When medical conditions are serious, and lack of treatment
exacerbates the condition, if critical medications are
not taken, lower income individuals tend to get sicker.
This means that they seek more medical attention. Sicker
patients are more costly to treat, regardless of the
treatment, in most cases. This in turn increases the
overall cost of healthcare, because their problems are
clinically more serious and more costly overall.
When businesses are presented with the cost of healthcare,
they think of it as a cost of doing business with little
or no benefits. "We have to provide healthcare coverage
but how does it help us build a better widget?" they
think. "How does it help us provide better customer
service?" they ponder. With healthcare plan costs rising
at between 8% and 15% per year -- and with operational
profit increases rarely keeping pace -- employers often
feel the pressure to provide aggressively cost-effective
plans. This often means employers and businesses choose
plans with the lowest cost... rarely with the best coverage.
These plans usually do not have Rx coverage. Rarely
are herbal treatments ever covered by medical plans
in the US (whereas, in Asia, herbs are part of the medical
mainstream and in Europe, they are in almost every woman's
pantry "first aide" drawer or closet). Companies with
a strong bottom-line profitability occasionally have
good Rx coverage. Interestingly, research done by this
consultant indicates that choice and quality in a medical
plan are high priority considerations for over 50% of
job seekers and for creating loyalty with one's workforce.
Companies rarely know of, or acknowledge this importance.
Sadly, people with no plans pay more for the same drugs
than people with Rx plans, since the plans negotiate
better prices due to their high volume purchasing. The
people who least can afford it pay the most. Uh-oh.
Prescription Drug Legislation -- Entitlement Plans
and Choice
Congress, as this is written, is grappling with various
versions of prescription drug legislation. Drug entitlement
plans are popular with voters and politicians have gotten
the message. How the legislation is written can deeply
affect which type of pharmaceutical offerings will be
covered by government plans.
Any prescription drug entitlement program will help
seniors, especially, pay for more drugs, and will tend
to keep their health steady, less ups-and-downs, more
consistent. Unfortunately the reliance on multiple drugs
is a double-edged sword. While AARP and most politicians
know this is a vote getter and are vocal advocates for
Rx coverage, the increase in drug purchases also means
increased side effects and avoids the REAL health and
cost issues.
Requiring people to purchase generics can decrease costs,
but denies choice. An incentive to purchase generics
is useful, but not a panacea. Some people are sensitive
to generics vs. the original. Every patient is different.
Sometimes the original works better. People prefer to
have the right to choose what is best for their own
health. Drugs for the same condition can rely on different
mechanisms. Some mechanisms work better for some patients
than others, depending upon a wide range of factors.
Some people are sensitive to all Rx drugs and do better
with herbs.
Most patients prefer having the choice to have what
works best for them. Entitlements that limit choice
will create incentives for choices that may or may not
be optimal for patients. To the degree that forced choices
create side effects, the overall effect of the legislation
may not cut costs to the degree anticipated.
What are the real issues?
1. Drug companies push the latest and greatest over
older drugs. These are the most profitable drugs for
these companies, which have a window of opportunity
for highest profit while the patent is still in force.
2. Older drugs, which sometimes work as well as their
newer alternatives, are often removed from the market,
when their profitability decreases. If not, this space
is often taken over by lower cost generics, which may
or may not work as well for all people.
3. Drugs cost more in the US, because other countries
have legislated lower costs. The majority of R&D and
developmental costs are ultimately paid by the drug
sales in the US, since there is less opportunity to
cover these costs in other countries. Within the US,
developmental costs are more heavily paid by non-plan
individual US consumers than by consumers covered by
a prescription drug plans which bargain aggressively
for volume discounts.
4. Herbal remedies with similar action, and lower cost
are often not considered at all, and are rarely reimbursed
in any plan in the US.
5. Western pharmaceuticals are often most effective
for ACUTE illness, while often herbs and natural remedies
are more appropriate for CHRONIC conditions. Western
Rx can be overkill for chronic illness, and they tend
to work predominantly on isolated symptoms whereas herbs
and eastern approaches tend to focus on the cause and
treat the whole person, which is often the most effective
approach for chronic problems, which must be treated
over a period of time.
6. MDs are not trained particularly well in drug mechanisms,
comparative drug effectiveness, side effects or dosage.
Most training is provided by the pharmaceutical companies,
which obviously have a vested interest in presenting
their preferred solution as an optimal solution.
7. Kinesiology, which can be used to appropriately determine
dosages, side effects and optimal combinations of drugs
BEFORE or instead of trial and error dosage, is not
well understood by most MDs. It is more often a competency
of naturopaths, homeopaths and chiropractors, most of
who are not licensed to prescribe prescription drugs
in the majority of the US states. (Most MDs use blood
tests to determine if drug dosages are having the desired
effect. Kinesiology is less invasive and provides answers
earlier.)
8. Entitlements, Medicare and Medicaid Drug Plans, and
other drug coverage tend to mean increased usage of
pharmaceutical Rx only, producing more side effects,
and ultimately increasing the overall cost of healthcare
not just by the cost of the drugs, but also by the cost
of treating the side effects as well.
Should drug companies do more to offset skyrocketing
drug costs?
Yes and No. Business 101 (for Dummies and for those
of us who do not understand medical economics which
is most of us).
Drug companies are in the business to make money for
their stockholders through innovative chemistry that
provides solutions to peoples' health issues. Many seniors
and baby boomers have pharmaceutical stocks in their
retirement plans. The way Rx companies make money is
the same way auto companies make money... i.e., offer
something new that makes people want the latest and
greatest product. They do not make as much money on
older drugs any more than dealers make as much money
on used cars. Drugs take a long time to develop and
make it through the FDA process (12 years on average).
Close to 300 potential drugs are created, tested and
evaluated for every one that makes it to market. This
is a costly process. Drug companies need to have a way
to recoup their costs, or they will stop taking the
risk to develop new drugs.
The FDA owns part of this problem. New drugs take more
time to make it to market in this country than in Europe,
for example, in part due to FDA process for approval,
which usually takes years. If drugs could make it to
market faster, the mark up would not need to be so high.
Drug patents typically last 17-21 years. That means
the high price can only last till the patent runs out.
This gives the drug company about five to ten years
to cover all development costs for the 299 drugs that
did not make it to market, plus the one drug that did.
(The FDA is currently without a director, and has a
number of professional vacancies as well. These vacancies
at the FDA make action on the speed of drug approval
front pretty difficult to achieve. The FDA director
is a presidential appointee.)
Drug costs have very little to do with the cost of manufacture.
As soon as the patent expires generic pharmaceutical
firms can legally reproduce the drug. Generics enter
the market, whose cost structure is very different than
the innovative pharmaceutical leader. Generics have
no R&D costs, just manufacturing and distribution. Of
course they are cheap!
Herbs have much lower developmental and marketing costs
than prescription drugs. They occur naturally. Most
development costs are focused on studies to determine
optimal standardized doses, optimal herbal combinations,
and optimal forms for the herb to be digested into the
system. While MDs are calling for more western double-blind
testing of their efficiency, which will raise their
costs, generally the high R&D costs present in prescription
drugs are not necessary.
Some cost control experts advocate mail-order drug companies
who give significant volume discounts in exchange for
locking in the business. These companies have recently
come under fire for helping Rx companies sell more of
their latest and greatest drugs by using the data that
has helped them push volume generics. They may have
a conflict of interest. This will undoubtedly be resolved
in the months to come. Given the recent Enron and WorldCom
scandals, this will probably not be seen in particularly
favorable light in today's environment.
Could pharmaceutical companies charge less for new drugs?
Sure. Would they have as nice stock market returns for
seniors' pensions? No. Would they have as much to invest
in new drugs? No. Would they have any incentive to drop
prices on their newest drugs? No. Is this what we really
want? Perhaps. We probably will do better with incentives,
streamlined FDA approaches and competitive pressure
than with regulation. Pharmaceutical companies need
to be profitable if we want them to continue to invest
in groundbreaking cures for cancer, AIDs and other nasty
diseases for which we have very poor options today.
Long Term Cost Cutting Recommendations
Restructuring pharmaceutical industry incentives so
that it is in pharmaceutical company best interests
to continue offering older drugs is good economic sense.
These incentives could be tax credits or other financial
motivators to help drug leaders keep these drugs on
the market after the generics enter.
How about incentives for offering some of the older
(patent expired) drugs over-the-counter, like Monostat
or Benedryl for example? While over-the-counter marketing
rarely means inexpensive, over-the-counter is rarely
as costly as blockbuster, new, patented alternatives.
Consequently these measures could contribute to keeping
costs of Rx down. Obviously this recommendation must
be accompanied by consumer education in use of over-the-counter
options. Lowering the barriers for pharmaceutical companies
to invest in this would be good healthcare economic
policy.
Funding studies that show effectiveness of older drugs
vs. newer offerings of drugs designed to address the
same conditions can also help physicians make cost-effective
recommendations and prescriptions for their cost-conscious
and drug-sensitive patients. Unbiased studies (almost
all drug research today is funded by the pharmaceutical
firms, who have obvious bias) that show which drugs
work best for what (for example beta blockers vs. diuretics
for reducing high blood pressure) could also be good
use of government funds. These studies might be funded
directly by the government or by industry sponsored
groups who reap tax benefits for company participation.
What about the inequality of drug costs in this country
vs. other countries? This is a tough issue, which is
beyond the scope of this article. However, individually,
patients can sometimes find drugs can be purchased in
other countries at a lower cost … even including shipping
and handling. Through the Internet, people can sometimes
purchase a several-month personal supply at reduced
prices. This is especially true for popular drugs. The
problem is figuring out which are the solid reliable
suppliers, and which are the rip-off artists.
Speeding up FDA approval processes in exchange for guaranteed
lower pricing might be one appropriate government strategy
to address this inequality of drug costs internationally.
Others might include tax incentives for affordable pricing,
especially where few alternatives exist, such as AIDs
cocktails, for example.
More Cost Cutting: Rx Paradox
So here is the irony or healthcare paradox. Herbs cannot
be patented, because they are natural. There are fewer
side effects because herbs occur in nature. Bodies have
more trouble processing chemicals they do not recognize,
than compounds they do. Herbs cost less, and are often
more appropriate choices, especially for chronic conditions.
With lower price points, they tend to have lower marketing
budgets. With lower marketing budgets, they tend to
provide very little doctor and provider education, which
means doctors of all kinds tend to know less about specific
formulations and use them less. Prescriptions cost more
because they are patented. They have accompanying higher
marketing budgets. Most doctor training is funded by
drug companies. Good thing we have drug companies to
fund training, but it is not enough. Comparative training
of any kind is almost non-existent.
Baby boomers have embraced herbs, natural and "alternative"
medicine in the US. (New England Journal of Medicine
1993, 1997, 1999 studies confirm this.) Baby boomers
have rebelled against almost anything that has been
important to them (think Elvis and the Beatles, Vietnam,
corporate greed), and as they age, healthcare is important
to them. They will continue to rebel against western
tradition, including high-cost pharmaceutical drugs.
Baby boomers have rebelled most where they have had
few choices. Choice in healthcare has decreased in most
medical plans since the early 1980s. This guarantees
more baby boomer interest in herbs and alternative offerings.
Because of this, savvy pharmaceutical companies are
buying up herb companies right and left as they sense
the dissatisfaction of the American public in general
and baby boomers specifically with the Rx business.
There are 81 million baby boomers. Pharmaceutical companies
are hedging their bets. This is exquisite business strategy
from the pharmaceutical companies' perspective, in meeting
customer needs and wants. However it guarantees increased
costs of herbs as big pharma companies gain controlling
interest in herb companies and apply pharma-pricing
paradigms to herbs and homeopathics.
Government incentives to SUPPORT rather than spread
FUD (fear, uncertainty and doubt) about herbal and natural
remedies will help keep treatment costs down overall.
As US medical care focuses more on drugs, this will
become increasingly important in terms of overall medical
costs.
From the healthcare policy perspective, the best recommendation
is to provide doctors and all brands of medical practitioners
better training in Rx, comparative Rx, herbal, and Rx/herbal
effectiveness studies. If medical professionals of all
stripes had better training, they would not prescribe
so many prescriptions in a trial and error fashion,
there would be fewer side effects and better health
in those that could least afford meds. Docs of all types
also need more training in prescription drug interactions,
drug herbology, herbology interaction and nutrition.
In Europe pharmacists receive considerable education
in these things and they are in most cases in charge
of prescribing specific meds and dosages in many countries.
In Germany, for example, pharmacy is a highly esteemed
profession that requires almost as much training as
an MD. Most MDs in the US have less than 5 hours of
nutrition in their entire education! Most do not trust
herbs because they do not know anything about them.
(Not prescribing them is probably good, under the circumstances,
because recommending herbs without knowledge is not
a good thing either.)
Better-drug-and-herb-educated docs could decrease the
cost of medications for seniors, low-income people and
businesses better than entitlements or government cost-control
regulations. Cost fixing is never more than a short-term
solution in a market-based economy. In a medical system
where drugs are playing a larger and larger role in
care protocols, the better-educated medical practitioners
would decrease the cost of medicine for everyone in
the US.
Medical education in the US is a dinosaur and also needs
massive revamping. It emphasizes critical care and hospital
practice when managed care practices for two decades
have been decreasing hospital days spent. Medical education
also has a hazing mentality that encourages 40-hour
shifts, exhaustion-driven MD drug usage and an "I had
to get through this, so will you if you want to join
the elite corps of MDs" attitude that does not provide
good medical outcomes by our interns and residents.
Mistakes by these docs are costly. Easy access to Rx-drugs
makes drug-abuse among young physicians-in-training
their nasty, not-so-little, industry secret. Addressing
these issues is beyond the scope of this article but
also a critical issue for healing the US healthcare
system.
Healthcare Cost Paradigm Switch: Business Imperative
This article has focused on the economic issues with
prescription drug costs within the healthcare industry,
but has ignored the big business connection. Businesses
in the US have been the driving factor for healthcare
cost cutting over the past 20 years. It was our largest
employers that embraced managed care, because of its
promise to cut benefit costs, which had reached 15%
of the business's cost of doing business.
No other business expense that consumes 15% of total
resources would have policies about cost, but nothing
about benefits. Other major elements would get complete
cost/benefit analysis, not rubber stamping of powerful
constituency positions. Since it was business that got
us where we are with regard to drug costs today, it
is business that will be most effective in getting us
focused on better solutions for the problem. Businesses
always want to have better operating results, businesses
want loyal employees and top new hires. Business will
get all of these and more if it puts its muscle where
its mouth is, addressing this critical issue. Business
participation is needed if this problem is to be solved
before it becomes a crisis. Here is the best part. If
business does the right thing, it will help restore
the public trust which has been eroded by the recent
accounting scandals of Enron, WorldCom and others. A
bargain by any standard!
Summary
The US medical system is the most costly in the entire
world, yet our longevity and overall health are far
from the best according to a World Health Organization
study. MDs trained in kinesiology would also decrease
money spent on unnecessary drugs. Pharmacists, NDs,
naturopaths, homeopaths, Asian herbalists, acupuncturists,
applied kinesiologists (most often chiropractors or
body workers by training) can decrease the cost of prescriptions
with their stronger understanding of chemistry of treatments
and/or dosage testing protocols, if they were more accepted
in American medicine. Business executives and large
employers can help bring these decisions to the forefront
and benefit handsomely for their efforts. If we decrease
the cost of prescriptions AND the overall cost of healthcare
in this country, while improving the business climate
and profitability in this country, both George Bush
and Ted Kennedy would have something to cheer about.
What a thought!
(3,938 words) Copyright © 2005-2008 Nan Andrews Amish. All
rights reserved.
Permission to reprint this article is granted, provided
original author is given credit, and contact information
and mini bio are provided as follows:
