Reforming Healthcare & Taking On Big Pharma: An E-Interview & Reader Q&A with S.J. Robinson

Former nurse and retired attorney S.J. Robinson, author of The Price of Death, has practiced law dealing with medical malpractice and insurance companies over the last 30 years. Her book focuses on issues such as health insurance reform, oversight for prescription drug production, and the growing power of healthcare conglomerates. For more information about Robinson and The Price of Death, visit www.sjrobinson.com. (Interview conducted by R. C. Anderson and Dr. J.C.)

In a capitalist healthcare system focused on profits, what is the most effective reimbursement structure to reward providers for care while also managing costs?

We need a regulated system – a private/public partnership [that…involves payment to the government for healthcare and government-monitored, private health insurance companies administering payment to privately employed doctors and privately run hospitals]. Over the last 20 years, we have been depending on the free enterprise system to bring costs down. Over that time, healthcare costs have risen faster than the rate of inflation. That is because we don’t really have a free enterprise system. The free market is skewed by politics. The large healthcare companies have huge amounts of money to pass along to Congress via lobbyists, who influence Congress to pass laws that benefit big business healthcare.

What we are not cognizant of is the tremendous amount of profit realized by these companies, healthcare insurance, managed care, and pharmaceutical companies. These companies drive up our healthcare costs. We have the most expensive healthcare in the world, spending 17% of our GDP. France, Italy, Germany, Japan, and Taiwan spend roughly 8-9% of their GDP on healthcare, cover everyone, and have extremely happy patients.

We are told that the only alternative to the system that we have is the Canadian style system. That is a false story put out by the beneficiaries of our current system, primarily the insurance companies.

One obvious consequence of bringing down big pharma and device companies is that they will no longer spend the huge R&D on blockbuster drugs if there is no capital reward via reimbursement. Thus one clear consequence of making healthcare more affordable is a slowing of discovery and advancement. How can we incentivize advancement in medicine while controlling costs?

Big pharma spends 10-15% of its profit on research and development and 30-40% on marketing. Professor Karl Lauterbach of Germany said in a PBS interview on Frontline, titled Sick Around the World, “I don’t know of a single economist who would buy into that argument. I think this is a lobbyist argument. A market works best if there are no inefficiencies, and higher-than-necessary prices are inefficiencies. And the drug companies now spend more for marketing the drugs than for innovating the drugs. This clearly is an artifact which comes across with this system of subsidized and too-high prices.”

Do you think that class-action lawsuits by providers against insurance companies are a good solution to balance the inequity of power insurance companies wield in the current healthcare climate? Or does this merely clog the judicial system and become a distraction from what providers should be doing: helping patients?

Class actions and lawsuits in general are very wasteful of resources because the outcome is extremely uncertain and the suits are very costly in time and money. They would take time away from healthcare and possibly put health care workers in an unfavorable light vis-à-vis the public. As I said, the outcome of lawsuits is uncertain, and I think they should be used as a last resort. The better approach in this case is to influence the public and Congress for the development of a new healthcare system: a public/private partnership which eliminates the excessive profits of health insurance companies, big pharma, and managed care.

In your August newsletter, you describe the many and varied problems the U.S. has had with contaminated or improperly supervised drugs coming from China. Would it not solve a lot of the U.S.’s problems as well as poor patient outcomes if we simply stopped accepting drugs from China and instead paid a bit more for drugs that are properly supervised in countries that care to ensure it? What do you think it would take to reduce consumerism from China, especially given that drugs are not the only problems we have had, but also melanin contaminated products and lead contaminated toys?

I don’t think it likely that world trade is going to be turned back, and it may not even be a good idea. We already pay two to three times more for pharmaceuticals than other developed countries, for example Canada. We have been told that we must pay more in order to safeguard our drug supply and promote the development of new drugs.

U.S. drug companies are making record profits but still want to make more. They are having their drugs made in China to increase profits. Because we pay a premium for pharmaceuticals, I believe that we are a target for counterfeit pharmaceuticals, not more protected. Counterfeiters have no compunction about who they kill and want to make the most money. In my book, The Price of Death, I discuss the point of view of the Chinese on counterfeiting. Because this administration has actually reduced funding for the FDA despite the fact that world trade has increased, we are at great risk. At its current rate, the FDA will be able to inspect the 700 plants now open in China in the next 40-50 years. What we should do is require importers to pay a government fee to have their imports inspected. There is no reason that they should be making record profits and putting the consumer at risk as they are.

There was a problem with Baxter International heparin earlier this year, which, according to the FDA, probably came from China. The FDA says that the manufacturer used oversulfated chondroitin sulfate (OCS) instead of chondroitin sulfate (CS). The relative cost of the bogus chemical was only $9 per unit vs. $900 for the correct ingredient. There had also been a reduction in the availability of other materials to make heparin because it comes from pigs, and there was a pig epidemic in China. While it is difficult to prove, one can speculate why the plants would have substituted the new ingredient when stocks of other ingredients fell short and became more expensive. I say that it is difficult to prove partly because the Chinese government had not admitted that the OCS was the cause of the problem even though the FDA has indicated so on its website. The bogus chemical fooled the standard tests [about the protein content of the product], impeding immediate discovery of the problem.

Now Here’s Your Chance to Ask the Questions (and Win One of Three Copies of The Price of Death, Too!)

Do you have a question that we didn’t ask? Here’s your chance to pick S.J. Robinson’s brain. Submit your questions for her in the comments section, and she’ll be available for a week to answer them. Also, by submitting your question, you will be automatically entered into a drawing next week in which three winners will receive a free copy of her book. (Sorry, you must be a U.S. or Canada resident to participate in the drawing.) Please see our Book Giveaways information page for complete details and ask away!

4 comments to Reforming Healthcare & Taking On Big Pharma: An E-Interview & Reader Q&A with S.J. Robinson

  • Lu Stewart

    Do you think that we can still have health care reform when the economy is as bad as it is?

  • MannyfromNYC

    Somehow I don’t trust half the stuff S.J. Robinson says.
    When she refers to a number of countries claiming they spend less than 10 percent of their healthcare and cover everyone, and…all have “extremely happy patients,” without citing an sources to back up her claims, well…I have to have proof first.

    When she uses loaded words like “eliminate excessive profits,” she loses tons of credibility in my eyes. She’s too obsessed with other people’s money.

    I’ll give her some credit though, she’s absolutely correct in saying that there is not really a free enterprise system in healthcare and that it is “skewed by politics.”

    So the real problem then should not “excessive profits” but excessive bureacracy and politics.

    The first step to solving the healtcare problem should be “behavior modification,” as in changing one’s lifestyle. To quote that old adage: “A ounce of prevention is better than a pound of cure.”

    What S.J. Robinson should be recommending is to reduce corporate manipulation of the political process.
    Let’s put an end to political/corporate corruption!

  • Like you, until I started researching the subject, I never would have believed that our government would allow the current situation to continue if it is as I found. My only explanation is the cycle money from lobbyists to politicians to big business. David Cay Johnston, Free Lunch–How the Wealthiest American Enrich Themselves at Government Expense (and Stick You with the Bill), 2007 Penguin Group, NY, NY, available at Amazon.com. He has an online article. The cost of a free lunch: David Cay Johnston on how the government protects the privileged
    http://findarticles.com/p/articles/mi_m1568/is_10_39/ai_n24966480.

    Like you, I agree that an ounce of prevention is the way to go because I have had a sneaking suspicion that we were heading toward the “you’re on your own” method of health care. I do the most that I can on that but no one can avoid the need for health care at some point in his/her life and most people who live very long need it several times. Then when I started researching the subject, I found out that it doesn’t have to be that way.

    Here is where I get my facts–Improving Healthcare Using Toyota Lean Production Methods, Second Ed, Robert Chalice discusses relative cost of health care at pages 31-32. Readily available online are other sources, the National Coalition on Health Care, http://www.nchc.org/facts/cost.shtml; and Kaiser Family Foundation, Snapshots in Health Care http://www.kff.org/insurance/snapshot/chcm010307oth.cfm

    One of the reasons for the rise is costs in health insurance profit which have increased in the last few years. See Insuring Health Care or Insuring Profits, Snapshot of the Health Insurance Industry, Summer 2008, Northwest Federation of Community Organizations, http://www.nwfco.org/pubs/2008.0727_insuring.health.or.ensuring.profit.pdf
    It lists the profit of United Health Group at $4.654 billion for 2007. Its CEO made $124 million in 2005. Forbes Online http://forbes.com/static/execpay2005/totcomp.html

    Another reason is drug prices, since the law enabling Medicare Part D prohibited the government from negotiating drug prices. Pharmaceutical Industry Profits Increase by Over $8 Billion After Medicare Drug Plan Goes Into Effect. Prepared for Rep. Henry A. Waxman. September, 2006.
    http://oversight.house.gov/story.asp?ID=1108

    I have more references under resources on my website, sjrobinson.com.

    Thanks for taking the time to read because I think this is IMPORTANT. I would be happy to discuss any other questions or comments that you might have.

  • We can have reform if we do it right. If we do it right, we need it now. With our financial situation so tenuous, we cannot afford to continue the diversion of health care dollars to insurance companies, big pharma and health management and hospital corporations that we do now.

    One of the developments of the past few years has been apparently lower cost health insurance which has a low cap on payout or even totally bogus health care companies which don’t pay at all. Limited Benefits: Insurers Peddle “Limited Health Care” to America’s Working Poor
    http://www.americanprogress.org/issues/2007/05
    People snap them up because they are desperate for health care insurance. Then they find out when the bills start coming in that there is no health care coverage. The end result is that the ligitimate health insurance companies have increased profits and the bogus ones just take the money.

    We need more regulation of the insurance companies just like we should have been looking at banking excesses. That is Senator Obama’s plan. Senator McCain’s plan would deregulate and increase the availability of these plans.

    Thanks for asking, because this is IMPORTANT. Let me know if you have any other questions.

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