Tuesday, April 01, 2008

Health Care Costs are going to Skyrocket

I don't think we (or our governments) are ready for the upcoming rise in health care costs. Unlike the rises in oil, electricity and agricultural product prices, which economists and experts have been predicting for decades, there has been no serious long term projections or analysis done for the health sector.

What are the factors?

Of course, there are the usual suspects -- the big pharmaceutical companies doing their best to stretch patent protection for their expensive drugs (to stave off, as long as possible, the release of cheap generic versions to the market), and constantly tweaking them to develop "new and improved" (read: more expensive) versions of the old standards.

Then, there's the increasing technologification of medicine. That MRI scan your doctor recommended is not cheap! A couple million dollars for the device and a couple hundred thousand dollars for yearly maintenance and technical staffing. Then there are CT scans, PET scans, ultrasound imaging -- and that's just medical imaging! In fact, with the costly spectre of malpractice suits, it's not uncommon for patients to be "overly diagnosed" -- scanned, probed, second-opinioned, several times over to ensure that the diagnosis is correct. (This is not necessarily such a bad thing!)

But the big cost increases have yet to have arrived. It's all in the future "personalization" of medical treatments. Biotech companies have been springing up left and right in the last decade promising to develop customized, targeted, even "active", treatments based on your genetic profile or on the biological markers of your specific disease variant. These are not drugs, but rather complex molecules, often coated by another set of unique delivery molecules, that are specialized for one purpose, one disease, and sometimes even one set of patients (e.g., those of one ethnic group, or those with a particular gene). As a result, it will now be much more difficult to develop generic versions of such treatments; ensuring that that prices stay high. In addition, the complex nature of biotech-derived treatments means that government regulators (e.g., FDA, Health Canada, etc.) will have to evaluate any possible generics on an individual basis, rather than relying on a standard comparative method, as for drugs. This could mean that generics might have to be tested via some form of clinical trial -- increasing the cost of the final product, of course.

In Canada, health care spending has reached nearly 11% of GDP; In the United States, it's closer to 15%. They have both long been creeping upwards. We seem to take it for granted. It's hard to debate health care, as it's a necessity. But shouldn't we do some planning? Are we ready for an acceleration in the cost increases?

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