Data, Facts, Opinions


George’s Corner

Data, Facts, Opinions

George Pennebaker, Pharm.D.

The difficulty arises when we make measurable things important rather than make important things measurable.

What a pharmacy benefits manager’s (PBM’s) drug trend report reveals is interesting, but what it conceals is essential.

Many of the readers of this column have learned a lot about analyzing data. Much of that education is used to truly understand charts and statistics that are laid on us. There is a saying that goes, “Ask a statistician for an answer and the statistician will ask: What do you want to prove?” Is a 50% decrease in a side effect important if only one in a million has the side effect?

However, it is well known that people make most of their decisions based upon instinct and emotions rather than data. Take the issue of climate change. The data is clear, the emotions (we couldn’t possibly be the cause of a problem that we don’t experience personally) get in the way of rational decisions.

Pharmaceutical economics are extremely complicated. Think of all of the factors that need to be integrated into an understanding. Here are a few, in no particular order: Medicare, Medicaid, insurance programs, drug development costs, manufacturing costs, PBMs, prescribers (many types with many pressures), dispensers, stockholders in profit-making entities, wholesalers, media (selling ads), FDA, and, oh yes, patients. And we cannot ignore the www. Everybody is getting information, good and bad, from the Internet. Who sorts out which information is good and which is bad?

Then think about how all of these interact. Here’s one example: I heard that one in every eight prescriptions is written at the request of the patient. I asked a physician about that. He said, “Sure, I do it all of the time. If I don’t think it is a good idea, I need to spend 30 minutes telling the patient why, and I don’t convince them, and I also lose the patient to a physician who will write the prescription.” The advertising won. (The United States is the only major nation that allows the advertising of prescription drugs.)

The Affordable Care Act (aka Obamacare) has three problem areas. Hospitals — how should they be reimbursed? Healthcare insurers — what should be their role? And drug economics — how to keep the manufacturers happy?

In the interest of making this short, I will skip the first two. The third one was solved by including a provision that prohibits the government from bargaining with the drug manufacturers. Every other developed country in the world bargains with the drug manufacturers. This free enterprise exercise results in them getting lower prices. The seller and buyer are sitting down and bargaining about the price. The result is that the highest prices are those in the United States. (I like to call this “hidden foreign aid.”)

So Congress has hearings, newspapers (sellers of advertising) write editorials, and people grumble about it at their local Starbucks.

The important things that need to be measured have to do with the effects upon healthcare and healthcare costs.

Speaking of healthcare costs, it is becoming apparent that the prices for drugs are based upon what the cost of care would be for the patient if the drug did not exist. Not upon how much it costs to develop and make the drug. If it is going to cost $80,000 to take care of this patient without using this drug, and it takes 80 tablets to cure the disease, those tablets must be worth $1,000 each. I cannot think of another example of product pricing that is so constructed.

I guess at this point I should refer you to a statement that appears in every issue of ComputerTalk: “Opinions expressed in bylined articles do not necessarily reflect the opinion of the publisher or ComputerTalk.” I see what I am saying as facts, but others may interpret it as opinions. So be it. I encourage those who see my remarks as being opinions and have contrary opinions to email your thoughts to me.

I am bothered by the number of “news” articles that moan about the high cost of drugs without examining the causes. They only say that the manufacturers are being greedy. (Just about everyone would like to get paid a little more for what they do. Me too.) The articles contain little analysis of the forces that exist in this very complex market.

What I would like to see is a full analysis and discussion of the forces that come to bear on the pricing of drugs. Perhaps some think tank could do it with some leftover funds. Being a bit of a skeptic, I can’t think of any grant provider that would like to fund such an effort.

But also being an optimist, I am looking forward to the day when we are able to move forward and deal with these economic issues that have such a great impact on our healthcare costs, and therefore on our health. CT

George Pennebaker, Pharm.D., is a consultant and past president of the California Pharmacists Association. The author can be reached at; 916/501-6541; and PO Box 25, Esparto, CA 95627.


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