
A Billionaire Pledges to Fight High Drug Prices, and the Industry Is Rattled - jseliger
https://www.wsj.com/articles/a-billionaire-decided-to-fight-high-drug-prices-and-the-industry-is-rattled-1540145686
======
tfha
If you want to fix medicine, increase transparency. Earlier this summer, I had
white spots on my throat and needed to go get checked for strep.

I called around, and finally settled on a facility that told me they could
check for strep for just $59. I go in, get my throat culture, then get my
bill.

"Well yeah, the throat culture was only $59. But the nurse had to do it and
it's $120 to see a nurse. Also, the doctor has to check in before any
operation is performed, and that's $200. After all other fees, your total bill
is $400".

There's no way that should be legal. I was quoted $60.

~~~
stickfigure
Automobile mechanics are required to provide a written estimate in advance. I
don't see why health care should be any different.

Before anyone objects with "but what about emergencies!" note that emergency
care is a single-digit percentage of total health expenditures.

~~~
lstodd
It's like being given a potentially ancient, bit-rotten code base and asked to
refactor the shit out of it for a fixed price. And you can't know that
upfront.

It might take a day. It may take a decade. It may take you the customer to
change your entire approach.

This is not feasible. You can not disregard hidden defects and the cost of
fixing them unless you do not really want reliabilty. If you do not want it,
then don't complain.

In IT this requested lack of reliability is accepted. In healthcare and auto
repair it is barred by law.

EDIT: i hate autocorrection.

~~~
manicdee
GP was booking an appointment for a routine procedure which has a known scope,
effort, and bill of materials. There is nothing in this procedure that even
remotely resembles refactoring a legacy codebase.

------
jseliger
It has long puzzled me that we don't have strong political constituencies for
price transparency in medicine. Every medical provider ought to have a website
that lists every fee and cost; this is not hard to do, yet when I call
providers for cash prices, the answer is often, "I don't know" or "I can't
tell you."

~~~
maxxxxx
I think it was a huge mistake that this didn't get tackled during the
Obamacare discussions. Price transparency and the removal of preexisting
conditions would be a big step for some sanity in the US medical system. It's
also pretty sad that the Republicans who are supposedly for markets don't push
for price transparency.

~~~
ilove_banh_mi
Actually Trump and the Republicans ran on a platform of price transparency,
but Senate Democrats can block and have effectively blocked (assisted by now-
deceased McCain) any non-taxation-related changes to Obamacare.

Reference: [https://www.politifact.com/truth-o-
meter/promises/trumpomete...](https://www.politifact.com/truth-o-
meter/promises/trumpometer/promise/1393/require-price-transparency-health-
care-providers/)

~~~
magicalist
> _Actually Trump and the Republicans ran on a platform of price transparency,
> but Senate Democrats can block and have effectively blocked (assisted by
> now-deceased McCain) any non-taxation-related changes to Obamacare_

This is a bizarre summary of the failed repeal of the ACA with a bill that
wouldn't have even included the proposal they supposedly wanted.

Reference: the article you linked to

~~~
ilove_banh_mi
It's a fact that Trump and Republicans ran on a platform of free-market
healthcare and full price transparency, unlike their opponents.

The article I linked points out that this price transparency could not be
achieved in the very first legislative step -- by the nature of that first
bill, related exclusively to tax and revenue since it originated in the House.

Politics is an art of compromises, to achieve what is doable with sufficient
majorities, as well as taking into account popular support in view of the next
round of elections.

In this case, the only change that could pass was to remove the tax-shaped
penalty so that people are allowed to ignore Obamacare plans. Next would have
been a basic repeal of Obamacare (blocked by Senate Democrats and McCain).
Finally would have been new and very different regulation, including price
transparency (which could not even be attempted since step two was blocked,
the consensus was that new regulations should only be passed after repealing
Obamacare, and Republicans failed to build a majority around that approach).

~~~
Latteland
But they didn't do that when they got power.

~~~
ilove_banh_mi
You're right, the Democrats did not require full price transparency when they
had overwhelming majorities in the House and Senate, plus the Presidency.
Also, the Democrats later managed to block the repeal of Obamacare, which
would have been a prelude to passing new regulations including full price
transparency in healthcare, thus defeating the plans of the Republicans.

~~~
Latteland
You are completely wrong, the democrats didn't have an overwhelming majority
in the senate. They had the minimum they needed to pass obamacare, 66.
Remember that they wanted to have a single payer option and the damn
democratic senator from nebraska didn't want that, and he thought if "he
single-handedly stopped single payer" he'd be re-elected. So that one senator
stopped single payer from being in the bill - he did vote for it after that.
And that guy wasn't re-elected. Sen. Ben Nelson of Nebraska. Anywhoo, you are
completely and utterly incorrect about the dems have an overwhelming majority
to do whatever they wanted. In the senate they had the bare minimum, and
anyone who felt they wanted a change could get it.

[http://www.nbcnews.com/id/34446325/ns/politics-
health_care_r...](http://www.nbcnews.com/id/34446325/ns/politics-
health_care_reform/t/single-payer-health-care-plan-dies-senate/#.W81xrd_Yov8)

------
maxxxxx
It's pretty sad that we have to rely on "billionaires" because the political
system is not able or willing to bring even some level of sanity into this
totally perverse system.

~~~
cimmanom
One thing that scares me is seeing how he's putting money into swaying how the
media report on things. That one billionaire is willing to do such a thing to
support the public good is great. How many are doing so for less laudable
ends?

~~~
stirlo
All of them? The drug company ones are... About time an organisation started
playing the same games these mega corporations do, if you don’t play how will
you ever win?

~~~
jacobush
A strange game. The only winning move is not to play.

~~~
cimmanom
In this case, I’d say the only way to win is not to let anyone else play.

------
endymi0n
> “Where it is impossible to create the conditions necessary to make
> competition effective, we should resort to other methods of guiding economic
> activity.”

\- Friedrich Hayek, The Road to Serfdom, p.37

Free markets work as expected where the alternative is dying at worst: They
fail completely. If you're lying unconcious in the ER and there's zero
regulation in the country of unlimited capitalism worship, the hospital can
charge whatever the fsck they want. And yet, there are still a few people in
the US surprised they actually do so.

[https://www.forbes.com/sites/chrisladd/2017/03/07/there-
is-n...](https://www.forbes.com/sites/chrisladd/2017/03/07/there-is-never-a-
free-market-in-health-care/#95025281147f)

~~~
hexane360
I'm kind of surprised that quote is from Hayek, considering I know of him as
"that Austrian Austrian economist", and mostly see him quoted in defense of
radical free market ideology. I guess it just goes to show how far pro-market
the Overton window's shifted recently.

~~~
jeffbax
It is a myth that the US has a free market in healthcare. It is a web of
regulatory hell and perverse incentives.

~~~
wnoise
While that's true, it's a complete non-sequitur to the parent comment.

~~~
hexane360
It appears that he's trying to argue that we haven't tried hard enough to
deregulate healthcare, and therefore we haven't proven it's "impossible to
create the conditions necessary to make competition effective". Which imo
shows a startling amount of specious reasoning or delusion.

------
40acres
There seems to be a pretty simple solution to high drug prices: the Bayh-Dole
Act.

The background to the law is this: previously if a private institution used
federal grants to develop a new drug, the federal government retained patent
rights. The federal government isnt particularly good at commercializing
products so the Bayh-Doye act allows for private institutions to retain
patents for innovations funded via government grants. The government retains
certain rights to the patent (this is important).

With this situation you have a case where the American tax payer essentially
pays twice for certain drugs, their taxes paid for the federal grant that
discovered the drug and now they have to pay a private company to actually use
the drug.

Well, the Bayh-Dole act grants the government "march-in" rights, which
basically allows the government to license any patent derived using federal
funds to a third party if the original partner “has not taken, or is not
expected to take within a reasonable time, effective steps to achieve
practical application of the … invention”.

The government has NEVER exercised it's march-in rights. I understand the
hesitation to drastically change the market for a product by granting a 3rd
party a patent that they would otherwise never have, but it's been made clear
over the past few years that many pharmaceutical companies are acting in bad
faith and abusing their market position by drastically increasing drug prices.

I think exercising Bayh-Dole on a high profile drug (EpiPen??) would shake the
market back into reasonable price structures. It's a huge hammer the federal
government is not wielding.

~~~
WaltPurvis
Do you happen to know how many drugs are developed with federal grant money?
I'm guessing that only a small percentage of high-priced drugs were developed
using federal grants, and therefore your solution would be only a very partial
solution, but I don't actually know. Do you?

~~~
40acres
According to Wikipedia from 2010-2016 about 200 new drugs were introduced that
were partly funded by the NIH, of these drugs about 80 were significant in the
fact that they worked via previously unknown mechanisms.

------
pcurve
I've been in healthcare, pharma industry for a long time.

Healthcare isn't 'broken'. The high drug and medical prices are by design.
That's the way system is designed and it's working as intended by regulators
and industry leaders.

If they really wanted to 'fix' the healthcare, they can fix it. But there is
no money in fixing it at this point. One guy with small amount of funding will
do nothing to highly regulated space full of deeply entrenched incumbents.
regulators, doctors, pharmacists, pharma, medical device, pbm, medical
insurance, hospital systems, lawyers, and IT jobs at those companies.

~~~
gorbachev
This, and many, many other similar issues will not be fixed until campaign
finance reform gets done.

~~~
chottocharaii
campaign finance will never be reformed, political movement needs to be able
to operate in spite of money contributed

I doubt Citizens United will ever be overruled

------
neonate
[http://archive.is/ED7g6](http://archive.is/ED7g6)

------
apo
_He [Billionaire Arnold] has spent more than $100 million in health-care-
related grants since 2014. A million dollars went to Civica Rx, a nonprofit
formed by seven U.S. hospital systems to make generic drugs. Up to $5.7
million is pledged to Initiative for Medicines, Access & Knowledge Inc., which
files legal challenges to the validity of certain U.S. drug patents, to clear
the way for lower-cost generics.

He funded research about the relationship between pharmaceutical packaging and
drug costs, leading Medicare to pass new rules that took effect in 2017. The
state of California, advised by an Arnold-funded group, passed a law in 2017
requiring drugmakers to justify steep price increases._

In other words, Arnold is spending money on:

\- a consortium that will manufacture generics

\- legal efforts to hasten the expiration of patents to provide more generics

\- research on packaging

\- lobbying legislatures to require justifications from drugmakers on price
increases

None of this sounds like it's addressing the main problems leading to high
costs:

1\. The customer (patient) doesn't directly pay all costs. The economic
incentive to keep prices low lies mostly with the insurance providers.

2\. It takes more than a decade of research and hundreds of millions of
dollars to develop a drug with a new mode of action.

3\. At least 90% of these projects will fail to deliver a marketable product.

4\. The amount of money spent on a drug project balloons the longer it remains
viable.

5\. Failure of a late-stage clinical candidate often leaves a drug company
with two options: (1) kill the program; and (2) send yet another candidate
through the pipeline.

6\. Data on late-stage clinical failures are often tightly held in silos,
preventing other companies from learning costly lessons.

------
booleandilemma
When I was younger and more naive I went to a surgeon to ask how much a minor
surgery would cost ahead of time. They couldn’t tell me. I said fine, could
you give me a ballpark estimate? And they couldn’t do that either.

Imagine going into a grocery store and not being able to check the price of
your groceries before you decide to purchase them?

Why do we put up with this?

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myroon5
Knew it would be John Arnold. If you find this interesting, he regularly posts
content like this on his Twitter:
[https://twitter.com/JohnArnoldFndtn](https://twitter.com/JohnArnoldFndtn)

------
perpetualcrayon
"there should be 'compensating upside' for the few drugs that do make it to
market to ensure investors continue to fund companies’ uncertain R&D efforts"

Ok, then open your books so we can see why you're pricing the way you are.
Obviously, given all the recent attention this has gotten, the industry is not
being very transparent about this. Why has no "outsider" been able to connect
these dots and why are you (the industry) preventing them from doing so?

------
EGreg
Here is a full proposal, I’d like some feedback:

[http://magarshak.com/blog/?p=93](http://magarshak.com/blog/?p=93)

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derReineke
Much rattled very startle. You'll also be AMAZED what doctors are saying about
this new diet thing!

------
DoreenMichele
I'm feeling cranky as hell, so let me go ahead and toss out the wildly
unpopular idea that the real solution here is more research etc into dietary
and lifestyle changes. But I seriously doubt he's going to go in that
direction.

~~~
amanaplanacanal
That kind of research is really hard. You pretty much have to lock people up
for long periods of time, and make sure they only eat what you give them. The
current state of dietary research is pretty much a morass of contradictory
associations, with no proof of any causative factors.

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almostdeadguy
I’m everyone in this thread talking about price transparency for goods people
need to live.

~~~
khuey
Price transparency in food seems to work alright.

~~~
jaggederest
Transportable commodity goods are not really the same as local, nonportable
professional services.

Imagine if everything you ate had to come from the county you live in. Would
it really matter how much they charged? You would have to pay it, right?

------
jorblumesea
Why do we talk about "high drug prices" as some kind of mystical force? The
cause is simple and very obvious: the medical industry is a for profit
institution that puts margins and bottom line above everything else. It's a
huge industry with a plethora of middlemen whose only purpose is to squeeze
dollars out of the system. Delivering effective care is almost always a
secondary consequence to making value for investors.

So long as healthcare has quarterly shareholder meetings, we will forever be
locked in this battle.

------
aviv
We are looking at the health care problem from the wrong angle. Nobody should
be needing most of these drugs to begin with. But we have a food culture and
system that feed civilization disease causing foods and that's where the cycle
starts.

~~~
jrace
There are plenty of people who need medications not because of poor diet.

