About...
Chris O’Toole
Chris O'Toole is a healthcare marketing communications and business professional with more than 25 years experience gained while a resident of Europe and since 1989 the USA. Chris has held sales and marketing positions in the pharma industry (SmithKline, Fisons and Schering-Plough) and in medical communications and business consultancy. He set up US operations for Medical Action Communications (MAC) in 1997 and became President of its US and UK business in 2000. Before MAC he was VP, International Marketing at Churchill Communications. Chris is now co-founder and Principal of Nine-TZ Healthcare Ventures, a business consultancy focused on commercial advisory and implementation for medium-sized and emerging pharmaceutical and biotech companies. His expertise is marketing, communications and management
What Price Good Health?
To many in and around the biotech and pharmaceutical industries the hot topic of the moment is the future of biogenerics in the US market. As the new administration undertakes an overhaul of the $2.5 trillion healthcare environment much of the focus is on drug costs and the increasing role of generics. But it is generally accepted that drug costs account for just 10% of total spending, so why all the attention?
Fixing US Healthcare
The cost of wellness in the United States is a major financial and collective concern. Fixing the system was one of the Obama Administration's highest priorities, making the phrase 'Healthcare Reform' increasingly well-known by most Americans.
Why so? Some claim that "the health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families".1
Indeed a recent study reported by the Robert Wood Johnson Foundation2 claimed that health insurance is becoming increasingly difficult for workers - and their employers - to afford. Premiums increased 114 percent between 1999 and 2007, while workers' earnings increased only 27 percent.
Money spent wisely?
The Big Picture shows that U.S. spending on health care - as a percentage of Gross Domestic Product (GDP) - is more than six percentage points higher than the average for other developed countries. In 2008 US spending accounted for 17% of its GDP, while the Organization for Economic Cooperation and Development (OECD) reported that health care spending accounted for 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France.
So where to start? Obama's platform called for three reforms:
1. Quality, Affordable & Portable Health Coverage For All
2. Modernizing The U.S. Health Care System To Lower Costs & Improve Quality
3. Promoting Prevention & Strengthening Public Health
While there are no quick fixes - some of these moves are clearly long term initiatives - there is a perceived need to address all aspects urgently. Few would argue that improving prevention and better attention to public health initiatives will save not just money but lives.
For example, it is widely accepted that six in 10 people in the United States are overweight, with a third considered obese. That extra weight leads to at least 100,000 deaths annually as obese people are at a much higher risk for heart attacks, strokes, diabetes, arthritis and some cancers. Direct medical costs attributable to obesity vary but a modest estimate is $93 billion with California, New York and Texas alone each spending between $5-7 billion annually treating health problems related to obesity3 . The future isn't encouraging either as 19% of children between ages 6 and 11 are now considered overweight compared with 4% in the 1970s. Clearly on a state and national level urgent education and support must be increased to promote better health and a reduction of related, avoidable costs.
Against these important but longer term initiatives lawmakers hope that some costs may be reined in sooner than later. To that end, the Senate Health Committee is planning to overhaul the U.S. health-care system before spending levels reach a projected $3.1 trillion in 2012.
So where does the money go? Taking a look at what $2.2 trillion bought in 2007 - at an average cost of $7,421 per person - healthcare spending was allocated as follows: 31 percent to hospitals, 21 percent to physicians and clinics, 7 percent for administrative costs, 10 percent to prescription drugs, 25 percent to "other" and 6 percent to nursing homes. Such broad categories are somewhat helpful but what lies beneath "other" or "administrative costs"?
1. The National Coalition on Health Care
2. High and Rising Health Care Costs: Demystifying U.S. Health Care Spending
3. Centers for Disease Control; Estimated Adult Obesity-Attributable Percentages and Expenditures, by State (BRFSS 1998-2000)