Monday, October 6, 2014

The Cancer of Pensions?

Lesley Stahl of CBS 60 Minutes reports on the astronomical cost of cancer drugs:
Cancer is so pervasive that it touches virtually every family in this country. More than one out of three Americans will be diagnosed with some form of it in their lifetime. And as anyone who's been through it knows, the shock and anxiety of the diagnosis is followed by a second jolt: the high price of cancer drugs.

They are so astronomical that a growing number of patients can't afford their co-pay, the percentage of their drug bill they have to pay out-of-pocket. This has led to a revolt against the drug companies led by some of the most prominent cancer doctors in the country.

Dr. Leonard Saltz: We're in a situation where a cancer diagnosis is one of the leading causes of personal bankruptcy.

Dr. Leonard Saltz is chief of gastrointestinal oncology at Memorial Sloan Kettering, one of the nation's premier cancer centers, and he's a leading expert on colon cancer.

Lesley Stahl: So, are you saying, in effect, that we have to start treating the cost of these drugs almost like a side effect from cancer?

Dr. Leonard Saltz: I think that's a fair way of looking at it. We're starting to see the term "financial toxicity" being used in the literature. Individual patients are going into bankruptcy trying to deal with these prices.
Indeed, it's tragic to see desperate patients going bankrupt to afford prohibitively expensive cancer drugs. I will let you watch the report below, it's excellent and a real eye opener.

I just finished writing my thoughts on my recent trip to Greece where I wrote their healthcare system is a joke. After watching this report, you'll see the one in the United States isn't much better. If you are very rich, no problem, but if you're part of the middle class, a cancer diagnosis will bring you one step closer to financial ruin.

None of this is news to me. I did a course on health economics during my undergrad years at McGill University and understood the advantages of Canada's single payer system, especially when it comes to negotiating drug costs lower. In the U.S., it's the Wild West, and shockingly, oncologists are incentivized to prescribe expensive cancer drugs.

This stuff makes me sick to my stomach. I was diagnosed with Multiple Sclerosis back in June 1997. I know firsthand the trauma of being diagnosed with a chronic disease and how expensive new drug therapies are.

Sure, it costs money to research and develop new drugs but as you'll see in the report, pharmaceutical companies love gouging consumers, arbitrarily setting the cost of newer, better treatments for cancer and other diseases. And what is the U.S. government doing? Absolutely nothing. They allow big pharma's special interest groups to write laws protecting predatory pricing tactics.

So what does the high cost of cancer drugs have to do with pensions? Actually, a lot more than you think. While the FT rails against how toxic politics are obstructing US pension reform, the real cancer isn't public pensions but the lack of proper reforms bolstering them. As I've repeatedly argued in this blog, large, well-governed public pensions covering all citizens are the best way to ensure people will retire in dignity and avoid pension poverty during their golden years.

Go back to read my comment where I eviscerated Andrew Coyne and the National Post for publishing trash on the CPPIB and Ontario's new supplementary pension. I wrote the following:
There is something else that really bothers me about Coyne's slanted piece. If he thinks investing in ETFs is a retirement policy, he's really a lot more clueless on pensions than I think. He completely ignores the benefits of defined-benefit plans which include bolstering overall economic activity, increasing tax revenues and more importantly, lowering costs and pooling investment and longevity risk.

You see while investing in a diversified portfolio of ETFs is fine, if another 2008 or worse strikes, Mr. Coyne and his followers will suffer significant losses and a big hit to their retirement accounts. If they are getting ready to retire when disaster strikes, they're really screwed whereas members of a defined-benefit plan have peace of mind that their pension payments are secure, allowing them to retire in dignity.

I can go on and on about the case for boosting DB pensions and enhancing the CPP, but suffice it to say that the trash the National Post is publishing is completely inaccurate and misleading. The only thing I like about his comment is that it can be used to trash PRPPs which the Harper government is pushing for.
When it comes to healthcare, education and pensions, we need to understand the advantages of pooling risks and lowering costs. It's simply not true that left to its own devices, the "free market" will offer the best possible outcome for the majority of the population. Public options are not a panacea but they're far better than leaving vulnerable citizens to fend for themselves.

A final note on health. A lot of what we're seeing today is the outcome of poor lifestyle choices. Smoking, eating junk food and lack of exercise are still the major factors contributing to poor health. I just came back from Greece where I felt like a million bucks eating the traditional Cretan diet (no pill beats this diet), soaking in the Aegean sun (we need vitamin D!!), swimming in the Mediterranean sea (love salt water, it's therapeutic) and sleeping as much as possible (sleep is crucial for health). We're all going to get something at one point of our life, but make sure you inform yourself on how to prevent disease by implementing a few lifestyle changes.

Below, Lesley Stahl discovers the shock and anxiety of a cancer diagnosis can be followed by a second jolt: the astronomical price of cancer drugs. Watch this report, it's a real eye opener, and provides ample evidence that the status quo isn't working and killing millions of vulnerable and desperate cancer patients. I can say the same about public pensions; the status quo is the path to destruction. We need to reform them and bolster them for all citizens. (If you have a problem loading the video, go to the link and watch it).

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