By Dwight Michael, M.D.
Gettysburg Times, April 9, 2015
We are five years into the Affordable Care Act (ACA), and yet we truly do not know how this very complicated bill will ultimately affect the affordability of healthcare in our country.
Prior to passage of the ACA, the cost of medical care for the average American was spiraling upwards at an ever-increasing rate. Presently, $3 trillion a year, 17% of the U.S. gross domestic product, is spent on healthcare in our country. This is nearly twice the amount that any other country spends on healthcare.
Despite the fact that we outspend other developed countries nearly 2:1, our clinical outcomes such as infant mortality rates, maternal mortality rates, and life expectancy are mediocre at best.
Although there are many facets to the excessive cost of healthcare in our nation, patients’ out-of-pocket cost for their prescription drugs is one of the most upsetting to me. Why do we have to pay so much?
At the core of excessive American healthcare costs, our political system allows money to “buy” legislators and legislation.
In his recent book “America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System,” Steven Brill reveals that our legislators needed to cut deals with several powerful players in healthcare if there was any hope of passage of the ACA.
As early as 2003, under the leadership of congressman Billy Tauzin, Congress passed a bill that forbid Medicare to negotiate drug prices with the pharmaceutical industry, costing Medicare patients and taxpayers literally billions of dollars.
Six years later, from March to July of 2009, the same Billy Tauzin-now lead lobbyist for PhRMA (Pharmaceutical Research and Manufacturers of America) at $2 million a year-led the way in a backroom deal with negotiators from Max Baucus’s Senate Finance Committee and eventually the White House.
The ACA deal: The pharmaceutical industry would give up $80 billion over 10 years by paying an additional tax based on market-share, give Medicaid patients deeper discounts on the costs of their drugs, and reduce the “doughnut-hole” costs of drugs for Medicare patients. White House analyst Tony Clapsis had calculated that the pharmaceutical industry would reap an additional $200 billion due to the increased number of Americans with health insurance. By his estimate, Big Pharma was giving up less than half of its increased revenues.
In return, Max Baucus and the White House gave the pharmaceutical industry four major gifts: 1. Medicare was still forbidden to negotiate drug prices with the pharmaceutical industry. 2. Importation of drugs from other countries such as Canada remained illegal. 3. There were to be no draconian cuts in Medicaid payments for drugs. 4. Biologic drugs would have 12 years of patent protection, markedly improving their profits during that timespan. These promises were made to gain the pharmaceutical industry’s support of this legislation.
Who really pays for this? Everybody in the United States who buys a prescription drug pays for this. Last year, we spent $309 billion for prescription medications.
Other countries in the industrialized world have a central health authority that negotiates drug prices with the pharmaceutical industry. Because we have no such agency, it is estimated that our country spends anywhere from 35 to 50% more for prescriptions drugs.
Even at a conservative 30% extra, this is an additional $93 billion a year handed over to the pharmaceutical industry. These companies claim they require such revenues for research and development of new drugs. Their profit margins (10-43%), however, are better than those of any other industry. In 2008 the top 10 pharmaceutical companies in the world made profits of $51.6 billion. In 2014 this figure had increased by $38.2 billion to $89.8 billion. This is profit after all other expenses are paid!
Think about it. Because of money’s influence on our political process, the pharmaceutical industry has used its vast riches to influence our legislators, who then produce legislation that essentially causes the United States — you, me and all other Americans — to pay for the massive profits of these international corporations. We are paying 35-50% more for our prescriptions than any other country. In effect, our government’s legislation has allowed Big Pharma to pad its profit margin with our money, while these companies give the rest of the world discounted prices. It does not seem fair to me. Does it to you?
One of my conservative partners at Gettysburg Family Practice has suggested that he could support a law that would limit the charge for any prescription to no more than the average of what other nations pay for that drug. If we did this, we could cut American prescription drug costs by $93 billion a year.
In our present healthcare climate of ever-increasing deductibles, co-pays, and other out-of-pocket costs, I often spend time with my patients looking for an affordable option for a drug they need. This happens on a daily basis.
Last week I saw a patient who was intolerant of the first two or three statins (cholesterol-lowering medications) that we tried. She told me that despite her insurance, she was paying an additional $100 per month for her Crestor, even though she was taking it only every other day. I checked online during her appointment and found that without insurance, she could get the generic form of Crestor from a reputable Canadian online pharmacy at a cost of $10 per month. Note, this is an exponential reduction in price, from $100 per month with insurance to $10 per month, no insurance needed!
I am fed up with the moneyed interests of our country dictating our public policy in general. There is a tremendous amount of wealth in healthcare. Until we fix the policies that allow this wealth to dictate what we pay for our healthcare, we will continue to struggle with the risk of healthcare costs bankrupting our nation.
Practically every other developed nation on earth provides universal healthcare for its people. I believe that healthcare is a human right. We already spend nearly twice as much for our healthcare as any other nation. If we spent this money more wisely, we could afford healthcare for every American.
Dwight Michael, M.D., is a local family physician who practices with his partners at Gettysburg Family Practice. He is a member of Gettysburg Area Democracy for America’s healthcare task force, and he is a board member of Healthcare4AllPa.