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DTC in Perspective: A Free Market and DTC

We are likely to see a much freer market for health care under the new Trump administration. What does that really mean for consumers and providers? How might it affect drug companies? And to those of us in DTC marketing, does a free market help or hurt our business?

America is not currently a true free health care market and has not been for over 50 years. Our someone else pays health care system has made users of health care unaware of costs. Is my service or procedure covered is what we ask. What is my co-pay is what we care about. Our providers make more money when they do procedures and tests. Patients readily accept this extra care as long as it is paid by insurers.

Bob Ehrlich

“DTC advertising will need to deal with price/value issues.”
-Bob Ehrlich

Our government has made our system extremely complex with its variety of programs and regulations. Medicare, Medicaid, The VA, HIPPA, The ACA, the 50 different state requirements, and a myriad of other public and private agencies oversee the most opaque system in the world.

What if we went to a free market where what we spend is truly our money and costs matter? Assume the government gives you a stipend through a tax credit or a cash payment. That is what you have to spend on your healthcare subsidized by government. Anything beyond that you pay. Regulations are loosened to allow you to buy whatever insurance you want, anywhere from an approved company in the 50 states. Health care providers must compete on providing quality care at a price people can afford for services they really need.

Drug companies will need to justify price premiums because consumers are now deciding where to allocate their limited available funds. Insurance companies who are competing on offering low premiums will want to squeeze drug companies as much as possible. That means consumers will have many drug coverage options to choose from and they will not pay higher premiums for me-too drugs. DTC advertising will need to deal with price/value issues.

What about people with pre-existing conditions? This is a complex problem. After all, signing up for insurance generally assumes the negative event has not happened yet. None of us get to buy car insurance after we total our car. So what we need is some way to help people with pre-existing conditions to get help on their costs. This is not insurance, it is compassion from society that prevents people from going bankrupt or dying because they cannot afford care. Instead of calling it insurance and forcing companies to cover these folks, it makes sense to create a special high risk pool subsidized by government.

A true free market is a hard but a doable thing to implement over a decade or so. It means treating health care like other consumer products and shifting purchase decisions to the patient. If prices are transparent, and quality measures are readily available for providers, consumers will make rationale choices.

Free markets give consumers incentives to stay healthy as the cost of prevention are lower than costs of treatment. Many critics say health care is a right better managed by government. They may be right as some developed countries do it well. America can go either way but cannot continue its current system which is neither free market or single payer. Under a free market system we would unleash tremendous forces of innovation that could do great things for patients. It will be a hard road to truly get to a real free market but it is worth a try. After all, that “someone else” paying is really us through higher taxes and insurance premiums and deductibles.  We are paying higher per capita for health care than anyone else in the world so we must consider real change.

Bob Ehrlich
Chairman & Chief Executive Officer at DTC Perspectives
Bob Ehrlich has over 20 years marketing experience in pharmaceutical and consumer products. Bob is the CEO of DTC Perspectives, Inc., a DTC services company founded in 2000. DTC Perspectives, Inc. developed the DTC National Conference, the largest DTC conference in the industry. DTC Perspectives, Inc. also publishes DTC Perspectives, a quarterly journal dedicated to DTC issues and practices. In addition DTC Perspectives, Inc. does DTC consulting for established and emerging companies, and provides DTC marketing plans for pharmaceutical companies.
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