Enbrel? They just received another patent extension, too.
This is what government granted monopolies look like.
This is what government granted monopolies look like.
Long term don't these companies think that charging outrageous prices for drugs will cause a future voter/government backlash of some sort... or maybe they think they should extract profits now because of a chance of drug price regulation coming to the US in the future?
No, because it demonstrably won't. People say they're angry and then do nothing about it. The US has an entire political party angrily decrying any effort to regulate healthcare as socialist slavery.
The drug companies know they'll be just fine. Maybe some token slaps on the wrist and public performance of cosmetic changes to appease people now and then, but nothing will happen to them.
Argubly regulation is the problem we're in this mess. Do you think an epipen would cost $600 if there weren't a Government granted monopoly?
We have two parties who love the current amount of regulations on competition - you need to go to an AMA approved medical school to become a doctor, there aren't H1Bs for health care workers, and the government gets to pick and chose who's allowed to sell medication.
They just disagree on the amount of subsidies for poor people. One party thinks prepaid consumption with cross subsidies is insurance and the other party thinks that insurance shouldn't be so binding if you get sick.
But in terms of overall effect, one can't ignore other nations which pay much lower prices for healthcare with both regulation for drug patents, as well as regulation on drug prices. That combination manages to deliver better care at lower costs than the US (we pay on average double per capita). So I don't think one can generically fault "regulation" for a poorly performing health market in the US.
You're absolutely right, however, I do think the worst parts of our medical system exist as consequences of regulation.
The mandate that emergency rooms treat anyone who enters is onerous and there's no free lunch, paying customers are stuck with the bill.
The licencing system isn't optimal for cost effective care.
There's a lot to be desired for people who favor supply side solutions to expensive problems.
I don't think that's onerous, I think that is a minimal, and admittedly imperfect, expression of our societal intent that people shouldn't die unnecessarily in emergency rooms - either from lack of being able to pay; nor from a practical standpoint, lack or delay of on-hand proof of ability to pay.
Removing those regulations would cause all sorts of other problems. Someone arrives in an ambulance near-death, if I lack morals then one level of maximized extraction price is to have those patients commit to pay a value that represents the earning potential for that person for the rest of their life. They have to agree before getting admitted. Even more profitable, if I judge that person as having a well connected social network, I can charge even more because I know their friends and colleagues would chip in to save them... I'm not sure how a competitive market with no regulation changes the worst case for this transaction - if someone is near death then moving on to another emergency room is out of the question.
I see universal healthcare with a shared cost-pool as the lowest overhead way to provide for our social moral desires (but then I'm not in fear of the regulation with may be needed to implement that policy).
Insurace with a shared risk pool is a technically workable, but adds even more overhead, and ends up a more expensive way to do the same thing... but again regulations are involved (and fixing very flawed ones at that).
Actual markets don't work that way. If you could actually make that much money then someone would open a competing emergency room right across the street, let everyone know that they charge $1 less and take all the business. Then the first emergency room would charge $2 less to take it back, until they're both charging reasonable prices.
It's the same reason you don't have to sign your life away to buy food even though you would die without it.
The problem in the US is that the regulations on the market for medical services work almost the exact opposite of that. There is no price transparency at all so you have no idea which facilities are more expensive. And if someone wants to open a competing facility, they have to get a Certificate of Need proving that the existing facilities don't have enough capacity. Even though having enough capacity doesn't preclude charging outrageous prices in the absence of competition.
> I see universal healthcare with a shared cost-pool as the lowest overhead way to provide for our social moral desires (but then I'm not in fear of the regulation with may be needed to implement that policy).
The existing US system is pure corruption. It's heavily regulated but the regulations are a result of regulatory capture by insurance companies (who want higher costs because higher costs means more vig), and all the industries the insurance money pays for like pharma.
The result is that medicine in the US is outrageously expensive. But the expense doesn't go away even with universal coverage unless you fix the regulations, and if you did that then people would be able to afford medicine out of pocket without insurance.
Isn't that exactly what's happening in slower motion with the incredible price hikes in many drugs such as insulin? And you assume that the neighborhood can sustain two emergency rooms - a second competitor isn't going to arise if the setup costs are high and the competitor can't undercut and survive the competition phase. This is exactly why there aren't multiple competitors to residential ISPs, because after the risk and costs are factored in setting up overcapacity for a market isn't a good investment.
Further if you look at the drug markets, sufficient cost and time barriers exist and allow even makers of generic drugs (with no patent monopolies) to charge inhuman rates for drugs. And generally investors are not going to back efforts to fund a head-to-head competitive slugfest when the market of users for a given drug is basically of fixed size. Again building overcapacity is generally avoided in these markets because of the high entry barriers.
https://www.nytimes.com/2017/04/14/business/lannett-drug-pri...
Again, the market for medicine suffers from regulatory capture. The regulations make it prohibitively expensive (literally millions of dollars) for new competitors to enter the market, which allows the incumbents to conspire to fix prices.
If we had the same standards for manufacturing medicine as we have for manufacturing food, that wouldn't be happening.
> And you assume that the neighborhood can sustain two emergency rooms - a second competitor isn't going to arise if the setup costs are high and the competitor can't undercut and survive the competition phase.
All you need is for the profits from entering the market to exceed the entry cost, which is exactly the case when the existing provider is charging outrageously high prices.
It is certainly true that adding a competitor will increase total costs. But that means total costs will at most double. That's not good, but it's not anywhere near as bad as having a monopoly that can demand your lifetime earnings in exchange for saving your life.
And everybody knows that to begin with, which is why you get this:
> This is exactly why there aren't multiple competitors to residential ISPs, because after the risk and costs are factored in setting up overcapacity for a market isn't a good investment.
It would be a good investment if the incumbent ISP was charging $500/month for residential internet service. But they know if they did that then it would open the door to a competitor who could charge $400/month and still pay the cost of duplicating the entire infrastructure.
So instead the incumbent charges $50-$100/month, even in areas where they have a monopoly, because they know that price is low enough to deter new competitors from entering.
A credible threat of competition is enough to prevent prices from becoming completely outrageous even in areas where there continues to be a monopoly in practice. Only monopolies under no threat of competition, like the ones enforced through patents or Certificate of Need laws, can charge outrageous prices without that happening.
The competition doesn't pay the cost of duplicating production - not after the competition has lowered the price. At least the chance of that is why no one tries to enter.
To make even the generics at a reasonable quality is a barrier sufficient in an of itself. And a competitor risks the incumbent lowering the prices to cut off the incumbent - no investor is signing up for that expensive fight as evidenced by the article... generics are rising in price to reflecting the effectiveness of the barriers. (well and lack of price regulation by our healthcare system)
But that's the whole point -- what is causing the barriers to be so high? Regulatory capture isn't just patents. Drug companies like the fact that a would-be competitor has to pay millions of dollars in regulatory compliance costs to enter the market. Because it should cost them $1 to make drugs they sell for $1.25, but apply enough red tape and it costs them $100 to make drugs they can sell for $300. They still can't charge $10,000 because that would invite competitors, but the $99 in overhead is what allows them to charge $300 for something that should cost $1.25. The overhead raises the barrier to competition, resulting in less competition.
And the fact that most of the drugs are paid for by insurance companies or the government only exacerbates the situation, because they're deep pocketed bureaucracies under orders to pay whatever price the seller sets. No surprise the sellers take advantage of that.
> (well and lack of price regulation by our healthcare system)
The problem with price regulation is that it only solves a small part of the problem. If you're wasting $99 in overhead, you might shave off some of the profit margins but you're still spending $100 to produce something that should cost $1 and sell for <$2. You have to actually address the regulatory costs -- and if you did that then you would have competition.
Go try to make and sell some generic drugs and see how far you get. Spoiler: you're very wrong.
I agree with about 95% of this: https://market-ticker.org/akcs-www?post=231949
We just need smarter regulations:
> every medical facility needs to have a price for each billing code
> every healthcare facility has to publish their prices
> heatlh care facilities must honor their published prices for everyone
> if someone needs car and they can't pay, the government will pay for the care but the government holds a debt and can garnish wages / use tax refunds / credit welfare to cover the debt
If people could shop on price for routine care, medical companies would become more efficient and extend those prices to people in an emergency
That's not 1/1000. Not 1/1000000. Not 1/1000000000. Zero. Entire companies get shut down because of a single mistake. Think about how ridiculous that is. A company owns 5 separate factories, and in one of them a product was produced that may, in a panel of doctor's opinions, have caused the death of a patient (mostly one who would have died without the medicine), and all 5 are immediately shut down until an extensive investigation is not just run, but run in an approved manner by outside experts, and the resulting cause was both found, approved by the panel of doctors and the government.
And of course, a company is supposed to take care of any patient they damaged, for life, full treatment for all ailments (not just the one that had something to do with what they did), ...
We used to let people prepare medicines in corner shops with at least a few ingredients they procured themselves. Needless to say, pretty cheap. Mistakes were ... not common, but certainly more so than today.
Until we find a balance between care provided and acceptable risk there will be no reasonably priced healthcare. Until we stop giving health at any cost, and count on "management" mistakes to do cost saving (regulating that people get thrown out of hospital the day after open heart surgery unless there are complications. Well, if you want to survive, you bloody well hope your doctor finds some complication. Needless to say, proposals for making it same day are on the table. Good luck).
And of course, like good capitalists faced with demands like this, companies don't say "are you bloody insane ? This will bankrupt the entire country", they say "How secure do you want it to be ? Perhaps even a bit more ? I mean we can always do better. That'll be $xxx(xxxxxxxxxxxxxxxx)".
Go ask the people who get jobs as billers - most hosptials have more billers than beds, they can sort it out.
Before you go to surgery agree on the price of everything and ask for a video so you can verify the work was done as billed and there wasn't any padding. In an emergency situation, you're entitled to the price they advertise. IF you can't afford it, the government picks up the bill and maybe you pay for it, maybe you don't. If you want insurance, you can buy insurance but let the insurers use every actuarially relevant bit of information so the insurance works as insurance
Several years ago, I had my gallbladder out in an emergency surgery. I was in intense, intense pain. My friends worried I was having a heart attack. They drove me to the hospital, because I could barely stand, let alone drive. Such intense pain I was barely conscious.
In the ER, I remember they did an ultrasound to determine it was my gallbladder, and then pumped me so full of morphine I was fully incoherent. Still in agonizing pain.
Then, a few hours later, they cut me open and pulled it out. It was starting to go necrotic. They said, had I waited a week, I simply would have died of blood poisoning.
At no point was I in any condition to agree to a price on anything--incoherent from pain, and the morphine. I was in no position to shop around. My friends didn't even know what was wrong with me, they just drove me to the ER because we all thought I was dying.
Even if I had been able to agree to anything--which I couldn't, due to pain--having a video recording of the surgery would have done absolutely nothing for me.
Oh, and while I was in the ER, I did see a couple of gunshot victims--fully unconscious--wheeled through from ambulances. What are they agreeing to??
Man, I don't think you've ever really experienced the health system, and I don't think you've thought about your plan.
(Sadly, I also don't think people's real experiences are going to change your mind, either, but it'd be great if you did think about how nonsensical that fix you're proposing is.)
You get to pay the advertised price which is going to be much lower than the myster price today.
Regarding gun shots - I think people with gang tattoos shouldn't get healthcare for bullet / stab wounds. Let gang bangers quash their own beefs.
And you obviously haven't thought one bit about the very common situation where someone without health problems is suddenly struck by them, and in a way that makes them unable to price-negotiate.
You're ignoring the reality of the health care world, and hey, fine, it's a free country, but it doesn't make you look like a reasonable or thoughtful person. It makes you look like someone with a blind faith in an ideology.
The whole point of negotiation under duress is rendered moot when the person under duress gets to pay prices that are presented to people who aren't under duress.
Let me craft an analogy - once upon a time I was going on a road trip and forgot to get my oil changed until the day of the trip. I called up the dealer and asked if they could sneak me in - they could, and I got to pay the same oil change price as someone who scheduled it two weeks in advance. The dealer didn't jack up the price because I needed an oil change immediately and they couldn't because they list their prices and are legally bound to honor them.
I think healthcare should have the same thing - every medical facility should have to publish their prices and they should be bound to honor them.
And in my system, if you can't pay, you're not going to debtor's prison. You get to go on your way and you might see less social security or tax refunds until you've made good on your debt.
Again, you don't know a single thing about the gunshot victims wheeled through the ER the night I was there.
You keep bringing up gang imagery, or trying to say somehow that those gunshot victims I saw deserved it or don't deserve medical care (they're just gang bangers and you want to call the cops??? no, they're fucking gunshot victims, and you don't know shit about them).
That is stupid, offensive, and wrong.
You don't know a thing about them and you've now twice inserted your completely-made-up-out-of-your-own-head "gang bangers" or "teardrop tattoos" shit.
Where the fuck is this gang banger garbage coming from?
You know what's offensive? I pay more than my fair share healthcare expenses and I don't get better access to care than lazy people.
You know what's stupid? Health insurers can't adjust my policy based on my gender, but auto insurers can.
You know what's wrong? The status quo that makes it better to present to an E.R as a lazy jobless poor person than someone who's working poor.
You know the system is bad, why are you defending it? Why don't you go out and tell those gang bangers to put down their guns? They won't, and you're too scared to talk to them because you know deep down that violent poor people in bad parts of town are dangerous and beyond reason.
You don't know shit about these gunshot victims but in your mind "gunshot victim = gang member".
Do you honestly really think that everyone who has been shot and taken to a hospital ER is a gang member?
Honestly, really? No one who's been shot isn't in a gang?
If your answer is "yes, every gunshot victim is a gang member" then you're a real prize moron, no two ways around it.
Neck tattoos, chains, bad attitude, won't tell the police who shot them = probable gang member
Wearing a suit, eager to talk to the police = probably not a gang member.
DO YOU UNDERSTAND???????
I'm talking about gun shot victims who look like gang members.
You're talking about people you've seen. If those people don't look like gang bangers, that's fine, then they can get help.
Secondly, what about people who become destitute because of a medical procedure and do what they sometimes do in Holland ? (if you're fucked on bills and the state comes after you and you would become homeless, simply rob places until you get convicted for 10 years, and stay in prison for 10 years. Free tv and internet, and nobody garnishes any wages. Outside you wouldn't be able to pay rent).
Well articulated counterpoint: http://slatestarcodex.com/2016/08/29/reverse-voxsplaining-dr...
Also, we live in a country where most places they don't even allow opening a new hospital without the permission of surrounding hospitals, and all of the recent healthcare regulations have encouraged a seriously problematic consolidation just like the big banks.
As an industry, healthcare is so over-regulated it isn't even funny. The good news is that drug prices are still generally falling outside of big examples like Daraprim and Epipens and there are fairly effective solutions to the spikes we could have if the FDA would get onto more reciprocity with other nations: http://marginalrevolution.com/marginalrevolution/2016/02/the...
Also relevant, the US Cost disease: http://slatestarcodex.com/2017/02/09/considerations-on-cost-...
Also, the comparison there in the drug vs the chair market there is poor too. The key difference between manufacturing drugs and chairs (as in the example), is that anyone could enter the chair making with one guys who has had high school woodshop. Manufacturing a drug has a much much higher bar...
If that's what you got from SSC's cost disease article, you might have some bias in your framework.
No, that's not even arguable. Other countries with even more highly regulated healthcare manage to provide it for much, much less. You're just regurgitating mindless libertarian talking points that have no relation to the real world.
The particular form of regulation in the US may be a problem, but regulation in general is demonstrably not.
IF we regulated single payer health care into existence, we'd have cheaper care. The problem isn't regulation per se, it's our current regulations.
Party B: Remove old regulations which disadvantage pharma
All property is government intervention. And property is good. Because property is capitalism, and capitalism is God's will.
/s
Property existed long before third-party regulation.
Rather than ownership being enforced by a third party with monopoly on violence, it was enforced by the threat of escalating violence from the property owners themselves.
Eg. You take one goat from my herd and refuse to give it back, and we are now at war. Result: Nobody takes any goats.
So the property was defined by mutual understanding and mutual enforcement, not regulation.
This is still done in some societies and sub cultures (Eg. Criminals). Even animals do it, with things like territory or sharing food from a kill.
A mutual cultural belief in property strengthens this mechanism and makes it work more smoothly. This cultural belief is part of what ""free-market" types" (sic) would like to spread.
Force protects the object, sometimes the government exerts the force sometimes not.
But if I show up with a better club then all his stuff is now mine. A third party enforcing certain resource allocations with overwhelming force is different to everyone defending their own stuff.
Government is the difference between property rights and might-makes-right.
Bingo. Ownership exists without government - ownership exists to the extent others respect the claim.
Government is the difference between property rights and might-makes-right.
Governments are legitimate because of their might. Why do you think the basic social contract between authorities and the governed is "obedience for protection"?
Even in places like East Germany or prison where overt markets are suppressed, people still exchange things with each other, even developing bootleg currencies such as loose cigarettes. And if there’s a sudden shortage of a specific good inside these black markets, the price will go up; likewise if there’s a sudden surplus, the price will go down; likewise; if there’s a sudden surplus in whatever good is used as a currency (e.g. cigarettes) then there will be inflation, at least until its cost-effective to switch currencies.
"Ultima ratio regum" is an appalling way to enforce fairness, but it doesn't seem to me that greed in general will stop short of a true class war or an external threat ala a World War.
Also to be clear I am definitely not advocating this route, I'm trying to figure out what anyone can do to prevent it and thus far I am at a loss.
You quietly find another path and make these insanely expensive drugs vastly less relevant. The real challenge is effectively spreading the word. Something truly disruptive in this area seems to be about the most offensive thing a human being can do.
I just don't understand how people can make such a blatantly destructive set of choices when it's really clear that it will come back and bite them in a way even the most psychopathically mercenary people should understand, let alone anyone with a more advanced morality than "I got mine".
I spent ~5.7 years homeless while classist assholes (online and off) shit all over me.
I believe part of this is happenstance. Humans are little monkeys with brains designed to parse a social order for a tribe of 150 members. With 7 billion people on the planet and a global economy by necessity, the paradigms developed to parse our tribe break in the face of a sudden new world order.
It is actively dangerous to give a damn about the welfare of other people. Some of that is also happenstance. Strangers from extremely different backgrounds face substantial obstacles to good communication.
But, we really need to solve this, even if we are all cold hearted sociopaths who don't give a damn about anyone but ourselves. Like you said: If we don't, this will eventually go very bad places.
Given the recent mass shooting in Las Vegas, the record destruction of hurricanes in Texas and Florida, and the ongoing fires in California, I think it is reasonable to assert that our choices are already coming back to bite us. We can do something more sensible or continue to suffer the consequences.
Businesses have no concern over their long term viability. Executives are not incentivized in anyway to care about long term interests. In fact all their bonuses and compensation explicitly reward the short term. Compounding the problem is a simple cost benefit analysis means they've already costed out the future "backlash," and still find themselves to be more profitable.
The "long term" is nothing but a mental exercise with no real world manifestation for businesses. The closest you can probably get to it having meaning is for business school grad students doing case studies.
[1] There isn't really any such thing, at least as a way to resurrect patents that would otherwise expire.
The best solution is probably to simply drop patent extensions for these things and allow generic drug manufacturers to do what they do best, but if you do that too early you risk damaging funding for new drug development. Too late and you wind up with companies just building up piles of cash like we have today. You need to hit that point of "we need to develop new drugs to make a profit" - what that is, I'm not sure.
Why aren't more American's up in arms about this?
Establish strict price controls, ban drug patents, and make production volume guarantees a hard condition of receiving federal drug discovery money. And the money should be large enough to be worth it. Ideally, 90%+ of a drug company's income should be from federal contracts and not from sales.
And if that turns out to not be feasible, just nationalize them. The federal government can hire drug-discovery chemists and manufacture the drugs themselves.
You'll have a hard time selling a plan like that to anyone even slightly right leaning - think about it politically for a second. The government decides what drug development gets priority? Remember the death panels talk from a few years ago?
It's viable, but involves a lot of trust in government, so much that even as a fairly left-leaning person myself I'd have to think twice about it.
This might become necessary if we're to avoid an antibiotic crisis. Bacteria are becoming resistant to antibiotics at a greater rate than antibiotics are being developed. The problem isn't that we've tapped out what antibiotics can do, but rather that drug companies have little to no interest in developing antibiotics because there's very little money in it. Antibiotics are un-sexy drugs that don't make for good marketing campaigns.
Ultimately, if we want to continue to have effective antibiotics, a large entity with no profit motive, nigh infinite money, and a monopoly on force (i.e. the government) will have to get involved.
They should be non-profits.
Due to the risk, investors are looking for high returns from successful drugs.
Now imagine if we had a regulation that both forbade universities from issuing patents and limited the price of any drug that is initially based on public funded research.
Unfortunately, no other class of drug class has worked, and the traditional delivery methods (ie - pill form) caused measurable hearing damage, just from the trial periods.
Good luck!
Edit: Sorry, read below that you need the trans-dermal version.