DAILY TRIFECTA: The Healthcare System Doesn't Suck. It Just Sucks For You.
Milton Friedman's School Of Medicine
THE SET-UP: America’s profit-motivated health insurance-based system is nuts. That nuttiness laid bare when you look at what it costs. The Kaiser Family Foundation crunched the numbers:
Health expenditures per person in the U.S. were $12,555 in 2022, which was over $4,000 more than any other high-income nation. The average amount spent on health per person in comparable countries ($6,651) is about half of what the U.S. spends per person.
And what’s different about the other “high-income” nations? Whether it’s Canada, the United Kingdom, Belgium, France, Germany, Austria, the Netherlands, Sweden … they’ve all embraced healthcare as a human right and, therefore, they all have universal, government-run (or funded) healthcare-based systems.
The United States, on the other hand, has a privately-run (or managed) health insurance-based system. Healthcare is patient-oriented. Its goal is good health and a positive prognosis. Health insurance, on the other hand, is a bet. Health insurers are betting that over time they’ll earn more from you than they’ll pay out because of you. Health insurance’s goal is profit. Health insurance is designed to benefit the insurer, not the patient.
As well it should.
The Neoliberal Gospel According to Milton Friedman is clear on this point. CEOs and business leaders have an ethical obligation to maximize return on investment. Period. It’s their highest obligation. It might even be their only obligation. Business is in the business of increasing its revenue, its market share, its market capitalization and its after-tax profit. Its only “job” is to produce results for shareholders. Everything else is just an externality. - jp
TITLE: What a $2 Million Per Dose Gene Therapy Reveals About Drug Pricing
https://www.propublica.org/article/zolgensma-sma-novartis-drug-prices-gene-therapy-avexis
EXCERPTS: Vincent Gaynor remembers, almost to the minute, when he realized his part in birthing the breakthrough gene therapy Zolgensma had ended and the forces that turned it into the world’s most expensive drug had taken over.
It was May 2014. He and his wife were sitting in the cafeteria at Nationwide Children’s Hospital in Columbus, Ohio.
Elsewhere in the hospital, an infant — patient No. 1 in a landmark clinical trial — was receiving an IV infusion that, if it worked, would fix the genetic mutation that caused spinal muscular atrophy, a rare, incurable disease. At the time, children born with the most severe form of SMA swiftly lost their ability to move, to swallow, to breathe. Depending on the disease’s progression, most didn’t live to their second birthdays.
The Gaynors’ daughter Sophia had been diagnosed with SMA five years earlier. Since then, they’d raced to fund research to save her. Their charity, Sophia’s Cure, was covering a substantial portion of the costs of the trial.
They’d helped raise about $2 million for a program at Nationwide run by Brian Kaspar, a leading researcher. Gaynor, a New York City construction worker, had forged a tight bond with Kaspar, speaking frequently with him by phone, sometimes deep into the night.
But their relationship had started to fray when — with success in sight — Kaspar became part owner of AveXis, a biotech startup that had snapped up the rights to his SMA drug. Billions of dollars were at stake.
When Kaspar walked into the cafeteria that day, Gaynor said, the scientist didn’t acknowledge him or his wife before sitting down a short distance away. Neither did the man with him, the startup’s CEO.
“It was like they didn’t know us,” Gaynor recalled.
When Zolgensma hit the market five years later, it was hailed as a miracle drug. Some babies treated with it grew up able to run and play. It helped reduce U.S. death rates from SMA, long the leading genetic cause of infant mortality, by two-thirds.
That leap forward came at a sky-high price: more than $2 million per dose, making Zolgensma then the costliest one-time treatment ever.
How did a drug rooted, like many, in seed money from the U.S. government — that is, American taxpayers — and spurred by the grassroots fundraising of desperate parents, end up with such a price tag?
The story of Zolgensma lays bare a confounding reality about modern drug development, in which revolutionary new treatments are becoming available only to be priced out of reach for many. It’s a story that upends commonly held conceptions that high drug prices reflect huge industry investments in innovation. Most of all, it’s a story that prompts, again and again, an increasingly urgent question: Do medical advances really have to be this expensive?
ProPublica traced Zolgensma’s journey from lab to market, from the supporters there at the beginning to the hired guns brought in at the end to construct a rationale for its unprecedented price.
We found that taxpayers and private charities like Sophia’s Cure subsidized much of the science that yielded Zolgensma, providing research grants and opening the door to federal tax credits and other benefits that sped its path to approval.
Yet that support came with no conditions — financial or otherwise — for the for-profit companies that brought the drug over the finish line, particularly when it came to pricing.
Once Zolgensma’s potential was clear, early champions like the Gaynors were left behind as the private sector rushed in. AveXis’ top executives and venture-capital backers made tens or hundreds of millions of dollars apiece when the startup was swallowed by the pharmaceutical giant Novartis AG in 2018.
Wall Street analysts predicted Novartis’ new prize drug would be the first therapy to smash the million-dollar-a-dose mark. The Swiss colossus crafted a sophisticated campaign to justify more than double that amount, enlisting a team of respected academics, data-modelers and pricing strategists to help make its case.
“This was a case where the charities and the government did everything to get this thing commercialized, and then it just became an opportunity for a bunch of people to make transformative, generational wealth,” said James Love, director of the public advocacy group Knowledge Ecology International.
In a statement to ProPublica, Novartis said Zolgensma’s price reflects its benefits to children with SMA and to society more broadly.
“Zolgensma is consistently priced based on the value it provides to patients, caregivers and health systems,” the company said, adding that the drug may reduce the burden of SMA by replacing “repeat, lifelong therapies with a single treatment.”
Zolgensma’s price quickly became the standard for gene therapies. Nine of them cost more than $2 million. A tenth, approved in November, is predicted to run about $3.8 million, just shy of the most expensive, also approved last year, which costs $4.25 million a dose.
“Drug companies charge whatever they think they can get away with,” said David Mitchell, the founder of Patients For Affordable Drugs. “And every time the benchmark moves up, they think, ‘Well, we can get away with more.’”
TITLE: Health companies return $2.6 trillion to shareholders over time amid rising medical costs
https://www.usatoday.com/story/money/2025/02/12/health-companies-profit-as-taxpayers-consumers-pay-more-study-finds/78340681007/
EXCERPTS: Consumers have grown accustomed to rising prices and red tape when filing a health insurance claim or filling a prescription. But for investors, health care has proven to be a lucrative industry to grow their returns.
Payouts to shareholders of large publicly traded health companies more than tripled over the past two decades, new research shows. In 2022, these companies paid $170 billion to shareholders in dividends and stock buybacks, a 315% increase over the $54 billion paid out in 2001, according to a study published Monday in peer-reviewed JAMA Internal Medicine.
A total of 92 companies that appeared in the broad S&P 500 index returned $2.6 trillion to shareholders from 2001 through 2022, according to the study.
The study highlights the flow of money in health care at a time when many patients struggle with rising bills and medical debt.
Consumers and employers ultimately contributed to corporate health profits by paying for insurance premiums, out-of-pocket medical bills and taxes, according to Victor Roy, a physician and researcher at the University of Pennsylvania, Penn Presbyterian Medical Center, who led the study.
"The fact that that money goes to shareholders, at this scale, is something that we should have as part of our public debate," Roy said. "We should care about whether this is the most effective way for allocating the dollars that come from all of us."
Taxpayers underwrite most of the nation's health care spending through tax breaks and direct spending on programs such as Medicare, which covers adults 65 and older, and Medicaid, which covers low-income families. Employers who provide health insurance to workers and their families also get tax benefits, and nonprofit hospitals get billions in federal, state and local tax breaks.
Roy teamed with Yale University researchers to calculate how much money large health care corporations returned to shareholders.
The researchers collected data on 92 health-related companies that appeared in the S&P 500 index for at least three months between 2001 and 2022. They calculated corporate profits returned as dividends or share buybacks, which describes companies that repurchase shares to shore up a firm's share value.
The study said 19 companies made about 80% of the total payouts over this period. Drug companies dominated list with Pfizer, Johnson & Johnson, Merck, and Amgen paying out the most lucrative returns, the study said. UnitedHealth Group, the health insurance giant that also owns the pharmacy benefit manager Optum Rx, ranked 5th.
Pharmaceutical companies collectively returned $1.2 trillion over the two-plus decades. Biotechnology and managed care companies ranked 2nd and 3rd on shareholder payouts, the study said.
The study didn't address private equity investors that have targeted specialty practices in certain states and metro regions. A National Bureau of Economic Research paper by researchers from Yale, Northwestern and the University of Chicago revealed 18 metro regions found serial anesthesiology acquisitions, known as "rollups," resulted in fewer provider choices and higher bills for consumers.
Nonprofit hospitals collect billions in federal, state and local tax breaks. One study by Johns Hopkins University and Texas Christian University researchers estimated the nation's nearly 3,000 nonprofit hospitals were spared $37.4 billion in federal, state and local taxes in 2021.
Dr. Vikas Saini, president of the Lown Institute, a Massachusetts-based health think tank, said the Roy's study raises an important question. How much profit is reasonable given U.S. taxpayers pay for a significant amount of health spending?
"It's a value question for the society," Saini said. "Is there a point where it's perfectly reasonable or is there a point where it's totally obscene? Clearly, for shareholders, it's not obscene. They love it."
TITLE: Doctors Affiliated With Private Equity Firms Typically Charge More Than Others: Study
https://www.aboutlawsuits.com/doctors-private-equity-firms-charge-more-study/
EXCERPTS: A new study suggests that patients visiting primary care doctors affiliated with major hospitals or private equity-owned facilities typically pay substantially higher costs, even though they do not appear to be receiving any better care.
The share of primary care doctors affiliated with hospitals rather than independent practices has risen by 23% over the past decade, according to a study published in JAMA Health Forum on January 17. Researchers warn that more doctors than ever are now linked to large hospitals or private equity firms, which could pose a serious health risk to Americans.
Researchers from Brown University School of Public Health analyzed data from PitchBook and IQVIA to study network-associated rates and doctor affiliations. They studied 198,000 primary care doctors in 2022, including more than 226 million negotiated prices across four national insurers, including Aetna, Blue Cross Blue Shield, Cigna and United Healthcare.
The study found that nearly half of all primary care doctors are now affiliated with hospitals, up from 25% in 2009 to 48% in 2022. Over the same period, 1.5% of doctors became linked to private equity firms.
The data indicates prices for doctors affiliated with private equity firms or hospitals were higher than prices among independent doctors who operated their own offices. Prices for office visits and other care costs among hospital-affiliated doctors were 11% higher, or nearly $15 higher per treatment than independent doctors.
Prices for doctors owned by private equity firms were 8% higher, or $9.56 higher per treatment, than those for independent doctors.
Researchers noted that doctors affiliated with private equity firms were concentrated in certain regional markets that were considered more profitable. But overall, primary care doctors affiliated with hospitals and those affiliated with private equity firms had higher prices while offering the same services.
Primary care doctor’s offices are not the only form of healthcare being acquired by private equity firms. They are also gobbling up an increasing number of emergency rooms.
Early last year lawmakers raised concerns over the lack of quality healthcare patients receive in ERs managed by private equity firms. In addition, a report published by Harvard researchers in early 2024 indicated patients face an increased risk of being injured or suffering a serious health side effect in hospitals owned by private equity firms.
Just last month a report released by the U.S. Senate Budget Committee warned private equity firms are a major threat to U.S. healthcare. The report said private equity firms prioritize profits over patient care as they typically buy hospitals, drastically cut costs, and resell the hospitals later for a profit after cannibalizing its services and equipment.