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Cost containment strategies in healthcare and profitability pdf
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Healthcare executives’ dilemma over drug pricing reminds me of Goldilocks, the little girl whose porridge was either too hot or too cold until she found something that was “just right.” Like Goldilocks, pharmaceutical executives are struggling for the perfect solution to pricing drugs that are affordable to the public but profitable for their producers. Payers, patients, and even politicians have increasingly focused on high drug prices. Manufacturers blame high prices on government regulations, shareholder expectations, and the complexity of biology. But discovering new drugs costs money: who will pay for it? Revenue growth has slowed as Big Pharma focus on developing the next blockbuster drug while facing investor pressure and a dwindling
Estimated annual revenue from U.S. drug trade is more than $3 billion, just short of Fortune 500
"In the past two decades or so, health care has been commercialized as never before, and professionalism in medicine seems to be giving way to entrepreneurialism," commented Arnold S. Relman, professor of medicine and social medicine at Harvard Medical School (Wekesser 66). This statement may have a great deal of bearing on reality. The tangled knot of insurers, physicians, drug companies, and hospitals that we call our health system are not as unselfish and focused on the patients' needs as people would like to think. Pharmaceutical companies are particularly ruthless, many of them spending millions of dollars per year to convince doctors to prescribe their drugs and to convince consumers that their specific brand of drug is needed in order to cure their ailments. For instance, they may present symptoms that are perfectly harmless, and lead potential citizens to believe that, because of these symptoms, they are "sick" and in need of medication. In some instances, the pharmaceutical industry in the United States misleads both the public and medical professionals by participating in acts of both deceptive marketing practices and bribery, and therefore does not act within the best interests of the consumers.
Many businesses that achieve great success become greedy and want more. Pharmaceutical companies, such as Turing, have been overpricing life-saving
Yu, Winnie and Joel Hay. 1999. “Drug Patents and Prices: Can we Achieve Better Outcomes?” Measuring the Prices of Medical Treatments. Pages 27-28.
In the article titled, Why the $600 EpiPen Costs $69 in Britain by James Paton and Naomi Kresge depicts the overwhelming increase in the price of the lifesaving medical device in the United States. The EpiPen’s prices are comparable to the new iPhone 7 in the U.S. while it would only less than a leather case in Britain. In the article, an advocacy group was able to report that it is still a profitable business when being sold at lower prices. Take a look at Europe’s model for drug pricing compared to the U.S. In the U.K., the government and the pharmaceutical industry negotiate on the spending limits on health services. If a pharmaceutical company exceeds that negotiated cap, they must repay the government for their over expenditures. While in the U.S. they had some sort of
LEADERSHIP BRIEFING PAPER Leadership Briefing Paper After spending your entire working life in one giant corporation that went down overnight; investing most of your retirement in stock options that plummet to zero; you are suddenly jobless and your retirement money is gone. Yet, perhaps even more threatening; our skilled and managerial jobs are steadily going abroad, due to poor corporate ethics. The crisis of poor ethics has jeopardized public trust, caused an erosion of organizational cultures, created human suffering, caused unemployment, and profit losses. Poor ethics
Why are the prices so high? Some critics of the drug companies argue that the larger firms are ripping off the American public, are dishonest and, in some cases, unsafe. On the other hand, there are health care workers such as doctors and their supporters who claim that research and testing for drugs costs money. This supposedly justifies their prices for their products. Also, as an argument to their side, they say that their practice is a benefit to the improvement to mankind. It is a life saving business, but are these prices justified? As one can see, this is a very important issue in medicine today. It affects everyone involved with medicine, which is much of the American public. It also affects the physicians and drug makers.
...emand for prescription drugs over the next 25 years. The number of people between 45 and 64 years old will increase 41% by 2015. Given the rise in age population and life expectancy rates around the world and the level of pharmaceutical use by aging individuals, growth in the industry should remain in an upward trend.
Total revenues increased 17% to $52.5 billion in 2004 and39% to $44.7 billion in 2003, primarily due to the acquisition of Pharmacia Corporation (Pharmacia) on April 16, 2003, the impact of foreign exchange and strong product performance
Martinez, Barbara “Firms Paid to Trim Drug Costs Also Toil for Drug Makers” The Wall Street
Jarvis, L. (2005, October 21). Pfizer faces challenges to growth. Chemical Market Reporter, 266, p. 10.
The segment of drug industry where Teva had to come up with innovative drugs demands to invest high capital on R&D that was in billions for a single drug could potentially lower the growth and revenues for Teva and could push the company in serious troubles.
Merck was one of the largest pharmaceutical companies in the world. Merck was about to lose patent protection of two of its best selling drugs, which had been a significant part of their $2 billion annual sales. Merck began putting millions of dollars into research (up to $1 billion) and within three years, Merck was able to discover four powerful medications. Profits weren’t all that Merck cared about; Merck’s founder believed that "medicine is for people. It is not for the profits." • He also believed that following the “medicine is for people” philosophy would lead to profits and had yet to fail.• River Blindness is caused by parasitic worms, which can be found in the Middle East, Africa and Latin America.• These places are developing, so many citizens are poor. • The worm larvae can enter the body through fly bites, with some people getting thousands a day. • Worms can cause grotesque growths, but the major problem lies in reproduction when millions of progeny are released in the system. •The resulting itching is so intense the infected have committed suicide. • Eventually, the larvae may cause blindness. • Two existing drugs could kill the parasite, but have serious, potentially fatal, side effects. • The only safe combative measure available was insecticides that eventually lose potency with immunity of the flies. • The average drug takes $200 million in research and 12 years time to produce. • In order for companies to stay in business (and ease human pain), they must make complex decisions about which drugs offer the most promise. • Investing time/money into drugs for rare diseases is risky (because the pool of recipients is small). • There are enough people with river blindness ...
Maris, D. (2012) ‘What’s Really Driving the Pharma M&A Frenzy’, Forbes, 27 April [Online]. Available at: http://www.forbes.com/sites/davidmaris/2012/04/27/pharma-feeding-frenzy/ (Accessed at: 15 December 2013)
The case under analysis, Eli Lilly & Company, will be covering the positives and negatives with regards to the business situation and strategy of Eli Lilly. One of the major pharmaceutical and health care companies in its industry, Lilly focused its efforts on the areas of "drug research, development, and marketed to the following areas: neuroscience, endocrinology, oncology, cardiovascular disease, and women's health." Having made a strong comeback in the 1990's due to its remarkably successful antidepressant Prozac, was now facing a potential loss in profits with its patent soon to expire. The problem was not only the soon to expire patent on Prozac, but the fact that Prozac accounted for as much as 30% of total revenue was the reality Eli Lilly now faced. (Pearce & Robinson, 34-1)