Generics do not work to lower prices on drugs because there is price fixing between companies. Price fixing is illegal in the US but does not seem to be enforced.
I discovered this because my sister in law has a rare disease and she depends on a rare drug called syprine. Her drug costs went from 177.00 a month to $8000.00 a month where it hovered there for a year, then it went up to $43,354.73 a month.
The US funds the manufacture and research on drugs for rare diseases but only while the drug is under patent. Once the drug is out of patent then there is no regulation. These are called "orphan drugs."
It turns out that Valeant (the maker of syprine) was guilty of price fixing and was under investigation by the federal trade commission. The case went all the way to the supreme court which came down against Valeant. The end result seems to be nothing.
That's half a million per year. At that price, unless syprine's manufacturing process requires digging diamonds, one could probably save money by hiring a dedicated chemist (100k p/y or thereabout) and giving them the necessary money to make the drug just for one.
If I were an insurance company, I'd consider buying a small pharma outfit and target it at these orphan drugs just to save money.
Here is why you'd rethink that position.
By law, insurance companies have to spend 80-85% of their revenue on patient care. Which means that their potential profits are limited by medical expenses paid out. As long as they have properly projected and accounted for the medical expenses in their business model, they therefore have a financial incentive to let expenses be high.
Spending $43,354 for something and getting a $30 copay in return will never be a part of any clever scheme to fleece anyone.
There's a few ways we can pay less for a compound where there are generics/biosimilars. We could contract with a hospital group saying we will pay a small % markup on the cheapest drug to treat each condition - i.e. they can use the cheapest generic/biosimilar and make profit, or use a more expensive one and make a loss. They naturally shift all volume to the cheaper one. That then makes demand very elastic to price, and so encourages a lower price from manufacturers. We do see some compounds all sit at the same lowest price and not shift - that does suggest collusion - potentially tacit collusion though. An alternative is to contract with one pharma company to get a rebate if we push volume to their drug. We could then mandate to providers that we'll only pay for that drug.
Games theory is pretty clear about how this all ends... Badly.
If they manage to undercut gouging, that should lead to lower insurance costs and put pressure on the rest of the industry to control costs too...
They are? Where is this happening? This could be a good thing, but I doubt it since the regulations on such entities will likely be warped in their favor.
First, they make you get evaluated by one of their psychs. Take depression for this example. Unless you're having suicidal thoughts, according to Kaiser, you don't have depression. So no, therapy is not covered.
So, you say "no really, I am demonstrating every symptom of depression other than suicidal tendencies, I just want a therapist." ok fine we've got a troublemaker over here demanding the healthcare they pay for, stick'm in a room with 10 other patients and an unconcerned therapist, call it "group therapy," done.
"But I don't want a room full of random people to know about the shit I go through in my life or my past abuse. I have depression, I want therapy." Fine, you have overcome the requisite 3 months of phone calls and bullshit that filters out 90% of our insurees, so you get to be on the waiting list for one of the five Kaiser approved therapists in the bay area. Next appointment: 2021.
Of course, you could always just pay out of pocket, between 100$ and 200$ a session...
They've been outsourcing significant amounts of this to secondary companies (e.g. Easter Seals, BHPN), which then outsource the work to smaller agencies. This turns into the smaller agencies fighting for basic services on behalf of clients.
There are regular mandatory meetings (monthly I think) where execs from Kaiser and the intermediaries announce breaking changes, or straight out berate the group of providers for doing their job, or for not doing things that aren't their job. They like to change coding rules without telling people and then blaming them for not coding properly. They also like to force companies to follow rules, especially when it doesn't particularly make sense (like carrying insurance for injuries to customers when customers aren't allowed on-site).
Then after all of that they'll arbitrarily hold payment as long as the possibly can. A couple of the smaller agencies in our area have gone under because they couldn't pay staff while they waited for checks. We've seen them delay payment by over a year after services were billed.
The only real strategy in this case is to spread out your customers by insurance provider. Unfortunately that means turning very needful customers away, because you can't become too reliant on any one funding source.
Source: I provide support to a mental health services agency in my off time.
Which is insane. Even I know that the DSM's definition of major depressive disorder includes numerous other criteria besides suicidal ideation, and I ain't even got a psychology degree (I did ace my AP Psych exam, though). That actual licensed psychologists/psychiatrists (and/or the representatives thereof) would pretend otherwise is surreal.
It was great being able to go to one facility to see a doctor, a specialist, get tests, and fill a prescription.
Essentially they want to get you having more than your blood pressure checked and enjoy some other things they can throw at your insurance.
Better to remove the profit motive from most of the healthcare economy rather than move it around.
But about how much they can profit from it.
I remember reading a book about the history of some (famous) chemical company in the U.S. – Dow? Dupont? – doing exactly what I described to compete with the at-the-time existing German chemical company cartel.
Plus there's the issue of whether a drug can remain safe to use after long periods of time at all.
The set of people with the condition probably does. I wonder if a kickstarter for generics would be successful?
In this particular case, there are actors for whom the profit would not be directly generated by sales of goods, but by the amount they save elsewhere in their operations - which, depending on various factors, might actually be multiples.
You could find a profit maximising capitalist who would be happy to enter the market and compete for a fraction of the outrageous profits - that would make a lot more money than paying to invest as is more usual. In theory there only needs to be a handful or so and that would be enough to bring the market back down close to cost of production.
However, it seems likely that government regulation would disrupt that process somehow, otherwise it would have happened by now.
It's not just prices as well. The US stands also out as being one of three countries that allows direct consumer drug advertisements.
How do street drug dealers compete with each other? Not by lowering prices. No. They actually attempt to monopolize their territories by either eliminating or merging with their competitors, until a stable state is reached.
They then set their prices to maximize margins and profits. This continues until something happens to destabilize the market, at which point there is some kind of struggle or even war, which stops when another stable state is reached by eliminating or merging the competitors.
Without regulation to prevent the creation of monopolies and cartels, this happens in legitimate businesses just as much as street drug dealers.
Competition by lowering price does happen, but when it does, it is part of the unstable phase that ends when another stable monopoly or cartel forms, at which point margins go right back up.
The elimination part of that is important though. If companies were allowed to round up a group of the boys and go break some kneecaps when the boss didn't like something then it is true there won't be a lot of competition.
But in civilised country that isn't an option. Nobody wants that level of deregulation - basic policing of physical safety is something of a given. People are somewhat protected by law in their attempts to compete.
But companies do things like dump product to drive a competitor bankrupt, and then raise their prices back up. After that happens a few times, people get the message that there is no money to be made competing with them.
Or they play patent games and litigate the competition either out of business, or strongarm them into joining a patent cartel.
The tools may be different, but without specific anti-monopoly and anti-cartel regulation that is enforced aggressively, companies will ruthlessly drive markets towards monopolies or cartels.
You charge robbery rates for drugs A, C and F and I'll take B, D and E.
We both make lots of money and don't have to worry about each other.
Competition assumes sellers don't collaborate and negotiate but they do all the time.
It's not easy to put that Nitrogens in the middle of the chain. Moreover, the method to produce it is to mix some smaller chains that have the Nitrogen in the ends of the chain and make them combine in a longer chain.
This produces a mix of a lot of similar chains with different length and number of Nitrogen. They have similar properties, so it is difficult to separate them. They use distillation. But at high temperature that Nitrogens like to burn, so heat the mix carefully.
Also, the mix you produce have a lot of compounds with the same "2D" formula, but they have a different shape in "3D". Some of the versions may have totally different properties, like been very toxic. So you must separate them too, and again, it's difficult.
Note: I studied a Chemistry specialization in the Secondary School, so I have some general knowledge about this, but I'm far from an expert in medical drug production.
Note 2: If you like this kind of things, I recommend to see the Nile Red channel in YouTube https://www.youtube.com/channel/UCFhXFikryT4aFcLkLw2LBLA It's nice to see some easy and not so easy projects, and he explain the reactions, and the problems and pitfalls he found. (I don't understand everything he does.)
Anyway, the difference of the cost of the medical drug and the chemistry drug is annoying.
How do you get from 60% to 99%? Do you have to (for pharmaceutical grade)?
What are the remaining 40%? poison? harmless byproducts?
Of course the latter two eventually will get you in deep shit with the FDA.
Ah, so we should just get rid of those regulations and let the little guy compete!
Not so fast. Maybe the first new market entrants are motivated by altruism as much as by profit. They do everything carefully but charge prices closer to cost. Patients pay less and there are hardly any downsides, except to the financials of legacy pharma companies.
But by year 3 there are people who have learned that you can buy barrels of technical-grade active pharmaceutical ingredients off of Alibaba and make pills from them without any quality control in between. Sometimes the products are contaminated with carcinogens. Sometimes they vary widely in potency across lot numbers. In the absence of regulations, fraudulent and shoddy products become widespread. It would be like the supplements industry, except that people actually die if they don't take real prescription drugs they need (this is less common for people who are sold fake herbs.)
You likely need to prove that you are producing a clean product, etc.
Similar to how there is regulation of you make food at industrial scale.
I've looked into it but the regulations get in the way. It's a crock of bologna - if you hire an American Chemist and set up an American chemical plant, you have to build the facility and wait for FDA inspection before you can start manufacturing and in some cases, you have to pay for a trial to prove that your medication works. Or you can just import the drug from China and India and the FDA will let you act like a compounding pharmacy and repackage the Chinese / Indian active ingredients.
Then you have to pay the licensing fees which are borne equally by all manufacturers. If you make 100 doses/yr, you pay as much as your competitor who makes 1 billion doses/yr.
There's a reason the market for easily-produced medication hasn't been disrupted yet, if you make affordable high quality medications in a way that doesn't defer to the FDA's stupid system, you can and will go to prison.
These cases from the last 1-2 decades are always because of FDA regulations. The drug is out of patent, any manufacturer is allowed to make it, but the FDA regulations for actually starting up manufacturing are so difficult and time consuming that whoever is left as the only manufacturer of a rare drug can crank up the price from $177 to $43k, and ride on that profit wave for a few years while FDA processes competitors applications.
More sad detail here: https://slatestarcodex.com/2015/09/24/the-problems-with-gene...
This is exactly the opposite of the case. The FDA wanted to encourage manufacturers to conduct new safety and efficacy trials on drugs (that can be out of patent) to treat 'orphan conditions', which are conditions that exist in rare populations, which could be currently off-label indications. Because it is outside of the scope of the FDA, the FDA cannot incentivise you to help this class of underprivileged people by extending your patent monopoly. What it can do, is to give you the exclusive rights to advertise your drug, which, in the US, is a de facto monopoly. Of course, this regulation is highly abused.
The funny thing is that this drug is given to horses in their feed. Like how we just put Vitamin D in our milk or Iodine in our salt, they put this drug in horse feed. I've tried to buy it this way, but you need a vet's license in this state to buy it wholesale. If things get bad, I'll try to buy it off of farriers or something and then dilute it down.
So, to be clear, my SO takes a drug so cheap they literaly toss it into horse feed, but some insurances will try to charge us ~$1000/gram for this.
 It's not really a drug per se, it's more of a supplement in that it does not cross the blood-brain barrier. It interacts in a more digestive sense.
P.S. I've written before about the issues with CU-Anschutz and vaccinations here and it may be interesting to you: https://news.ycombinator.com/item?id=19760317
Oh my God, we're free!
THANK YOU! You've saved us!
Your SO should become a horse owner.
I know that name. Valeant doesn't do any r&d. Their entire business model is to buy up rights to, or manufacture drugs that are supply limited, and ratchet up the prices to the maximum that the market will permit. They typically end up selling these drugs at 100k-10m times higher than the cost to manufacture. They've also ceased manufacture of several life-saving drugs because the profit margins weren't high enough for their model.
I am anti death penalty, but I would make an exception for the people who run the likes of Valeant. Profiteering off people with rare diseases belongs in a lower ring of hell than serial murder.
That named sounded very familiar to me (no being from the USA) and I just remembered why:
Amazing how many times on this forum I've read people suggesting people should be killed for what are, at this point, nothing but alleged crimes.
Where does such an inhumane mindset come from? Hypocrisy?
This isn't hypothetical, GP is talking about a treatment that went from ~$200/mo to ~$43k/mo simply because a bunch of heartless assholes figured that was the point of max profit even if it ruins the lives of a bunch of people and kills a bunch more.
Is my viewpoint hypocrisy? I don't think so. Your comment seems to be centred around the alleged part, and I also strongly oppose the death penalty because of the false-positive rate of convictions. But take an hour out of your life to study Valeant and its leadership, and come back and tell me that you believe that there is room for error in their motive or the outcome of their actions. These are people who have found loopholes in the law and have grossly crossed any imaginable ethical boundaries. The only contentious part of my viewpoint is that I believe ethics supersedes law, and the heads of Valeant have technically complied with the law despite falling to the lowest low of ethics. These people are gaming the system at a level that most hard convicts wouldn't consider.
I upvoted your comment, it is a good avenue of discussion.
First, you can look at intent. If a person stabs someone, then it usually means that they intended to directly hurt someone. If a CEO raises the prices of a drug, then it usually means that they intended to make more money. The harm it causes is collateral damage rather than the main intent.
Second, a CEO controls/owns the production of the drug. They are not responsible before the public for the public having access to the drug. Private property means that they don't have to share if they don't want to. If this wasn't the case then where would you draw the line? We can all agree that asking for $43k for the treatment is outrageous and scummy, but where do you draw the line? $10k? $5k? $1k? $500?
Another question: if they had stopped producing the drug altogether then would that have been morally better in your opinion?
Obviously these price increases are ridiculous and unacceptable, but I don't see how you fix this without the government requiring that a drug company must supply a certain drug that they started making for X amount of time and in Y amount.
I think in my country there are laws against (translation: "racketeering"). It is selling goods/services to people in distress/danger for an unreasonable high price. There is no death sentence here, but also no loophole.
One way we have gotten into this mess is going at healthcare in a piecemeal fashion. First we have a program for the seniors, then for the veterans, then for the poor, then we get COBRA and "you can keep your children on your employer's plan until they are 26", then there is Obamacare which can be good sometimes and bad other times.
(When I am between jobs I have a $20 premium and a $15 copay. When I am making moderate money I my premium is similar, but I get high deductible "junk insurance" where I pay more like $150 for a visit. I could buy low deductible insurance but the price difference is about the same the deductible)
Each time they add a new piece to the system, you are left with the remainder that is more intractable. If they do something special for insulin that will somehow cost the government a lot of money and then next time it will be some other drug.
If they really wanted to save money they would start dismantling parts of the system. For instance, eliminate the tax deduction for employer insurance and herd everybody onto Obamacare. "Medicare for all", something like that.
This is nuts! $43000+ per month is insane!
1. I did a quick check and in India Syprine is available for Rs. 1.5 lakh / pack (which is roughly 2100$ at current exchange rate (Rs. 69 = 1 USD)): https://www.indiamart.com/proddetail/trientine-capsule-sypri...
2. Another brand (non-Valeant; same chemical composition as Syprine) is available at even cheaper rates of Rs. 20000 / bottle (which is roughly 300$ at current exchange rate): https://www.indiamart.com/proddetail/trientine-capsule-250mg...
Is it possible to import the drug from India instead? Or is this market highly regulated?
It is, and in my experience it's as simple as just placing an online order.
Those companies are too powerful. There have been many investigations, but you never hear anything back.
The price in itself carries information, so, I would not be surprised if in many cases not conversations are happened between the parties, but all the necessary information exchange have happened through the prices. That would be very difficult to police.
The problem with the astronomically escalating drug prices tends to be those where there's a bottleneck of a single producer. Two manufactures would help this, and syprine is an excellent example:
According to NYTimes  Syprine was about $21k when Teva introduced a generic, which was priced around $18k. In the roughly 2 years since though, the price has dropped significantly down to about $11k 
I suspect it will continue to drop as the two manufacturers gradually undercut each other over & over again. It's a slow process, and it could be much, much better, but it is one avenue of attack against these abusive pricing tactics.
Time and time again an issue is left to fester until it becomes fiscally or pr fashionable to do something about it. Then they end up cashing in with a big fine upon the company involved. Goverment gets a nice payout, consumers who have been shafted for years - just end up paying for the shafting and then in many cases, indirectly end up paying for the fine.
I'm certainly a bit of a cynic in my age, but I does kinda feel like governments use consumer abuse as a revenue stream thru fines.
The only consumer alternative to get financial justice always falls down to class actions/private cases more than not and in process's that takes forever.
Frankly I fail to understand why their is no consumer protection as any price increase of over X% in any field should always be investigated. More so the entire drugs industry. Even if that trigger was 100% in a period of a year, it would be a start in preventing such abuse. Which it is blatantly more than not.
It's as if such companies are aware of what they are doing, not even illegal drug dealers push their prices up that much upon a captive market. That certainly puts some perspective upon such activities in the legal drug industry.
Maybe we need someone to set up a nonprofit pharmaceutical company to look at treatments (including vaccines) for chronic illnesses instead of treating customers as cash cows.
A partner like this funding university research would be amazing.
> Insulin from cattle and pigs was used for many years to treat diabetes and saved millions of lives, but it wasn’t perfect, as it caused allergic reactions in many patients. The first genetically engineered, synthetic “human” insulin was produced in 1978 using E. coli bacteria to produce the insulin. Eli Lilly went on in 1982 to sell the first commercially available biosynthetic human insulin under the brand name Humulin. 
This process—programming bacteria to generate complex human biomolecules for our consumption(!!)—was a crowning human achievement. It did not occur 100 years ago. Insulin is not simple , and making it in the current pharmaceutical form that we expect, at the scale we need, is not some simple, 100 year old thing. We can't take these things for granted.
No comment on how much makers should charge for insulin.
The marginal costs (per unit) are relatively cheap but the fixed costs, especially regulatory costs, are very much not cheap; which is one reason why there's so little competition.
>If your alternative is to take this or die due to not being able to afford the proper medicine you need, what is your choice?
I don't view it as "an alternative". Just like drinking battery acid is not "an alternative" to treating esophageal cancer because it happens to kill off cancerous cells.
>What solutions do you put forward for fixing the pricing problems?
I don't know of a market based solution that would do that. But you can have the government provide a single-payer system, and negotiate the prices. That's one sensible option IMHO.
> Five days later, he was dead.
I don't mean to sound insensitive here, but... last I checked it's possible to pick up insulin (without a prescription) for $25 a bottle. Sure, it's not the same insulin he was probably on, but it does work (I was on it for many years). A little bit of searching on the web would have turned of this information; so why is he dead instead of on a different insulin?
IMO, we've gotten to a point in our society where there are risks we used to take routinely that we no longer think are acceptable, even when the alternative is complete failure. Prescribed medicine and other healthcare-related areas are some of those things.
There are other articles available that describe the situation.
tl;dr - Yes, you can get a vial of insulin for $25. But, it's not the same kind of insulin most diabetics take. They are typically prescribed insulin analogs, which still require a prescription. The $25 version could likely keep them alive, but the dosing/usage/effects are not as consistent.
You don't sound insensitive, you sound ignorant.
If you know more, share some of what you know so the rest of us can learn something. You can also downvote and/or flag bad comments. But please don't post one yourself—that doesn't help.
"Walmart sells an old version of human insulin for $25, but as Lipska explained, it doesn’t work for all patients and is incompatible with many new delivery devices."
Medications that had costed me $500 with insurance per month in the US I can buy for $20/month. One of my friend's father is diabetic, and he spends maybe $40/month on insulin.
The patent system in the US combined with the 3rd party payer system has created astoundingly bad incentives for every party. And the result of all of this is sky high drug prices.
People seem to think that the defective US healthcare system is an indictment on free-market capitalism. But there's nothing free-market at all about our system. What it's really an indictment on is cronyism, corruption, and rent-seeking.
The question becomes, what do we do about it? The tangled and corrupt web of healthcare will be almost impossible to undo. I'm a staunch neoliberal but even I don't think it's going to be possible to go back to that in the US. It pains me to say/think this, but maybe the only solution for us is single-payer.
Single-payer has pretty terrible incentives too, but probably not even as bad as the current system.
They're still building up an unassailable position.
Wait until they are firmly embedded in critical supply chains to where it is almost unthinkable to remove them and see how they behave. There's a reason they have been operating for most of their existence at break-even yet their stock continues to rise -- investors expect for them to begin to leverage their dominance very, very soon.
It's a minor miracle and a testament to the moral standing of health-care industry execs up until recently that the market has worked as well as it has for most of the last hundred years.
So why is food so cheap? Why is water so cheap? We need both to survive but nobody is jacking up rates for them.
If T.Boone Pickens has his way, the rates will be jacked up for water.
As for food, there are lots of options. If I charge too much for corn, you can buy lima beans. Plus, there is time to explore options. When that becomes untrue, people do gouge for such things. The more immediate the need, the more extortionary it can become. Medicine tends to be fairly immediate.
1. Food would be extremely safe. Nobody would die of food allergies.
2. Food would be far more expensive than it is today.
3. More people would die of starvation.
If you ask any economist why the prices of certain drugs are so high, they will point out the lack of competition, the onerous and costly approval process, and consumer inability to comparison shop. They will not say it is because drug company execs are selfish bastards. The benefit of competition is that it doesn’t matter if people running the companies are purely selfish. The system forces them to provide a compelling product or they go out of business.
Because that is a given. Dealing with a selfish bastard is ok as long as you can walk away from a transaction if it is not to your liking. People bargaining for their life don't really have that freedom.
I can buy a watermelon from a guy selling it out of the back of his pickup on the side of the road and be pretty confident that it won't kill me. You won't ever be able to say that of medicine. Many of the regulations are there for a reason.
There will never be as much competition in medicine as there is in food (unless it is in the 'Uh, oh, a handful of companies own all of the farms' direction). So, even if we eliminate all regulation it still wouldn't solve the problem of competition.
So, we will have few players in a market that is difficult if not impossible for your average consumer to understand selling items that are essential for people to continue to live no matter which direction we go. So the only question is: would the threat of government forces keep these players in line better or worse than self-policing under the fear of market punishment if what they do goes badly?
My thought is that the government is going to have the resources to effectively go after bad actors where the surviving relatives of individuals harmed will not. And there won't be enough market players in any case for those trying to make a decision based on what news they get of such bad market behavior to effectively stop them by spending their money elsewhere.
It's the difference between being able to pump the brakes on a bad situation or relying on coasting to a stop.
>There will never be as much competition in medicine as there is in food (unless it is in the 'Uh, oh, a handful of companies own all of the farms' direction). So, even if we eliminate all regulation it still wouldn't solve the problem of competition.
This may be true, we don't necessarily need that level of competition and a lower level, but still competitive market can handle this. Rather, we're at the other extreme, where regulatory barriers are heavy enough essentially prevent competition, effectively ensuring monopoly.
A good example here would be the list of off patent drugs with no generic alternative. In particular the infamous case of Daraprim, where generic Daraprim could be made, but would have to go through the FDA approval process.
The modern marketing campaigns against meats and dairy are designed to move food production into even more vertically integrated, easy to control and high margin businesses.
As climate change impacts California, you’ll see more upward price pressure on produce, which will drive more business to alternative manufactured food.
Basically, you’ll see that what happened to water happen to food.
That might be because those corrupt rent-seeking cronies have been selling their behavior as "free-market capitalism" for decades.
I agree with you that corruption is the real problem with the US healthcare system, but I'm not sure I agree that an unregulated free market is the best solution. It seems to me that it would work very well for regulating the prices of popular treatments and procedures (insulin, vision correction etc.) but it seems to me there would be no incentive to do the same for rare or difficult conditions.
For instance, treating some types Leukemia require teams of dozens of caregivers over months-long hospital stays. It seems to me that there's no way a market would make that affordable to the average person, and it seems inevitable you would end up with a two-tiered healthcare system.
> Single-payer has pretty terrible incentives too, but probably not even as bad as the current system.
What's so terrible about single-payer? It seems like it's pretty effective at bringing costs down where it's implemented.
I think that's a pretty good and fair point. Clearly the healthcare system in Tanzania is more primitive and leads to worse best case outcomes. Or in other words, the best care you get can here doesn't even get close to the best care you can get in the US. In fact, the US probably has the most advanced care in the world.
The downside of this is that it creates a system in which everything is expensive. Doctors only consider the efficacy and quality of treatment, instead of making trade-offs based on efficacy and cost. I think this is a largely a culture issue, though the Hippocratic oath and the litigiousness of American society are certainly contributing factors as well.
> What's so terrible about single-payer? It seems like it's pretty effective at bringing costs down where it's implemented.
Single payer systems result in inflation of costs and creates individual incentive to pursue inefficient options. If my healthcare costs are amortized through payment from primarily other people instead of myself, I don't care how much money anything costs. From an individual perspective, it would make sense to have doctors spend another million so I can live another month.
Moreover, it incentives risky behavior (smoking, getting HIV, etc) because I personally will not have to bear the financial burden of those choices. The only way to get around this would to to institute caps on lifetime medical credit. And if that happened, people would be screaming about "death panels" and such.
I find it hard to imagine a simple and clear single-payer system that would a) provide individual incentives to maintain health b) not impose exorbitant costs on the majority by the few c) fairly allocate healthcare resources to people who would derive the most benefit.
I think this can be somewhat mitigated thorough co-pays. It's been shown that even if you make a doctor's visit cost a few dollars/euros then people will treat it as something of value.
Also there's nothing that says a single-payer system has to cover everything the patient wants carte-blanche. In Germany, which is a hybrid system where a vast majority of people are on the public plan, the state insurance is somewhat judicious about what is covered, and it's possible to get elective treatment out-of-pocket. I think this is a reasonable incentive structure.
> Moreover, it incentives risky behavior (smoking, getting HIV, etc) because I personally will not have to bear the financial burden of those choices. The only way to get around this would to to institute caps on lifetime medical credit. And if that happened, people would be screaming about "death panels" and such.
I have a lot of problems with this reasoning. First of all, I think it is probably a tiny minority of people who only value their health because of the threat of financial ruin. I think there's a strong intrinsic incentive to avoid things like HIV and lung cancer.
Second, not all health issues are the result of bad choices. I have relatives who are or have been affected by conditions like MS, dementia and cancer through no discernible fault of their own. This argument seems to imply that it's more important to punish callous smokers and people who have unsafe sex than it is to care for innocent people who are the victim of circumstance.
It's typically US companies that take the brunt of the R&D costs to develop novel drugs. Then once they're developed, it's easy for them to spread to other countries for cheap.
That said I do agree the healthcare system is pretty messed up, and patents are part of the problem. But you have to recognize that R&D in this space is not cheap, and companies need some incentive to spend billions of dollars
Isn't the allowance of 'cronyism' etc, what makes the market "free?"
The original concept of free-market economics, as envisioned by Adam Smith, was defined in opposition to entities governments and guilds using their power to impose artificial rules in the market to subvert natural market forces like supply and demand. Pharma companies use regulatory capture to do exactly that: they set up a legal landscape for their own benefit and everyone else's detriment. Rent-seeking is anything but free-market.
So if I’m understanding correctly, the problem is not a lack of willingness to break up/regulate this monopoly, but instead the regulations and lobbying that explicitly facilitated its creation?
Are there any inherent facets of a free market that prevent such abuses?
It's incredibly hard to generate the political will of many people who will slightly be hurt by something against the will of the few who will be significantly hurt even if the aggregate damage is far greater for the many than the few.
Almost all legislation follows this sort of calculus: zoning laws, tariffs, minimum wage, etc.
No, there's nothing about free market which will automatically mitigate this issue. Markets are very good at certain things, like delivering goods and services efficiently if certain conditions are met, but they are not some panacea which can magically solve every problem.
There are certain cases where markets are not very good at serving a majority of people: for instance in the case of monopolies, or when there are negative externalities which are not priced into the market (for instance it can be profitable for a company to burn a lot of fossil fuels to produce products cheaply, and everyone else suffers the environmental costs).
Strict libertarians will disagree with me, but markets alone are not enough. In every example of what we could consider a well-functioning society, the government plays a role in guiding and constraining the market where necessary.
Regulatory capture does represent a problem, and is an example of bad government, but that does not negate the need for good government.
This is a natural and obvious end following from the foundation of capitalism, which is the existence of private property ensured by the state.
There isn't much discussion of why it's expensive in the US specifically. In other countries insulin prices haven't risen in the same way and are still affordable. So why is the price gouging only happening in the US?
As a T1 diabetic in the UK, where the wonderful NHS covers all of my insulin costs, this is one reason why I'd never be able to move to or work in the US.
I'm a T1 Diabetic in the US and I consider myself very lucky to work in software. I have good insurance, so my medication only costs me about $200 per month. That's just an additional cost I have to pay to be alive, on top of all the other stuff everyone else has to pay for, too. If I had a lower paying job, or a job with less good health insurance, I can see how I'd be priced out of living.
I'm in Australia, my brothers recently diagnosed as a T1 diabetic, he's currently taking a career break to spend time with his family and get his health and medication all sorted out. Thats all fine here because the costs are reasonable, I see these reports form the US and can't help but wonder when it will get here, most 'innovations' do, fortunately the US health system doesn't seem to be getting a foot hold here.
It seems to me, as an observer, that the health system along with the cost of education have been set up to produce a slave class, I could be wrong but its definitely something that I fight to keep out of here. Five years or so ago I was regarded as a socialist, but with how things are going, most people I speak to no longer argue about it, so it seems the battle is being won here. I find it hard to understand how there aren't marches in the street over there about this.
And there is progress being made. The ACA passed under Obama was a very significant step forward, and public perception is shifting in favor of more government involvement in healthcare. As with most things, the problem is money in politics and media. Republicans resist any attempt to slow the accumulation of money into the hands of the ultra-wealthy, and also own the most popular news channels, so they've convinced a significant chunk of the population that making the wealthy wealthier will somehow help them. A good chunk of Democrats are also paid to oppose changes to the current healthcare regime. But there's a growing number of Democrats actively campaigning for single-payer and other sane systems, and support among voters for single-payer is also growing.
There's hope. The situation isn't so bad that violence is the answer, yet.
Hope you don't lose your job for some bullshit reason.
My best guess is that the price rises were to bring in some immediate profits in the short term ("this quarter isn't looking good") and them these were shortly followed by the compensating discount you have to give to your pissed off customer.
Problem was that nobody gave a toss about the profit margin on the lone guy paying $1000 a month (or $1300 a month) at retail.
The price hasn't really risen in the US either. Or at least not as much as the article implies. The list price has gone up but the corresponding discount given to insurance companies via PBM has gone up about the same. For most people it doesn't make a difference because they buy through insurance. For people like in TFA they get screwed because they have to pay list price. Theoretically, the number of people in that situation should be 0 post Obama care but obviously there are cracks.
Unfortunately, the guy in the the articld fell through a crack. Mostly because he didn't realiZe that buying through insurance would save him a bunch of money. Or maybe he was at the wrong pharmacy to get a huge manufacturer discount.
Being in an employee-owned company, I'm very aware of how much the company pays for insurance. It never goes down, it always goes up. The company has to switch to plans where employees pay larger and larger deductibles, just to keep the insurance cost increases down in the 10% per year range. Usually the reason costs go up is because we "use it too much", people need to use generic drugs, etc. Of course, it's hard to determine actual costs in such a convoluted system, but orders of magnitude cost increases for medicines obviously plays a significant role.
It's not really that difficult. You just buy insurance or get on Medicare/Medicaid and you get the discounts. That's not to say that the system hasn't been grossly perverted. Just that the hoops aren't difficult to jump through for pretty much everyone.
The hoops are incredibly difficult, just at random.
My son was just diagnosed with T1 diabetes as a juvenile. The insurance company denied coverage for the ER visit and in-patient overnight stay after being admitted. They stated since he was not yet hyperglycemic and in acute stress that it should have been an outpatient procedure.
So what sounded like a $50 co-pay because he has good insurance, turned into a $20,000 bill out of the blue that must be fought.
The pharmacist should’ve given him a better consult and told him options for cheaper stuff. I had a pharmacist and a tech search for 30 mins several times for a rebate that brought my cost to $0. They will suggest another medication if the one you are getting isn’t covered. They will even call you doctors to get a new script.
It seems there were failures on multiple levels. He should’ve been aware of better options. The pharmacist shouldnt have let him leave when he couldn’t afford it.
Health insurance by private companies is just a scam. In combination with "not-for-profit" hospitals, medical practicioners loaded with college debt, lobbying to government to enforce ongoing rent-seeking (eg "Medicare D is specifically not allowed to negotiate drug prices").
The entire US health system needs an enema.
It should not be up to the patient to "be aware of better options". It should not be up to the pharmacist to stop him leaving when he couldn't afford it.
What should have happened is that a doctor prescribed the appropriate medication, and a pharmacist supplied that medication, both ensuring the best outcome for the patient.
The cost of the medication should be absorbed (not totally perhaps, but within the bounds of reality and the minimum wage) by the government.
That forces the government to negotiate the best possible price with the suppliers and to remove inappropriate IP "rights" when they no longer "promote the progress of science and the useful arts".
Note the guy died in 2017 and my link below is from this year. It looks like a small amount of progress has been made since his death.
edit: the cost to the end user is the required 385 euro.
Here it is happening as well: Novo Nordic set the cost of the - the new - Tresiba insulin higher than the covered amount, it simply wasn't offered as there were fortunately enough alternatives available though the stuff actually works better. A few years back they finally gave in and now it is still sold at the premium price but the apothecaries get back the amount not covered by insurance from the distributor (and I guess thus Novo). Which basically tells me they can offer it for that price but don't want to and hope the covered price goes up (not likely).
I'm not sure where in Europe you are, but it's nowhere near that in the UK - testing strips are around 0.20 each, (which TBH I think is expensive, but plainly no going to cost 100k/year!).
For CGM, if you're lucky enough to get the NHS to pay for it (unlikely), it costs them around 1k for the monitor, and around £1,500/year for sensors.
Finally, insulin costs the NHS around £400/year for a T1 diabetic.
However, doesn't some of that mafia fee go toward R&D? (Developing new drugs)? Why isn't the price to the NHS slightly higher, also in part to fund research?
It's hard to imagine $10,000 just gets pocketed by Don Carleone, without any of it going back to the laboratory.
Is the analogy really sound?
The NHS (via NICE) sets a standard amount that it is prepared to pay for any treatment based on the QALYs (Quality Adjusted Life Years) it results in. So really a non-generic manufacturer can charge whatever they like, so long as the end result is worth it. In a sense we don't eliminate the mafia, just set the terms of engagement under which they have to justify their pricing. Whether they take that money and spend it on R&D or dividends is the vendor's decision.
He did not make a rational decision. This is the most upsetting part. I looked. You can buy an insurance plan in Minnesota with a $750 deductable $6000 out of pocket max for $350 per month.
It is not possible with that plan and a few more like it to spend more than 1000 per month. If you are planning to spend that much anyway it is irrational to pick anything else.
What seems to have happened is he was using expensive autoinjector pens while on good insurance and then didn't adapt when he lost it and didn't get the right advice for purchasing his own insurance or the right education to be able to pick an appropriate plan.
And here I am today in the USA (visiting for 1 week of work), with what appears to be a stomach infection, and I'll have to just survive it maybe with Pepto, until I go back to Mexico, or otherwise pay a lot of money to see a GP to give me a receipt for a something that will cost me $6 USD back in Mexico ( https://www.angloinfo.com/blogs/mexico/mexico-city/more-adve... )
What did you find exactly? Are you sure it’s something that was available to Alec? That price sounds surprisingly low, and sometimes there are cheaper plans for temporary work gap transitions that aren’t available to someone with a job permanently. The article said he was looking on the healthcare.gov marketplace, which doesn’t have plans anywhere near that low. I was using healthcare.gov for a few years while I ran a startup, and the prices went up so fast and so high I don’t know how normal or poor Americans can even afford them. We looked outside the marketplace and only found the same plans for the same price being offered privately.
When I looked outside the exchange a few years ago I found a plan I liked more than my other options which I chose (didn't look today).
Quirks and or better management in MN gives it relatively favorable prices.
You can only be charged rates based on location, age, and tobacco use.
Syringes were fine for me, pens might be less embarrassing to use in public maybe?
The problem isn't their choice of insulin delivery, it is that there are no price controls and an incentive to increase prices without any significant loss in sales. This is an area that government need to be all over.
Source: Type 1 diabetic.
But you also have a tiny mass produced machine that is life and death for people. Insuring quality is expensive and the cost of mistakes is extreme.
If you want cheaper medicine you have to also have cheaper mistakes and there aren't many people arguing equally loud for both. (Just one issue of many)
Higher numbers for the previous two will increase cost and death to people who can no longer afford the treatment.
"Least likely" means infinite quality control and is not possible. Failure rate is not zero, you have to pick finite regulatory requirements and financial consequences for failure.
You have to assign a dollar amount to a human life. It is uncomfortable for many people to think big picture thoughts but you're contently using things made by people who have to.
The cheaper insulin in the US is garbage and should not be used. period. The problem is the companies are have no pressure to reduce prices. the customers are captive and must pay or die. They make money in other countries that have price controls on the same product.
But you do the best with what you have, and that means picking your pain.
I suspect the problem is market collusion and the FDA shutting down competitors on drugs where patents expired, which I believe is what happened during the epipen crisis.
This happens in the garbage collection industry, people make competitors and offer 30% discounts on going rates, Waste Management or similar megacorp loses an entire county or region... Then they buy the company and slowly raise prices back up.
There's non-competes in the contract, but the owner doesn't care, they pocket 10 million and take a 1-year vacation then repeat the process. Only customers and employees are hurt (as there's less need for employees when the companies merge)
Same with pharma... Though I imagine there's extra pressure on the factories to not serve "little guy" as part of their contract with big pharma. So even if you have all the necessary process and expired patents, the industry stacked agreements and laws to make it nearly impossible.
Like many American industries, this is the kind of behaviour that caused Roosevelt (a Republican) to leverage the Sherman Anti-Trust Act... The key point being that mega corps were exploiting the populace and the only solution was to break up these giant monsterous companies that effectively created monopolies. He specifically targeted companies that used this power for ill, jacking up costs to consumers.
Now we are back at this point, but the public unrest hasn't reached a critical point while we are upset over other political issues, so big business continues to shovel buckets of money at Republicans to try and maintain the status quo until enough Americans get upset that politicians fear loosing their seat over the money (and right now, thanks to gerrymandering, enough politicians need 10% or more of their loyalty base to convert to the other party for that to be an issue.
In reality, this is a genius system that is perfectly legal... On the surface.
It would be very difficult to make a profit on generic insulin because it's a biologic drug, which means a generic manufacturer wouldn't be able to bypass the FDA approval process by proving bioequivalency.
EDIT: Upon further reading, there is a pathway for "biosimilars", but it seems to have higher requirements than chemical generics.
Here’s just the first hit I saw on Google, there have been quite a few exposés on the topic.
Throw in over regulation besides limiting which types are available also can interfere with refills of both insulin and testing materials and even require periodic confirmation by a medical professional you are still diabetic.
With that said, if tight on money, its certainly better to use it, and monitor it closely, than not be able to afford the $225+/vial novolog or humalog.
- The incidence rate for diabetes has skyrocketed over the past 25 years. It's estimated that 100 million Americans are now living with diabetes or prediabetes.
- Most of the patents for the newer insulins are mostly on manufacturing processes. Read up on Lusduna if you want to see how difficult it is to bring an insulin to market in the US.
- Biosimilars are significantly more costly to bring to market than generic drugs.
- Alex Azar, and every other secretary of HHS have had the ability to allow legal importation of drugs from Canada since 2003. We actively choose not to. While IMO the risks are worth the benefits, I will concede the other side does have a valid argument against importation.
- The price difference is with fast acting insulins. These insulins offer a higher quality of life relative to the older insulins. The clinical benefits of using a fast acting insulin versus something like Novolin 70/30 (aka Walmart insulin) are negligible, while the price difference is substantial. (Talk to your physician before switching insulins) From the people I've talked with, fast acting insulins are a godsend if you have diabetic children or can't keep a regimented schedule.
- All of the companies that manufacture insulin are public and you can read through their financial statements to verify that what they are saying is true.
All that being said...
I'm surprised that an enterprising Canadian has not exploited insulin arbitrage.
You can buy insulin over the counter without a prescription in the USA and Canada. Canadian law does not prohibit exportation of drugs to the United States.
Theoretically you could set up an escrow service that connected Canadians who wanted to make a buck with American diabetics. The service could offer insurance in case a delivery was not made and you needed to buy insulin in the US.
Obviously this would complicate things with your insurance. No insurance company is going to cover bootleg Canadian insulin when it comes to your deductible.
Holy cow - that's like 1/4 to 1/3 right? That seems insanely high!