The Absurd Inefficiency of American Healthcare

If you want an idea of just how absurdly unjust and inefficient the U.S. healthcare system is, read this breakdown by Seth Ackerman of Jacobin of what the average American must navigate in order to access a high-tier but vital drug.

The bestselling blockbuster drug on the U.S. market is Humira, an anti-inflammatory biologic manufactured by Abbott Laboratories and approved by the FDA in 2008. Humira is classified as a “fourth-tier drug” (a cutting-edge specialty drug); it’s used for inflammatory conditions like rheumatoid arthritis and Crohn’s disease. It goes without saying that these can be awful and stressful illnesses to live with.

Currently the U.S. retail price of Humira (2 syringes of 40mg/0.8ml) is around $3,500. That’s how much you’ll have to pay for the drug if you don’t have insurance. Good luck.

But what if you do have insurance? (And remember, 27 million will still be left uninsured when Obamacare is fully implemented.) Well, you might be among the 15 percent of workers with employer-provided insurance whose plans nevertheless don’t cover specialty drugs at all. If so, again, you’re out of luck.

Or you might be one of the 34 percent of employer-covered workers who face “co-insurance” for fourth-tier drugs, which means you’ll have to pay a certain percentage of the drug’s cost. The average co-insurance rate for these workers is 32 percent. So, absent any overriding plan provisions, the Humira would cost you $1,120.

Then there are the 40 percent of covered workers whose plans charge co-payments for fourth-tier drugs, rather than co-insurance — a fixed dollar amount, rather than a percentage of the cost. The good news here is that the average copayment is $93. (Though, of course, some plans have much higher copayments.) That doesn’t sound so bad, right?

Don’t get too excited, though. After all, you might be one of the 12 percent with a separate prescription drug deductible, which means you have to foot the entire bill until you reach a certain threshold. The average drug deductible is $231 per year — but, again, your mileage may vary considerably. And although your insurance will kick in once you’ve paid that much, in almost all cases you’ll still have to cough up co-payments or co-insurance.

And don’t forget, you’re also paying premiums every month — $521 for single coverage on average. That’s more than 20 percent of the average wage for single, childless workers with employer insurance.

And that’s not all. Almost half of employer plans that cover specialty drugs employ a variety of additional special strategies for “saying no” when it comes to fourth-tier medicines. Some have an additional cost-sharing tier for these drugs. Others impose “tight limits on the number of units administered at a single time”, or mandate “step therapies”, where they make you take cheaper treatments before they’ll pay for the expensive drug  — even if your doctor is sure it’s the best one for you.

Then there’s the infinite variety of “utilization management programs” that appear the instant you request such drugs: special surveillance regimes that find creative and innovative ways of making sure you don’t splurge too much on your life-saving medicine. Often these make people’s lives a living hell.

Contrast this confusing, costly, and inequitable arrangement with that faced by the average French citizen, who enjoys the benefit of what many analysts identify as the world’s best healthcare system (a mix of private and public sector providers).

The French equivalent of the “retail” drug price is called the prix public, or public price — the sum that Abbott is actually paid for the drug, plus sales tax. The public price of Humira in France (same dose, same strength) is not $3,500 (as it is here) but €940.90 ($1,028).

Why the difference? Here’s an explainer from the website of a French online pharmacy directory:

“The price of medications covered by national insurance is not a free-market price, it is set partly by the Economic Committee for Medical Products (ECMP), after negotiations with the manufacturing pharmaceutical laboratory. In case of disagreement, the ECMP, which is a government body, has the final say.”

In reality, though, no one in France pays even $1,028. National insurance covers, at minimum, 65 percent of the public price. Thus, the most a French patient would pay for Humira is $360.

Now, that’s still a lot of money for a person of modest means. But we’re not done yet. Patients who need drugs to treat serious, chronic illnesses like diabetes, hypertension, or cancer don’t have to pay a thing. A full 6.8 percent of the French population fall into this category, and another 1.7 percent are exempted for other reasons (newborns, pregnant women, the disabled, nursing home residents, etc.).

And, as it happens, rheumatoid arthritis and Crohn’s disease, two of the main chronic conditions Humira is used to treat, appear on the list of diseases that qualify for an exemption.

[…]

The “no” imposed on Abbott saved French taxpayers about $2,500 per Humira prescription – the difference between the “market price” (i.e. the U.S. retail price) and the price fixed by the French Health Ministry. By comparison, the “no” handed down to you, the patient, requiring you pay 35 percent, saved taxpayers only an additional $360.

By this (admittedly partial) reckoning, more than 87 percent of the taxpayer savings generated by France’s “Saying No Apparatus” (as it were) came out of the pockets of Abbott’s shareholders. Only 13 percent came out of the patient’s.

This sobering tidbit is part of a much longer and somewhat meandering piece analyzing the viability of a single-payer healthcare system in the U.S., including some of the weak critiques and counter-arguments of such an approach. The whole article is well worth your time if you care about healthcare reform and want to know how and why a better alternative would work.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s