New York Times columnist Thomas Friedman waded into the weeds of health care costs yesterday with a column about a little start-up company called EndoStim. According to Friedman, the St. Louis firm is developing an implantable medical device to treat acid reflux disease. It’s the latest attempt at a new product to treat that perennial problem zillions of Americans believe they have—heartburn.
Friedman concedes that he doesn’t know whether the product will work, but what interests him is how the company was formed and is being run today. He says:
It is the epitome of the new kind of start-ups we need to propel our economy: a mix of new immigrants, using old money to innovate in a flat world.
Friedman’s column, essentially a puff piece for EndoStim, presented the quintessential American dream story. The company was inspired by Indian and Cuban immigrants, funded by St. Louis venture capitalists, and is run by a South African who lives in Missouri and California. The new treatment, an electro-mechanical device that dams up a patient’s esophagus, is being manufactured in Uruguay with the help of Israeli engineers. India and Chile are hosting the clinical trials, conducted by what the South African CEO calls “superb surgeons with high levels of skill, enthusiasm for the project, an interest in research and reasonable costs.”
Friedman suggests we don’t hear much about companies like EndoStim because our national debate is dominated by “the ignorant ramblings of Sarah Palin, talk-show lunatics, tea parties and politics as sports.” He’s thankful that we still have “risk-takers who are not paying attention to any of this nonsense.” How does he know that EndoStim’s CEO doesn’t relax listening to a talk show lunatic? But that’s not what’s wrong with his column.
There’s another story here that Friedman did not tell—how EndoStim fits into the high price of medical care in the U.S., the highest in the world. Here is where health care blogger Merrill Goozner, who writes GoozNews, pounced on Friedman’s prose. All his puffery about superb surgeons and leaner, more capital-efficient start-ups obscured the billions the U.S. has spent on heartburn treatments over the years, and the way the nation goes about piling up its gargantuan health care tab.
In a fine post on his blog, Goozner takes Friedman to task for not dealing with “the realities of acid reflux disease, the costs it is levying on our overburdened health care system, or the nature of the miraculous cure that this yet-to-be invented implantable device will provide for the suffering masses.” He gives a short history of heartburn treatments, beginning with Pepto Bismol in the 1970s. I could go back even further, to the 1950s, when a very cute cartoon character named Speedy Alka Seltzer flitted across the TV screen trying to sell Americans on the virtues of Alka Seltzer for heartburn.
Goozner tells readers how Zantac replaced Pepto Bismol and cured about 88 percent of patients in clinical trials. When its patent ran out, AstraZeneca introduced Prilosec, a proton pump inhibitor, which slowed the production of acid—but, said Goozner “it was at best a minor improvement” over drugs like Zantac. Yet through the magic of marketing, it became one of the country’s best-selling drugs. Then, when that patent expired, came Nexium, which does the same thing as Prilosec. The Purple Pill commercials are embedded in our brains. Last year, writes Goozner, the drug maker racked up $6 billion in sales for Nexium, “despite the availability of equally efficacious products being sold over-the-counter for less than a third the price.”
He asks some essential questions that Friedman might want to address in a Part II. Is a device damming up someone’s esophagus really the way to go? How much will it cost? How much will the surgery cost to implant it? And, most important, will it work any better than treatments currently on the market? The answers, he says, won’t come cheap, though they get to the crux of why the U.S. health care system costs so much and why it is unlikely to produce affordable premiums or affordable health care any time soon.
Goozner, like me, has been skeptical of the cost containment provisions in the new health care law. Right after the House gave the thumbs up to reform, Goozner wrote:
Many of the payment reforms may not be achieved. They could face delay or repeal on Capitol Hill, which has consistently bowed to pressure from lobbyists for medical providers like doctors, hospitals and drug and device companies.