom. It should come as no surprise that the index does not look favorably upon the United Sates who comes in ranked 18th in the world. There are some interesting points of similarity and divergence between the two indices  
Cato's 5 most economically free countries (Hong Kong, Singapore, New Zealand, Switzerland and Austria) are all in the top ten of the Economist's index. However, Mauritus and Bahrain, two nations considered to have high economic freedoms, do not make the list for The Economist. Also, Norway (3) and Sweden (4), are ranked 25 and 30 by the Cato Institute. 
I find that most interesting cases are the former communist countries: 
  • Despite more than 30 years of spectacular growth, and more growth projected over the next two decades, China comes in at 49 out of 80, below every South American country other than Ecuador. 
  • Despite a stifling lack of economic freedom, Cuba ranks 40th overall, ahead of several South American and Eastern European countries.  
  • Russia ranks 71st out of 80, just ahead of Syria and below a number of countries with much lower GDP per capita. 

Tuesday, November 27, 2012

Will the ACA increase waiting lines for patients?

Brad DeLong has a question on ACA implementation:
What is your guess as to what will happen if the ACA works for access, works for quality, works for coverage--but the extra health-care workforce needed isn't there, and the lines start to get longer?

I have two thoughts: 

First, to answer the question directly: looking at the issue from a market-based standpoint, if his scenario comes true, I think the obvious answer would be that we need to graduate more doctors.  Doctors make a ton of money, meaning that there is probably an undersupply (although there are probably additional reasons) and there are loads of people who would like to be doctors, but can't get into medical school because there are not enough spots.

The problem, in my opinion, is that a lot of healthcare seems supply-sensitive, rather than demand-sensitive.  Which is to say that the more available doctors or hospital beds, the more doctors will prescribe more treatment, despite the fact that a lot of this treatment has very little effect on overall health outcomes.  It's possible that lines will start to get longer as a result of the ACA's provisions on access, quality and coverage, but it's possible that demand-side is a less significant factor than we believe it will be.  If nothing else, the studies on supply-sensitive care suggest that training more doctors would result in a spike in healthcare costs.

A better solution, as my doctor friend Dylan notes, is to expand the Nurse Practitioner workforce: "Non-urgent medical screening can be handled by NPs, and physicians can see sicker patients. Many clinics already do this. There's no reason a doctor has to perform a screening pap-smear for example." 

How to Make Aid Work: Don't give to local-decision-makers

The Economist cites a World Bank report warning that giving aid to local decision-makers is less useful than had been hoped:
Channelling development aid directly to local decision-makers sounds like a good plan. Empowering local groups like community clubs and school boards means decisions can reflect actual needs on the ground. It should mean fewer bureaucratic hands in the pot, too. But a new report by two World Bank economists warns against relying on decisions made at the most local level of government. Entrenched elites, bribery and fraud are as much of a problem in village life as they are in big emerging-market bureaucracies.
Also this:
The first problem is corruption. A study based in Madagascar, for example, found that central government was actually a relatively safe steward of development cash, with more of it siphoned off at local-government levels.