Spurred by the death of his father from preventable infections he got while in the hospital—all of it paid for by Medicare—David Goldhill decided to launch his own investigation into our health care system. The result is Catastrophic Care: How American Health Care Killed My Father—and How We Can Fix It, a businessman’s analysis of what’s wrong with the insurance-based system and his patient-centered ideas for fixing it. Here, Goldhill illustrates how pharmaceutical companies try to convince us we “need” unnecessary treatments:
In the movie Mission: Impossible 2, the Biocyte Corporation creates both the lethal virus Chimera and its antidote, Bellerophon. Tom Cruise’s character spends the entire movie preventing a variety of evildoers from capitalizing on this extraordinary profit opportunity. What better business model than the release of a plague for which only your company has the cure? The film, of course, is absurd.
In 1996, Pfizer, one of the world’s leading pharmaceutical companies, patented Sildenafil. The drug had not shown much promise in treating angina, its intended target, but it did demonstrate a remarkable ability to induce erections. So in 1998, Pfizer introduced Viagra—its new brand name for Sildenafil—as a treatment for something the company called erectile dysfunction. To date, Viagra and its competitors, Cialis and Levitra, have accounted for an estimated $35 billion in sales.
Pfizer may have coined the term “erectile dysfunction,” but it didn’t actually cause impotence, which had apparently existed for thousands of years before Pfizer’s formation. But the absurd M:I-2 and the real Viagra both illustrate something important about contemporary health care.
The traditional understanding of health care is that people get sick and medicine provides a cure. Today, that order is often reversed. With society’s willingness to pay for even more care—a willingness demonstrated by the forty-five-year increase of our spending from $42 billion to $2.5 trillion—much of the innovation in health care is now about the simultaneous search for new treatments and new conditions that require these treatments. It’s not that these new conditions are somehow fake illnesses. Rather, illness is increasingly recognized and often only named when a treatment becomes available.
If Pfizer had chosen to market Viagra through sex shops, it’s unlikely it would have been able to consistently raise prices even after it lost market share to competitors. The key to its success—and that of its competitors—is that Viagra is marketed as a medicine. The ED drugs have all the trappings of health care. They require prescriptions written by licensed physicians. They look like any other type of medicine, packaged in the iconic plastic prescription bottles. Medicare (and sometimes Medicaid) and many private insurers will cover ED drugs; Viagra and its competitors can legitimately be expensed against tax-advantaged flexible spending and health savings accounts.
Viagra is a classic example of why we seem to need more health care even as we get healthier. Before the treatment was available, most male impotence was seen as a consequence of age. Don’t get me wrong: Improving the sex lives of older males is a clear social good. But in an economic and political landscape where we have decided to subsidize all health care expenses via insurance and government programs, should we be considering this problem a health issue?
As we’ve expanded our willingness to pay for care—through private actions and government support—health care as an industry has met the challenge. It’s proved able to absorb our trillions in additional dollars by charging higher prices, convincing us that more expensive options provide better results and expanding our definitions of “need.” In other words, health care has done what any industry does to increase its market and revenue base in the face of rising consumer demand.
But health care as an industry isn’t quite like consumer products or automobiles or food. Sure, Procter & Gamble, Ford and General Mills try to grow by raising prices, introducing new and improved versions of existing products and extending their product lines. But they must do so in a constant give-and-take with the consumer, overcoming natural consumer resistance to spending more money. As I argued in my new book Catastrophic Care, what makes health care unique is the absence of this consumer in the equation: We’re essentially cut out by the same insurance companies and government programs we rely on to pay for these products. Health care companies can raise prices, introduce “better” products and expand the definition of what your health requires without the typical consumer resistance—without needing to prove that a new product is worth a high price.
The most important strategy of the health care industry has been to endlessly increase our demand for health care. To maintain its continued access to the most generous of customers—private insurers, Medicare and Medicaid—the health care industry must convince us that its services fulfill genuine needs, not merely wants, as all other goods and services do. And once a treatment is considered a need, how can we possibly argue it isn’t worth paying for?
In Catastrophic Care, I argue that we as consumers need to recognize that the health care system won’t function properly—indeed, will continue to be downright dangerous—unless it is accountable to actual consumers rather than the surrogates (private insurers and government programs) we rely upon. And the only way to increase consumers’ role is to shift many of the enormous resources now passing through insurance and government programs back to us. We will need to confine insurance to what it does efficiently (protect us against catastrophe) and remove it from what it does disastrously (serve as the payment system for all care). Only then will we align health care incentives with our interests.
Excerpted from Catastrophic Care by David Goldhill Copyright © 2012 by David Goldhill. Excerpted by permission of Knopf, a division of Random House, Inc. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.