Concierge medicine or can't find a doctor

[weilke]

The drugs Weilke refers to are those which I researched as well. Generics are available in India, but are unable to be sold here. The cost may very well come down over time, but meanwhile there are literally 2.9 million people in the US being "warehoused" without treatment, many many of which will not live to see the day.

Yet another triumph of profit over ethics.

Actually, you have that wrong. Without a profit motive, neither of these drugs would exist (and no, the NIH didn't develop them to marketability). The triumph is that we finally have drugs that can eradicate the virus from the patients system.

It would be more honest for the manufacturer to simply not make the drug available in developing countries. For political reasons, they decide to give the drug away for free overseas, but that doesn't really have anything to do with how much or little they should collect here.

 

[Chip Sylverne]

Actually, you have that wrong. Without a profit motive, neither of these drugs would exist (and no, the NIH didn't develop them to marketability). The triumph is that we finally have drugs that can eradicate the virus from the patients system.

It would be more honest for the manufacturer to simply not make the drug available in developing countries. For political reasons, they decide to give the drug away for free overseas, but that doesn't really have anything to do with how much or little they should collect here.

What is it I have wrong, exactly? The Indian generic is manufactured by Mylan Pharma. Marketed as MyHep LVIR. They will soon be manufacturing a Sovaldi generic as well.

I wholehearted agree the drugs are miraculous, but the profit maximization strategy in the US is less than congruent with medical ethics. So the choice is die because your plan won't spring, or fly to India.

 

[weilke]

All it looks like to me is that the larger insurance companies had deeper pockets to absorb the losses without the promised reimbursements. No one was very good at estimating the losses, because the risk pool data for such large community rated pools did not exist, contrary to your false assertion. That was abundantly clear to anyone paying attention to the insurance executives at the time.

My assertions about the data come from an actuary who retired after 35 years of pricing health insurance for the state of NY and a relative who sets up health plans for a living. Also, there was plenty of data from places like Minnesota who had expanded coverage through Minnesotacare and Mass with its 'Romney-Care' project.

This was no suprise to anyone familiar with the numbers.

 

[weilke]

What is it I have wrong, exactly? The Indian generic is manufactured by Mylan Pharma. Marketed as MyHep LVIR. They will soon be manufacturing a Sovaldi generic as well.

I wholehearted agree the drugs are miraculous, but the profit maximization strategy in the US is less than congruent with medical ethics. So the choice is die because your plan won't spring, or fly to India.

The reason the IP licensed out to Mylan exists is that the investors in Pharmasset and Gilead took a risk to develop the drug to marketability. The companies make those overseas licensing deals to be nice yet every time it comes back to bite them with these kinds of allegations.

 

[bbchien]

Chip, read this. it's much more complicated than you can imagine.
Chien, R. I. [1979, ed.], Issues in Pharmaceutical Economics, Lexington Books,.

 

[Chip Sylverne]

Two states with small populations as far as risk pools go. By far, Mass insured most people through employer groups, and already had a very high percentage insured prior to Romneycare.

I'm not saying there wasn't data for actuaries to work with, but not enough to work out tables eith any high degree of confidence.

 

[Chip Sylverne]

The reason the IP licensed out to Mylan exists is that the investors in Pharmasset and Gilead took a risk to develop the drug to marketability. The companies make those overseas licensing deals to be nice yet every time it comes back to bite them with these kinds of allegations.

To be nice? C'mon Florian. They do it because India is facing a public health crisis should this not be addressed. Why should that make folks here feel they are not facing their own unaddressed crisis?

Bruce, I will look into that. Believe me, I understand the economics are quite complex.

 

[airdale]

Agreed, the economics of drugs are complex, but one doesn't have to understand the economics to know that we in the USA are getting screwed when many drugs cost more here in the US than they do anywhere else in the world. This is due to drug companies' successful purchase and continuing ownership of an adequate quantity of congresscritters.

 

[Rushie]

As far as "that foundation" is concerned, I am not up to speed. But that higher prices charged here for drugs sold overseas is common, actually encouraged.

Yes. And I will get you up to speed. Here is part of a message from the CEO of "that foundation" to another member: (I bolded parts and removed partisan identifying information, parenthetical insert is mine.)

"We were taken by surprise by President *******’s comments on world AIDS day and wish that someone had consulted with us before he made these comments. As you will see when you read this memo, we think that publicly pressuring the US and European AIDS drug companies to lower prices and bringing pressure to allow generic AIDS drugs into the United States ... could seriously jeopardize our negotiations to continually lower prices in poor countries. ...

"We have always told the drug companies that we would not pressure them and create a slippery slope where prices they negotiate with us for poor countries would inevitably lead to similar prices in rich countries... It has taken us many years to build positive relationships with these companies while at the same time pushing them to continually lower their prices (for this foundation) We will now have to try to repair these relationships.

"Since President *******’s comments were made, we have been contacted by a number of advocacy groups who are now intending to wage a public campaign to bring in generics and lower drug prices. We do not feel we can participate in this without jeopardizing our work around the world."

In other words, this guy is saying, "Whoops you stupid idiot," (addressing the founder), "you just told Americans we're going to try to lower drug prices here, and we don't want to do that. We've been telling the drug companies it's okay to keep prices high here in the U.S. because it helps them give us low prices for our overseas projects. Now look what you've done, you got people all stirred up about lowering prices here, and that's not good for your own foundation you stupid idiot, because it will impact our standing and hence donation$$ and hence the money going into your and my pocket and the glory and ego gratification we get from helping people overseas while encouraging the drug companies to screw our own countrymen. You should run this stuff by me before you open your big mouth. We don't want Americans expecting the drug companies to lower their prices, that messes up my plan here."

Agreed, the economics of drugs are complex, but one doesn't have to understand the economics to know that we in the USA are getting screwed when many drugs cost more here in the US than they do anywhere else in the world. This is due to drug companies' successful purchase and continuing ownership of an adequate quantity of congresscritters.

Yes. And above you can see another of many reasons why.

 

[wsuffa]

That's a politically slanted opinion piece re-stating your argument. It doesn't refute any of the points I made using what you would call 'facts'.



When the law was being passed, we were told that among other things, the evil capitalist insurance companies making huge profits are what drives healthcare cost. One of the remedies were the co-ops who wouldn't pay their execs hundreds of millions in salaries and didn't have all these bowler hat wearing stockholders who mercilessly squeeze quarterly profits out of the companies. The co-ops, so the cheerful childrens drawing promised, would use all of their revenue to benefit the patient, not the company. Most of the coops priced their products way below the commercial payors with financial models based on the universally accepted actuarial concepts of 'hope' and with the intent to 'change how healthcare is delivered'. Unfortunately, at the end of the day, people still got sick and it looks like the folks who ran the commercial plans knew a thing or two about who to price things to cover expenses.




(Note: For full disclosure. One of my employers is an insurer that provides coverage through several of the federal exchanges. I am not involved in the HMO side of the company and anything I say is my opinion alone and does not reflect the position of the company.)

That's the same argument made with respect to government single payer. Problem is that once you eliminate the profit, your still left with administrative costs and inflation. In other words, you get to take the savings - once. Government can impose price controls to a greater degree than private insurance, but that leads to the situation you have with Medicare: insufficient reimbursement to make the profession attractive.

 

[Chip Sylverne]

That's the same argument made with respect to government single payer. Problem is that once you eliminate the profit, your still left with administrative costs and inflation. In other words, you get to take the savings - once. Government can impose price controls to a greater degree than private insurance, but that leads to the situation you have with Medicare: insufficient reimbursement to make the profession attractive.

On its face, that may appear to be true. But I'm not sure such a broad statement holds water. CMS recently released a study of the billing differentials in each hospital in four major markets for the most and least and average costs across all procedures. The difference between the most expensive and least expensive hospital in each market was well in excess of $100k. This was true even in Los Angeles, where there is a high concentration of top tier medical talent.

That's pretty substantial price delta. Now, of course, there is no quality of outcome data, but such a price disparity could lead one to believe that a well managed and financed cooperative could significantly reduce costs other than administrative.

All those marble lobbys with waterfalls can get expensive.

 

[lbfjrmd]

Is this the new normal? Do we now need to pay retainer to get anything better than abominable service?

Any of you near San Antonio and can tell me anything about any of the doctors here?

there are 7 MDVIP doctors in San Antonio accepting patients. 2 more listed are full.

 

[paflyer]

In reference to the "huge price increases". When the ACA was enacted, part of the deal for the insurance companies to participate was the establishment of risk corridors, essentially training wheel allowing losses to be reinsured and spread, for the underwriters until they could establish enough loss experience to accurately underwrite the new pool. When control of congress changed, the new congress cut off the risk corridor appropriation and reneged on the commitment to the underwriters after billions of dollars of losses had already been incurred.. The underwriters had no choice but to raise premiums, and or exit the individual market.

Since this was timed to coincide with an election year, I'll leave the motives up to the imagination. In the interest of full disclosure, I am a self-employed, a member of my family has a pre-existing condition and my only choice for coverage is the individual market through our MD state exchange. A simple process. Prior to its establishment, coverage had become essentially unavailable at any price. Even though it's expensive, at least with the ACA coverage could be had. High deductibles, I can take thàt hit. A million $ incident, I can't easily absorb. Now, once again, I will have to lose sleep wondering if a medical emergency will bankrupt me. I had hoped those days were over.

Prior to the ACA "jack up", a self-employed person could shop competitively for a cost-effective plan. You could join a professional group plan to cover high expenses for a low monthly premium, if you so chose. Or self-insure. In 2009 Ds changed that so now the only thing available is a federally mandated plan that covers everything such as prenatal care for people with no children and beyond child-bearing age. At very high expense. Or pay a penalty, er "tax."

My premium went up 50% for 2017. It still carries the same $13000 deductible with a $14000 annual premium for two middle aged people with no pre-existing conditions and no meds. There is only one insurance company in my state to "chose" from. Who do I blame for that, Chip?

 

[paflyer]

Agreed, the economics of drugs are complex, but one doesn't have to understand the economics to know that we in the USA are getting screwed when many drugs cost more here in the US than they do anywhere else in the world. This is due to drug companies' successful purchase and continuing ownership of an adequate quantity of congresscritters.

And the fact that everything eventually points back to Medicare.

 

[paflyer]

On its face, that may appear to be true. But I'm not sure such a broad statement holds water. CMS recently released a study of the billing differentials in each hospital in four major markets for the most and least and average costs across all procedures. The difference between the most expensive and least expensive hospital in each market was well in excess of $100k. This was true even in Los Angeles, where there is a high concentration of top tier medical talent.

That's pretty substantial price delta. Now, of course, there is no quality of outcome data, but such a price disparity could lead one to believe that a well managed and financed cooperative could significantly reduce costs other than administrative.

All those marble lobbys with waterfalls can get expensive.

The public posting of the price of every billable item should be mandated.

 

[paflyer]

What is it I have wrong, exactly? The Indian generic is manufactured by Mylan Pharma. Marketed as MyHep LVIR. They will soon be manufacturing a Sovaldi generic as well.

I wholehearted agree the drugs are miraculous, but the profit maximization strategy in the US is less than congruent with medical ethics. So the choice is die because your plan won't spring, or fly to India.

Chip, let us know when your GoFundMe site opens so we can invest in your pharma company that gives your ethical products away!

 

[weilke]

The public posting of the price of every billable item should be mandated.

Not that easy. The price the end user pays is usually governed by a payor contract.

Two ways to get to what you (and I) want:
- we find a way to post the price applicable for all potential contracts.
- get away from the forced re-pricing model and go to a system where the patient pays what they are being billed and receives reimbursement from their insurance or medicare at whatever the insurance or the .gov deems appropriate.

 

[paflyer]

Not that easy. The price the end user pays is usually governed by a payor contract.

Two ways to get to what you (and I) want:
- we find a way to post the price applicable for all potential contracts.
- get away from the forced re-pricing model and go to a system where the patient pays what they are being billed and receives reimbursement from their insurance or medicare at whatever the insurance or the .gov deems appropriate.

Yes, the whole thing is a crooked shell game IMO. If "they" wanted to reform health care to make it "affordable" then "they" should have started with things like this. But we also know that wasn't the real reason behind it.

 

[airdale]

And the fact that everything eventually points back to Medicare.

Well, yes. But Medicare is just a symptom of the disease: drug companies' successfully taking control of congress.

A related problem is the fact that pharmaceuticals are not a classical free market. Buyers often do not have the option of deciding that prices are too high and walking away. Their option may often be pay or die, or pay or suffer. This puts tremendous pricing power into the hands of drug companies, who behave effectively as fiduciaries, maximizing the amount of money that they earn for their shareholders. This is why government intervention in the market is necessary and why Pharma is so desperately working to keep that from happening. And, unfortunately, succeeding.

 

[weilke]

Yes, the whole thing is a crooked shell game IMO. If D"they" wanted to reform health care to make it "affordable" then "they" should have started with things like this. But we also know that wasn't the real reason behind it.

Most commercial network contracts treat pricing information as a trade secret. The verbiage usually includes 'unless required by law'. If the feds wrote a law that requires disclosure of all network rates for the 20 most common services billed by a provider, I would have this information on my website by the end of the week.

The underlying problem is that everything models after what medicare does. And medicare is who came up with this harebrained scheme involving repricing and assignment. If I want $100 for a service I should be able to put up a sign with the $100 price, have you pay that price and leave it up to you to deal with your insurance company or medicare. If the guy across the street advertises the same service for $85, feel free to go there.

 

[paflyer]

The underlying problem is that everything models after what medicare does. And medicare is who came up with this harebrained scheme involving repricing and assignment.

This is what I referred to in Post #94. It all comes back to the feds, not the 'greedy' providers, who just play along. I wonder who actually wrote the words in the original Medicare bill...

 

[weilke]

This is what I referred to in Post #94. It all comes back to the feds, not the 'greedy' providers, who just play along. I wonder who actually wrote the words in the original Medicare bill...

Oh there is no shortage of greedy providers. With full pricing transparency, the crooks would be out of business in short order. If you receive your bill at the time of service, you notice quickly if there is something on it that wasn't provided.
Funny, I picked up my car after a clutch job this week. For some reason, the shop was able to give me a bill with parts and labor charges the moment they were done. It's magic. You pay, you get your car.

 

[bbchien]

This is why government intervention in the market is necessary and why Pharma is so desperately working to keep that from happening. And, unfortunately, succeeding.

Airedale, (and to a lesser extent, Chip) your nice sounding polemic is confounded, unfortunately by fact. I don't like defending pharma but you display a very very limited understanding. It goes thus:

A drug Co. wants to develop a new drug.

If identifies 20 compounds, related to each other that might have the required effects.
The do animal testing mostly for toxicity. If some/any pass, then the promising ones are slated for human testing....majority of the time outside the CONUS. There are then phase 1 human toxicity trials. and they cost huge bucks. If one of the makes it (livers don't rot, people don't go blind, etc) then they start worrying about efficacy. You don't worry about efficacy if the drug is going to kill. The efficacy trials are done in the US and abroad and require institutional review board approvals.

Now remember, we are developing a handful of compounds. and many will still flunk human toxcitiy observations. Femember, the rats dont' tell the whole story.

Let's say the company lucks out and the data are good. Then it's to the FAA review process, which is at least 30 months.

So now it has been 11-13 years since the patents were taken out, and the patent runs out at year 18.

The company has to recover all the costs for all 20 drugs' devleopment and recover them from the one that is successful, all the costs of the other 19, over 13 years it has taken (average) and do so in just five years. So the new mega drug costs Mega.

Now, say you're Canada. The assembly has legislated the price of losartan (which recently went generic). Canada orders 10 million pills and offers 50 cents per pill. To the drug maker this is just extra money so they ship 10 million pills and collect 5 mil. That pill used to cost $4.00 until it went generic. But the costs had already been incurred, and the 5 Mil to physically make the pills probably incrementally cost about 1 cent a tab to manufacture and ship (all the machinery is there already). Easy money.

What Canada has done, is to Medicare cost shift on the US manufacturers. If we do the same thing here at home, there will be no way to recover the costs of the 19 failed drug development trials. Innovation stops. Recent innovations are the Hep C curative drugs, control of HIV to normal life expectancy, and I sure hope a new drug for TB.

Why do we have drug resistant TB? Because other countries get ethambutol and isoniazid for 0.1 cents per pill....it's so cheap you buy them without Rx, on the pharmacy streets in Asia and Latin America. But if we don't send them the pills, the hue and cry! Genocide!

*****
So we permit the rest of the world to medicare us; we pay retail they do not (just as those not on medicare subsidize the medicare population), because if we do not do so, innovation will certainly cease. The riskier the proposition, the more potential profit has to be there to support the gamble. How much wall street money do they think they will attract if the pill will sell for 1 cent per pill?

Do you really want us to taxpayer fund drug research directly, oh I just love that! It would be like Air Force procurement. [/sarcasm off]. The government can make it worse. They're here to help.

 

[paflyer]

Airedale, your nice sounding polemic is confounded, unfortunately by fact. I don't like defending pharma but you display a very very limited understanding. It goes thus:

A drug Co. wants to develop a new drug.

If identifies 20 compounds, related to each other that might have the required effects.
The do animal testing mostly for toxicity. If some/any pass, then the promising ones are slated for human testing....majority of the time outside the CONUS. There are then phase 1 human toxicity trials. and they cost huge bucks. If one of the makes it (livers don't rot, people don't go blind, etc) then they start worrying about efficacy. You don't worry about efficacy if the drug is going to kill. The efficacy trials are done in the US and abroad and require institutional review board approvals.

Now remember, we are developing a handful of compounds. and many will still flunk human toxcitiy observations. Femember, the rats dont' tell the whole story.

Let's say the company lucks out and the data are good. Then it's to the FAA review process, which is at least 30 months.

So now it has been 11-13 years since the patents were taken out, and the patent runs out at year 18.

The company has to recover all the costs for all 20 drugs' devleopment and recover them from the one that is successful, all the costs of the other 19, over 13 years it has taken (average) and do so in just five years. So the new mega drug costs Mega.

Now, say you're Canada. The assembly has legislated the price of losartan (which recently went generic). Canada orders 10 million pills and offers 50 cents per pill. To the drug maker this is just extra money so they ship 10 million pills and collect 5 mil. That pill used to cost $4.00 until it went generic. But the costs had already been incurred, and the 5 Mil to physically make the pills probably incrementally cost about 1 cent a tab to manufacture and ship (all the machinery is there already). Easy money.

What Canada has done, is to Medicare cost shift on the US manufacturers. If we do the same thing here at home, there will be now way to recover the costs oaf the 19 failed drug development trials. Innovation stops. Recent innovations are the Hep C curative drugs, control of HIV to normal life expectancy, and I sure hope a new drug for TB.

Why do we drug resistant TB? Because other countries get ethambutol and isoniazid for 0.1 cents per pill....it's so cheap you buy them without Rx, on the pharmacy streets in Asia and Latin America. But if we don't send them the pills, the hue and cry! Genocide!

*****
So we permit the rest of the world to medicare us; we pay retail they do not (just as those not on medicare subsidize the medicare population), because if we do not do so, innovation will certainly cease. The riskier the proposition, the more potential profit has to be there to support the gamble. How much wall street money do they think they will attract if the pill will sell for 1 cent per pill?

Do you really want us to taxpayer fund drug research directly, oh I just love that! It would be like Air Force procurement. [/sarcasm off]. The government can make it worse. They're here to help.

Excellent post, I think this sums up why our HC is always slammed by certain parties as the most expensive per capita, therefore we have to "do something": "we pay retail they do not"

 

[gacoon]

Exactly my point of what insurance really should be. You need it for the $300K heart attack. But for a $5000 baby delivery, why not pay out of pocket? If you can't afford $5000 to get the kid into the world, you have no business having a kid. People will gladly pay two or three or four times that amount out of pocket for a CAR for Pete's sake. But for some reason everybody expects somebody else to cover the cost of getting their baby.

And the expectation that you should get an antibiotic for almost nothing. It's mind boggling how people forget that we are lucky to even have antibiotics. $280 out of pocket to kill a bacteria that can kill you or cause you permanent injury, we should be grateful the cost is that low, and we should gladly budget and save for such minor illnesses.

It's our expectations that are out of whack here. The math will never add up. We expect way more value for way less money and reality doesn't work that way.

Yea but. There are tons pf people having babies that cant cough up the $5k. What becomes of the non-payers. One thing to total car and lose it, not servicing health issues for lack of $ is another. Really complex problem.

 

[bbchien]

And this is quintessentially why O-care has failed. It was called the affordable care act, and sold to us as such. Not too affordable eh? The docs can't practice on $28.00 per visit the liability costs them $30 per contact. So they leave. The go concerige.

My wife and I just go upped to $30,000 this year for an 8020- silver plan, yes that's $2,500 per month. When does it stop? I get that rate to support all the ones who have had to CABGs (I'm being "Medicare'd"). And now I get FINED (oh, no, it's a tax) if I don't participate.

Some folks NEVER MAKE $30,000.

 

[Fearless Tower]

And this is quintessentially why O-care has failed. It was called the affordable care act, and sold to us as such. Not too affordable eh? The docs can't practice on $28.00 per visit the liability costs them $30 per contact. So they leave. The go concerige.

My wife and I just go upped to $30,000 this year for an 8020- silver plan, yes that's $2,500 per month. When does it stop? I get that rate to support all the ones who have had to CABGs (I'm being "Medicare'd"). And now I get FINED (oh, no, it's a tax) if I don't participate.

Some folks NEVER MAKE $30,000.

Bruce, are you actually paying $30k or is that just what it would cost you for an ACA marketplace plan?

I thought you were retired Navy?

 

[Chip Sylverne]

Bruce, let's look at another example. Let's say Drug x is a combination of three compounds developed by two companies which were acquired by a third to market the drug. Compound A is priced at full retail before being added to X, as is number two, as is number three, then the final drug is again marked up to whatever price the marketer wants to charge while under patent. The Compound X has now been tripled dipped even before the final price has been set.

How much is enough? Or are you supportive of the Shrekili pricing model?

https://hbr.org/2016/07/price-gouging-and-the-dangerous-new-breed-of-pharma-companies


Imho, direct to consumer advertising is the worst thing to ever happen to health care. It wastes resources that would better be spent in development, and creates ailments were none really exist.

 

[Everskyward]

I see people saying that, from the drug companies' side, if they don't make some profit, or at least enough to cover the cost of development, they won't bother to come up with these drugs.

But from the consumer's side, if you need a drug to stay healthy, or especially to stay alive, you will pay almost anything. If they want to charge $90,000, there are some people with the ability to pay, but many can't.

It's a difficult problem.

 

[Chip Sylverne]

And this is quintessentially why O-care has failed. It was called the affordable care act, and sold to us as such. Not too affordable eh? The docs can't practice on $28.00 per visit the liability costs them $30 per contact. So they leave. The go concerige.

My wife and I just go upped to $30,000 this year for an 8020- silver plan, yes that's $2,500 per month. When does it stop? I get that rate to support all the ones who have had to CABGs (I'm being "Medicare'd"). And now I get FINED (oh, no, it's a tax)

I have the same plan, underwritten by Carefirst blue cross. Yes, it's expensive, but since every indidual underwriter in MD had exited the market prior to the ACA, save one which was about the same premium 4 years ago, with lifetime caps etc., I consider myself lucky. The other choice we have is to give up our business and work for someone else, but that's not worth giving up the freedom of being self employed.

So I pay.

I would love to see some improvement, but I don't see returning to the "status quo ante" as yielding any sort of positive result. And as yet thete is no plan. And shouts of "let the free market solve it" are at naive at best.

 

[Rushie]

there are 7 MDVIP doctors in San Antonio accepting patients. 2 more listed are full.

Thanks! I talked to Mark and he agrees, MDVIP is what we're going with eventually.

 

[Rushie]

My wife and I just go upped to $30,000 this year for an 8020- silver plan, yes that's $2,500 per month. When does it stop? I get that rate to support all the ones who have had to CABGs (I'm being "Medicare'd"). And now I get FINED (oh, no, it's a tax) if I don't participate.

Some folks NEVER MAKE $30,000.

That's the situation my BIL was in after my sister died. I helped him find plans. It was $17,000 per year and his income was barely $30,000. He didn't get any insurance and was found dead lying on the couch with a prescription in his hand he never filled.

 

[airdale]

Airedale, (and to a lesser extent, Chip) your nice sounding polemic is confounded, unfortunately by fact. ...

Bruce, let me start by saying I am a fan. I enjoy your posts, particularly the personality that projects through them. But .... you are not much of an economist.

From the perspective of a retired CEO, I will tell you this: There is nothing special about drug development as an economic activity.

Product development can be looked at in pieces. These might be (a) market projections, (b) time, (b) money, and (c) risk. Some development efforts are relatively simple. Consider developing a new flavor of Wheat Thins, to be manufactured in an existing facility that already has capacity for it. Other developments are mind-bogglingly complex, like developing man-rated space vehicles and boosters. Some are maybe not complex but are especially risky due to external factors, like the new Tesla battery plant. Simultaneously with that humongous facility being build, there are tens of thousands of researchers worldwide working to make the Tesla battery technology obsolete.

Drug development is, IMHO, somewhere in the middle. There are risks and difficulties as you carefully enumerate, but in the context of all product developments none are particularly special. Drugs probably come in somewhere below self-driving car development.

What is special and what the drug companies have successfully sold to you and others is this: Drug companies are permitted to levy a special tax on Americans through drug prices, the amount of which is determined solely by them and is not disclosed. Further, they state that the tax is being used to benefit others, again as determined by them and undisclosed. If you think about your argument from that angle for maybe a nanosecond, I think you'll see that the situation is beyond ridiculous.

All this is easily finessed by some government intervention. If such a tax is desirable, put it on top of the table -- the amount of the tax and the use of the money. If certain behavior is desirable, reward it with prizes, incentives, or guarantees to purchase at specified prices. None of this involves the government directly in drug development. I don't know the details of how NASA is motivating civilian space companies so I won't try to defend details, but it seems to be working.

I am conservative almost to the point of being Libertarian. I donated to the Libertarian party this cycle. But even the most rabid free-market capitalist will admit that there are places and times when the greatest good for the greatest number requires government intervention in markets. And the drug market is not even close to being a free market. It is a stinking cesspool of monopoly, monopsony, oligopoly, and outright fraud. No wonder we get what we're getting.

 

[Rushie]

But there are also ethical and public health issues involved when you talk about the free market in relation to medicine. For example, controlling the spread of AIDS is in everyone's interest.

Absolutely. I agree for example, a public program to eliminate polio is worth making the taxpayer fund it for the good of society. The problem happens when there's "program creep". Where do you draw the line and who makes the decisions? As a taxpayer, I might not be willing to fund eradicating a disease that, to make up an example, only effects people who were born on a Tuesday. If 6/7 of society is immune, why shouldn't we sacrifice the 1/7 and keep our money? The answer is of course, that would be cruel and inhumane. But the problem comes when you have thousands of diseases and disorders, and if you make the taxpayer responsible for everything that affects anyone, where does it end, before the taxpayer is stripped of 100% of his money?

Yea but. There are tons pf people having babies that cant cough up the $5k. What becomes of the non-payers. One thing to total car and lose it, not servicing health issues for lack of $ is another. Really complex problem.

I said they had no business having a baby, I didn't say they wouldn't anyway and then expect somebody else to pay for it. Yes, when you start thinking healthcare is everyone's "right" it's a really complex problem.

 

[paflyer]

Bruce, let's look at another example. Let's say Drug x is a combination of three compounds developed by two companies which were acquired by a third to market the drug. Compound A is priced at full retail before being added to X, as is number two, as is number three, then the final drug is again marked up to whatever price the marketer wants to charge while under patent. The Compound X has now been tripled dipped even before the final price has been set.

How much is enough? Or are you supportive of the Shrekili pricing model?

Imho, direct to consumer advertising is the worst thing to ever happen to health care. It wastes resources that would better be spent in development, and creates ailments were none really exist.

On your last point I agree.

On the rare occasions I visit some health care provider, the question is "what meds are you taking" vs "are you taking any meds." They are always sort of shocked when I say "none."

Are you involved in the industry somehow? You seem to have more than a consumer's level of knowledge.

 

[paflyer]

Bruce, are you actually paying $30k or is that just what it would cost you for an ACA marketplace plan?

I thought you were retired Navy?

Not Bruce, but as I stated previously my/spouse plan, which can ONLY be purchased through the "Marketplace", just went up from $800/mo to $1200/mo, and still has a $13000 combined deductible. The plan pays ZERO until that threshold is met.

 

[Rushie]

Bruce, let me start by saying I am a fan. I enjoy your posts, particularly the personality that projects through them. But .... you are not much of an economist.

From the perspective of a retired CEO, I will tell you this: There is nothing special about drug development as an economic activity.

Product development can be looked at in pieces. These might be (a) market projections, (b) time, (b) money, and (c) risk. Some development efforts are relatively simple. Consider developing a new flavor of Wheat Thins, to be manufactured in an existing facility that already has capacity for it. Other developments are mind-bogglingly complex, like developing man-rated space vehicles and boosters. Some are maybe not complex but are especially risky due to external factors, like the new Tesla battery plant. Simultaneously with that humongous facility being build, there are tens of thousands of researchers worldwide working to make the Tesla battery technology obsolete.

Drug development is, IMHO, somewhere in the middle. There are risks and difficulties as you carefully enumerate, but in the context of all product developments none are particularly special. Drugs probably come in somewhere below self-driving car development.

What is special and what the drug companies have successfully sold to you and others is this: Drug companies are permitted to levy a special tax on Americans through drug prices, the amount of which is determined solely by them and is not disclosed. Further, they state that the tax is being used to benefit others, again as determined by them and undisclosed. If you think about your argument from that angle for maybe a nanosecond, I think you'll see that the situation is beyond ridiculous.

All this is easily finessed by some government intervention. If such a tax is desirable, put it on top of the table -- the amount of the tax and the use of the money. If certain behavior is desirable, reward it with prizes, incentives, or guarantees to purchase at specified prices. None of this involves the government directly in drug development. I don't know the details of how NASA is motivating civilian space companies so I won't try to defend details, but it seems to be working.

I am conservative almost to the point of being Libertarian. I donated to the Libertarian party this cycle. But even the most rabid free-market capitalist will admit that there are places and times when the greatest good for the greatest number requires government intervention in markets. And the drug market is not even close to being a free market. It is a stinking cesspool of monopoly, monopsony, oligopoly, and outright fraud. No wonder we get what we're getting.

Well I think based on your last paragraph you don't disagree with Bruce's point or rather the spirit behind it; he is correct, in a TRUE free market that is uncorrupted. But in my post about the charitable foundation which negotiates very low prices for poor countries, and encourages the drug companies to keep prices high in the United States, so they can remain a going concern, you are correct. This is an example of one of the UNDISCLOSED (your term) factors keeping prices high. Bruce is right; they need to get the money back. But my point, and it seems yours also, is that there are secretive and unfair ways they do this.

The CEO of the charitable foundation uses the terms "poor countries" and "rich countries". He conspires with drug companies to keep prices high in "rich countries" so that they can be very low in "poor countries" where his foundation purchases the drugs to dispense to, presumably, poor people there. The subconscious belief of this CEO seems to be that in the "rich countries", all of us patients are rich people. He is blind to, or is willfully ignoring, the reality of Americans such as my brother in law found dead with his unfilled prescription in his hand. It is laudable to want to help poor people in other countries. But must we help them FIRST over helping the poor people of our own country? If we don't put our own countrymen before foreigners, why even BE a country? Why not just dissolve the borders and dilute ourselves into the third world.

 

[Rushie]

Imho, direct to consumer advertising is the worst thing to ever happen to health care. It wastes resources that would better be spent in development, and creates ailments were none really exist.

On the rare occasions I visit some health care provider, the question is "what meds are you taking" vs "are you taking any meds." They are always sort of shocked when I say "none."

YES. I'm convinced that Chip's statement has a lot to do with this. It did not used to be this way. Seems there's a chronological correlation.

 

[Chip Sylverne]

That's the situation my BIL was in after my sister died. I helped him find plans. It was $17,000 per year and his income was barely $30,000. He didn't get any insurance and was found dead lying on the couch with a prescription in his hand he never filled.

Gosh, that's tragic. Sorry for your loss.

Why did your brother not qualify and obtain the subsidy? At a $30k gross income, his premium would probably have been in the vicinity of $250 monthly.

 

[airdale]

... But my point, and it seems yours also, is that there are secretive and unfair ways they do this. ...

Well, sort of. I would not have chosen the word "unfair" because to me it implies a sort of game situation where these hidden ripoffs might in some cases be "fair." I would use the word "dishonest" because they are openly and fraudulently representing that these taxes somehow apply to the drugs that are being taxed. I will bet you a good steak against a McDonalds hamburger that there is no drug-company cost-accounting that does this. The pricing is simply whatever the (highly distorted) market for individual drugs will bear, irregardless of what development costs were for a particular drug.

Re "rich" and "poor" countries, that is a legitimate position. Too simplistic in my view, but that is irrelevant. What that foundation ought to be doing, however, is lobbying the "rich" to tax themselves to help the poor. Put everything on top of the table; the tax and the use of the tax. This idea of running an unknown amount of money through a totally opaque process and hoping that at the end some of it will dribble out to the poor can be called lots of things. "Naive," "egregious," and "stupid" come to mind.