SUMMARY: The current state of healthcare is unsustainable. Please read that again. There are too many players who are taking too much money in profits while adding little if any value.
At first thought, people might be thanking pharma companies for developing COVID-19 vaccines and they would be partly right. The truth is that these companies are going to make billions of dollars. The federal government has paid almost $4 billion to Pfizer for 200 million doses.
According to The Nation “executives at Moderna have admitted that their product was funded 100 percent from bench to bedside through Operation Warp Speed, a federal government program bankrolled by American taxpayers. Not only did the public provide $1 billion to the company to bring the vaccine to market, but government scientists at the National Institutes of Health (NIH) also helped conduct the clinical trials that led to its authorization by the Food and Drug Administration. Experts also posit that, according to patent application disclosures, the US government may actually co-own key patents for the vaccine since a critical component was discovered by NIH scientists. Now, the US government has paid again for this vaccine through a $3.2 billion contract with Moderna for 200 million doses”.
Then there are health insurers. With many in the U.S. struggling during the pandemic, it’s health insurance companies that are thriving. Top health insurance companies UnitedHealth Group, Humana and Anthem reported billion-dollar second-quarter profits that doubled year over year. How is it that health insurance companies could be raking in massive profit during a pandemic that is seeing hospital capacity overwhelmed, people losing employer health insurance and unpaid health care piling up?
Since 2009, employer health care premiums rose 57%, or an average of $7,459 per year. At the end of the third quarter of 2020, average gross margins among individual market and fully-insured group market plans were 21% and 24% higher, respectively, than at the same point last year. Gross margins among Medicare Advantage plans were 35% higher through the third quarter compared to 2019. (Gross margins per member per month for Medicare Advantage plans tend to be higher than for other health insurance markets mainly because Medicare covers an older, sicker population with higher average costs).
What about PBM’s?
PBMs have their MBAs tell MDs which drugs (formulary) they can prescribe based on how much money the PBM can make instead of clinical efficiency and the welfare of the patient(s). These ‘formularies’ are created based on drug manufacturers paying bribes and kickbacks in the forms of rebates, fees, and/or discounts in exchange for inclusion on this formulary list.
In a Pew Research study from March 2019, drug manufacturers paid PBMs $10.2 Billion in rebates, fees, kickbacks, and/or bribes in 2012. Then 4 years later in 2016, the drug manufacturers paid PBMs $22.4 Billion. PBMs did NOT share these fees with their health-plan clients (the employers).
Eventually the anger from voters is going to surpass the money healthcare companies give to politicians. Now that the Republican Party is imploding allies to the healthcare industry are going to lose their cover.
Paying companies millions of dollars for vaccines that were funded by taxpayers is nothing short of robbery. In the meantime insurers and PBMs are laughing on the way to the bank while too many people have trouble paying for healthcare.
It’s not sustainable!