Psychiatric medication development restrained by insurance regulation and FDA

Restraint of patient in stretcher illustrates restraint of psychiatric medication development by insurance regulation and FDA

Psychiatric medication development declined steeply after the 1950s and 1960s

…there has been a steep decline in the development of new medication classes. Instead of new molecular entities, slight molecular modifications producing ‘‘me-too’’ drugs attempted to garner market share.

The current deficit in novel agents contrasts sharply with the 1950s. Then, there was a sudden efflorescence of potent psychiatric therapeutic agents. The pace of discovery of entirely new classes of psychotropic drugs was dizzying. These included lithium, lysergic acid diethylamide (LSD), chlorpromazine, iproniazid, reserpine, imipramine, chlordiazepoxide, haloperidol, and clozapine.

These discoveries resulted from chance observations of unexpected clinical benefits rather than being derived from basic neuroscience. All major classes were serendipitously discovered by 1969. For instance, chlorpromazine was a pre-surgical antihistamine sedative whose antipsychotic properties were completely unsuspected. Imipramine was developed as a chlorpromazine ‘‘me-too,’’ but turned out to be an antidepressant. Conversely, clozapine was a potential antidepressant, but turned out to be an antipsychotic with remarkably low extrapyramidal toxicity and superior efficacy.

What stymied generative serendipity over the next 40 years? A number of elements came together.

  • The most important factor may have been the drastic change in medical practice economics. Hospital-based academic research was supported from clinical income. That freed up clinicians for therapeutic explorations. However, ‘‘managed care’’ declared this irrelevant to patient care and markedly shortened hospital stays.
  • Second, often patients were discharged before the effects of a new therapeutic regimen became clear.
  • Third, industry became concerned with immediate return on their investments, which were limited by extensive regulations, liability concerns, and exhaustive preclinical animal model testing.
  • Fourth, the growth of clinical research organizations (CROs) diverted industrial support from investigator-initiated academic research to relatively inexpensive, pre-set industrial protocols.

Psychiatric medication development trials could be much better for patients both in trials and in treatment

The standard randomized parallel-group design leaves a crucial causal ambiguity. If 60% of those treated with medication have substantial improvements, while only 30% of those on placebo improve (assuming statistical significance), then in about half of those who seemed to have a direct drug benefit, the drug was actually not required. Identifying individuals who actually require medication to improve and maintain their gains remains obscure. Therefore, attempts to determine how a drug brought about its benefits by studying those who improved during drug treatment are handicapped by study of a causally heterogeneous mixture.

…an alternative design would be to initially and openly treat all patients with the putative medication, titrating for the individual’s optimal dose, until it is clear if the patient was not a treatment responder. These subjects would leave the trial. Apparent responders would be maintained on medication for a period, but then randomly, and in double-blind fashion, switched to placebo or remain on medication. All patients would be followed independently and closely, blind to treatment status, for defined signs of worsening. At a predetermined level of modest worsening, double-blind medication retreatment would start. A worsening rate higher in the placebo-substituted group than in the medication-maintained group would provide clear evidence of medication efficacy. Those individuals who worsened on slow placebo substitution and then improved on medication re-treatment are very likely specific drug responders. Those who switched to placebo and nevertheless continued to do well would be far less likely to be specific medication responders.

To summarize, this design would determine individuals very likely to be medication-specific responders, very likely non-specific responders, and non-responders.

Other practical benefits are that all patients initially receive active treatment. This fosters recruitment, since many patients will not risk being initially assigned to placebo. In addition, patients will learn if medication is necessary for them to remit or that they have sufficient resources.

In fact, academic investigators have successfully used this design.

  1. Weingart, Scott. “Podcast 060 – On Human Bondage and the Art of the Chemical Takedown.” org, 13 Nov. 2011, Accessed 25 Feb. 2017.
  2. Klein, Donald F., and Ira D. Glick. “Industry withdrawal from psychiatric medication development.” Revista Brasileira de Psiquiatria 36.3 (2014): 259-261.

Preexisting conditions need to become business opportunities

Preexisting conditions consultation

Preexisting conditions can be insured and treated better by making changes that give people good incentives. Here are ten such changes:

Change Explanation
Create a national market for health insurance. More competition, especially among the special needs insurers, would be a huge benefit for the chronically ill. Being able to buy insurance across state lines would encourage that competition.
Encourage portable insurance. Most of the time, the problem of preexisting conditions arises precisely because health insurance isn’t portable.
Allow access to mandate-free insurance. …mandates raise premiums… and divert dollars away…
Give individual buyers the same tax break employees get. All insurance should get the same tax relief regardless of where it is obtained, and individuals should get the same tax relief, regardless of how they obtain it.
Encourage post-retirement health insurance. …give post-retirement health insurance the same tax encouragement as active-worker insurance and allow pre-retirement insurance to be portable.
Allow special needs health insurance. …allow plans to specialize in treating one or more chronic conditions. Plans could specialize, for example, in diabetic care, heart care, or cancer care, and they would be able to charge a market price (say, to employers, other insurers, and even risk pools)…
Allow providers to repackage and reprice their services under Medicare and Medicaid. …to create innovative solutions to the care of diabetes, asthma, cancer, heart disease, and other chronic health issues… …providers should be able to offer a different bundle of services and be paid in a different way so long as they reduce the government’s overall cost and provide a higher quality of care.
Allow health status insurance. …health status insurance would pay future premium increases people face if they have a change in health status and then try to switch to another health plan. You can think of this as a way of insuring against the emergence of preexisting conditions.
Allow self-insurance for changes in health status. …people need the ability to engage in contingency savings—a Health Savings Account for future, rather than current, medical costs.
Allow special Health Savings Accounts for the chronically ill. Cash and Counseling pilot programs in Medicaid are under way in more than half the states. Homebound, disabled patients manage their own budgets and hire and fire those who provide them with services. Satisfaction rates are in the mid-90 percentile (virtually unheard of in any health plan anywhere in the world).

[2, pp. 249-251.]

…markets enjoy their greatest advantage in complex settings that call for imaginative solutions that no government-driven system can deliver.[2, p. 610.]

…you have got to let business make money out of the process…[3]

  1. “China Health Insurance For Pre-Existing Conditions.” Accessed 23 Jan. 2017.
  2. Goodman, John C. Priceless: Curing the Healthcare Crisis. Scribd ed., Independent Institute, 2012, pp. 249-251, 610.
  3. Higgs, Robert. Depression, war, and cold war: Studies in political economy. Oxford University Press, 2006, p. 30.

Ideal health insurance would be developed by people in business, not government

Ideal health insurance would pay the full cost where this reduces risk, and would pay less for less-proven options.Figure 11.2

Ideal health insurance

Imagine you could… create an insurance plan just for 1,000 people.

Terms of entry

Each person should pay a premium equal to the expected healthcare costs he or she adds to the 1,000‑person pool. …or others must make a charitable contribution on their behalf.

Terms of renewal

…a reasonable rule is to raise or lower everyone’s premium at renewal time, based on whether the whole group’s costs have been more or less than expected.

Third-party insurance vs. self-insurance

…we should encourage individuals to purchase directly most diagnostic tests, most forms of preventive medicine and most primary care.  It may make… sense for the pool to pay for vaccinations, …or to require that members obtain them…

Suppose… a member is diagnosed with cancer. …bad decisions early on could generate larger subsequent costs for the group. Such considerations may create a presumption in favor of paying for all treatment costs from the pool in cases where the entire treatment regime promises to be expensive.

Table 11.1. General Rules

Individual Choice Collective Choice
1. No risky medical event. 1. Risky medical event.
2. Price of third-party insurance is high. 2. Price of third-party insurance is low.
3. Exercise of choice creates no externalities [risks for others]. 3. Exercise of choice creates risks for others.

Implications for HSA design

The design pictured on the right side of Figure 11.2 [above] is preferable. Under this design, the plan pays first dollar for some treatments, while leaving the insured free to pay even higher amounts for other services.

Design of third-party payment

…why not fix the plan’s cost for an entire treatment regimen? If patients selected doctors who charge more, they paid the difference out of pocket.

Terms of exit

After an automobile accident, a claims adjuster inspects the damage, agrees on a price, and writes the car owner a check.

…members would commit to the pool for a period of, say, three, four, or five years. …leaving the pool would require the consent of the pool.

…if a healthy member left… plan A to join… plan B, B would compensate A… …if a sick member left A to join B, A would compensate B…

Ideal health insurance would allow insurers to specialize in the business of insurance

Ideal health insurance would allow… market developments by providing a mechanism for people to leave one insurance pool and join another (without extra cost) when their health condition changes.

Ideal health insurance would be improved by the free flow of information 

Under ideal health insurance… the insurer and the insured are on the same team, with a similar interest and objective: acquiring good value in a competitive market.[1]

  1. Goodman, John C. Priceless: Curing the Healthcare Crisis. Independent Institute, 2012. Chapter 11.