I really wanted to link to Dr. Marcia Angell’s July 15, 2004 temper tantrum article in The New York Review of Books — but I couldn’t get permission. So, rather than infuriate you further with her dangerously slanted views, let me share a more useful debate.
Imagine American health care spending as a dollar bill divided into a hundred pennies. How many pennies do you think represent spending on prescription drugs? 60? 80? Wrong. 10 1/2. The rest (otherwise known as 85%) represent everything else — from doctor visits and hospitalization to administrative charges, and insurance.
What’s a better bargain: time spent in the hospital, or drugs that keep Americans healthy and productive? The answer is clear. Fewer cents make the most sense.
More Americans are using more prescription drugs and for good reason. New medicines are increasingly the first, most effective, and most cost efficient treatment options. Ask any doctor. Ask your doctor. Is spending on pharmaceuticals up? It is, because more drugs are being prescribed. And the result is a healthier America and a reduced burden on the American health care system.
ItÃ¢s also true that insurance companies have been increasing their monthly premiums — but not because prescription drugs costs are busting their budgets. That is, as they say, a lie Ã¢ but an often repeated one. Prescription drugs account for only a small part of monthly insurance-premium increases. Consider this, from 1998 to 2003, insurance companies increased their premiums by an average of $104.62 per person. During that same time period prescription-drug costs increased by $22.48. What about the other $82.14? That’s a good question. And America deserves an answer.
What about Medicaid? In 2002, prescription drugs accounted for only 11.4 percent of Medicaid spending, and from 1997 to 2002 Medicaid prescription drug increases accounted for less than 20% of the total increase in spending.
Are the majority of Americans with private health insurance spending more for drugs? Yes — because their insurance companies are paying less. In 2000, people under 65 with private health insurance paid 37.2 percent of the cost of their prescription drugs costs out of their own pockets. (Not surprisingly, this leads many Americans to believe that their increased out-of-pocket expenses is because of higher drug costs.) The truth is that the growth in prescription-drug co-payments outpaced the growth rate of prescription drug prices four to one.
This imbalance has had a devastating impact on the health of Americans and the American health care system. Out-of-control out-of-pocket expenses have caused many patients to stop using prescription drugs for controllable chronic conditions like high cholesterol, high blood pressure, ulcers and depression. The unfortunate result among patients with diabetes, asthma, and gastric acid diseases is that visits to emergency rooms have increased 17 percent and hospital stays have risen 10 percent.
ItÃ¢s not about the price of drugs Ã¢ itÃ¢s about the cost of health care. And the American pharmaceutical industry is committed to being a part of the solution. As Disraeli said, Ã¢it is easier to criticize than be correct.”