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Is Pharma Really the Villain? – Understanding the Real Cost of Healthcare

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Is Pharma Really the Villain? – Understanding the Real Cost of Healthcare

Jeff Smedsrud

Updated: March 21, 2017    Published: September 24, 2015

The toughest issue in healthcare is not access, but cost. We hear much about the rising cost of healthcare, and nowhere are there more “villains” than in the pharmaceutical industry. But is that fair?

In this past week, there was a sensational story about Martin Shkreli, CEO of Turing Pharmaceuticals AG, and what has been widely panned as price gouging by the general public. In case you haven’t heard this news, Mr. Shkreli is a former hedge fund manager who is now CEO of Turing Pharmaceuticals, and he made headlines after the New York Times profiled the backstory behind the increase in Daraprim, a 62-year-old drug used in the treatment of an infectious disease:

Once Turing obtained the drug, it quickly raised the price to $750 a tablet from $13.50, drawing protests from infectious disease doctors that ignited the firestorm.

The story became national news, and even many of the 2016 presidential candidates chimed in with their generally negative sentiments. Due to the immense backlash, and despite some protests on Mr. Skhreli’s personal Twitter page, Turing backtracked on the price increase.

While this story is one that makes headlines because of the near-universal public response, there are still a lot more thought-provoking questions about the cost of healthcare that aren’t as black-and-white.

I sit on several board of directors based in Washington D.C., including the Council for Affordable Health Coverage (CAHC). is a proud member of this group, and also of the Clear Choices Coalition. Joel White is the executive director of CAHC. A column he recently wrote about high priced prescription medications got national coverage, including in my hometown newspaper.

Taking on Mayo Clinic is never easy. Supporting high cost drugs is even harder. But if the evidence proves that the Rx-based solution is more effective, and less costly in the end, then that is argument we should all make.

Healthcare is all about the real cost. The cost of health insurance plus the cost not covered by health insurance is one example of “real cost.” That is why exists — to help consumers be better shoppers by understanding the real cost of healthcare.

Another example of real cost is understanding that a drug that costs $84,000 is less expensive than a protocol of treatment that costs more than $100,000, with less certain outcomes.

I invite you to read Mr. White’s article, and let me know what you think.

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