Is Big Pharma A Piñata?
Healthcare is, or more correctly, continues to be the topic of the day. We are all, as patients, providers and/or tax payers, necessarily involved in the whole issue of how best to provide reasonable and universal access, on an affordable basis, to quality healthcare.
Big pharma, and therefore, investors, are directly involved. Media commentary likes to focus on the “high” cost of prescription drugs, particularly, the newest and costliest regimens. Looking at the whole healthcare cost structure, pharmacy, while important, is a relatively small percentage of the healthcare costs of a typical family.
Milliman, a large, independent actuarial and consulting firm, annually publishes the “Milliman Medical Index (MMI)” which examines the cost of healthcare for the typical American family of four under five separate categories of service. According to MMI, the 2016 components of spending totaled $25,826, broken down as follows:
- Inpatient facility care – $7,965(31%)
- Outpatient facility care – $4,922(19%)
- Professional Services – $7,728(30%)
- Pharmacy – $4,270(17%)
- Other – $941(4%)
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA®