Kudos to Lilly for Straight Talk About Value in Medicine

Posted by: in Healthcare Insights on October 21, 2010

In 10 years, there will only be two kinds of communicators in the health care industry: those that can talk seriously and knowledgeably about the issues of cost and value in our health care system, and those that are out of work. The intense health care battles of the past 2 years are only prologue to what is likely to become an even more incendiary — and more difficult — conversation about how we tame medical costs.

It’s not a conversation that can be avoided. Medical treatment — everything from pills to diagnostics to a stay in a cramped hospital bed — is getting more expensive, and there is no single, obvious silver bullet. Starting a dialogue about cost is going to require education: there are very few people who really understand where the more than $2 trillion we dump into the system really goes.

So hats off to Eli Lilly for trying to jump-start that education by pushing out, last week, an extraordinary 52-page document that clearly lays out, with easy-to-follow charts and copious footnotes, the exact value that medications bring to the American people. It details how pharmaceuticals are improving outcomes in everything from HIV to asthma, all backed by a nearly $90 billion annual research effort — almost triple the R&D outlays of the software industry.

And prescription medications make up just a fraction of health care spending: 10 cents of every dollar. That’s half of what we spend on physicians and a third of what we spend on hospitals.

All of this lays critical context that will be needed as we prepare for the next round of scorched-earth health care battles. And we need more context as long as there continues to be the perception that drug costs are driving overall health care spending and as long as news stories enjoy shocking readers with tales of high-priced therapies. Compare those stories to the media void around a government report earlier this month that found the most-costly 5 percent of hospital visits in 2008 ran an average of $192,000 per stay. Yes, some drugs are expensive. But they pale in comparison to an $18,000-a-day inpatient admission, and that’s perspective that seems sorely lacking in the discussion over cost.

Just because hospital costs can be jaw-dropping doesn’t mean that Lilly’s view can’t — or shouldn’t — be scrutinized or debated, nor does it mean that attention should be focused on just one sector of the system (be it drugs or hospital stays). But what Lilly did do is provide a critical perspective is going to lead to higher-quality dialogue and — we can hope — higher-quality solutions. It’s a welcome voice in the discussion, and I can only hope that other players — from across different industries — are as willing to put their cards on the table.

By: Brian Reid

Brian Reid is a managing director at W2O Group, where he oversees influencer relations. He is a former journalist who believes content really is king.

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