Fixing drug cost: A collective responsibility

With healthcare reform as one of the biggest campaign topics, it gets tiring to see every player in the healthcare system portrayed as a villain. As leaders, we like to surround ourselves with people who embrace diverse points of view, who look at things holistically, who are collectively accountable to one another. We need to carry this same thinking into the healthcare reform discussion. What we need most is collaboration and openness beyond partisan views.

Let’s stop with the belief that pharmaceutical companies are overcharging and overpromoting to patients who do not need it. When it does happen, this should be reprehended but isolated cases should not tarnish the work of hundreds of thousands of people who are committed to progress medical science and enhance patients’ lives.

While we are at it, let’s also stop denigrating payors, hospitals and even politicians, Democrats and Republicans alike. We are all in this system together, and we all need to play a role to make it work and to ensure that medical innovation reaches the patients in an efficient way. If we can establish a basic respect for the contribution of each player in the industry, we can move on to agree that the current system is financially, socially and politically unsustainable. But, we need an objective understanding of the root causes of these issues in order to make realistic proposals to inspire change that will produce meaningful results, while maintaining the basis of a free market. Even a well-written and well-researched article in The Financial Times titled, “Why Prescription Drugs Cost So Much More In America,” falls short in truly addressing why the costs are so high. While the article importantly examines patient suffering, it fails to explore the complexity of the American system.

Collectively, we are overlooking some of the aspects that make the U.S. healthcare system unique. These are: A distorted insurance system caused by sub-optimal social solidarity; a system where all stakeholders are profit makers regardless of the value they provide; and last, but not least, misaligned incentives between manufacturers, providers and payors.

Exploring ways to create balance in the system and build on its unique nature are going to be the keys to successful reformation, and some critical considerations include:

1. Universal access to quality and affordable healthcare is a reasonable right. However, it must be based on the chronically healthy population paying for the chronically sick, and the rich for the poor. A fully-centralized system works well in small and homogeneous populations, such as those in the Scandinavian countries, but is unlikely to be the solution in America. In America, everyone needs to be willing to contribute to make it work. For instance, having family deductibles based on income would create better equity and should be explored. 

2. While protecting a free market is critical, regulations must be instituted to better align incentives among stakeholders and maintain inducements to fund R&D. Profits should be aligned with the value created and the risk undertaken. Efficiency savings should be passed on to the end consumers in the form of lower premiums/deductibles and better care.

3. Drug innovation can only come at a cost. However, that cost should offset other healthcare and societal expenses. Methodologies can be developed to assess the value of a treatment holistically and its benefits to the healthcare systems as well as to the patients. Such methodologies would help inform a transparent Health Technology Assessment and define an Economic Value-Based price that would serve as a price benchmark for insurers. Such systems would eliminate the need for rebates and heavy resource utilization which create significant administrative burden to doctors and bring manufacturers and payors around a common goal: To ensure that patients receive the most optimal treatment. An article published in JAMA by J.Robinson, S.Howell and S.Pearson provides greater perspective on this idea. 

I have had the chance to work across all key geographies in the world and I have never encountered a perfect healthcare system. Let’s then not try to change everything, but instead, make adjustments to increase the system’s efficiency. Science has never progressed as fast as it is today, and technologies like gene therapies or gene editing, which were seen as science fiction not so long ago, are now a reality.  If we stop classifying each other as villains and start getting realistic about what we each need to relinquish in order to make this work, it will be possible to create a successful system, where patients benefit from current treatments and future innovations.