Health Out of Pocket Costs Will Impact Pharmacy

The following information was recently released by the AIHW which is showing a trend for government spending to remain a constant while private expenditure is trending upwards.
“Total expenditure on health was estimated at $154.6 billion in 2013–14, up by 3.1% on 2012–13 in real terms.
Growth in expenditure per person was $6,639, which was $94 more in real terms than in 2012–13.
Despite this relatively slow growth, total expenditure was 9.8% of GDP in 2013–14, up from 9.7% in 2012–13.
Governments provided $104.8 billion (or 67.8%) of total health expenditure, which represented about 25% of taxation revenue (unchanged from 2012–13).
The non-government sector share of total expenditure increased from 30.0% in 2011–12 to 32.2% in 2013–14, despite generally falling throughout the decade. Funding by individuals was the fastest growing area of non-government sector expenditure over the decade”.
released: 24 Sep 2015 author: AIHW media release

This must also be viewed against the recent sale of Medibank to private investors and the loss of income to government.
But it is the consumer that is hit hardest with an increase in premiums and a deletion of a range of benefits usually covered under hospital reimbursements.
Cynically, government is passing on costs to consumers with Medibank taking the heat that government would normally have to absorb.

Now items like falls in a hospital setting will not be reimbursed by Medibank, nor will rebound patients returning to hospital within 30 days.
A total of 165 benefits like the above have been deleted, with hospitals supposedly to pick up the tab.
However, it is inevitable that these costs will be passed on to patients with the very real problem that out of pocket costs will now escalate rapidly.

There are other ominous signs that health costs will rapidly escalate, one of which has arisen in the US Pharma companies that have found a new way to extort US taxpayers.
The drug Daraprim, a decades-old but still useful drug had its rights purchased by a former hedge fund manager, Martin Shkreli, who founded a start-up company, Turing Pharmaceuticals.
This company immediately jacked up the price by over 4000 per cent, risking lives of patients who could no longer afford the medication that kept them alive.

Other drugs have also had sudden price escalations.
The price paid by an Australian patient for Daraprim is less than $15.00 for a 25mgm x 30 pack.
How long will that drug stay that price and how long will it remain on our PBS system?

This is also a reason why there are concerns with the Trans Pacific Partnership Agreement where clauses in that agreement may allow Big Pharma’s to sue the Australian government if they hold Australian legislation is damaging their market or their profits.
The secrecy surrounding this agreement is unacceptable in an open democracy and I do not trust government of any persuasion to stand up to the lobbying that has been quite intense during this negotiation given the lobbying outcomes achieved in the US (noted below).

A situation in the US arose with Big Pharma’s most extraordinary win in 2003, when Congress passed a law that at once expanded government health insurance for the elderly, known as Medicare, to include prescription drugs.

The law also – and this is not a joke – banned the government from negotiating the prices they would pay the drug companies.

That is, once a drug had been approved for coverage, the government was forced to pay whatever the companies demanded.

This bewildering concession – normally referred to as simply “Medicare Part D” – was made after a colossal lobbying effort under the Bush administration in 2003.

The pharmaceutical industry spent a staggering $US2.6 billion on lobbying activities between 1998 and 2012, according to

That is four times as much as the defence and aerospace industries spend and almost twice the lobbying outlay of oil and gas companies.

According to the Centre for Public Integrity, the pharmaceutical industry employs two lobbyists for each member of Congress and spends $US100 million a year to keep many of those members of Congress on its side.

Medicare Part D was eventually passed after an ugly late-night battle on Capitol Hill.
This is bribery and corruption under a lobbyist label.

It is this sinister machine that Big Pharma drives and it derives its power by making extraordinary profits through patenting new molecules brought on to the market by manipulating the initial studies and ensuring all written information about their drugs is managed down to the most finite detail, often involving academic fraud and ghost writing.

However greed is its fuel and has no bounds.
Taxpayers have to fund Big Pharma prices, but they are also cheated when Big Pharma refuses to pay its fair share of income tax, that uses a system of transfer pricing to ensure that its profits end up in a tax haven.
The same applies to any international company that is based in Australia.

It is now estimated that this cash pool is now ocean-sized and runs into $’s multi-billion.
The reality is that Big Pharma is able to make any payment of any size to any individual who can generate favourable results for Big Pharma.
And payments can be made from a tax shelter to a recipient in basically any country that can provide a suitable level of secrecy for that recipient.

They say everyone has a price and it must be very tempting to be offered a large some of money for a minimum of time and effort.

Medibank Australia it seems, with government support, is driving health care towards the US model – and that is the worst model in the entire world.
It is also a model requiring large amounts of capital to fund managed care and the ownership of private hospitals and medical practices or whatever is deemed necessary to control costs.
But the fund member must underwrite the entire cost.

As that process unfolds we will see a few related issues and a lot of unrelated issues that will serve to drive the Big Pharma objectives.

Care models of health will be attacked unless they become part of the drug supply chain.
Pharmacy fills this segment unless it gets involved with compounding or patient care not involving drugs. Big Pharma opposes both these activities. 

I have just read Mark Coleman’s article in this edition of i2P about the Homeopaths and the NHMRC so-called investigation.
This is suspiciously like a Big Pharma intervention funded from the tax haven ocean of funds.
And now official pharmacy has been firmly attached to this decision through the APLF recent announcement on homeopathy.
Why are we even involved in trying to decimate a member of a health profession relying on a substantial component of care?

But the real issue for pharmacy will be that health consumers will not have sufficient personal funds to pay for their health care, including dispensed drugs and care services.
Pharmacies will have more calls for financial assistance, particularly as the average age of the consumer increases and becomes an ever-expanding demographic.
Pharmacy marketing programs will have to be skewed to alleviate this problem and patients will need to aggregate as much of their individual marketing capital to negotiate the benefits they will require, particularly funding their out of pocket costs.

Management of patients will have to extend to managing their available health resources as well, and this is where pharmacy must trend towards in the new paradigm pharmacy.

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