Healthcare industry representatives recently debated in Hartford what to do about the rising cost of health care and whether the private or government sector should lead the charge.
By now, most news consumers have heard of a company called Turing Pharmaceuticals, which jacked up the per-pill price of a recently acquired AIDS drug by more than 4,000 percent.
Turing and its CEO Martin Shkreli, who openly defended the decision before later yielding somewhat to public outcry, became “the latest poster child for monstrosity in the world of [drug] pricing,” said Dr. James Sabin, professor of population management and psychiatry at Harvard Medical School and director of Harvard Pilgrim Health Care’s ethics program.
The question is what to do about the exorbitant costs of pharmaceuticals and health care in general and what role government should have in that discussion? The answer depends on what the market, which has significant competing financial interests, can achieve on its own, according to Sabin, who spoke at a Connecticut Health Council breakfast in Hartford last week.
Sabin, who described himself as conservative and leaning towards a market-based approach to health care, admitted that private industry hasn’t made much progress in reducing drug prices and other healthcare costs.
“Can the market adjudicate that?” Sabin asked. “It hasn’t happened so far.”
Sabin, who gave the keynote at the Harvard Pilgrim-sponsored event, also participated in a panel discussion that included State Comptroller Kevin Lembo, PhRMA lobbyist Sharon Brigner and former Connecticare CEO Mickey Herbert. The discussion that ensued was a microcosm of the national debate over drug pricing.
Though insurers and drug makers straddle opposite sides of the fence on who is to blame for the United States’ expensive healthcare system (relative to other developed countries) there was some talk of industry collaboration to help slow the overall health cost curve.
As a representative for drug makers, Brigner was arguably on the panel’s hottest seat. She said the media and government put too much focus on drug prices, when they account for just a fraction of total healthcare costs. The largest cost drivers, she said, are long-term care and hospitalizations.
Brigner said she would like to see efforts focus on ensuring patients take their medication as prescribed. She pointed to a 2013 study from the IMS Institute for Health Informatics, which calculated that medication adherence could slash health spending by $213 billion.
Sabin, meanwhile, said he thinks drug prices should be better tied to their value. For example, Gilead’s Hepatitis C drug Sovaldi, which costs about $1,000 per pill before rebates, can cure the disease, and is therefore worth more than another drug might be, he said.
If the industry can’t control costs, Herbert, who led Harvard Pilgrim’s entry into the Connecticut market in 2013 as a consultant, contended that the government will step in, like it did when public opinion turned on managed care in the mid-1990s for being too profit-driven. Herbert was head of the American Association of Health Plans at the time.
“I would argue we’re at this crossroads again,” Herbert said. “Greater government involvement will occur if the industry can’t control prices.”
Lembo, who oversees healthcare spending on state workers and retirees, which recently saw spikes in prices for specialty drugs like Sovaldi, is an advocate for government wielding its authority. The idea of industry working together to reduce costs is nice, he said, but he has a hard time believing it can happen.
“My confidence level in our ability to do that has gone up and down over time,” Lembo said.
There are inherent clashes between the interests of insurers, drug makers and providers, and industry is often effective at convincing lawmakers that the high costs of insurance or procedures are justified, he said.
Consumer expectations also play into the challenge. They want “the best, the brightest, the shiniest, now,” Lembo said. “Fix me. I don’t care what it costs.”
Lembo said expensive specialty drugs and compound medications have reduced gains the state has made in recent years in controlling costs through preventative care and by reducing emergency room visits.
While those drugs represent barely more than 1 percent of total prescriptions, they represented about one-quarter of the state’s $337.8 million in overall pharmacy spending last year.
“I’d like to see some of the promised payoff over time on some of these,” Lembo said. “In the short term, I’m not sure we’re making great ground.”n
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