What the Government Doesn’t Want You to Know About High Healthcare Costs

IN SUMMARY: With health-care firms making excess profits of $65bn a year the worst offenders are not pharma firms but an army of corporate health-care middlemen. Total excess profits amount to only about 4% of America’s health-care spending. But this still makes health care the second biggest of the giant rent-seeking industries that have come to dominate parts of the economy. The excess profits of the health-care firms are equivalent to $200 per American per year, compared with $69 for the telecoms and cable TV industry and $25 captured by the airline oligopoly. Only the five big tech “platform” firms, with a figure of $250, are more brazen gougers.

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Most people said they trust drug companies to come up with new and effective drugs

  • Most people — 71% — said they trust drug companies to come up with new and effective drugs.
  • But 80% said industry profits are a major factor in high drug prices.
  • 75% said it’s easy to afford their prescriptions, and 45% said they pay less than $25 per month. Unsurprisingly, poorer people and those in worse health had a harder time covering their bills. Source: Kaiser Family Foundation
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Pharma sideshow to perform in front of Congress today

KEY IDEA: Today some pharma CEO’s will go to Congressional Hill to answer questions about high drug prices. Politicians are conducting this charade because they want to give voters the idea that “they care” and that they are doing something. What won’t be discussed are the real reasons American healthcare is the most expensive in the world with poor results.

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Defending the $375,000 annual price tag of a prescription drug

  • Catalyst CEO Patrick McEnany is now building his stand around the FDA approval of the $375,000 annual price tag it has slapped on its newly approved drug Firdapse.
  • “We believe that the pricing of our product is in line with the pricing of other products that provide significant clinical benefits” according to their CEO.
  • The CEO also says the company will do whatever they can to limit patients’ out of pocket cost but the damage is already done.
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Our high cost of care will remain stubbornly fixed unless our behavior changes.

  • Our high cost of care and modest health outcomes will remain stubbornly fixed unless our behavior changes.
  •  Nearly 40% of Americans were considered obese in 2015 and 2016, a significant increase from 2007 and 2008.
  • 2016 study published in the Journal of the AMA found that only 2% of Americans met the ideal dietary guidelines adopted by the American Heart Association.
  • In a 2015 survey, 28% of American adults that they did not participate in the past year in any of 104 listed physical activities and were considered “totally sedentary.”
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Why pharma companies continue to feel the heat over pricing

  • Pharma continues to be portrayed as the villain in pricing but there are other villains who are escaping scrutiny.
  • The 5 largest conglomerates combining health insurance and pharmacy benefits are on track this year to be bigger than the 5 preeminent tech companies.
  • Half of people in fair to poor health are uninsured or struggle with affordability.
  • Annual family premiums for employer-sponsored health insurance rose five percent to an average $19,616 this year, extending a seven-year run of moderate increases.
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Pharma still blaming drug middlemen for obscene prices

  • Pharma, which used to cite the high cost of research, now say rebates within supply chain drive up prices.
  • Pharma says they don’t actually benefit much from list-price increases and that their net prices are suffering, because they are paying bigger rebates to pharmacy-benefit managers that negotiate prices in secret with their clients, such as employers and labor unions.
  • Drugmakers’ price increases are unrelated to the rebates, according to research commissioned by the Pharmaceutical Care Management Association, a trade group for PBMs.
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