Keshav Sharma is a freshman at Queen’s University in Kingston, Ontario, Canada, who plans on majoring in Health Sciences.
At the forefront of the enigma of American healthcare lies the contentious debate of the value of private healthcare in serving the welfare of the American people. While the United States continues to boast the highest spending of all OECD countries in the healthcare sector, allocating an average of 16.9% of its annual GDP from 1980 to 2018, which is more than double the OECD average, the health outcomes for Americans persist in a downward spiral. Compared to other OECD members, the United States has the lowest life expectancy at 78.6a, the highest suicide rates at 13.9 deaths/100,0002b, the highest chronic disease burden at 28%2c, and the highest obesity rates at 40%2d.
At the heart of this issue is accessibility to healthcare. Certainly, the American healthcare system reigns supreme in the quality of healthcare being offered with top-of-the-line physician and hospital services, advanced diagnostic and procedural technology, and unparalleled access to a bounty of prescription drug treatments. Yet, private and out-of-pocket spending by Americans continue to be among the highest of all OECD members countries2e and is persistently increasing with a frustrating lack of action from government officials. As a result, Americans have the 3rd lowest usage rate of physicians2f and the lowest physician-to-population ratio at 2.5 per 1,0002g of all OECD members. Among the potential causes for the worsening health outcomes for Americans is prescription drug legislation, or lack thereof, that has reduced access to necessary treatments to improve their quality of life.
Several factors need to be considered to understand how current prescription drug pricing arose. The enactment of Medicare Part D in 2003 stipulated that Medicare, the country’s largest single-paying healthcare system, was not allowed to negotiate drug prices. This effectively severed the last vestiges of government regulation on prescription drug pricing while giving free reign to pharmaceutical companies. Consequently, skyrocketing prices can be duly attributed to augmented research and development expenditures, although numerous reports, mostly of critics, seem to note that only a fraction of revenues are reinvested into R&D while the vast majority is distributed to marketing and administration. More importantly, the patent litigation framework in the United States has enabled drug monopolies to form, thereby driving down competition among pharmaceutical companies, and increasing prescription drug prices. The FDA enables market exclusivity for a drug after approval for a maximum of 20 years, yet the effective patent life of the drug is usually significantly less considering the length of the drug approval process (i.e. 10-12 years), allowing pharmaceutical companies to be granted a patent extension of up to 14 years. Orphan drugs, another factor in rising drug prices, considers the targeting of drug companies to produce treatments for rare diseases and deliberately placing them at a cost that an individual cannot reasonably pay, since the expected payers are insurance companies or the government. The impetus for the rise in orphan drugs came from the Orphan Drug Act (ODA) of 1983, which sought to incentivize pharmaceutical companies to increase research into the treatment of rare diseases. Since patients have treatment options, meaning that no additional advertising is needed, and insurance companies are often paying for the drug (i.e. 93% of the time), monopolizing orphan drugs can serve a source of considerable profit for pharmaceutical companies.
The need for greater governmental control is the clearest solution to this problem, yet it is the most difficult, as multiple failed attempts at healthcare reform through the 21st century has shown time and again. While it is important to recognize the aid that the private sector and the pharmaceutical industry has contributed to the improving the health infrastructure of the United States, it is also equally important that we ensure that they are still committed to working to improve the livelihoods of the American people and not solely for making a profit. Aside from large-scale healthcare reform, which seems unlikely at the moment considering the fierce political divide pervading the country and fears of a nationally socialized health system, it is difficult to envision a system that maintains an equilibrium between the quality of healthcare in the country while making it affordable for the vast majority of Americans.
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