There is a drumbeat of the rising cost of medical care, so much so that experts are twisting their already convoluted selves into pretzels to prove that the cost of care is directly correlated to the over diagnosis, over harm, over use and over reach in caring for the patients by their physicians. One wonders at the wisdom of that. But what is true, reveals itself easily.
In every article written, an element of cost seems to take center stage. In fact most articles in medicine are not complete unless a paragraph on cost is couched to win over the publication mantle. Most of the blame is hurled at the doorstep of the treating physicians. Thus the rise of mantras such as “Choosing Wisely” and “Less is More.”
Digging through the morass of expense, a few easy to locate, issues are self-evident:
Administrative Costs: CMS alone projects them to be at $361 Billion in 2014 and these are conservative estimates at best.
Hospital Costs especially the “facility fees” that make cost of care to the patients treble if not quadruple.
Overuse of Diagnostics estimated by Peter Orzag to run in the $700 Billion range and that includes Defensive medicine, Newer technology use, and excess use for profit.
Pharmaceutical costs…this is the subject we discuss below.
If one were to use $1 as the total cost of healthcare in the United States, estimates suggest the following (based on the CMS Data Dump of 2012-2013:
$0.36 are for hospital costs
$0.15 Administrative costs
$0.26 for Pharmaceutical Costs
$0.07 for Physician care
$0.16 other, including fraud and abuse
The Pharmaceutical costs have been inching or rather “yarding” upwards at a scale not seen before.
A recent research letter termed, “The Rising Price of Cancer Drugs—
A New Old Problem?” in the JAMA Oncology authored by Vinay Prasad, MD, MPH is a fascinating read on the explosive increase in cancer medicines. The first salvo that brought the issue to the public consciousness is when Turing Pharmaceutical company raised the price of pyrimethamine overnight by 5000%.This was followed shortly after by the price increase of the oft used in pediatric/adult allergic response, Epipen by 600%. In fact, Eighty-six cancer drugs reported average sales price in both January 2010 and January 2015. “ The following 11 drugs underwent price increases of 100% or more: carmustine, oral methotrexate, cyclophosphamide injection, oral cyclophosphamide, mitomycin, oral busulfan, leucovorin, vinblastine, oral etoposide, pegaspargase, and oral melphalan." The Authors in the article further state; “For in- stance, although our investigation finds that the price of oral cyclophosphamide increased 300% after adjusting for inflation, absolute Medicare Part B spending on this drug increased from 1 million to 90 million dollars.”
What is most disconcerting is that older drugs have increased dramatically in price even when inflation adjustments are taken into account. This does not bode well for the average citizen who will find with their rising premiums, deductibles and Copays that medical care for their cancer is out of their reach, either by insurer denial or by the cost of the drug itself.
The ills in the recent rise of the pharmaceutical costs can be deciphered fairly easily, if one were to wear a neutral, non partisan hat. How does the Pharmaceutical company advance the costs to such astronomical levels? However one must keep in mind that innovation does come at a price, as long as it is not beyond the reach of the average individual and not dependent on a third party to the exclusion of reasonableness.
Answer: Easy
If there is a policy in the government, which has been strongly bandied about by lobbyists that there be a Non-Compete clause and that free market principles of supply demand and negotiations are not to be considered, then raising prices to any level are borne off the rising premiums for all and the burden on tax payers who cover expenses for Medicare and Medicaid.
Speaking of newer drug costs per year, such as the Biologics; Some are given below:
Perjeta - $126,000 / year
Keytruda - $150,000 / year
Opdivo - $158,000 / year
Ibrance - $142,440 / year
These newer biologics aim for individualized therapy based on available molecular diagnostic criteria (these have their own inherent costs). So the advances in medicine are restricted to most patients given the exorbitant costs of diagnosis and the drug treatment. The costs of the drugs are in most cases arbitrary and capricious. If one remembers the “Provenge” debacle that led to the bankruptcy of the parent company Dendreon because they marketed “Provenge" for Prostate Cancer at $104,000. The problem; drug seemed to give an average of 4 months increase in the Progression Free Survival. Perjeta, however gives us a progressive increase in survival over the 3 year period noted in the CLEOPATRA trial (encircled). ( http://cancerres.aacrjournals.org/content/72/24_Supplement/P5-18-26.short )
Perjeta on the other hand shows an increasing Survival rate (CLEOPATRA Trial) with time as shown below:
Answer: Easy
If there is a policy in the government, which has been strongly bandied about by lobbyists that there be a Non-Compete clause and that free market principles of supply demand and negotiations are not to be considered, then raising prices to any level are borne off the rising premiums for all and the burden on tax payers who cover expenses for Medicare and Medicaid.
Speaking of newer drug costs per year, such as the Biologics; Some are given below:
Perjeta - $126,000 / year
Keytruda - $150,000 / year
Opdivo - $158,000 / year
Ibrance - $142,440 / year
These newer biologics aim for individualized therapy based on available molecular diagnostic criteria (these have their own inherent costs). So the advances in medicine are restricted to most patients given the exorbitant costs of diagnosis and the drug treatment. The costs of the drugs are in most cases arbitrary and capricious. If one remembers the “Provenge” debacle that led to the bankruptcy of the parent company Dendreon because they marketed “Provenge" for Prostate Cancer at $104,000. The problem; drug seemed to give an average of 4 months increase in the Progression Free Survival. Perjeta, however gives us a progressive increase in survival over the 3 year period noted in the CLEOPATRA trial (encircled). ( http://cancerres.aacrjournals.org/content/72/24_Supplement/P5-18-26.short )
Perjeta on the other hand shows an increasing Survival rate (CLEOPATRA Trial) with time as shown below:
With Ibrance for instance, “The median PFS by blinded independent central review was 30.5 months versus 19.3 months, respectively. The objective response rate was 42 percent with the combination versus 35 percent in the control group,” in the PALOMA-2 Trial.
The most encouraging drug remains Keytruda with a 3- year 40% survival rate at present in Malignant Melanoma.
To solve the problem, one has to look at the mechanics that increase it’s complexity. A simpler Free Market in drug pricing where patient needs are aligned with the profits of the company. The so called “Social Responsibility” mantra bandied about by the C suite only satisfies their conscience of “doing good.” The government is not without blame either in allowing this form of wealth recapture from ordinary citizens. The positive regression line points to un-affordability...
The most encouraging drug remains Keytruda with a 3- year 40% survival rate at present in Malignant Melanoma.
To solve the problem, one has to look at the mechanics that increase it’s complexity. A simpler Free Market in drug pricing where patient needs are aligned with the profits of the company. The so called “Social Responsibility” mantra bandied about by the C suite only satisfies their conscience of “doing good.” The government is not without blame either in allowing this form of wealth recapture from ordinary citizens. The positive regression line points to un-affordability...
Newer drug costs are mostly blamed on the $1.2 - $2 Billion needed to do Research and Development. These are overly inflated numbers by the pharmaceutical companies. The attempt here is to justify the high price point.
Some blame also lies at the feet of the FDA where ties to the pharmaceutical industry make choices in their self interests to raise or lower the bar for approvals and designations. Dr. Saurabh Jha (@RogueRad) writes eloquently about the revolving door of the FDA and the Pharmaceutical Industry citing Dr. Vinay Prasad (@vinayprasad82) in a recent article, Money and virtue: An odd tension in health care; “In public choice economics there’s a phenomenon known as “regulatory capture.” Briefly, regulators sculpt regulations which benefit certain industries, and industry influences regulators, by promising a lucrative career, to create regulations which give them an advantage. Remember, regulations are a barrier to entry — successful capitalists love regulations, aspiring capitalists hate regulations.” And so it is in the deeper dungeons where policy and people meet, the clink of champagne glasses occurs.
In all, the system is badly broken. if the falcon cannot hear the falconer anymore, the center cannot hold and chaos is about to reign.
In all, the system is badly broken. if the falcon cannot hear the falconer anymore, the center cannot hold and chaos is about to reign.
