This is all difficult enough without an election, so it’s easy to be pessimistic. And it’s tough to tell whether this is a game of chicken between Republicans and Democrats, or a case of lemmings of all stripes headed over a cliff.

So, how worried should we be?

As matters stand, the House of Representatives has passed a continuing resolution to fund government operations for the first six months of fiscal 2013 at roughly current levels. So far, so good, especially since the user fee calendar aligns with the federal fiscal year. All that waits now is a Senate vote, which President Obama can be safely presumed to sign.

The situation at FDA is a really outstanding reason to give the cooler heads in Washington more time at the mike. After all, there’s nothing like the specter of counterfeit drugs and devices flooding American medicine cabinets and hospitals to give a legislator a queasy stomach. There isn’t a whole lot of clarity on the question of whether sequestration would affect device user fees, as Mark Leahey, President/CEO of the Medical Device Manufacturers Association told me last week. And a lot of people would argue FDA is about as useful as a screen door in a submarine should the sequester damage or eliminate all the various user fees at FDA.

As for the tax issues that make up the fiscal cliff, I suspect the outcome will help the economy at least a little no matter which way it goes. Assuming business is still on the sidelines over unpredictability, even a tax increase would bolster some additional investment if only because everyone would then know what they’re working with. Incidentally, whoever is sitting in the Oval Office after inauguration day will get some credit for an economic boost, regardless of whether they helped (or hindered) the process.

So I think our elected officials will muddle through the budget and the fiscal cliff. Easy to say, I know, but believe it or not, all those cynical you-know-whats in Washington really do care. Besides, who wants to go down in history as the clown posse who ran the world’s largest economy into the ground?

Beyond that, anyone who needs votes to keep their job has to remember that this big a deal won’t be forgotten if they botch it, and in that event it won’t be a case of lemmings running over the cliff come election day 2014. It’ll be a case of chickens being heaved over the cliff by an angry mob. If nothing else gets Washington’s attention, that will.

The FDA medical device review mechanism has come under fire from many quarters for some time now, but one of the criticisms of the 510(k) and PMA programs is that the reviews are funded by user fees, a claim that can be made of pharmaceuticals, biotech and now even FDA’s overview of food production. Opponents can complain all they want about user fees, but what can they do about them?

As has been widely reported, the Obama administration has proposed that FDA’s total budget for FY 2013 would rise by double-digit percentages, but 98% of that increase comes from user fees. Call me a cynic, but I have a tough time believing that Congress will be able to keep its hands off that last 2% – or more – of appropriated monies in an effort to get a handle on the amazingly large U.S. federal budget deficit. That’s an understandable move in the current climate, but past congresses and presidents don’t have that fig leaf to explain their lassitude where the FDA budget is concerned.

So opponents of user fees currently face a fairly immovable budgetary object, but it won’t always be that way (we hope). This raises the question, however, of why the expression of these adversarial views has had no effect. After all, it’s not just outside groups who don’t like user fees. Industry doesn’t rant about them but device makers can’t be fond of them, especially the smaller firms with limited financial resources.

One way of looking at this is that nothing gets the attention of the folks on Capitol Hill like a call from a constituent. And nothing lights a fire under their behinds faster than multiple calls from constituents on a particular matter. Would that work for user fees?

I’m not claiming that outrage from the heartland would necessarily put an end to user fees, but it’s tough to see how they could be eliminated without such an outcry. And the thing I find most conspicuous about this discussion is how it always involves the same message delivered by the same faces living in the same zip codes. The conversation is all inside the Beltway.

Like it or not, Congress won’t end user fees unless someone tries to get the citizenry involved, but ask yourself this: When was the last time you heard someone with the necessary credibility (or bankroll) propose “taking it to the people”? The Alliance for a Stronger FDA is probably the best hope for such an undertaking, but I doubt seriously its member organizations are prepared to fork over the cash needed for such an effort, and the Alliance might not be interested in fighting that fight in the first place.

Ergo, we can only conclude that the effort will not be undertaken, and therefore FDA user fees are the necessary evil with which we must all live. So get over it already.

Screening for various diseases is controversial these days thanks to the U.S. Public Services Task Force and similar agencies in other nations, which have suggested a more cautious approach to screening. These suggestions have been blasted by doctors and patient groups for obvious reasons.

Former Medical Device Daily executive editor Jim Stommen took up prostate cancer screening in a posting at this blog a few weeks back, and while I agree with Jim on a lot of things, I felt one perspective was missing; that of the federal budget.

The problem is that no national economy can support indiscriminate screening for everything that can kill. We might take comfort hearing from the Centers for Medicare & Medicaid Services on Jan. 9 that national health spending grew by only 4% between 2009 and 2010, but lets not kid ourselves into thinking that persistent healthcare inflation of an unusually low 4% per year is sustainable, because the recent norm has been closer to 6-7%. The CMS actuaries acknowledged, by the way, that the lousy economy is the prime factor in the recent lower levels of healthcare inflation. And as the folks at Health Affairs will tell you, healthcare’s share of GDP is still at nearly 18%.

It’s true that not everyone who contracts breast or prostate cancer is enrolled in Medicare, but government statistics indicate that between 2004 and 2008, the median age at diagnosis of prostate cancer was 67 years. Hence, it’s plausible to argue that Medicare and/or Medicaid will pay for a majority of those costs.

One of the problems with screening is that you may spend more than you save, as was argued in the New England Journal of Medicine. I’ll also argue that minus a family history or something likewise suggestive of risk, indiscriminate screening runs afoul of the idea of personalized medicine, which I always took to mean that you do everything the patient needs, but you also avoid doing things the patient doesn’t need.

Here’s something else to consider. In a Jan. 6 article in the online edition of the Journal of the National Cancer Institute, NIH’s Philip Prorok, PhD, and others describe a PSA study of more than 77,000 men between 55 and 74, a study that included follow-up of up to 13 years. The authors concluded in the abstract that 13 years of follow-up offered “no evidence of a mortality benefit for organized annual screening … compared with opportunistic screening,” and that the cumulative mortality rates between the study and control arms were 3.7 and 3.4 deaths per 10,000 person-years, respectively.

Please note that while the numbers did not hit statistical significance, they nonetheless favored the controls, not those on more thorough screening. The authors also said the data indicated no interaction traceable to age, baseline co-morbidity, or pre-trial PSA testing.

I’m reminded of an event I covered at the National Institutes of Health a few years ago after which someone approached me to talk about lung cancer screening. Her position was that an enormous amount of suffering and some cost could be averted by such a program, but my position was then – and still is now – that the bankroll you’d need for something like that simply does not exist.

To be affordable, screening has to be tied to evidence of a meaningful individual risk factor, and is a mortal fiscal hazard as a blind, test-everyone strategy. Willful ignorance of that fact is guaranteed to drive us all into bankruptcy, at which point all that well-intended screening comes to a screeching halt along with everything else.

Well, FDA and the Centers for Medicare & Medicaid Services are at it again with parallel review, but this time they’ve tacitly acknowledged what everyone knew all along; that it would never be willingly adopted by more than a very few device makers. In the Federal Register notice of Oct. 11, the two agencies state that the two-year pilot for parallel review won’t accommodate more than five applications per year.

When FDA and CMS initially tried to drum up interest in the idea, a number of observers told me industry would never flock to the idea in any numbers greater than that. However, it’s also worth pointing out that the timing for coverage analysis is no different under parallel review if a device maker can’t apply for parallel review until the device appears at an advisory committee hearing. Ditto the timing of disclosure.

Another peculiarity is that the notice states that CMS will have the option of using coverage with evidence development as a potential reimbursement outcome in parallel review. No point in stopping the presses for that one, is there?

The net result is that you’re probably safe if you bet the cost of your kid’s braces that parallel review will never attract industry in droves. In fact, if you can find someone foolish enough to take that bet, by all means take it.

Fans of conspiracy theory might smell cost containment in parallel review. After all, the FR notice does not say CMS can’t inject itself into the device approval process before that device goes to advisory. Furthermore, the two agencies signed an MOU in 2010 regarding data sharing that does nothing to limit CMS’s use of FDA’s data. What better way for CMS to get its camel’s nose in the tent?

That last part is admittedly speculative, but what’s the alternative explanation? “We just wanna know” isn’t it. Does CMS want to help FDA foster innovation? Sure, that’s it.

Think I’m paranoid? Then describe the net benefit to industry if parallel review is of little (or no) help to five or fewer applications each year. Let’s not forget that relatively inexpensive510(k) devices are ineligible, or about all the budget pressure in Washington. If there’s one mantra regarding Medicare these days in this town, it’s “cut costs.”

Of course it’s possible that this whole thing will fizzle and become nothing more than a curiosity for future generations of med-tech policy geeks. Or maybe the only place it’ll fly is on that topsy-turvy mess known to comic book fans as Bizarro World. In that case I’ll eat a plate of crow, preferably with a dollop of bearnaise, please.

Still, I have to ask: Could parallel review as a screening mechanism for those really expensive PMA devices take root in our normal, non-Bizarro little corner of the Universe, where we drive on the parkway and park on the driveway?

Not a chance. Right?

Chernew and his co-authors remind that calculations of Medicare costs typically consists of a comparison of the world with and without the ACA, stating that the ACA has to do better than healthcare inflation of about 5.5% in order to impress the audience.

The article states that the assumptions about ACA’s ability to “bend the curve” are based on scoring provided by the Congressional Budget Office rather than the Office of Chief Actuary at the Centers for Medicare & Medicaid Services. CBO, as the reader will recall, gets its mathematical marching orders from the text of the legislation, which encodes numerous assumptions based on reforms that to date have a mixed record.

Also of note is that CMS’s chief actuary Rick Foster doesn’t think much of CBO’s scoring thanks to CBO’s failure to account for the SGR/Part B “doc fee” dilemma. CBO furthermore counts healthcare savings twice, once to prop up the sagging Medicare Part A trust fund and again to finance expanded coverage.

Chernew, et al don’t mention this, but state that caution “is clearly warranted” where the ACA’s assumed savings are concerned. They cite first that savings associated with a CMS physician group practice demonstration had more to do with changes in coding practices than with changes in care delivery, an interesting message to (or shot across the bow of) the readership of NEJM. Another source of pressure on the CBO score is that the SGR overhang comes to at least $300 billion over the next decade and that the failure to deal with this means that “proposed Medicare reforms must cut at least” that amount “before they’ll be scored as saving a dime.”

The article states that the primary driver of Medicare cost increases in the years ahead will have more to do with Baby Boom demographics than with increases in per-capita spending, but that the savings derived from the ACA are “likely to fall short of the $300 billion associated” with the interminable SGR headache.

Chernew et al are unimpressed by market-based plans, describing them as likely to shift costs to beneficiaries, whom they point out are not always equipped to determine which plan is best for them. One interesting piece of timing in connection with this is another opinion piece, this one penned by Mike Leavitt, Secretary of Health and Human Services during the George W. Bush administration, and Tevi Troy, who also worked for the Bush White House. They write in a Sept. 20 item at the online edition of The Hill that as the deficit supercommittee “struggles to meet its budget targets, politicians on both the left and the right should look to the [market-based] Medicare Part D model as a valuable example of a bipartisan, effective and economical healthcare reform.”

So why should a device maker care about Chernew’s views? Because the most influential healthcare lobby in the history of the U.S., namely the physician lobby, cares about it.

We can just make more money, right?

In this blog, we’ve explored the issue of NIH funding twice. The first time, we examined the reported fiscal spending numbers (here) and the second time, we examined funding by program areas (here), but now we have the budget/deficit ceiling debate, and yet we still see examples of truly nonsensical arguments about NIH funding.

Let’s acknowledge at least one thing: It makes no sense to fatten the NIH basic research pipeline when we know FDA can never keep up with it. It’s akin to putting up a larger water tower in the hopes of getting more water to the townspeople when you have done nothing with the maxed-out spigot at the bottom of the tower.

Still, some pout and stomp for more. For instance, the Federation of American Societies for Experimental Biology (FASEB; Bethesda, Maryland) has demanded that the NIH budget be increased to more than $35 billion (here).

The explanation for this demand is that in just two years, NIH had spent almost all the $10 billion in additional funding provided by the American Recovery and Reinvestment Act of 2009 and that the additional money is needed to keep some NIH programs running. So instead of advising NIH to learn to stretch a buck, FASEB’s president, William Talman, MD, told Congress that a failure to increase NIH spending would be “damaging to our country’s future.”

Damaging to what? Damaging to the pipeline of yet more cancer therapies that will wash out of the system without having cured a single patient?” Or is the real damage that Sen. Arlen Specter got  another $10 billion for the National Cancer Institute to treat his pet disease? Specter said at the time that he thinks “its scandalous that we haven’t done more to cure cancer.”

But let’s check the numbers further. At clinicaltrials.gov, you can find in excess of 30,000 trials for cancer. How many for Alzheimer’s, which will cost society several times more?

Less than 1,000.

So Specter’s attitude is that $8 billion a year for cancer at NIH is scandalous. I agree. It is scandalous when spending on Alzheimer’s research is far less but will cost society much, much more. We should also ask ourselves, “what if every condition acquired by a member of Congress got another $10 billion over two years?”

Here’s a Jan. 6, 2010, explanation of the return on investment for cancer research at freakononomics.com. The author, Stephen Dubner, acknowledges that age-adjusted mortality for cancer is flat over the past 40 years, but he correctly points out that those cured of heart disease sometimes go on to contract cancer, thus distorting the mortality numbers. However, he does not claim that the greater number of diagnoses explains the flat mortality numbers.

Dubner quotes a source as saying that “between 1988 and 2000, life expectancy for cancer patients increased by roughly four years, and the average willingness-to-pay for these survival gains was roughly $322,000.” The improvements in cancer treatment over those four decades have “created 23 million additional life-years and roughly $1.9 trillion of additional social value, implying that the average life-year was worth approximately $82,000 to its recipient,” Dubner states.

Guess what. The recipient didn’t pay the entire $82,000 for each of those four years. They paid a little of it and the vast majority of it was paid by the other people. Who isn’t willing to run up a tab of more than $300,000 for four additional years when you know good and well it won’t come out of your pocket? And who in their right mind wants to die?

In this economic predicament, we had better start thinking about a GDP argument for further increases in NIH spending. Otherwise, 22nd Century history books will tell the tale of an American economy that went bankrupt curing people so they could retire with no money or return to work in an economy that had no jobs. Makes a lot of sense, doesn’t it?

The best way to get run over by a runaway train is to ignore it. We in the U.S. have grown more than fond of ignoring runaway trains. It’s almost a national fetish. We’re ignoring the massive locomotive of costs associated with Alzheimer’s and pretending that cancer kills more people than heart disease. Then we want to engage in the kind of touchy-feely stupidity that goes with asserting the need for more for NIH when FDA is getting less?

I get it. Why use the old gray matter when just switching off the brain and using our feelings is so much easier?

We have to grow up about healthcare spending and how it crowds out other investments or we are fiscally doomed. One way we can show we’ve grown up is to start talking about the return on investment from additional spending at NIH, or at least for specific areas of NIH spending. Otherwise, we’re just sucking our thumbs while sitting on a train track.

The newest iteration of H.R. 1249 includes the language, “there is established in the Treasury a Patent and Trademark Fee Reserve Fund,” which will be filled with the proceeds collected in excess of the amounts appropriated to the U.S. Patent and Trademark Office in a given fiscal year. This new feature of H.R. 1249 provides that the monies in question “shall be made available until expended only for obligation and expenditure by” PTO “to the extent and in the amounts provided in appropriations Acts.”

So as the saying goes, the Appropriator giveth and the Appropriator taketh away. Or as some on Capitol Hill like to say, “there are legislators and then there are appropriators.”

It’s not hard to understand why the House Appropriations Committee wants to avoid the appearance of favoritism, but the conceptual construct underlying the idea of ending diversion of PTO’s fees into the Treasury’s general fund is that innovation creates job and PTO needs more money to clear the patent backlog, which is presumed to be chock-full of job-creating innovation. Therefore, you have to let PTO keep the fees it collects from inventors if you want intellectual property to play a meaningful role in bringing the economy back to life. I have not heard the argument that the $50 million the Treasury would lose to PTO would be at least offset by an increase in tax revenues, but any such effect might not be felt for a couple of years, which might seem like an eternity to those trying to keep the U.S. government from ending up with the kind of credit rating now enjoyed by Greece and Ireland.

Still, the casual observer has to wonder how many small cuts to the corpus will yield a corpse. First-to-file is not universally popular, and the purportedly offsetting prior user defense is obnoxious to a far greater number. Is there any need for this bill if it allows appropriators to dive into the PTO piggy bank any time they want?

Now that the U.S. House of Representatives has voted down a higher debt ceiling for the U.S. government, Congress can go back the drawing board on deciding how many Medicare spending cuts the voters and stakeholders can stomach, but as always, there are pockets of concern within the larger picture. The picture for device makers is somewhat complicated in part because the Medicare Part B “doc fix” is a $30 billion-a-year overhang that will be tough to resolve, not just because of the positions taken up on each side of Capitol Hill.

On the Senate side, Kent Conrad (D-North Dakota), chairman of the Senate Budget Committee, hinted a few weeks back that he would not seek offsets for the doc fix – an artifact of the sustainable growth rate (SGR) mechanism – as reported in the May 4 edition of Medical Device Daily, but that position may be softening if a more recent report in The Hill is any indication. Conrad is said to have indicated he might be amenable to at least some offsets somewhere in the Medicare program for an SGR overwrite, but he kicked that porcupine away, stating, “we don’t specify” the amount of offsets “because we don’t decide that. The Senate Finance Committee decides that.”

On the other side of Capitol Hill, House Budget Committee chairman Paul Ryan (R-Wisconsin) is sure to take a harder line on finding offsets for SGR, given the more aggressive budgetary stance found in the House. The next question might seem to be: “Where do they find offsets?” Or the question might be: “Can they find offsets?”

Finding offsets will prove pretty difficult if only because Medicare is already an accounting nightmare. For instance, the long-term care bill that was attached to the Patient Protection and Affordable Care Act is sure to be grossly underfunded even if administered as written, and the idea that our government will force beneficiaries to contribute for the full five years before they can receive benefits is a bit tough to believe. After all, someone is going to need it before they’ve kicked in their share, and who on Capitol Hill is going to ignore a phone call from that constituent? Given Congress’s reputation for micromanaging operations at the Centers for Medicare & Medicaid Services, this is like asking me to land a job playing hoops in the NBA. In both cases, it’s vaguely funny but in the end is a largely futile attempt at humor.

Then we have to look at the double-counting assumed in the Affordable Care Act for both expanded enrollment in public programs and the expected extension of the Part A hospital trust fund, which seems to suffer from a progressively worsening case of the actuarial blahs. As reported in the May 17 edition of Medical Device Daily, the trust fund may go dry by 2024, five years earlier than the Medicare Trustees projected last year. I’ll go out on a limb and forecast that negotiations with drugmakers will not provide sufficient offsets in the Medicare Part D prescription drug program, and as we noted in the June 1 edition of Medical Device Daily, many people working inside the Beltway believe there’s little more to be wrung out of Part B imaging. So much for the virtue of counting one’s beans twice.

And the new centerpiece in all this is the draft guidance for accountable care organizations, which the top-shelf healthcare providers such as Intermountain and Geisinger pretty much laughed off. I don’t believe the ACO program is aimed at the top providers at all, but as was the case with the hospital quality demo, some of the participants will actually lose money in the ACO program, and there’s not much to be made in it to begin with. The difference here is that hospitals and other providers have seen this routine before and are sure to be much more wary of any governmental prestidigitation, especially where start-up costs are concerned.

The House Energy and Commerce Committee’s health subcommittee tackled the SGR dilemma in the second week of May, and the committee’s members were very nice to each other. They were also nice to the witnesses at the hearing, including Cecil Wilson, MD, the boss of the American Medical Association (AMA; Washington) who along with others lobbied for a statutory excision of SGR and a five-year program for Part B reimbursement, including a “menu” of payment rubrics doctors could pick and choose from. Let’s not forget that Wilson and Co. also lobbied for more money each of those five years. Five years at $30 billion comes to $150 billion, which nowadays is real money, even in Washington.

As a member of the media, I almost hate to see SGR vanish. It has filled out a lot of column inches in my Washington roundup, and saying or writing “doc fix” makes me feel like I’m in the know. All the same, I suspect I have nothing to worry about. If I had to bet, I’d bet that SGR goes on hiatus for a year – two at the most – but I just can’t imagine the phrase “doc fix” is ready to vacate its place in the lexicon of Medical Device Daily.

Obama’s plan calls for a repeal of the Bush-era tax cuts on families making more than $250,000 annually. The president also called for the creation of a “debt fail-safe” trigger that would impose automatic across-the-board spending cuts and tax changes in coming years if annual deficits are on track to exceed 2.8% of the nation’s gross domestic product.

The president claimed that by building on or adjusting the healthcare reform bill passed last year, $480 billion would be saved by 2023, followed by an additional $1 trillion in the following decade. For example, he proposed tightly constraining the growth in Medicare costs starting in 2018.

Obama’s plan sought to carve out a political middle ground between conservatives – who are pushing for deficit reduction based solely on spending cuts and expected economic growth – and liberals, who generally resist any entitlement reform, instead seeking higher corporate and personal taxes.

President Obama’s plan contrasts markedly with the House Republican 2012 budget proposal, a nonbinding plan that calls for cutting $6.2 trillion over the next 10 years (the Senate has not unveiled its plan yet).

The plan, devised by Budget Committee Chairman Rep. Paul Ryan (R-Wisconsin), proposes transforming Medicare from a program in which the government directly pays medical bills into a voucher-like system that subsidizes purchases of private insurance plans. People 55 and over would remain in the current system, but younger workers would receive subsidies that would likely lose value over time.

 Predictably, the GOP’s solution to unsustainable deficits ignores the necessity of tax increases to accompany the proposed deep spending cuts, particularly for the wealthiest people in the U.S. It leaves Bush-era revenue levels intact and calls for tax reform that would lower the top income tax rates for corporations and individuals and ignoring the bipartisan deficit commission’s recommendations that $100 billion a year in new revenues be devoted to easing the deficit.

So it appears that Democrats still want to hold onto their vision of social utopia no matter what the cost and Republicans want to continue to give tax breaks to the wealthiest people and corporations, even when they haven’t been shown to provide any meaningful jobs in the U.S. in the decade since they were enacted. Nothing changes, and yet things cannot stay the same any longer. It’s time to try something different in Washington.

Ultimately, both parties will have to compromise to get anything done on the deficit. The last time I checked, neither party has enough votes to get their way outright. Can meaningful deficit reductions be made without gutting government healthcare programs?