Sneaky deals are keeping cheaper generic medicines off the market
latimes.com
latimes.com
Pay for delay is bad, but let’s put it into perspective. This is 0.1% of healthcare spending.
That’s the most frustrating thing about the healthcare debate in the US. Nobody has a clear idea of where all the money is going.
Germany spends 1.56% of GDP on pharmaceuticals. The US spends 2%. If we forced drug makers to give us discounts to German levels, we’d save $86 billion. To get our overall healthcare expenditures down to German levels (11% of GDP), we need to cut $1.4 trillion. Where is the rest coming from?
~16 "we spend a bit more on pharmaceuticals than Germany" sized problems.
Snarky answer, but I think probably somewhat close to the truth. There is no silver bullet.
My wife and baby stayed 3 days at the hospital after the c-section. Charge for room and board item on the bill is $30,000 for her and $50,000 for the baby. In total $80,000 for 3 days.
And it was shared room. There was another woman with her baby with them. That single hospital room's rate is $53,000 a day.
All other charges are 10% of room and board.
No idea how insurance affects prices. But here's another anecdotal evidence: When we were poor (minimum wage level), my wife was on Medicaid or Medicare; think we did not pay anything for it. I'd remember having to pay anything over $1,000 back then. Don't have the receipt to actually say how much hospital charged and how much Medicare payed for it. In that case we'd have 2 points to compare.
And that was baby No.3 that part of my life is done :D
Hmm.... I'm getting that same spidy-sense feeling I got the first time I learned about recursive functions. :)
For Germany it’s 20%, in line with the OECD average (and the average number of rooms per person is 1.8, compared to 2.4 for the US).
http://www.oecdbetterlifeindex.org/topics/housing/
So adjusting for average income housing costs about the same, and adjusting for average income US doctors make more than twice as much as German doctors. How many years of income do you think a doctor needs to buy a median house in the US and Germany? If you think the number is lower in Germany I’d like to see your numbers.
(Just in case: the relevant comparison here was US doctors vs. German doctors, not German doctors vs. German non-doctors.)
What makes you think drug prices in other countries aren't 'market' prices? Is it because they're negotiated on a country-wide level by the governments? I.e. because the buyer is a larger entity than the seller? But when the buyer is smaller than the multinational drug company, such as an individual or a medium-sized insurance company, then the price somehow is a market price?
> What about the fact that Americans are essentially subsidizing world health care via private R&D?
This tired argument again. Given that pharmaceutical companies spend more on just marketing than they do on R&D [1], isn't it more accurate to say that the US is subsidizing drug ads? How high would drug prices have to get, and how small the R&D budget, before you'd stop claiming the US is 'subsidizing' R&D? Or would whoever pays the highest price always be hailed as subsidizing R&D, to try and guilt everyone else into paying more?
> The reason a huge majority of pharma innovation happens here is because there is an incentive for it.
Given that drugs are sold internationally, pharma could continue their extortionate pricing in the US no matter where the drugs are developed, so the cost of drugs doesn't act as an incentive for where to conduct innovation.
[1] https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...
Pfizer, for example, does spend more on “SG&A” than it does on “R&D” but marketing makes up just a small part of “SG&A”.
> Pfizer topped that list with $622.3 million in ad spending last year. Pfizer came in fourth on FierceBiotech's list of R&D budgets, with $7.9 billion. That means DTC ads were less than one-tenth the size of its R&D budget.
Moreover, look across any number of research industries be it Pharma, Tech, Industrial Automation, whatever, you will find SG&A as a rule of thumb tends to roughly equal R&D spending as a total share of expenses.
[1] - https://www.fiercepharma.com/regulatory/does-pharma-spend-mo...
Annual drug R&D spending isn’t “small.” In 2014-2017, pharmaceutical R&D was about the same size as total VC investment nationwide. (There is some overlap between the two numbers.)
Additionally, the “marketing expenditure” angle is an ignorant trope. The pharmaceutical industry is as efficient as other high tech industries in concerting revenue to R&D. In 2017 US pharma companies spent 20% of revenues on R&D. That’s at the top of the range compared to companies like Intel, Facebook, Apple, and Google. https://www.theatlas.com/charts/N1Gs8E4v. Few would deny that Google is a highly innovative, R&D-heavy company, but it's at 15%.
“Market Prices” are what the market pays (ie. what the customer thinks it is worth). I think you might be confusing it with “suggested retail price” which is what companies think their product is worth.
The customers are the "market"! So the price they pay is literally the market price!
For profit insurance means getting the highest premiums while giving out the lowest payouts. That’s American capitalism to you. There is such little transparency that the big players can price set whatever they want and coerce the public into paying it. After all, it’s your life.
America is America because of the mega corps. Some give us 280 characters, some fly shit into space, some let people die because they got no paper.
Zero price transparency combined with high price insensitivity (due to extremely high value of life) and no practical substitute services (“protest” healthcare and go uninsured....at your peril) is a toxic combination. It guarantees that people are fleeced for every penny they could pay. Almost no other industry in America works in that way.
Imagine a grocery store with no listed prices. When you roll up to the register and ask for the price, the employees are baffled. How dare you question the value of those who provide you sustenance. Do you even know how many years it took to optimize our supply chain so that you can have organic chicken and avocados? Our executives have to pay off their MBA debt somehow. They then inform you that the price of your basket is probably somewhere between $100-$1000, and that it’s really up to your grocery insurance provider. You call the insurance company, which then ask for the chicken code, avocado code, toilet paper code, etc... 2 hours later, they say they can give you an answer on how much your groceries will take from your deductible, but it’s going to take a week. They can quote the same prices for a couple other in-network grocery stores too, but you have a choice to make. Leave your groceries for today and wait a week for an answer, or buy your damn groceries like 99.9% of other people and get on with your life. You decide to wait. You find out that all the prices are exorbitant, but the grocery store that’s 2 hours away would only charge $300 as opposed to $500. Alas, it’s not even worth taking off work for that.
If that sounds utterly dystopian, that’s healthcare in America today. It’s a game of name-your-price for providers. Insurance companies are in on it too. They want prices to be higher because high total spending results in higher insurance premiums. Businesses mostly shrug at the problem because of tax subsidies and because they want employees to fear losing their insurance along with their job.
Americans must be unapologetic to medical organizations complaining about single-payer (“We’ll literally go out of business! We’ll close rural hospitals! Insurance workers will lose their jobs! Long socialist wait times! Government death panels!”). They want to keep the status quo at the expense of American families. For that reason, I assign close to no value to what healthcare insiders have to say about solving the spending problem. Lastly, consider this: American employees take home less of their paycheck than employees in all other developed nations except Netherlands. Note that this takes into consideration the portion of your premiums paid by your employer, which otherwise would have been paid to you in income. That’s why tax increases seem so unfathomable in the U.S. The healthcare industry is parasitically sucking out all the slack. Imagine if all that economic rent went to education and infrastructure instead.
1) "Europe" is not single payer, England is while the two largest EU countries, Germany and France, are not.
2) Medicare is already an enormous single payer system, covering the demographic that consumes the most health care services, and does not have costs anywhere in line with Europe.
So, I think copying Europe would be reasonable, but that maybe it would be better to draw inspiration from one of the non-single-payer systems instead. The results don't seem to be any worse and it seems a bit safer to have more choices.
Additionally, I’m aware that there are different gradations of government healthcare in Europe. All of them would be better than the current system, though I’m a fan of single-payer. I was just simplifying.
I guess you could achieve cost savings by cutting reimbursement rates even further if you prohibit any alternatives. Hospitals can and do go bankrupt but it seems likely that physician salaries could also be cut. I'm sure this will drive many doctors that were borderline into retirement but I guess we're facing a physician shortage anyway.
I think there's a number of other things we could do to contain health care costs. We could expand the role of nurses and physician assistants (possibly with the aid of computer diagnostic systems). We could increase the number of doctors produced (which will in general lower salaries). We could subsidize medical education more, so doctors graduate with less debt, in exchange for accepting a lower salary later. We could have better conversations around end-of-life care, since many patients choose treatment plans that doctors would not chose for themselves, but might not if things were explained better. We could have official guidelines to establish when certain tests are necessary using evidence-based medicine, to limit thoughtless CYA testing for liability purposes if it isn't medically warranted.
So, my feelings on single payer are tied to whether it will make it more or less likely that we can explore these things. Given the current state of our political discourse I'm not encouraged.
https://fee.org/articles/the-medical-cartel-is-keeping-healt...
We absolutely need more physicians. Med school should be cheaper and shorter in duration, but the AMA has been fixing the supply of doctors like a cartel in the name of “quality.” They’re defending the economic moat for current physicians by using a false front, nothing more.
Also, people started believing that end-of-life care is a problem in the U.S. partly because of misleading statistics. Let’s say your grandma is 75 and has complications due to pneumonia. The situation spirals out of control and she becomes a really costly patient. However, she has a reasonable chance of living to 85, giving you 10 more (quite valuable) years with her. No one will argue that we should give up on her. However, if she dies after all that expense, she will feed that stupid statistic about X% of Medicare spending in the last X months/years. Many people die when they have a reasonable probability of living. There are edge cases, like people that somehow enter a catatonic state or get some rare disease, but they’re overblown. Lastly, there is a subgroup of people that you just can’t “control costs” on, like Alzheimer’s patients. What kind of sick society would give up on them?
End-of-life care is a red herring in the U.S. healthcare debate, as is overconsumption of diagnostic screening. It is certainly true that America has a culture of screening but 1. MRIs shouldn’t cost $1500, so its hard to fairly compare the magnitude vs. Europe where the healthcare system isn’t broken 2. Excessively high treatment costs are so much more of a problem that this is a small factor in comparison 3. There are benefits to screening which obviously net out the cost to some degree. Screening really shouldn’t feature much in the debate at all in my opinion, nor should healthcare consumption levels for that matter. For some perspective, a study estimated that $45 billion is spent on “defensive medicine” meant to avoid lawsuits out of the $2.3 trillion spent on healthcare in 2008. However, if you ask some industry insiders why healthcare costs are so high, they might quickly inform you of defensive medicine and medical liability.
There's no citation, but I actually find the part about the hours to be extremely surprising if there are half as many of them doing the same work. Do Germans consume less than half as much medical care? US doctors don't work particularly short hours (even after residency), so it's very surprising if Germans work more considering they usually get much more vacation.
> the AMA has been fixing the supply of doctors
As far as I am aware, the supply of doctors in the US is determined by the number of Medicare-funded residency slots, which is set by Congress.
> No one will argue that we should give up on her. > What kind of sick society would give up on them?
No one would argue that for your specific examples, but with things like end stage cancer it can be more tricky. Part of the problem is that it is too often framed around "giving up" when it comes to aggressive interventions that are unlikely to help. But doctors who see the system from the inside would generally not choose that path for themselves, for reasons totally unrelated to cost. Too aggressive interventions usually don't make people live longer (they often die sooner!) and can really degrade any remaining quality of life. Atul Gawande wrote a book about it [1] (interestingly, he's also one of the authors of the paper you cited).
Excessive testing probably isn't purely a defensive medicine thing. I don't have a citation, but apparently when the medical group ordering the tests has a financial interest in the testing center, hugely more testing is done. And of course when the guidelines are unclear it's easier to default to just ordering things, it doesn't cost the doctor anything. There's another article (again by Atul) that touches on it [2].
It's interesting, if you talk to doctors (in a non-professional setting) they'll generally tell you their profession is getting worse. That they're more and more overworked with no change in pay. And if you look at the statistics, physician pay hasn't gone anywhere while health care costs have skyrocketed. [3]
[1] https://www.amazon.com/Being-Mortal-Medicine-What-Matters/dp..., https://www.youtube.com/watch?v=mviU9OeufA0
[2] https://www.newyorker.com/magazine/2009/06/01/the-cost-conun...
[3] https://slatestarcodex.com/2017/02/09/considerations-on-cost...
No, it's not. It's a multipayer component (it involves both federal government and non-federal — both private and state government — payers, the latter, private specifically, exclusively for Part D, and both together in an arrangement loosely similar to the ACA with a default public option for the combination of Parts A-C) of a multipayer system, with the government part forbidden to use it's buying power to negotiate drug prices but instead required to accept prices set by other participants in private markets.
We have single-payer k-12 education at state level, where the teachers' unions fund election campaigns, and when it's time to negotiate education contracts, those politicians are "surprisingly" very favorable to their funders and former colleagues.
Other government-run single-payer projects - Amtrak, USPS, etc - are not exactly beacons of efficiency either.
You can trace it in California politics - the citizens were "in dire need" of high-speed rail back when construction unions poured significant funds into Sacramento, which was then overtaken by water infrastructure buildout (and respective rise of political contributions from farming industry), today it's our youngsters' education that needs critical intervention (and, by extension, underperforming pension plans of educators retired long ago).
Healthcare providers are also just as mystified as to where all the money goes, not the workers doing the direct patient care.