As we enter the new PPACA era I was thinking of all the ways the law does not address the actual cost of health care. I was also thinking about areas where we could have significant impacts on the costs of care without massive system overhauls. There are actually many and I will explore those over the coming days and weeks. Today, I thought we should look at Prescription Drugs.
In 2010 we spent nearly $260 Billion on Prescription drugs in the US (about 10% of our health care spend). While the growth rate for prescription drugs has slowed in the last 5 years we still see huge increase from 1999 to 2011 - 43%. We went from about 2.8 billion scripts in 1999 to over 4 billion in 2011. The US population only grew 9% during that same period, showing that we are clearly treating more with drug therapy than ever before.
The slowing of the annual growth rate to about 4.3% is a reflection of slower growth in utilization of drugs (part of the recession), increased use of generics at a lower cost, the loss of important drug patents for key brand-name drugs (Lipitor and Plavix), increasing Medicaid prescription drug rebates and a small decrease in the number of new drugs approved. However, in a recent 2012 study by Keehan SP et al, they expect the growth rate to explode again in 2014 with the enrollment expansion in PPACA. They are predicting growth rates of nearly 9%. Add to this that several new drugs are now in the pipeline and many will get 20 year patents. So we will see escalation in drug spending in the US starting next year.
So what can we do? Well I think one simple way to decrease this spend is to demand that drug companies give the US pricing equity. What this means is that they can't charge us anymore for a prescription drug than the lowest price they sell it for somewhere else in the world. (excluding direct aid situations). This simple act would represent a huge price drop for us and while the drug companies would have to find alternatives (probably increase world prices) we are not telling them how to run their businesses, legislating price controls, tampering with their R&D expenditures or marketing costs. Some studies estimate that the savings could be as high as 10-15% of our national spend annually. By the way most countries with national health plans demand this of their drug suppliers.
The other way we might decrease costs is to ban all prescription drug advertising as this is becoming a national health risk and would be good public policy. The US and New Zealand are the only two countries that allow Direct to Consumer Pharmaceutical Advertising that includes product claims. Most countries don't allow any pharma advertising at all and they report no significant change in treatment protocols or compliance. Canada allows ads that mention either the product or the indication, but not both. So why don't we learn from the rest of the world.
For example, in 1980, total spending on DTCPA was $12 million; in 1990, it was $47 million; and in 1995, it was $340 million, representing a nearly 3,000% increase in expenditures during a 15-year period before broadcast ad regulations were relaxed. Spending on DTCPA nearly quadrupled again during the following decade, topping $5 billion in 2006 and 2007, before dropping to $4.5 billion in 2009. The average American television viewer watches as many as nine drug ads a day, totaling 16 hours per year, which far exceeds the amount of time the average individual spends with a primary care physician.
Then there are the issues with the actual ads themselves. While the FDA has durastriction over the claims made in the ads they don't have the necessary enforcement staff. In 2008, only 35% of broadcast DTCPA materials had been reviewed as a result of staff shortages.
As we all know many of the ads are very biased and don't really tell the consumer the true story. Studies show that any ad requiring more than a typical 8th grade education is lost on the average US consumer. Nearly all pharma ads are testing way above an 8th grade level. So when the ads are presented and are not factual most consumers can't ascertain the flaw and believe the ad as presented. For example, in one study, 82% of DTCPA ads made some factual claims and rational arguments for use of the advertised drug; however, only 26% of the ads described risk factors or causes of the condition, and only 25% mentioned prevalence. Because DTCPA rarely focuses on public health messages about diet, exercise, addictions, social issues, and other treatments, it can also cause people to falsely believe that they are well informed, reducing their motivation to search for more reliable information. One survey of consumers found that 50% of respondents thought that the ads were approved by the government, 43% thought that a medication had to be completely safe for it to be advertised; and 22% thought that a drug known to have serious side effects could not be advertised. None of the above is true.
Finally, there is the problem of folks asking for or demanding the drugs they see advertised. Sadly most believe the visuals they see in the ads which are rarely indicative of reality. Consumers with false expectations then present a treatment nightmare for doctors. Physicians report that most patients who initiate a request for a new drug understand the benefits much better than they understand its risks. Information about risks is also typically presented in often-ignored smaller print or as part of a large, undifferentiated block of text or audio. In addition, ads often show a mismatch between visual imagery and verbal messages when risk information is presented. Qualifying language with respect to side effects may therefore be misleading and open to multiple interpretations because of the use of words such as “mild,” “usually,” “short time,” “if,” and “may.
DTCPA has been criticized as contributing to the “medicalization” of natural conditions, cosmetic issues, or trivial ailments, resulting in an over medicated society. For this reason, some commentators have even referred to DTCPA as a threat to public health.
Based on all this if we were to ban such ads and demand equity in pricing we could decrease drug cost significantly and begin to solve our health care crisis. Just some food for thought.
In 2010 we spent nearly $260 Billion on Prescription drugs in the US (about 10% of our health care spend). While the growth rate for prescription drugs has slowed in the last 5 years we still see huge increase from 1999 to 2011 - 43%. We went from about 2.8 billion scripts in 1999 to over 4 billion in 2011. The US population only grew 9% during that same period, showing that we are clearly treating more with drug therapy than ever before.
The slowing of the annual growth rate to about 4.3% is a reflection of slower growth in utilization of drugs (part of the recession), increased use of generics at a lower cost, the loss of important drug patents for key brand-name drugs (Lipitor and Plavix), increasing Medicaid prescription drug rebates and a small decrease in the number of new drugs approved. However, in a recent 2012 study by Keehan SP et al, they expect the growth rate to explode again in 2014 with the enrollment expansion in PPACA. They are predicting growth rates of nearly 9%. Add to this that several new drugs are now in the pipeline and many will get 20 year patents. So we will see escalation in drug spending in the US starting next year.
So what can we do? Well I think one simple way to decrease this spend is to demand that drug companies give the US pricing equity. What this means is that they can't charge us anymore for a prescription drug than the lowest price they sell it for somewhere else in the world. (excluding direct aid situations). This simple act would represent a huge price drop for us and while the drug companies would have to find alternatives (probably increase world prices) we are not telling them how to run their businesses, legislating price controls, tampering with their R&D expenditures or marketing costs. Some studies estimate that the savings could be as high as 10-15% of our national spend annually. By the way most countries with national health plans demand this of their drug suppliers.
The other way we might decrease costs is to ban all prescription drug advertising as this is becoming a national health risk and would be good public policy. The US and New Zealand are the only two countries that allow Direct to Consumer Pharmaceutical Advertising that includes product claims. Most countries don't allow any pharma advertising at all and they report no significant change in treatment protocols or compliance. Canada allows ads that mention either the product or the indication, but not both. So why don't we learn from the rest of the world.
For example, in 1980, total spending on DTCPA was $12 million; in 1990, it was $47 million; and in 1995, it was $340 million, representing a nearly 3,000% increase in expenditures during a 15-year period before broadcast ad regulations were relaxed. Spending on DTCPA nearly quadrupled again during the following decade, topping $5 billion in 2006 and 2007, before dropping to $4.5 billion in 2009. The average American television viewer watches as many as nine drug ads a day, totaling 16 hours per year, which far exceeds the amount of time the average individual spends with a primary care physician.
Then there are the issues with the actual ads themselves. While the FDA has durastriction over the claims made in the ads they don't have the necessary enforcement staff. In 2008, only 35% of broadcast DTCPA materials had been reviewed as a result of staff shortages.
As we all know many of the ads are very biased and don't really tell the consumer the true story. Studies show that any ad requiring more than a typical 8th grade education is lost on the average US consumer. Nearly all pharma ads are testing way above an 8th grade level. So when the ads are presented and are not factual most consumers can't ascertain the flaw and believe the ad as presented. For example, in one study, 82% of DTCPA ads made some factual claims and rational arguments for use of the advertised drug; however, only 26% of the ads described risk factors or causes of the condition, and only 25% mentioned prevalence. Because DTCPA rarely focuses on public health messages about diet, exercise, addictions, social issues, and other treatments, it can also cause people to falsely believe that they are well informed, reducing their motivation to search for more reliable information. One survey of consumers found that 50% of respondents thought that the ads were approved by the government, 43% thought that a medication had to be completely safe for it to be advertised; and 22% thought that a drug known to have serious side effects could not be advertised. None of the above is true.
Finally, there is the problem of folks asking for or demanding the drugs they see advertised. Sadly most believe the visuals they see in the ads which are rarely indicative of reality. Consumers with false expectations then present a treatment nightmare for doctors. Physicians report that most patients who initiate a request for a new drug understand the benefits much better than they understand its risks. Information about risks is also typically presented in often-ignored smaller print or as part of a large, undifferentiated block of text or audio. In addition, ads often show a mismatch between visual imagery and verbal messages when risk information is presented. Qualifying language with respect to side effects may therefore be misleading and open to multiple interpretations because of the use of words such as “mild,” “usually,” “short time,” “if,” and “may.
DTCPA has been criticized as contributing to the “medicalization” of natural conditions, cosmetic issues, or trivial ailments, resulting in an over medicated society. For this reason, some commentators have even referred to DTCPA as a threat to public health.
Based on all this if we were to ban such ads and demand equity in pricing we could decrease drug cost significantly and begin to solve our health care crisis. Just some food for thought.