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Alice Rivlin's efforts to break the deadlock in the bipartisan Obama administration commission. The commission was setup to recommend ways to control the US budget deficit. This group is paralyzed by politics as Democrats have tried to safeguard Social Security, and the Republicans are dead set against tax increases. Rivlin is working through a shadow commission on the deficit headed by former Senator Pete Domenici. This shadow commission is supported by the Bipartisan Policy Center, a think tank setup by former Republican and Democratic majority leaders. The idea is to get the process started through leaders of both parties, as happened in 1983, when Senators Monynihan and Dole initiated the process after a similiar deadlock. The agreement reached then led to a change in the Social Security law, which increased the cap on payroll taxes and raised the retirement age.

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The publisher of the Wall Street Journal, Dow Jones & Co., is working to overturn a court injunction that prevents the public from seeing the Medicare billing records of individual doctors. Dow Jones & Co., filed court papers in January 2011, to overturn the court injunction. The American Medical Association has fought to keep secret the amounts of money individual doctors get paid by Medicare. The AMA filed a lawsuit against the government to keep secret these Medicare records, on the grounds of privacy rights, and won a court ruling in 1979. This court ruling still stands. The position of Dow Jones in its efforts to change this situation, is that giving the public access to the records is essential to the monitoring of so large a public expense as Medicare. These records would then be available to state medical boards, nonprofit organizations, universities and newspapers who can act as watchdogs over the $500 billion Medicare program. Such transparency and monitoring is an essential feature for the proper functioning of such programs and to prevent misuse of public money. For a program like Medicare, fraud and waste has enormous implications, as it adds to the spiralling cost of healthcare and to the unsustainable budget deficits. In one of the largest cases so far, the FBI, Justice Department, 700 state, federal and local agents, worked together to charge 114 defendents nationwide with Medicare fraud in February 2011. A senior law enforcemet official says Medicare fraud is so rampant, "there's no way in hell you can prosecute your way out of this problem, no way." He says the the answer is more effective monitoring of the money that goes out. And a key part of that is transparency and public access to how the money in Medicare is spent, what individual doctors and healthcare providers are getting paid by Medicare. The lack of this transparency for a program the size of Medicare can only lead to a lack of monitoring as the Dow Jones suit asserts, and make it difficult for the government to check abuses in the way money goes out. At a time when teachers and public workers and seniors are expected to make their share of the sacrifices to fix the budget deficits, it is incomprehensible that money should then be allowed to go out of the Medicare system through fraud and waste, because of a lack of transparency....

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Slowdown in drug sales growth in USA and Europe. Top seven emerging markets will account for 34% of global sales growth upfrom 7% in 2000. And the USA accounted for 40 to50% of growth in global pharmaceutical sales each year early in this decade, in 2009 the sales in the USA will account for just 9%. Forecasts and figures are from IMS consulting firm. USA sales will rise only 1-2% if at all, while emerging markets will grow by 4.5% to 5.5%. With the economic troubles American consumers are less likely to fill prescriptions and insurers are not covering new drugs and favoring generics. Intense competition among generics drug makers is reducing prices. IMS predicts that the global generic market will grow by 5 to 7% in 2009 to $68 billion, slowing from double digit growth. This is from total sales forecast for pharmaceuticals globally of $830 billion.

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How diagnostic tests in portable toolskits, that patients can use themselves, are being developed at low cost in developing countries like China. This creates the kind of care appropriate for poor countries, where patients need something they can afford, and something that does not require repeat visits to doctors offices or clinics. Ustar Biotechnologies is a Chinese startup, that says it has the technology, costs that the founder says "no one can compete with," and affordable prices for poor countries. The sales of such diagnostic test portable devices or kits is expected to soar in coming years. Quimin You, the inventor and founder of Ustar, graduated in North America and worked with multinationals. His proposals for cheap diagnostic technologies were turned down by multinationals, who in their narrow focus saw these thechnologies undermining their existing products. Now Qimin is back in China with a startup that will do this.

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The differences in the Democratic party between conservatives and liberals that make it difficult to get things done in healthcare, energy and other areas. The lack of White House leadership in a number of areas, and in anumber of instances. The lack of Senate leadership on these issues with the Senate not having done much in energy and healthcare legislation. Add to this the influence of the $133 million that lobbyists spent in the 2nd quarter 2009 alone. The failure of Republicans and Democrats in Congress to push vigorously for cost control in the health care industry adds to these problems.

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Leonhardt argues that rationing is rational allocation of limited resources, health care budgets are limited resources even in rich countries like the USA, and if you overpay here you cut somewhere else. Now the cuts that are not noticed he says are in take home pay as employers face increased premiums from insurers. Rationing is taking place all the time with poor health outcomes relative to the cost for poor allocation of resources as survival rate for many diseases are not that much better than other countries. Rationing takes place everyday when patients see doctors only for a few minutes as doctors race to see more patients, and when diseases are not caught early on in the process as doctors do not know their patients well enough. And rationing is taking place as patients simply delay or forego treatments based on the extra cost, or as uninsured get no care. There are so many buzzwords like this thrown around, with doctors, hospitals and insurers and other groups trying to preserve the status quo, even as it is becoming rapidly unaffordable fort the US to be spending so much on health care....

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An average of major opinion polls compiled by Real Clear Politics website shows 50.5% of Americans opposed to the Obama U.S. health care law.

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Copies with slight changes to extend drug life with new brand names- Clarinex for Claritin, Nexium for Prilosec, Paliperidone for Risperdal being the latest in this new marketing strategy of drug companies to extend the life and sales of a successful drug. The drug companies try to market the copy drug as a significant improvement, which is what J&J is doing with Paliperidone. Experts are skeptical. Pricing of the generic versions of Risperdal or its copy will be much less expensive. Cost is a sensitive issue. About 15% of Risperdal's $1.35 billion sales were from Medicaid, generic substitutions offer potentially large savings. Meantime J&J did not do clinical tests between Risperdal and Paliperidone, the tests with 1600 patients compared Risperdal with a sugar pill. A psychiatry Professor at Duke and another professor at NYU are skeptical of J&J claims for Paliperidone. United Health shows savings of $150 million by using generics instead of Nexium, so managed care payors will tread carefully....

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The National Childhood Vaccine Injury Compensation Program protects vaccine makers from much of the litigation risk faced by pharmaceutical manufacturers. It limits compensation for death to $250,000. This special vaccines court is called Office of Special Masters at the U.S. Court of Federal Claims. This may be one reason for Pfizer's willingness to pay $68 billion for Wyeth which is amaker of childhood vaccines. Vaccines will generate $21.5 billion in sales by 2012, according to Sanofi-Aventis. Vaccines are biologic products that can't be copied. Wyeth's Prevnar is designed to protect children against 7 strains of pneumococcal disease. It has sales of $2.7 billion projected to grow to $5.5 billion in 2015 according to Sanford C. Bernstein & Co. Vaccines have driven huge reductions in childhood diseases, and the Act is designed to potect makers of vaccines, who suffered from excessive litigation in the 1980's.

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Bowles and Simpson call for deficit savings along the lines they suggested as co-chairmen of the President's Deficit Commission- reducing the cost increases in Medicare, changes to Social Security, and cutting tax expenditures.

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As Indian pharmaceutical industry sees drug testing in India as an opportunity, conditions for obtaining the best results are being established by taking necessary steps. With ashortage of experienced people to run drug trials, Indian government has stepped up training, setting up partnerships with the U.S. FDA, Health Canada, the World Health Organization, and other similiar organizations, The emphasis should be on credible dat and the safety of subjects says A.K. Pradhan, India's Assistant Drug Controller. After the death of an infant in a Wyeth Pharmaceuticals drug testing effort, the Drug Controller of India though supportive of Wyeth has raised certain issues that Wyeth is addressing.

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David Brooks says the Paul Ryan Budget proposal is a bold step forward that is badly needed in this debate on health care, even though it has some grave weaknesses which need to be corrected. It is a bold step forward because he says Democrats say they want no middle class tax increases, or are not willing to say what kinds of tax increases they support, and yet they believe the Medicare and Medicaid and Social Security programs are worth preserving. This is'nt based on reality. He cites the weaknesses, beginning with the one discussed in David Leonhardt's column in the New York Times on April 7, 2011. Too many Americans pay too little into Medicare taxes and expect to collect several hundred thousand dollars more in Medicare benefits. The example given in Leonhardt's column is from a study that shows 56 year olds with average earnings pay about $140,000 in dedicated Medicare taxes over a lifetime, and then go on to collect $430,000 in benefits. Middle class and affluent boomers can't get off paying their share like everybody else. Its just the right way for their children and the nation's children. Ryan's plan excludes older people reaching retirement in ten years. The other major weakness is that the cuts are too deep. Things like the Pell grants which Ryan proposes to cut back to 2008 levels need to be preserved, and more money has to go into science, education and research and early childhood education for the U.S. to be competitive with China and India. The Ryan proposal places cuts that would be required so that tax revenues need to be at 18% of GDP. The number where a larger consensus exists is for tax revenues at 20% of GDP (also supported by business and the Wall Street Journal's editorial columns). This would preserve programs that are most productive for the economic future of the U.S. Ryan's proposal lets the hope for reducing costs of medical care rest entirely on future retirees deciding how much medical care (tests, procedures etc) they consume through larger cost sharing. Yet a structure and framework is needed to manage these costs effectively, and some combination of incentives to retirees to control costs and an effective structural framework is needed. ...

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Tyler Cowen, Professor of Economics at George Mason University, points out some basic truths about health care as it is practiced today in the USA, and healthcare spending as it stands today. He questions whether starting out with extra spending plans to provide coverage to all will help solve the basic problems facing American health care. Too many tests and diagnostic procedures used by doctors is not aproblem that will be solved by spending more money to cover everyone. And government taking on more spending to cover all will not address all the other major shortcomings of the American way of practicing medicine, like prescribing a battery of tests, that tend to drive up costs, to just mention one of the problems. And it will not address any of the shortcomings in the way Americans take care of their health, diet, exercize and healthy lifestyles. THese are critical to get good health outcomes for the people, and which combined with careful spending of dollars where it will provide the greatest benefit, is the only way the health care solutions can be found....

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Walgreens is changing its growth model to add the business of Health and Wellness buying two companies I-trax Inc. and Whole Health Management which run 350 health centres at corporate offices. Pharmacies will be added to these centres. Its targeting 7600 office sites with 1000 or more employees that could use a health-care center. Its competitors CVS and Walmart are going into managing employer drug benefit programs, with Walmart's selling point being reducing costs of paying for prescriptions for employers.

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A study by Dr. McCormick of the Harvard Medical School and professors at the City University of New York School of Public Health at Hunter College, shows that the anticipated savings from conversion to medical records may not materialize to the extent expected. This study of data from 1100 doctors of 28,000 patient visits shows that with access to digital records doctors actually increased the number of tests ordered- from 12.9% of visits without digital records to 18% of visits with digital records. For more advanced tests such as MRI and CT scan the rate was 70% higher. Dr. McCormick says this may be because the new digital technology may have made it easier to order tests.

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Sheila Bair says she fears the next crisis will start in Washington. Bair points to the need for urgent action along the lines recommended by the Bowles-Simpson Deficit Commission. Areas identified by Bowles-Simpson should be tackled as early as possible, she says - tax subsidies for housing and health care that lead to misallocation of resources, defense spending, special-interest provisions. She points out that the increase in the deficit is a result of the unwillingness of governments over the last two decades to make the hard choices necessary to control the structural deficit. Total federal debt doubled in the last 7 years, to almost $14 trillion, or about $100,000 for every American household. Bair, as Chairman of the FDIC, played a critical role in the efforts to control the US financial crisis of 2008-2009. Relentless federal borrowing she says, undermines the confidence private investors have in US government obligations. The cost for bond investors and others to purchase insurance against a default by the US governmet went up from 2 basis points in January 2007 to 100 basis points in early 2009, and is now at 41 basis points. With 70% of US Treasury obligations held by private investors scheduled to mature in 5 years, a decline in investor confidence would lead to higher government and private borrowing costs. She writes this just as the debt crisis in Ireland is taking place, following the one in Greece, and contagion to Portugal and Spain is feared. Bair fears a similar loss of confidence in US public debt. High and volatile interest rates could lead to losses for financial institutions holding Treasury debt and raise funding costs for depository institutions....

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The worst flaw in the health care bill says the Economist is that "fee for service" and doctors billing for each test done continues as before.The whole idea of medical services based on medical necessity and value for money has been left out of the billsin Congress. Alan Meltzer also pointed this out in his discussion of the deficits and debt over the next decade; that the 25% reduction in medical expenditures does not look anywhere closer to reality, worsening the deficits. This is also the view expressed in the discussion of health care reform in the November 2, 2009, issue of Business Week. Never mind said BW that the doctors and hospitals account for one third of medical expenditures and there is waste in Medicare spending. Congress said BW has made no changes in the "fee-for-service" system of medical care that has inflated medical costs, by paying doctors for the volume of services delivered and not the quality of services delivered.

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Glaxo's Dr Garnier talks with Jeane Whalen of the WSJ about his work, a lot about his committment to running a company not just for rich countries, that access is a very important word for him and his efforts to make drugs affordable or even free or close to free depending on the country's standard of living, his 24-7 day handling the Avandia issues, and the innovative drug pipeline he has put together over the years.

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Krauthammer says there is reason for optimism that the super committee of the August 2 Debt Ceiling and Deficit bill can achieve major results. The reason he says is that much of the work in key areas has already been worked out by the Simpson-Bowles Commission. This has also received extensive public scrutiny and discussion. Its now upto the committe to make some choices for tax reform. For the sake of efficiency and fairness this needs to be done. Efficiency is gained by closing the loopholes and the tax exemptions for mortgage interest deductions, health-care exclusion, and subsidies such as the one for ethanol. And in its place moving to lower tax rates, the 23% envisaged by Simpson-Bowles, or the 28% from the Reagan days, down from the 35% today. Fairness is gained by removing tax breaks for special interest groups that do much of the lobbying. The mortgage interest deduction can be phased out starting at $500,000 in the inital phase or using the plan for tax expenditures proposed by Martin Feldstein. Feldstein's proposal outlined in the New York Times on May 4, 2011, (see group for Feldstein) was to limit the reduction in taxes from deductions and exclusions to 2% of the person's AGI or adjusted gross income. The other part of the Committee's focus would be the structural changes to Social Security and Medicare- raising the Social Security and Medicare ages and changing the inflation formula, and means testing Social Security. Obama has already considered the raising of the age for Social Security and changing the cost of living formula....