America Pays More for Branded, Less for Generic

Americans are asked to pay the highest prices in the world for brand name pharmaceuticals.  How much higher?  In the report Multinational Comparisons of Health Systems Data, 2009, Johns Hopkins researchers Gerard F. Anderson, Ph.d., and Patricia Markovich provide two examples.  

Lipitor is one of the world's most prescribed medicines to treat high levels of serum cholesterol.  In 2008, it was the most dispensed medicine and the medicine with the most sales revenue in America as you'll see in Table 1 and Table 2 here.  In 2006-2007, Americans and their health plans paid about twice as much as health plans and citizens of seven other nations paid.  Americans paid almost $1 per tablet (or 54 percent) more for Lipitor than Canadians, who paid the next highest price.  (Click to enlarge graph.)

If the graph, above, gives you heartburn, you really won't like what you see next.  Nexium, used to treat gastroesophageal reflux disease, was the seventh most dispensed medicine in America in 2008, but because of its relatively higher price, produced the second largest sales revenue as you can see in Table 1 and Table 2 here.  (Click to enlarge graph.)

Canadians' health plan paid about half what Americans paid for Nexium. Citizens of the United Kingdom, the Netherlands and France and their health plans paid about one-third what Americans paid for Nexium. German's paid only 22.5 percent of what Americans paid for this medicine.  For more on Nexium's history, read this.

One bright spot in America's pharmaceutical costs is in generic medicines.  Our costs are generally lower than those of the rest of the world as Anderson and Markovich demonstrate in this table.  (Click to enlarge table.)

Why are generics less expensive in the United States?  In a study authored by Patricia Danzon, a Wharton health care systems professor, and Michael Furukawa, a Wharton doctoral candidate funded by Merck and Company and appearing in Health Affairs in 2003, competition is an important part of the answer.  

Because some generics are available from multiple sources, whereas branded drugs and some generics are available from only a single source, competition can work to lower prices where multiple manufacturers compete.  In most countries compared with the United States, prices for drugs are negotiated or regulated,  keeping brand name prices lower relative to the U. S., but, according to Danzon, resulting in higher post-patent pricing.  Danzon does not explain why she believes this is so.  

Certainly there is no requirement that lower brand name negotiated prices must lead to higher post-patent pricing.  Post-patent drugs are usually made by a different manufacturer than the brand name manufacturer, so negotiations or price controls could be as strict for generic as for name-brand products.  Perhaps negotiations are based on therapeutic equivalency, so that a country is unwilling to pay much more for Nexium, than for Prilosec, Nexium's predecessor, which is now available as an over-the-counter medicine in America.

Generic drugs, with their lower relative cost and growing share of pharmaceuticals dispensed in the United States -- 68.3 percent in 2008 according to IMS, and growing -- is one bright spot, helping to control overall prescription drug spending in the United States.  

America Pays Most for Pharmaceuticals

For years, Americans have crossed borders to Canada or Mexico to access the far lower-priced branded pharmaceutical products available in those countries.  A few years ago, several states were setting up websites to enable residents to purchase medicines from Canadian pharmacies, essentially getting around prohibitions on drug reimportation.

So, how bad is it?  In the report Multinational Comparisons of Health Systems Data, 2009, Johns Hopkins researchers Gerard F. Anderson, Ph.d., and Patricia Markovich provide some examples.  

At $878 per capita, pharmaceutical spending was highest in the United States, by far, than in any of the 11 countries compared.  Pharmaceutical spending per capita in the United States was nearly twice as high as the median of $446 in 30 Organization for Economic Cooperation and Development (OECD) Countries.  Americans spend 27 percent more per capita for pharmaceuticals than the next most expensive country -- Canada, as you can see in this graph.  (Click to enlarge graph.)

The report's authors, provide another way to look at the relative costs of prescription medicines.  Comparing prices for the 30 most commonly prescribed drugs in 2006 and 2007, and setting the United States at a relative position of 1.0, the rest of the countries compared pay only a fraction of the amount paid in America.  Canadians pay 23 percent less.  The British pay 49 percent less.  The French pay 56 percent less.  New Zealanders pay 66 percent less.  (Click to enlarge graph.)

Tomorrow, I will take a look at prices for two of the world's most prescribed prescription medicines, and also look at one area where pharmaceuticals in America cost less than in the rest of the world.

America's Health Care Compares Poorly, Part II

America ranks last in potential years of life lost to diseases of the circulatory system and the respiratory system.  

Gerard F. Anderson, Ph.D., and Patricia Markovich, Johns Hopkins researchers, have compared the performance of several nations' health systems in a report supported by The Commonwealth Fund, entitled Multinational Comparisons of Health Systems Data, 2008.  We ranked last among eight developed nations in potential years of life lost to diseases of the circulatory system.  (Click to enlarge graph.)

America suffered about 50 percent more potential years of life lost when compared to the next poorest performing country -- the United Kingdom.   France and Switzerland suffered fewer than half the potential years of life lost as the United States.

America also suffered the most potential years of life lost to diseases of the respiratory system.  Five of the eight countries compared had fewer than half as many potential years of life lost as did America.  (Click to enlarge graph.)

The Patient Protection and Affordable Care Act will help America improve its performance on these measures, and those discussed yesterday.  Health reform will provide improved access to preventive services and more timely diagnosis and treatment of disease.  

Our cardiologists and vascular surgeons, our endocrinologists and pulmonologists are among the best in the world.  Health reform will get patients to primary care physicians early so that some disease can be prevented.  Because more of us will have regular access to primary care physicians, more disease will get diagnosed early.  This will enable patients to see specialists soon enough that they will be able to use their skill and knowledge to heal more of us.

America's Health Care Compares Poorly

America suffers far more Years of Potential Life Lost for several disease categories than do other developed countries that provide universal coverage for their populations.  The years of potential life lost calculation considers the age at death, so more potential years of life are lost when a 20-year-old dies from any cause than when a 74-year-old dies from the same cause.

Gerard F. Anderson, Ph.D., and Patricia Markovich, Johns Hopkins researchers, have compared the performance of several nations' health systems in a report supported by The Commonwealth Fund, entitled Multinational Comparisons of Health Systems Data, 2008. Their research shows that the United States health system performed best in its treatment of malignant neoplasms (cancer) as you'll see in the following graph.  

While this was the best performance of the America's health system, we still ranked in the bottom half of the eight countries compared, with four countries suffering fewer potential years of life lost per 100,000 people, and three countries suffering more potential years of life lost per 100,000.   France, which has the world's top rated health sytem, turned in the worst performance of the eight countries compared.  (Click to enlarge graph.)

As I discussed here, America ranks last among eight nations in the potential years of life lost due to diabetes.  The United States' suffered nearly four times more potential years of life lost per 100,000 as did France, the United Kingdom and Switzerland.  America suffered about 50 percent more potential years of life lost per 100,000 than the next worst performing country -- New Zealand.

Tomorrow, we'll look at how the United States compared with other countries in potential years of life lost to circulatory and respiratory diseases.

Universal Care Produces Bigger Life Expectancy Improvement

In work done a year earlier than that I've been looking at recently, Gerard F. Anderson, Ph.D. and Patricia Markovich of Johns Hopkins, did more detailed analyses of mortality variances among nations for The Commonwealth Fund.  In the study, entitled Multinational Comparisons of Health System Data, 2008, the authors report the change in life expectancy at birth for the 20 year period 1986-2006.  For the period, covering nearly a generation, the United States showed the smallest improvement among the nine countries compared as you can see in this graph.  (Click to enlarge graph.)

In another look at relative change in life expectancy between countries, the authors looked at how life expectancy at age 65 has changed over the same 20 year period.  Here, the United States' relative position improves modestly, but still shows the eighth smallest change among nine nations for the period.  (Click to enlarge graph.)

These data support an argument in favor of health reform.  In nations which have universal coverage, life expectancies are generally longer than in the United States, as we saw here.  And, as noted today, progress in improving life expectancy has been better in countries with universal coverage than the progress made in the United States during the period from 1986 to 2006.  I expect that the Patient Protection and Affordable Care Act will begin to bring some of these benefits to America, when the law takes full effect.

Universal Coverage Improves Preventive Care

One area where America is far behind in delivering high quality health care is in the area of preventive services.  Preventive services are not terribly expensive, yet they pay enormous dividends in avoiding far greater costs that come from needing to treat preventable illness, or to treat poorly managed disease.

Gerard F. Anderson and Patricia Markovich, two researchers at Johns Hopkins, completed a study funded in part by Commonwealth Fund entitled Multinational Comparisons of Health Systems Data, 2009.  Two interesting comparisons show the strong benefits of universal coverage in obtaining better preventive healthcare outcomes.

The following graph shows the impact of poor diabetic care in the United States versus nine other countries.  Americans lose 99 years of life per 100,000, a rate that is 50 percent greater than the next worst performing country, and a rate that is three to five times greater than eight other countries.  American endocrinologists can manage diabetes as well as specialists in other countries, but patients need the financial resources to allow for regular follow-up care, routine monitoring and supplies, and insulin and/or medicines required to treat the disease.  (Click to enlarge graph.)

While not a perfect comparison, the following chart, which shows immunization rates for those over age 65, supports the argument that with universal coverage, we do about as well as other nations.  Because of Medicare, those over 65 are the only American population cohort that currently enjoys universal coverage.  When compared with other nations immunization rates, the United States' senior population falls in the middle of the pack -- having the fifth highest influenza immunization rate among 10 countries.  (Click to enlarge graph.)

Universal coverage also produces better outcomes for diseases that we know how to treat.  You can read more here about how America ranks last among 19 countries in preventing mortality resulting from diseases that we can treat successfully when patients have access to insurance coverage.

When the Patient Protection and Affordable Care Act is fully implemented, life will be better, and there will be more of it for American diabetics.  When this important law is fully implemented, life will be better, and there will be more of it for all Americans.

U. S. Has Lower Life Expectancy

Johns Hopkins researchers Gerard F. Anderson's and Patricia Markovich's study Multinational Comparisons of Health System Data, 2009, includes the following graph showing life expectancy at birth for 12 countries.  The U. S. ranks last, having the shortest life expectancy for males and females among the 12 countries compared.  (Click to enlarge graph.)

Using data from the Organization for Economic Cooperation and Development, I have developed a graph to show life expectancy at age 65.  While the U. S. position improves modestly, it still ranks near the bottom of the 12 countries measured. (Click to enlarge graph.)

It is reasonable to expect that as more Americans come to receive the benefits of health insurance coverage and preventive care through the Patient Protection and Affordable Care Act, our life expectancies should increase.

Universal Coverage Leads to More Physician Care

It is reasonable to assume that a country that covers its entire population will experience more physician visits per capita than a country, like the United States, which covers only 83 percent of its population.  

The study Multinational Comparisons of Health System Data, 2009, funded in part by Commonwealth Fund and conducted by Johns Hopkins researchers  Gerard F. Anderson and Patricia Markovich supports that assumption.  

Here's a graph showing physician visits per capita for 11 countries.  The United States has, on average only 60.3 percent of the physician visits as the average Organization for Economic Cooperation and Development country studied.  (Click to enlarge graph.)

Some have worried that as government plays a larger role in the health care system, the supply of physicians will shrink.  After all, physicians in nearly every country around the world earn less than physicians in the United States.   Without a strong financial incentive, why would anyone endure a long course of study in medical school and years of work in a residency program?   

The following chart seems to dispel that concern.  Of 12 countries studied, the average OECD median number of practicing physicians per 1,000 population was 50 percent higher than the number of practicing physicians in the United States, as seen in the following graph.  (Click to enlarge graph.)

Knee, Hip and CABG Rates

Today, I continue to explore how medical services are provided in the developed world using Johns Hopkins researchers Gerard F. Anderson's and Patricia Markovich's study Multinational Comparisons of Health System Data, 2008.  

The following graph shows the rate of knee and hip replacement operations performed in five developed countries.  Note the U. S. ranks first in the rate of knee replacements performed per 100,000, but last in the number of hip replacements.  In Italy, the United Kingdom, Germany and France, roughly two hip replacements are performed for each knee replacement.  In the United States, 1.2 knees are replaced for each hip replacement.  Are Americans equipped with stronger hips but weaker knees than Europeans?
(Click to enlarge graph.)  

The United States ranks second among 12 countries in its rate of coronary artery bypass grafts (CABG) performed per 100,000 people.  Interestingly, the rate of CABG in Germany is 55 percent above the rate in the United States.  (Click to enlarge graph.)

These data do not provide evidence of severe restriction of health services in countries which provide universal health coverage for their populations.  

Less Hospital Care in U. S.

Continuing to explore Gerard F. Anderson's and Patricia Markovich's  study Multinational Comparisons of Health System Data, 2008, today, I look at the provision of services.  One of the reasons often cited for opposing the Patient Protection and Affordable Care Act is an irrational fear that government will withhold services or restrict the supply of services in ways that harm the population that elects the government.  

So, how do things in the United States compare with the rest of the developed world which has adopted programs to provide universal health care coverage?  The following chart shows that most of the world gets more hospital care than do Americans.  The number of hospital discharges per thousand is higher in eight of the 12 countries examined, and lower than the rate of discharges per thousand in the United States in only two countries.  In France and Germany, the number of discharges per thousand averages two times as many as in the United States.  (Click to enlarge graph.)

Following a heart attack, the amount of time patients spend in the hospital is longer in eight of 11 countries studied, than in the United States, and shorter than the United States' average in only two countries.  (Click to enlarge graph.)

These data, while not definitive, do not support a concern that health care services are severely restricted to hold down costs.  For hospitalization, and for care following AMI, OECD countries in general provide more care than is provided to Americans. Tomorrow, I will be looking at data for knee and hip replacements, and coronary artery bypass grafting.

Spending More, Getting Less Coverage

Gerard F. Anderson and Patricia Markovich of Johns Hopkins University have completed Multinational Comparisons of Health System Data, 2008 supported by the Commonwealth Fund.  The report includes an extensive series of charts that illustrate the strengths and weaknesses that exist between health systems.  Over the next several days, I will be including graphic examples from the report.

Today I look at coverage under public programs.  The following chart, combined with yesterday's charts, points out the fallacy of arguments that extending coverage to everyone is unaffordable.  In fact, what is unaffordable, is leaving millions of Americans without coverage.

The following chart shows that many countries cover their entire populations for what the United States spends to cover less than one-third of the population with Medicare, Medicaid, S-CHIP, CHAMPUS, the VA system and the Indian Health Service.  And many of these countries have populations that are substantially older, and need more health care than that of the United States, as seen here or here.  The chart also shows that among the eight nations compared, the United States has the second highest level of out-of-pocket spending for health services, exceeded only by Switzerland.

We Spend Most and Have Fastest Rising Costs

Gerard F. Anderson and Patricia Markovich of Johns Hopkins University have completed Multinational Comparisons of Health System Data, 2008 supported by the Commonwealth Fund.  The report includes an extensive series of charts that illustrate the strengths and weaknesses that exist between health systems.  Over the next several days, I will be including graphic examples from the report.

To begin, we'll look at cost comparisons, and see that the U. S. spends more per capita than any of the nine countries compared.  This chart shows spending per capita for 2006, adjusted for differences in cost of living between respective countries.  OCED is the Organization for Economic Development which is made up of European countries and Canada, Mexico, Australia, New Zealand, Japan, Korea and the United States.  (Click to enlarge graph.)

And costs are rising faster in the United States, than in any country with which it is compared.  (Click to enlarge.)

The Patient Protection and Affordable Care Act will begin to address this cost problem, by extending health insurance coverage to an additional 32 million Americans.  By doing so, we will improve our competitive position in the world economy, helping us improve exports, while keeping more jobs at home.