There are a thousand ways that healthcare is different than other economic sectors; those differences keep the market from working to keep care affordable.
Better-known causes include: insured consumers don’t directly pay the full price of their own care; prices have nothing to do with quality; there isn’t enough science about which treatments work; and providers can drive demand for their services.
It’s important to point out that consumers pay all healthcare bills, either directly from our wallets but also indirectly through taxes and lost wages. These factors and many more distort the healthcare market, so it doesn’t work.
An important way the healthcare market fails is that industries have powerful tools to drive the prices and use of their products that most consumers aren’t aware of. ProPublica’s latest analysis of payments by drug and medical device companies to physicians finds that despite substantial bad press around the problem since 2010, not much has changed.
Between 2014 and last year, total payments to doctors for promotional talks and consulting have remained between $2.1 and $2.2 billion. This is a widespread issue; over the last five years, about a million of the 1.1 million doctors in the US have received industry payments. Over 700 doctors received more than a million dollars each from the drug and device industries and over 2,500 received more than $500,000.
Connecticut doctors and teaching hospitals are well-represented in the database. Just last year, drug and device companies paid Connecticut physicians $27.3 million. Four doctors received over $500,000 each and another 64 received over $100,000. Specialists are over-represented among the 10 highest-paid Connecticut doctors. Teaching hospitals in Connecticut received payments of over $1.5 million last year. You can look up your own doctor’s payments here.
There is strong evidence that the payments are working. Physicians often claim they aren’t influenced by industry payments, but doctors who receive funding from pharmaceutical companies are more likely to prescribe brand-name drugs. A study found that the drugs most promoted directly to physicians are less likely to be effective, safe, affordable, or innovative.
Many of the most promoted drugs — Xarelto, Eliquis, Latuda, Invokana, Humira, Aubagio, Victoza, Otezla, and Repatha — will sound very familiar to TV watchers.
In more bad news for consumers, the Institute for Clinical and Economic Review (ICER) just released its first innocuously-named report on Unsupported Price Increases for US Prescriptions. ICER is an independent non-profit research institute that evaluates the evidence on the effectiveness and value of drugs and other medical treatments. The report identifies seven drugs with substantial price increases last year on already high costs but with “no new important evidence [of clinical benefit] to support their price increases.”
Together, the seven drugs cost American consumers over $5.1 billion extra last year without any added benefit. Topping the list is Humira, which cost US consumers $1.9 billion more. A growing number of payers use ICER reports to control healthcare costs.
Prescription drugs are the biggest driver of rising healthcare spending in Connecticut and rising healthcare costs are crowding out other important government and family priorities. Too often, discussions about lowering healthcare costs devolve into arguments about denying care for people who need it, but it doesn’t have to be that way. Ensuring we are prescribed the most effective drugs, and only the drugs we need — at a fair price — is critical to controlling costs. We need to stop paying higher prices for medicines that aren’t worth it, and doctors need to refuse industry money.
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