Thursday, 18 Jul 2024

U.S. Companies Are Fighting Their Big Pharma Addiction

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American corporations want to kick their reliance on big pharmaceutical companies.

Walmart and Home Depot are among the many companies that are fighting back against drugmaker programs that cut patients’ expenses while leaving employers paying full rates. It is part of an escalating war between providers, insurers and corporations over health care costs. The effectiveness remains to be proved.

America spends about 18 percent of its gross domestic product, or roughly twice as much as most developed nations, on health care. A large part of that pays for the administrative staff that battle to take dollars from other players and patients, or defend their own pockets. The United States had the highest percentage of health expenditure on insurance and administration, and patient time spent on cost disputes, among 11 industrialized countries, according to a 2014 study by The Commonwealth Fund.

Pharmaceuticals, which account for some 10 percent of the U.S. health budget, are a good example of this struggle. To limit what they consider unnecessary drug spending, most insurers require that patients pay a portion of the cost, known as the co-pay, subject to an annual limit. As co-pays have escalated, drugmakers have introduced assistance cards that limit patients’ out-of-pocket costs while leaving insurers and employers stuck with the bill.

Some of those insurers and employers are now counterattacking with programs called co-pay accumulators and maximizers. By excluding drugmaker payments from annual deductible limits, they leave patients on the hook for a larger share of their drug bill, and encourage them to switch to cheaper alternative medicines. Undoubtedly, pharmaceutical firms will think of a clever retort, given the stakes.

Confused? You aren’t alone. Insurers may not tell patients and drugmakers that they have adopted a co-pay accumulator. Add in various discount programs and kickbacks among participants in the drug chain and it’s hard for even well-educated participants to figure out how much a drug will cost a patient.

It all resembles “The Glass Bead Game” by Hermann Hesse. In that book, society’s elite spend a lifetime playing a game whose rules are so vague and sophisticated that outsiders can’t comprehend it. Those that master the game achieve spiritual transcendence. In American health care, the stakes are slightly higher margins.

Of course, dedicating so many talented, well-educated Americans to such pursuits is not a good prescription — for health or happiness.

Robert Cyran is columnist of Reuters Breakingviews. For more independent commentary and analysis, visit

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