Viewpoint: Why Americans are too focused on high drug costs

While high drug costs represent a common issue addressed by lawmakers, the media and general public, one former congressman thinks there's another issue that deserves more attention: hospital spending.

David Dreier, a fellow at the Brookings Institution, a Washington, D.C.-based think tank, wrote a column for The Hill discussing why America should shift more attention to tackling high hospital expenses.

Here are four things to know.

1. Of the $3.4 trillion the U.S. spends annually on healthcare, Americans give the most money to hospitals ($1.1 trillion), followed by physicians and clinical services ($684 billion) and prescription drugs ($347 billion), according to a February study by the Altarum Institute. In 2016, hospital, physician and clinical spending increased by $87 billion. Drug spending rose by $13 billion.

2. Mr. Dreier believes the country focuses more on high drug costs —rather than rising healthcare costs — in part because of the U.S. health insurance system. High deductibles and copays cause Americans to pay 15 percent of drug costs out of pocket, compared to just 3 percent of hospital costs out of pocket.

"This insurance system is counter-productive. It discourages the use of lower-cost medicines that can keep patients out of higher-cost hospitals," Mr. Dreier wrote in the column.

3. Mr. Dreier said policy makers need to look at the healthcare system through a supply and demand lens. "When supply rises or demand falls, prices decline," he said. To increase the supply side, the U.S. should use more trained clinicians to treat patients currently only cared for by physicians and accelerate drug approvals to release more generics onto the market, according to the report.

4. Kenneth Thorpe, PhD, chairman of the department of health policy and management at Atlanta-based Emory University, cites an unhealthy population with rising disease rates as the underlying issue of rising healthcare costs. To limit the demand for healthcare services, Mr. Dreier believes Americans need to live healthier lifestyles and take more responsibility for managing their own health. He also thinks improving Americans' medication compliance could help limit the demand for costly inpatient and outpatient services, according to the report.

More articles on supply chain:

4 latest FDA approvals
Sen. Sanders eager to partner with Trump on drug cost legislation
Mylan recalls 81k EpiPens globally: 3 things to know

Copyright © 2022 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.