Rising Costs of Drugs
In a recent report from HealthDay News, they reported on more Medicare Part D plans using specialty tiering for the newer drugs that treat rheumatoid arthritis and stated it may impose an intolerable financial burden on poor and disabled beneficiaries and the Medicare system itself.
This is just the beginning of what will occur if universal healthcare with the Obama plan goes forward.
This study followed 14,929 low-income rheumatoid arthritis patients who were enrolled in the Medicare Replacement Drug Demonstration and whom 81 percent were enrolled in Medicare Part D, and compared the cost-sharing provisions for the drugs vs. stand-alone plans.
Although the researchers found that Medicare Advantage plans had lower deductibles and premiums, and fewer restrictions on prior authorization, step therapy, and quantity limit than the stand-alone plans, they found that about 75 percent of all plans used coinsurance as the preferred form of cost sharing. In all of their cost-sharing scenarios, they estimated that out-of-pocket expenses for patients were higher than $4,000 per year.
The study showed that patients assume up to 28 percent and Medicare assumes more than 58 percent of the costs of these drugs and neither is in a position to sustain such financial burden. This ultimately means that high cost drugs such as these would not be covered by a universal health plan and the cost is too great.
This is just the beginning of what will occur if universal healthcare with the Obama plan goes forward.
This study followed 14,929 low-income rheumatoid arthritis patients who were enrolled in the Medicare Replacement Drug Demonstration and whom 81 percent were enrolled in Medicare Part D, and compared the cost-sharing provisions for the drugs vs. stand-alone plans.
Although the researchers found that Medicare Advantage plans had lower deductibles and premiums, and fewer restrictions on prior authorization, step therapy, and quantity limit than the stand-alone plans, they found that about 75 percent of all plans used coinsurance as the preferred form of cost sharing. In all of their cost-sharing scenarios, they estimated that out-of-pocket expenses for patients were higher than $4,000 per year.
The study showed that patients assume up to 28 percent and Medicare assumes more than 58 percent of the costs of these drugs and neither is in a position to sustain such financial burden. This ultimately means that high cost drugs such as these would not be covered by a universal health plan and the cost is too great.
posted by Anonymous at 6:16 AM
15 Comments:
What it means is that Medicare administrators should be able to negotiate drug prices and U.S. citizens should be able to import the exact same drugs from other countries where Big Pharma sells them at half the cost. Plan D was a Republican led plan to subsidize Big Pharma at the expense of taxpayers and should be changed to reflect patient interests.
When that happens, Big Pharma's unjustifiable charade will end.
sure bluegill, in your world, you'd have government run motors, government run healthcare, government run banks, and end all of the free markets that have made the US great.
By doing so, you eliminate progress, eliminate ingenuity, eliminate the desire of individuals to excel in order to make a profit and you eliminate R & D that brings these new drugs to market. Profit is still why the US does the most R & D of any nation.
You end up like Europe.
No thanks
The Truth About the Drug Companies by Marcia Angell, NY Review of Books, July 15, 2004
But while the rhetoric is stirring, it has very little to do with reality. First, research and development (R&D) is a relatively small part of the budgets of the big drug companies—dwarfed by their vast expenditures on marketing and administration, and smaller even than profits. In fact, year after year, for over two decades, this industry has been far and away the most profitable in the United States. (In 2003, for the first time, the industry lost its first-place position, coming in third, behind "mining, crude oil production," and "commercial banks.") The prices drug companies charge have little relationship to the costs of making the drugs and could be cut dramatically without coming anywhere close to threatening R&D.
Second, the pharmaceutical industry is not especially innovative. As hard as it is to believe, only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). The great majority of "new" drugs are not new at all but merely variations of older drugs already on the market. These are called "me-too" drugs. The idea is to grab a share of an established, lucrative market by producing something very similar to a top-selling drug. For instance, we now have six statins (Mevacor, Lipitor, Zocor, Pravachol, Lescol, and the newest, Crestor) on the market to lower cholesterol, all variants of the first. As Dr. Sharon Levine, associate executive director of the Kaiser Permanente Medical Group, put it,
'If I'm a manufacturer and I can change one molecule and get another twenty years of patent rights, and convince physicians to prescribe and consumers to demand the next form of Prilosec, or weekly Prozac instead of daily Prozac, just as my patent expires, then why would I be spending money on a lot less certain endeavor, which is looking for brand-new drugs?[4]'
Third, the industry is hardly a model of American free enterprise. To be sure, it is free to decide which drugs to develop (me-too drugs instead of innovative ones, for instance), and it is free to price them as high as the traffic will bear, but it is utterly dependent on government-granted monopolies—in the form of patents and Food and Drug Administration (FDA)–approved exclusive marketing rights. If it is not particularly innovative in discovering new drugs, it is highly innovative—and aggressive—in dreaming up ways to extend its monopoly rights.
And there is nothing peculiarly American about this industry. It is the very essence of a global enterprise. Roughly half of the largest drug companies are based in Europe. (The exact count shifts because of mergers.) In 2002, the top ten were the American companies Pfizer, Merck, Johnson & Johnson, Bristol-Myers Squibb, and Wyeth (formerly American Home Products); the British companies GlaxoSmithKline and AstraZeneca; the Swiss companies Novartis and Roche; and the French company Aventis (which in 2004 merged with another French company, Sanafi Synthelabo, putting it in third place).[5] All are much alike in their operations. All price their drugs much higher here than in other markets.
Since the United States is the major profit center, it is simply good public relations for drug companies to pass themselves off as American, whether they are or not. It is true, however, that some of the European companies are now locating their R&D operations in the United States. They claim the reason for this is that we don't regulate prices, as does much of the rest of the world. But more likely it is that they want to feed on the unparalleled research output of American universities and the NIH. In other words, it's not private enterprise that draws them here but the very opposite—our publicly sponsored research enterprise.
sure bluegill, we can all do this by finding arguments on both sides.
How much did your author make off of her book which has many inaccuracies and/or lies .
August 19, 2008, 6:00 a.m.
The Real Truth about Drug Companies
Developmental issues.
By Henry I. Miller
In 1999, the NIH thoroughly investigated whether its research funding commonly leads to the development of pharmaceuticals, the profits from which taxpayers might be entitled to share. Of 47 drugs that had earned revenues of $500 million or more, NIH support had figured significantly in only four, two of which were actually the same drug. The NIH supports primarily pre-commercial, fundamental research into the biochemistry, physiology, and molecular biology of cells and organisms, in health and disease.
This issue has been further and more comprehensively investigated by economist Benjamin Zycher and his co-workers, who published their results earlier this summer. They constructed “summary case histories of 35 drugs and drug classes (a group of drugs used to treat a given medical condition in similar ways) identified in the scholarly literature as important and/or that were among the most prescribed in 2007.” Among the 35 drugs and drug classes, which encompass every major group and individual medicine, private-sector research was responsible for “central advances in basic science for seven, in applied science for 34, and in the development of drugs yielding improved clinical performance or manufacturing processes for 28.” These advances occurred in basic science — the understanding of fundamental biological processes in health and disease; in applied science — the discovery of compounds that treat particular conditions; and in new methods for the purification, formulation and manufacturing of those compounds.
Zycher and his colleagues concluded that scientific contributions of the private sector were essential for the discovery and/or development of virtually all of the 35 drugs and drug classes researched, and that, therefore, few if any of the drugs and drug classes investigated would have been developed (or, at least, their development would have been delayed significantly) in the absence of the contributions and participation of the pharmaceutical firms.
The U.S. research-based pharmaceutical industry (that is, excluding companies that make generic drugs) currently spends upwards of $58 billion annually on R&D. Moreover, it invests in research and development a far greater percentage of sales (17.7 percent) than any other industrial sector, including electronics (6.0 per cent), telecommunications (5.1 percent), and aerospace (3.7 per cent).
The pharmaceutical industry is far from perfect, to be sure. Drug companies develop too many “me-too” drugs that differ little from earlier products, and spend disproportionately on marketing and promoting them. And they have been woefully ineffective in lobbying for public policy that would create needed incentives for R&D.
But in large part these developments are the result of the industry’s being the victims of government policies, not beneficiaries, as some industry critics would have us believe. In spite of increasingly powerful and precise technologies for drug discovery, purification, and production, development expenses have soared.
One important reason for these debilitating costs is that an increasingly risk-averse FDA keeps raising the bar for approval, especially for innovative, high-tech products and technologies. The FDA is too often a reed in the political winds, and regulators now find themselves in a gale that is blowing them in the direction of a more imperious and adversarial posture toward drug companies.
We need public-policy strategies that will lower the costs and time of development. That would stimulate the formation of new companies (the number of which is now shrinking) and enable them to pursue more drug candidates, including some that are medically needed but offer only modest revenues. In the meantime, Americans will go on dying for reform.
Again, nothing to change the fundamental equation: Drug companies spend far more on marketing than R&D.
If they were developing truly innovative products that clearly differentiated themselves from others in their ability to control or cure disease, why would they need to devote such large marketing budgets to them? And if selling drugs at greatly reduced prices in other countries is profitable, why do they need to charge us double when it's clearly not justified by R&D expenditures as they claim?
47 drugs that had earned revenues of $500 million or more
Which drugs are those? Do they represent significant breakthroughs in disease treatment or are they simply the "me too" drugs that were most heavily marketed? Profitability isn't necessarily a measure of medical importance.
And if strict FDA regulations are the problem, why do the drug companies themselves argue that we shouldn't be allowed to import their products because other countries don't regulate them as well? They can't have it both ways.
Thank you Bluegill, you said what I wanted to say only much better.
Thank you, Shirley, for advocating based on your front lines experience and for having the integrity to sign your name to it. It shows a strength of character that some here lack.
Because you have never addressed the legal issues involved and the cost of frivolous suits.
Very few liberals actually want to even discuss the legal environment that directly and indirectly escalates cost in every industry but even more so in the medical field.
As someone asked yesterday: How much should drug companies make? How much should doctors make? Who should decide?
During the Bush administration and while congress was under Republican control, the CBO found “no evidence that restrictions on tort liability reduce medical spending.”
According to a report highlighted in The Insurance Journal:
* The number of malpractice payments from trials and settlements remained stable between 1991 and 2003
* Average payment size grew 4 percent per year and leveled off more recently, reflecting increases in medical costs
BUT, "In 2002, on average, malpractice premiums for internists, general surgeons, and obstetricians rose 20-25 percent. Specialists in some states have seen one-year increases of 75 percent."
Also, from Maggie Mahar:
In 2003, the HMO industry as a whole reported total earnings of $5.5 billion — up 83 percent from $3 billion in 2002, according to Weiss Ratings, a firm that assesses the financial strength of banks and insurance companies.
In 2004 the industry’s profits jumped another 10.7 percent to $11.4 billion, and in the summer of 2005 industry leader WellPoint told investors that it expected its profits to continue to levitate by an average of 15 percent a year for the next five years. That same week Wellpoint announced its plans to boost average premiums by 16.6 percent in 2006.
Doctors, unfortunately, often believe, repeat, and live with insurance company lies. They should be as outraged as anybody, but that outrage should be directed at the insurance companies rather than our legal system.
So Bluegill, do you think any industry should make a profit? Doctors, it doesn't seem so. Drug companies, no. Insurance companies, no. Hospitals, I doubt it.
What do you do? Do you own a business? Is it profitable? How could you make a profit by taking advantage of customers?
If you just work for someone else, are they profitable? Or maybe you on the side give away the services or products when the boss isn't looking to keep things fair.
How can grocers make a profit when some people eat hamburger rather than steak? Some live in large homes while others have two room apartments with outrages rent payments. How is that fair? Should we all have government issued uniforms so our clothing will not reflect unfair advantages the bourgeois have from evil market capitalism? After all, this is a democracy and the people can exercise their rights! POWER TO THE PEOPLE!!!!!
Well actually this isn't a democracy. It never has been, was never designed to be, and God help us if it ever is.
Bluegill,
There is no feasible way to quantitate the malpractice issue and cost as we have developed a defensive system of practicing medicine.
There is a "standard of care" that is set by physicians in every specialty and area of the country and is established by practice patterns that include ordering tests that are likely unnecessary for diagnosis and treatment but is solely to protect physicians from malpractice claims.
Ask any physician and you'll get the same answer.
Many of the tests we order and reorder are to "CYA". If the legal climate were different, the cost of healthcare would be lower.
The BHO argument for health care reform is to save money. Ha! At today's town hall (his definition, not mine), BHO stated that he was sure that private health insurance companies can compete with government. He made the mistake of citing Fedex and UPS in competition with the USPS. The USPS is a shining example of how the government cannot run an enterprise and not loose money. Until I hear BHO and his radical liberals propose Tort reform as part of the solution for high medical costs, I will continue to believe that this is not health reform, but a gross extension of Big Government, a power grab and a belittling of the constitutional freedoms of the individual.
I agree with you, HB, about the defensive medicine problem. I think, however, that the evidence suggests that physicians' fear of malpractice suits is purposely exacerbated as an insurance company tactic.
Malpractice premiums have risen much faster and higher than actual malpractice payouts. In simplest terms, when insurance companies say they have to drastically raise premiums to cover a correlating rise in those payouts, they're not telling the truth.
That's one of the reasons tort reform typically does not lead to lower medical costs. The insurers rates weren't much tied to risk of tort claims to begin with. With caps, the companies face less risk but doctors and others continue to pay more for malpractice insurance anyway.
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According to the premier expert on the relationship between tort liability and insurance:
-"In short, we do not have a precise understanding of the impact of tort liability or insurance on the provision of health care. And the data we have on the impact of malpractice on the incidence of liability for malpractice does not suggest that there is necessarily a close connection between the two."
Kenneth S. Abraham, The Liability Century: Insurance and Tort Law from the Progressive era to 9/11, Chp. 4, p. 104 (Harvard University Press 2008) (citing every major study on the topic at note 1).
No one will do it, but if you want to understand this issue, read Chp. 4 to that book. Basically, individual physicians (rightly or wrongly) have insisted on full professional autonomy and therefore have become the main focus for legal and financial responsibility (i.e. lawsuit targets). This is the organizing paradigm for malpractice liability. You cannot have both full professional autonomy and freedom from tort liability.
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