Even if you believe that the recent news coverage on the price of cancer drugs was abysmally incomplete, you have to feel a measure of sympathy for the news producers.  It’s difficult – in fact, virtually impossible – to explain a subject as complex as healthcare and the intricacies of pricing medical goods and services in a 15-minute segment.  Knowing that comprehensive clarity was not doable, the report went for ratings.  That’s the nature of the business.

But if it was the intention to paint a more complete picture of healthcare pricing, it would’ve been prudent to explain that every aspect of healthcare, not just pharmaceuticals, costs more in the United States. Positioning physicians at Sloan-Kettering Hospital in New York City as the heroes of their story on cancer drugs because those doctors refused to prescribe a medication they deemed overly expensive, what wasn’t reported is that those doctors get paid a good deal more than their counterparts in other countries.  And Sloan-Kettering’s bills to patients and their insurance companies are also significantly higher than hospital charges in other countries. For instance the average cost of a hospital stay is five times higher in the United States compared to European countries. Costs are higher in the U.S. for a physician visit (three times that found in Europe). Procedures like a hip replacement in the U.S. cost more than $40,000, four times higher than countries like the United Kingdom and France.


But these doctors and hospitals shouldn’t be villainized any more than U.S. pharmaceutical companies should.  The simple, undeniable fact is that healthcare is more expensive in the United States because this country provides medical innovation for the world.  Patients throughout the globe benefit from the pharmaceuticals, medical devices and innovative treatment approaches developed by U.S.-based manufacturers and healthcare providers, but pay less for them because their countries make liberal use of government price controls.

Is it fair that other nations don’t pay their share for the drugs, devices and treatments that yield longer and healthier lives?  Of course it’s not.  Should this be a priority in trade negotiations between our government and their counterparts in other capitals, ensuring that prices are set by the market and not by arbitrary price ceilings? Certainly.  Spreading the financial responsibility for innovation among all those who benefit from it would lead to more equitable pricing worldwide and greater benefit ultimately.

Until that occurs, though, it’s foolhardy to point a finger at just one healthcare sector, and blame it for the high price of modern medicine. The fact is that pharmaceuticals represent around 10 percent of the nation’s total healthcare spending – and have been for more than 40 years. The drugs administered for a host of diseases, from cancer to diabetes to heart disease, many times actually save money by preventing more expensive acute procedures. Given that the primary outcomes of medical innovation are longer life, less disability, and better quality of life, it perplexes me that these benefits are almost always ignored in the analysis of prices of any number of medical goods and services.

Ours is a system that can and should continue to improve.  Today, medications are highly affordable for the vast majority of patients and are key to keeping down overall healthcare costs.  Within the Medicare Part D prescription drug program – a program that was called out during the segment -- average monthly premiums for seniors have remained around the $30 mark for the past four years with very manageable co-pays and deductibles.  Not long ago, the Congressional Budget Office also recognized that greater use of medications associated with Medicare Part D actually resulted in a decrease in other medical costs for the Medicare program. 

Other Americans are dependent upon the policy terms established by their health insurers, and those too are undergoing changes as a result of the Affordable Care Act.  

In the short-term, steps need to be taken to make sure quality healthcare is accessible to all Americans.   Over the long run, though, the key to continuing to benefit from innovation is to share the costs of modern medical innovation more equitably worldwide. 

Thorpe, Ph.D., is chairman of the Partnership to Fight Chronic Disease (PFCD) and a Robert W. Woodruff professor and chair of the Department of Health Policy & Management in the Rollins School of Public Health at Emory University, Atlanta, Georgia. He also co-directs the Emory Center on Health Outcomes and Quality. He was deputy assistant secretary for Health Policy in the U.S. Department of Health and Human Services from 1993 to 1995.