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How to Edit Your Physician Group Employment Agreement Online
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Is the United States in decline?
Yes.I could cite some dry statistics and display some graphs but plenty of other people have done that. I am going to give the perspective of a 52-year-old who has seen a great deal of change, some of it for the better, most of it for the worse. I am going to share what has led to my misanthropic nihilism and negativity concerning the current “state of affairs.”When I was growing up I literally never heard of mass shootings. This does not mean they did not happen. It means they were very rare. Now, they are so commonplace as to be discussed with barely a nod. “Ten people dead; sixteen injured. Pass the potatoes, please.” We must get to the root of this epedemic, and there are multiple causes. A solution is not easy. The non-glorification of violence would be a good start. Unfortunately, Americans are not only desensitized to the horror of violence and death; we are entertained by it. We have cultivated a culture of violence appreciation. I am further alarmed that so many people completely dismiss this phenomena because it hasn't happened to them or someone they know. We have dismissed and accepted this with a shrug.Republicans: Beginning in the middle part of the 20th century, GOP conservatives went so far to the right that they no longer resembled their former somewhat progressive selves. They soaked up the incredibly racist Dixiecrats that the Democrats were growing sick of and swung themselves to the racist extreme. In addition, their every effort has been to take from the poor and give to the wealthy. This became abundantly clear during the absolutely ridiculous “trickle-down-economics” era of Ronald Reagan. The rich can never be rich enough. Medicare, Medicaid, and Social security are all in danger. The gulf between the poor and the rich widens every day. The time grows nearer when the 95% will not be able to put roofs over their heads, even as the very rich, who should be paying more, lounge on their sun-drenched pool decks contemplating their wealth. I do not advocate “taking their money away,” as so many people suggest. I advocate a fairer playing field where the poor and the wealthy pay a more equal percentage in taxes rather than allowing the wealthy unfair advantages that have them paying less. And, big news flash here; we need to tax everyone fairly across the board and bring down our overall spending to decrease the deficit, rather than cut social security, and Medicare. Why are the poor the first people we think of when we consider cutting costs? Even the legendary investing guru Warren Buffet once said that his secretary's tax rate is higher than his own, and Buffet is a multi-billionaire. We are an oligarchy, folks.Democrats: ( I am just left of center myself) have swung so far out into fantasy land that we have to be careful of everything we say and do. Literally everything is offensive. We have taken equal treatment and turned it into some kind of weird Frankenstein's monster. Everyone deserves equal rights but political correctness has run amok. I am on the liberal side, but we need to tone down the anger. SJWs care about the welfare of all but are often so angry they can't even be engaged in a polite debate without wanting to call in a firing squad. Sometimes this is a danger to free speech. Fight bigotry and hate where it exists, but don’t see it in every corner, jumping to identifying it as such until you know for sure what it is. Treat everyone equally. Use common sense and learn to identify some extreme left ideas from fringe groups as the bizarre notions they are. Even with all this said, at least the Democrats mostly shed their past racism (even as it was embraced by many conservatives) and have been the leaders in advancing minority rights for decades. They have made mistakes, but I fault them far less in current times than Republicans.Politicians are bought and paid for. They should be forced to wear the names of their contributors on their suits, like those ads that are printed on the sides or racing cars. I saw this suggestion on Facebook and it is so true. How can politicians properly serve the people when they are beholden to the wealthy benefactors and corporations who donate money to them? Capitalism isn’t necessarily bad but it must be overseen and regulated. Unchecked, it produces tremendous wealth inequality and political corruption, as noted above. We need strict limits on political donations and a restructuring of how they are made, perhaps with a government supplied stipend distributed equally.Religion still rules the masses, much more so than other highly developed countries of the world, allowing bigotry and anti-science to flourish on into the 21st century. Politicians (especially conservatives) pander to this because it is one way to ensure continued support. Give your voters a couple of the things they want most and they will overlook the crooked bigger things (like tax cuts favoring the super rich.) I am not against religion: I am against having it in politics. Separation of church and state has always been a nifty idea in America but has never been a real thing. That is sad.Housing costs are out of control. One must mortgage away many decades of one’s life to buy a house that is too large and too expensive. It’s ridiculous. Small, modest homes could be purchased for much less money, but that would meet with the dissatisfaction of city ordinances and neighbors. It’s a big, fancy house in many cases or nothing. The alternative is sky-high rent on an apartment. Gone are the days when renting was cheaper than owning. Now, even modest apartments are so expensive they leave little money left for food. No one seems to advocate rent control anymore because greed is master. A livable wage is not high on the agenda either. Meanwhile, more and more people are pushed out onto the streets and homelessness increases. We find it easy to put the blame on the victims. Yes, many homeless have made mistakes but not all of the onus is on them. We have a system that is, by its very nature, generating more and more of this problem.A college education has gone completely into the stratosphere with its exorbitant cost. It’s unbelievable. A text book can cost several hundred dollars and full-time tuition for a single semester well into the thousands. Small non-traditional for-profit “colleges” didn't help the situation any either. Though some are at least somewhat legit, many are not, and nearly all are far too expensive, thereby producing many graduates with overpriced degrees that are not likely to be valued at what they cost. And what about the large percentage of dropouts who aren’t likely to benefit at all from what they have spent? In the 1980’s college was still affordable. I signed promisory notes and managed to pay the 4 or 5 hundred dollar costs by the time the term ended. I could not afford to go to college today. It would not be possible. People are exiting universities (not necessarily graduating) many thousands of dollars in debt. Even upon graduating, most students have depressingly low chances of landing jobs in their chosen fields. Competition is greater than ever. Young people are depressed. They are sarcastic and prematurely cynical; and they have every right to be. This generation is yet another that promises to perform more poorly, save less money, have less opportunity, and be more dysfunctional than their parents and grandparents; yet, the bulk of our politicians do not appear to care. A country that wants to offer hope to all people, grant a good standard of living, and preserve this standard for the future, understands the value of turning out well-educated citizens. Yet, we make it ridiculously expensive to become educated. Why are we doing this? We must take greed out of higher education. Should profit be the top priority? * I would also add that we need to stop housing students in luxury apartments while they attend college. Living in an efficiency or a dormitory is good for you. It builds character to live simply and humbly while going through school.*Infrastructure has begun to suffer. Our city roads aren't built to withstand the burgeoning population. Roads most everywhere are in terrible shape, and bridges are a nightmare - old and deteriorated as they are - and in need of expensive care. I am amazed, after having traveled a fair amount, that many of our states have some of the worst roads in the developed world. That is embarrassing and we can do better.My newest edit in this piece is to mention the problem we have with illegal drugs in this country (and I do not refer to pot, which I consider less dangerous than alcohol). The illegal use of powerful, lab-created drugs has reached wide-scale pervasiveness both in cities and rural communities. It is a huge problem that ruins lives, costs a great deal of money, creates crime, violence, and too often results in death. Elderly folk lose their life savings (and sometimes their lives) to some charismatic stranger who cons them for drug money. Many addicted people will stop at nothing to get their fix. Drugs become these people’s lives. Only the lucky few benefit from some sort of intervention/rehab, while the majority do not. On top of this, it has now become harder for people who desperately need pain medications to be prescribed them because of the violence and crime that people are willing to commit in order to obtain, sell, and use them. One of our mistakes (in less violent cases) has been to over-incarcerate. With the exception of violent and murderous offenders, this hasn’t helped much, if any. Drug-users also enter the work force and cause constant problems. I have had the displeasure of working with them. In some industries this is dangerous. One thing we need to do to curtail the problem is to stop romanticizing drugs and to stop treating those of us who recognize the problem as being uncool nerds. Many of the other items on this list, such as cost of living and the political divide, cause depression and hopelessness, and these things make drugs more appealing. Reduce the pain caused by many of our other problems and you do, to some extent, reduce the desire to take drugs. We must examine the pharmaceutical industry as well and look into its marketing practices to determine the extent to which it has contributed to the problem.U.S. companies relocate to other corners of the world in order to pay their employees very little and government encourages this. Good employment opportunities domestically are shrinking and I am not talking about the many low pay service jobs. Many people who would have formerly held these higher paying skilled jobs are forced into the only careers available; retail, restaurants, and other service jobs where the pay does not meet one’s needs. While unions were desperately needed at one time, their demands grew out of control, demanding ever-higher pay and benefits even in sectors that were no longer profitable. They are partly to blame. We also need officer salary caps, especially on publicly traded companies. More profits need to be handed down to shareholders and lower tier employees rather than having officers make 100 million or more salaries. To the fat-cats of corporate America, this is a big grown-up game of Monopoly where they horde as much wealth as possible while everyone else suffers. I am not against capitalism, but (like any system) it has to be monitored and governed; otherwise, it becomes capitalism out of control, and that is what we have now. The operative word is GREED.Our health care is still unaffordable. The Health Care Act is a start but is flawed, largely due to the concessions that had to be made to pass it. Greed is absolutely rampant in this industry in which a simple pill can cost hundreds of dollars. The very sick must worry about medical bankruptcy while trying to battle their illnesses. Some of the most broadly advertised physician-prescribed medications are the most expensive ones still under patent. When was the last time you saw a commercial for an older unpatented inexpensive medication? Any minor move made on a patient's behalf in the hospital is ridiculous in its cost. Greed is master above all else. Now, it is quite likely that Republicans will remove protections for people with pre-existing conditions as well as other features of the health care act. Additionally, a little-known consequence of the health care act is that it forces people who might otherwise retire early to remain in the work force into their late 60s in order to receive health care. Medicare and Medicaid will not kick in yet (in most cases) if you retire at 58 or 60. This is one item that tells me that the government is worried about the lack of enough workers in the next few decades.By the 2030s or early 2040s things will be gravely worse, with an ageing population and fewer people paying into social security than drawing from it. Thanks to government’s redistribution to the wealthy, the problem is exacerbated. We will initially lose a chunk of those payments and will eventually lose this and other programs completely. This initiates our entry into third-world status.I think what disturbs me most is the complete unwillingness of our two major parties to work together for the good of the nation. And yes, (due to individuals like the hateful obstructionist Mitch McConnell), I fault the conservative party more for this than the other, although fault lies on both sides. A few decades ago, we had some caring politicians who went to the table with honest intentions of compromising and reaching a solution, even when they highly disagreed with each other. We may have disagreed with others but we often respected them. Now, we have a complete unwillingness to cooperate, even going so far as to refuse to allow the opposing party to put judges on the supreme court. This hateful divide hurts everyone. The parties have opposing views, but they should not be enemies. Their goal should be to unite in promoting as good a life as possible for all citizens. Additionally, we have tactics and tricks like gerrymandering and voter-suppression as well as the grossly outdated electoral college that suppress the will of the actual majority of people.Even with our greater technology, I-Phones, computers, medical advances, and other luxuries, these problems lessen us every day, and not enough people care to do a damn thing about it. Obsessive greed is one of the things we most need to tackle, from big corporations to medicine and higher education. Money is important but we have allowed that obsession to get in the way of the higher interest of caring for all our citizens. Making all their needs more affordable and obtainable is a good start. I am thankful I do not have kids. I would grieve incessantly now to think of the world I have brought them into. I only hope that younger people are observing this disaster and that they will take the reigns and make some needed changes. It may be too late.* To the few folks (including a lady who was so rude I deleted her comment) who think we should love the country as it is or “get out,” I say this. Such reactions are naive and juvenile. I love my country and I wish to see it become better. Civilizations do not progress through complacency. They advance when folks sound alarms and encourage change. That is why women and minority groups now have rights they would never have enjoyed had they just “loved it or got out.”In response to people both in this thread and in their own answers who keep pointing out that the U.S. is a world leader, has a great military might, has abundant freedom and influence, etc.. this is my reply. I am largely talking about internal conflict here. I am discussing problems that are dividing us from within, and this includes the aforementioned two-party system of hatred and divide. There is more to being a success than having a great military or a high GNP or world influence. I am talking about the hate that has nearly taken us over, and of the increasing unaffordability of the cost of living. We are disintegrating. We still lead the world in many ways, perhaps, but even the rest of the world sees the problems we are experiencing that are collapsing us from within and are appalled. We lose the world’s respect more every day. Some of the horrendous politicians and presidential administrations of recent years (including the current one) have greatly contributed to the problem. What one administration accomplishes, the other tears down with the next election. We can’t even be trusted to remain in a peace agreement or environmental agreement anymore. The two-party hate is palpable.*Years later, I now look upon the blatant attempt by one narcissist and his legion of worshipers AND legislative enablers to overthrow our government to install a dictatorship and I am more pessimistic than before. What happened to us.
How is the United States healthcare system unique?
HelloThe U.S. health care system is unique among advanced industrialized countries. The U.S. does not have a uniform health system, has no universal health care coverage, and only recently enacted legislation mandating healthcare coverage for almost everyone. Rather than operating a national health service, a single-payer national health insurance system, or a multi-payer universal health insurance fund, the U.S. health care system can best be described as a hybrid system. In 2014, 48 percent of U.S. health care spending came from private funds, with 28 percent coming from households and 20 percent coming from private businesses. The federal government accounted for 28 percent of spending while state and local governments accounted for 17 percent. Most health care, even if publicly financed, is delivered privately.In 2014, 283.2 million people in the U.S., 89.6 percent of the U.S. population had some type of health insurance, with 66 percent of workers covered by a private health insurance plan. Among the insured, 115.4 million people, 36.5 percent of the population, received coverage through the U.S. government in 2014 through Medicare (50.5 million), Medicaid (61.65 million), and/or Veterans Administration or other military care (14.14 million) (people may be covered by more than one government plan). In 2014, nearly 32.9 million people in the U.S. had no health insurance.This fact sheet will compare the U.S. health care system to other advanced industrialized nations, with a focus on the problems of high health care costs and disparities in insurance coverage in the U.S. It will then outline some common methods used in other countries to lower health care costs, examine the German health care system as a model for non-centralized universal care, and put the quality of U.S. health care in an international context.In Comparison to Other OECD CountriesThe Organization for Economic Co-operation and Development (OECD) is an international forum committed to global development that brings together 34 member countries to compare and discuss government policy in order to “promote policies that will improve the economic and social well-being of people around the world.” The OECD countries are generally advanced or emerging economies. Of the member states, the U.S. and Mexican governments play the smallest role in overall financing of health care. However, public (i.e. government) spending on health care per capita in the U.S. is greater than all other OECD countries, except Norway and the Netherlands.This seeming anomaly is attributable, in part, to the high cost of health care in the U.S. Indeed, the U.S. spends considerably more on health care than any other OECD country.The OECD found that in 2013, the U.S. spent $8,713 per person or 16.4 percent of its GDP on health care—far higher than the OECD average of 8.9 percent per person. Following the U.S. were the Netherlands, which allocated 11.1 percent of its GDP, then Switzerland also at 11.1 percent, and Sweden, which allocated 11 percent of its GDP to health care in 2013. In North America, Canada and Mexico spent respectively 10.2 percent and 6.2 percent of their GDP on health care.On a per capita basis, the U.S. spends more than double the $3,453 average of all OECD countries (see chart below).Health Expenditure per capita, 2013 (or nearest year)Drivers of Health Care Spending in the U.S.Prohibitively high cost is the primary reason Americans give for problems accessing health care. Americans with below-average incomes are much more likely than their counterparts in other countries to report not: visiting a physician when sick; getting a recommended test, treatment, or follow-up care; filling a prescription; and seeing a dentist. Fifty-nine percent of physicians in the U.S. acknowledge their patients have difficulty paying for care. In 2013, 31 percent of uninsured adults reported not getting or delaying medical care because of cost, compared to five percent of privately insured adults and 27 percent of those on public insurance, including Medicaid/CHIP and Medicare.While there is no agreement as to the single cause of rising U.S. health care costs, experts have identified three contributing factors. The first is the cost of new technologies and prescription drugs. Some analysts have argued “that the availability of more expensive, state-of-the-art medical technologies and drugs fuels health care spending for development costs and because they generate demand for more intense, costly services even if they are not necessarily cost-effective.”In 2013, the U.S. spent $1,026 per capita on pharmaceuticals and other non-durable medical care, more than double the OECD average of $515.Another explanation for increased costs is the rise of chronic diseases, including obesity. Nationally, health care costs for chronic diseases contribute huge proportions to health care costs, particularly during end of life care. “Patients with chronic illness in their last two years of life account for about 32% of total Medicare spending, much of it going toward physician and hospital fees associated with repeated hospitalizations.” The National Academy of Sciences found that among other high-income nations the U.S. has a higher rate of chronic illness and a lower overall life expectancy. Their findings suggest that this holds true even when controlling for socio-economic disparity. Experts are focusing more on preventative care in an effort to improve health and reduce the financial burdens associated with chronic disease. One provision of the Patient Protection and Affordable Care Act, commonly referred to as simply the Affordable Care Act (ACA), implemented in 2013, provides additional Medicaid funding for states providing low cost access to preventative care.Finally, high administrative costs are a contributing factor to the inflated costs of U.S. health care. The U.S. leads all other industrialized countries in the share of national health care expenditures devoted to insurance administration. It is difficult to determine the exact differences between public and private administrative costs, in part because the definition of “administrative” varies widely. Further, the government outsources some of its administrative needs to private firms. What is clear is that larger firms spend a smaller percentage of their total expenditures on administration, and nationwide estimates suggest that as much as half of the $361 billion spent annually on administrative costs is wasteful. In January 2013, a national pilot program implemented under the ACA began. The aim is to improve administrative efficiency by allowing doctors and hospitals to bundle billing for an episode of care rather than the current ad hoc method.Health Insurance in the U.S.: Uneven CoverageWhile the majority of U.S. citizens have health insurance, premiums are rising and the quality of the insurance policies is falling. Average annual premiums for family coverage increased 11 percent between 1999 and 2005, but have since leveled off to increase five percent per year between 2005 and 2015. Deductibles are rising even faster. Between 2010 and 2015, single coverage deductibles have risen 67 percent. These figures outpace both inflation and workers’ earnings.The lack of health insurance coverage has a profound impact on the U.S. economy. The Center for American Progress estimated in 2009 that the lack of health insurance in the U.S. cost society between $124 billion and $248 billion per year. While the low end of the estimate represents just the cost of the shorter lifespans of those without insurance, the high end represents both the cost of shortened lifespans and the loss of productivity due to the reduced health of the uninsured.Health insurance coverage is uneven and often minorities and the poor are underserved. Forty million workers, nearly two out of every five, do not have access to paid sick leave. Experts suggest that the economic pressure to go to work even when sick can prolong pandemics, reduce productivity, and drive up health care costs.There were 32 million uninsured Americans in 2014, nine million fewer than the year prior. Experts attribute this sharp decline in the uninsured to the full implementation of the ACA in 2014. Of American adults who had health insurance in 2014, 73 percent had one or more full-time workers in the family and 12 percent had one or more part-time workers in the family. Just 49 percent of American adults reported getting health insurance from an employer in 2014.Coverage by employer-provided insurance varies considerably by wage level. Firms with higher proportions of low-wage workers are less likely to provide access to health insurance than those with low-proportions of low-wage workers.In 2014, 11.2 percent of full-time workers were without health insurance. However, the percentage of part-time workers without insurance was 17.7 percent, a significant decrease from 24 percent in 2013, thanks in part to the Affordable Care Act. The uninsured rate among those who had not worked at least one week also decreased from 22.2 percent in 2013 to 17.3 percent in 2014.Smaller firms are significantly less likely to provide health benefits to full or part-time workers. Among all small firms (3-199 workers) in 2015, only 56 percent offered health coverage, compared to 98 percent of large firms.After the Affordable Care Act allowed for many young adults (19-25) to remain on their parents’ health plans, there was a statistically significant increase in the percentage of insured young people from 68.3 percent in 2009 to 82.9 percent in 2014. Over the same period, the percentage of young people aged 26-34 with insurance increased from 70.9 percent to 81.8 percent.Minorities and children are disproportionately uninsured. In 2014, 7.6 percent of non-Hispanic Whites were uninsured, 11.8 percent of Blacks were uninsured, 9.3 percent of Asians, and 19.9 percent of people of Hispanic origin were uninsured. The Kaiser Family Foundation has found that about 80 percent of the uninsured are U.S. citizens. Among children, six percent were uninsured in 2014. These children are 10 times more likely than insured children to have unmet medical needs and are five times as likely as an insured child to go more than two years without seeing a doctor.Women in the individual market often faced higher premiums than men for the same coverage. Beginning in 2014, the Affordable Care Act banned this practice, as well as denying coverage for pre-existing conditions.In 2014, 19.3 percent of the population living below 100 percent of the poverty line ($23,550 a year for a family of four) was uninsured. According to the Kaiser Family Foundation, 90 percent of the uninsured have family incomes within 400 percent of the federal poverty level. This makes them eligible for either subsidized coverage through tax credits or expanded Medicaid eligibility under the Affordable Care Act’s state health exchanges. Rising Healthcare PremiumsHealth insurance premiums in the U.S. are rising fast. From 2005 to 2015, average annual health insurance premiums for family coverage increased 61 percent, while worker contributions to those plans increased 83 percent in the same period. This rate of increase outpaces both inflation and increases in workers’ wages.In 2005, the average annual premiums for employer-sponsored health insurance were $2,713 for single coverage and $8,167 for family coverage. In 2015, premiums more than doubled to $6,251 for employer-sponsored single coverage and $17,545 for employer-sponsored family coverage.A growing number of workers face a deductible of $1,000 or more for individual plans. In 2015, 46 percent (compared to 38 percent in 2013 and 22 percent in 2009) of workers were enrolled in a plan with an annual deductible of $1,000 or more. Employees at small firms are more likely than those at large firms to have a deductible greater than $1,000.The Union Difference: Union workers are more likely than their nonunion counterparts to be covered by health insurance and paid sick leave. In March 2015, 95 percent of union members in the civilian workforce had access to medical care benefits, compared with only 68 percent of nonunion members. In 2015, 85 percent of union members in the civilian workforce had access to paid sick leave compared to 62 percent of nonunion workers. At the median, private-sector unionized workers pay 38 percent less for family coverage than private-sector nonunionized workers, according to a 2009 study.Across states, there are significant disparities in both the availability and the cost of health care coverage.In 2012, Medicare reimbursements per enrollee varied from $6,724 in Anchorage, Alaska to $13,596 in Miami, Florida. Annual premiums are similarly disparate. In 2015, the average family premium in the South was $16,785 while the same coverage averaged $18,096 in the Northeast.Firms in the South were less likely to provide coverage for an employee’s domestic partner than other regions. In the South, 41 percent of firms reported providing benefits for same-sex partners (compared to 51 percent in the Northeast) and 20 percent reported offering benefits to opposite-sex domestic partners (compared to 46 percent in the Northeast).High Costs Drive Americans into BankruptcyUniversal coverage, in countries like the United Kingdom, Switzerland, Japan, and Germany makes the number of bankruptcies related to medical expenses negligible. Conversely, a 2014 survey of bankruptcies filed between 2005 and 2013 found that medical bills are the single largest cause of consumer bankruptcy, with between 18 percent and 25 percent of cases directly prompted by medical debt. Another survey found that in 2013, 56 million Americans under the age of 65 had trouble paying medical bills. Another 10 million will face medical bills they are unable to pay despite having year-round insurance.It has been suggested, based on the experience of Massachusetts, where medical-related bankruptcies declined sharply after the state enacted its health reform law in 2006, that the ACA may help reduce such bankruptcies in the future.The Affordable Care Act: Successes and Remaining ChallengesIn March, 2010, President Obama signed the ACA into law that made hundreds of significant changes to the U.S. healthcare system between 2011 and 2014. Provisions included in the ACA are intended to expand access to healthcare coverage, increase consumer protections, emphasizes prevention and wellness, and promote evidence- based treatment and administrative efficiency in an attempt to curb rising healthcare costs.Beginning in January 2014, almost all Americans are required to have some form of health insurance from either their employer, an individual plan, or through a public program such as Medicaid or Medicare. Since the so-called “individual mandate” took effect, the total number of nonelderly uninsured adults dropped from 41 million in 2013 to 32.3 million in 2014. The largest coverage gains were concentrated among low-income people, people of color, and young adults, all of whom had high uninsured rates prior to 2014.A major provision of the ACA was the creation of health insurance marketplace exchanges where individuals not already covered by an employer-provided plan or a program such as Medicaid or Medicare can shop for health insurance. Individuals with incomes between 100 percent and 400 percent of the federal poverty line would be eligible for advanceable premium tax credits to subsidize the cost of insurance. States have the option to create and administer their own exchanges or allow the federal government to do so. Currently, only 14 states operate their own exchanges.Designed to promote competition among providers and deliver choice transparency to consumers, the state-based exchanges appear to be doing just that. A recent analysis by the Commonwealth Fund found that the number of insurers offering health insurance coverage through the marketplaces increased from 2014 to 2015. Additionally, there was generally no reported increase in average premiums for marketplace plans over that period. The analysis found only a modest increase in average premiums for the lowest cost plans from 2015 to 2016.The ACA also included a major expansion of the Medicaid program, although the Supreme Court ruled in 2012 that this expansion is a state option. As of November 2015, 30 states have chosen to expand Medicaid. As of 2014, adults with incomes at or below 138 percent of the federal poverty line are now eligible for Medicaid in the states that have adopted the expansion.Despite improvements to the U.S healthcare system under the ACA, a number of challenges remain. In 2014, 10.4 percent of Americans were still uninsured, and those with insurance still face high deductibles and premium costs. Furthermore, in the 20 states that had not expanded Medicaid, an estimated three million poor adults fall into the “coverage gap” where their incomes are above current Medicaid eligibility limits but below the lower limit of premium credits on the healthcare exchanges. The bulk of people in the coverage gap are concentrated in the South, with Texas (766,000 people), Florida (567,000), Georgia (305,000) and North Carolina (244,000) having among the highest number of uninsured.The ACA included a number of other provisions to improve healthcare access and affordability. The law banned lifetime monetary caps on insurance coverage for all new plans and prohibited plans from excluding children and most adults with preexisting conditions. Insurance plans are also prohibited from cancelling coverage except in the case of fraud, and are required to rebate customers if they spend less than 85 percent (80 percent for individual and small group plans) of premiums on medical services. Additionally, the ACA established the Prevention and Public Health Fund to allocate $7 billion towards preventative care such as disease screenings, immunizations, and pre-natal care for pregnant women and between 2010 and 2015. Furthermore, $11 billion in funding for community health centers and $1.5 billion in additional funding for the National Health Service Corps was included in the law.A number of cost control provisions were included in the ACA in an attempt to curb rising medical costs. Among them is the Independent Payment Advisory Board, which will provide recommendations to Congress and the President for controlling Medicare costs if the costs exceed a target growth rate. The administrative process for billing, transferring funds, and determining eligibility is being simplified by allowing doctors to bundle billing for an episode of care rather than the current ad hoc method. Additionally, changes were made to the Medicare Advantage program that would provide bonuses to high rated plans, incentivizing these privately-operated plans to improve quality and efficiency. Furthermore, hospitals with high readmission rates will see a reduction in Medicare payments while a new Innovation Center within the Centers for Medicare and Medicaid Services was created to test new program expenditure reduction methods.Common Methods to Lower Health Care CostsBy taking an international perspective and looking to other advanced industrialized countries with nearly full coverage, much can be learned. While methods range widely, other OECD countries generally have more effective and equitable health care systems that control health care costs and protect vulnerable segments of the population from falling through the cracks. Among the OECD countries and other advanced industrialized countries, there are three main types of health insurance programs:A national health service, where medical services are delivered via government-salaried physicians, in hospitals and clinics that are publicly owned and operated—financed by the government through tax payments. There are some private doctors but they have specific regulations on their medical practice and collect their fees from the government. The U.K., Spain, and New Zealand employ such a system. A national health insurance system, or single-payer system, in which a single government entity acts as the administrator to collect all health care fees, and pay out all health care costs. Medical services are publicly financed but not publicly provided. Canada, Denmark, Taiwan, and Sweden have single-payer systems.A multi-payer health insurance system, or all-payer system, which provides universal health insurance via “sickness funds,” used to pay physicians and hospitals at uniform rates, thus eliminating the administrative costs for billing. This method is used in Germany, Japan, and France.A universal mandate for health care coverage defines these systems. Such a mandate eliminates the issue of paying the higher costs of the uninsured, especially for emergency services due to lack of preventative care. Other methods for reducing costs may include:Funding health care costs in relation to income rather than risk or people’s medical history.Negotiating the price of prescription drugs and bulk purchasing of prescription medications and durable medical equipment is a method used in other countries for lowering costs. This has been effectively used by the U.S. Department of Veterans Affairs, Medicaid, and Health Management Organizations in the U.S. Yet, it has been prohibited by law from traditional Medicare. Savings of up to five percent of total health care expenditures could result from the full adoption of these practices.An International Case Study: How Germany Pays for Health CareGermany has one of the most successful health care systems in the world in terms of quality and cost. Some 240 insurance providers collectively make up its public option. Together, these non-profit “sickness funds” cover 90 percent of Germans, with the majority of the remaining 10 percent, generally higher income Germans, opting to pay for private health insurance. The average per-capita health care costs for this system are less than half of the cost in the U.S. The details of the system are instructive, as Germany does not rely on a centralized, Medicare-like health insurance plan, but rather relies on private, non-profit, or for-profit insurers that are tightly regulated to work toward socially desired ends—an option that might have more traction in the U.S. political environment.The average insurance contributions to German sickness funds are based on an employee’s gross income, around 15.5 percent with an income cap at $62,781, and employers and employees each pay about half of the premium. Generally, an individual employee’s contribution is 8.2 percent and the employer pays the remaining 7.3 percent. Premiums are not based on risk and are not affected by a person’s marital status, family size, or health. Germans have no deductibles and low co-pays.Doctors are private entrepreneurs and get a fee from insurers for every visit and procedure they perform. However, they are tightly regulated. Groups of office-based physicians in every region negotiate with insurers to arrive at collective annual budgets. Doctors must remain in these budgets, as they do not receive additional funding if they go over. This helps keep health care costs in check and discourages unnecessarily expensive procedures. The average German doctor also makes about one-third less per year than in the U.S., around $123,000.Government general revenues cover premiums for children, on the premise that the next generation should be the entire nation’s fiscal responsibility, instead of just the responsibility of the parents.Germany reformed its coverage for prescription drugs in 2010 after costs for prescription drugs continued to rise. Prior to reforms, drug companies set the price for new drugs and were not required to show that the new drug was an improvement over previously available prescription drugs. Pursuant to the reforms effective in 2011, manufacturers could set the price for the first 12 months a new drug is on the market. “As soon as the drug enters the market, a new process of benefit assessment begins.” Manufacturers must establish, through comparative effective research that the new drug has an “added benefit to the patient, compared to the previously existing standard treatment.” Drugs without added benefit will be reimbursed according to a government pricing list. New drugs without added benefits are available to patients, but the patient has to pay the price difference. For drugs with added benefit, a price will be negotiated between health insurers and the manufacturer.Quality of U.S. Health Care in an International ContextU.S. health care specialists are among the best in the world. However, treatment in the U.S. is inequitable, overspecialized, and neglects primary and preventative care. The end result of the U.S. approach to health care is poorer health in comparison to other advanced industrialized nations. According to the Commonwealth Fund Commission, in a 2014 comparison with Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland, the U.K., the U.S. ranked last overall. In terms of quality of care, the U.S. ranked fifth, but came in last place in efficiency, equity, and healthiness of citizens’ lives.Comparing other health care indicators in an international context underscores the dysfunction of the U.S. health care system.Despite the relatively high level of health expenditure, in the U.S. there are fewer physicians per capita than in most other OECD countries. In 2013, the U.S. had 2.6 practicing physicians per 1,000 people—below the OECD average of 3.3.In the U.S., there are only about 1.2 primary care physicians per 1,000 people. Projections indicate that the U.S. will need 52,000 more primary care physicians by 2025 to meet demand. While population growth and aging make up a substantial proportion of this increased need, expanded access to insurance under the Affordable Care Act means more people will seek out treatment. Therefore, there are provisions in the legislation to increase the number of primary care physicians in the U.S.There is a significant spatial mismatch within the United States for physicians as well. While the U.S. averaged 225.6 doctors active in patient care per 100,000 people in 2014, there is a wide variance across states; Massachusetts ranks highest with 349.5 active doctors per 100,000 people, while Mississippi has only 170.3.In 2013, the U.S. infant mortality rate was 5.96 per 1,000 live births, while the OECD median was 3.8.The obesity rate among adults in the U.S. was 35.3 percent in 2013, down slightly from 36.5 in 2011. This is the highest rate among OECD countries. The average for the OECD countries was 19.0 percent in 2013.Thanks
Do price controls on prescription drugs in EU and Canada make those drugs more expensive in the U.S?
Please look at the graphs in Dan Munro's answer.I have developed new drugs in biopharma since 1981 so have first hand experience. Understand this: every drug company in the world wants to get its drug approved for marketing in the US. Why is the US market the singular big win?There is no oversight of drug pricing in the US. It can occasionally happen within an individual institution (and only in very recent times). So, in the US, a drug company can charge any amount they want. Look back to the graphs in Dan Munro's answer again.Sure, R&D is VERY expensive and the company needs to bring in enough revenue to either 1) do that development themselves or 2) buy the molecule as a partially or fully developed entity from another company. However, that is not the basis for determining what the company will charge for the drug in the US.I have sat at the conference table when we are in late stage clinical trials and begin discussing pricing. The following words are said, literally, with respect to the US: "Whatever the market will bear." Period.Then the discussion continues in order to determine what that number is.BTW, even though the regulatory authority for a particular (non-US) country may approve the new drug, that drug may not even make it into the country's drug formulary (e.g., if it is a "me too" drug that offers nothing safer or more effective than what is currently in their formulary). If it DOES make it into the formulary, pricing is negotiated with the drug company.Although quite long (a mini-thesis, in effect), I include below an informative piece published on MedScape. See, in particular, the section titled, "No Negotiation, the Price Is Set."*******************************************************************Why Are Drug Costs So High in the United States?Roxanne Nelson|November 19, 2014The United States has the dubious honor of paying the highest costs for drugs in the world, even compared with other wealthy nations, such as Canada, Germany, and Japan. The difference in price can often be substantial, especially among the newer and very costly agents that have recently come on the market.In this indepth feature, Medscape Medical News examines the reasons for this. The story starts at a "watershed" moment 2 years ago.In a David versus Goliath move, oncologists at Memorial Sloan Kettering Cancer Center (MSKCC) made a deliberate and measured decision to exclude a drug because of its exorbitant cost, and went public about it. The drug they were objecting to — aflibercept (Zaltrap, Sanofi) — was no more effective in the treatment of colorectal cancer than bevacizumab (Avastin, Genentech), but was more than double the cost, explains an op-ed published in the New York Times. "Ignoring the cost of care is no longer tenable," the piece asserts. "Soaring spending has presented the medical community with a new obligation. When choosing treatments for patients, we have to consider the financial strains they may cause alongside the benefits they may deliver."Sanofi argued, but ultimately backed down and offered discounts of 50%, according to an MSKCC news release. However, the official price was not being reduced.Although the MSKCC oncologists were satisfied with Sanofi's response, many are viewing this decision as a pivotal event in cancer care. As Lee Newcomer, MD, senior vice president for oncology at United Healthcare, said, "It was the first time physicians have stood up and said, 'Enough is enough.' And I think that was a watershed moment."Although that might be true, it only begins to scratch the surface of a deep underlying labyrinth — the cost of drugs in the United States.Prices Have Doubled in a DecadeAn even more pressing issue is the continuously rising cost of new drugs rolling off the assembly line — not only for cancer, but for other serious conditions as well. It is sobering to note that of the 12 drugs approved by the US Food and Drug Administration (FDA) for different cancer indications in 2012, 11 cost more than $100,000 per year. As highlighted last year (Blood.2013;121:4439-4442), the prices for oncology agents have nearly doubled in the past decade, from an average of $5000 per month to more than $10,000 per month.In addition to new drugs arriving with hefty price tags, the cost of pharmaceutical agents that are already commercially available keeps rising — and in some cases, quite significantly. One of the more dramatic price hikes has been for imatinib (Gleevec, Novartis), which was developed to treat chronic myelogenous leukemia (CML) and initially offered, in 2001, for about $30,000 per year. Imatinib has now tripled in price, retailing for about $90,000. In the meantime, however, it has become the bestselling drug for Novartis, generating revenue of $4.7 billion in 2012.Why are drug prices so high, and why do they continue their upward spiral with no end in sight? And why is the United States shouldering the lion's share of the cost?"For the longest time drug companies had a dual mission," said Hagop M. Kantarjian, MD, professor and chair of the Department of Leukemia at the University of Texas M.D. Anderson Cancer Center in Houston, who was involved with the study published inBlood. "They wanted to help patients and at the same time make a reasonable profit."Dr Kantarjian pointed to George Merck, son of the founder of the pharmaceutical company, who highlighted this concept when he said that "medicine is for the people. It is not for the profits.""Until about 2000, this practice has been followed; they were in synergy with investigators, they were helping patients, and they were making reasonable profits," Dr Kantarjian told Medscape Medical News. "But now I think they have lost their moral compass."Going Up, Up, and UpIn 1989, the New York Times published a scathing editorial that chided a drug manufacturer for the high cost of a life-saving drug. The ire was directed at AZT, the only drug available at that time for patients with HIV. It came with the "extraordinary cost" of $8000 a year and was said to be the most expensive prescription drug in history.Burroughs Wellcome, the manufacturer, justified this "astoundingly high price" by noting that there were a limited number of patients and that rival drugs would soon be on the market. However, the rival drugs were slow in coming, and about a third of HIV patients either lacked health insurance or had policies that did not pay for drugs. To add salt to the wound, the development of AZT had been heavily funded by the government.A month after the Times published its editorial, the AIDS Coalition to Unleash Power (ACT UP) protested at the New York Stock Exchange and succeeded in halting trading. Within 4 days, Burroughs Wellcome lowered the price of AZT by 20%, to $6400 per year, which was still out of reach for many patients.These days, $6400 might pay for a month of cancer therapy if the patient is fortunate enough to be prescribed one of the lower-cost agents. But what is really extraordinary about this event is not so much the price of the drug, but the outrage that it triggered and action that ensued.AZT set a precedent in drug pricing that had not been seen before, and perhaps foreshadowed things to come, pricewise.A report issued by the Institute of Medicine, Ensuring Patient Access to Affordable Cancer Drugs: Workshop Summary, notes that in the 50-year period from 1965 to 2013, the monthly cost of cancer drug therapy has increased from $100 to $10,000. Total Medicare spending on drugs increased from $400 million in 1992 to $7 billion in 1999, by another $1 billion in 2000, and then an additional 26% from 2001 to 2002. The growth in spending was attributed to the increased volume of new and more expensive medications that were being substituted for older therapies.The targeted cancer therapies have garnered the most attention for their high costs. Many of them are priced between $6000 to 12,000 per month, or approximately $70,000 to $115,000, annually. Brentuximab (Adcetris, Seattle Genetics/Millennium-Takeda Oncology), which was recently approved in the United States for Hodgkin's lymphoma and systemic anaplastic large cell lymphoma, costs about $5000 per vial. Patients typically need 3 vials per dose, and usually 7 to 9 doses per course of treatment; the resulting cost could reach $135,000 or more.Ipilimumab (Yervoy, Bristol-Meyers Squibb), used to treat melanoma, costs $30,000 per injection, which translates to $120,000 for a course of therapy, based on the approved dosing regimen of 3 mg/kg every 3 weeks for 4 doses.In addition to targeted therapies, novel or reformulated chemotherapy drugs are also expensive. These include pralatrexate (Folotyn, Allos Therapeutics), at $120,000 per course; omacetaxine (Synribo, Teva Pharmaceuticals), at $28,000 for induction and $14,000 for monthly treatments; and pegylated asparaginase (Oncaspar, Sigma-Tau Pharmaceuticals), at $22,000 (J Clin Oncol. 2013;31:3600-3604).But cancer hasn't cornered the market on expensive pharmaceuticals. Pricey drugs are also being developed and approved for other medical conditions. One such agent is ivacaftor (Kalydeco, Vertex Pharmaceuticals), which is the first drug that targets the underlying molecular defect in cystic fibrosis. It is designed to treat the disease in a small subpopulation of patients who carry a specific genetic mutation, G551D, and costs $311,000 a year — making it one of the most expensive drugs currently on the market. In a commentary published last year, a group of physicians decried the cost of this drug, especially since the National Institutes of Health and Cystic Fibrosis Foundation helped support its development (JAMA. 2013;310:1343-1344).Another drug that has attracted attention is sofosbuvir (Sovaldi, Gilead), which grabbed headlines for its $1000-per-pill price tag, or $84,000 for 12 weeks of treatment. The drug has been shown to be highly effective for treating hepatitis C, which afflicts more than 3 million people in the United States. Because sofosbuvir needs to be taken in combination with other drugs, full treatment can cost upward of $100,000, because some patients require retreatment.Gilead has just rolled out an even more expensive drug for hepatitis C. Ledipasvir/sofosbuvir (Harvoni) is a combination drug that is the first treatment that does not require administration with interferon and ribavirin. The current price for the agent is set at $1125 per pill, which translates to $63,000 for 8 weeks of treatment, $94,500 for 12 weeks, and $189,000 for 24 weeks. But these costs might be lower than for sofosbuvir, because it is taken without companion medications and because many patients will only require 8 weeks of therapy.Multiple sclerosis seems to be set on rivaling cancer therapy, and treatment is generally lifelong. The newest player, peginterferon β-1a (Plegridy, Biogen), was approved in August, and is listed at $62,036 for a year's treatment, according to a report published in the Boston Globe.The cost of dimethyl fumarate (Tecfidera), also developed by Biogen and approved last year for relapsing-remitting multiple sclerosis, is almost the same — at $60,121 a year.The Long Road to DevelopmentDrug prices in the United States are basically a confluence of the complex and lengthy drug development and approval process, and an equally complicated healthcare system."The drug companies and others believe that these drugs represent such a significant value to patients and society that the cost is warranted," said J. Leonard Lichtenfeld, MD, Deputy Chief Medical Officer for the American Cancer Society. "They say that if we don't allow the drugs to be priced properly, we will stifle innovation on a number of fronts, especially when it comes to new 'druggable' targets, where we have only scratched the surface.""I think it's fair to say that some of these drugs, especially the new immunotherapies, are really going to be game changers," he added. "It may take decades to see the full impact, and we always have great hopes. It was the same for the tyrosine kinase inhibitors; the outcomes are good, but some of them have not been sustained. We are hoping that the outcomes that we are seeing now in immunotherapy will be long lasting."There is the argument that there are now treatments for diseases where there were none before, so that is high value to patients, Dr Lichtenfeld explained. "Another argument is that there is value to society, in that new drugs can help a patient avoid additional medical expenses, which may have occurred if the drug wasn't available. Whether that's a valid argument is subject to opinion, but those are some of the points that are raised."Critics of pharmaceutical companies point out that only a small portion of the drug companies' expenditures are used for research and development (R&D); the majority of their money is spent in marketing and administration.But Robert Zirkelbach, senior vice president of communications at PhRMA, the trade association of the pharmaceutical industry, disputes that.Prescription drug expenditure is projected to grow at the same rate as overall healthcare spending, he explained. "At this time, 10% of every healthcare dollar goes for prescription drugs, and that's the same percentage it was in 1960, and that's what they project 10 years from now," he said. "Not only is that number consistent, but we are also bringing a lot of new medicines to the marketplace."Currently, drug development is a long, rather inefficient, and expensive undertaking, and is full of failures and successes. It takes 10 to 15 years to develop a new drug, at an often cited cost of about $1.3 billion, which is based on analysis by the Tufts Center for the Study of Drug Development. That investment is reflected in final list price of the drug."When research and development is discussed, most people are talking about the drugs that make it to the marketplace," explained Zirkelbach. "Unfortunately, most drugs that go through the clinical trial process fail. That is part of the nature of science and drug discovery."PhRMA recently issued a report that looked at oncology from 1998 to 2014. "There were 96 potential treatments for melanoma, but only seven made it to the marketplace," he pointed out. "There were 75 for brain cancer, but only three made it to the marketplace. There were 167 potential treatments for lung cancer, but only 10 made it to the marketplace."Zirkelbach emphasized that bringing a new medicine to the market "takes an incredibly long time, it is incredibly costly, and more fail than succeed. When you look at what it takes to bring a medicine to the marketplace, you have to look at what didn't succeed. That's a point that is almost always left out of these discussions."According to an analysis in Forbes last year, manufacturers hoping to get a single agent on the market can expect to spend about $350 million before it hits the marketplace. But because of the high rate of drug failure, large pharmaceutical companies that are developing a number of products at one time actually end up spending about $5 billion per each new drug."We have a system here that is encouraging, incentivizing, and rewarding for drug development," said Zirkelbach, adding that the problem in other countries is that they could be thwarting innovation by having too many restrictions and price controls.It is imperative to look at the big picture, he added. "Take Alzheimer's disease, which is going to put a huge burden on our economy in the coming years. We need effective medicines to treat it."Dr Kantarjian disputes the $1.3 billion figure, saying that it might be as low as 10% of that. In the report on drug costs he was involved in, the authors argue that this number is roughly calculated by dividing total expenditures on R&D by the number of agents that receive FDA approval (J Clin Oncol. 2013;31:3600-3604)."The figure may be inflated, because it includes ancillary expenses, salaries, bonuses, and other indirect costs not related to research or development, as well as an 11% compounded discount rate over 10 years based on stock market returns on capital investment," they write. "Other independent estimates of cost of drug development put the figure as low as 4% to 25% of this estimate."Another analysis, for example, estimates that the cost of R&D to bring a new drug to market is $60 million and $90 million (BMJ.2012;345:e4348).But at least for some new drugs, R&D amounts to purchasing a smaller company that already developed the product. An example is sofosbuvir, which has borne the brunt of intense scrutiny, including an ongoing Senate investigation. Gilead did not develop the product, but instead purchased a small company —Pharmasset, Inc. — for $11.2 billion in 2012. Pharmasset actually did the R&D and reported that the related costs for the drug totaled $62 million, and that it had $177 million in R&D costs company-wide over the 3 years that the drug was being developed. The company expected to profitably sell sofosbuvir for $36,000 a year — less than half of what Gilead is currently charging for it.A similar situation is the case of pirfenidone (Esbriet), which just received FDA approval for the treatment of idiopathic pulmonary fibrosis. The drug was developed by InterMune, which pharmaceutical giant Roche recently purchased for about $8 billion. When the drug was approved, Roche announced that it would sell for $94,000 a year. Peter Bach, MD, one of the renegade physicians from MSKCC who pushed back on the price of aflibercept, notes in a report published in Forbes that if full market penetration is achieved, Roche could make back their full investment in 1 year."Once again, the potential to affix this huge price tag to Esbriet didn't spur the innovation, it spurred Roche to pay up for the company," writes Dr Bach. "Today's shareholders are super happy (and I'm glad for them), but how many of them were even around and invested in the company back when the high-risk decision to develop Esbriet was made?"Premium Prices in the United StatesBut any way that development expenditures are evaluated, the cost of drugs is unevenly shared globally, with the United States far outspending other nations on prescription drugs. In 2012, the United States was projected to spend $883 per person on prescription drugs, which was nearly twice as high as the amount spent in other wealthy nations. For example, Canada spends about $0.70 for each dollar spent in the United States per person, the United Kingdom spends just under $0.40, and Denmark spends only $0.35, according to a report from the Center for Economic and Policy Research.An analysis in Health Affairs found that from 2000 to 2011, the average price of 29 cancer drugs in Europe was 10% lower than the average wholesale price in the United States (Health Aff. 2013;32:762-770). It was also about 8% lower than the average sales price in the United States, including the Medicare Part D price.Overall, cancer drug prices are 20% to 40% lower in European countries than in the United States, according to IMS Health, a data and consulting firm.Imatinib will cost Canadians and New Zealanders less than $1000 a dose. In the Netherlands, Spain, and Switzerland, it runs about $3500. In the United States, the price jumps to more than $6000.Prices for patented brand-name drugs are also about 18% lower in Japan. Nivolumab (Opdivo, Ono Pharmaceutical), the first immunotherapy to act on the programmed death pathway, was approved in Japan for metastatic melanoma. The annual cost for the drug will be about $143,000. Bristol-Meyers Squibb, which will be distributing the drug in the United States when it is approved, has declined to say how much it will cost when it arrives on the American market, but the price tag could be substantially higher, given the usually lower rates in Japan."The US makes most of the discoveries, the taxpayer funds 85% of the basic research, and yet at the end of the day when a drug is FDA-approved — for cancer as well as for other indications — we as Americans are paying at least twice the price as those outside the US," said Dr Kantarjian. "In the setting of most cancer drugs, you can find them at half the price in Canada. For the hepatitis C drug [sofosbuvir], in the United States we pay $80,000 to $160,000 for a 3- to 6-month course, but in Egypt and India, the drug company has an agreement to give the total course of treatment to an individual patient for $900."Even at that cut rate, they still make a large profit, he emphasized. "That's because the total cost of treatment is only $138. In the US, we are in a very awkward situation because we fund most of the research as taxpayers and we get zero in return," he explained."In fact," he said, "it is double jeopardy because we pay more than anyone outside the United States."No Negotiation, the Price Is SetThe major reason for the disparity in pricing is that the United States lacks any sort of central or universal healthcare system or agency that regulates across the board cost. In contrast, negotiations of drug prices between governments and pharmaceutical companies are routine in Canada, most European nations, and most countries in the Middle East and Far East. They have centralized authorities to negotiate more favorable prices with manufacturers, and some also have drug formularies and advisory boards that put restrictions on the use of new and expensive medications."In the US, we are covered under a fragmented system, where there really aren't enough numbers to negotiate effectively," said Leigh Purvis, director of health research at the Public Policy Institute at AARP (formerly known as the American Association for Retired Persons), a large membership organization for people 50 years and older. "We have different health insurers and they don't represent enough people to actively and successfully negotiate prices in the same way that other countries do.""Countries like the UK and Germany are also willing to take a much harder line on the drugs and compare them with what is already on the market," she said. "In the US, once it's approved, that's pretty much it."Price negotiations take place on an individual level in the United States, with each private insurance company negotiating with each drug company for the price of each product. Pharmacy benefits managers, a third-party administrator of prescription drug programs primarily responsible for processing and paying prescription drug claims, will also take part in developing and maintaining the formulary, contracting with pharmacies, and negotiating discounts and rebates with drug manufacturers. Dozens of plans are available in every state, and insurance costs and plans can vary significantly from state to state. They charge different premiums and copayments, and formularies may favor different drugs, which leads to variations in pricing and out-of-pocket costs to patients.The Centers for Medicare and Medicaid Services (CMS) is the single largest payer for healthcare in the United States, covering nearly 90 million Americans through Medicare, Medicaid, and the State Children's Health Insurance Program, which is more than a quarter of the entire American population. However, by law, the federal government cannot negotiate for Medicare drug prices or obtain any sort of volume discounts. The 2003 Medicare Modernization Act explicitly prohibits the federal government from negotiating drug prices or establishing a list of preferred drugs.The rationale for this move was that the market would lower prices and that each of the private prescription drug plans, in competition to attract more Medicare beneficiaries, would negotiate with prescription manufacturers to reduce costs. Whether or not that has come to pass is open to debate. Currently, Part D drug prices are determined through a negotiation between the private drug plan that administers the benefit and the drug manufacturer."We weren't supportive of that part of the legislation when it was enacted, but AARP did support the overall Medicare Modernization Act, which established the Part D benefit," said K.J. Hertz, senior legislative representative for government affairs at AARP. "We decided that the greater good was getting a prescription drug program under the Medicare program. What we've tried to do now is to get the message out there that we need to improve on that."The organization has strongly advocated for giving the secretary of the Department of Health and Human Services (HHS) the ability to "negotiate on behalf of Medicare's 50 million plus beneficiaries and use that for potential leverage in getting prices for the drugs that seniors take in this country," Hertz told Medscape Medical News. "There has been resistance to that in Congress ever since the Part D program was initiated but, nonetheless, we keep fighting to get that message out there."However, Medicaid, the program for low-income people that is administered by the CMS and the Department of Veterans Affairs (VA), is able to negotiate with drug companies for lower prices. In fact, under federal law, drug makers must provide a discount or rebate equal to at least 15% of the average manufacturer price for most brand-name drugs covered by Medicaid. Federal law also guarantees discounts for the Department of Veterans Affairs, which can negotiate with drug makers to secure discounts on top of those guaranteed by law. Generally, they are able to negotiate prices that are 25% to 50% lower than Medicare.In fact, many critics of the non-negotiation clause in Medicare point to the VA prices to show that direct negotiation by the federal government and price control statutes can result in lower prices and greater savings. A report by Families USA, which compared VA prices with those in Part D of Medicare, found a median price difference of 58%, suggesting that market forces are not bringing prices down, as was hoped.Making Tradeoffs"The US is different from other countries because they negotiate drug prices and we don't," said Dr Lichtenfeld. "But the rest of the world also makes tradeoffs."Making tradeoffs means that even though drug prices are lower in other countries, some drugs will simply not be paid for by national healthcare systems. Thus, they will be unavailable to patients except those who choose to pay out of pocket.However, he pointed out, in some cases, there is only one drug available for a certain indication, so there is no competition. "I'm not sure how one negotiates a noncompetitive drug," he said.The analysis of approval and reimbursement decisions in the United States and four European countries for the 29 cancer drugs (for publicly covered patients only and, in the United States, for Medicare beneficiaries) pointed to some differences in approval rates (Health Aff. 2013;32:762-770). Only one of the 29 drugs was not approved by Medicare. In Germany, 97% of the drugs were approved, and in the Netherlands, 86% of them were covered. The lowest number of approved drugs was in England and Wales, at 44%.Last year, the National Institute for Health and Care Excellence (NICE) in the United Kingdom decided not to recommend National Health Service coverage of crizotinib (Xalkori, Pfizer) for lung cancer. Crizotinib has been hailed as a major therapeutic breakthrough for the small subgroup of patients with non-small cell lung cancer (NSCLC) whose tumors test positive for ALKgene rearrangement, but Canadian researchers have also questioned its place in their health system because of its high price and the limited number of patients who would benefit.More recently, NICE rebuffed the breast cancer agent ado-trastuzumab emtansine (Kadcyla, Roche), stating that it was not effective enough to justify the cost of £90,831 (US$152,800)."If we did that here in the US there would be significant complaints about restricting access," said Dr Lichtenfeld. "I don't know if those populations accept it or not, but they have government structures in place that limit treatment options."Another tradeoff is that Americans generally have to pay a portion of the cost, which varies according to the individual insurance plan. In some cases it can be significant. For the 29 cancer drugs examined in the comparison study, Medicare beneficiaries paid 20% coinsurance for physician-administered drugs and a median rate of 33% coinsurance for self-administered drugs. In many cases, these out-of-pocket costs translated into thousands of dollars.In contrast, Germany and the United Kingdom have minimal cost-sharing, and France and the Netherlands have no cost-sharing at all.Chicken or Egg?Who is most to blame: insurers or drug companies?"The pharmaceutical industry says that insurance copays are too high for patients to afford, while the payers say that the drugs are too expensive and that's why patients are paying more," said Richard L. Schilsky, MD, FASCO, chief medical officer at the American Society of Clinical Oncology (ASCO).Private health insurance has been under fire for quite a while, and insurance reform was a primary focus of the Affordable Care Act (ACA). But for all the complexity and endless battles over coverage and cost-sharing, when it comes to expensive drugs, insurers are shouldering a significant share of the expense.Insurance plans generally have some type of cost-sharing program in place, depending on formularies and drug tiers. Most benefit designs have 3-tier plans, for example, with the highest tier requiring the largest cost-sharing. But plans with 4 or more tiers are becoming increasingly common, and products on the top tier tend to be specialty drugs, with the highest copayment or coinsurance amounts.One provision of the ACA is a maximum limit on out-of-pocket spending and cost-sharing reductions, although there are a variety of coverage options. Some policies offer lower deductibles and cost-sharing, but the tradeoff is higher monthly premiums. As an example, an individual who is enrolled in a standard "silver plan" would be responsible for no more than 6.8% of the total cost of a drug. For a drug costing $100,000, that would be almost $7000, but the health plan would be paying for more than 93% of the remaining cost, according to America's Health Insurance Plans (AHIP), the trade association for insurers. Still, that can be a significant amount for many patients.In fact, consumers might be seeing their employers passing along a larger share of insurance costs. An annual report released by the National Business Group on Health found that large employers estimate that their health-benefit costs will rise by an average of 6.5% in 2015. However, they will try to hold increases to 5% by making changes to their coverage, such as shifting more medical costs to workers and expanding the use of high-deductible policies. Employers cited high-cost patients, specific diseases, and an uptick in spending for specialty drugs as the main drivers of rising costs."There's no question that insurers are requiring patients to pay an increasingly large share of the cost of medicine, and far larger shares than for hospitalization or for a physician office visit," Zirkelbach explained. "That is penny wise and pound foolish. Approving adherence by making sure that patients can afford their medicine helps to avoid other more costly services, but these are trends we are seeing."Not only is there exorbitant cost-sharing, but there is a lack of transparency when patients are shopping for coverage, he continued. "All too often, patients don't find out if their medicine is covered before they purchase their policy."Some patients go through complicated processes, like "fail this one first," before they can access their medicine, Zirkelbach noted. "Or their out-of-pocket costs are more than they can afford. Access to the medicine needs to be part of any discussion when evaluating the cost and value of a drug."Insurance companies, however, point to the pharmaceutical industry as the main culprit. "In nearly all sectors of the economy, innovation not only provides advancement, but also lowers costs for consumers," according to AHIP. "Unfortunately, drug companies seem to believe that pharmaceutical innovation simply allows them to price their products higher and higher."Karen Ignagni, president and CEO of AHIP, challenged the sustainability of six-figure drug treatments during the Future of Medicine meeting held earlier this year. She said that in the insurance industry, administrative costs and profits are capped, and "we have to be very transparent about what they are. I think the promise of innovation is a bucket that actually prevents conversation about exactly how much is going into R&D."Ignagni also questioned the lack of transparency in defining and separating R&D, marketing, separating out profits. "When we are talking about all the other industries in healthcare, there's not that kind of transparent ability to look," she said. "If you do start looking, you really see now that manufacturers are charging whatever they can get away with. We can't have a system that operates that way. We can't sustain it."Clare Krusing, director of communications at AHIP, told Medscape Medical News that "as for the solution, we hope there is one. That's why we have been asking drug makers to come to the table — so that there can be an opportunity to forge a private sector solution without the government having to step in."Problems Specific to OncologyAnother reason for the increasing cost of cancer drugs has nothing at all to do with the prices set by the pharmaceutical industry; rather, it is related to how oncology medicine is evolving in the United States.Hospital systems have been increasingly buying up the practices of independent oncologists and then charging more for the same treatment. A 2013 Milliman survey revealed that when chemotherapy was administered in hospital outpatient settings rather than a physician's office, costs ran as much as 53% higher.Even if the treatment is still delivered in the physician office, once the practice has been purchased and is no longer independent, prices go up. One reported example is for a breast cancer patient who had been receiving trastuzumab (Herceptin, Roche/Genentch). The initial charge was approximately $5100 per month for the drug; this suddenly jumped to $16,000, even though it was being delivered by the same oncology practice in the same office. The reason for the abrupt change was that the practice was no longer independent and was deemed to be a "hospital outpatient center." The price increased to account for "overhead", even though nothing had physically changed in the set up.Another reason often cited for high drug costs is that physicians have a monetary incentive to use a more expensive drug. Private practice oncologists buy drugs wholesale from pharmaceutical companies, and sell them retail to their patients. Before the Medicare Modernization Act (MMA) of 2003, oncologists paid around 66% to 88% of the average wholesale price of the drug, but when they filed claims for the treatment, Medicare reimbursed 95% of that price.This differential resulted in oncologists being overpaid by $1.6 billion annually, according to one analysis. After the passage of the MMA, reimbursement was set at the average sales price plus a 6% mark-up to cover practice costs. In some cases, such as with carboplatin, this 6% mark-up does not even cover the cost of administering the drug. The drug has fallen in price from $125.00 to $3.50, which makes the 6% payment exceedingly low. To make up for this, some oncologists have switched to using higher-margin brand-name drugs. Instead of using generic paclitaxel and earning 6% of $312, for example, they use Abraxane, a branded protein-bound version of paclitaxel, and earn 6% of $5824.This so-called "buy and bill" practice can create a very substantial incentive to use more expensive drugs. As Peter Ubel, MD, professor of business, public policy and medicine at Duke University in Durham, North Carolina, pointed out in a blog post, a $6 mark-up on a $100 treatment is very low, but a $600 mark-up on a $10,000 treatment is quite another story. This situation can present a real conflict of interest.Push Back TimeSix-figure drug prices are becoming increasingly common, but so is push back. Although there has been no take over of the New York Stock Exchange since the AZT protest, there have been many expressions of concern about high costs."There has been no forceful coalition that has come together to basically confront the drug companies about the cost," said Dr Lichtenfeld. "There is a lot of concern but no resolution. But it's fair to say that these things take time. I think a lot of the pressure really has to come from the patients."The HIV experience is a prime example of patient advocacy, he noted, where people really came together. Not only did they get a reduction in cost, their activism helped spearhead the FDA Accelerated Approval Program, which can bring life-saving drugs to market sooner.But push back can emerge in many different forms. Breaking patents, for example, is one step that several low- and middle-income countries have taken. Even with discounts offered by the manufacturer, drug costs are often too steep for their limited healthcare resources. Brazil, for example, supplies treatment for all patients with HIV/AIDS free of charge, and by 2001, Brazil was manufacturing eight of the 12 drugs commonly used in the drug cocktails.Then in 2007, Brazil issued a "compulsory license" that overrode the patent on the anti-HIV drug efavirenz (Sustiva, Merck). A compulsory license is an authorization granted by a government without the permission of the patent holder. Most countries have some sort of provision for issuing compulsory licenses, either under their patent laws or, as in the United States, through antitrust legislation. Currently, a year's supply of brand-name efavirenz for one patient costs Brazil $580, whereas the generic version costs only $166.Thailand has also issued compulsory licenses for efavirenz and other drugs.More recently, India denied a patent claim for a slightly altered version of imatinib (the original version was not patented under Indian law), after a 6-year legal battle with Novartis. India has already issued compulsory licenses for a number of other cancer drugs, including sorafenib (Nexavar, Bayer), erlotinib (Tarceva, Roche), and sunitinib (Sutent, Pfizer).Needless to say, their generic versions are dramatically cheaper than the branded products. For example, Natco Pharma was granted the license to reproduce sorafenib in India in 2012, which it did at a cost per patient of $177 per year. That is 97% less than the approximate $69,000 price of the patented version.The primary patent on trastuzumab expired in Europe this year, but will remain in force in the United States until 2019. A biosimilar has already launched in India (by Biocon and Mylan), after Roche gave up a patent fight. However, its status is on shaky ground because Roche is currently embroiled in a legal battle with both companies and the regulatory body, saying the approval violates guidelines in India.In 2007, the Indian company launched a generic version of another Roche drug, rituximab (Rituxan), which sold at approximately 36% of brand-name product's price.In the United States, the pushback has been mostly talk, so far.The high cost of drugs, especially cancer drugs, has been increasingly highlighted in the mainstream news. It reached a climax when it was recently discussed on the popular news show 60 Minutes.In the opening segment of the show, correspondent Lesley Stahl notes that "more than one out of three Americans will be diagnosed with some form of it in their lifetime. And as anyone who's been through it knows, the shock and anxiety of the diagnosis is followed by a second jolt: the high price of cancer drugs."Government regulators are also stepping in. Medicaid beneficiaries have limited access to the hepatitis C drug sofosbuvir in 35 states because it is restricted to those dealing with liver failure. All but three states require some type of prior authorization, and the remaining states are not offering coverage until they put standards in place. Most states will likely limit the ledipasvir and sofosbuvir combination in the same manner, and there could be even more restrictions, such as banning patients dealing with drug and alcohol addiction from getting it, and limiting who can prescribe it. Since the combination works best for hepatitis C genotype 1, Washington State has announced that coverage will only be for those with that genotype.Gilead has offered to discount the price of Solvadi by 6% to Medicaid state directors (from $1000 a pill to $940), with the stipulation that access to the drug be open with no restrictions. So far, they have yet to find a taker.Sofosbuvir has attracted a substantial amount of attention and inquiry, probably because of the sheer number of people infected by hepatitis C, including many receiving government assistance and incarcerated individuals. During the first half of 2014, the product generated sales of more than $5.75 billion, and now makes up nearly 50% of Gilead's total revenue. The Senate Finance Committee, however, has launched an investigation into Gilead Sciences. It is a bipartisan effort, spearheaded by committee chair Sen Ron Wyden, a Democrat from Oregon, and Sen Charles Grassley, the committee's senior Republican, from Iowa.In their letter to Gilead the CEO and chair of Gilead, the senators made 20 separate requests for documentation, including costs of research. They also point out that Gilead is selling sofosbuvir in Egypt for $900, which is 99% lower than the price in the United States, and that according to the FDA, many patients will need 24 weeks of treatment, which brings the cost to $168,000.Advocates and politicians are also taking aim at changing the Medicare law to allow the CMS to negotiate prices. During the 113th Congress (2013/14), legislation was introduced that would allow the HHS Secretary to negotiate lower Medicare drug prices or require discounts for low-income Medicare beneficiaries. These bills include the Medicare Prescription Drug Price Negotiation Act of 2013 (S. 117, H.R. 1102); the Medicare Prescription Drug Savings and Choice Act of 2013 (S. 408, H.R. 928); and the Medicare Drug Savings Act (S. 740, H.R. 1588).According to the office of Sen Jay Rockefeller, one of the sponsors of S. 117, the bill would save $141.2 billion, help to responsibly reduce the deficit, and avoid reckless proposals to cut Medicare benefits. The Medicare Drug Savings Act would eliminate a special deal for brand-name drug manufacturers that allows them to charge Medicare higher prices for prescription drugs for individuals and for people with disabilities.It would also require drug companies to provide rebates to the federal government on drugs used by dual eligibles — people eligible for both Medicare and Medicaid (predominantly low-income older adults and people with disabilities) — as was done for dual eligibles on Medicaid before Medicare Part D was created in 2006.AARP supports this legislation. "It would extend the Medicaid level rebate to Part D to low-income dual eligibles, and that is a measure we have advocated for this Congress," said Hertz. "It would save quite a substantial amount of money — more than $140 billion over 10 years."Advocates of the bill have tried to generate momentum, but it's been tough going, he concedes. "Congress hasn't been able to focus on that, and there haven't been any major healthcare bills to attach it to.""We're hoping that with the sustainable growth rate patch set to expire at the end of March, Congress will have to figure out what they will do. This may be an opportunity for the bill to be considered again," Hertz said. "Certainly, that is something that AARP is going to be strongly advocating for."Value and EvidenceAnother means of curbing costs is focusing on value, rather than just cutting the price tag. ASCO has a major initiative to promote value in cancer care, and the society has been trying to shift the discussion on cost to a discussion on value, Dr Schilsky explained.There are a number of expensive treatments out there, and some have far better outcomes than others, he noted. But the value of these treatments needs to be assessed, so that higher-value treatments will cost more, and less-effective treatments will cost less.Dr Schilsky believes that value begins with clinical trials, which need to be designed with more relevant outcomes for the patient. "That is really the starting point. We would all like therapies to deliver the greatest efficacy to the patient," he explained, "Let's no longer accept clinical trials designed for drugs that deliver 4 or 6 weeks of improvement for important end points like survival. Let's get greater incremental efficacy out of our trials."That, by itself, will help deliver more effective and higher-value treatments. "Then we have to couple those treatments with biomarkers that will identify patients most likely to benefit," Dr Schilsky said, "and hopefully limit the use of those drugs and reimbursement for populations likely to benefit."As part of the ASCO Choosing Wisely campaign, one recommendation to oncologists is that they match a therapy to a biomarker test. "If a treatment requires a biomarker test, then the treatment should not be administered in the absence of those tests," he said.A number of activities regarding drug pricing and value are ongoing, one of which is an ASCO task force that is developing a framework on the incremental value of a new treatment. "We have been engaging in conversation with both drug companies and payors. Maybe we need a new approach to price setting and reimbursement," Dr Schilsky said."The current strategy of value pricing follows the notion that if you have a drug that is approved in a number of different settings, it may not be as efficacious in all of them, so why should it be the same price across the board?" he pointed out. "Maybe the cost should be higher in the more efficacious settings and lower in the other ones."Value-based insurance follows the same philosophy, and Dr Schilsky believes that if there is really an effective and life-saving treatment, all patients should have access without any barriers. As an example, there are no patients with CML who should not have access to imatinib, he said.But the situation is different for "other therapies on the market, such as erlotinib for pancreatic cancer," he said. "It was FDA approved for that indication, but the incremental benefit of survival in clinical trials was just a few weeks. Maybe that could be reimbursed by insurance but with higher copay."Dr Kantarjian echoed that sentiment. "We can have a drug like imatinib, which prolongs life for many years, and then have another drug that prolongs survival by 2 months, and they are priced the same," he said. "You don't see that in any other industry."Professional societies, investigators, and physicians need to demand better results and stop the practice of reveling over marginal outcomes. "We need to raise the bar for new drugs, and not hype minor benefits of new and more expensive drugs over the older and cheaper ones," he said.In their report on the cost of cancer drugs (J Clin Oncol. 2013;31:3600-3604), Dr Kantarjian and his colleagues also point to value as a means of gauging drug cost. Tumor regression and prolongation of life are the often treatment goals. The amount of time that life is prolonged could be used as a simple measure of efficacy and guide drug pricing, the team writes."A realistic range might consider a new drug that prolongs survival by more than 6 months or by more than one-third of the life expectancy (e.g., 12 months becomes ≥16 months, or 30 months is increased to ≥40 months) as extremely effective, with pricing at a range of $50,000 to $60,000," they explain. "Similarly, an agent that improves long-term survival or progression-free survival by 10% or more would fall into that category."Conversely, agents that show statistically significant survival benefits of 2 months or prolong life by less than 15% would be considered to be minimally effective, and would cost much less, such as $30,000 per year. Those with intermediate effectiveness would be priced in between these two ranges, they suggest.The idea of value is catching on, even with insurers. WellPoint, along with AIM Specialty Health, has developed the Cancer Care Quality Program in collaboration with oncologists working in both academia and in independent practice. The program essentially identifies certain cancer treatment pathways that are based on current medical evidence, peer-reviewed published literature, consensus guidelines, and WellPoint's clinical policies, and helps oncologists determine which cancer treatment therapies are clinically effective and provide greater value."We found that there are large variations in cost, but sometimes the more expensive treatments are not any more effective than older therapies that are cheaper," said Jennifer Malin, MD, PhD, oncology medical director at WellPoint.This difference is especially dramatic for NSCLC, she pointed out. As a first-line treatment for patients who do not have mutations such as EGFR and ALK, treatment with carboplatin and paclitaxel runs about $452 for 4 cycles, with an estimated patient survival of 13 months.Add bevacizumab to that combination and cost is boosted to $39,770, but survival edges up to only 13.4 months, and serious toxicity is increased. Almost double that cost ($64,988) is a regimen of carboplatin, pemetrexed, and bevacizumab, which actually decreases survival by a few notches (12.6 months).The Wellpoint program began this summer and is currently active in California, Colorado, Georgia, Kentucky, Indiana, Missouri, Nevada, Ohio, and Wisconsin, It is expected to expand to other states in 2015.A monetary incentive is offered when the pathways are followed. Oncologists will receive a $350 one-time fee at the onset of treatment planning and care coordination, explained Dr Malin. This incentive will help offset the difference in what the practice makes from administering more costly drugs."The program is new, so we don't have any real data on it yet," said Dr Malin. "But so far most feedback has been positive."The US Oncology Network, a nationwide network of approximately 1000 oncologists, has also developed its own clinical pathways. They have partnered with insurers to use preferred treatment pathways for adjuvant and metastatic regimens in breast, lung, and colorectal cancers.A study presented at the 2013 ASCO annual meeting showed that using an oncology pathways program could save about 15% on cancer-related costs and reduce hospital admissions by about 7%."There is no question that drug prices are too high, and many are not well justified," Dr Schilsky summarized. "Clearly, many therapies are complicated to develop and manufacture, and there are many failures; we recognize all that. We need innovation and drugs companies to be profitable to continue R&D, and we accept all of that."But none of that provides the clear rational for the current pricing schemata, he noted, because even drugs that are easy to develop, quick to manufacture, and receive support from foundations, government, and other sources, still come out with a very high price."Nowhere is anyone saying that if we can control these costs, we can come out with a lower-priced drug, but if we can't, then the price needs to be high," he added. "No matter what the development costs are, the price just seems to go up."Medscape Medical News © 2014 WebMD, LLCCite this article: Why Are Drug Costs So High in the United States? Medscape. Nov 19, 2014.