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Personal Notes

July 28, 2014 | Weekly Commentary

The look of healthcare is changing. Growing rapidly is the difference in quality of healthcare between:

  1. those people who must rely upon the government sponsored health insurance program Medicaid,
  2. those who can afford an insurance plan like the “Blue’s” and ObamaCare
  3. those who have sufficient wealth to obtain an insurance plan like those in 2 PLUS afford to pay “out of pocket” for drugs, medical devices, and innovations not covered by Medicaid and insurance plans. As an example, I will describe what is happening to millions of Americans suffering from Hepatitis C.

About 3.2 million Americans are infected with Hepatitis C, blood-borne disease of the liver, which kills about 80,000 people a year, or five times the death rate of AIDS. Now a Gilead Sciences drug called Sovaldi cures the virus in at least nine of 10 patients, and perhaps even 98%. Instead of celebrating this breakthrough, the world of health-care insurance companies blew an alarm whistle. Neither Medicare nor those insurance companies can afford to pay for Sovaldi’s three-month course of treatment which costs about $84,000, or about $1,000 a pill. The total cost to treat Americans who have Hepatitis C is estimated between $300 – $400 Billion. Many are already fingering Gilead as an icon of corporate greed. But the irony is Sovaldi is a medicine that eliminates a disease for a one-time cost, rather than one that must be taken for life or many years to mitigate a chronic disease. It is priced at a discount relative to inferior treatments for advanced liver disease with toxic flu-like side effects that don’t prevent relapses but do cost about $97,000. A liver transplant runs about $580,000 on average. A PwC report predicts a nationwide spending increase in the first two years but then Sovaldi lowers costs over the next half-decade as older treatments are rendered unnecessary. A solution is needed but it is unlikely any time soon due to Washington’s lack of problem solving skills.

I suspect Sovaldi is the tip of the iceberg. In the future, many high cost drugs, medical devices, and innovations will become available. In many cases, only those who have insurance PLUS wealth will be able to take advantage of them – another reason to accumulate wealth and make your money grow.

Thomas M. Riddle
President, VNFA

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