Overview of the US Healthcare System

US Healthcare System Overview

•  The US healthcare system is complex, involving many stakeholders.
•  Spending exceeds $4.1 trillion annually, making it a major industry.
•  Drug spending accounts for approximately 10% of total US healthcare spend.
•  ~300 million individuals are insured.
•  41% of global drug spend occurs in the US.

Key Stakeholders

•  Consumers: Account for $1.078 billion in annual spending.
•  Employers: Account for $959 billion annually.
•  Government: Accounts for $2,087 billion in annual spending.
•  Payors: Manage payment to providers and include Commercial, Medicare, and Medicaid payers.
•  Providers: Include physicians, hospitals, and other healthcare providers.
•  Pharmaceutical Manufacturers: Produce and sell medications.
•  Pharmacies: Dispense medications to patients.
•  PBMs (Pharmacy Benefit Managers): Administer and manage pharmacy benefit programs.
•  Wholesalers / Specialty Distributors / GPOs (Group Purchasing Organizations): Manage distribution and logistics for medications.

Overview of Coverage Channels

•  Commercial: Primarily covers employer-sponsored plans, often with high deductible plans and patient cost-sharing.
•  Medicare: Covers individuals 65 and older, and those with specific disabilities or diseases. Coverage levels vary among the different parts of Medicare (A,B,C,D).
•  Medicaid: Covers low-income individuals, pregnant women, children, and the elderly.

Products and Types

•  Pharmacy Benefit Products: These are prescription drugs dispensed by pharmacies, often with payor (e.g. Medicare Part D) managed access and policies, such as formularies.
•  Medical Benefit Products: These are medical services provided by physicians (e.g. ER consults, diagnostics) or other primary care or specialty medical providers. Payor/PBM agreements determine which products and/ or procedures are covered and the corresponding out-of-pocket cost to the patient.
•  Gross-to-Net: A measure of where the pharmaceutical company spends money in the US market. It is the difference between gross sales and net sales and is driven by, for example, commercial discounts, mandatory discounts, patient support programs (e.g., financial assistance), and channel strategy differences, all of which greatly impact final price paid.

Patient Support

•  Many factors affect patient out-of-pocket costs across different health plans (Medicare, commercial).
•   Government and health plans negotiate price and/or funding for pharmaceutical products, impacting patient out-of-pocket costs.
•  Stakeholders (including manufacturers, foundations, and payers) support patients with programs (such as co-pay assistance or patient assistance programs), potentially lowering patient out-of-pocket costs.

Provider Pay and Outlay

•  Providers often acquire drugs ("buy-and-bill") prior to receiving a patient's request for the drug.
•  Reimbursement amounts depend on the patient's health care plan and provider contracting agreements.
•  Providers face financial risks from potentially losing money on high-cost drugs or losing reimbursement revenue through negotiated payment structures impacting their profitability and ability to provide care.

Explore the complexities of the US healthcare system, an industry that accounts for over $4.1 trillion in spending annually. This quiz covers the various stakeholders involved, including consumers, employers, government agencies, and providers, all while examining drug spending and insurance coverage in the United States.