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Trust in Healthcare: Warning Signs For Pharma
http://www.edelman.com/post/warning-signs-for-pharma/
The 2016 Edelman TRUST BAROMETER shares disturbing news about a widening gap in trust in all major institutions between the informed public and mass population. While trust is generally rising among more educated, affluent audiences, trust levels have barely moved since the Great Recession in the remaining 85 percent representing the mass population in the 16th year of our survey of more than 33,000 respondents.
The story for the healthcare industry is a cautionary tale and one that bears watching. At a global level, and using general population (informed public plus mass population) findings* with 28 countries surveyed, healthcare is near the bottom with a trust score of 61, just ahead of Telecommunications, Energy and Financial Services. In the U.S. it is tied for second to last with the automotive industry, and is doing just a little better than Financial Services, which although in last place has experienced a remarkable rebound in trust since the financial crisis.
Digging deeper into the industries that collectively represent healthcare and perceptions of the general population, there are warning signs for the pharmaceutical industry in particular. Consider this: while the moves may be small, trust has increased at a global level in four of the five health subsectors – Hospitals/Clinics, Consumer Health, Biotech and even Health Insurers, who were lower ranked among this peer set last year. Only trust in Pharmaceuticals has declined. And in the U.S., trust has increased in only two of the five subsectors, with both Pharmaceuticals and Biotechnology declining by two points and Consumer Health remaining flat.
Put another way, global trust in those on the front lines of delivering care or on the shelf delivering value to consumers is on the rise, while trust in the research-based companies that deliver the innovation through these channels is declining. If these trends continue, we’ll experience a growing trust gap between those who do the innovating and those who deliver on innovation, in addition to the gap already evident between the informed public and mass population. Lesser trust in pharma and biotech companies carries with it broad implications for the ability to attract and keep employees, license to operate in the larger health and business ecosystem, and greater support for regulations that may threaten a license to lead.
Some takeaways for healthcare companies in general:
Gap In Trust
Since I am in the trust business, I pay attention to the Edelman Trust Barometer when it comes out in February each year. Richard Edelman and his associates have been publishing a compendium of statistics on trust each year for more than 15 years.
Using online surveys, they measure the level of trust in 28 countries and categorize it into four sectors: Business, Government, Non-Government Organizations, and Media. For example, in the Business sector the question they ask is “Do you trust Business to do what is right?” Note: they intentionally leave the specific definition of what is “right” up to the person who is responding.
The sampling is also split between what they call “informed publics” (college educated populations with incomes in the top 25% and who follow the news daily) and they also survey the mass population who are less educated and often do not follow international trends closely.
I usually spend a couple days absorbing the latest information each year and updating my summary charts. It is good to keep abreast of the trends in trust around the world. There is an interesting trend in the worldwide information on trust that is particularly evident in the USA.
Cartoon – We should get along just fine
Cartoon – The Cost of Living
Cartoon – New Wonder Drug
A timeline of eye-popping drug prices
http://www.usatoday.com/story/news/2016/08/25/timeline-eye-popping-drug-prices/89335852/
The firestorm over steep price increases for the EpiPen — which can rescue people having life-threatening allergic reactions — is just the latest in a long line of controversies over high prescription drug prices. A decade ago, much of the concern over prescription drug prices involved new high-tech cancer drugs, used by only a few thousand patients a year. In recent years, the prices for decades-old generic drugs have soared, as well, as pharmaceutical companies purchase the rights for drugs with no competition.
Here’s a recap of some of the most eye-popping prices.
Pfizer’s Involvement in EpiPens Could Complicate Drug Price Debate
Mylan Pharmaceuticals has come under intense fire for massive price hikes of EpiPens over the last week, facing scrutiny from lawmakers and industry groups. It is less well known, however, that while Mylan markets and prices the drug, Pfizer Inc. actually manufactures the drug and has seen increased revenues from EpiPens over the last few years.
The financial relationship between the two drug companies is unclear, and Pfizer declined to elaborate. Mylan did not respond to a request for further comment about EpiPens or how the two companies divide revenues.
“Meridian Medical Technologies is the contract manufacturer of EpiPen and takes great pride being able to supply a high quality and life-saving product. The terms of our supply agreement are confidential,” said Rachel Hooper, a Pfizer spokeswoman. Meridian Medical Technologies is a Pfizer subsidiary.
The EpiPen outrage centers around a 400 percent hike for the dispenser, used for emergency allergic reactions, since 2009, even though the product remains unchanged. It now costs as much as $600 for a pack of two EpiPens, which must be replaced every 12 to 18 months.
There’s a simple fix for Obamacare’s current woes: the public option
http://www.vox.com/2016/8/18/12520820/public-option-health-care-obamacare
THE REALITY IS THAT COMPETITION AMONG PRIVATE INSURERS HAS NEVER LIVED UP TO THE RHETORIC PUT FORTH BY THE INDUSTRY OR FREE MARKET FUNDAMENTALISTS
This week, Aetna announced it would stop selling insurance plans in all but four Obamacare exchanges, the state-run markets set up under the 2010 Affordable Care Act. Aetna, which now covers more than 800,000 people in 15 exchanges, said it had been hemorrhaging money on the plans. (A fight with the government over an acquisition of the insurance company Humana may have played a role, too.)
Aetna’s exit, following similar departures by UnitedHealth and Humana, means that a growing number of US counties — 20 to 25 percent, according to the Kaiser Family Foundation — now have only a single private insurer offering coverage on the exchanges, a development that essentially eliminates consumer choice. One county in Arizona now has no insurers. Even before Aetna’s decision, more than half of state exchanges had four or fewer insurers, with DC, Vermont, Connecticut, and Rhode Island having only two.
It’s enough to make a frazzled health care consumer in one of those feeble markets wish there were another option — perhaps even (dare one say it?) a public option. Does the phrase ring a bell? That’s the health care policy that some policymakers pushed to include in the 2010 law.
JAMA Forum: Why Are Private Health Insurers Losing Money on Obamacare?
Uwe E. Reinhardt, PhD, is the James Madison professor of political economy and of economics at Princeton University, where he teaches health economics, comparative health systems, general microeconomics, and financial management. Dr Reinhardt is also the codirector of the Griswold Center for Economic Policy Studies at Princeton University. The bulk of his research has been focused on health economics and policy, both in the United States and abroad. He is a member of the Health and Medicine Division of the National Academies of Sciences, Engineering, and Medicine (formerly the Institute of Medicine) and served on its Governing Council in the 1980s. He is past president of AcademyHealth, the Foundation for Health Services Research, and the International Health Economics Association. He is also a member of JAMA‘s editorial board.
The contributions individuals make out of their paychecks toward employer-sponsored health insurance are community rated, which means that they are the same for all employees of the firm, regardless of their health status and even age. So healthy employees are forced to subsidize less healthy colleagues through the premiums they pay. With the ACA, the Obama administration sought to provide the same deal for US individuals purchasing health insurance in the individual market.
For health insurers, however, this approach can be called an unnatural act, because it forces them knowingly to issue policies to very ill people at premiums evidently far below these individuals’ likely claims on the insurer’s overall risk pool. Actuaries and health policy analysts understand that this approach can work only if all individuals, healthy and ill, are mandated to purchase coverage for a defined, basic package of benefits, at the community-rated premium—thereby forcing young and healthy individuals to subsidize with their premiums the health care of individuals with medical conditions in the insurer’s risk pool.
However, for purely political reasons, the ACA mandate for all person in the United States to be insured was rather weak, leading many younger or healthier individuals simply to forgo purchasing health insurance and paying the relatively low fines for doing so. Over time, this practice naturally will drive up the community-rated premiums, inducing even greater numbers of young and healthy individuals to forgo insurance coverage, leaving private insurers with ever-more expensive risk pools.
The result of this adverse risk selection (the scenario in which sicker-than-average people purchase insurance while young and healthy people do not) has been that some private health insurers underpriced their policies on the ACA exchanges, perhaps to gain market share early on or because they simply did not anticipate quite the adverse risk selection that occurred.
