Burdened by High Medication Costs? Your Boss May Be Able to Help

Shutterstock

Pharmaceutical companies have been charging way too much for way too many of their products. Both Donald Trump and Hillary Clinton complained about drug prices during the election campaign, but neither political party has taken action since November to tackle the problem. Insurance companies aren’t doing much about this problem either, despite having a huge incentive to tackle high prices.
But there is someone who appears to be up to the challenge – employers. According to a recent study in the New England Journal, a consortium of 55 Catholic organizations decided to redesign their employee healthcare benefits in 2013. Before that time, these organizations provided their employees with tiered co-pays for their medications. Under formulary tiers, a patient might pay $10 a month for generic drugs, $25 a month for brand-name drugs, and $100 or more per month for expensive specialty drugs and biologics. Tiered formularies are designed to motivate patients to use less expensive medications, because they carry lower co-pays. But such formularies are usually blunt motivational instruments. They might convince a patient to choose a generic medication rather than a brand-name cholesterol pill, but the patient will have no further incentive to choose the least expensive generic medication. Similarly, a patient with rheumatoid arthritis will face a significant co-pay for a biological therapy, but that co-pay won’t change from one biologic drug to another, even if those drugs have very different price tags.
That’s where reference pricing comes in, a topic I have written about before. The Catholic organizations got together and looked at different categories of medication, and decided how much they would pay for drugs within each category, with the understanding that patients would pick up the rest of the tab. For example, medications for stomach reflux range in price from $26 a month to almost $300 a month. The employers promised to cover $26 of the cost of whichever reflux medications patients chose to take. Similarly, patients who wanted to take $400 nasal inhalers for their allergies could go ahead and do that, but the insurer would only cover $34 of that price, given that an equally effective inhaler was available at that price.
(To read the rest of this article, please visit Forbes.)

Why Investing in Better Primary Care Failed to Save Money

Shutterstock

We have a huge healthcare problem in the U.S., spending way more than other wealthy countries, expenses that not only burden state and federal governments, but that also take money out of American pockets.
Some people hope that better primary care will reduce U.S. healthcare spending. They point out that a small number of chronically ill patients—super-utilizers—account for half of healthcare spending. The hope is that taking better care of these super-utilizers, with more robust and improved care coordination, will improve their health and reduce healthcare spending.
Or perhaps not. When the Palo Alto VA tested an intensive primary care program for its super-utilizers, healthcare spending and utilization didn’t budge. One iota. Except for primary care utilization which, unsurprisingly, rose significantly among people receiving intensive primary care.
The Palo Alto study was well-designed. The researchers targeted patients who were in the top 5% of healthcare utilization. These patients were typically elderly, and on average had 10 chronic health conditions. Two-thirds carried mental health diagnoses, and a quarter had a history of homelessness. The population included people I am very familiar with from my almost 20 years in the VA: older men with PTSD and anxiety; hypertension, diabetes, coronary artery disease, congestive heart failure, emphysema, and a touch of renal failure; recent hospitalizations for pneumonia, leg wound infections, or maybe a mild stroke.
(To read the rest of this article, please visit Forbes.)

Medical Malpractice – Who's Being Sued and What Is It Costing

Shutterstock

A baby is born. The delivery was rocky, with the infant’s heart rate showing occasional signs of distress. Later, the parents learn that their child has cerebral palsy, and may never walk normally. Was the obstetrician to blame and, if so, should the parents sue?
American medical care is burdened by a flawed and expensive malpractice system. Too many doctors are being sued not because they make mistakes, but because their patients experience bad outcomes.
A fascinating study lays out recent trends in malpractice, offering good and bad news for physicians. First, the good news: malpractice claims are declining. The rate of paid claims, in fact, went down more than 50% from the early 90s until now.
(To read the rest of this article, please visit Forbes.)

The USA Is Number One… In Healthcare Prices!

The folks at Vox media put together a series of pictures, illustrating how much more expensive medical care is in United States compared to other developed countries. Today, and in the next few days, I’m going to circulate some of those pictures. Prepare yourself for horror!
Take medications, for example. (Please!) Pills for rheumatoid arthritis are often way more expensive in the US than elsewhere:

And hepatitis C:

The fastest way to increase the value of US healthcare is to reduce the price!

Physician (and Pharma, and Insurance Executive) Pay: Doing Too Well by Doing Good

Shutterstock

American physicians deserve to be paid well for their work. As a physician, myself, I know what it takes to become a doctor in the U.S. Four years of late nights in the college library in hopes of achieving a GPA commensurate with medical school admission; then four years of medical school, which makes the college work load feel light in retrospect; then, in my case, three years of residency training, where an 80-hour work week begins, making everything before feel like a vacation. And in the case of more specialized physicians than me, like orthopedic surgeons or cardiologists, clinical training continues another handful of years. Moreover, becoming a physician in the U.S. carries enormous financial costs, with many Americans graduating from medical school with six-figure debt.
So I support paying American physicians well for their labors. But how well? Is more than $535,668 the right amount for the average – the average! – orthopedic surgeon to make? Should dermatologists – whose training is far less intense and prolonged than many other physicians – make a average of $400,898?
The U.S. has a healthcare spending problem, and soaring healthcare incomes are partly responsible. Importantly, those incomes are by no means limited to physicians. In 2014, the CEO of Aetna, an American health insurance company, brought home more than $15 million. In 2012, the CEO of the nonprofit Atlantic Health System in Morristown, New Jersey made more than $10 million.
With so much money spent on medical care in the U.S., there are many people involved in the healthcare marketplace who are doing very well by doing good. Consider pharmaceutical companies, historically one of the most consistently profitable industries in the private sector. These companies make a disproportionate share of their profits in the U.S., where they charge significantly higher prices for their products than they do in most other markets. Device companies also garner significant profits in U.S. markets.
I don’t begrudge anyone who makes a lot of money doing honest, legally sanctioned work. But all this money, all the healthcare spending that leads to these high incomes, comes either from the pockets of individual patients, or from the people enrolling in private health insurance plans, or from the employers subsidizing those plans or from taxpayers who fund programs like Medicare and Medicaid. And all this money – all these personal expenses and taxes – are posing a very heavy burden on the American public.
(To read the rest of this article, please visit Forbes.)

The Benefits of High Health Care Expenditures

I write frequently about the high costs of healthcare, in the U.S. and in many other parts of the world. And in general, I believe strongly that most developed countries need to look seriously at how they’re spending healthcare dollars, and make great efforts to promote high value medical care. But in trying to control healthcare costs, we must not forget about the benefits of healthcare spending. Consider this picture, from a study by Warren Stevens and colleagues, showing that countries that spent the most on cancer care have also experienced the greatest decline in cancer mortality:

Our efforts to curb healthcare spending need to account for the value of the care we spend our money on.

Half of Healthcare Spending: For 1/20th of the People

It is not unfair that we spend more on medical care for some people than others. After all, some people are sicker than others. If there’s anything unfair, it’s probably the uneven distribution of illness and disability. That said, the disparity in healthcare spending across people is pretty staggering. As this picture shows, courtesy of The Financial Times, half of all US healthcare spending goes to 5% of people receiving medical care: 

It is not always great to be a big spender!

PeterUbel