24 Jun Why Drugs Cost So Much
There is a great opinion piece in the NY Times from Jan 14th on why prescription drugs costs so much (it can be accessed by clicking on the Link below). Peter Bach looks at some disturbing trends in the industry and some options to curtail the escalating costs. Some of the examples are eye popping- $14,000 a month for a lung cancer drug. Another cancer drug for which the US pays $8,500 a month, while France and Germany pay $3,300 and $4,500 respectively for the same drug.
So what are we to do? I think there are a couple of takeaways-
1. Realize the insurance companies don’t have a huge incentive to say no to the drug manufacturers.
If a drug maker wants to charge $14,000 a month for a lung cancer drug- no problem, the cost gets passed to the client in the form of increasing premiums. From the insurance company’s perspective, it is better to cover it than not cover it. This avoids having issues with the insureds and the clients down the line. It also makes the insurance carrier more competitive since all of their competitors have also accepted the drug and the high cost.
2. We have this belief that cost should not enter into a medical treatment plan.
US patients still want and expect everything to be covered, but don’t want to pay for it, or expect someone else to pay for it. Nothing else is bought or paid for this way. Could you imagine if we bought cars this way? Everything would be a bulletproof safety conscious Lamborghini.
3. We are going to have to change the paradigm.
There are things you can do. From educating your employees to designing a custom plan that actually covers and pays what the employer wants as opposed to what the insurance company thinks you should pay.
By the way, it isn’t our fault we feel this way. We were conditioned to view our medical care this way. HMOs educated us to believe that all the services cost were the co-pays.
My father in law who is a cardiologist tells a story of a patient whose life was saved from a heart attack he suffered right there in the office. After he was stabilized, the grateful patient remarked- “Thanks Doc- that was the best $5 I’ve ever spent”- referring to the co-pay. Meanwhile, the man had just undergone emergency surgery costing thousands of dollars. But his insurance plan was going to cover all those costs. To him it actually cost $5…