"The Cost is in the Capsules" - A Life & Health Agent's Perspective

Why isn't anyone even approaching the "Big Pharma" issue?

As a Life & Health agent registered in all states, I have the unique opportunity to speak with individual health insurance clients from all backgrounds, financial situations and conditions. I also have a very keen understanding of the relationship between these clients and their insurers. That said, I have a couple of observations...

On a "traditional" PPO (Preferred Provider Organization) copay plan, there are basically four "buckets" of coverage that makes up the overall package of the insurance certificate. These are:

- Office visits (sick visits)
- Prescription coverage
- Preventive care (NOT the same as office visits!)
- Major medical (hospitalization, surgery, testing)

Insurance companies employ some very intelligent people who are able to determine the balance of possible claim risk with the premiums they need in order to continue on as a viable business. These people (called actuaries) need to have a constantly updated understanding of the changes that happen with regard to claims within a specific geographic area and the costs of services provided to these policyholders.

The greatest challenge to an actuary is not the cost of a strep test, or an appendectomy or even a liver transplant. For the most part, these are relatively "predictable" and thus manageable.

The number-one area of concern for an actuary is medication. Period.

Medication is bar none the most costly and dynamically changing part of the equation for an insurer. The reason why is simple. Prescription medication costs in the United States are usurious. I use this word because the definition from the American Heritage Dictionary reads as:

usurious - greatly exceeding bounds of reason or moderation; "exorbitant rent"; "extortionate prices"; "spends an outrageous amount on entertainment"; "usurious interest rate"; "unconscionable spending"

Why is it that a prescription in the US is 1000 times more expensive than in Canada? It's because in the United States, we allow it. It all comes right down to the people we elect and their political parties.

Big Pharma is one of the largest political lobbying groups in the United States. They are a very strong cog in the political machine and their strength is increasing with every administration. They are not regulated. Sure, the FDA regulates the actual formulation and safety of what they produce, but no one actually regulates their business practices, thus creating a pure, textbook monopoly.

See the following example:

The SSRI medication, Zoloft was priced at roughly $185/mo. throughout most of its history. It was THE highest prescribed medication for anxiety/depression for many years because it was marketed and it worked.

On June 23, 2006 Pfizer lost the patent for Zoloft and the drug went generic.

Now, the generic formulation Sertraline is on the Wal-Mart $4 list. That’s quite a disparity. Believe me, I’m in sales and have been since college. Making a buck drives me. However, there should be a certain level of corporate responsibility associated with how pharma prices and markets their products. Personally, the majority of my family’s monthly healthcare costs come from prescriptions, not providers. Like I said, I'm ok with making a profit but I'm not ok with theft. To me, a difference this drastic equates to theft.

Take a look at this article. See the numbers that Pfizer made the year before it went generic:

http://money.cnn.com/2006/04/04/news/companies/antidepressants/index.htm

So one may ask, why isn't Obama talking about the cost of medication and more importantly, the fact that drug companies need to be regulated.

Why? Because they were the ones who were an integral part of his election victory.

So this man whom some call a great leader is simply a smooth talking charlatan who doesn't have the credentials to run bingo hall, much less a nation.

So as we move towards a socialist health services structure (oh, and his proposed plan is NOT health insurance BTW), it's going to be interesting to see how long it takes before all those Obama disciples wise up and rise up.

The bottom line is we don't need socialized health care.

Fix pharma and we fix the system.

Joe Faraldi
Kansas City