Page 22 - Summer 2024 Bulletin

Medical-Industrial Complex
Big Pharma, the Scapegoat
Richard F. Lockey, MD* rlockey@usf.edu
Dwight David Eisenhower began and ended his presidential term, Jan- uary, 1953 – January, 1961, respec- tively. In his farewell presidential address, he warned the nation about the increasing amount of resources devoted to the “military-industrial complex.” In 1961, approximately 9 to 10% of the gross national product (GNP) was spent on national de- fense. This percentage had dropped
Why is it there so much misinformation about “Big Pharma” and the 8.9% cost versus the 91.1% of which goes elsewhere? First, the pharmaceutical industry is the scape- goat for politics, politicians, and others. It is an easy tar- get. It is much more convenient to blame a limited number of pharmaceutical firms than tamper with hospital costs, physician costs and charges, and the salaries of healthcare professionals. The latter all vote. Second, patients are often required to pay a co-pay or completely pay for medication, particularly if it is not on their formulary. In some cases, physicians and other healthcare professionals do not take the time to prescribe a substitute drug that is on their for- mulary. Third, pharmaceutical firms advertise with ads that exude high costs for the ad itself, not just the medication. Fourth, patients usually will not forgo medications. They take priority in today’s personal or family budget, more and more in jeopardy because of inflation. Fifth, when patients see physicians, many times a deductible is already met or the care delivered is much more personal, and therefore not as annoying as picking up a prescription and having to pay something at the local drug store. The common knowledge of the notable cost differential for identical medications in different countries also plays a role.
I think you will agree and like many, be surprised that only 9.8% of healthcare costs go to the pharmaceutical in- dustry, amazingly low versus the overall healthcare costs. The pharmaceutical firms are the golden geese that lay the golden eggs, i.e., a variety of new and remarkable pharma- ceutical products that allow patients to survive cancer, infec- tious, chronic inflammatory, and cardiovascular diseases, as well as many other illnesses.
As an allergist/immunologist, I have seen the care of asth- ma change dramatically over the past 50 years; the changes are miraculous. When I first joined the faculty at USF in 1973, hospitalizations and deaths from asthma were not uncommon. The first or second reason why patients, both adults and children, went to the emergency room or were hospitalized was because of asthma. Today, that’s no lon- ger true. Asthma is now the most treatable chronic disease known to mankind because of our better understanding of its pathogenesis, its comorbid conditions, and the incredible medications available to treat it. I am proud to say that the
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Richard F. Lockey, MD
from approximately 15% in 1953, near the end of the Korean War. In the year 2022, the percentage of military expen- diture of the GNP in the United States was around 3.45%. This, versus the approximate 17.3% spent on healthcare that same year. Today, the share of the GNP devoted to health- care in the United States over the past several years is as fol- lows: 2020, 19.5%; 2021, 18.2%; and, as stated above, 2022, 17.3% or 4.5 trillion dollars (CMS.gov). Today, rather than the “military-industrial complex,” we have witnessed the growth of the “medical-industrial complex.”
The reasons for the increase are not appreciated by most physicians or other healthcare professionals nor are they by the public. I polled some of my MD colleagues via an email and asked them: “What percent of the healthcare dollar in the USA goes to the pharmaceutical industry?” The answers included: 10, 20, 35, 50, or 60 percent. I did the same with patients who visited the clinic one day of the week. Among physicians, the average answer was 30% and ranged from 10% (3) to 50 or 60% (3) out of the 12 who replied. What about lay individuals? The same written question was asked of them as they entered the clinic. Results: 17 responded, the average answer, 43%; 2 answered 10%; and 11, 50 or 60%.
The United States spent $4.25 trillion on healthcare in 2021 (AMA update). Where did it go? Hospital care, 31.1%; physician services, 14.9%; clinical services, 5.4%; home health care, 2.9%; nursing care facilities, 4.3%; prescription drugs, 8.9%; other personal healthcare, 16.0%; government administration, 1.2%; net cost of health insurance, 6.0%; government public health, 4.4%; and investment, 4.9%. Note, once again, prescription drugs made up 8.9% of the total expenditures for USA healthcare.
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HCMA BULLETIN, Vol 70, No. 1 – Summer 2024