Bethel College Total Rewards Compensation & Benefits Discussion

Williams, S. J., & Torrens, P. R. (2008). Introduction to health services (7th ed.). Clifton Park, NY: Thomson Delmar Learning.

1 Identify the main reasons why there is a looming physician shortage rather than a surplus. Then, explain how mid-level providers, physician assistants and nurse practitioners, can be utilized to offset the projected physician shortage in the future.

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1,500 word count and there is a total of 6 questions each (not including in-text citation and references as the word count), a minimum of 4 scholarly sources are required in APA format. For the 4 scholarly sources, one from the textbook that’s posted below and the other two from an outside source . Let’s be sure to write it in own work 100% and give appropriately when using someone’s else work. Under no circumstances use any direct quotes. Any directly quoted or copied material will result in a zero for the assignment.

Reference for textbook attached:

Williams, S. J., & Torrens, P. R. (2008). Introduction to health services (7th ed.). Clifton Park, NY: Thomson Delmar Learning.

Knowledge: What are a few key issues that everyone needs to know about the pharmaceutical (not pharmacy) industry and about the recruitment of professionals to the healthcare field?

Comprehension: What is your understanding of the challenges that grow out of the overwhelming success of pharmaceuticals? Be specific as to what success and the challenges they create.

Application: Give an example of one of the challenges that is growing out of the pharmaceutical industry. A case study.

Analysis: What cause and effect relationships are growing? Do a root cause and/or comparative analysis.

Out of the growth of pharmaceuticals?

Synthesis: Offer a new and unique idea of yours or from the research that proposes a solution to the challenges face in pharmaceuticals. OR (pick one) offer a new idea for the recruitment, training and distribution of healthcare professionals. Be specific as to which professionals you are focusing on

Evaluation: How is your idea new and different? Is it better / same / worse than current best practices in either pharmaceutical development or recruiting / training? How? What new improved consequences might your new idea offer? What unintended consequences might arise if your idea was implemented?

Nonfinancial Resources
for Health Care
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
The Pharmaceutical Industry*
Regulatory and Legal Issues
From Idea to Treatment: The Long,
Uncertain Research and Development
Access, Pricing, and Patent Issues
The Value of Medicines
Upon completing this chapter, the reader
should be able to
1. Understand the nature of the pharmaceutical industry.
2. Understand the drug discovery process.
3. Appreciate the role of pharmaceuticals in
promoting health.
4. Appreciate the complex legal and regulatory
issues facing the industry.
5. Understand the role of government and public policy with regard to pharmaceuticals.
*This chapter is adapted from Pharmaceutical Industry Profile 2007, Pharmaceutical Research and Manufacturers of America (PhRMA),
2007, Washington, DC: PhRMA. Copyright © 2007 by the Pharmaceutical Research and Manufacturers of America.
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 11 The Pharmaceutical Industry
Breakthrough medicines and vaccines have
played a central role in this century’s unprecedented
progress in the treatment of fatal diseases. New
medicines generated 40 percent of the 2-year gain in
life expectancy achieved in 52 countries between
1986 and 2000. Leading causes of death have been
eliminated, and people of all ages enjoy vastly increased life expectancy and improved health. Antibiotics and vaccines figured importantly in the near
eradication of syphilis, diphtheria, whooping
cough, polio, and measles. Likewise, cardiovascular
R have
drugs, ulcer therapies, and anti-inflammatories
had a major impact on heart disease, ulcers,
I emphysema, and asthma. Advances in biomedical science
and revolutionary new research techniques are helpA infecing to develop novel approaches to attack
tious, chronic, and genetic diseases. By unraveling
the underlying causes of disease, today’s research
holds the promise that tomorrow’s medicines
move beyond the treatment of the symptoms
disease to the prevention or cure of the disease itself. While much progress has been made, many
challenges remain. The role of the pharmaceutical
industry in addressing the challenges of disease and
illness is the subject of this chapter.
Improvements in life expectancy are due
R in large
part to historic discoveries of anti-infective theraI in 1935
pies. Introduction of the first sulfa drug
stimulated interest in pharmaceutical research
set the stage for the successful development of peniN
cillin. The 15 years between 1938 and 1953 became known as “The Age of Antibiotics”Nas the result of the introduction of an unprecedented
number of new anti-infective agents. Antibiotics and
vaccines played a major role in the near-eradication
of many major diseases of the 1920s,1including
syphilis, diphtheria, whooping cough, measles, and
polio. Since 1920, the combined death9rate from
influenza and pneumonia has been reduced
85 percent. Despite a recent resurgence of tuber2
culosis (TB) among the homeless and immunosuppressed populations, antibiotics have reduced
number of TB deaths to one-tenth the levels experienced in the 1960s. Before antibiotics, S
the typical
TB patient was forced to spend 3 to 4 years in a
sanitarium and faced a 30 to 50 percent chance
of death. Today, most patients can recover in 6 to
12 months with a full and proper course of antibiotics. Lack of compliance among the homeless and
the subsequent emergence of drug-resistant strains
of TB remain a challenge to public health officials.
Pharmaceutical discoveries since the 1950s have
helped to cut death rates for chronic as well as
acute conditions. Cardiovascular drugs such as
beta-blockers and ACE inhibitors have contributed
to a 74 percent reduction in the death rate for
atherosclerosis. Similarly, H2 blockers, proton
pump inhibitors, and combination therapies have
cut the death rate for ulcers by 72 percent. Antiinflammatory therapies and bronchodilators have
helped reduce the death rate from emphysema by
57 percent and provided relief for those with
asthma. Similarly, since 1960, vaccines have greatly
reduced the incidence of childhood diseases—
many of which once killed or disabled thousands of
American children. A vaccine has helped to cut the
incidence of hepatitis B, a leading cause of liver
cancer in the United States.
The twenty-first century beckons as the Biotechnology Century. Rapid scientific advances—in
biochemistry, molecular biology, cell biology, immunology, genetics, and information technology—
are transforming drug discovery and development,
paving the way for unprecedented progress in developing new medicines to conquer disease.
In the 1980s, scientists identified the gene causing cystic fibrosis; this discovery took 9 years.
Scientists located the gene that causes Parkinson’s
disease—in only 9 days! Gene chips will offer a
road map for the prevention of illnesses throughout
a lifetime.
Biotechnology offers new approaches to the discovery, design, and production of drugs, vaccines,
and diagnostics. The new technology will make it
possible to prevent, treat, and cure more diseases
than is possible with conventional therapies; to develop more precise and effective new medicines
with fewer side effects; to anticipate and prevent disease rather than just react to disease symptoms; to
replace human proteins on a large scale that would
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
not otherwise be available in sufficient quantities,
such as insulin for diabetics and erythropoietin for
cancer patients; and to eliminate the contamination
risks of infectious pathogens by avoiding the use of
human and animal sources for raw materials, as
with the use of recombinant Factor III for the treatment of hemophilia and human growth hormone
for growth-deficient children. Through modern biological science, particularly genomics—the study of
genes and their function—we better understand the
underlying cause of disease, the ways in which
drugs operate, and how to create new therapies. R
The drug discovery and development process is
time consuming, complex, and highly risky. At the
same time, to ensure safety, the research-based
pharmaceutical industry is one of the most heavily
regulated in the country. The historic Food and
Drug Administration (FDA) Modernization Act D
1997 has enabled the agency to further reduce regR
ulatory approval times. Manufacturers are able to
make new cures and treatments available to patients about a year earlier than would otherwise
have been possible.
The process of discovering and developing a new
Drug Discovery and Testing
drug is long and complex. In the discovery phase,
pharmaceutical companies employ thousands of
scientists to search for compounds capable of 1
affecting disease. While this was once a process of
trial and error and serendipitous discovery, it has
become more rational and systematic through the
use of more sophisticated technology.
From discovery through postmarketing surveillance, drug sponsors and the FDA share an overridT
ing focus to ensure that medicines are safe and effecS
tive. The drug development and approval process
takes so long in large part because the companies
PART FOUR Nonfinancial Resources for Health Care
and the FDA proceed extremely carefully and methodically to ensure that drug benefits outweigh
any risks. More clinical trials are being conducted
than ever before. More patients are participating in
the trials than ever before. As a result, more information on benefits and risks is being developed
than ever before. The companies and FDA cannot,
however, guarantee that a drug will be risk-free.
Drugs are chemical substances that have benefits
and potential risks. The FDA does not approve a
drug unless it determines that its overall health benefits for the vast majority of patients outweigh its
potential risks. But there will always be some risks
to some patients.
The FDA and the pharmaceutical industry follow elaborate scientific procedures to ensure safety
in four distinct stages:
1. Preclinical safety assessment
2. Preapproval safety assessment in humans
3. Safety assessment during FDA regulatory
4. Postmarketing safety surveillance
The relative safety of newly synthesized compounds is initially evaluated in both in vitro and in
vivo tests. If a compound appears to have important biological activity and may be useful as a drug,
special tests are conduced to evaluate safety in the
major organ systems (e.g., central nervous, cardiovascular, and respiratory systems). Other organ
systems are evaluated when potential problems appear. These pharmacology studies are conduced in
animals to ensure that a drug is safe enough to be
tested in humans. An important goal of these preclinical animal studies is to characterize any relationship between increased doses of the drug and
toxic effects in the animals. Development of a drug
is usually halted when tests suggest that it posseses
a significant risk for humans, especially organ damage, genetic defects, birth defects, or cancer.
A drug sponsor may begin clinical studies in humans once the FDA is satisfied that the preclinical
animal data do not show an unacceptable safety
risk to humans. The time ranges from a few to
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 11 The Pharmaceutical Industry
many years for a clinical development program to
gather sufficient data to prepare a new drug application (NDA) seeking FDA regulatory review to
market a new drug. Every clinical study evaluates
safety, regardless of whether safety is a stated objective. During all studies, including quality-of-life and
pharmacoeconomic studies, patients are observed
for adverse events. These are reported to the FDA
and, when appropriate, the information is incorporated in a drug’s package labeling. The average
NDA for a novel prescription drug is based on alR 4,000
most 70 clinical trials involving more than
patients—more than twice the number ofI trials and
patients for the NDAs submitted in the early
Clinical studies are conduced in threeA

Phase I: Most drugs are evaluated for
R safety in
health volunteers in small initial trials. A trial is
conducted with a single dose of the drug, begin,
ning with small doses. If the drug is shown
to be
safe, multiple doses of the product are evaluated
for safety in other clinical trials.
A primary
Phase II: The efficacy of the drug is the
focus of these second-stage trials, but
D safety is
also studied. These trials are conducted with paR are coltients instead of healthy volunteers; data
lected to determine whether the drugI is safe for
the patient population intended to be treated.
Phase III: These large trials evaluate safety and
efficacy in groups of patients with theNdisease to
be treated, including the elderly, patients
N with
multiple diseases, those who take other drugs,
and/or patients whose organs are impaired.
Investigators must promptly report all unanticipated risks to human subjects. Investigators
also required to report all adverse events that occur
during a trial. A sponsor must report 9
an adverse
event that is unexpected, serious, and
0 possibly
drug-related to the FDA within 15 days. Every indi2
vidual adverse event that is fatal or life threatening
must be reported within 7 days.
A sponsor submits an NDA to the FDA for apS
proval to manufacture, distribute, and market a
drug in the United States based on the safety and
efficacy data obtained during the clinical trials. In
addition to written reports of each individual study
included in the NDA, an application must contain
an integrated summary of all available information
received from any source concerning the safety and
efficacy of the drug.
The FDA usually completes its review of a “standard” drug in 10 to 12 months. One hundred and
twenty days prior to a drug’s anticipated approval,
a sponsor must provide the agency with a summary
of all safety information in the NDA, along with
any additional safety information obtained during
the review period. While the FDA is approving
drugs more expeditiously, the addition of 600 new
reviewers has been made possible by user fees.
Over the years, the percentage of applications approved and rejected by the FDA has remained stable. Two decades ago, 10 to 15 percent of NDAs
were rejected—the same as today.
Postapproval Safety
and Marketing
Monitoring and evaluating a drug’s safety becomes
more complex after it is approved and marketed.
Once on the market, a drug will be taken by many
more patients than in the clinical trials, and physicians are free to use it in different doses, different
dosing regimens, different patient populations, and
in other ways that they believe will benefit patients.
This wider use expands the safety information
about a drug. Adverse reactions that occur in fewer
than 3,000–5,000 patients are unlikely to be detected in Phase I–III investigational clinical trials
and may be unknown at the time a drug is approved. These adverse reactions are more likely to
be detected when large numbers of patients are
exposed to a drug after it have been approved.
Safety monitoring continues for the life of a
drug. Postmarketing surveillance is a highly regulated and labor-intensive global activity. Even before a drug is approved, multinational pharmaceutical companies establish large global systems to
track, investigate, evaluate, and report adverse drug
reactions (ADRs) for that product on a continuing
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
basis to regulatory authorities around the world.
As a condition of approval, the FDA may require
a company to conduct a postmarketing study, or a
company may decide on its own to undertake
such a study to gather more safety information. A
company may also undertake a study if it believes
that the report of ADRs it has received requires
such action. These studies may consist of new clinical trials or they may be evaluations of existing
databases. The FDA collects reports of ADRs
from companies (which submit more than 90 perR
cent of the reports), physicians, and other health
care professionals. The agency evaluates the Ireports for trends and implications and may require
a company to provide more data, undertake a new
clinical trial, revise a drug’s labeling, notify health
care professionals, or even remove a product from
the market.
In addition to meeting regulatory requirements
necessary to prove drug safety and efficacy, manu,
facturers must also comply with FDA regulations to
ensure the quality of pharmaceutical manufacturing. These “good manufacturing practice” (GMP) A
requirements govern quality management and control for all aspects of drug manufacturing. D
enforce GMP requirements, the FDA conducts field
inspections where training investigators periodiI
cally visit manufacturing sites to ensure that a facility is in compliance with the regulations.
The FDA also regulates all aspects of pharmaN
ceutical marketing. These regulations are to ensure
that health care professionals and the public are
provided with adequate, balanced, and truthful inE
formation and that all promotional claims are
based on scientifically proven clinical evidence. Key
aspects of marketing regulations include labeling,
advertisements, promotional claims, investigational
new drugs, and advertising in the form of Internet,
television, and direct-to-consumer marketing. 0
Labels and other written, printed, or graphic matter
on a drug or its packaging (including all other
promotional material such as brochures, slides,
video tapes, and other sales aids) must not be false
PART FOUR Nonfinancial Resources for Health Care
or misleading in any way. The labeling must include
adequate directions for use of a product, warnings
when needed against use in children and people
with certain conditions, dosage information, and
methods and duration of use. Labeling must include a brief summary of a drug’s side effects, contraindications, and effectiveness. Any deviation
from labeling regulations is considered “misbranding,” a serious violation of federal law.
Advertising and Promotional
All advertising is subject to the same requirements
that apply to drug labeling. An ad must include a
brief summary that gives a balanced presentation of
side effects, contraindications, and effectiveness. It
also must include information on all indications for
which a drug is approved but may not include any
information on unapproved or “off-label” uses. All
promotional claims must be in agreement with the
most current information and scientific knowledge
available. The FDA may cite an ad as false, misleading, or lacking in fair balance based on its emphasis or manner of presentation.
Claims of safety relate to the nature and degree
of side effects and adverse reactions associated with
a drug or the overall risk benefit ratio of the drug.
Claims of effectiveness relate to the ability of a drug
to achieve its indicated therapeutic effect. Any product claims relating to safety and effectiveness must
be supported by adequate and well-controlled studies. The FDA Modernization Act allows promotion
of economic claims to HMOs based on “competent
and reliable scientific evidence.”
Investigational New Drugs
Unapproved drugs under clinical development or
approved drugs under investigation for a new indication can be discussed in scientific literature and
at medical conferences but cannot be promoted as
safe or effective. The FDA may authorize distribution of the unapproved treatment investigational
new drug to seriously ill patients who are not participating in clinical studies.
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 11 The Pharmaceutical Industry
According to the National Science Foundation,
pharmaceutical product development comprises
one of the most research-intensive sectors
R in the
United States. The industry is one of the largest emI
ployers of scientists in the United States—and
success or failure relies heavily on theirCability to
make breakthroughs.
On average it takes 10 to 15 yearsAand costs
more than $800 million (and up to $1.2R
billion for
a biologic) to advance a potential new medicine
D by the
from a research idea to a treatment approved
FDA. That means that for more than a decade,
entists, engineers, and physicians strive every day in
laboratories and hospitals searching for a new disA
covery and a way to deliver those new medicines
patients. It may entail trying to understand how to
turn a key gene on or off. Researchers may test
thousands of chemicals for biochemicalR
activity in
the body. It might involve attempting to
I create a
completely new chemical compound, one so
E inventor
unique that the U.S. government grants its
a patent.
The research doesn’t end with the understanding
of how a gene works or the creationNof a new
molecule—scientists must then transformEthose discoveries into medicines. The chemicals and biologics must be safe and work as they should when ingested. They must be engineered so that1 the body
absorbs them in the proper quantities and trans9
ports them to their sites of action.
Even after a medicine is discovered, teams
0 of engineers, biologists, chemists, and physicists must
spend long hours figuring out how to mass-produce
T at his
the results achieved by an individual scientist
or her lab bench. Often promising experiments
not replicable on a large scale. The research may fail
because it is not possible to manufacture the drug
safely or to the proper specifications.
Teams of physicians must study the effects of a
new medicine on patients to discover whether it really works in a population and works without causing unacceptable side effects. Clinical trials may take
years and involve thousands of patients and procedures. On average each new trial requires many procedures and increasingly larger numbers of patients.
After a decade or more of the scientists’, engineers’, and physicians’ efforts, still only one out of
five medicines that enter clinical trials is approved
for patient use by the FDA. The process is long,
risky, fraught with failure, and ultimately expensive.
Failure at the clinical trial stage could completely
nullify 15 years of work.
The United States is the world leader in pharmaceutical research. During the 1990s, the United
States surpassed Europe as the leading site for
pharmaceutical research and development (R&D).
The increased concentration of research efforts
in the United States is reflected by the fact that 8 of
the top 10 medicines by sales originate from the
United States, compared to 2 from Europe.
Americans are also conducting more pharmaceutical-related research in universities and public
institutions as compared to their European counterparts (Figure 11.1). However, academic scientists
U.S. Companies’
Figure 11.1. Wo r l d w i d e P h a rm a c e u t i c a l R e s e a rc h
SOURCE: Pharmaceutical Industry Profile 2004, 2004,
Washington, DC: Pharmaceutical Research and Manufacturers of America (PhRMA).
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
PART FOUR Nonfinancial Resources for Health Care
might use National Institutes of Health (NIH) dollars to discover how two genes interact to cause a
disease, but a scientist in a pharmaceutical research
company lab will discover how to create a medicine
to regulate those genes, thus inventing the treatment or cure for a disease.
Last year pharmaceutical research companies
spent $33 billion on research to develop new and
better medicines, a 7 percent increase from the previous year. Over time, this investment will yield
new medicines that will make progress in better
treating a range of diseases that impose large direct
and indirect costs on patients and society.
The innovation taking place in pharmaceutical
research leads to new and better treatments for disA
ease (Exhibit 11.1). The products of this innovation
will allow millions of patients to live longer, better,
and more productive lives. New medicines also
help curb overall health care costs by often reducing the need for hospitalization and more invasive
procedures, such as surgery, or by delaying nursing
home admission. The combination of innovation in
new medicines and a shift to prescription medications as preferred medical intervention means that
spending on prescription drugs has increased.
Since 1990, pharmaceutical research company
scientists have invented and developed more than
300 completely new medicines, vaccines, and biologics approved by the FDA to treat more than 150
conditions, ranging from infectious diseases to
chronic diseases—and from diseases affecting millions of patients to those afflicting less than
200,000 people. Recent pharmaceutical research
company advances are helping to meet the emerging diabetes epidemic, save the lives of cancer patients, and forestall the burden of Alzheimer’s disease. The progress made in reducing death rates
from heart disease and stroke, for example, is saving the lives of more than 1 million Americans each
year. In addition, pharmaceutical research has created new medicines for a number of serious, but
rare, conditions such as Fabry’s disease, cystic
EXHIBIT 11.1 A Decade of Innovation
Today, patients who would have faced death or dis1995, scientists have developed two new
ability a few years ago have treatments options
classes of blood pressure medications,
available to help them live healthier, more produc-E
angiotensin-II antagonists and selective
tive lives. A sampling of these innovations are as N
aldosterone receptor antagonists. These new
medicines improve blood pressure control with
individualized treatment plans and have fewer
Patients suffering from Alzheimer’s disease (AD),
side effects.
a neurological condition that leads to cognitive

decline among older people, had few treatment
options until the past decade, when the FDA ap1
proved new medicines to treat AD and slow impairment. A new class of drugs is the first ap- 9
proved treatment for moderate to severe AD.
New medicines are still greatly needed to stem
the enormous costs of AD because the number2
of cases continues to rise.
High blood pressure can lead to stroke, blindS
ness, heart problems, and kidney damage. Since

Schizophrenia is an incapacitating mental illness that impairs the patient’s sense of reality,
reduces the ability to relate to people, and, in
many cases, causes hallucinations.
New atypical antipsychotic medicines treat
schizophrenia with fewer problematic side
effects than older drugs, which makes them
easier for patients to tolerate and continue taking.
As a result, many people with schizophrenia can
now lead more normal, independent lives.
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 11 The Pharmaceutical Industry
fibrosis, sickle cell anemia, and a number of rare
Medical literature today includes countless studies demonstrating medicines’ ability to help patients avoid hospitalization and invasive surgery, or
delay the need for long-term nursing home care. In
addition to improving patient quality of life and
giving physicians more options to tailor treatment
to the needs of individual patients, the use of new
medicines also reduces overall health care costs.
For example, by preventing complications, side efR
fects, and symptoms, new medicines drastically
reduce the need for hospitalization.
Examples of Pharmaceutical
Scientists have developed new medicines to treat a
D the past
number of gastrointestinal disorders over
two decades. Since these medicines have
, become
available to patients, the need for surgical procedures to correct ulcers has slowed, and today ulcer
surgery is a relic of the past.
A new Alzheimer’s drug slows the progression of
D their
cognitive decline, allowing patients to maintain
independence longer and delay enteringRa nursing
home by an average of 30 months. Nursing home
care is more costly than in-home care, soI this delay
can significantly reduce health care expenditures—
and the economic and emotional burden on both
patient and caregiver.
The health of AIDS patients is notNonly improved by new medicines, but those medicines
also reduce the need for costly hospital care. After
the introduction of highly active antiretroviral therapy (HAART) for the treatment of AIDS,
1 pharmaceutical expenditures increased by about 33 per9
cent, while hospital expenditures decreased
about 43 percent. Overall, total health care
ditures decreased by 16 percent (between 1996
and 1998).
New medicines to reduce the incidence
T of breast
cancer can help women avoid later chemotherapy
S science
and surgery. Because of the high-technology
needed to develop these new prescription drugs,
the medication costs as much as $1,050 a year.
However, surgery, chemotherapy, or other invasive
treatments for women suffering from breast cancer
may cost as much as $14,000 a year.
Medicines have played a significant role in the
life expectancy gains made in the United States and
around the world. New medicines are estimated to
have generated 40 percent of the 2-year gain in
life expectancy achieved in 52 countries between
1986 and 2000.
In many cases new medicines and vaccines help
prevent disease, in addition to those that may cure
or alleviate previously fatal or debilitating conditions. For example, new medicines contributed to
the decline in U.S. HIV/AIDS death rates.
Some cancers have become a “chronic disease
much like asthma, diabetes, and, more recently,
AIDS” as a result of new diagnostic techniques and
innovative medicines. Today there are 3 million
more cancer survivors than there were a decade
ago. The chance of surviving for five years after diagnosis has risen by 10 percentage points over the
past two decades to 62 percent today.
New and better medicines are not only extending more people’s lives but also giving them higher
quality, more productive years. Risks for chronic
disabilities such as stroke and dementia have declined sharply.
As patients and health care professionals have
turned increasingly to medications as cost-effective
alternatives to invasive surgery and hospitalization, spending on prescription medicines has naturally increased. Although prescription medicines
are often portrayed as the main driver of rising
health care costs, prescription drugs accounted for
16 percent of total health care spending increases
in a recent year.
In addition to more than 70,000 scientists, the
pharmaceutical research industry directly employs
more than 315,000 Americans. New medicines
also benefit the economy by increasing worker
productivity and reducing absenteeism. Many types
of medicines—including those for depression,
migraines, diabetes, and allergies—help boost
worker productivity.
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
Ultimately, innovative medicines make a difference
only when patients have access to them and use
them. Underutilization of effective new medicines
is a serious concern that limits the potential public health impact of pharmaceutical discoveries
(Exhibit 11.2). Strategies to contain pharmaceutical
costs have led to less access to needed medicines for
patients. However, some important programs that
broaden access to innovative medicines illustrate
the positive impact of this approach.
PART FOUR Nonfinancial Resources for Health Care
In recent years, many Medicaid programs have
instituted preferred drug lists (PDLs), which specify
the reimbursable medicines physicians can freely
prescribe. Drugs not on the PDL are reimbursed
only if a patient’s doctor first obtains special permission from the insurer to prescribe the drug
(known as “prior authorization”). Although the intent of this mechanism is to control costs, the result
has been less access to needed medicines for patients. Prior authorization and restrictive PDLs
limit a physician’s ability to choose the most appropriate medicine(s) for the patient. Yet one size does
not fit all when it comes to medicines because individual differences in drug response are common.
Access restrictions are particularly onerous for
low-income patients, who lack the resources to pay
EXHIBIT 11.2 Underutilization
of Drugs
Use of medicines is increasing as more patients
take medicines for a broader range of conditions.A
This is indicative of new medicines offering new
treatment options (e.g., Alzheimer’s disease and D
chemotherapy-induced anemia) and changing R
standards of medical care that call for earlier use
of medicines to prevent the progression of disease,
use of combination therapy rather than a single E
medicine, and improved therapies. Nonetheless, inN
creasing use of medicines is often cited in policy
debates as indicating widespread overuse of
In fact, while only limited research indicates
overuse of prescription drugs, there is much evidence that large numbers of patients underuse 1
needed medical care, including prescription
medicines, for many serious health conditions. 9
Such underuse is not limited to patients without 0
health insurance or prescription drug coverage—it
clearly afflicts patients who have health insurance
with prescription drug coverage.
A RAND study found that nearly half of all adults
in the United States fail to receive recommendedS
health care. Only 45 percent of patients with
diabetes received the care they needed; only
68 percent of patients with coronary artery disease
received recommended care; only 45 percent of
heart attack patients received medications that
could reduce their risk of death; only 54 percent of
patients with colorectal cancer received recommended care; and less than 65 percent of patients
with high blood pressure received recommended
care. According to the RAND researchers, “the
deficiencies in care . . . pose serious threats to the
health of the American public that could contribute
to thousands of preventable deaths in the United
States each year” (McGlynn et al., 2003).
In assessing underuse and overuse of health
care services, the study included an examination
of nine health conditions that require treatment
with prescription medicines. There was underuse
of prescription medications in seven of the nine
conditions. Those seven conditions were asthma,
cerebrovascular disease, congestive heart failure,
diabetes, hip fracture, hyperlipidemia, and
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 11 The Pharmaceutical Industry
for innovative medicines out of pocket. If the most
appropriate medicines for them are not on the
PDL, they face fighting their way through the bureaucracy of prior authorizations and/or lengthy
appeals processes—or doing without.
Yet experience shows that denial of the most appropriate drug therapy ultimately lowers quality of
care and increases use of more expensive services,
such as hospitalization. For example, clinicians
treating patients in Michigan’s Medicaid program
reported that the prior authorization process was
Rfor them
overly burdensome and time consuming
and their patients. The process also harmed
I vulnerable Medicaid beneficiaries, such as an HIV/AIDS
patient who had to be hospitalized due to a delay
in obtaining prior authorization for aAnecessary
While Medicaid PDLs seek to restrict access to
D improve
medicines, alternative approaches seek to
quality of care and achieve overall health
, cost savings by promoting the correct use of medicines,
thereby avoiding the later need for more costly interventions. Increases in expenditures for
A prescription medicines often help patients lead healthier
lives while avoiding expensive hospitalizations,
emergency room visits, and long-term care.
R Disease
management programs work to increase patient access to innovative medicines to improve Ihealth and
reduce overall health care costs.
Patient-focused disease management programs
promote appropriate use of pharmaceuticals and
medical resource utilization. In these programs,
tients receive more intensive education, assistance,
and monitoring in following a treatment plan tailored to their needs. Managed-care organizations
and large employers make up the majority
1 of disease management clients, although some state
9 manMedicaid programs also offer them. Disease
agement programs rely heavily on giving
0 patients
access to innovative medicines to reduce health
care costs and improve outcomes.
For example, disease management Tprograms,
which target patient populations with specific
S shown
high-cost, high-risk chronic conditions, have
that increased spending on medicines that manage
disease helps reduce surgeries, hospitalizations,
and emergency room visits. Patient-focused disease
management programs promote appropriate use of
pharmaceuticals and medical resource utilization.
Direct-to-consumer advertising (DTCA) brings
Food and Drug Administration approved information about prescription medicines to patients and
families. Through print and broadcast channels,
many people learn about new medications for
symptoms they are experiencing.
The ability of patients without insurance coverage to access medicines is essential to maintaining
health. Pharmaceutical research companies employ
a number of programs—discount cards, supporting
clinics, donated medicines—to help patients gain
access to the medicines they need. Through these
programs, companies provide prescription drugs
free of charge to patients who might otherwise not
have access to necessary medicines, such as those
who do not have prescription drug insurance coverage or who are underinsured with either private
and/or government health plans. Companies also
allow physicians, hospitals, community pharmacies, home health companies, and others to obtain
drugs for patients in need. In 2003, an estimated
6.2 million patients received prescription medicines
through these programs.
In the United States today, a vigorously competitive pharmaceutical market provides incentives for
scientists to be the first to bring a new product to
market and potentially earn rewards after more
than a decade of costly research. Pricing through a
competitive market also allows innovators to earn
returns on successful inventions, thus providing the
substantial funds necessary to continue other research projects.
However, in parts of the world where the government controls prescription drug prices, both innovation and patient access to innovation suffer. In
many European countries where governments impose prescription drug price controls, patients must
wait as long as 2 years for new medicines to get to
market while bureaucrats decide on price levels.
Some national health care systems restrict access
to a new medicine even after setting its price. In the
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PART FOUR Nonfinancial Resources for Health Care
United Kingdom (UK), a governmental board, the
National Institute for Clinical Excellence (NICE),
issues recommendations based on a number of factors (including cost effectiveness) as to whether the
National Health Service (NHS) should make
medicines available to patients covered by the
government-run health care system. European price
controls often restrict patient access to medicines
that American doctors cite as essential for proper
patient care. There are huge differences in the access to medicines among the various European
countries. The shift of research and development
(R&D) investment and the physical relocation Iof
pharmaceutical research laboratories from Europe
to the United States especially with consolidation
underline the significance of free-market policies for
producing innovation.
Patents and Drugs
Another policy important to innovation is governments’ granting of patents as an incentive for research and for inventors to share their discoveries
with the public. In the United States, patents are
granted according to strict standards by trained examiners at the U.S. Patent and Trademark Office
(USPTO). They are granted only to inventions
proved as new, useful, and nonobvious and provide
only a limited period of exclusivity to the inventor
(20 years in the United States), after which anyone
can replicate or use the invention.
Patent incentives encourage the developmentN
new medicines by attempting to provide a level of
certainty to inventors. If granted a patent, scientists
and the companies they work for know that they
have a protected period of time in which they may
prevent others from selling their invention. The ex9
clusive right to exclude others from selling the new
invention during this time gives them the opportu0
nity to potentially recoup the hundreds of millions
of dollars invested in researching and developing2a
new medicine.
Under current law, generic drug manufacturers
can infringe unexpired patents in order to prepare
their copies for Food and Drug Administration
approval and the market, and can—in an increasing
number of instances—enter the market with their
copies years before patents expire. In fact, a growing number of generics seek to enter the market as
quickly as 5 years after an innovator medicine is
approved. Yet pharmaceuticals already have fewer
effective years of patent protection than other U.S.
Continuing Innovation
Over the past several decades, scientists have invented and discovered a steady stream of new and
better medicines, advanced our scientific and technological capabilities, and improved our knowledge of disease. The work of these scientists is far
from over.
In some labs geneticists are striving to unlock
the secrets of the human genome and to develop
new scientific techniques for regulating the genes
that cause disease. In other labs chemists are developing new and more efficient ways to combine
chemical compounds to produce new treatments
for patients. Engineers and computer scientists are
designing robots to screen new compounds for biochemical activity and design new and faster computers and applications to analyze data on potential drug targets. Biologists are trying to understand
and replicate the complex structure of proteins and
are looking for new tools to combat antibioticresistant bacteria and bioterrorism agents.
Prescription drugs save lives, alleviate suffering, and improve the quality of life. They also
often reduce the need for other more invasive and
expensive treatments. A narrow focus on the cost
of drugs, without regard to their value and their
role in the health system as a whole, would discourage innovation and harm the prospects for
health advances.
Better quality patient care is often more efficient
care. For example, large percentages of patients with
conditions such as diabetes, depression, hypertension, and high cholesterol are not receiving needed
care, yielding worse health outcomes and higher
overall costs. Focusing on promoting solutions that
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 11 The Pharmaceutical Industry
improve quality will lead to better results for patients and more affordable medical care.
Instead of focusing on reducing the prescription
drug line item, some health plans are emphasizing
disease management programs, which recognize
the value of medicines in both improving patient
care and offsetting other health care expenditures.
Furthermore, a competitive market provides greater
opportunity for access to medicines.
A and preMedicines save lives, relieve pain and cure
vent disease. Medicines help keep families together
longer and improve the quality of life for patients
D on the
and caregivers. Medicines keep employees
job and productive in the community.,They also
help people—and the health care system—avoid
disability, surgery, hospitalization and nursing home
care, often decreasing the total cost ofA
caring for
an illness.
D of the
Ulcer treatment provides a good example
ability of pharmaceutical innovation R
to reduce
costs, both for individuals and for the health care
system. Before 1977, the year in whichI stomachacid-blocking H2 antagonist drugs were
E introduced, 97,000 ulcer surgeries were performed each
year. By 1987, the number of surgeries per year
had dropped to fewer than 19,000. InNthe early
1990s, the annual cost of drug therapy per person
was about $900, compared to about $28,000 for
surgery. The discovery that the H. pylori bacterium
is the principal cause of ulcers led to the1use of antibiotics in combination with H2 antagonists to
treat duodenal ulcers.
Every 5 years since 1965, roughly 0one additional year has been added to life expectancy at
birth. These longer life spans are due, in2large part,
to the conquest of diseases by pharmaceuticals:
Vaccines have virtually wiped out such diseases as
S polio in
diphtheria, whooping cough, measles and
the United States. The influenza epidemic of 1918
killed more Americans than all the battles fought
during the World War I. Since that time, medicines
have helped reduce the combined U.S. death rate
from influenza and pneumonia by 85 percent; in
large part to new medicines, deaths from heart disease have been cut by more than half since 1950.
And this steady decline is continuing; deaths from
all cancers combined as well as for the top 10 cancer sites declined in the United States between
1990 and 1997, due to better treatments and early
detection; and since 1965, drugs have helped cut
emphysema deaths by 57 percent and ulcer deaths
by 72 percent.
Medicines are helping more children grow into
healthy adults. In 1949, more than one in every
hundred babies died of respiratory distress syndrome due to immature lungs. Today, thanks in
large part to new medicines that accelerate lung
maturity in premature babies, infant mortality rates
have sunk to record lows. Polio, which killed nearly
2,000 American children in 1950, is now virtually
unknown, thanks to vaccines. Before routine
measles vaccination began in the 1960s, more than
3 million cases of this childhood disease and 500
deaths from measles were reported each year. Cases
of bacterial meningitis among young children
dropped nearly 80 percent over 11 years after the
introduction of a vaccine.
Treating cystic fibrosis patients with a breakthrough medicine reduces hospitalization and related medical costs. This medicine, when used in
conjunction with standard treatments, was proven
in clinical trials to reduce the risk of respiratory
tract infections requiring intravenous antibiotic
therapy by 27 percent. For asthma patients,
increased drug spending kept patients out of the
hospital. Total health care costs declined nearly
25 percent and hospitalization rates dropped by
50 percent for asthma patients using new inhaled
corticosteroid therapy.
New medicines have helped reduce the toll of
cancer, and ongoing pharmaceutical research
promises to continue and accelerate the impressive
progress made against cancer in the past decade
(Exhibit 11.3). Researchers are using new knowledge
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PART FOUR Nonfinancial Resources for Health Care
EXHIBIT 11.3 New Chemotherapy: Nineteen Years
from Idea to Approval
In 2000 the FDA approved a new chemotherapy
treatment, Mylotarg®, for patients with relapsed
acute myelogenous leukemia. The approval came
19 years after scientists at Lederle Labs, now
Wyeth, first discovered a microorganism in a soil
sample that produced a powerful anticancer substance called calcicheamicin.
Scientists learned that calcicheamicin destroys
cell DNA, which results in the cell’s death. Thus, in
theory, targeting it to cancerous cells could elimiC
nate them. In developing any cancer treatment, a
key challenge is finding a way to kill cancer cellsA
while minimizing or avoiding damage to the body’s
other healthy cells. However, calcicheamicin’s exD
ceptionally high toxicity (between 1,000 and 10,000
times more toxic than traditional anticancer
medicines) meant that scientists had to find a novel
way to deliver the drug only to cancer cells.
Before concentrating on making the medicineA
safe for patient use, the pharmaceutical
and innovative techniques to hone in on cancer
cells without damaging healthy cells.
Pharmaceutical companies have developed a
number of drugs that improve the quality of life for
cancer patients and, in some cases, lower the cost
of cancer treatment. Drugs that prevent nausea durE
ing chemotherapy are making treatment easier to
bear for many patients, as are medicines that help
restore the energy that chemotherapy can take
away. Another medicine, called a colony stimulat9
ing factor, helps patients whose immune systems
are weakened by high-dose chemotherapy. A shift
from intravenous to newer forms of oral
chemotherapy is also yielding savings both in quality of life and in cost reductions.
Prescription medicines can reduce disability and
absenteeism and increase productivity—while improving the quality of life for employees. Migraine
researchers first had to figure out how to make
large quantities of calcicheamicin for experimentation. During the next 5 years, they worked to
understand its structure and how to stabilize it.
The team spent the next 3 years trying to
develop a “linker” molecule that would bind tightly
to the calcicheamicin to deliver it directly to cancer
cells without releasing it in the bloodstream.
Although they found linkers that worked in animals,
they had problems converting them to a form
usable in humans. Working virtually around the
clock, only stopping for a break on Christmas day,
the pharmaceutical research company scientists
tested 35 linkers before finding one that worked.
Finally, in 1995, 14 years after discovering calcicheamicin, the new medicine Mylotarg® entered
human clinical trials. After nearly 5 years of
successful clinical trials, the FDA approved the
medicine for widespread patient use.
headaches not only cause pain to those who suffer
from them—they also take a huge toll in absenteeism and lost productivity. Thanks to a breakthrough drug, however, the human and economic
costs of migraine headaches are dropping. Total
costs of treating patients for migraine headaches
declined 41 percent as the result of the new drug
treatment. The drug saved employers $435 per
month per treated employee due to a reduction in
lost productivity costs, while the monthly cost of
the drug per employee was only $43.78.
Depression affects nearly 18 million Americans.
Its annual toll on U.S. businesses amounts to about
$70 billion in medical expenditures, lost productivity, and other costs. Innovative prescription
medicines are reducing employers’ costs and absenteeism drops when depressed workers are treated
with prescription medicines. Savings from improved
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 11 The Pharmaceutical Industry
productivity and the reduction in work loss and
medical costs far outweighed the cost of the drug.
Hay fever, or seasonal allergic rhinitis, affects an
estimated 13 million working adults and has been
shown to cause absenteeism and diminished work
productivity. But new nonsedating antihistamines
actually increase worker productivity.
Women live an average of 7 years longer than
men. The bad news is they are more susceptible to a
number of diseases and more likely to experience
illness or disability. Pharmaceutical companies are
R afflict
targeting diseases that disproportionately
women. Over 300 medicines are in development
for such diseases as rheumatoid arthritis, multiple
sclerosis, lupus, osteoporosis, breast cancer, ovarian cancer, diabetes, and depression. A
Breast cancer is the second leading cause of canR
cer death among U.S. women, exceeded only by
D Amerilung cancer. Breast cancer afflicts 8 million
can women and takes 40,000 lives ,each year.
Breast cancer deaths have declined due to early detection and better treatments, including new
medicines. Some of the latest medicinesA
for breast cancer are a genetically engineered version of one of the body’s own weaponsD
for killing
invaders; an oral anticancer drug to shrink
R hard-totreat tumors; and a drug that can reduce the inciI
dence of breast cancer in high-risk women.
Multiple sclerosis, or MS, is a chronic,Eoften progressive disease of the central nervous system in
which scattered patches of the covering of nerve
fibers in the brain and spinal cord are destroyed.
is most often diagnosed in people in their twenties
and thirties, and women develop the disease at a rate
almost double that of men. An estimated 350,000
Americans have this disease.The average annual
of MS exceeds $34,000 per person, while the life9
time cost is more than $2.2 million per person.
Treatment with a breakthrough medicine
0 slows
the cognitive impairment often suffered by people
with relapsing MS. The medicine has 2also been
shown to reduce relapses and slow the progression
of the disease. A combination of two powerful
drugs may help patients who continueS to suffer
flare-ups on one-drug treatment.
One of every two women will have an osteoporosis-related fracture at some point in her life. In
osteoporosis, a reduction in bone mass leads to
fractures, particularly of the vertebrae, hips, and
wrist. Bone-density screening for early detection,
strengthening exercises, and innovative medicines
can help people avoid osteoporosis. Several types
of medicines are available to help prevent osteoporosis and to reduce the human and economic toll
of this disease. Because fractures due to osteoporosis often lead to disability and nursing home admission, new medicines for osteoporosis are the best
hope of cutting the cost of this disease.
Heart disease is America’s number-one killer,
and stroke is third, following cancer. Heart disease
and stroke claim almost a million lives and cost
$300 billion each year. New treatments, including
innovative medicines, have helped cut deaths from
heart disease and stroke in half in the past 30 years
and are also reducing the economic toll of these
diseases. The widespread use of blood pressure
drugs over the past half century appears to have
sharply reduced dangerous hypertension and
potentially lethal enlargement of the heart’s main
pumping chamber. A blood thinning drug reduces
the risk of new heart attacks, strokes, and death by
20 percent a year in people being treated for mild
heart attacks and bad chest pain. ACE inhibitor
drugs for patients with congestive heart failure
helped avoid $9,000 per person in hospitalization
costs and reduce deaths. The use of a beta-blocker
medicine to treat high blood pressure and congestive heart failure sharply reduces hospital admissions. Combining two common medicines can significantly reduce the risk of death for patients with
mild heart failure: Using beta-blockers and ACE
inhibitors in combination can reduce the risk of
death from heart failure by 30 percent. A study
sponsored by the National Institutes of Health
(NIH) found that treating stroke patients
promptly with a clot-busting medicine reduces the
need for hospitalization, rehabilitation, and nursing home care.
Some historians have called the era from the
1940s through the 1990s “the Golden Age of
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
Medicine.” But many scientists predict that even
those accomplishments will be dwarfed by the
achievements of the twenty-first century. Stunning
advances in the knowledge about disease, increases in targets available for drug discovery, and
our growing ability to design effective medicines
open the door to exciting possibilities. No one can
predict the future with great accuracy, but here are
some of the developments scientists believe are
possible in this next “Platinum Age” of medicine:
Medicines can already stop the AIDS virus from
reproducing. The next breakthrough may R
medicines that can stop the virus from entering
the cell in the first place; drugs that will slow the
progression of Alzheimer’s disease; “cocktails” of
treatments, including vaccines, monoclonal antibodies, immune system boosters, and drugs that
cut off a tumor’s blood supply in an all-out attack
against cancer; medicines that will prompt the
heart to grow new blood vessels, reducing the
need for bypass surgery; and treatments that may
regenerate nerves damaged by brain disease or
spinal cord injury.
Rheumatoid arthritis (RA) is a chronic inflammaI
tory autoimmune disease that primarily affects the
joints. In this disease, the body’s immune system
attacks the cells of a fluid that surrounds the joints.
This fluid normally lubricates and nourishes the
bones and cartilage within a joint, but with RA,
the inflammatory process causes this fluid to beE
come thicker and begin to destroy the cartilage and
bone. This leads to RA’s characteristic effects on the
joints: pain, swelling, loss of function. RA can also
lead to bone loss that causes osteoporosis, as well
as the development of anemia, neck pain, dry eyes
and mouth, bumps under the skin, and very rarely,
inflammation of the blood vessels, the lining of the
lungs, or the sac enclosing the heart.
Medicines seek to relieve the symptoms of RAT
three main ways: reducing pain, decreasing inflamS
mation, and slowing damage to the joints. Before
1998, treatment of rheumatoid arthritis depended
PART FOUR Nonfinancial Resources for Health Care
largely on nonsteroidal anti-inflammatory drugs
(NSAIDs) like aspirin. However, since 1998, patients suffering from rheumatoid arthritis have benefited from a surge in the approval of new treatments for their often painful condition. In 1998,
the FDA approved the first new disease modifying
anti-rheumatic drug (DMARD) specifically developed for the treatment of rheumatoid arthritis in
more than a decade. This class has the potential to
reduce or prevent joint damage, preserve joint integrity and function, and ultimately, reduce the
total costs of health care and maintain economic
productivity of the patient with RA. That same
year, the FDA also approved the first in a new category of biologic products known as biological response modifiers. Medical products in this category
reduce inflammation by blocking the protein in the
immune system that causes excessive inflammation
in those with RA.
Advances in drug treatment continued in 1998
with the FDA’s approval of a medicine in a third
new class of drugs known as COX-2 (cyclooxygenase-2) inhibitors. Like NSAIDs, these
drugs block COX-2, an enzyme that causes inflammation. However, unlike NSAIDs, they do
not block COX-1, an enzyme that protects the
lining of the stomach, thus reducing risk of the
gastrointestinal ulcers and bleeding that can
occur with NSAIDs. In 2004, these drugs faced a
challenge due to concerns about elevated cardiovascular risks in clinical use.
Although RA still has no cure, drug treatments
are helping patients live more comfortable, productive lives. New drugs in development focus on the
early stages of the immune response to block only
those specific immune system cells involved in autoimmune disease; so-called “next generation biologics,” including co-stimulatory blockers that prevent the initial signaling and chain of chemical
reactions that turn on the immune system; and
therapies that inhibit the migration of inflammatory cells into the joint tissues, thus preventing cartilage and bone destruction. Trials of gene therapy
products that affect factors regulating the immune
system have also shown promising results.
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CHAPTER 11 The Pharmaceutical Industry
Like other viruses, the human immunodeficiency
virus (HIV) that causes acquired immune deficiency
syndrome (AIDS) replicates by entering a healthy
cell and taking over its machinery. Most medicines
available to treat HIV infection have gained FDA
approval in the past decade, including four new
classes of medicines that target three different
stages of the HIV virus’s life cycle. Two new classes
of medicines, along with one class approved in the
R interfere
late 1980s, use different mechanisms to
with the reverse transcriptase enzyme, thereby inI
terrupting an early stage of the HIV life cycle.
Medicines in the earliest class of drugs, C
analogues, provide faulty DNA building
A blocks,
halting the DNA chain that the virus uses to make
copies of itself.
A second drug class, introduced in D
1996 and
called nonnucleoside reverse transcriptase in, copy ithibitors, binds to the enzyme so it cannot
self. The third class, nucleotide analogue reverse
transcriptase inhibitors, was first introduced in
2001. These drugs block the reverse transcriptase
to prevent replication of the HIV virus.DA second
enzyme, protease, is a critical player in a later stage
of the HIV life cycle. The first drug in a class of protease inhibitors to combat this enzyme
I was approved in 1995. Health care providers combine
protease inhibitors with the other classes of antiviN
ral medicines in a strategy known as combination
therapy (using more than one type of medicine
treat a condition). This strategy has been used to
E HIV distreat both early-stage and advanced-stage
ease and is an important factor behind the significant decline in AIDS deaths in the United States in
recent years.
In 2003, the FDA approved the first 9
in another
new class of drugs that prevents the HIV virus from
0 as fuattaching to healthy cells. This class, known
sion inhibitors, blocks the virus’s ability
2 to infect
certain components of the immune system. Recent
clinical trials showed that when added toTcombination therapy regimens, fusion inhibitors
S can decrease the amount of virus in the bloodstream to
undetectable levels. Because these drugs attack the
HIV virus in a totally different way, they can be of
particular benefit to individuals who have developed resistance to previously available medicines.
Beyond the entirely new classes of drugs, important innovations within existing drug classes have
made the treatment of people living with
HIV/AIDS more effective as well as more tolerable.
For example, the first treatments had to be taken
multiple times a day, but many new drugs are available in twice-daily or even once-daily dosage forms.
Medicines under development for AIDS and
AIDS-related conditions include, among others, an
antisense gene therapy medicine that uses two
novel technologies to boost immune responsiveness against HIV; a new medicine that blocks a
third enzyme, known as integrase, that the HIV
virus uses to copy itself; and a number of
HIV/AIDS vaccines that may prevent the spread of
the virus.
Although a cure has not yet been found for
HIV/AIDS, new medicines that are the product of
research have dramatically affected the length and
quality of life for those infected with the HIV virus.
Because people receiving pharmaceutical therapy
for HIV/AIDS are better able to maintain their
health, they use fewer health care services and use
them less often.
Neurology and Mental Health
Parkinson’s disease is a condition that results from
the breakdown of neurons in the part of the brain
that controls movement. This breakdown causes a
shortage of a chemical called dopamine. Dopamine
is responsible for relaying the brain’s instructions
for movement, and a lack of it causes the tremors,
rigidity, and slower-than-normal movement that
many Parkinson’s patients experience. Until recently, patients suffering from Parkinson’s disease
were usually first treated with levodopa, a chemical
that is converted to dopamine once it enters the
brain. Unfortunately, levodopa is often broken
down in the bloodstream before it reaches its target
in the brain, causing decreased effectiveness.
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
In 1997, researchers made a major advance in
treating Parkinson’s disease by introducing a second generation of medicines called dopamine agonists. These medicines mimic the effect of
dopamine and stimulate neurons to act as though
sufficient dopamine were present in the brain. A
new class of drugs introduced in 1998, known as
COMT (catechol O-methyltransferase) inhibitors,
blocks the enzymes that break down levodopa as it
moves through the bloodstream, allowing it to get
to the brain and be converted to dopamine. ConsisR
tent exposure to dopamine allows patients to function more independently and for longer periodsIof
time between doses with fewer of the burdensome
symptoms of Parkinson’s disease.
Alzheimer’s disease (AD) is a progressive neurological disease that affects memory, personality,
and behavior. The pathological processes involved
in AD disrupt the three key functions of nerve cells
in the brain—communication, metabolism, and ,repair. When these processes are disturbed, brain
cells stop working, lose connections with each
other, and eventually die. Over a period of years,
those with AD gradually lose their ability to reD
member things and think clearly.
All four of the prescription medicines, belonging
to two therapeutic classes, approved by the FDA to
treat Alzheimer’s disease have been developed Iin
the past decade. The first class, acetylcholinesterase
inhibitors, prevents the breakdown of a neurotransN
mitter in the brain called acetylcholine. This chemical is thought to carry messages between nerve
cells. The breakdown of acetylcholine can lead to
disruptions in thinking and memory. These
medicines were first introduced in 1993. The second class, cholinesterase inhibitors, also prevents
the breakdown of acetylcholine as well as another
similar chemical, butyrylcholine. This class was first
approved for use in 2000.
By preventing the breakdown of these chemi2
cals, these new medicines ensure that more acetylcholine is available for memory-related and cogniT
tive functioning. They also help with some
behavioral problems commonly experienced S
those with AD, including delusions and agitation.
PART FOUR Nonfinancial Resources for Health Care
Although these drugs do not stop or reverse AD,
they allow people with the disease to maintain their
independence for longer periods of time. These AD
treatment innovations are the current standard of
care among neurologists for those with mild to
moderate AD.
Another medicine in recent clinical trials is the
first in a new class of drugs known as NMDA
(N-methyl D-aspartate) receptor antagonists. The
medicine works by modulating the levels of glutamate, a nerve signaling agent in the brain. Too much
glutamate can lead to the death of nerve cells.
As the Baby Boom generation reaches its older
years, the number of Americans suffering from
Alzheimer’s disease is likely to increase dramatically, and this will have major financial and social
consequences. As a result, the search for new AD
treatment strategies is a high priority.
Schizophrenia is a condition that causes those
who suffer from it to lose their sense of reality, become delusional, suffer from hallucinations,
become emotionally unstable, and find it difficult
to make decisions and relate to people. Little is
known about the causes of schizophrenia and it
has no cure, but medications are now available to
treat many of the symptoms. The first medicines
to treat schizophrenia were introduced in the
1950s, but these drugs often caused side effects
such as muscle stiffness, tremor, and abnormal
The past decade witnessed the introduction of
new atypical antipsychotic medicines. These atypical antipsychotic medicines work by blocking receptors of the neurotransmitters dopamine and
serotonin. Serotonin controls mood, emotion,
sleep, and appetite and is thus implicated in the
control of numerous behavioral and physiological
functions, while dopamine acts on the cardiovascular, renal, hormonal, and central nervous systems.
These drugs appear to change the chemical balance
of serotonin and dopamine in the brain. The new
medications are able to control the so-called “positive” symptoms of schizophrenia—symptoms and
behavior that should not be there—as well as the
“negative” symptoms—lack of characteristics that
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 11 The Pharmaceutical Industry
should be present—thereby allowing patients to
lead more normal, independent lives.
Diabetes and Heart Disease
Diabetes is a metabolic disorder in which the body
is unable to make enough of and/or properly use
the hormone insulin to control blood glucose levels. Glucose provides the basic fuel for all cells in
the body, and insulin transports glucose from the
blood into the cells for storage. When glucose
R cells, it
builds up in the blood instead of going into
can cause two problems. Immediately, cells
I may be
starved for energy, and over time, serious problems
develop for many body systems. During the past
decade, research breakthroughs have ledAto the approval of new insulin products to treat Type 1 and
advanced Type 2 diabetes. One closely mimics the
D release
action of human insulin by providing a slow
over a 24-hour period, with no pronounced
, peak.
Another medicine works quickly and for a short period of time, allowing patients to take the medication right before they eat a meal, instead
A of the
30 minutes before eating that insulin doses have
D a string
traditionally required. Beginning in 1995,
of additional treatment advances have allowed
R people with Type 2 diabetes to more effectively manage
their condition.
Until 1995, only one category of oralEmedicines
was available in the United States to treat patients
with Type 2 diabetes. This category of drugs, the
sulfonylureas (SU), was a major advance
N in treatment for Type 2 diabetes because it was the first
oral medicine that could be used to treat the disease. Available in the United States since 1954, SU
drugs stimulate the pancreas of a patient with
1 Type 2
diabetes to produce more insulin and remain an
9 New
important part of diabetes treatment today.
SU drugs with fewer side effects have been
0 developed and are used as “monotherapy” or as part of
2 diabetes
combination therapy with other types of
pills or insulin.
In 1995, one class of medicines known as
S States
biguanides was introduced in the United
after having been available in Europe for a number
of years. This class lowers blood sugar levels by preventing the liver from making too much glucose
and by improving the sensitivity of the muscle to
the body’s own insulin.
Since 1995, four totally new classes of
medicines have been introduced in the United
States, allowing doctors to better customize treatment regimens to fit their patients’ needs. Alphaglucosidase inhibitors, controls blood sugar by
slowing down the digestion of carbohydrates in the
small intestine after meals. By blocking the enzyme
that digests carbohydrates, the medicine keeps
blood sugar levels from rising too dramatically
after a diabetic eats a meal. Thiazolidinediones are
designed to reduce insulin resistance. These
medicines were first introduced in 1997. By making cells more sensitive to insulin, thiazolidinediones allow insulin to move sugar from the blood
into cells more effectively. The third class of Type 2
diabetes medications, meglitinides, was also introduced in 1997. The drugs stimulate insulin secretion from the pancreas, which lowers blood sugar
levels. The first drug in the most recent class of new
medicines for Type 2 diabetes was approved by the
FDA in 2000. The class, D-phenylalanine derivatives, stimulates rapid, short-acting insulin secretion from the pancreas, effectively lowering overall
blood sugar levels and blunting the increases in
these levels that most people with Type 2 diabetes
experience after meals.
Because these medications have different mechanisms of action and different side effects, combination therapy can prevent patients from becoming hypoglycemic or experiencing serious complications
such as kidney problems. Experimental pharmaceutical treatments in development include a protein to
promote increased insulin secretion when blood glucose levels are high, but not when they are normal;
inhaled forms of insulin that do not require injections; dual-acting sensitizers that increase muscle cell
uptake of blood sugar and inhibit the liver’s production of blood sugar, as well as reduce blood lipid levels; and drugs that are designed to lessen diabetic
nerve disease and complications involving small
blood vessels, such as those in the eye or kidney.
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
Approximately one in every four adults has high
blood pressure, a condition in which the force of
blood against the walls of the arteries remains too
high for an extended period of time. High blood
pressure is a symptomless condition, and nearly
one-third of people with it do not know they have it.
Fewer than 3 out of 10 people with high blood pressure have it adequately controlled by medication.
High blood pressure can lead to stroke, blurred vision or blindness, congestive heart failure, heart attack, kidney damage, and hardening of the arteries.
Major advances continue to be made in treating
this condition. As researchers have learned more
about existing drug classes—such as calcium chanC
nel blockers, ACE inhibitors, alpha-blockers, betaA
blockers, and diuretics—they have been able to develop new medicines with easier dosing schedules
(such as once-daily dosing) and better side effect
profiles. Researchers also have learned that combining multiple types of high blood pressure medi,
cations can help patients.
Over the past decade, two new therapeutic
classes for treating high blood pressure have been
developed. The first class, introduced in 1995 and
known as angiotensin-II antagonists, blocks the
hormone angiotensin-II. This hormone normally
causes blood vessels to narrow, but angiotensin-II
antagonists cause blood vessels to dilate, resulting
in decreased blood pressure. The formulation E
these medicines allows patients to take them once
daily and provides smooth, gradual, 24-hour blood
pressure reduction.
In 2002, the FDA approved a second new class
of medicines to treat high blood pressure—selective
aldosterone receptor antagonists. These medicines
work to block aldosterone, a hormone that helps
the kidneys absorb sodium and water. If too much
absorption takes place in the kidneys, blood pressure can increase. By blocking the hormone, selec0
tive aldosterone receptor antagonists can prevent
that increase in blood pressure. High blood cholesterol is a primary risk factor for coronary artery
disease, the nation’s number-one killer. Nearly
100 million Americans now meet the definitionS
having high blood cholesterol.
PART FOUR Nonfinancial Resources for Health Care
Researchers have continued to develop the class
of breakthrough cholesterol-lowering drugs known
as statins (HMG-CoA reductase inhibitors). First
introduced in the late 1980s, statins act by preventing the body from manufacturing cholesterol,
reducing absorption of dietary cholesterol, or removing cholesterol from the bloodstream. Some
statins work by slowing down the liver’s production of cholesterol and increasing that organ’s ability to remove low-density lipoprotein (LDL) cholesterol already in the blood. Some statins also
modestly increase high-density lipoprotein (HDL),
which carries cholesterol to the liver, where it can
be broken down and removed from the body, and
reduce other fats in the blood.
In 2002, a new class of medicines was approved
by the FDA. These medicines, called cholesterol absorption inhibitors, act in the small intestine, keeping cholesterol from ever entering the liver. This
means that less cholesterol is stored in the liver, and
more is removed through the blood. Because this
class works differently than statins, it can be used in
combination with statins, resulting in improved
cholesterol levels.
New drugs are discovered, tested, and approved
for marketing for numerous conditions. Often new
applications of existing products are identified. Recently, for example, in the area of cardiovascular
health clopidogrel bisulfate was found to be beneficial for certain heart attack victims in emergency
rooms without the capability to perform angioplasty procedures. Sometimes drugs reach the market, but use in large numbers of individuals uncovers serious adverse side effects such as happened
for certain nonsteriodal anti-inflammatory agents.
Unfortunately, the United States does not have in
place an ongoing comprehensive surveillance program for population drug use.
The pharmaceutical industry has contributed to
improvements in the nation’s health. Yet many
complex issues remain unresolved including pricing, testing, approval procedures and standards,
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 11 The Pharmaceutical Industry
distribution and access issues, international equity,
and legal and regulatory concerns. The industry
will continue to be a key part of the national health
care system, but its nature and operations will likely
adapt to changes in technology, demands for accountability, public policy issues, and many other
complex factors.
1. What is the role of the pharmaceutical
R industry in the health care system?
2. What are the regulatory and legal issues
related to drug and pharmaceutical developC
ment and sale?
3. What is the role of the pharmaceutical and
biotechnology industry in making R
available to the poor in the United States?
4. How are drugs priced in the United States,
and how does it differ from drug pricing
other countries?
5. What economic benefits are derived from
the use of prescription drugs and other
6. What does the pharmaceutical industry need
to do to thrive in the future?
Altman, S. H., & Parks-Thomas, C. (2002). Controlling
spending for prescription drugs. New England
Journal of Medicine, 346(11), 855–856.
McGlynn, E. A., et al. (2003). The quality of health care
delivered to adults in the United States. New
England Journal of Medicine, 348(26), 2635–2645.
Rosenthal, M. B., Berndt, E. R., Donohue, J. M., Frank,
R. G., & Epstein, A. M. (2002). Promotion of
prescription drugs to consumers. New England
Journal of Medicine, 346, 498–505.
Scherer, F. M. (2004). The pharmaceutical industry—
prices and progress. New England Journal of
Medicine, 351(9), 927–932.
Schweitzer, S. O. (1997). Pharmaceutical economics and
policy. New York: Oxford University Press.
Topol, E. J. (2004). Failing the public health—Rofecoxib,
Merck, and the FDA. New England Journal of
Medicine, 351(17), 1707–1709.
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
Health Care Professionals
Stephen S. Mick and Kenneth R. White
Employment Trends in the Health
Care Sector
Upon completing this chapter, the reader
should be able to
The Supply of Physicians
1. Appreciate the growth and changes in the
composition of the health profession
workforce during the twentieth century
and into the twenty-first century.
Dentistry: A Profession in Transition
Public Health: New Roles, New Possibilities
Physician Assistants and Advanced
Practice Nurses
The Changing Nature of Health
The Puzzle of Managed Care
2. Understand the key role of physicians and
osteopaths in the workforce, and account
for the growth in physician supply.
3. Account for the various trends and
changes in dentistry, public health, nursing,
and pharmacy and the forces affecting
these health professionals.
4. Comprehend the importance and potential
of physician assistants and nurse practitioners in the health care system.
5. Understand the various major transitions
occurring in the health care workforce,
with particular emphasis on current and
impending shortages.
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 12 Health Care Professionals
Health care professionals play a key role in the
provision of health services to meet the needs and
demands of the population. This chapter highlights
health care professional trends and discusses issues
of provider supply, education and training, distribution, specialization, and the impact of recent
market and regulatory changes on the health professions workforce.
At the dawn of the twenty-first century,Aobservers
now look back at the latter part of the twentieth
century and are struck by the dramatic growth in
D in the
the number and types of personnel employed
health care sector. Table 12.1 shows the ,large gains
in health sector employment in the United States
over the period 1970 to 2003, starting with a pool
of about 4.246 million employed persons
growing to 13.615 million. These figures include
D health
people who work in hospitals and all other
services organizations and include professional
clinicians as well as those without professional
training such as clerical staff, artisans, laborers,
others who have supporting roles in theE
delivery of
health services. Although these nonclinical workers
are not discussed in this chapter, they are important
because they evidence the role the health care sector has played for new employment opportunities
in the service-oriented economy that now characterizes the United States.
The health care sector has maintained a steadily
increasing proportion of all persons employed,
and it currently includes almost 1 in 10 persons
(9.9 percent) working in the U.S. labor force. Thus,
growth in employment in the health care sector
between 1970 and 2003 (221 percent increase)
has outpaced growth in overall employment in the
economy (79 percent increase) as well as total population growth (43 percent increase). The health
sector is clearly a major engine of economic growth
in the U.S. economy. This assertion is underscored
by the 124 percent increase in the rate of health
care personnel per 100,000 population, from
2,090 in 1970 to 4,682 in 2003 (Table 12.1). In a
33-year span, the number of people involved in
health care has increased by about 2,592 workers
per 100,000 population, an extraordinary reflection of the central place health and health care have
in the lives of Americans.
At least as extraordinary as the increased supply
of health care personnel has been the emergence of
a wide variety of new categories of personnel,
including physicians’ assistants (PAs), nurse practitioners (NPs), dental hygienists, laboratory technicians, nursing aids, orderlies, attendants, home
Table 12.1. T h e H e a l t h S e c t o r a s a P r o p o r tion of All Employed Persons, 1970, 1980, 1990, 2000, 2003
Employment in health sector (thousands)
Total number of persons employed (thousands)
Health sector as a proportion of all occupations 2
Total resident U.S. population (millions)
Number of health personnel per 100,000 population
SOURCE: From Health, United States, 2004, with Chartbook on Trends in the Health of Americans, National Center
for Health Statistics, 2004, Hyattsville, MD: U.S. Government Printing Office.
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
health aids, occupational and physical therapists,
medical records technicians, X-ray technicians, dietitians and nutritionists, social workers, and the
like. The Department of Labor recognizes about
400 different job titles in the health sector. Some of
the most rapid growth in the supply of health care
personnel has occurred in these recently developed
The traditional health care occupations of physician, dentist, and pharmacist have generally experienced declines, some dramatic, in their relative
proportion of all health care personnel. For example, physicians (including osteopaths) constituted
30 percent of all persons in health occupations as
the decade of the 1920s began, but had declined to
8.0 percent by 2000. Over the same period, dentists declined from 8 to 1.9 percent, and pharmaR
cists 11 to 2.3 percent. Registered nurses have flucD
tuated up, then down, during this 80-year period:
about 20 percent in 1920 to a high of 36 percent,in
1940, then a steady decline to 23.4 percent in
2000. The group of health care workers that has
gained the largest share of the overall number A
includes allied health technicians, technologists,
aides, and assistants: They composed a mere 1 D
2 percent in 1920, but in 2000, they made up over
54 percent. These figures should not mask the fact
that all groups of health care personnel have Iincreased in absolute number from year to year E
inspection of any of the tables of this chapter will
show. What the data emphasize is the higher rate of
growth of nontraditional allied health and support
personnel, who now constitute the majority of all
personnel employed in the health care sector.
The primary reasons for the increased supply
and wide variety of health care personnel into the
twenty-first century are the interrelated forces of
technological growth, specialization, health insurance coverage, the aging of the population, the
emergence of the hospital and hospital systems and
their associated ambulatory clinics as the central 2
institution of the health care system, and the large
array of posthospitalization treatment venues that
include nursing homes, rehabilitation facilities, hospices, and home health organizations. The hospital
PART FOUR Nonfinancial Resources for Health Care
has become the setting where new technology can
be used and where medical, nursing, and other
health professional students can be educated. The
technological revolution has led to diagnostic and
treatment procedures that, in turn, have led to an
increased use of hospitals, with a corresponding
concentration of health personnel. The rise of private health insurance in the 1940s, plus enactment
of the publicly funded insurance systems in the
mid-1960s (Medicare and Medicaid), fueled hospital growth because reliable payment mechanisms
provided hospitals with assured revenues. These
funding sources, intersecting with the ineluctable
aging of the population, have given rise to an extensive network of care options for the elderly, all
leading to increasing demand for such personnel as
home health aides and inhalation or respiratory
therapists as well as nursing personnel.
Technological innovation has also led to increased specialization of health care personnel, primarily during the last 40 years. This specialization
has resulted in new categories of health care
providers within the traditional professions [e.g.,
pediatric nephrologists and gastroenterologists in
medicine, periodontists in dentistry, intensive care
unit (ICU) specialists in nursing]. Notable among
new medical specialists are hospitalists—physicians
who work solely or mostly in hospitals—and
intensivists—physicians who work solely or mostly
in hospital intensive care units. In 2005, hospitalists numbered about 15,000, and their roles were
focused on improving patient quality and safety,
increasing patient flow, and affording convenience
and support for community physicians (Society of
Hospital Medicine, 2005). There has also been the
advent of new types of allied health professions
(e.g., occupational and radiological technicians
and speech pathologists).
Health care personnel will be discussed in
greater detail by focusing on five of the more
traditional groups of professions—physicians and
osteopaths, dentists, public health professionals,
nurses, pharmacists—and two of the more recently developed categories of personnel—PAs
and NPs.
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 12 Health Care Professionals
From a Surplus to a Shortage?
Physicians per 100,000 Population
Number of Non-Federal Physicians
The number of physicians in the United States has
increased rapidly in the last four decades, with an
estimated 845,684 active nonfederal physicians, including osteopaths (described more fully in a later
section), practicing in 2005 (Figure 12.1).
R Between
1965 and 2005, there was a 218 percent increase
I in an
in the supply of active physicians, resulting
average of approximately 285 physicians
100,000 population. Over the same period, the
physician to 100,000 population ratio increased
105 percent. In 1980, the Graduate Medical
R Education National Advisory Committee (GMENAC)
reported to the Secretary of the U.S. Department of
Health and Human Services that there would
be a
surplus of physicians of 70,000 in 1990, and
roughly 140,000 in 2000, underscoring the belief
Aits subsithat the nation could substantially reduce
dization of medical education (Graduate
D Medical
Education National Advisory Committee, 1980). In
1999, the Council on Graduate Medical Education
(COGME), an advisory group to the federal government, noted that despite the warning of a surplus made 20 years previously, only limited
progress had been made in reducing the growth of
the U.S. physician supply (Council on Graduate
Medical Education, 1999).
But, by the early 2000s, some observers were
raising the spectre of a physician shortage, especially among some specialty groups (Cooper et al.,
2002). Figure 12.1 shows that for the first time
since at least 1965, between 2000 and 2005, there
was a slight decrease in the ratio of physicians per
100,000 civilian population (288 to 285), which
draws attention to this new concern. How could
the fears of a surplus change so quickly into fears of
a shortage? The answer to this question is complex.
Although part of the response lies in the way that
differing methodologies and assumptions yield
varying physician requirement and supply projections, the more pertinent answer lies in the crosscutting forces that have affected the U.S. health care
system in the last several decades.
First, although managed care remains a
formidable force in the organization and delivery of
Number of Physicians
Physicians per 100,000
2 1990 1995 2000 2005
eral Physicians and Number of Physicians per 100,000 Civilian
Figure 12.1. To t a l N u m b e r o f N o n f e dS
Population, 1965–2005
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
health care, its more restrictive elements have been
blunted due to widespread physician and patient
dissatisfaction, particularly with limits on choice.
Medicine’s distaste of tightly controlled reimbursement and of nonphysicians’ attempts to control
their work fueled much of this backlash (Lesser,
Ginsburg, & Devers, 2003). The outcome of this
has been a movement away from capitated insurance arrangements back to coverage that more
closely resembles fee-for-service plans, especially
preferred provider organizations (Mick, 2004). The
move away from more efficient forms of organized
medical practice commonly means that more physiI
cians will be necessary to deliver the same level of
care (Weiner, 2004). Physicians and patients seem
to prefer choice to efficiency, which will add pressure for more physicians and is the first of several
possible factors fueling fears of a new shortage.
Second, in the early 2000s, a historic first was
reached in U.S. medical schools. The proportion
of first-year students who were women basically
reached parity with men: The entering class of
medical students in 2004–2005 was 49.5 percent
female; the proportion of all medical students
who were women was 48.6 percent. Aside from
the social and economic features of this remarkR
able change (two decades before in 1983–1984,
the total proportion of women enrolled was just
30.7 percent), the impact on physician supplyEis
generally thought to be one that will require someN
what more physicians to do the same work previously done predominately by men (Dedobbeleer,
Contandriopoulous, & Desjardins, 1995; Carr
et al., 1998; Pearse, Haffner, & Primack, 2001).
The reasons for this are clear: Women still do a
majority of the tasks surrounding the raising 1of
children and maintaining a home, leaving less
time available for practice. Taken together this
important demographic shift within the workforce
may produce more pressure for more rather than
fewer physicians.
Third, physician preferences now favor a more
“controllable lifestyle.” This factor stems in part from
the increasing number of women in the workforce,
but it affects men as well. Generally, younger physi-
PART FOUR Nonfinancial Resources for Health Care
cians seek a different lifestyle that allows for weekends off, limits on the number of hours worked per
week, and other amenities that allow for activities
outside the workplace. Taken together, these preferences have had and will probably continue to have
the effect of reducing the amount of time available
for patient care (Dorsey, Jarjoura, & Rutecki, 2003).
Fourth, on the demand side, there has been unusual growth of the U.S. population fueled in large
measure by immigration. Since the mid-twentieth
century, immigration has dramatically increased so
that almost one-third of U.S. population growth
in the decade 1990–1999 was due to net legal migration (Philip & Midgley, 2006). The present population of the United States of roughly 297 million
is expected to increase to slightly over 400 million
by 2050. In the presence of this population pressure, the need for more physicians will inevitably
Fifth, within the general increase in the U.S. population, there exists the ever-increasing lifespan of
Americans, with their attendant levels of chronic
conditions. In 2000, 12.4 percent of the U.S. population was 65 years of age or older; in 2050, the
figure is projected to be 20.6 percent (U.S. Census
Bureau, 2007). This change will produce a steadily
increasing demand for physician services and a
consequent increase in the need for physicians.
On the other hand, there are those who argue
that before any effort is made to increase the supply
of physicians, consideration should be given to several key problems with the way medical care has
been and currently is delivered. The first argument in
favor of caution derives from the apparent abandonment of efforts to extract more efficiency from the
physicians we already have through innovative delivery arrangements and combinations of different levels of providers. This is the obverse of the point already made about the decline of managed care.
A second factor revolves around the use of physician substitutes or “extenders” in health care delivery.
If, for example, nurse practitioners and physician assistants, among others, were increasingly used to
provide primary care, there would be less pressure to
increase physician supply. The rate of increase of
Copyright 2008 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.
CHAPTER 12 Health Care Professionals
these so-called “midlevel” practitioners has been
very high since the 1990s, and their ability to deliver a large proportion of primary care services is
no longer argued (Cooper, Laud, & Dietrich, 1998;
Cooper, 2001). The extent to which these clinicians
continue to grow in number, and are more widely
used, will have a restraining influence on how
many more physicians need to be trained.
The third argument stems from decades of
analysis—called Small Area Variation Analysis—
that has documented wide variation in the use of
physician services without any obvious connection
to levels of health of patients and populations
(Wennberg, 2004). These findings raise the quesC
tion of why there should be more physicians if
areas with high levels of physicians—particularly
specialists—have health outcomes that are no betR
ter than those in areas with low levels of physicians
D about
(Goodman, 2005). This lack of evidence
whether present levels of physician supply
, are optimal leads to the worry about how projections of
future supply based on current patterns can be
justified. Thus, without a clear demonstration
A that
increasing physician supply will have a positive impact on health outcomes, this position D
is skeptical
of calls to add 3,000 more physicians inRresidency
training programs and to increase medical school
I decade
enrollment by 15 percent over the next
(Council on Graduate Medical Education,
E 2005).
A fourth, and related, point is the relatively new
movement by payers and insurers toward a “pay for
performance” reimbursement approach, particularly
for office-based practice. The essence of these payE
ment schemes is to reduce unnecessary diagnostic
and procedural work, to tie clinical processes to outcomes, and to emphasize evidence-based1medicine.
Much of the variation in physician work is skewed
9 any retoward more rather than less work, and thus,
duction in variation will probably reduce
0 work. If
this is true, the aggregate amount of work necessary
for a given population of patients will experience
dampening effect, which, in turn, couldTadd pressure for fewer rather than for more physicians.
S effect of
It is difficult to determine what the net
forces favoring and disfavoring growth in the physi-
cian supply will be. However, the focus of debate
has now shifted from a putative surplus to a possible shortage. Advocates and analysts on either side
of the question are pressing hard for policy responses, and over the next several years, a clearer
picture will emerge about the issue.
International Medical Graduates
The issue of an appropriate supply of physicians is
complicated because of the fact that there exist two
distinct avenues to becoming a practicing physician
in the United States. The first is the domestic track
consisting of persons who are U.S. citizens and
who are trained in U.S. medical schools. The second track consists of persons who are foreigntrained physicians known as international medical
graduates (IMGs).
As for U.S. medical graduates, Table 12.2 shows
the substantial increase in both the number of medical schools and the number of medical students
(first year and total enrolled) between the period
1965 and the early 1980s. By 1980–1981, the
yearly number of graduates had more than doubled
the 1965–1966 number. This increase can be directly attributed to massive federal outlays for training, research, and construction in the 1960s and
1970s. By the early 1970s, 40 to 50 percent of
medical school support came from federal sources.
However, the retreat of the federal government
from an active role in the financial support of medical education was initiated in the early 1980s as a
result of pressures to reduce federal spending, …

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