The International Federation of Health Plans has published the 2015 Comparative Price Report, Variation in Medical and Hospital Prices by Country. Once again this illustrates the excessive cost of health care in the USA. See related posts for some of our previous posts on this topic.
The damage to the USA economy due to inflated health care costs is huge. A significant portion of the excessive costs are due to policies the government enacts (which only make sense if you believe the cash given to politicians by those seeking to retain the excessive costs structure in the USA the last few decades buy the votes of the political parties and the individual politicians).
In 2015, Humira (a drug from Abbvie to treat rheumatoid arthritis that is either the highest grossing drug in the world, or close to it) costs $2,669 on average in the USA; $822 in Switzerland; $1,362 in the United Kingdom. This is the cost of a 28 day supply.
All the prices shown here are for the prices reported are the average allowed costs, which include both member cost sharing and health plan payment. So it only includes costs for those covered by health plans (it doesn’t include even much larger price tags given those without insurance in the USA).
Harvoni (a drug from Gilead to treat hepatitis C is also near the top of drugs with the largest revenue worldwide). This is also a drug that has been used as a lightning rod for the whole area of overpriced drugs. One interesting thing is this is actually one that is not nearly as inflated in the USA over other countries nearly as much as most are. Again, for a 28 day supply the costs are $16,861 in Switzerland; $22,554 in the United Kingdom and $32,114 in the USA. Obviously quite a lot but “only” double the cost in the USA instead of over triple for Humira (from Switzerland to the USA).
Tecfidera is prescribed to treat relapsing multiple sclerosis. The cost for a 30 day supply vary from $663 in the United Kingdom to $5,089 in the USA ($1,855 Switzerland).
There are actually some drugs that are more expensive outside the USA (though it is rare). OxyContin is prescribed to treat severe ongoing pain and is also abused a great deal. The prices vary from $95 in Switzerland to $590 in the United Kingdom ($265 in United States).
The report also includes the cost of medical procedures. For both the drugs and the procedures they include not only average but measures to show how variable the pricing is. As you would expect (if you pay attention to the massive pricing variation in the USA system) the variation in the cost of medical procedures is wide. For an appendectomy in the USA the 25th percentile of cost was $9,322 and for the 95th was $33,250; the average USA cost was $15,930. The average cost in Switzerland was $6,040 and in the United Kingdom was $8,009.
As has been obvious for decades the USA needs to stop allowing those benefiting from the massively large excessive health care costs in the USA from buying the Democrats and Republicans support to keep prices so high. But there has been very little good movement on this front in decades.
Related: USA Heath Care System Needs Reform – USA Health Care Spending 2013: $2.9 trillion $9,255 per person and 17.4% of GDP – Decades Later The USA Health Care System is Still a Deadly Disease for Our Economy – USA Spends $7,960 per person Compared to Around $3,800 for Other Rich Countries on Health Care with No Better Health Results (2009) – Drug Prices in the USA (2005)
Comments
4 Comments so far
John, I’m not at all convinced that the comparative data are fair. A single provider was the source for countries other than the US. Personally I’d rather see distributional data more like a box plot than solid blocks representing the mean. But I agree that it is inexcusable that we tolerate the drug companies in particular and health care providers in general to set rates way out of line with common levels outside the US.
What do you mean by “not at all convinced that the comparative data are fair”? I do agree that this is a limited view, it provides some understanding but you have to realize it is far from complete.
I agree their display is not so great (with those solid blocks). It was nice they even included the data on 25th percentile and 95th percentile to give us at least a bit of a view of the variation.
I would also like to see total size of the market for the various drugs. I happen to know 2 of those they used (that I mentioned above are huge) but on some of the others I have no idea if they are some tiny sliver or a very large drug (variation in tiny drugs is less important).
I would also like to see why drugs like OxyContin break the normal pattern so clearly – I suspect the UK may be trying to reduce the use of it (either on grounds of something like a better alternative or due to the abuse of it outside the prescribed use)? Or it could also be things like giving preference to some UK drug or something else?
Health care costs are so huge that in affect everyone in the USA pays a huge tax that just transfers money to those benefiting from the current system (medical specialists, drug companies, etc.). Other special interests have bought favors but when the sugar or some other small industry taxes the rest of us the cost is so tiny that it isn’t a big deal (still unfair and lame but not very costly). Health Care in the USA is 17.5% of GDP and rising – that is a huge tax on all of us.
Sadly, I don’t see this changing. I own both Abbvie and Gilead stocks because I see they are very likely to continue to buy both political parties very easily. At least I will partially be able to afford paying this huge yearly tax with investments that will gain profits from me and everyone else paying the tax to them.
I also see the huge market of many billions of rich people around the globe that can afford drugs growing greatly in the next 20 years and billions are also aging and will require more drugs (which will benefit drug companies a huge deal). The stocks likely would do well even if the USA changed to reduce the ludicrous transfers to the drug companies and hospitals etc. the current system perpetuates.
But likely that won’t happen so on top of good prospects, good macroeconomic conditions they will benefit from buying the 2 political parties in the USA. I wish they wouldn’t but given that it is going to continue happening (most likely) and how large that tax is on everyone if you don’t have ways to pay for that portion of the costs you have to your future finances will suffer. If the political parties were to change and stop diverting say at least 6% of GDP as excess costs the current system creates the benefits will be huge and while those 2 investments will suffer from that hit other investments will greatly benefit and costs (health insurance, health costs imbedded in everything we buy, drug costs if I ever need any prescriptions drugs…) will greatly decline.
I do think several large USA drug companies are very good investments with a huge kicker for USA investors particularly in that if health costs keep skyrocketing in the USA likely those investments will do very well (so you have gains to pay the increased costs). And if that category of stocks loses the extra profits due to buying favors from the Democrats and Republicans the expense you face will be significantly reduced. So either way you benefit. Of course, it could be you are hit by bad management at one company or bad luck (huge drugs have very big potential profit risks) or even a situation where drug companies stocks do poorly (say they get the extra “tax” they receive stripped from their profits) but the overall burden of the USA health care system doesn’t decline (the other special interests manage to protect themselves). But I think those are unlikely.
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