Yesterday evening the American Sustainable Business Council launched a new campaign, Business Leaders Transforming Healthcare, and screened a half-hour film called “Big Pharma – Market Failure.” The new coalition is urging sweeping and greatly needed changes to the U.S. health care system, advocating for a single-payer model, evidence-based decision making, best practices, and transparency and accountability throughout the system, for drug manufacturers, insurance companies, and pharmacy benefit managers (PBMs).
In addition to a single-payer system, the coalition is pushing for the following reforms: 1) An evidence-based formulary of drugs at the federal level, 2) elimination of those PBMS and insurance companies who provide no real benefits to consumers and simply increase drug costs, and 3) changing the law to allow Medicare to negotiate the price of drugs.
This campaign could be a potential game changer, and it is very welcome. America’s health care system has major problems that are disproportionately affecting businesses and harming their ability to compete. In the past fifteen years health care costs for businesses have doubled, far exceeding inflation or wage growth, to the point commercial health insurance now costs employers $700 billion per year. Our health care system is also wasteful due to administrative requirements, unneeded differences of prices, lack of standardization, and blatant profiteering. This is not sustainable over the long term.
The film “Big Pharma – Market Failure” is powerful, highlighting the pharmaceutical drug industry and details how they are a massive part of the problem. Right now the average American family spends $4,200 annually drugs, twice as much as the rest of the industrialized world. The government, as previously noted, does not regulate or negotiate drug prices. Instead, it allows monopoly drug pricing through our patent system. We hear how drug companies have bought the patents to various drugs and then increased the prices astronomically, forcing many people to choose between lifesaving medicines and their homes. When former Turing CEO Martin Shkreli was asked how he justified buying the rights to the antiparasitic drug Duraprim and raising its price by a factor of 56, he couldn’t even provide an excuse. The film also shows how most biomedical research costs are paid by the U.S. government through the National Institutes of Health and grants to academics and philanthropic groups. Large drug companies spend more funds on marketing, sales, and mergers rather than genuine research.
We then hear from experts about how the PBM market is broken and leads to higher drug costs, how PBMs get rebates that benefit only themselves, and how there is no effective regulation of the industry. Antitrust lawyer David Balto explains that for a market to operate fairly and benefit consumers it needs transparency, consumer choice, and a lack of conflicts of interest. Health care markets need more of these qualities, and the PBM market lacks any of them. The health insurance industry also exercises an enormous amount of influence over Congress through lobbying and campaign contributions, and shapes laws and rules to favor their pocketbooks rather than consumers. Drug manufacturers, health insurance companies, and PBMs have dug in their heels and stand in the way of reform, blocking any progress.
Fortunately, all this may be changing. In the past American businesses have been wary of challenging the health care industry and how it operates, despite the fact that health care costs are now their third largest expense after labor costs and materials. And substantial areas of health care spending provide no benefits—they don’t deliver better health care to consumers, they don’t drive down costs of promote competition, and they don’t fund and develop new techniques or life-saving medicines. More businesses are coming to realize this and are working to fix our broken system, standing as a counterweight to pharmaceutical and insurance companies.
We welcome these new allies to the campaign, and look forward to working with them to build a health care system that benefits all Americans.