The blatant price gouging of life-saving medicines that topped recent news headlines should serve as a signal to the public about the kinds of bottom-line-oriented strategies that continue to drive up American
News of the practice started to surface in February when Canada's Valeant Pharmaceuticals International Inc., purchased the rights to two heart drugs— Isuprel and Nitropress — and on the same day jacked up the prices on
those drugs 212 and 515 percent, respectively.
"Our duty is to shareholders to maximize [product] value," Valent's spokeswoman told The Wall Street Journal. The newspaper noted in its coverage that the practice of buying the rights to undervalued drugs and then promptly increasing the prices of those medicines is becoming increasingly common among pharmaceutical companies.
Then, Turing Pharmaceuticals announced in September that it planned to dramatically increase the price of Daraprim, a medicine that's use to treat a rare but deadly infection, from $13 to $750 a pill. Turing and it's 32-year-old CEO, Martin Shkreli, were immediately the center of a public relations firestorm that included presidential candidate grandstanding.
"Pharmaceutical companies that acquire an existing affordable drug that people rely on and then turn around and charge a fortune for it just bet on the fact that desperate people will find some way to pay for it," Hillary Clinton said during a campaign stop. "That's price gouging, pure and simple." Shkreli has since been dubbed "the most hated man in America" and "the face of corporate greed." The company's public and media relations crisis grew so big so fast that it threatened Turing's financial stability. Turing has subsequently announced that it will back down from the $750-per-pill price on Daraprim (without actually announcing what the new price of the drug will be.)
Hedge Funds Over Humanitarianism
Just because one "Big Pharma" company was forced to recoil from its money-grubbing, which ultimately resulted in a devaluation of Turing stock, there remain other factors within mainstream medicine today that have equally dramatic effects on the overall cost of medical services and products. These factors play a much bigger role in the increased cost of healthcare than the issue's most common scapegoat: medical malpractice lawsuits.
That fact is that medical malpractice cases only account for about two percent of American healthcare dollars spent, according to 2010 research from the Harvard School of Public Health. And that amount is falling. Other studies have pegged the impact of medical malpractice at no more than 0.5 percent of healthcare costs.
A Fragmented System
Although the Affordable Care Act means that more Americans than ever now have health insurance, Congress has yet to address the fact that multiple healthcare agencies within the medical system offer duplicate services
within a single community.
That's because where a person receives their healthcare is largely dictated by their personal economics.
For instance, while a high-paid worker with premium health insurance can probably select from a number of nearby doctors, low-income Americans are shuffled into facilities that specifically accept Medicaid. And other groups of Americans, such as the self-employed or service personal and their families, have other specially designated care facilities.
In addition to making each stop along this healthcare continuum that much more expensive, this fragmented service dynamic also leaves neighborhood hospitals struggling to cover the demands of expenses related to treating
the very seriously ill.
The High-Tech Chokehold
It is one of the major ironies of contemporary business: Technological advancements tend to make work easier, faster and cheaper in most industries. But in medicine, economists say new machines and drugs only
serve to make the cost of healthcare more expensive.
Research suggests that this is due to the vast array of available treatments, some of which are effective while others are less so, and an insurance system that favors expensive solutions. Those who study this issue note that American spending on medicine and healthcare doubles about every decade. It currently makes up about a fifth of the country's economy and is expected to grow in the next 25 years to ensconce a third of the federal budget. The challenge, notes one healthcare economist, is: "How do we move from cost-increasing to cost-reducing[medical] technology?"
One thing is for sure: medical malpractice is commonplace and it is not a significant factor in the cost of healthcare. Many people, when faced with
severe injuries or the death of a loved one due to medical malpractice, turn to experienced medical malpractice lawyers to investigate their cases and get them some measure of justice.