Yes drug prices are too high, but they aren’t alone when it comes to high health care costs

alzheimers-drugsOK, I get it.  Prescription drug prices are too high, but before we send out a lynching party, perhaps we had better look at the real reason healthcare in America costs us too much.

Federal regulators are pressing the Supreme Court to stop big pharmaceutical corporations from paying generic drug competitors to delay releasing their cheaper versions of brand-name drugs. They argue these deals deny American consumers, usually for years, steep price declines that can top 90 percent.


A new study puts the cost of treating Alzheimer’s and other forms of dementia at $109 billion, making it more expensive to society than either cancer or heart disease.  The study, which appeared this week in the New England Journal of Medicine, also estimates that costs will more than double in the next 27 years, reaching $259 billion by 2040. The same study puts the estimated cost of treating heart disease at $102 billion, and cancer treatment at $77 billion.  In addition, in the U.S. today, 78 million adults are considered “obese” – more than the populations of California, Texas and New York combined.  This is twice as many adults in 2013 as there were obese in 1980, and today 112,000+ deaths a year in the U.S. are associated with obesity.

While Alzheimer’s may be beyond our control, obesity and the health problems that go along with it are not and it’s costing us billions.

cost of obesity


The drug industr, which is taking a lot of heat from the media,  is giving back a lot of money.  A press release from the Department of Health and Human Services states that [inlinetweet prefix=”” tweeter=”” suffix=””]seniors have saved roughly $6 billion on prescription drugs following the closure of the infamous donut hole.  [/inlinetweet]

According to John LaMattina, the Former president of Pfizer Global Research

Drugs prices are not set by the costs accrued in their discovery and development. Yes, drug R&D is very expensive, particularly when this research is being done in a broad chronic disease category such as diabetes or heart disease. The overall R&D costs for a new medicine can easily exceed a billion dollars. But drug pricing is set by the value that the new drug brings to the healthcare system – value that is increasingly determined by payers such as insurance companies, governments and even physicians.

I know that is corporate PR talk, but remember that drug costs are only $. 10 of every healthcare dollar spent.

Then there are the adherence issues with drugs.  According to the CAHC,[inlinetweet prefix=”” tweeter=”” suffix=””] lack of medical adherence leads to 125,000 deaths per year, $290 billion in annual costs, and accounts for 69% of all medical-related hospital admittance[/inlinetweet]. White said that nearly one in five prescriptions is never filled, leading many patients to require additional medical attention and hospital care and increasing national healthcare costs.

In a report issued by the Congressional Budget Office in November 2012, it was stated that a 1% increase in the number of prescriptions filled would cause Medicare spending on medical services to fall by .2%.

Now I’m not saying the drug industry has a sterling white, clean image, quite the contrary.  There is a lot of dirty laundry that has been brought out into the open over the last 3-4 years.  What I am saying however is that we continue to target the drug industry when it comes to costs while ignoring other costs that are driving a really big portion of our healthcare dollars.


According to a Deutsche Bank report, medical inflation is outpacing overall inflation. “This rise in health care spending is due both to the aging of the “Baby Boomer” generation and the fact that inflation for medical services is projected to continue to outpace broader measures of inflation.”

[inlinetweet prefix=”” tweeter=”” suffix=””]The CBO projects that about 60% of the rise in spending on health care programs over the next several decades will be because of an aging population[/inlinetweet], the other 40% will because of medical care is going to continue to get more and more expensive.  Where will a lot of that money be spent?  On hospital stays or largely preventable conditions because of our unhealthy lifestyles.  In addition The American medical system squanders 30 cents of every dollar spent on health care, according to new calculations by the respected Institute of Medicine.

The Institute of Medicine report — its research led by 18 best-of-class clinicians, policy experts and business leaders — details how the American medical system wastes an estimated $750 billion a year while failing to deliver reliable, top-notch care. That is roughly equivalent to the annual cost of health coverage for 150 million workers, or the budget of the Defense Department, or the 2008 bank bailout.


When the media and consumers talk about the cost of Rx drugs, perhaps they should also look in the mirror.  Too many people believe that a statin can compensate for eating red meat or that gaining weight is just a symptom of old age.  We need to retarget the real problems that are adding costs to our healthcare system and above all pharma companies need to learn the meaning of the word transparency.



2 thoughts on “Yes drug prices are too high, but they aren’t alone when it comes to high health care costs

  1. Pingback: Drug company budgets could take a big hit under new budget | World of DTC

  2. Pingback: More than 400 medicines in the pipeline for older Americans | World of DTC

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