Happy New Year! Now let’s get down to business. It is time for those of us in the branded pharmaceutical world to begin to wake up, stand up and lead the much needed change in the US healthcare system. For the last decade we have seen a race to the bottom with layoffs, patent expirations, generic dominance, government restrictions/lawsuits, ludicrous pricing schemes and payers now completely controlling the marketplace. Change is needed or “Big Pharma” will totally lose its significance. That would be disastrous for the US healthcare system. Let’s look at some facts.
Dan Munro’s Forbes piece on Sunday gives us a wonderful starting point for this discussion. Take a look at all of the charts to again refocus on what is happening in our country. The final chart that compares life expectancy and spending on a per capita basis should be the most critical scorecard we use to determine if the system is working or not. When you look at this chart it is important to note that at least in 2009 only the US, Mexico and Turkey did not have universal coverage among the OECD nations. But the issue seems to be much more than just that if you look at the cost savings predicted in the Affordable Care Act chart that shows only modest savings as more people are brought into the system. It is important to transpose on these charts the fact that only about $1,000 per person is spent on drugs and most expect this to go well under $1,000 in the coming years. Could it be we have our priorities mixed up?
Something is out of control here and it must be changed. Look at the chart that compares the rate of inflation and growth in wages as compared to health insurance premiums and worker contributions. The “free market” does not seem to be serving us well here. Keep in mind most of the OECD countries have single payer in addition to universal coverage. We believe the private sector can do things better than the government and I would usually agree but in this case the results do not bear that out. Perhaps we at least need a public option to help “control” the craziness seen in the private sector or we just need greater competition. How much of the insurance premiums go toward administrative costs, waste and abuse? Again we need to clamp down. How much is going to technology that is way over the top? How much is going toward the need to practice defensive medicine?
The real concern I have is how little of the spend is going towards doctors and drugs. Take a look at the charts and note that most physicians are making about the same as product mangers and just a little more than reps. Drug costs have flattened and 85% of all drugs used are generics. By definition, that means we are using old drugs while everything else in the system seems to be going to “breakthrough” technology. I am not saying the old drugs are bad but rather some balance is needed.
Maybe it is time that we start to turn the system upside down. It might be time to invest more money on providers and patient access. Along with this we should place a much greater emphasis on pharmaceuticals that are proven to be cost beneficial and back off on hospitals, defensive testing, superfluous procedures and redundant technologies. Perhaps it is also time to loosen up FDA regulations relative to off-label discussions and use of data to support product use. If there is data to show a drug works and it has been proven safe why not allow broader discussion that is not hindered by today’s cumbersome regulations? There needs to be some middle ground especially if we believe that drugs save costs for the system. The “freedom of speech” case that the Supreme Court will hear later this year may help. Let’s try to use drugs wherever there could be a benefit as the alternatives of hospitals, expensive testing and lower life expectancy are not that attractive.
Yes we need government help. We need longer protection for our intellectual property. We need help with patent protection from generic companies trying to break patents early. We need a more streamlined regulatory process. We need a free market system that allows our drugs to be used by broader groups of patients. For that to happen we need more realistic pricing and greater innovation. We need better educated consumers and policy makers. We need an improved image and a greater understanding of what our industry brings to to the marketplace.
In so many ways this will be a transformational year for healthcare and our industry as we get ready for the full implementation of healthcare reform in less than a year. It is during times of radical change that real progress can be made. Let’s begin to really drive that change.