In case you missed it, the Wall Street Journal published commentary last week explaining the vital role of medicine development in reducing health care costs and spending. In the piece, Michael Mandel, chief economic strategist at the Progressive Policy Institute, highlights how innovative medicines reduce long-term costs by helping shrink the amount of labor needed for care.
The piece explains a few key points:
- “It’s important for policy makers to understand that innovative medicines bring down long-term costs by reducing the amount of labor needed by the health-care system. For example, the new drugs that treat and cure hepatitis C will, over time, reduce the number of labor-intensive and extremely costly liver transplants, each of which costs on average more than half a million dollars. And new cholesterol-lowering drugs called PCSK9 inhibitors will reduce the number of doctors, nurses and support workers needed to deal with cardiovascular diseases, which are today the single most costly diagnostic group, driving roughly eight million inpatient operations and procedures a year.”
- “According to data from the Bureau of Economic Analysis and estimates by the Progressive Policy Institute, total labor compensation at hospitals, doctors’ offices, ambulatory care facilities and nursing homes has risen by roughly $270 billion since 2007, including the amount paid to doctors and dentists who own their own practices. That’s far greater than the roughly $60 billion increase in the retail cost of prescription drugs.
- “The cost of labor amounts to more than 40% of the increase in the total cost of personal health-care spending since 2007, while the cost of prescription-drugs amounts to only 10% of the increase.”
The WSJ opinion piece clarifies an important distinction in the value of innovative treatments and cures. Not only do medicines help save lives, but they can also help avoid health care costs. For example, in the fight against Alzheimer’s disease, a new medicine that delays the onset of Alzheimer’s disease by five years would avoid $367 billion annually in long-term care and other health care costs by 2050.
Learn more about how medicines can help reduce health care costs.
Holly Campbell Holly Campbell is former deputy vice president of public affairs at PhRMA focusing on the cost and value of medicines. Prior to joining PhRMA, Holly worked for large and small public relations firms where she provided strategic communications counsel, media relations and partnership expertise to health care and pharmaceutical clients. In her free time, she enjoys taking barre classes, trying new restaurants and spending time with Boss and Poppy, her rescue pups.