Consumer-Driven Health Care: The Changing Role of the Patient

Policy Reports | Health

No. 276
Tuesday, May 10, 2005
by Devon M. Herrick, Ph.D.

Legal Obstacles

State and federal regulation of medical care has not kept up with the technology now available to patients. Neither has it kept up with patients’ ability to easily participate in their own medical decisions.

Needed Reform: Laws on Physician Practice. In the United States, physicians are licensed by a state medical board to practice medicine. Many state medical boards find the practice of cyber-medicine unethical if a consultation does not involve face-to-face examinations.138 This makes practicing medicine online and across state borders difficult — if not illegal. Even rendering second opinions by way of the Internet is sometime problematic.139 For example, physicians working for the Web-based service faced the threat of legal action for treating patients after having online consultations.140 However, 43 percent of Internet-using patients report seeking, in effect, a second opinion on a medical Web site. About one-third of patients on the Internet have sought the advice online of a physician other than their own.141

State medical licensing also restricts trade. A patient receiving a mammogram or body scan could request that the results be sent electronically to a high-tech facility in India to be interpreted by a highly trained Indian physician at a fraction of the cost of an American radiologist. Likewise, it would cut costs if a patient receiving comprehensive blood tests through a direct testing facility could choose a physician anywhere in the country (or world) to interpret the results. A few hospitals have arrangements with high-tech facilities staffed with Indian radiologists who interpret X-rays and scans at night when an American radiologist is not available. However, various state laws make this arrangement difficult unless the Indian radiologist is licensed in the state where the hospital is located or unless a state-licensed American physician signs off on the results.142

Needed Reform: Laws on Referrals. Regulation also affects how medical referrals are made. State and federal laws prevent practitioners from paying fees in return for patient referrals. Although this sounds like a good policy, it also has some negative ramifications. Blocking all referral fees makes it difficult to connect patients with providers of medical services.

“Blocking all referral fees makes it difficult to connect patients with medical service providers.”

Imagine a medical services auction Web site similar to eBay. Sellers could offer package deals for various medical services available at given time slots. Potential buyers could read feedback left by previous patients to ensure the service provider’s quality and honesty. Shady practitioners would be essentially blacklisted by accumulated negative feedback and no one would be willing to patronize them. But, because they are not able to charge physicians a referral fee, medical auction Web sites have to trust consumers to pay for completed services (although the patients have little incentive to do so after they have connected with a physician). And consumers are often difficult to track down since they likely only purchase services occasionally. Neglecting to report the purchase of the service to the Web site could save them $20 to $95 depending upon the procedure purchased. For this reason, most Web sites advertising medical services are promoting the services of individual medical practices rather than bringing together numerous physicians to compete on price to earn patients’ business. As a result, the online market for connecting buyers and sellers of medical services is small and uncompetitive compared to the numerous auction Web sites like eBay and Yahoo.

One medical auction Web site that does exist,, connects cosmetic surgery providers with potential patients. Physicians compete for business on both quality and price. Patients are free to consider any offer made by a physician and schedule a complimentary consultation. Since cosmetic surgery is paid for out-of-pocket, patients are free to pick the physician of their choice. However, it is difficult for the Web site to collect fees for their services. Whereas Web sites selling airline tickets receive nominal fees from the airline whose ticket is sold (usually $5 to $10) — and the air traveler often also pays a nominal fee — cannot make similar arrangements as easily. Since surgery is ultimately an arrangement between doctor and patient after a consultation, it is difficult to track and bill a patient whose services were successfully arranged. The most logical party to pay a “finder’s fee” would be physicians, since they stand to gain from performing numerous procedures, but they are not legally allowed to pay for referrals.

Like other Web sites, earns revenue by displaying commercial advertising. However, selling advertising is not as lucrative as physicians paying referral fees per completed transaction. Thus the market for medical auction Web sites is not very competitive.

“Two-thirds of office visits to physicians result in prescription drug therapy because it is among the most efficient methods to treat illnesses.”

Needed Reform: Drug Regulation. Two-thirds of office visits to physicians result in prescription drug therapy because it is among the most efficient methods to treat illnesses.143 But only a licensed medical practitioner can prescribe prescription drugs. The only drugs that consumers can obtain without a prescription are those approved for sale over the counter. The process of moving a drug from prescription-only status to OTC status is called Rx-to OTC switching. Drug manufacturers usually request this switch when their patent protection is about to expire. In other words, OTC drugs are usually older therapies that have been replaced by a newer medicine. In many cases newer drugs are more effective than older, less expensive drugs.144

Restricting patent medications to the prescription-only market drives up consumers’ costs. Likewise, denying consumers access to any safe drug drives up treatment costs.145 The Food and Drug Administration (FDA) has recently shown a greater willingness to consider increasing patients’ access to formerly prescription-only drugs.146 Consequently, the number of drugs switched to OTC status is expected to increase 50 percent over the next few years.147 The FDA recently held public hearings to discuss possible changes in the criteria or inclusion of classes of drugs to consider for OTC status.148 A request initiated by WellPoint Health Networks (which manages health plans) to move second generation antihistamines (Claritin, Allegra and Zyrtec) from prescription-only status to over the counter was the first time an FDA panel voted to recommend OTC status when manufacturers hadn’t requested it and were opposed to the switch.149

Figure VIII - Annual Cost of Cholesterol Control

“Europe has approved four times as many prescription drugs as the United States for over-the-counter sale.”

Unfortunately, the FDA’s recent track record of moving medications to the OTC market is decidedly mixed. Europe approves far more drugs for OTC sales. Over the last two decades, for every drug switched from RX to OTC in the United States, Europeans have switched more than four.150 The FDA missed a chance to approve two power cholesterol-lowering drugs, Mevacor (Lovastatin) and Pravacol (Pravastatin), for OTC use in 2000.151 In January 2005 an FDA advisory panel again voted overwhelmingly against recommending Mevacor for over-the-counter sales.152 This is unfortunate because recent studies have shown how beneficial these drugs are in reducing coronary heart disease and heart attacks.153 Analysts hoped the FDA would eventually approve OTC sales of Lovastatin. However, Merck, the maker of Lovastatin, may not be willing to bear the cost of satisfying all the FDA’s queries. For instance, in the latest attempt to convince the FDA to switch Mevacor, Merck conducted trials with mock storefronts where observers studied consumers’ ability to self-diagnose high cholesterol, read product labels and follow directions. Despite an extensive study, the FDA did not think Merck had proved their case. The expense of submitting an RX-to-OTC petition to the FDA is high. And once the patent expires, opportunities to extend a drug’s profits quickly diminish over time.154 As a result, American consumers are denied OTC access to drugs that could significantly reduce treatment costs.155 [See Figure VIII.]

“Drugs for high blood pressure and cholesterol control are good candidates for overthe-counter status.”

Regulations are not so restrictive in some other developed countries. For example, the British have approved the OTC sale of a low-dose version of Merck’s newer drug Simvastatin under the brand name Zocor Heart Pro, with a short pharmacist consultation.156 The British Committee on Safety of Medicines recommended selling Simvastatin OTC after studies showed that Simvastatin can reduce LDL cholesterol (e.g. bad cholesterol) by 27 percent and the risk of heart attack of death from coronary heart disease by one-third after three years of treatment.157 Interestingly, European medical publications address the issue of “self-care” more frequently (and openly) than journals based in the United States. This may be one reason why Europe has switched far more prescription drugs to OTC status during the past two decades.158

Another consumer choice was effectively thwarted — some say for political reasons — when the FDA declined to allow sales of Plan B (emergency contraception) for OTC use.159 Both the FDA’s reproductive health drugs advisory committee and nonprescription drugs committee voted in favor of the OTC switch for Plan B in a joint meeting.160 However, 49 House Republican legislators sent a letter to President Bush voicing their view that it should not be made available without a prescription.161 Since this medication must be started within 72 hours of unprotected intercourse, requiring a doctor’s prescription effectively prevents access by women.

The FDA needs to make more medications available to the public over the counter — including those for chronic conditions. Easier access to drugs like statins for cholesterol, medications for high blood pressure and cardiac drugs to treat heart conditions all are good candidates for over-the-counter.

Some critics argue that self-treatment based upon information obtained from the Internet is not in patients’ best interest.162 However, patients could discuss treatment protocols with their physicians. They could also discuss the cost of various treatments and the trade-offs they are willing to make.163

“A different malpractice standard for e-mail (compared to in-person) consultations is needed.”

Needed Reform: Legal Liability. Physicians usually counsel patients on treatments and therapies in person and then write relevant information in the medical records based on the physicians’ observations. Whereas there is usually no complete documentation of phone conversations or examination room visits, an e-mail exchange is often an unfiltered transcript of patient and physician exchanges.164 Physicians may risk lawsuits if an e-mail exchange in the medical record is not concise in its explanation of patient treatments plans and does not conform to standards of accepted care protocols. A bigger problem is that there is no examination on which advice is given. The American Medical Association recommends that physicians establish guidelines for situations when e-mail correspondence is appropriate and when in-person office visits are preferred.165 A different malpractice standard for e-mail consultations (compared to in-person consultations) is needed so that physicians are not afraid to use e-mail with patients out of fear of malpractice suits. Legal reform should protect physicians following appropriate guidelines on patient/physician e-mail communication such as those established by the American Medical Informatics Association.166

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