It’s hard not to read a story about how high drug prices are hurting patients, but while drug prices are too high and outpacing inflation, insurers, PBMs, and hospitals are taking huge slices of healthcare dollars with little notice from Congress and the media.
According to KFF “half of all Part D covered drugs (50% of 3,343 drugs) and nearly half of all Part B covered drugs (48% of 568 drugs) had price increases more significant than inflation between July 2019 and July 2020, which was 1.0%. Among the 1,947 Medicare-covered drugs with price increases above the inflation rate in 2020, one-third (668 drugs) had price increases of 7.5% or more – the current annual inflation rate.
It’s hard to justify those price increases, but pharma is big business, as all parties in healthcare are.
As The New York Times reported, the pandemic has produced an embarrassment of profits for health insurers, who doubled their 2019 revenue by Q2 in 2020. By the second quarter of 2021, five of America’s largest health insurers reported a combined total of more than $11 billion in profits.
That’s a lot of money that benefits CEOs and shareholders but hurts patients and is coming at a time when a new survey from the Medical Group Management Association indicates that 79% of practices say that prior authorization requirements have increased over the past 12 months. Another 19% say there has been no change, and a mere 2% reported that such requirements have decreased.
In talking with colleagues within the industry, they point to the life-saving vaccines and treatments for COVID, which is true but let’s also remember that Pfizer expects combined sales from these Covid products of at least $54 billion for 2022—an amount that exceeds the total revenue for most other drugmakers. The expected Covid-19 sales could push Pfizer’s total company sales over $100 billion for the first time in its history. Some analysts say Pfizer could top forecasts for both Covid and overall revenue.
Then there is this tidbit “the richest ten men doubled their fortunes during the pandemic, and a new billionaire is created every 26 hours. Of those new billionaires, 40 of them have made their billions profiting from vaccines, treatments, tests, and PPE. And for every life lost in a rich country, another four people have died in a poorer nation; 54% of all deaths caused by COVID-19 have been in the low and lower-middle-income countries, where 10.6 million people have died.
Many people I talk with acknowledge that pharma has been profiteering from drug sales, but they balance that with the need for new drugs to help patients live a better quality of life. One director told me, “people complain about the costs of prescription drugs, but most have company-paid insurance that absorbs those costs.” She went on to say, “people look to prescription drugs to take care of themselves because, for the most part, they do what’s necessary to eliminate health issues caused by obesity and lack of exercise.”
Of course, she is correct, but she also acknowledged that when she reads about the compensation of her company’s CEO, she gets distressed. “I do make a good living working in the drug industry, but I just don’t understand how someone could take tens of millions of dollars in pay.”
According to Harvard Business Review, “a single person with a clarity of conscience and a willingness to speak up can make a difference. Contributing to the greater good is a deep and fundamental human need. When a leader, even a mid-level or lower-level leader, skillfully brings a voice and a vision, others will follow, and surprising things can happen—even culture change on a large scale”. Where are these people?
A lot of them ARE trying to implement change within the industry. STAT News and Endpoint do an excellent job of calling out pharma’s missteps, but it’s not enough. It starts with a culture shift that focuses on spreadsheets and money to patients and caregivers. Pharma people don’t do anything without doing an ROI analysis. That has to change.
The industry can implement change as we prepare for the new decade of healthcare, or they will have change forced on them by an angry public inflamed by the media. It may not be fair, but life often isn’t fair.