You might expect an economist to focus on the state of public spending on health. Certainly were I the minister of finance I would. Indeed in a recent speech Michael Cullen expressed some dismay because since 1996 we have been increasing health spending faster than GDP and yet the problem of inadequate health funding appears unresolved.
We can only speculate what might be the effects which are contributing to this apparent black hole, for there is sadly little systematic analysis. They include
– the demographic shift towards the elderly which Mansoor Khawaja has just been discussing;
– a catchup from the cut backs in public health funding in the early 1990s, probably being more expensive than if they had been done at the time because it is cheaper to treat early than late.
– a bigger share of the funding going into preventative health care, but the benefits not yet appearing;
– some switching out of private health care to public health care, indicated by the falling proportion of the population with private health insurance;
– some of the funding increases have gone into reducing the cost of health care to particular groups – especially children – so that we may be more financially equitable between the sick and the well, without necessarily having improved health status.
– probably there is still waste in excessive managerial overheads on one hand, and new primary care providers that have not yet settled in on the other;
– new (expensive) medical technologies.
Some of these effects are transitory, although they may take decades to work their way through, others reflect fundamental changes elsewhere in the economy. Today I want to focus on but one, related to technology, and reflect on how it might affect the pharmacy industry. Talking about new medical technologies is misleading for it is a consequence of a more fundamental, more obvious, and yet more overlooked change to health care, one which has many subtle implications with which we are struggling to deal. That change is that the health system is steadily moving away from saving lives to enhancing the quality of life. That does not mean that the significance of life saving and prolongation has diminished – it is still has the highest priority. The change is that an increasing proportion of activity is concerned with improving the quality of life.
The point is that these increasingly expensive new technologies are meeting new needs, not just meeting old needs better. I want to illustrate the principle with a problem I worked on a few years ago. I am not medically trained, so I may get the story a little wrong, hopefully at the edges. In any case medical knowledge has moved on. Even so the story I tell is indicative of a common problem which those involved financing health care take.
In 1999 the Multiple Sclerosis Society approached me in regard to a very expensive drug, beta-interferon or ‘betatron’, which moderated the impact of the disease but which, at the time, Pharmac did not provide free because of its great expense.
Multiple Sclerosis is a chronic neurological disease which affects the myelin in the brain, leading to progressive loss of control over some muscles. We are familiar with MS sufferers on crutches or in wheelchairs, but that is a late stage of the disease, often decades after it has struck. The early stages involves acute episodes of illness often leading to periods of hospitalisation. For some, but not all, patients a course of betatron reduces these episodes in frequency and severity, and the treatment can mean they can return to living a reasonably normal life during the early stages. It also seems likely that prevention of these early stage episodes will delay the onset of the later stages of MS when there is less control over limbs. For a number of good scientific reasons this is conjecture, but in my work I used the common assumption, that where betatron was effective, it could delay the onset of the wheelchair stage by at least ten years.
A course of betatron is expensive – around $20,000 a year, and all the more effectively expensive because it does not work on all patients. Moreover it is more expensive than the costs of hospitalisation and other treatments which it avoids in the early stages of the disease. A pertinent element of the evaluation is that it does not seem that MS shortens life, it reduces its quality – I avoid saying it ‘only’ reduces its quality, because MS sufferers say it can be a big reduction. So the significant gains from the use of the medication are the enhanced quality of life of patients, both in the short term and also from the future delays in the progression of the disease. The economic problem I faced was whether the quality of life gains justified the considerable additional outlays of the medication. For some people the gains are so great they were purchasing the drug privately – some were literally bankrupted themselves or the family to do so. But not everyone could afford that amount, which is more than the average income of a New Zealander.
For the record, Pharmac agreed to provide the drug on a limited basis, the aim being to ensure it only went to those MS patients who would benefit. However, my purpose of telling you this story is to illustrate that this new medical technology was about life enhancing rather than life saving, and how it is much harder to decide what to do in such circumstances: who if any should receive free a new medicine. Betatron does not cure multiple sclerosis, it may delay its rate of progression, it does not reduce health costs. Its significance is it raises the quality of life of those who respond to it.
It would be easy to say that we should give the same priority to life enhancement as we do to life saving, but in truth the notion is a very encompassing one. Look around your pharmacy. You would probably argue that most of what you sell enhances the life of your customers. For instance, there are women who say their life would be devastated had they not recourse to cosmetics. Why then if betatron now available free from Pharmac, cosmetics are not? To complicate the story further, there may be free cosmetic treatment for the port wine stain of a birthmark or the removal of a tattoo. Why not if a psychiatrist recommends to a patient to get a make-over is that not paid for the state? While these examples might be thought of as extremes, it is difficult for common sense to draw a line in the between them separating what should be government funded from what could be privately funded. Note that because of the financing implications that line may be a function of the cost of treatment.
And just in case you think the contents od a pharmacy is the problem, the supermarket next door can argue that it also supplies life enhancing products. Why should we charge for life enhancing food if we provide life enhancing medicines free? (Should pharmacies distribute red wine on prescription?) My answer today to the paid-free dichotomy is not one of deep philosophy but the sort of pragmatism that one might expect from Pharmac or the Minister of Finance. There is a tight fiscal constraint, which arises from the limits on the willingness of the public to pay tax, and so each funding or availability decision has to be made incrementally, with the hope that they will not be over-influenced by special interest groups but show some sort of retrospective coherence. One suspects that we are well inside the boundary of what commonsense says should be funded, but additionally there is the constant worry that a great many of the treatments – including drug therapies – are not as effective as is claimed. Indeed often there is not a great deal of compelling scientific evidence for their effectiveness. The temptation, were I minister of finance or health, would be to introduce a program of eliminating the subsidy on well-established but scientifically unproven therapies, although the resistance from both those who use them for treatment and those who being treated makes this a politically unattractive option, even if it is fiscally responsible.
This does not directly impact upon pharmacists, since the decision to dispense government subsidised medication is made by others. Your task it is to ensure the dispensing is done efficiently to the required quality standards, that there is a minimisation of waste, and that the recipient is as fully informed as what is reasonable in the circumstances.
However, I want to suggest that the fiscal pressures plus another important social change is leading to another prominent healthcare task for pharmacists. That change is the shift from the view that the medical profession is responsible for the nation’s health to that the individual has responsibility for management of their own health (and their children’s) , supported by the medical profession. This transformation reflects, I think, two crucial changes in the postwar era. The first is a general shift to the liberal values of self-responsibility and the retreat of the big-brother state. The second is the realisation that while particular acute incidents are health and life threatening – for instance an inflamed appendix – how one conducts one’s life affects one’s overall health, the frequency of those acute incidents, and even their outcome. So while the medical professions are no less committed to dealing with the acute incidents, they are likely to add that their contribution could be avoided or substantially reduced if patients ate and drunk sensibly, exercised regularly, did not smoke, and so on. This message is so strong today, that even smokers are likely to say they are less entitled to treatment because they smoke, despite their contributing generously to the cost of public health system via the excise duties on tobacco.
This self-management approach involves a different approach from the health system, treating the public and private parts of it as a coherent whole. In comparison to the regime of professional responsibility, it is less obvious that one’s doctor is the gateway into the system based on self-management. Certainly, and I am agreeing here with recent developments in primary care, it make sense to have a special relationship with a particular general practitioner or practitioner group. But what self-management does is to subtly shift the focus from illness to well-health. While general practitioners might try to relocate themselves in that direction, the fact is that the majority of their work is likely to be past the point when self-management is sufficient by itself and where some sort of professional sick-care seems necessary.
It does not necessarily follow that the self-managed individual usually needs the counsel of the medical professional, but insofar as he or she does, that professional may be a pharmacist, who is not only dispensing prescribed medication, but is also providing information, therapeutic products, and possibly some services. I am offering this as a tentative suggestion, for they may be no need for an advisor or perhaps some other health professional such as the district nurse may do the job.
But let me explore a little about what the well-health pharmacist might look like, noting that this downplays the traditional role of the pharmacist as back-end of the GP dispensing prescribed medicines, and emphasises the front-end as health professional before the doctor.
Perhaps I should say that it seems likely that there may be no single model for the dispensing pharmacist. One obvious option is what might be called the ‘main street chemist’ which locates in the CBD of a large city and is in competition with other nearby pharmacists, but also with the supermarket for dietary supplements and body care products, and with special stores for body care products and so on. My impression is that the majority of customers are not attached to any particular main street chemist, and insofar as they are self managing they consult a convenient pharmacist on a casual basis.
The contrasting model may be the community chemist, typically located in a neighbourhood shopping centre with not much local competition either from other pharmacists or alternative providers of non-dispensing services, except perhaps the local supermarket. The customer may be much more attached to the pharmacy, repeatedly coming back to it for a variety of products and services, and may be well known to its staff – even with a computerised record. A typical conversation with the staff during a purchase may often be wider than the immediate concern and include an exchange of the customer’s health status with the pharmacist offering advice or extending knowledge – as well as the weather. The best placed community chemists will be very close to the local general practitioners’ clinic so not only are they the front and back end of the GP, but an adjacent geographical one. Perhaps there may even be some exchange of records.
Now this scenario may not be very different from the current practical situation of many existing pharmacists. What I am concerned here with is the change in head-space which the self-management approach involves. A practical example is the existence of over-the-counter medicines, the range of which has been increased in recent years. From the perspective of the standard commercial model, the purchase is an interesting one, because unlike the purchase of most products there are contra-indications when it should not be consumed. OTC medicines are one of the ultimates in health self-management, and for good reasons pharmacists are given an exclusive responsibility for selling them. This exclusivity may give pharmacists the unique selling proposition which they hope will give them a viable commercial future to practice their profession.
While health self-management rests on a liberal philosophy of people being independent and self-responsible, and is to be pursued for that reason alone, it also both reduces and increases the pressure on public spending. The spending reductions occur because effective self-management involves better prevention and early identification, each of which put less pressure on the public health system. Similarly, self prescribing with the support of a pharmacist may be considerably cheaper in resources than going to a doctor on a routine matter, with the bigger private cost being offset by time savings.
On the other hand, better management of health care may prolong life, eventually leading to greater public costs for the longer living elderly. This is a common paradox in health policy. Abolition of smoking prolongs life and adds to medical costs. The fiscally ideal cigarette might be one that extinguishes each smoker on the day he or she becomes eligible for New Zealand Superannuation. The resolution to such paradoxes is the concern is no longer simply saving lives but of enhancing its quality. Well-health strategies tip the balance away from medical treatments for avoidable conditions towards necessary ones for unavoidable ones.
Now economists are not very good at predicting the future, and I would be even less so about chemists, for I have not done a close study of the pharmacists’ industry. So I cannot tell you whether the industry will go down the main street or community pathway or how much of each, or perhaps there is a third way I have not addressed. My professional interest – the focus of this talk – is the implications of well-health strategies, especially today as they apply to pharmacies. You could decide to describe pharmacies as ‘well-health’ centres as a marketing ploy. I leave you to decide how effective that would be, and the extent to which it would give you a competitive edge over those who are contesting some of your markets. My economist caution is that the community pharmacy strategy probably involves giving free or near free services, at the very minimum spending a little more time with each customer. Of course one might say that the resulting customer loyalty pays for itself, and while I do not want to discourage such a notion, I wonder as to just how profitable it might be.
So let me suggests two strategy issues you might ponder on. The first is whether there are well-health activities that the government might contract pharmacists to do. Recently, it has been putting considerable emphasis of primary health care, funding a wide range of organisations – not all of which, I am afraid, have proved effective. Should well-health pharmacies be seeking some of the action, and if so what contribution could they make? Should you tender from the local DHB to provide preventive and advice services? (As an aside, this is quite a different issue from a possible need to subsidise some pharmacies to ensure that some communities have one where otherwise it may not be commercially viable.)
The other issue is what role might a well-health pharmacy have in relation to other health providers. Should you more systematically allow other local providers – such as podiatrists – to advertise in your shop? (What guarantees of quality do you give? Do you only allow some sorts of providers to advertise excluding, say, some alternative medicine providers?)
The big one is, of course, your relationship with general practitioners. Recall how I suggested there was an element in well-health of your being the GP’s front door, and not the just the back door dispenser. I suspect that is an issue fraught with complexities, because many general practitioners see their medical centres as well-health in addition to being sick-care agents.
These are only suggestions, intended to provoke you. Perhaps you can identify other possibilities which arise from a well-health strategy. Perhaps you may conclude that pharmacies are not part of a national well-health strategy.
In summary then, my theme has been that here is an ongoing transformation of the health system from professional management of individual health to self-management where the professional supports the individual. We do not seem to be sufficiently exploring the implications of this transformation, so I have suggested that perhaps pharmacists have a significant role to play in getting the best for the nation out of the transformation.
Let me conclude then with Skol, Kia ora, Well-health.