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Good News for Seniors, Not A Big Sacrifice For Pharma
The announcement that drugmakers will offer 50 percent discounts to Medicare beneficiaries who fall into the Medicare Part D doughnut hole is excellent news for seniors. Drugmakers will help to bridge the gap in coverage that forces roughly 15 percent of seniors stop buying medications when their annual prescription drug bill reaches $2700.
But this is, as President Obama said, "a first step." Pharma is going to have to do more.
Look at it this way: this year, prescription drug sales in the U.S. will total $252 billion. http://www.marketresearchbulletin.com/?p=47 (Pundits often say that spending on drugs accounts for just 10 percent of the $1.6 trillion we, as a nation, lay out for health care. But that figure includes only the medication that you and I buy retail, at the pharmacy. Add in the drugs that are administered in hospitals, and in doctors' offices and Pharma's slice of the pie is much larger.)
Meanwhile, if sales continue to rise--and drug-makers continue to hike prices -- spending on drugs is expected to double between 2014 and 2018. By 2019, Pharma hopes to rake in over $500 billion in U.S. sales.
In that context, giving up $80 billion over ten years is not a huge sacrifice. Pretend that the $80 billion is spread out evenly, $8 billion a year. This means that in 2019, instead of showing revenues of $500 billion, the industry would have to make do with $492 billion.
But unless the GDP doubles, we cannot afford to spend $492 billion on drugs in 2019. Why does Pharma charge U.S. patients sky-high prices? Because it can. No one is pushing back. In other countries governments negotiate to protect dying patients from being gouged.
Meanwhile, Pharma is spending twice as much on marketing and advertising as it does on research. Perhaps it should re-think that spending -- and pricing. Either that, or prepare to negotiate. Together, Medicare and a public sector insurer should be able to make drugs as affordable as they are in France.
By
Maggie Mahar
|
June 23, 2009; 3:25 PM ET
| Category:
Pharmaceutical Companies
,
Prescriptions
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Posted by: davidbrownnep | June 24, 2009 9:22 PM
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It's all well and good to try to find ways to rein in health care costs. I'm all for it. But in conjunction with cost control, this country needs to reduce the demand for medical services. How? By improving the biological potency of the food supply and by improving the quality of nutrition information disseminated by government agencies, academia, and corporations. They're all pretty much in agreement as to what constitutes appropriate food intake for the masses. But they're all pretty much wrong about what sorts of fats are beneficial or harmful and how much fat people ought to consume to stay slim. And they are way off target regarding safe levels of sugar consumption.
Everyone I meet wants to be healthy but very few have the time or motivation to analyze nutritional controversies. Most rely on the mainstream sources of nutrition instruction mentioned above. So most are at risk for developing medical problems. Access to high quality food and the sound advice of nutrition experts who understand how the real world works would do far more to reduce medical costs than any sort of negotiations with the medical/industrial complex.