In Part I of this series, Dr. John Abramson of Harvard Medical School talked about changes in the relationship between pharmaceutical companies and academic medical institutions and journals regarding publication of study results. In a revolutionary change from prior experience, the drug companies are insisting on not only owning the data from their studies, but in actually writing the research study results for publication. This jeopardizes the integrity of the published results and recommendations that doctors make to their patients.
Part I concluded with statistics that show Americans pay $12,914 per person per year for healthcare while similar advanced countries pay only $6,125 per person per year. That’s $2.3 Trillion in excessive healthcare expenses. To make matters worse, life expectancy in the U.S. is declining in comparison to these other countries.
In Part II we will be discussing reasons for these excessive costs. Dr. Abramson says there are three main factors:
- The U.S. is the only wealthy developed nation that has no formal mechanism of price negotiation.
- Since most consumers are insured, they pay only a small part of the price – so high prices don’t provide market discipline.
- As a nation, we are too mesmerized by the idea of biomedical innovation.
Historian Jill Lepore has written: “Innovation might make the world a better place, or it might not. Innovation is not necessarily concerned with goodness, but often with novelty, speed, and profit.” This means we should question whether new innovations actually represent a true value to the public.
Abramson says the U.S. is spending 96 percent of our biomedical research money on medical drugs and devices, and only four percent on how to make the population healthier and how to deliver healthcare more efficiently and effectively. Put another way, the U.S. spends $116 billion on researching new drugs and devices – which comprise only 13 percent of total health care costs – but only $5 billion on research concerning the remaining 87 percent of healthcare costs.
Why? The answer should be obvious – money. It is the job of pharmaceutical companies and medical device manufacturers to make money for their investors. Much more money is made from new drugs and devices than from studying and promoting healthy diets and lifestyles. It’s much like golf equipment manufacturers. Every company must come out with a new line of drivers to sell each year – even if there is no real improvement over last year. Why does Apple introduce a new iPhone every September, when last year’s performs just as well? To sell new phones! Many new drugs are no real improvement over existing drugs, but they are packaged as “the latest and greatest” nonetheless.
Dr. Abramson says only one out of four new drugs is actually materially better than previously available and far less expensive therapies. Germany’s Institute for Quality and Efficiency in Healthcare, an independent agency under contract to Germany’s Ministry of Health, found that of 216 new drugs entering the German market from 2011-2017, only 54 were of “major” or “considerable” benefit. Thirty-seven were evaluated to be of “minor,” “less,” or “non-quantifiable” benefit. And there was “no proof of added benefit” for 125 of the drugs. The U.S. has no equivalent method of judging the effectiveness of new drugs.
What about the price tags on these drugs?
Many new brand name drugs are being developed here in the U.S. and all of them are heavily marketed. It’s nearly impossible to watch any hour of television without being subjected to pharmaceutical advertising. The drug companies that own the patents are monopolies. In comparative terms, these drugs cost three-and-half times more in the U.S. than in other wealthy developed countries. But the most shocking numbers have to do with the rate of increase in prices. In 2008, the average annual price of a new drug in the U.S. was $2,115; by 2021, this annual average price of a new drug had risen to $180,000. In 2022, the average annual price was up to $257,000. That’s a 42% increase in one year – a rate of increase far exceeding our record-breaking rates of inflation under the Biden administration.
How do we change this situation?
For-profit companies are supposed to make profits. Abramson says, “Accusing drug companies of being greedy is like accusing zebras of having stripes.” That’s their job! Which means it’s up to others to rein in these spiraling healthcare expenses. That means doctors, and patients, must ensure these companies serve the public needs, rather than their own.
Abramson recommends:
- We must ensure the evidence base of medicine is accurate and complete, which requires independent, transparent peer review.
- We need to implement health technology assessment to ensure our doctors know which drugs and devices are actually most effective.
- We need to control the price of brand name drugs.
The obstacles to these needed changes are much like those that obstruct change in our public education system: politicians who accept large contributions from those who don’t have our best interests in healthcare, and in education, in mind. Dr. Abramson calls for leaders on both sides of the political aisle to come together in the interests of the country. Now that would be an innovation we could all endorse!
