It's simply a case of unlimited demand for a quite scarce service/good. It's extremely difficult to become a doctor, but under the current healthcare system almost anyone can afford to go to the doctor even with the exorbitant prices, which is an economic problem.
Well, that's part of the problem. The other - from my perspective even more pricey - part is the US litigation system. If you as a doctor have to have a very expensive litigation insurance or as a pharmaceutical company have to set aside billions of dollars for the obviously coming litigation cases, than your service will cost more.
And the US justice system with its litigation process is indeed flawed as the system produces litigation cases and crafty lawyers. Even if a pharmaceutical company has fulfilled all information duties to the FDA and updated their patient information and healthcare information always as soon as reasonable possible if a new risk has been identified for a medicinal product, there will be a lawyer seeking "victims" of the drug as soon as there is money to be made from the company or the drug. And in the system the jury will always give a punitive damage call, as it is "poor victim" vs "bad pharmaceutical company".
So, as a pharmaceutical company, you have to calculate some billions of damages into your revenue for every product. That's why US medicines cost at least double what they cost in the high revenue countries in Europe (Germany, UK, France, Denmark, Netherlands). Because otherwise no company would be stupid enough to sell drugs in the US.
And that's not only for Originators and patented drugs... even Generic companies have been sued...
And even individual doctors have been sued for millions...
Economically the solution is uncomplicated, but politically it is extremely complicated.
What would that solution be?
The justice system cannot be changed.
The American healthcare system is miserable, if you compare costs vs. benefits. (...)
I am really looking forward to receive updates regarding this partnership. If the government can come up with a functioning system, we should give the corporations a chance.
Well, even I can see a "major culprit" in the diagrams.
What the hell is "other" costs? Seeing that "administration" is missing otherwise, that's probably the biggest part in "other" - costing the US about 30% of all healthcare spendings. With drug prices and service prices all about double the cost of Germany, the administration should NOT have the same relative cost as in Germany (administration of the healthcare insurance is about 25% of all spendings of the healthcare insurance - which even is a stupididly high amount!), and certainly not three times the costs for prescription drugs. That comparision is hilarious: the (in Germany unanimously blamed for the "high insurance spending and) in the article cited No. 2 reason for high spending, "high drug prices" amount to just 10% of the healthcare spending (that's less than in Germany, where medicines amount to 13-16%, respective who you ask for data), whereas the administration eats 30% - resulting in the USA spending three times the prescription drugs spending on admin, Germany "just" two times.
I work in the wrong industry... I should have gone to the administration of healthcare "providers" in the US...
Seeing that... I think that the solution that Buffet (a really intelligent man) and Bezoz will come up with will indeed focus on administration costs [as they are bound to cut that - and Bezoz is best at cutting that], and hospital care [no pay for service anymore, instead pay per case].
I also really like to see if they implement the "pay per effective healing" instead of "pay per case" scenario that everyone is always fantasizing about in Europe. I can imagine that major pharmaceutical companies are willing to go for that if it is properly funded and judged independently.