Pharmaceutical Pricing: When It Comes to Cost the Devil is in the Details

At Patients Rising, our focus is on patient access to the right treatments and making sure the doctor-patient relationship remains at the forefront of that decision making process. Sensationalizing the perceived drug cost issues for one sector of the total cost “problem” is disingenuous at best. Cost and pricing are distractions from a more meaningful discussion centered on making total patient care more efficient and therefore more cost effective.

With that said, we believe it’s important to take a complete and accurate look at the totality of healthcare spending and its impact on patients. Looking at just one piece of the healthcare pie can lead us to conclusions that are just half baked.

How problematic is pharmaceutical pricing? The devil is in the details, details that we’re not always seeing.

Several news stories have covered a report from the federal government that says, “The rising cost of prescription medicines is putting pressure on public and family budgets in the United States.” The report has been picked up by the Wall Street Journal and a trade publication called Fierce Pharma. From a healthcare perspective, family budgets are strained from the rising costs of premiums, high copays, even higher deductibles and yes, what they pay at the pharmacy counter. It’s all expensive and it’s all stressful, especially to patients with chronic and life-threatening illnesses using the system the most.  

We asked our friend and colleague, medical economist Robert Goldberg, Ph.D., and he says on that score we’re being short changed. Dr. Goldberg says it is important to look at the entire government report. He says, “Facts are stubborn things, even if a press release ignores them.”

The devil is clearly in the details.

So what can we find if we pull back the curtain? Take rebates and discounts for example. Dr. Goldberg says in 2014, rebates and off-invoice discounts offset much of the increase in prices for branded pharmaceutical products.  (A 7 to 8 percent increase in prices vs the 13.5 percent that was quoted.1)

So what? Aren’t drug prices a threat to the economy? After all, as the Wall Street Journal quoted from the report, “prescription drug spending in the U.S. is rising and is projected to continue to climb faster than overall health spending.”

That would be a problem. However, according to the Congressional Budget Office and other research outlets, drug spending has in fact reduced the overall rate of healthcare spending by keeping people healthier, longer with fewer hospital stays, which is the most expensive form of healthcare.

We could work our way through a whole field of statistical weeds. For example, prescription medicines as a percentage of personal health spending has actually remained pretty much the same since 2009.

But that’s not where our concerns lie.

Our concerns lie with you, the patient. When reports like this come out and cast the shadow of blame on one industry no one wins, least of all patients. As a country our aim should be to work together for our citizens within the system we have while advocating to make it better. There are reasonable people on all sides of the cost of healthcare debate and the sooner we get those people in a room together, the better.  

Patients not only deserve it, they should demand it.   

Source: Medicines Use and Spending Shifts. Report by the IMS Institute for Healthcare Informatics. 2015

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