One topic that never fails to create a firestorm of debate at any given dinner party, is the U.S. Healthcare system – and if there is a runner up to that particular discussion, it is the cost of pharmaceuticals.
Imagine my ethical frown when I came across a troubling article by Mathilde Hamel for CNBC (March 24, 2014) entitled: “Gilead Sciences high-priced medication poses questions.”
According to Ms. Hamel:
“U.S. lawmakers are scrutinizing the price of Sovaldi, a new hepatitis C drug produced by Gilead Sciences, and has asked the biotech company to explain why it cost $1,000 a pill. The $84,000 price tag for a three-month treatment has health insurers and state Medicaid programs nervous as it is difficult to draw a line between what the company charges and what it costs to produce it. “
It is hard to know where to begin.
What we have versus what we know
It is called The Patient Protection and Affordable Care Act (PPACA), but many call it “Obamacare.” The many who call it that, are generally those citizens who don’t like the president. I am not about to take sides here. That would be ethical quick-sand.
I will instead make the argument that in general, healthcare in America doesn’t work for anyone — except those who are blessed enough to have a great plan.
On one side of the argument are those who feel that the government should pay for everything, and on the other side are those who believe the government should pay for nothing. Some say that health care is a right, and others feel it is a privilege.
However one argument that never seems to be included in the discussion is the “why” of it all. There are indeed, a hundred “why’s,” I know, but in this case I would like to know why one capsule of a hepatitis C drug comes to cost $1,000?
Yes, I realize that biotech pharmaceutical companies are easy targets, but I also realize that those of us caught in the middle with “OK, but not great” healthcare plans are concerned about asking our “OK, but not great,” insurance companies to pay $84,000 for a handful of pills.
Embedded in the article was a video where Christopher Raymond, an R.W. Baird biotech analyst said:
“Biotech companies do not encounter such problems in other parts of the world because health-care systems are so different. Europe, for example, has a single-payer system in which governments cover health-care costs…But the United States lacks such a system, and until we get that, I think this is just headlines.”
You are an undoubtedly very bright man, sir, but you are completely missing the point.
Why should anyone pay $1,000 a pill?
When I last checked, I too am my government. My taxes go to pay many things. Maybe a penny or two goes to these pills. When I also checked, the company that makes these pills is publicly traded. I think I’d like to know a little more about how this publicly-traded company prices its products. Perhaps the expectation in the company is that whatever they want to charge, some “rube,” perhaps me, will pay for it.
It would be one thing if this was an isolated incident and that no one in the healthcare system ever tried to gouge the government. We know that is not true. I have posted blogs about physicians, clinics and hospitals over-charging. Medicare fraud runs rampant. These over-charges occur because, as the Wall Street analyst kind of put it, “governments cover healthcare costs.”
It is the big bad government and they can pay the freight, right? So if they want to charge $1,000 a pill, somewhere down the line, someone like Chuck Gallagher (or a thousand Chuck Gallagher’s) will pay for it. Is that the idea?
We’ll stay with that thought for a minute. Suppose I, Chuck Gallagher, calls up the publicly-traded biotech company and says, “You know, I’m a pretty compassionate fellow and I would not want to deny a Hepatitis C sufferer their pill. So could you show me the books?”
They might push back and tell me that I don’t understand all of the research costs, all the development costs and such. Oh, but I do. I’m a pretty fair business person and I am sure I could gather a team of 50 CPA and financial analyst friends in about 10 minutes who are also taxpayers, and we could very carefully analyze the development costs. When we’re done, we might agree to pay you $50 a pill, or $25 or whatever is fair.
It won’t happen
Here is where “East meets West,” so to speak. Those who think the government should not be giving handouts are also the same people who bluff and bluster about biotech, publicly-traded companies and the market for $1,000-a-pop pills. They are fine with these prices. But who will ultimately pay for it? You and me.
Yes, the same people who are trying to bring us all affordable health care; the “Obamacare” you deride, are the people you expect for these pills. Again, I am not being political, I am pointing out the hypocrisy.
Somehow, many of us, even Wall Street biotech analysts have forgotten how our government pays for things, including fancy pills. Open your books and allow folks to clearly understand the justification for charging $1,000 per pill. And by the way, what does that same pill cost if purchased in Canada?
YOUR COMMENTS ARE WELCOME!