Knowledge@Wharton -- Health Economics

Rx for the Pharmaceutical Industry: Focus on Innovation, Not Marketing

Wed, 14 Oct 2009 15:33:51 EST

The good news for the pharmaceutical industry is that, short-term, it may emerge as a winner in the health care reform battle as new customers enter the system and price protections remain in force. The bad news is that while big pharma has used increasingly large megamergers to support its reliance on blockbuster products, it still faces the long-term need to develop fundamentally new business models to cope with its most significant problem -- a failure to come up with new treatments, according to Wharton faculty.

Value Destruction: The Cost to Companies That Engage in Deceptive Marketing

Wed, 30 Sep 2009 17:48:04 EST

On September 2, Pfizer agreed to pay $2.3 billion to settle civil and criminal allegations that it violated federal rules governing drug sales. While the settlement was the largest ever levied against a U.S. company, the indirect costs to Pfizer may be even higher over time in terms of lost shareholder value. New research puts a price on the less tangible costs to a company that can arise when marketing efforts backfire.

Bangkok's Bumrungrad Hospital: Expanding the Footprint of Offshore Health Care

Wed, 02 Sep 2009 16:37:02 EST

Thailand's Bumrungrad International Hospital is one of a growing number of institutions making a name for themselves among "medical tourists" by offering patients from Boston to Bahrain a combination of lower-cost, state-of-the-art medical care along with service worthy of a five-star hotel. But what will it take for such hospitals to gain acceptance among national policy makers, major insurers and employers? Mack Banner, CEO of Bumrungrad, and Kenneth Mays, the hospital's director of marketing, recently met with Ravi Aron, a senior fellow at Wharton, to discuss the future of offshore health care.

Another Hurdle to Health Care Reform: Too Few General Practice Doctors

Wed, 22 Jul 2009 15:41:58 EST

While the possibility that millions of uninsured Americans might soon have access to health coverage may conjure images of patients stacked up in hospital hallways or waiting for months for an MRI, the most likely stress point in an expanded health care system will involve the family doctor, according to Wharton health care experts and others.

One Way to Lower Health Costs: Pay People to Be Healthy

Wed, 24 Jun 2009 16:27:19 EST

When employers want their employees to live healthier lifestyles -- to lose weight, stop smoking and exercise regularly -- nothing works like cash, according to research led by Wharton faculty. While some may wince at the notion of paying people to do the right thing, the research found that the incentives cost less than the diseases they prevent.

Information Technology: Not a Cure for the High Cost of Health Care

Wed, 10 Jun 2009 17:08:51 EST

Advocates and policymakers often argue or assume that applying a new form of information technology (IT) will save money and improve the quality of health care. But there are some who are not so certain, especially about IT's cost-cutting promise. One Wharton professor argues that IT could actually raise costs because of culture clashes, training, the implementation of the systems and the labor required to maintain the new technology.

Social Security and Medicare: Trying to Tackle Two 800-pound Gorillas

Wed, 13 May 2009 16:53:27 EST

While many people worry about the billions of dollars spent bailing out banks, auto makers and other sectors, shortfalls in Medicare and Social Security are what could ultimately sink efforts to revive the U.S. economy. As 78 million baby boomers begin to retire, funding for the government's two primary old-age security plans grows increasingly precarious, suggest several Wharton faculty. A report released earlier this week by trustees of Social Security and Medicare echoes those concerns.

Why Consumers -- Not Companies -- Should Make Health Care Decisions

Wed, 18 Mar 2009 16:34:51 EST

Mike McCallister, president and CEO of Humana, is precise when he chooses his words to describe the U.S. health care industry. "We don't actually have a health care system. We have a lot of different systems that are glued together," he told an audience at the recent 2009 Wharton Health Care Business Conference. And because of that, he noted, "the incentives are wrong for virtually everyone, including providers, payers and patients."

'Major League, Middle Class Anxiety': Is the U.S. Closer to Universal Health Care?

Wed, 04 Mar 2009 14:25:43 EST

The doctor. The insurance executive. The economist. The industry consultant. What was perhaps most striking about the health care panelists at the recent Wharton Entrepreneurship Conference was that they all seemed to be pretty much in agreement. Forget about what happened last time health reform was high on a new president's agenda. Under the Obama administration, health reform is coming, the panelists said, and in fact, it's already begun.

Is a Medical Intern's 'Initiation' Harmful to Your Health?

Wed, 20 Aug 2008 15:17:15 EST

Sandeep Jauhar's book, Intern: A Doctor's Initiation, is the unsettling account of his medical residency at a New York hospital, largely focused on his first year. It represents his take on his internship, interweaving that experience with something of his childhood, family history, previous studies and work experiences. In the process, Jauhar tells us about himself, medical education and health care.

Cost-effective Medical Treatment: Putting an Updated Dollar Value on Human Life

Wed, 30 Apr 2008 17:36:16 EST

A thorny question lies at the heart of meaningful health care reform. How much is human life worth? New Wharton research based on Medicare kidney dialysis data shows that the average figure -- $129,090 per additional year of quality life -- is higher than prior studies have shown. Perhaps more important, the study also puts a value on the cost-effectiveness of treatment across percentiles of the entire dialysis population in an attempt to develop a benchmark for coverage decisions. Chris P. Lee, a Wharton professor of operations and information management, co-authored the paper titled, "An Empiric Estimate of the Value of Life: Updating the Renal Dialysis Cost-effectiveness Standard."

'A Race to the Starting Line': Diagnosing What's Holding Biotechnology Back

Wed, 19 Mar 2008 14:57:40 EST

New strategies will be necessary for biotechnology companies to thrive in the new era of personalized medicine, but the healthcare system itself will also have to change, according to a panel of biotechnology company representatives at the 2008 Wharton Health Care Business Conference. Leaving behind the "blockbuster drug" mentality must be part of a new mindset for biotech companies going forward, suggested one panelist. Others discussed stem cell research, regulatory hurdles and competition within the industry.

Eli Lilly's Sidney Taurel: 'Tailored Therapeutics' -- the Pharmaceutical Industry's Next Blockbuster?

Thu, 13 Mar 2008 14:44:02 EST

Sidney Taurel, who will retire as CEO of Eli Lilly on March 31 and as chairman on December 31, predicts that significant changes at all levels of the health care industry will affect doctors, payers and consumers alike. "I believe that the years ahead will amount to revolution much more than evolution," Taurel said at the recent 2008 Wharton Health Care Business Conference. Part of that revolution, he added, will be a move away from "blockbuster" drugs towards a focus on highly individualized solutions for patients.

Presidential Candidates Push Health Care Reform, but Who Will Pay?

Wed, 17 Oct 2007 16:23:27 EST

As medical costs escalate and the number of Americans without health insurance continues to rise, the 2008 presidential candidates have responded by putting health care near the top of their agendas. Indeed, many candidates have already laid out detailed programs to address the nation's health care problems. As a result, meaningful change in the system seems likely to occur once a new president takes office. As Mark V. Pauly, Wharton professor of health care systems, notes: "I'm optimistic this time that we'll get something.... There is actually a chance of doing more good than harm, and I wouldn't have said that in some other years."

A Prescription for Healthier Medical Care Decisions: Begin by Defining 'Risk'

Wed, 05 Sep 2007 15:46:23 EST

"Risk" is a term that comes up frequently when people discuss medicine and health: What's my risk of heart attack? Breast cancer? What's my risk of dying from a complication of surgery? Or having a dangerous reaction to a drug? But according to Mark V. Pauly, Wharton professor of health care systems, consumers don't necessarily use that term in the same way that medical and insurance experts do -- which is a potential pitfall that can lead to less than optimal health care decisions and faulty policymaking.

'Harry and Louise,' the Sequel? The Universal Health Care Debate Is Back

Wed, 27 Jun 2007 13:13:32 EST

In 1993, a television ad featuring "Harry and Louise" -- a "typical" American couple dismayed by the Clinton administration's universal health care proposal -- helped to kill health care reform in the U.S. for the next decade. With the 2008 presidential election in sight, the debate has resurfaced, but are the prospects for universal health care any better today? In an ongoing study of health care systems spanning five countries, Arnold J. Rosoff, Wharton professor of legal studies and business ethics, has identified a set of factors that, in one combination or another, come into play when a country commits to adopting universal health care. This time, he says, one thing seems likely: Instead of a health care "revolution" in the U.S., change will come in increments.

Can Anyone Make Sense -- or Money -- Out of Personal DNA Testing?

Wed, 13 Jun 2007 14:33:58 EST

It seemed only right that James Watson, who co-discovered the structure of DNA with Francis Crick and Rosalind Franklin, was the first to receive a DVD holding the sequence of his own DNA produced by 454 Life Sciences, a division of the Swiss drug giant Roche, and academic researchers. While DNA mapping technology under development at Roche and other companies has the potential to bring the long-awaited era of personalized medicine closer, there are enormous ethical, legal and investment hurdles to building successful business models based on decoding an individual's DNA, according to Wharton faculty and executives in the industry.

In South Africa, Poor Health Can Kill Small Businesses

Wed, 30 May 2007 15:38:15 EST

According to estimates, micro and small businesses contribute almost 50% of South Africa's total employment and 30% of its gross domestic product. Until recently, however, the impact of poor health, and in particular HIV/AIDS, on these enterprises -- ranging in size from single owner-workers to companies with 100 employees -- has been largely overlooked by researchers. A new study by Li-Wei Chao from the University of Pennsylvania's Population Studies Center, Mark V. Pauly, Wharton professor of health care systems, and others examines how owner health determines the fate of small businesses in South Africa, and impacts the larger economy as well.

Novartis's Alex Gorsky: Ensuring that Patients Get Access to the Medicines They Need

Wed, 27 Sep 2006 18:51:22 EST

Alex Gorsky was named head of Pharma North America and CEO of Novartis Pharmaceuticals Corp., the U.S. affiliate of Swiss drug giant Novartis, in the fall of 2005. Since joining the company in 2004 as chief operating officer and head of general medicines, Gorsky has overseen the continued growth of Novartis's industry-leading cardiovascular franchise, notably the blockbuster drugs Diovan and Lotrel. The company sells a variety of products, including those that treat endocrine and respiratory disease, gastrointestinal illnesses, cancer and blood disorders and bone and joint conditions, among others. Prior to joining Novartis, Gorsky was company group chairman for Johnson & Johnson's pharmaceutical business in Europe, the Middle East and Africa. Before that, he spent 15 years in sales, marketing and management at Janssen Pharmaceutica. Gorsky was recently on campus to take part in a Wharton business roundtable on leadership and agreed to talk with Knowledge@Wharton about trends in the pharmaceutical industry.

The Business of Hospice Care

Wed, 31 May 2006 14:49:23 EST

Hospice care occupies a specialized and growing niche in the healthcare economy as a comfort to the dying and their families, and a potential cost-saver for Medicare. With baby boomers now hitting their seventh decade, hospice is expected to become an even more important part of the healthcare landscape, according to Wharton faculty and industry analysts. How profitable are hospice-providers, what is their long-term business outlook, and what are the unique challenges that hospice companies face, given strict government regulation amid increasing demand for their services?