Health care “dinosaurs” heading for extinction?

TriceratopsVijay Vaitheeswaran writing in The Economist predicts that socio-economic Darwinism will shake up American health care in 2009:

Big Pharma will feel the force of generic competition in earnest in 2009. Billions of dollars of branded blockbuster drugs are due to go off-patent in 2009 and 2010. Aggressive pricing by generic-drugs manufacturers is sure to drive the prices of those drugs down by 80% or more, battering the profitability of branded firms.

Meanwhile, two different sorts of disruptive innovations promise to upend America’s health-care system…One is the spread of cheap-and-cheerful retail health clinics located next to the pharmacist at drug stores, in shopping malls and even inside Wal-Mart outlets. The second is the coming boom in American medical travel to faraway places such as Thailand and India.

Yet another great disruption in 2009 will be the arrival, at long last, of…online medical records…venture capitalists in Silicon Valley are betting heavily on firms with better technology and smarter business models for tackling this problem. Several are expected to emerge from stealth mode in 2009.

Despite all the talk about transformation and redesign, the economics of health care and point-of-care technologies both tend to advance very slowly.  Also, what constitutes “advancement” is in the eye of the beholder.  Generics may be good news for patients and bad news for Big PhRMA, but Big PhRMA is where new drugs come from.  The generics which are so popular now were once expensive, branded products.  And they didn’t drop like manna from heaven.  They had to be painstakingly developed which takes money.  Lower profits may mean fewer funds for new drug development.  I hope any money the pharmaceutical industry saves as a result of the new PhRMA guidelines will be put into R & D.

“Cheap and cheerful” retail clinics are okay if you’ve got a sore throat.  But this is the Chronic Disease Era.  The nurse practitioner in the kiosk next to the pharmacist who tells you your rapid strep test is negative is probably not going to draw blood to check your Hgb A1c and lipid levels, call you with the result, and refer you to the local ophthalmologist for your retinopathy screening.

I’d call my view of 2009 with regard to health care “cautiously optimistic.”


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