Let’s say you have insurance with a high deductible (you’d be in the majority — more than half of Americans who are insured by private plans are in high-deductible plans). Maybe that deductible is $5,000, so you’re on the hook for $5,000 before your insurer foots ANY of your health care bill, and you likely have co-pays on top of that. Then your doctor prescribes a drug that costs $50,000 per year.
$50,000 is a lot! Let’s say the government stepped in, and mandated that the price be cut in half. $25,000 is a lot less than $50,000, but you still can’t afford that because of your $5,000 deductible. What about a 90% price cut, to $5,000? Nope. Still can’t afford it. So the drug remains unaffordable because of the way your insurance benefit is designed. And now the drug company’s only able to make 10% of the revenue it originally projected … You know from Chapter 2 how that will grind future drug discovery and development to a halt.
Here is a short clip of Peter talking about this exact issue: