WHAT I”M THINKING: Are there things wrong with the pharma industry? Yes, but because of the pharma
I have been critical of pharma because it hurts me to read that the industry has a lower rating than our government. Not too long ago a diagnosis of HIV meant a death sentence and patients with HepC would lose out on a better quality of life. That has changed due to prescription drugs.
The news that drugs like BMS’s Opdivo can add years to the lives of lung cancer patients is being largely overlooked because the media loves to demonize pharma for the wrong reasons. The media is great at stoking the fires of discontent often making people feel angry and helpless. I get the fact that pharma has helped itself with high CEO salaries and increasing drug prices but let’s be honest at some of the ether causes:
1ne: PBM’s adding cost but where is the value? Significant delays and ongoing price hikes are all too common when dealing with PBMs. The relationship between PBMs, pharmaceutical manufacturers and insurance companies is complex, multi-faceted and has direct impacts on the delivery of patient care in this country. We don’t know what percentages of rebates are kept by PBMs to this day yet their profits keep rising.
2wo: Health care expenses forced 8 million Americans into poverty in 2018, according to the Census Bureau. Medical expenses remain “the largest contributor to increasing the number of individuals in poverty,” according to the Census Bureau. Most people who have insurance and who make less than 150% of the federal poverty level don’t have enough liquid assets to cover a $1,500 deductible.
3hree: Workers’ health care costs just keep rising. Overall, the cost of employer-based health benefits is growing pretty modestly from year to year, according to the Kaiser Family Foundation’s annual review of those plans. For single coverage — a plan that just covers you, no family members — employees are paying an average of about $1,200 per year in premiums. That’s 65% more than what they paid in 2008. The bigger story is deductibles — the amount you have to pay before your insurance kicks in — which are growing in every way. The number of employees who have a deductible is up. The size of the average deductible is up — 212% since 2008, to be precise. And the number of employees with above-average deductibles is also up. The increases in premiums and deductibles both outstrip increases in wages.
4our: Historic Highs in Obesity. In 2018, for the first time, more than 35% of adults in nine mostly southern states — Alabama, Arkansas, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Dakota, and West Virginia — were obese. In 2017, the prevalence of obesity was more than 35% in only seven states. The nationally representative NHANES data reveal “unprecedented levels of obesity,” the report states. In 2015-2016, 39.6% of adults and 18.5% of children in America were obese (body mass index > 30 kg/m2 for adults), with the increased risks of numerous poor health outcomes that go along with obesity.
5ive: Hospital price growth driving healthcare spending. Hospital prices are the main driver of U.S. healthcare spending inflation, and that trend should direct any policy changes going forward, according to a new study.
For inpatient care, hospital prices grew 42% from 2007 to 2014 while physician prices rose 18%, according to researchers who studied the Health Care Cost Institute’s claims data for people with employer-sponsored insurance from Aetna, Humana and UnitedHealthcare Group. Similarly, for hospital-based outpatient care, hospital prices increased 25% while physician prices grew 6%, the new Health Affairs study found.
The argument that drugs cost a lot of money to develop
Drug companies tend to say they are unique in needing to spend a higher proportion of their capital on research than almost any other industry. But of all the companies in the world, the one that invests the most in research and development is not a drug company. It’s Amazon. The online retailer spends about $20 billion a year on R&D, despite being renowned for both low prices and low profits. Among the 25 worldwide companies that spend the most on research and development—all more than $5 billion a year—seven are pharmaceutical manufacturers, but eight are automobile or automobile-parts companies with profit margins under 10 percent. Amazon’s operating margin is under 5 percent. Meanwhile, the top 25 pharmaceutical companies reported a “healthy average operating margin of 22 percent” at the end of 2017, according to an analysis by GlobalData.
Continuing to callout big pharma for their mistakes in judgement is warranted but anyone who thinks that prescription drugs alone are to blame for our healthcare woes is willfully informed. We need to look at ourselves, and our bad habits as well as PBM’s and other middlemen. It’s a system which is too profitable and American’s who don’t have the time to live a healthy life.