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.

I can’t justify the high price of insulin for diabetes patients, I really can’t, but the cost of prescription drugs has a cast of many villains, all of whom want a slice of the lucrative healthcare market.

Healthcare spending on average totaled $5,641 for individuals with an employer-sponsored health plan in 2017, according to a new study from the Health Care Cost Institute released Tuesday. Healthcare spending per person in 2017 increased 4.2% year-over-year, while the overall utilization of healthcare services only grew by 0.2%.

What does this mean? It means pissed off consumers & patients. Workers who get health care coverage through their jobs are bearing the brunt of rising health care costs. And that’s mainly because health care prices keep going up, not because we’re using more health care services.

The 5 largest conglomerates combining health insurance and pharmacy benefits are on track this year to be bigger than the 5 preeminent tech companies. The big picture: Anthem, Cigna, CVS Health, Humana and UnitedHealth Group cumulatively expect to collect almost $787 billion in 2019, compared with $783 billion of projected revenue for Facebook, Amazon, Apple, Netflix, and Google.

According to the WSJ “facing pressure over rising drug prices, pharmaceutical companies are pushing a new defense: They aren’t raising prices to make more money but rather to pay a greater cut to middlemen in the medicine-supply chain”.

It is difficult to assess the merits of the arguments because reimbursement contracts between drug companies and PBMs are done in secret and neither discloses how much profit they make on each of the contracts for each drug.

Even if ALL prescription drugs were free our healthcare costs would still be rising

The number of US adults with diabetes increased from 21.2 million in 2003-2004 to 30.2 million in 2013-2014, while the prevalence of obesity rose from 31.7% to 37.5% over the same period, according to findings published in Obesity. This translates into billions of healthcare dollars.

In addition, most Americans are concerned about their weight and understand the connection between weight and cardiovascular health, but a substantial proportion of them are not doing much to lose excess weight, according to a Cleveland Clinic survey. Again, this translates into billions of healthcare dollars.

The authors of a JAMA study pointed to diabetes as the medical condition responsible for the greatest increase in spending over the study period. The increased cost of diabetes medications alone were responsible for $44.4 billion of the $64.4 billion increase in costs to treat that disease. After diabetes, conditions with the greatest increase in costs were low-back and neck pain ($57.2 billion), high blood pressure ($46.6 billion), high cholesterol ($41.9 billion), depression ($30.8 billion), falls ($26 billion), urinary disease ($30.2 billion), osteoarthritis ($29.9 billion), bloodstream infection ($26 billion) and oral disease ($25.3 billion).

Cancer survivors have higher-than-average rates of medical financial hardship, a U.S. study suggests.

Medical financial hardship includes problems paying bills and other challenges with money; psychological stress like intense worry over unpaid bills; and behavioral issues like delaying needed care because of cost.

Cancer survivors ages 18 to 49 appeared hardest hit by these problems. About 43 percent had health-related money problems, compared to 30 percent of their counterparts who never had cancer, and 31 percent delayed care due to costs, compared to 21 percent of average people this age.

While that is troubling we have to remember that research from the American Cancer Society (ACA) supports that 40 percent of all cancers, as well as 50 percent of cancer deaths, can be prevented by “simple lifestyle changes in daily routines.”

The drug industry talks the talk but doesn’t wake’s the walk

The drug industry has a LOT to answer for. They haven’t invested the money from the recent tax cuts back into R&D opting instead for stock buybacks and acquistions. Only two of the Pharma Big 10, Pfizer and Merck, have announced any quantifiable sharing of tax savings with existing employees through bonuses, wage hikes or fringe benefit improvements. They are providing one-time bonuses worth a total of $169 million. The industry’s estimated $6.3 billion in 2018 tax cuts is 37 times more than what drug companies are giving workers.

Five Pharma Big 10 firms have announced a total of $45 billion in stock buybacks since late 2017. That’s 266 times more than the $169 million in announced worker bonuses. Stock buybacks overwhelmingly benefit wealthy shareholders, including top executives and foreign investors.

If we are going to be serious about cutting our healthcare costs it has to go beyond demonizing pharma companies. Mr Sanders quickly touts the “bad drug companies” but the reality os that there is a lot of blame to go around.