School Bells – Current Affairs – Grade 8 – week 13
High cost of medication in the United States
Last week the class decided to talk about the electoral college. We had a most interesting discussion, This week we agreed to talk about the topic we had originally agreed to explore last week – the high cost of medications. Although it is election day the school is not a polling site and school is in session. Since it is election day I am aware that the students may want to talk about some subject related to the election although my guess is that they are as tired talking about it as are most adults.
I have, as promised, brought homemade chocolate chip cookies.
Here comes the class now.
Me: Good morning class.
Students: Good morning Mr. Jim. Cookies?
Me: Yes. I brought cookies. Abdul and Susie will you pass them out please.
They do so.
Students: Thanks Mr. Jim!
Me: You are welcome. Unless someone has an issue they want to discuss, I am eager to hear what you and your families think are the reasons for the high cost of medications/prescription drugs in the United States.
None of the students raise their hands.
Me: Okay. What came out of the discussion and research with family members?
Tom: Mr. Jim. When we goggled “High cost of mediation in the United States” we got 2,540,000 hits. There is a lot of interest in this topic.
Me. I got the same. Why did your family limit the search to the United States?
Tom: That was the assignment, but also my mother said that the cost in the United States is much higher than other countries.
Me: That is true. How did all of you limit research and what were some of the answers you found?
Ann: Our family found that drug companies claim one thing and others claimed other reasons. It was tough to know how to know who was telling the truth.
John: It was also difficult because profit of companies is usually after all expenses listing salaries. Some CEOs and other staff are being paid millions of dollars.
Susie: According to www1.salary.com some of the salaries at Mylan who recently raised the cost of Epipens to hundreds of dollars are:
MYLAN INC.
Compensation by Company
For its 2013 fiscal year, MYLAN INC., listed the following executives on its annual proxy statement to the SE
Name/Title
Total Cash
Equity
Other
Rajiv Malik
President
$2,404,385
$2,978,138
$2,384,328
Heather Bresch
Chief Executive Officer
$3,280,769
$4,955,218
$471,971
John D. Sheehan
Executive Vice President and Chief Financial Officer
$1,690,000
$1,626,700
$216,469
Me: I have put those on the whiteboard. Also notice the following on the board:
Center for public integrity – 2014
Almost all of the publicly traded health insurers reported big increases in revenue and profits last year. The big winners have been the top executives of those companies, led by Mark Bertolini, CEO of Aetna, the nation’s third largest health insurer. Bertolini’s total compensation of $30.7 million in 2013 was 131 percent higher than in 2012.
Will: Our family found the profit margin for health insurance companies was much less than that for pharmaceuticals, but the articles we read did not mention salaries and stock prices. We also were very confused.
Paul: A lot of the drug companies said the high cost was the research, but we knew that was not true Uncle Jim. The Epipen has been around for a long time and cost very little to make . We have a relative who has had AIDS for a long time. The first drug he was on was AZT which had been originally researched for some other illness but when they found it worked for HIV they charged a lot and blamed it on the high cost of research.
Amena: How do we know who is telling the truth? I found an article by Sidney Lupkin in Kaiser Health News of August 23, 2016 which reviewed a study on this subject published in the Journal of American Medical Association. They reviewed studies published from January 2005 through July 2016 and then listed five reasons why prescription drug prices are so high in the United states.
Me: That is great. Did you make a note of the five reasons? Paul will you write them on the board.
Amena: Yes Mr. Jim. They are:
1. Medicare is not legally allowed to negotiate drug prices. Medicaid legally must cover all drugs approved by FDA even if a cheaper drug is available. Private insurers rarely negotiate prices because third party pharmacy benefits managers administer prescriptions.
2. The law allows drug manufactures to maintain their patent for 20 years or more and they can increase that by making slight changes such as pill coatings.
3. There are apparently some state and federal laws which limit ability to keep prices of generic drugs down.
4. It is not research and development. Most of the cost of research is funded by venture capital or the National Institute of Health via federal grants.
5. Drug companies in U. S. set their own prices.
Me: Wow! That is a lot of information. Thanks Amena.
Did anyone else find any more information which they think was helpful to learn.
Will: Our family thought that this was interesting. Can I put it on the board?
Me: Certainly Will.
Will put the following on the board:
Forbes, Dec 21, 2015
Liyan Chen reports: The Most Profitable Industries in the US
Here are the top 10 most profitable industries according to Factset:
Industry
Net Margin in 2016
Pharma: Generic
30%
Investment Managers
29.1%
Tobacco
27.2%
Pharma:major
25.5%
Internet Software/Services
25%
Biotechnology
24.6%
Savings Banks
24%
IT Services
23%
Regional Banks
23%
Major Banks
22.9%
Me: All of you have done an amazing job of finding out how complicated this issue is. Can someone in the class remind me of the primary goal of this class?
Susie: To learn to think critically.
Me: Thanks Susie. Can someone explain what that means?
John: To learn to look at all sides of an issue and see if the information tells us anything.
Me: Very good John.
Me: Are there any common themes in all this information?
Amena: The goal seems to be to make money.
Paul: Yes, everyone seems to think that the only reason to make drugs is to make a big salary.
Susie: The stocks are another way to make money.
Me: What do the drug companies and the insurance companies tell us their goal is?
Ann: To help us be healthy.
Me: Do they do that?
Tom: We are overall healthier than we were many years ago aren’t we?
Me: Yes, many people are living and have more quality of life because of the health care industry.
Paul: Is it different in other countries Uncle Jim?
Amena: We read that some other countries are even healthier and health care is not as expensive.
Me: Why do you think profit is so important in this country?
Ann: Is this the same as we have been talking about Mr. Jim? Does money make us feel important?
Me: Certainly that seems to be the case. One CEO – I don’t recall who – told an interviewer it is not about the money but an indication of how important one is considered.
Tom: But don’t all the people making a big profit have relatives who do not?
Me: Good point Tom. It is interesting that does not seem to play a big role in changing the system.
Will: My mother says it is a spiritual issue. She says that until we find some other way of feeling important then nothing will change.
Me: What do you think we can do to reduce the cost of drugs? Is this something the class wants to discuss next week?
Susie: That is a big question but the election will be over by then. Can we write a letter to our new elected members of Congress after we talk about this Mr. Jim?
Me: I think that is a great idea Susie. I will print out the assignment and the information we put on the board for you to share with your families.
Great job!
Class: Cookie
Me: Yes, the bell is about to ring. How about picking up your cookie on the way out?
Have a great week.
Ring! Ring! Ring!
The kids pick up a cookie and leave.
Class: Thanks Mr. Jim.
Me: You are welcome.
Written November 7, 2016
School Bells – Current Affairs – Grade 8 – week 13
High cost of medication in the United States
Last week the class decided to talk about the electoral college. We had a most interesting discussion, This week we agreed to talk about the topic we had originally agreed to explore last week – the high cost of medications. Although it is election day the school is not a polling site and school is in session. Since it is election day I am aware that the students may want to talk about some subject related to the election although my guess is that they are as tired talking about it as are most adults.
I have, as promised, brought homemade chocolate chip cookies.
Here comes the class now.
Me: Good morning class.
Students: Good morning Mr. Jim. Cookies?
Me: Yes. I brought cookies. Abdul and Susie will you pass them out please.
They do so.
Students: Thanks Mr. Jim!
Me: You are welcome. Unless someone has an issue they want to discuss, I am eager to hear what you and your families think are the reasons for the high cost of medications/prescription drugs in the United States.
None of the students raise their hands.
Me: Okay. What came out of the discussion and research with family members?
Tom: Mr. Jim. When we goggled “High cost of mediation in the United States” we got 2,540,000 hits. There is a lot of interest in this topic.
Me. I got the same. Why did your family limit the search to the United States?
Tom: That was the assignment, but also my mother said that the cost in the United States is much higher than other countries.
Me: That is true. How did all of you limit research and what were some of the answers you found?
Ann: Our family found that drug companies claim one thing and others claimed other reasons. It was tough to know how to know who was telling the truth.
John: It was also difficult because profit of companies is usually after all expenses listing salaries. Some CEOs and other staff are being paid millions of dollars.
Susie: According to www1.salary.com some of the salaries at Mylan who recently raised the cost of Epipens to hundreds of dollars are:
MYLAN INC.
Compensation by Company
For its 2013 fiscal year, MYLAN INC., listed the following executives on its annual proxy statement to the SE
Name/Title
Total Cash
Equity
Other
Rajiv Malik
President
$2,404,385
$2,978,138
$2,384,328
Heather Bresch
Chief Executive Officer
$3,280,769
$4,955,218
$471,971
John D. Sheehan
Executive Vice President and Chief Financial Officer
$1,690,000
$1,626,700
$216,469
Me: I have put those on the whiteboard. Also notice the following on the board:
Center for public integrity – 2014
Almost all of the publicly traded health insurers reported big increases in revenue and profits last year. The big winners have been the top executives of those companies, led by Mark Bertolini, CEO of Aetna, the nation’s third largest health insurer. Bertolini’s total compensation of $30.7 million in 2013 was 131 percent higher than in 2012.
Will: Our family found the profit margin for health insurance companies was much less than that for pharmaceuticals, but the articles we read did not mention salaries and stock prices. We also were very confused.
Paul: A lot of the drug companies said the high cost was the research, but we knew that was not true Uncle Jim. The Epipen has been around for a long time and cost very little to make . We have a relative who has had AIDS for a long time. The first drug he was on was AZT which had been originally researched for some other illness but when they found it worked for HIV they charged a lot and blamed it on the high cost of research.
Amena: How do we know who is telling the truth? I found an article by Sidney Lupkin in Kaiser Health News of August 23, 2016 which reviewed a study on this subject published in the Journal of American Medical Association. They reviewed studies published from January 2005 through July 2016 and then listed five reasons why prescription drug prices are so high in the United states.
Me: That is great. Did you make a note of the five reasons? Paul will you write them on the board.
Amena: Yes Mr. Jim. They are:
1. Medicare is not legally allowed to negotiate drug prices. Medicaid legally must cover all drugs approved by FDA even if a cheaper drug is available. Private insurers rarely negotiate prices because third party pharmacy benefits managers administer prescriptions.
2. The law allows drug manufactures to maintain their patent for 20 years or more and they can increase that by making slight changes such as pill coatings.
3. There are apparently some state and federal laws which limit ability to keep prices of generic drugs down.
4. It is not research and development. Most of the cost of research is funded by venture capital or the National Institute of Health via federal grants.
5. Drug companies in U. S. set their own prices.
Me: Wow! That is a lot of information. Thanks Amena.
Did anyone else find any more information which they think was helpful to learn.
Will: Our family thought that this was interesting. Can I put it on the board?
Me: Certainly Will.
Will put the following on the board:
Forbes, Dec 21, 2015
Liyan Chen reports: The Most Profitable Industries in the US
Here are the top 10 most profitable industries according to Factset:
Industry
Net Margin in 2016
Pharma: Generic
30%
Investment Managers
29.1%
Tobacco
27.2%
Pharma:major
25.5%
Internet Software/Services
25%
Biotechnology
24.6%
Savings Banks
24%
IT Services
23%
Regional Banks
23%
Major Banks
22.9%
Me: All of you have done an amazing job of finding out how complicated this issue is. Can someone in the class remind me of the primary goal of this class?
Susie: To learn to think critically.
Me: Thanks Susie. Can someone explain what that means?
John: To learn to look at all sides of an issue and see if the information tells us anything.
Me: Very good John.
Me: Are there any common themes in all this information?
Amena: The goal seems to be to make money.
Paul: Yes, everyone seems to think that the only reason to make drugs is to make a big salary.
Susie: The stocks are another way to make money.
Me: What do the drug companies and the insurance companies tell us their goal is?
Ann: To help us be healthy.
Me: Do they do that?
Tom: We are overall healthier than we were many years ago aren’t we?
Me: Yes, many people are living and have more quality of life because of the health care industry.
Paul: Is it different in other countries Uncle Jim?
Amena: We read that some other countries are even healthier and health care is not as expensive.
Me: Why do you think profit is so important in this country?
Ann: Is this the same as we have been talking about Mr. Jim? Does money make us feel important?
Me: Certainly that seems to be the case. One CEO – I don’t recall who – told an interviewer it is not about the money but an indication of how important one is considered.
Tom: But don’t all the people making a big profit have relatives who do not?
Me: Good point Tom. It is interesting that does not seem to play a big role in changing the system.
Will: My mother says it is a spiritual issue. She says that until we find some other way of feeling important then nothing will change.
Me: What do you think we can do to reduce the cost of drugs? Is this something the class wants to discuss next week?
Susie: That is a big question but the election will be over by then. Can we write a letter to our new elected members of Congress after we talk about this Mr. Jim?
Me: I think that is a great idea Susie. I will print out the assignment and the information we put on the board for you to share with your families.
Great job!
Class: Cookie
Me: Yes, the bell is about to ring. How about picking up your cookie on the way out?
Have a great week.
Ring! Ring! Ring!
The kids pick up a cookie and leave.
Class: Thanks Mr. Jim.
Me: You are welcome.
Written November 7, 2016
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