Medicare spent $57 million to cover the drug in 2017. It spent $4.6 billion in 2022
By George W. Chapman
The catchy tune in the commercial might be referring to its price.
Medicare approved the drug to treat diabetes in 2017. Part D spent a sensible $57 million on it for patients in 2018. But due to increased demand, new uses like weight loss and glaring price gouging by manufacturer Novo Nordisk, Part D spending on Ozempic rose to an astounding $4.6 billion (with the “b”) in 2022.
Medicare has been prevented from using its vast purchasing power to negotiate drug prices literally by an act of Congress under George W. Bush. Recently, Congress has magnanimously allowed Medicare to negotiate 10 yes, just 10 drug prices in 2026. This shows how much influence and control the drug lobby exerts over Congress. Maybe one of the 10 prices Medicare negotiates in 2026 will be Ozempic.
This is another example of why our care and drugs cost so much and why we need to seriously consider/study a national plan. As mentioned last month, total healthcare costs in the US are expected to increase from about $5 trillion last year to around $15 trillion in 2030.
Pharmacist Shortage
Not getting much attention, (like the nurse and physician shortage), is the increasing shortage of pharmacists.
In the past 10 years, the number of applicants to pharmacy schools has declined a precipitous 60%. Some of this decline could be self-inflicted as pharmacy schools unilaterally decided to mandate all students must get a Ph.D. starting in 2000. It has gotten so bad that CVS is offering $20,000 scholarships to 21 needy pharmacy students. While laudable, that won’t even make a dent in the shortage.
Pharmacy is a great career. Pharmacists work in hospitals, supermarket, community retail stores, primary health centers, nursing facilities and research. Salaries are in the $130,000 to $170,000 range. Pharmacists are increasingly involved in direct patient interaction. The shortage of pharmacists and our dependence on the “goodwill” of corporations like CVS to mitigate the shortage is just another example of our fragmented and uncoordinated healthcare system where individual components must fend for themselves because there isn’t a national strategic plan or vision.
Health Over Wealth Act
In an effort to control unscrupulous private equity firms notorious for realizing profits over patient safety and community welfare, this proposed bill would require medical groups, nursing homes and hospitals to reveal any PE affiliation.
Struggling healthcare organizations, particularly vulnerable rural nursing homes and hospitals, have resorted to partnering with PE for salvation. Typically, the PE firm will quickly turn around the finances of their client by immediately cutting staff and unprofitable services. Before the facility knows what has hit them, their fledgling hospital or nursing home has been stripped to bare bones, leaving the remaining employees and the community high and dry.
Once the ephemeral profits are gone, so too is the PE firm. PE firms typically get paid a hefty management fee and then first crack at profits. The Health Over Wealth Act is intended to regulate PE in healthcare and to require healthcare organizations to reveal any PE involvement.
Task Force on Employer-Sponsored Healthcare
Half of the US population is covered by employer-sponsored healthcare.
The Commonwealth Fund has recently created a task force comprised of representatives from politics, universities and insurers to identify market incentives and regulatory policies that would result in better access, delivery, outcomes and overall population health.
Employers are faced with rising premiums. Consequently, employee contributions and copays are also rising (cost shifting) causing many families to postpone or even avoid seeking care because of high out-of-pocket expenses. As discussed in previous columns, medical debt is the No. 1 cause of personal bankruptcy. While the goals of the task force are laudable, they should also consider a functioning national healthcare system to replace our enormously expensive, confusing, inequitable, uncoordinated and fragmented healthcare system.
Kaiser Permanente acquires Geisinger Health
California-based Kaiser has just added Pennsylvania-based Geisinger Health to its vast multi-hospital, multi-system, multi-state healthcare system, Now known as Risant Health, the multifaceted healthcare system boasted revenues more than $100 billion last year. Geisinger brings 10 hospitals (including Guthrie Cortland Medical Center) and 600,000 members to Risant.
Nonprofit hospitals have had to build large networks and capital in order to compete with well- heeled for-profit providers like Walmart, Amazon and CVS. Size helps Risant effectively negotiate with wealthy commercial insurers like United, Aetna, BCBS, Anthem and Humana. The ultimate goal is to further develop Risant’s own health insurance plan (Kaiser Permanente) by adding members which mitigates risk and keeps their premiums competitive. Profits generated by their proprietary insurance plan are then re-invested in the healthcare system and patient care.
Amazon RxPass
Medicare can’t negotiate prices, but Amazon can. Prime members are eligible for the RxPass which promises not only lower drug prices but drone delivery to your doorstep someday soon. This home delivery presents an existential threat to “mom and pop” pharmacies and huge corporate chains like CVS and Walgreens. Between 2009 and 2015, one of eight brick and mortar pharmacies closed, most in depressed and underserved communities. Innovation is great, but once again our lack of a national gameplan is apparent.
George W. Chapman is a healthcare business consultant who works exclusively with physicians, hospitals and healthcare organizations. He operates GW Chapman Consulting based in Syracuse. Email him at gwc@gwchapmanconsulting.com.