The Pharmaceutical Industry and Health Reform

Health inequity is a crucial consideration in contemporary health reform. Factors responsible for health inequity, and which health reform should aim to rectify are doubtless legion, but is the pharmaceutical industry one such factor, and if so why and what could change it positively? Surely, we cannot gainsay the need for proper conceptualization and measurement of health inequity to address the issues it creates successfully, which point, the frequent proxy usage of health inequality to measure health inequity for example, underscores.

Not only is equity not the same thing as inequality, health inequality measures, for instance predicated on a decomposition of the Pietra Ratio, discountenance the health inequity linked with the added burden on financially-challenged peoples of poor health status, among others. A recent study that examined the potential effect of assuming that equity and equality are correspondent for example found the least healthy global sub-region to be about four times disadvantaged with a health inequity analysis than a straight health inequality analysis would show, the healthiest sub-region, on the other hand, about four times, advantaged1.

Should we therefore, not countenance the inequity of poor health, seemingly the lot of deprived peoples, much worse than shown by health inequality analysis, not just to have a more accurate picture of the disparities, but also to consider them as appropriate in strategic health and economic policy decision making? The answer to this question might help us figure out the role that the pharmaceutical industry plays in an iniquitous health system, if any, and how to ensure it plays a positive role, if in fact it had not been.

Given the centrality of an individual’s health status in this regard, it is apt to consider its interplay with economic status. This makes the symbiotic dyad inherent in this relationship immediately obvious, albeit the potential role that the industry could play in its facilitation or otherwise. The products that the industry makes help prevent, and treat diseases, in which sense it is easy to see how this could facilitate rather than hinder the dyad. Yet, some would contest that the overall effect of the industry on health is positive not just for health, but also economic well-being, in particular given the findings of studies such as one in the U.S recently published in the November/December 2007 issue of the journal Health Affairs2.

Titled “How Much ‘Skin In The Game’ Do Medicare Beneficiaries Have? The Increasing Financial Burden of Health Care Spending, 1997-2003”, and written by Kaiser’s Patricia Neuman, Sc.D., and Juliette Cubanski, Ph.D.; and Katherine A. Desmond, M.S., and Thomas Rice, Ph.D., of the University of California, Los Angeles, the study’s findings are indeed, instructive. The researchers, who assessed the changes in Medicare beneficiaries' health care spending between 1997 and 2003, found that beneficiaries spent an increasing share of their income on healthcare, median out-of-pocket health spending up from 11.9% of income in 1997 to 15.5% in 2003, about 40% of beneficiaries spending at least 20% of their income on healthcare in 2003.

Clearly, continued increases in out-of-pocket spending could compromise healthcare affordability for beneficiaries perhaps minus those with the financial wherewithal. Yet, we could not conclude that medications hindered the dyad in this regard, which does not depreciate the enormity of the problem given especially that Medicare beneficiaries have had to contend with more hikes in out-of-pocket health spending relative to income for some time now3. This is not to mention that more seniors who, theoretically, have less income, versus younger adults have also had comparatively high out-of-pocket expenditures3, 4, the prospects for which, in an aging population, among others, to be disruptive for the economy, potentially profound, regardless of the funding model of its health system.

Given that employer-sponsored retiree coverage is more costly and tightfisted, that Medicare Part B doubled from 2000, and the prospects of copayments and deductibles not slashing out-of-pocket drug expenses, except for beneficiaries with low incomes, despite Medicare Part D coverage, the role that the pharmaceutical industry plays in the dyad could begin to have more than face validity. Should policy then focus on changes in Medicare and similar initiatives that could further spike enrollees’ healthcare costs, and create more inequity, and would that constitute the sort of reform that could eliminate this blight? What for example, should policy be regarding generics and given, their existence in the first place, what does this portends for the role that the pharmaceutical industry plays regarding these medications being developed to start with, and by extension for the role, they have played in reducing health inequity, and for their continuing development and production?   

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