12 ms·

Not condoning this behavior at all, but don't we see this with the lack of equal access to drugs all the time? :(

cortesoft 10y ago
Yes; this is why using the free market to set prices in health care is always such a troubling thing. People don't like the idea of putting a price on their health.
- gwright 10y ago
  Please don't blame the free market for these high prices. This is a highly regulated medical device market with patent protections and insurance market complications. The price hikes would immediately attract lower-cost competitors if this were truly a free market.
  - Ironchefpython 10y ago
    > The price hikes would immediately attract lower-cost competitors if this were truly a free market. Any participants in a free market for a product with inelastic demand (e.g. something you need to stay alive) and non-trivial entry costs immediately implements price fixing in the absence of regulation. When life-saving devices that require a significant supply chain to manufacture capture the bulk of consumer surplus from the majority of potential customers (and the poorest are left to die), the free market is working as intended, efficiently allocating resources to maximize profits.
    - gwright 10y ago
      The non-trivial entry costs are there because of regulations and the legal environment regarding liability. You can view the high price as the free-market finding the intersection of supply and demand given the regulatory and legal constraints but that seems like a less than useful way of understanding 'free-market'.
      - hackuser 10y ago
        > The non-trivial entry costs are there because of regulations and the legal environment regarding liability I think that misplaces the cause. The requirement for safety and the high cost of failure is what creates those regulations and liabilities. Theoretically, we could eliminate the regulations and liabilities and just let people die, but 1) that's a really bad idea, and 2) it would be excluding from the market mechanism (i.e., externalizing) the most important aspect of the product, its safety.
      - Ironchefpython 10y ago
        > You can view the high price as the free-market finding the intersection of supply and demand given the regulatory and legal constraints but that seems like a less than useful way of understanding 'free-market'. Stop using regulation as a stalking horse for your argument. Everything you need to know about the price of epi pens you can derive from inelastic demand (people don't want to die), and barriers to entry (copyrighted brand, network of doctors writing prescriptions, and yes, FDA approval so these things don't kill people). The price is high because people will pay almost anything to not die. This drives the price point up to capture consumer surplus. It's easy to understand. The Free Market isn't a magic bullet that will drive down these prices. For one simple reason. Rational actors don't compete on price. I'm going to repeat this, because so many people don't get it. Rational actors don't compete on price. Rational actors will spend up to their expected monopoly profits to create a Nash Equilibrium where new entrants into a market will be unprofitable. The simplest way to do this is through dumping. (see "competition" in the generic drug market for example) Why doesn't this happen in every market? Regulation. Maybe you don't like that in unregulated markets, people starve, are poisoned, are denied treatment, and worked like slaves. Because that's how you maximize profit, by minimizing your own costs by maximizing externalized costs. So you'll think anything to avoid that realization. Like blame 'regulation' for what's obviously rationally maximizing profits. And if you want to know how exactly the 'free-market' for medical supplies would work without regulation, just look at the 1800s. Demand was still inelastic, so prices were high, quality was low (for obvious reasons), and competition was still stupid, because price fixing and dumping were still more profitable than competing on price.
        10y ago
    - ancap 10y ago
      I can think of many products which are life-saving which are readily available from countless producers for relatively cheap. The difference here is just as gwright has pointed out and you have a corpus of regulation which makes this particular product more expensive and/or chokes out competition. The only sectors of the economy where significant, lasting shortages occur are the ones most heavily regulated.
      - hackuser 10y ago
        > The only sectors of the economy where significant, lasting shortages occur are the ones most heavily regulated That's not what economic theory (and practice) say, I'm pretty sure. For example, unregulated electrical, communication (including Internet service) and transportation markets have resulted in shortages in rural areas. Unregulated food and housing markets (and many other markets, including Internet service) result in shortages for poor people. Unregulated fishing creates shortages of fish - a 'tragedy of the commons'. Monopolies and oligopolies eliminate whole categories of products. The free market is very good for some purposes, but it's not a benevolent God that finds solutions to all our problems. It's just a very useful tool in the toolkit.
        ancap 10y ago
        I would first like to point out that in the context of this conversation the definition for shortage I am using is that there is a shortage of a good or service where it once was readily available. Sure I could, say, take a rocket ship, to mars and denounce the absence of internet connectivity, but that's not what I'm referring to here. >unregulated electrical, communication (including Internet service) and transportation markets have resulted in shortages in rural areas Again, according to my above definition this is a slightly different topic, but it seems highly dubious that a lack of regulation is what has resulted in shortages of internet service is some podunk town. >Unregulated food and housing markets (and many other markets, including Internet service) result in shortages for poor people The most significant factor limiting the availability of low cost housing is municipal regulation, not the absence of it. I'm not aware of any place in a developed nation which has a shortage of food. It seems what you are getting at is the options may not be affordable for some, but that is a different concept from a shortage. Furthermore, it is a bit of a stretch to refer to the food and housing markets as "unregulated". If there are any shortages in these markets it's certainly not due to a lack of regulation. >Unregulated fishing creates shortages of fish - a 'tragedy of the commons' I have commented on the idea of "tragedy of the commons" many times. It generally leads to quite a tangent in the conversation, but if you're truly interested I'd be happy to discuss why the problem does not lie with a lack of regulation. >Monopolies and oligopolies eliminate whole categories of products. A true, lasting monopoly is only possible through market regulation which strangles out competition. All the textbook examples of "monopolies" (Standard Oil) were not monopolies at all. In fact in the early days of electricity there was so much competition in the big cities that the big guys lobbied hard to get their monopoly privilege.
    - WalterBright 10y ago
      Food is necessary for life, but food (in the US) is cheap, and food prices are not regulated.
      - gpderetta 10y ago
        There is also no government protected monopoly on food (although not for lack of trying).
- refurb 10y ago
  People don't like the idea of putting a price on their health. They don't like it, but healthcare costs money and money is a limited resource. That's reality. In the US system it's the insurance companies that limit access (or the cost to an individual). In other countries it's the gov't.
  - Thlom 10y ago
    Yes, but in other countries everyone gets the same access to health care and people don't die on the street because they can't afford a commodity like an epipen! Though you might die in a hospital bed because the government wont spend a million euros a week on medication that may or may not give you a year more to live.
mikeash 10y ago
Of course. This case is particularly interesting because the device/drug combo is so commonly needed. But you'll find many other stories of manufacturers hiking the price of drugs people need to live, and the resulting backlash. Look up Martin Shkreli for a couple of recent examples that got attention.
actuallyalys 10y ago
Yep. :( We also see drug shortages because the lone manufacturer temporarily or permanently stops manufacturing. For example, there's an ongoing injectable estrogen shortage because the manufacturer has an issue sourcing a key ingredient [0] [1]. (Thankfully, other forms and dosages are not impacted.) [0]: https://www.theguardian.com/commentisfree/2016/aug/13/estrogen-shortage-trans-women-impact https://www.theguardian.com/commentisfree/2016/aug/13/estrog... [1]: http://www.out.com/out-exclusives/2016/8/04/exclusive-theres-injectable-estrogen-shortage-thats-leaving-trans-women http://www.out.com/out-exclusives/2016/8/04/exclusive-theres...
- refurb 10y ago
  One of the reasons for drug shortages is because it's just not profitable to produce the drugs when you roll in all the regulatory costs.
tcbawo 10y ago
It seems especially egregious when we are talking about a dispenser versus the drug itself.

Yes; this is why using the free market to set prices in health care is always such a troubling thing. People don't like the idea of putting a price on their health.

gwright 10y ago
Please don't blame the free market for these high prices. This is a highly regulated medical device market with patent protections and insurance market complications. The price hikes would immediately attract lower-cost competitors if this were truly a free market.
- Ironchefpython 10y ago
  > The price hikes would immediately attract lower-cost competitors if this were truly a free market. Any participants in a free market for a product with inelastic demand (e.g. something you need to stay alive) and non-trivial entry costs immediately implements price fixing in the absence of regulation. When life-saving devices that require a significant supply chain to manufacture capture the bulk of consumer surplus from the majority of potential customers (and the poorest are left to die), the free market is working as intended, efficiently allocating resources to maximize profits.
  - gwright 10y ago
    The non-trivial entry costs are there because of regulations and the legal environment regarding liability. You can view the high price as the free-market finding the intersection of supply and demand given the regulatory and legal constraints but that seems like a less than useful way of understanding 'free-market'.
    - hackuser 10y ago
      > The non-trivial entry costs are there because of regulations and the legal environment regarding liability I think that misplaces the cause. The requirement for safety and the high cost of failure is what creates those regulations and liabilities. Theoretically, we could eliminate the regulations and liabilities and just let people die, but 1) that's a really bad idea, and 2) it would be excluding from the market mechanism (i.e., externalizing) the most important aspect of the product, its safety.
    - Ironchefpython 10y ago
      > You can view the high price as the free-market finding the intersection of supply and demand given the regulatory and legal constraints but that seems like a less than useful way of understanding 'free-market'. Stop using regulation as a stalking horse for your argument. Everything you need to know about the price of epi pens you can derive from inelastic demand (people don't want to die), and barriers to entry (copyrighted brand, network of doctors writing prescriptions, and yes, FDA approval so these things don't kill people). The price is high because people will pay almost anything to not die. This drives the price point up to capture consumer surplus. It's easy to understand. The Free Market isn't a magic bullet that will drive down these prices. For one simple reason. Rational actors don't compete on price. I'm going to repeat this, because so many people don't get it. Rational actors don't compete on price. Rational actors will spend up to their expected monopoly profits to create a Nash Equilibrium where new entrants into a market will be unprofitable. The simplest way to do this is through dumping. (see "competition" in the generic drug market for example) Why doesn't this happen in every market? Regulation. Maybe you don't like that in unregulated markets, people starve, are poisoned, are denied treatment, and worked like slaves. Because that's how you maximize profit, by minimizing your own costs by maximizing externalized costs. So you'll think anything to avoid that realization. Like blame 'regulation' for what's obviously rationally maximizing profits. And if you want to know how exactly the 'free-market' for medical supplies would work without regulation, just look at the 1800s. Demand was still inelastic, so prices were high, quality was low (for obvious reasons), and competition was still stupid, because price fixing and dumping were still more profitable than competing on price.
      - 10y ago
  - ancap 10y ago
    I can think of many products which are life-saving which are readily available from countless producers for relatively cheap. The difference here is just as gwright has pointed out and you have a corpus of regulation which makes this particular product more expensive and/or chokes out competition. The only sectors of the economy where significant, lasting shortages occur are the ones most heavily regulated.
    - hackuser 10y ago
      > The only sectors of the economy where significant, lasting shortages occur are the ones most heavily regulated That's not what economic theory (and practice) say, I'm pretty sure. For example, unregulated electrical, communication (including Internet service) and transportation markets have resulted in shortages in rural areas. Unregulated food and housing markets (and many other markets, including Internet service) result in shortages for poor people. Unregulated fishing creates shortages of fish - a 'tragedy of the commons'. Monopolies and oligopolies eliminate whole categories of products. The free market is very good for some purposes, but it's not a benevolent God that finds solutions to all our problems. It's just a very useful tool in the toolkit.
      - ancap 10y ago
        I would first like to point out that in the context of this conversation the definition for shortage I am using is that there is a shortage of a good or service where it once was readily available. Sure I could, say, take a rocket ship, to mars and denounce the absence of internet connectivity, but that's not what I'm referring to here. >unregulated electrical, communication (including Internet service) and transportation markets have resulted in shortages in rural areas Again, according to my above definition this is a slightly different topic, but it seems highly dubious that a lack of regulation is what has resulted in shortages of internet service is some podunk town. >Unregulated food and housing markets (and many other markets, including Internet service) result in shortages for poor people The most significant factor limiting the availability of low cost housing is municipal regulation, not the absence of it. I'm not aware of any place in a developed nation which has a shortage of food. It seems what you are getting at is the options may not be affordable for some, but that is a different concept from a shortage. Furthermore, it is a bit of a stretch to refer to the food and housing markets as "unregulated". If there are any shortages in these markets it's certainly not due to a lack of regulation. >Unregulated fishing creates shortages of fish - a 'tragedy of the commons' I have commented on the idea of "tragedy of the commons" many times. It generally leads to quite a tangent in the conversation, but if you're truly interested I'd be happy to discuss why the problem does not lie with a lack of regulation. >Monopolies and oligopolies eliminate whole categories of products. A true, lasting monopoly is only possible through market regulation which strangles out competition. All the textbook examples of "monopolies" (Standard Oil) were not monopolies at all. In fact in the early days of electricity there was so much competition in the big cities that the big guys lobbied hard to get their monopoly privilege.
  - WalterBright 10y ago
    Food is necessary for life, but food (in the US) is cheap, and food prices are not regulated.
    - gpderetta 10y ago
      There is also no government protected monopoly on food (although not for lack of trying).
refurb 10y ago
People don't like the idea of putting a price on their health. They don't like it, but healthcare costs money and money is a limited resource. That's reality. In the US system it's the insurance companies that limit access (or the cost to an individual). In other countries it's the gov't.
- Thlom 10y ago
  Yes, but in other countries everyone gets the same access to health care and people don't die on the street because they can't afford a commodity like an epipen! Though you might die in a hospital bed because the government wont spend a million euros a week on medication that may or may not give you a year more to live.

mikeash 10y ago

Of course. This case is particularly interesting because the device/drug combo is so commonly needed. But you'll find many other stories of manufacturers hiking the price of drugs people need to live, and the resulting backlash. Look up Martin Shkreli for a couple of recent examples that got attention.

actuallyalys 10y ago

Yep. :( We also see drug shortages because the lone manufacturer temporarily or permanently stops manufacturing. For example, there's an ongoing injectable estrogen shortage because the manufacturer has an issue sourcing a key ingredient [0] [1]. (Thankfully, other forms and dosages are not impacted.) [0]: https://www.theguardian.com/commentisfree/2016/aug/13/estrogen-shortage-trans-women-impact https://www.theguardian.com/commentisfree/2016/aug/13/estrog... [1]: http://www.out.com/out-exclusives/2016/8/04/exclusive-theres-injectable-estrogen-shortage-thats-leaving-trans-women http://www.out.com/out-exclusives/2016/8/04/exclusive-theres...

refurb 10y ago
One of the reasons for drug shortages is because it's just not profitable to produce the drugs when you roll in all the regulatory costs.

tcbawo 10y ago

It seems especially egregious when we are talking about a dispenser versus the drug itself.