21 Feb 2008

How Not to Estimate Benefits:
The case of Avastin

by Richard Belzer

in Regulatory Economics, Regulatory Policy

The Wall Street Journal editorializes today against a longstanding Food and Drug Administration policy that values the benefits of drugs for terminal cancer patients solely in terms of life extension. Some visual aids may help make the issues easier to understand. More...

19 Feb 2008

The Precautionary Principle in Action:
Is taking or not taking Vytorin 'precautionary'?

by Richard Belzer

in Regulatory Science, Regulatory Policy

A recent study raised doubt about the benefits of Vytorin, a patented combination of two anti-cholesterol drugs, ezetimibe and simvastatin. Some cardiologists say the study is sufficient evidence to stop prescribing it as widely; others disagree.

The decision whether to take Vytorin or its component drugs rests with patients, but they rely heavily on the advice of their doctors? How can patients makes sense of this debate? More...

6 Feb 2008

The Perils of Regulatory Policymaking by Opinion Poll:
Consumer Reports on "health care reform"

by Richard Belzer

in Regulatory Economics, Regulatory Policy

Consumer Reports has sponsored a poll on health care that yielded results characterized as "revealing a significant disconnect." But there is no disconnect at all if elementary economic analysis is applied. More...

3 Jan 2008

Where to Have a Cardiac Arrest?
Answer: not in the hospital

by Richard Belzer

in Regulatory Science, Information Quality, People & Institutions

New York Times reporter Denise Grady previews a research report due to be published in today's New England Journal of Medicine that says many hospitals do not respond quickly enough to cardiac arrest. Leslie Saxon, who wrote an accompanying editorial, delivered the money quote: “You’re better off having your arrest at Nordstrom, where I’m standing right now, because there are 15 people around me.” More...

5 Dec 2007

Why Is Blood In Short Supply?
Anecdotal evidence of highly precautionary (but discretionary) donation policies

by Richard Belzer

in Regulatory Science, Regulatory Economics, Regulatory Policy

Recently Neutral Source managing editor Richard Belzer attempted to donate blood, but was declined. Although the story is anecdotal and not empirical, it suggests good reasons why this particular blood bank seems to always be in short supply. More...

19 Sep 2007

OMB's Principles for Risk Analysis:
OMB's initial response to the National Academy of Sciences

by Richard Belzer

in Regulatory Science, Regulatory Policy

Today the Office of Management and Budget issued a memorandum to agency heads directing them to adhere to certain principles of risk analysis. The memorandum is OMB's initial response to the report of a National Research Council panel that OMB asked to review a 2006 proposed bulletin on risk assessment. That report called the proposed text "fundamentally flawed" and gave seven recommendations, one of which was that it be withdrawn.

A fair reading of the new memorandum is that OMB followed this specific recommendation. More...

20 Aug 2007

Health Insurance and Incentives:
Ending reimbursements for certain hospital-acquired conditions

by Richard Belzer

in Regulatory Economics

For most Americans, third-party insurance companies reimburse health care providers based on the diagnosis-related group codes (DRGs) originally established by Medicare. When Medicare changes policies, it is likely that private health insurance companies will follow. Recently, the Centers for Medicare & Medicaid Services announced a policy change on reimbursements for "hospital-acquired conditions" -- a bureaucratic term for medical errors.

Until now, a hospital could be reimbursed for the costs of treating Medicare patients will ailments resulting from hospital mistakes. Under the new regulation, if a surgeon amputates the wrong limb or leaves an object behind after surgery, or hospital staff administer an incompatible blood type or permit an air embolism, CMS will not reimburse the added cost of subsequent treatment. The policy change is intended to give health care providers a financial incentive to avoid committing these errors.

In our discussion below, be analyze one specific medical error of special interest: mediastinitis.

7 Aug 2007

Taxing Cigarettes to Fund Health Care:
How government becomes a partner in promoting undesirable behavior

by Richard Belzer

in Regulatory Economics, Regulatory Policy

There is a long pedigree in economics for taxing undesirable behavior as a way to change it. The author of this theory is Arthur Cecil Pigou, an early 20th Century British economist. So-called Pigouvian taxes remain popular among economists; see, for example, Greg Mankiw's views on carbon taxes to combat climate change. Thay also have been popular with governments because, unlike taxes on labor or investment, they distort incentives in generally desirable ways. That means they have the added advantage that they are useful for generating revenue without causing economic harm.

Pigouvian taxes have a dark side, however. Government becomes dependent on the revenue these taxes generate, and the more effective they are in achieving the desired change in behavior the more government revenue from the tax declines.

Passage by the House of Representatives of legislation that would raise the tax on cigarettes to fund an expansion of the State Children's Health Insurance Program (SCHIP) provide a timely illustration of the problem. In recent years, the states have become senior partners in the business of selling cigarettes. They collect billions of dollars annually in excise taxes and receipts from the settlement of certain legal claims. These revenues depend on sustained future cigarette sales. If smoking ended tomorrow, the states would experience a huge financial crisis.

Funding the expansion of health insurance by raising federal excise taxes on tobacco puts the federal government in the same awkward position. More...

27 Jul 2007

Who Pays the Cost of Regulation?
Insights from corporate income tax incidence

by Richard Belzer

in Regulatory Economics

Regulation is widely understood as a tax on the activity or person being regulated. Where these activities repair genuine market failures, benefits from regulation may result. If there are benefits from, say, automobile safety regulation, one would expect the beneficiaries to be persons who otherwise would have been killed or injured at the pre-regulatory safety level.

But what about the costs of regulation? Who bears them? More...

21 Jun 2007

The Power of Incentives:
Health care and physician behavior

by Richard Belzer

in Regulatory Economics

In a Wall Street Journal commentary, Peter Bach explains succinctly why heath care in the United States is lower in quality than it should be given the resources devoted to it. It comes down to incentives. Physicians are compensated based on outputs, not outcomes. Therefore, they are motivated to increase outputs and not motivated to improve outcomes. More...

29 May 2007

Journal Peer Review and Objectivity:
The case of Avandia (rosiglitazone) and the New England Journal of Medicine

by Richard Belzer

in Regulatory Science, Information Quality

We've been a consistent supporter of high standards for information quality, especially for federal agencies that disseminate influential information in the support of regulatory objectives. We've also been consistently concerned about one particular aspect of the information quality and peer review guidelines issued by the Office of Management and Budget: the rebuttable presumption that scientific, technical, economic or statistical information published in peer reviewed journals satisfies the guidelines' standard for objectivity.

In the past week, the New England Journal of Medicine published online an article by Steven Nissen and Kathy Wolski claiming that Avandia, GlaxoSmithKilne's blockbuster drug for type 2 diabetes mellitus, "is associated with a significant increase in the risk of myocardial infarction [heart attack] and with an increase in the risk of death from cardiovascular causes that had borderline significance."

The Nissen & Wolski study has received enormous press attention. In today's Wall Street Journal former Food and Drug deputy commissioner Scott Gottlieb asserts that the NEJM has political motives for subjecting the study to inadequate peer review and publishing the study with excessive fanfare. Though not directed at federal information quality law and policy, Gottlieb's commentary suggests circumstances when OMB's rebuttable presumption of objectivity ought to be replaced with a rebuttable presumption of bias. More...

11 May 2007

Government-wide Information Quality Guidelines:
Does journal peer review achieve "adequate" objectivity?

by Richard Belzer

in Information Quality, Peer Review, Glossary

Federal guidelines require information disseminated by federal agencies to satisfy a few broad criteria, one of which is objectivity. These guidelines give a "rebuttable presumption" to scientific information published in scholarly journals.

• Do all scholarly journals transmit this rebuttable presumption of objectivity? What about scholarly journals that also have an advocacy mission?
• What is the burden of proof for mounting a successful rebuttal?

10 May 2007

When Science Becomes Advocacy:
Childhood obesity in Somerville, Massachusetts

by Richard Belzer

in Regulatory Policy, Peer Review

Wall Street Journal health columnist Tara Parker Pope has a Page One article about a recent program intended to reduce the incidence of childhood obesity in Somerville, Massachusetts. The occasion for the story is publication of a scientific review of the program.

Pope's article, and the journal article on which it is based, raise troubling questions about scientists and journalists behaving as advocates. It also exposes problems inherent to scientific peer review. More...

9 May 2007

Federal Agency Guidance Documents:
What's "significant"?

by Richard Belzer

in Regulatory Policy

OMB has new procedures for agencies to follow in making significant guidance documents transparent.

We posted an extensive discussion on OMB's Bulletin on Good Guidance Practices, and recently OMB issued an implementation memorandum. Yesterday we commented on the first task facing federal regulatory agencies: assembling and publishing online lists of guidance documents.

Today we address another fundamental question: What constitutes a "significant" guidance document, an d how is this determination made? More...

8 May 2007

Federal Agency Guidance Documents:
Building the inventory

by Richard Belzer

in Regulatory Policy

Executive Order 13422 and OMB's Bulletin on Good Guidance Practices will lead to major changes in the way federal agencies issue guidance.

The first step for each agency is to develop and publish inventories of their significant guidance documents. The deadlines for agency compliance are July 24, 2007 (for significant guidance documents issued on or after January 25, 2007) and August 23, 2007 (for all significant guidance documents). More...