Mylan CEO Heather Bresch recently testified to congress about the EpiPen price controversy. There’s an important sub-text in Bresch’s testimony that goes way beyond the resulting headlines and sound-bites that we’ve seen for the past few weeks. Bresch argued that it’s not her company that’s at fault, but rather the healthcare system overall.
“Patients are paying higher out of pocket costs… The system wasn’t intended to have people pay the full wholesale acquisition cost, and that’s what’s happening at an alarming rate.”
Bresch has repeatedly pointed to the rise in high-deductible health plans as the reason for the controversy. In other words, if Mylan’s high prices would have continued to be concealed in our insurance premiums then there would be no controversy at all. She’s right. And that’s a huge problem.
— Don Lee (@dflee30) September 23, 2016
A riddle wrapped in a mystery inside an enigma
The U.S. healthcare system might be the most complex thing any of us will ever deal with. One of the best breakdowns I’ve seen on the current situation and how we got here comes from healthcare outsider David Goldhill in his book Catastrophic Care. It’s an enlightening (and infuriating) read that tells the story of what’s going on under the hood. Goldhill explains how complex regulations and reimbursement schemes blend together to make unimaginable things happen. For example, in one story he showed how a drug-maker had to dramatically raise their prices to become competitive. The dialysis clinics they sold to were reimbursed on a cost-plus model and that made it way more profitable to use the most expensive drugs. That’s not how rational markets work.
The great healthcare writer and Forbes contributor Dan Munro often quotes Michael Lewis (who was speaking about high-speed trading):
If it wasn’t complicated, it wouldn’t be allowed to happen. The complexity disguises what’s happening. If it’s so complicated that you can’t understand it – then you can’t question it.
That fits healthcare quite well.
In his great piece on the EpiPen scandal, Munro makes three key observations that are central to our problem:
- Mylan’s CEO and all the other business leaders are doing exactly what they’re supposed to do. They have a fiduciary responsibility to their boards and stockholders to maximize profits by all legal and ethical means. What Mylan and the others are doing is legal. We can argue all we want on the ethics side, but that will never be enough to change anything.
- We’re all complicit. In our ignorance of how things actually work and our refusal to dig deeper and find out.
- The system isn’t broken. It was designed this way.
Heather Bresch is right. This is the healthcare system’s fault. We’ve designed a complex system of complex systems and we’re getting the crazy results that you can expect from that type of setup. She’s also right that as premiums and deductibles continue to rise, more controversies will follow. The financial pain felt by the average American to pay for their healthcare costs is already great and it’s headed in the wrong direction. In fact, if health care spending grows only half as fast as CMS is projecting, then Millenials will spend 50% of their lifetime earnings on healthcare. That’s not ok. And throwing more complexity on top of what we already have is not the answer (I’m looking at you MACRA).
So what can be done? How do we help the average patient understand before we all go bankrupt?
Let’s pull the curtain back
I think Dave Chase is on the right track with The Big Heist film project. It’s intended to be The Inconvenient Truth or The Big Short for our industry as it aims to educate the patients, citizens and business owners on the fixable issues that are costing us all so dearly. The film will be a bi-partisan, satirical take on how we’ve gotten here. More importantly, it will introduce us to the people who are already beating the system and getting tremendous results at a fraction of the cost. You can learn more about the project here.
The average American needs to understand why healthcare costs are robbing them of their wealth and they need to scream and yell about it. It’s great that we noticed the EpiPen issue, but that’s just one example amongst thousands. It’s time to unearth the next wave of issues and work together to drive towards a more sustainable healthcare system.
On Wednesday, October 5th the #hcbiz community welcomes Dave Chase to the show. Co-hosts Don Lee and Shahid Shah will interview Dave on the movement that he’s trying to help catalyze through the film. We’ll also dig into the project itself. The team, approach, crowdfund, etc. The interview will run from 12-12:30 PM EST. You can watch and subscribe here:
The live cast will be followed by a tweet chat at 12:30 PM EST. We’ll ask 3 questions in 30-minutes:
Q1: Everyone wants to “fix healthcare”. That’s ambiguous and unproductive. What’s one specific problem that you would like to see fixed? How?
Q2: What are the biggest gaps in understanding/misconceptions for the average American when it comes to the cost and structure of our healthcare system?
Q3: Tell us about your role. What are you doing on a day-to-day basis to help improve healthcare?
In my opinion, Dave Chase is one of the best minds in healthcare and is one of the best people to carry this message. I encourage you to support the film by contributing to the crowdfund.