Hartford Connecticut Financial Services Group Inc.’s profit dropped drastically in the second quarter due to an asbestos hit of mesothelioma cancer cases in its property and casualty business. Far more catastrophe cases occurred and investment income fell.
The company sells commercial and personal insurance and financial products such as property and casualty insurance, group benefits, and mutual funds.
“The second quarter bottom line was disappointing,” said Chief Executive Christopher Swift with particular emphasis on the property and casualty business.
“Greater-than-expected mesothelioma claim filing for certain defendants in asbestos cases helped push loss in the property and casualty ‘other’ category to $154 million from $111 million a year earlier,” said Swift. “In the overall property and casualty unit, net income fell to $33 million from $189 million in last year’s quarter.
According to a recent CBS News Report, cancer drugs cost more than $120,000 per individual annually—and that cost is expected to increase. The median gross income for American households is $52,000 and many insurance companies expect families to contribute up to 30% of the total cost of cancer treatment.
For example, in 2005, Blue Cross and Blue Shield of Alabama required cancer patients to make a $1,000 co-pay on Phenergan, an antiemetic (anti-nausea drug) commonly used in chemotherapy regimens.
With Medicare, the cost of cancer drugs can be negotiated up to 20 – 30 percent off, but the cost is still significant for these beneficiaries who have an average household income of $22,000 per year.
According to the National Institutes of Health (NIH), in 2008, pharmaceutical companies spent $50 billion in research and development of new cancer drugs. Among the drugs that enter clinical trials, only 16-19% typically receive approval. After approval, it takes an average of 10 years for a drug to earn Food and Drug Administration (FDA) approval and get to market—costing around $1.2 billion.
Mesothelioma treatment is particularly expensive costing tens to hundreds of thousands of dollars. In addition to the factors of diagnosis, overall health, age, location of tumors, cell type, where you live, and health coverage to consider, there are additional costs. These can include travel and room and board while visiting cancer centers and specialists.
Common costs related to mesothelioma include diagnostic imaging, biopsies, endoscopies, thoracotomy or laparotomy, debulking surgery, radiation, systemic chemotherapy, and hyperthermic intraperitoneal chemotherapy.
Hartford Financial ended up reporting a $216 million profit down from $413 million the year before. Per-share earnings dropped from 91 cents to 31 cents. In comparison, analysts had projected 80 cents per-share profit.