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Across Healthcare System, Stakeholders Share Responsibility For High Costs
The ongoing feud between pharmaceutical companies and pharmacy benefit managers (PBMs) over prescription drug prices has sparked intense debate. Amidst the noise, it is crucial to acknowledge that there are far more significant issues at play in the healthcare system than a simple tit-for-tat between these two parties.
In reality, stakeholder groups share responsibility for the crisis of rising costs and the subsequent unaffordability of medical care. This shared blame stems from misaligned financial incentives throughout the industry. The key issue is that every participant has a vested interest in maintaining high costs, rather than working together to bring down expenses.
Pharmaceutical manufacturers are often criticized for their launch prices being unrelated to value, as well as purchasing and pricing strategies that incentivize higher usage of pricey drugs. However, this criticism also extends to pharmacy benefit managers (PBMs), who create revenue streams by procuring discounted drugs from wholesalers but then charge insurers or Medicare at higher rates.
Hospitals and clinics further contribute to the issue through practices such as “buy-and-bill,” where physicians can purchase expensive medicines at a markup. In essence, these business models reward the use of costly treatments rather than promoting more cost-effective therapies.
As much as one might want to focus solely on PBMs or pharmaceutical companies for the problems they cause, the reality is that each party has a stake in maintaining high costs. This shared responsibility stems from their financial incentives and profit motives.
The problem we face is not just about scapegoating. It’s an entrenched issue of misaligned incentives within healthcare.
Source: http://www.forbes.com
