Big Pharma Manipulates the System to Increase Drug Prices—Anyone Surprised?

A drug company’s goal is to increase revenue.  Cost efficiency, value for the money?  Not their department. 

On Feb. 10, Valeant Pharmaceuticals International Inc.bought the rights to a pair of life-saving heart drugs. The same day, their list prices rose by 525% and 212%.

Medicynical Note:  Health care in case you didn’t notice is a perfect set up for blackmail.  The companies have something you think you want, something that you have been told you must have in order to survive.  Insurers are a buffer and in part delay the effects of price increases on drugs and pay the increased prices.  So companies raise prices whenever and however they can.  They think they can get away with it so they do it.

How else to explain the above increases?  How else to explain the fact that today we are paying in multiples of our median and average incomes for a single medications which  most often are  of modest value.  Panaceas?  Cures?  Not these.  But cash cows for Big Pharma and investors, yes.

What about regulations on prices?  What about some pay back for government funded research?  Both were given away by congressmen/women who guess what, receive lots of money from drug companies.  It’s a corrupt vile system.  But really it’s just business…….as usual.

Drug Costs Outstripping the Ability to Pay

Health Affairs’ blog had an interesting discussion of the problems of our drug patent system and it’s costly consequences.

One critical incentive for ongoing drug discovery and development is the temporary monopoly pricing that manufacturers can command for novel drugs. Yet this incentive, embedded in current patent and regulatory policy, does not guarantee that manufacturers will deliver novel products with clinically meaningful benefits. Indeed there are many diseases—including Alzheimer’s disease and Amyotrophic lateral sclerosis (ALS)—that pose significant patient, family, and societal burden but have not benefited from meaningful treatment advances.

Meanwhile, the American public appears increasingly wary of the unintended consequences of these market-based incentives. Since the early 2000s, regulatory actions have focused increasing public attention on shortfalls in the efficacy and safety of already marketed drugs — including the withdrawal of celebrated “blockbusters.” Recently, patient and insurer attention has focused on the list prices of novel specialty drugs, including those to treat cancer, that commonly exceed $50,000 per treatment course — these drug prices have also grown faster than all other medical spending.

Medicynical Note:  In the U.S. the medium and average family incomes are about $50-60,000/year.  So we are talking drugs that cost multiples of the annual incomes of families.  A few of these drugs have miraculous effects but most offer slight improvement in patint’s outcomes. 

Other countries try to control these expenditures by providing strong guidelines on expensive medications use; negotiating prices with the manufacturers and suggesting equally or more effective alternatives.   Their costs are significantly less than ours.  The Affordable Care Act has started this process but whether or not it’s political overseers (under the influence of  drug companies contributions)  will allow a rational implementation remains to be seen. 

Value in Health Care: Not Our Concern

Another in the series on health care costs by Elizabeth Rosenthal in the New York Times—The Odd Math of Medical Tests.

Over use and over charge seem to be the watchwords of American healthcare.  Why?  read below.

Testing has become to the United States’ medical system what liquor is to the hospitality industry: a profit center with large and often arbitrary markups. From a medical perspective, blood work, tests and scans are tools to help physicians diagnose and monitor disease. But from a business perspective, they are opportunities to bring in revenue — especially because the equipment to perform them has generally become far cheaper, smaller and more highly mechanized in the past two decades.

Read the article for more details.

Medicynical note:  There are interesting contrasts between the U.S. approach and the experience elsewhere in the article.  The end result is that we pay much much more for the same services….that are done many many more time/unit of population.  Our costs are double most other industrialized countries.  Sustainable?  No.

Why?  In the U.S. there are no restraints on gouging the “system.”  Everyone is in the business to make money for themselves and stockholders—its their “fiduciary” responsibility.  Quality patient care and appropriate use of technology and medical care is really not their concern. 

America Lags Behind: Even with Medicare

Even with Medicare the U.S. lags behind other countries in healthcare access,  costs and quality.  This graph from the Commonwealth Fund survey of older adults says it all.

Among American seniors, 21 percent had out-of-pocket medical expenses that topped $2,000 and 11 percent had problems paying their medical bills. In Norway and Sweden, 1 percent had problems paying; in Germany, 3 percent.

“As good as Medicare is – it provides excellent coverage over all – it still isn’t as protective as the coverage people get in other countries,” Ms. Osborn said. Its deductibles and cost-sharing requirements still leave many Americans scrambling to afford drugs and doctors – which also cost more here.

Read the article for more.

Medicynical Note:  The basic premise of those involved in healthcare in the U.S. is different than in other countries.  Instead of assuring   value, quality and access, our system is devoted to assuring excessive financial returns to providers, insurers, drug companies and hospitals.  Protections are in place not to assure good quality affordable health care but rather to guarantee profits.

Some examples of this include congress forbidding the government from negotiating price of drugs purchased by Medicare part D; the generation long monopoly afforded new drugs without assuring reasonable pricing (one of the requirements of the Dole-Bayh law that is not enforced); the obscured price of services at medical facilities–insurers pay half of what an individual would pay for the same service.  It’s worse than buying a used car. And so on.

American Exceptionlism, Again: 42.9 million Americans have unpaid medical bills

Another only in American moment. 

Nearly 20 percent of U.S. consumers with credit records — 42.9 million people — have unpaid medical debts, according to a new report by the Consumer Financial Protection Bureau.

The findings suggest that many Americans are being trapped by debt because they are confused by the notices they get from hospitals and insurance companies about the cost of treatment. As a result, millions of Americans may be surprised to find they are stuck with lower credit scores, making it harder for them to borrow to buy a home or an automobile.

Medicynical Note:  Not only do we have the most expensive, inefficient health care non-system in the world, but we also lead the world in medical debt and bankruptcy (a category of bankruptcy unknown in other industrialized countries).  Even with the Affordable Care Act, this problem persists. 

Instead of doing something about it our new republican congress wants to make it worse by doing away with the Affordable Care Act (the only progress in 30 years) and replacing it with …………….nothing.  Amazing. 

America isn’t fit to lead the world until it gets it’s own house in order. 

Healthcare Theater of the Absurd: I’m an Obama supporter. But Obamacare has hurt my family.

This poorly reasoned self pitying whine appeared in the Washington  Post.  In it the author bemoans having to pay about 13% more for insurance  than she paid in 2013.  Part of that was the yearly increment of insurance and part just and increased payment for better coverage.  The author and her spouse are in their late 50’s he has prostate cancer and a history of  heart surgery.

Since his heart diagnosis in 2005, Jim, who probably couldn’t have found a policy as an individual because of his condition, had been covered by small-business group insurance — because his self-storage business in Banning had one other employee. But his work, and his coverage, were always subject to change.

I remained vulnerable as a freelance writer and part-time university professor who had to pay for her own health insurance. I also had had a few health hiccups, including surgery to repair a herniated disk from spinal degeneration, and so I lived with the daily realization that one bit of bad health news could cause my policy to be canceled

Absurdly she complains

We have no choice to opt out of the required pediatric dentistry or maternity coverage we’ll never use, so we’ll eventually have to settle for less generous policies, with higher deductibles and out-of-pocket maximums.

But she notes that in the first year of coverage it more than returned the additional cost in better coverage for her husband’s cancer–which in turn was funded by people who had no need for cancer treatment.  But that’s the way insurance is supposed to work.  Read the article for more:

Medicynical Note:  Yes the system, thanks to the republican opposition to a simple single provider approach, is convoluted and complicated.  Yes you have to have comprehensive coverage that includes some things that you don’t really need at this time.  But in this woman’s case she and her spouse get guaranteed insurability at an affordable rate.  Pre-health reform it was normal for people with illnesses like her husband’s to have their insurance cancelled or their premiums doubled.  Paradoxically in that non-system the goal of insurers was not to cover sick people so as to maximize profits–health care is really not their primary concern. 

The Affordable Care Act has enabled millions of uninsured to get coverage but it does need to be viewed as a first step.  The process needs simplification; insurers need to become more efficient (their 20% or so profit is unacceptable); and yes costs need to be controlled.  It should be noted that this year we had the lowest increase in health spending in 30 years.

But despite the progress, our conservative friends can still revel in the facts that the U.S. still has the most expensive, least efficient health care in the world.  We are number one in costs, uninsured and bankruptcy from medical costs.   They seem to like it that way.

It’s NOT a Health Care System

The Times reports on bribes given to health care providers to prescribe their patent protected product.  In this case it’s a addicting medication.

Dr. Judson Somerville, a pain specialist in Laredo, Tex., received $67,000 in speaking fees, travel and meals in 2013 to promote a powerful and addictive painkiller called Subsys, according to a new federal database of payments that drug companies make to physicians.

But while Insys Therapeutics, the Arizona company that makes the product, was paying Dr. Somerville to promote it, he was under investigation by the Texas Medical Board. Last December, the board ordered him to stop prescribing painkillers after it found that he had authorized employees to hand out pre-signed prescriptions to patients and after it learned that three of his patients had died in 2012 of drug overdoses, most likely from drugs that he had prescribed.

Read the article and weep!

Medicynical Note:  Health care in the U.S. is not systematically provided and the way it is delivered is not a “system” to provide it.   Rather what patients received is carefully designed “system” to maximize revenue for providers, hospitals, insurers, technology developers and pharmaceutical manufacturers.  The well-being of their stock holders and investors are much more important to them than the well-being of patients.