Big Pharma and Politics

On July 20, 2017 we posted a blog titled, “Is Big Pharma A Pinata?’

It appears that the answer may be yes.  While healthcare availability and costs remain a major issue, it appears that government is disproportionately focused on prescription drugs.

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.  The following chart highlights changes in the aggregate and relative cost of these services from 2016 to 2022.

Over the six years, pharmacy costs, in both dollars and as a percent, have declined.  On the other hand, the cost of professional services has shown material increases, in dollars and as a percent of family expenditures.  

Healthcare workers across the country are seeking increased compensation and improvements in staffing.  Recently, employees at Kaiser Permanente initiated a brief job action in pursuit of these two goals.

Investors should consider that pressure on big pharma may appeal to politicians, but it is not going to materially address the bigger problem, wages and staffing, in providing quality healthcare at manageable costs.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA