Our system of third-party payment has, for many years, struck me as fundamentally flawed. A college economics course taught me that people follow financial incentives, and that when costs are born by a third party, you can expect all hell to break loose. It has been bad for years now, but it has finally gone too far.
I remember taking a short course on managing a medical practice when I was a resident 25 years ago. The practice consultant was explaining how to set prices. Setting a fair price or setting a price that was related to costs was not part of the lecture. The advice she gave was to set the standard prices higher than whatever the highest paying insurer was paying to assure that no money would be left on the table.
That advice struck me as consistent with the kind of moral hazard behavior that one could expect in a third-party payment system. Self-control—much less fairness or what is best for patients in mind—was not a part of the equation. As we have watched recent generic prices skyrocket, as we have watched copayment assistance programs remove any semblance of financial incentive for cost conscious behavior from patients, all constraints from moral hazard seem to have been let loose.
I was set over the edge recently when a patient asked me to refill his prescription for fluorouracil (Carac), a drug that has been around for as long as I can remember. The next day, my nurse contacted me to say the patient called and could not afford the medication. He was quoted a price of $3000 for a single tube.
This cannot be blamed on drug shortages or regulatory hassles. I am not sure who is to blame for this—the company that manufactures the product, the pharmacy, or some other unseen hand in our system. It is clear that something is beyond amiss and that our health care system is going over the falls of moral decay.
Steven R. Feldman, MD, PhD
Chief Medical Editor
Dr Feldman is with the Center for Dermatology Research and the Departments of Dermatology, Pathology, and Public Health Sciences at Wake Forest University School of Medicine in Winston-Salem, NC.
Our system of third-party payment has, for many years, struck me as fundamentally flawed. A college economics course taught me that people follow financial incentives, and that when costs are born by a third party, you can expect all hell to break loose. It has been bad for years now, but it has finally gone too far.
I remember taking a short course on managing a medical practice when I was a resident 25 years ago. The practice consultant was explaining how to set prices. Setting a fair price or setting a price that was related to costs was not part of the lecture. The advice she gave was to set the standard prices higher than whatever the highest paying insurer was paying to assure that no money would be left on the table.
That advice struck me as consistent with the kind of moral hazard behavior that one could expect in a third-party payment system. Self-control—much less fairness or what is best for patients in mind—was not a part of the equation. As we have watched recent generic prices skyrocket, as we have watched copayment assistance programs remove any semblance of financial incentive for cost conscious behavior from patients, all constraints from moral hazard seem to have been let loose.
I was set over the edge recently when a patient asked me to refill his prescription for fluorouracil (Carac), a drug that has been around for as long as I can remember. The next day, my nurse contacted me to say the patient called and could not afford the medication. He was quoted a price of $3000 for a single tube.
This cannot be blamed on drug shortages or regulatory hassles. I am not sure who is to blame for this—the company that manufactures the product, the pharmacy, or some other unseen hand in our system. It is clear that something is beyond amiss and that our health care system is going over the falls of moral decay.
Steven R. Feldman, MD, PhD
Chief Medical Editor
Dr Feldman is with the Center for Dermatology Research and the Departments of Dermatology, Pathology, and Public Health Sciences at Wake Forest University School of Medicine in Winston-Salem, NC.
Our system of third-party payment has, for many years, struck me as fundamentally flawed. A college economics course taught me that people follow financial incentives, and that when costs are born by a third party, you can expect all hell to break loose. It has been bad for years now, but it has finally gone too far.
I remember taking a short course on managing a medical practice when I was a resident 25 years ago. The practice consultant was explaining how to set prices. Setting a fair price or setting a price that was related to costs was not part of the lecture. The advice she gave was to set the standard prices higher than whatever the highest paying insurer was paying to assure that no money would be left on the table.
That advice struck me as consistent with the kind of moral hazard behavior that one could expect in a third-party payment system. Self-control—much less fairness or what is best for patients in mind—was not a part of the equation. As we have watched recent generic prices skyrocket, as we have watched copayment assistance programs remove any semblance of financial incentive for cost conscious behavior from patients, all constraints from moral hazard seem to have been let loose.
I was set over the edge recently when a patient asked me to refill his prescription for fluorouracil (Carac), a drug that has been around for as long as I can remember. The next day, my nurse contacted me to say the patient called and could not afford the medication. He was quoted a price of $3000 for a single tube.
This cannot be blamed on drug shortages or regulatory hassles. I am not sure who is to blame for this—the company that manufactures the product, the pharmacy, or some other unseen hand in our system. It is clear that something is beyond amiss and that our health care system is going over the falls of moral decay.
Steven R. Feldman, MD, PhD
Chief Medical Editor
Dr Feldman is with the Center for Dermatology Research and the Departments of Dermatology, Pathology, and Public Health Sciences at Wake Forest University School of Medicine in Winston-Salem, NC.
