The Case for Enlightened Self-Interest in Health Care

Access to medical care is a highly charged partisan issue anytime. Nonetheless, the 2016 presidential election has upped the ante on promises to fix the nation’s health system, from Medicare for all to ending Obamacare and replacing it with “something terrific.”

Despite these promises, a handful of corporate executives could be more influential than the next president in shaping the way health care will be delivered and paid for in the U.S — and not in a good way. That is why it is time to confront industry outliers.  Their shortsighted actions threaten the long-term viability of the private insurance and pharmaceutical industries as we know them today.

Within the health insurance industry, one example is Aetna, which called the state exchanges a “good investment” and then had a dramatic change of heart. After the Justice Department blocked Aetna’s merger with Humana in August, the company pulled out of all but four state exchanges, blaming short-term treatment costs without accounting for the long-term savings of better health.  Similarly, after the government sued to block the merger of two other large insurers, Cigna and Anthem, Cigna withdrew from the Florida exchange, citing high addiction treatment costs as the reason. Yet, rather than work with state officials to balance care and costs, Cigna pulled the plug, affecting 30,000 Floridians in 23 counties.

In the short run, consumers pay the price for these actions through fewer choices and higher prices in the state exchanges. However, the longer-term consequences touch the core of our health care system.

Refusals to participate in exchange markets bolster partisan arguments that the Affordable Care Act is fatally flawed. In reaction, Republicans will attempt to repeal the law, resulting, at best, in limited coverage of complex health conditions, including mental health and substance use disorders. Conversely, Democrats would start with what the insurance industry has been fighting against for years — a government-operated “public option” to fill the void left by private insurers like Aetna and Cigna. Ultimately, what a number of Democrats really want, and what we could eventually get after the Republicans’ unrealistic alternative fails, is government-run health care.

There are also storm clouds for the pharmaceutical industry due to the abuses of companies like Valeant and Turing Pharmaceuticals. Valeant has gone into free fall after increasing the prices of two heart drugs and 54 other medicines by an average of 66 percent in 2015.  In the case of Turing, the now disgraced former CEO Martin Shkreli earned the title of the “most hated man in America” after obtaining the marketing license for an out-of-patent drug used in treating people with HIV and hiking the price over 5,500 percent.

Also in the spotlight are the makers of naloxone, an opiate antidote widely used to reverse overdose deaths that has seen dramatic cost increases, despite being on the market since 1971. Over the past two years, prices for generic versions have risen as much as 17-fold while the cost of a newer auto-injector increased more than six-fold, to more than $2,000 a dose.  Not surprisingly, public officials view the price hikes as unwarranted and worry about the affordability of the drug for first responders, hospitals, and people at risk for overdose.

Additionally, Mylan Pharmaceuticals has come under fire for raising by more than 500 percent of the cost of its EpiPen, which treats anaphylaxis related to severe allergies, rightly resulting in a Congressional probe and investigations by state attorneys general. Government price caps and the importation of drugs not regulated by the Food and Drug Administration are next if industry does not do better.

On a whole, pharmaceutical companies vigorously support research and development, and the results include miraculous treatment outcomes, such as successfully treating former President Jimmy Carter’s melanoma and curing actress Pamela Anderson’s hepatitis C.  Similarly, when properly structured and managed, health insurance gives Americans peace of mind that a range of high-quality treatment options will be available when they are sick or injured, and their out-of-pocket costs will be reasonably capped.

Given that the misdeeds of a few have cast a pall over two entire industries, insurers and drug companies alike would do well to follow the lead of drug maker Allergan, which announced that pricing will be part of a “social contract” to maximize value and minimize costs for consumers. Allergan’s social contract is an example of a corporation acting with “enlightened self-interest,” which recognizes that companies acting on behalf of their stakeholders — in this case, patients and our system of health care at large — ultimately serve their own self-interest.  Especially at a time of public criticism and knee-jerk reactions by federal and state policymakers, greater industry responsibility will help keep choice and quality in health care.


Barnes is executive director of Center for Lawful Access and Abuse Deterrence (CLAAD). He served as confidential counsel in the White House Office of National Drug Control Policy under President George W. Bush.

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