The pharmaceutical industry has become abundant with misuse and greed. Profit, shareholder returns and risk minimization are the primary goals for most stakeholders. Half of specialty drug spending is for cancer, rheumatoid arthritis, and multiple sclerosis. Saved lives and cured diseases are products of these primary objectives, but as a multi-trillion dollar money trail evolves, capitalism prevails. Predatory pricing is a major business strategy for many.
Click here to access the entire white paper.
We’re not quite in a hypercompetitive market, but we are definitely experiencing severe turbulence while effective underwriting and claims analysis is replaced by illogical market forces. The current pricing strategy employed by new entrants and Hartford mainstays, has introduced irrationality into an otherwise sophisticated underwriting approach. Our valued partners aren’t solely responsible. Compliance with the Affordable Care Act, complex funding strategies, and increased service level expectations, has led to consolidation in the broker distribution channel as well. This consolidation has left collateral damage, with some employing desperate tactics in an attempt to hang on. Here are the perspectives of three stakeholders: Continue reading Insurance Market Turbulence
In his last post, my colleague George Papagelis talked about the rapid explosion of both utilization and cost in the specialty drug market and what this means to employers. One class of biologic specialty drugs in the late stages of clinical testing are PCSK9 inhibitors. If you haven’t heard of them, you will. PCSK9 is an abbreviation for an enzyme known as protein convertase subtilisin/kexin type 9. These drugs lower LDL-C (“bad”) cholesterol by increasing the ability of the liver to remove cholesterol from the body. Approximately 33% of U.S. adults have high LDL-C levels, of which half are currently being treated. PCSK9 inhibitors will be prescribed for those with statin intolerance, familial hypercholesterolemia, and those who cannot achieve adequate results with current therapies. Expect the third category to be the largest.
For most people, diet and exercise continues to be the most effective way to reduce LDL-C but effective therapies are often the most difficult. By 2018, global sales for cholesterol medications will reach $21-$24 billion. The pill prevails. Continue reading The Next Multi-Billion Dollar Battle for Your Premium Dollars
I’m fascinated by my current read, The Zero Marginal Cost Society, by Jeremy Rifkin. I may not witness the complete evolution of our dependence on fossil fuels to free forms energy—wind, solar and water (by 2050 Rifkin predicts); but I can see how The Internet of Things, The Collaborative Commons, and The Eclipse of Capitalism is rapidly revealing that companies refusing to step back and see the forest through the trees are becoming irrelevant at an unnerving pace.
Many goods and services that have historically carried significant, marginal cost are now free. Rifkin gives many examples is his latest book; on-line universities, e-books, photos, music, renewable energy, and 3D printing. All carry zero marginal cost—that is—it costs almost nothing to add one more student, publish another e-book, print another prosthesis, etc. Companies refusing to recognize this dynamic and evolve are destined for failure. I’d place traditional colleges and text book publishers as two potential candidates for irrelevancy or certainly niche status. Rifkin talks about this but he should credit me on these, I’ve been talking about both of these longer than he has. Continue reading Employee Benefits Brokers Must Evolve in the Face of Marginalization