Martin Shkreli & Why He’s Only the Tip of the Healthcare Iceberg

Warriors, Folk, Freemen, please gather your pitchforks and torches for we haveth a new heathen to burn at our metaphorical burning pyre.   Shkreli, aka “Pharma Bro” , must pay for the infractions he hath made upon our great nation and those most affected by his greed and must suffer for his chagrin.   How dare he raise the price of Daraprim, a drug used to treat the parasitic-caused disease, toxoplasmosis, not HIV.    Thank goodness scathing criticism of our collective internet hive mind was able to lower the cost of the drug back down to a reasonable price.

but…but…He looks like a douche!

However, in our mass media fetish we often raise blinders to any other noteworthy news, much like the blinders that race-horses wear.   If social media were the proxy to the opinion of the our nation, then it certainly missed the pervasive insight that should have been recognized during this debacle.   “No, I get it, we should definitely be much more aware of those scumbag Pharmaceutical companies inflating the costs of drugs without our knowing nor the input of the patients who needs those drugs, I get it Alex.”   Huh,  I don’t think that was what I was referring to my figurative friend.

The Rising Cost of Healthcare

TMZ, like it or not, is one of the most up to date and rapid paced news outlet for everything celebrity related.   No press junction is complete without it, and no random videos of celebrities doing stuff that regular people always do is complete without a TMZ camera.  The Kaiser Family Foundation is basically the TMZ to our nation’s healthcare, spewing statistical reports like Donald Trump does political lies.

Two days ago, it released a fantastic report based on 2000 interviews with both public and private healthcare firms detailing how our nation’s healthcare premium rose 4% from 2014 to 2015.   However, lets consider that the rate of inflation from 2014 to 2015 currently is at 0.7% based on this inflation calculator.  That really does stink doesn’t it?  We’re paying 3.2% more than inflation for our healthcare insurance, now mandated by the Affordable Care Act.     Yikes.  There exists an even more concerning trend though, detailed by another one of those tastefully colored and white-spaced infographics our PowerPoint/Excel generation loves so much.

Orange bars to directly contrast the blue bars? Bravo! Just…*sniff*…so beautiful.

Notice something funny?   Our price jumps in healthcare premiums has historically outpaced both inflation and earnings.    “But Alex!”  my astute figurative college graduate says again “this is misleading as a statistic.  It is only the average and doesn’t really describe the distribution of costs!  You content aggregating minx!”   My response will and shall forever be:  Don’t ever screw with the homie Kaiser.

Kaiser’s been there for me since the beginning. When I was hustling articles for my school newspaper to nail unpaid internships.

I’d like to once again focus your attention on something aside from the absolutely wondrous use of color contrast.    Families tend to pay more than single coverage, note the distribution of those paying average to 120% in family coverage compared to single.  So if your family ever gives you a hard time again about being single by 30, just point to this chart and lecture them about how you’re simply being much more money wise.

Don’t think I’ve forgotten about how our drug prices have pretty much doubled in the last decade either, especially for those who are undergoing treatment for cancer.   Seeing that almost 75% of our nation say that drug costs are unreasonable, its almost criminal to continue this trend seeing as most of us view prescription drugs in a favorable light when it comes to improving our quality of life.

the answers are always just a pie chart away

The news gets even worse, as when we shift our lens over to hospitals, even they are growing in costs as well.    Even if the patient is under medicare, their out of pocket costs are still increasing!  While I’d love to drop a lot of numbers right about now, the percentage of growth differs by procedure and treatment, which would inflate the word count of this article to proportions similar to what Mr. Shrkeli proposed for his drug buyouts.  So, check back on that last source for all the best data available for 2012.  You’ll probably notice that, unsurprisingly, our costs still outpace inflation.

So we as citizens are getting gouged by all three healthcare entities.  Insurance, pharmaceuticals, and hospitals.   Unless you’re a part of the narrowing upper class, you’re stuck with the declining middle class, or the growing lower class in terms of wealth distribution.  Why is this even happening?  Who can we point our pitchforks to, now that Shrkeli has been burnt by the fury of our internet petitions and totally not by a bunch of politicians sending him threats.

We don’t freaking know, Okay?! 

If you were somehow expecting there to be a straight forward answer to the question of why our costs are increasing at such a rapid pace.   Know that even the most qualified analysts, all holding PHD’s in this specific field basically shrug their shoulders collectively and basically guess to which factors matter most. I can’t believe I’m actually going to say this, because it runs counter to everything good and moral in this world, but CNN actually did a decent job of compressing the problem to one sound bite.  “Shifting payment burden“.

I’m in no way a healthcare expert so I can’t… Oh wait, if I exploit the lack of credential tagline, which is a logical fallacy,  I’m no better than the climate change deniers now aren’t I?  Well my resume aside, I’ll do my best to explain what Ezekiel Emanuel, U Penn’s head of Medical Ethics, analyzed in his novel, Reinventing American Health Care.  Which is where CNN’s analysis comes into play.

Oh CNN, always biting more than you can chew

There are three facts of healthcare providers in our American system, which is the crux of the issue.  This primer published by the New England Journal of medicine by both Dr. Emanuel and Dr. Orzag of the Brooking’s Institute addresses how to fix costs, and in doing so, does a great job of summarizing key components of the problem.   I’m going to run you through a hypothetical scenario to dilute the sheer density of this topic.

Let’s say our person, lets call this person Joey.  Is an adult under family insurance and takes a nasty fall, breaking his or her thigh bone.   Joey is shipped off to the nearest hospital on an ambulance and operated on.   This person is then given anti-biotics and pain killers and taken home for some much needed R&R.  The bill comes in to the tune of $82,000 USD.   Insurance only covers $20k so Joey is still left with $62,000 dollars out of his or her pocket.     That’s an awful lot isn’t it?

Here’s the hidden costs behind Joey’s predicament.   There are the X-rays, which uses expensive equipment from a pharmaceutical company that needs to cover maintenance fees, while the machine itself is already $50,000 dollars or more.  Then you need to factor in the use of surgical instruments, which to no one’s surprise, are also expensive.  Let’s also account for the towels to soak up blood for the operation, the anesthesia needed, the energy, and your titanium screws and plates.    Oh wait, we almost forgot about paying the surgeons for the operation, the anesthesiologist, the 3 nurses, and the workers in sterile supply that have to wash all the instruments in acid and stick it in an autoclave.  Additionally you have to account for the prescription and drugs needed after the operation.  Now here’s the where the fun part begins.

Before any of this happens, all three entities of healthcare sit down in a room and hash out how much this will cost and who pays for what, or where the payment burden lies.  Insurance has this huge, convoluted, and complicated formula calculating your rate of insurance for this procedure based on data from previous operations.  They spit out an initial figure of how much they want to cover, and the hospital immediately wants less of the burden on themselves.  After all, they’re the ones technically fronting the cost until the patient coughs up the money.  Then the pharmaceutical company steps in and says “Oh wait you two, your X-Ray machine and dialysis machine for your patients are outdated, we have this new iPhone…er…machine which these sweet upgrades that is now standard practice.  You can buy it for a lot of money, or just rent it from us. Oh, and that drug costs us a billion dollars to make, literally, so its going to be pretty expensive too.”   This back and forth continues until they all look at the bill, smile, and then proceed to negotiate the bill for the fancy restaurant they were having this conversation at.

Uh….do you have Venmo?

Basically, development of the technology and drugs needed are compounded by the hospital costs and even further altered by the insane risk formula by insurance.  All of which happens behind closed doors, with no real means of knowing exactly how this all happened.  That is the super duper simplified version of what control costs.  So you can imagine all the other factors that would make this even more complex than it already is.

Give it to me straight, are we just screwed? 

No.  Not by a long shot.

We simply just are absolutely dreadful at spending wisely.  From here on out this is simply my observations from reading literature at my firm, but we are terrible at one crucial thing.  Preventative health.

We as a nation have all the things in place for when things go wrong, but never real backbone to step up to the plate to prevent these things.  It’s why we have obesity as an issue, our doctors should basically be mandating everybody getting 8 hours of rest and exercising 1 hour daily to prevent a myriad of chronic illnesses.  Simple things such as good hygiene helps immensely as well.   Embracing risk as a business strategy is one thing, letting that mindset spill over into your health is just plain stupid.  This isn’t an attempt to shift the blame from the big three to us citizens in regards to better health.  It’s their responsibility for not promoting this sort of thing in the first place in my opinion.

Medical efficiency isn’t a new phenomenon, and politics plays a crucial role in this as well.  Imagine, if we had laws set in each state senate to prevent price gouges like Shkreli’s, this really wouldn’t be an issue would it?

So then next time someone gives you the whole “Big Pharma” talk and how its ruining our society, feel free to agree with them.  However, let them know that this isn’t the only part of what is historically a huge issue.  We owe it to ourselves to point the pitchforks in the right direction.

try as I might, i couldn’t rid of the watermark

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