4 ms·

> Sounds like the old price of $13 was way too cheap. Given that its off patent and still no one else wants to make it I'd think the new $750 prices is probably

> Sounds like the old price of $13 was way too cheap. Given that its off patent and still no one else wants to make it I'd think the new $750 prices is probably not crazy. On top of that, there was an investigative article a while back that tried to measure the actual effects on patients. Turns out, they weren't able to find any patients who themselves had to pay anything close to $750/pill for the drug. It's not prescribed that commonly in the US, and the only patients who needed it were all on insurance plans that covered it, subject to standard copays and deductibles. Many of the patients already meet their annual maximum deductible anyway, due to the other medical care they already have to receive, so the marginal cost to them was $0. In other words, raising the price of the drug literally did not increase the price that those patients had to pay by one cent. I'm aware that this has a complicated and implicit impact on prices elsewhere, but that's the real problem: medical billing is ridiculously convoluted, and focusing on the price of a single drug - especially the price that isn't actually paid by any consumer - is missing the real problem that needs to be fixed.

monocasa 8y ago
But they are still paying it, it's just obfuscated. Since the ACA capped profit percentages, the insurance companies have been looking for ways to increase pay outs, os they can increase total revenue, and then total profit. That perverse incentive is one of the reasons why insurance premiums have been going up so much the past few years.
- chimeracoder 8y ago
  > But they are still paying it, it's just obfuscated. They're not still paying it. Collectively, yes, the insurers are passing the cost on to the insured population. But the number of people taking that drug is tiny[0], so it amortizes very quickly. For the patients taking the drug, the effect on their own premiums from that price increase is less than a penny. This is what I'm talking about when I say that medical billing is the real problem: the effects are non-obvious and highly-interconnected. You're right about the perverse incentive created by the MLR; and that's just the tip of the iceberg. [0] There were 500 pills sold in Dec 2015.
  - monocasa 8y ago
    The issue is systemic. Yeah, this drug only has a few people, another drug only has a few other people, etc. But looking at it from a per drug perspective is not seeing the forest through the trees. Seriously, average premiums increased in my state 26.7% last year. It's because of systemic issues that this a perfect example of a facet of. https://www.thedenverchannel.com/news/politics/colorados-2018-health-insurance-premiums-finalized-267-average-increase-in-individual-plans https://www.thedenverchannel.com/news/politics/colorados-201...
    - blackbrokkoli 8y ago
      Yes, that is true. The problem is that the media coverage of the issue is like 99,5% Shrkeli, his smug face and lacking social skills. Look at the title of this post alone - and we're on the rational, reflecting side of the internet here
      - monocasa 8y ago
        And even with that, we couldn't even manage a societal patch fix to this one drug.
    - chimeracoder 8y ago
      > The issue is systemic. Yeah, this drug only has a few people, another drug only has a few other people, etc. But looking at it from a per drug perspective is not seeing the forest through the trees. I don't understand, because it sounds like you're trying to argue with what I'm saying, but we're literally making the same point. Shkreli makes for an easy target because he's the absolute caricature of a villain. But at the same time, focusing on this drug misses the point. Even if Shkreli cut the price of the drug to $0, there would be no measurable effect on patients. And while not everyone is as overtly malevolent as Shkreli is, the incentives that cause this sort of behavior aren't caused by the pharmaceutical companies (nor can they really be fixed by the pharmaceutical companies - at least not systemically - because they're just responding to the incentives that have already been created).
- hristov 8y ago
  Insurance premiums have been going up long before the ACA was passed into law.
  - chimeracoder 8y ago
    > Insurance premiums have been going up long before the ACA was passed into law. They've gone up much faster after the ACA has gone into effect.
    - zzzeek 8y ago
      please cite your sources. Here's one that contradicts this directly: https://www.forbes.com/sites/robbmandelbaum/2017/02/24/no-obamacare-hasnt-jacked-up-your-companys-insurance-rates/#4f22443a3a01 https://www.forbes.com/sites/robbmandelbaum/2017/02/24/no-ob... > Except that it doesn't seem to be true. Health insurance premiums have been rising for decades, almost (though not quite) as stubbornly reliable as an eastern sunrise. And it turns out that these increases actually slowed after the Affordable Care Act became law in 2010. That's according to data collected by the U.S. Department of Health and Human Services, which tracks a range of topics around spending on health care in its Medical Expenditure Panel Survey. The survey tracks the health insurance offered by private firms big and small, and in all cases, the average rate of premium growth from the time the law passed in 2010 through 2015 was actually lower than from 2004 to 2010. And premium growth was lowest for firms with fewer than 50 employees.
  - cosmie 8y ago
    True, but there was at least an attempt before at cost containment, as they could directly capture that revenue and increase their profitability. Now there's both no incentive for cost containment measures beyond what's needed to hit their maximum allowed profitability percentage and a direct disincentive to spend more than is needed in this area, since it'd eat into the limited amount administrative overheard allowed by the MLR[1]. [1] http://thehealthcareblog.com/blog/2012/02/04/does-obamacare-limit-profits-for-health-insurance-companies-in-your-state/ http://thehealthcareblog.com/blog/2012/02/04/does-obamacare-...
- cosmie 8y ago
  This is a point I don't see raised nearly often enough. If their profit potential is capped at a percentage of total revenue, they have absolutely no incentive to truly attempt to reign in costs. As out of control costs can be used as evidence that, through no fault of their own, they need to increase rates substantially year after year.
- liveoneggs 8y ago
  my insurance went down and I got a refund the first year of ACA. the accountants eventually figured it out, I guess. There was no incentive before ACA to control prices either.
  - chimeracoder 8y ago
    > There was no incentive before ACA to control prices either. Sure there was. Profit = revenue - costs. Previously, lowering costs - particularly claims - was a direct way to improve profits. Now, the formula is more complicated, because 80% of costs must be spent on claims. Lowering claims directly reduces the maximum amount of profit you can make. There's still an incentive to reduce non-medical costs, but there's an incentive to increase medical costs, or shift non-medical costs to medical costs, in order to satisfy the 80% rule.
    - liveoneggs 8y ago
      if you say so. I find for-profit insurance morally untenable regardless.
tpush 8y ago
Can you link to that article?
zzzeek 8y ago
> Turns out, they weren't able to find any patients who themselves had to pay anything close to $750/pill for the drug. It's not prescribed that commonly in the US, and the only patients who needed it were all on insurance plans that covered it, subject to standard copays and deductibles. it's not uncommon for a doctor to ask, "are you on insurance? otherwise this drug would be too expensive for you". there is no statistic on how often this happens.
busterarm 8y ago
And he went on record saying that if anyone couldn't afford the drug and asked him for it, he would give it to them for free. Some villain.
hristov 8y ago
This kind of thinking is wrong, stupid and dangerous. Yes we still pay $750. If someone's insurance pays $750 for a pill then all the people on that policy will end up paying it. This is true whether these people use one of the ACA insurance plans or not. Saying "oh duh medical billing is just so complicated and convoluted, i guess the money just comes out of the ether." is wrong. It is actually not that complicated. If a drug company charges medical insurance companies really high prices, all people that pay medical insurance (even those not using that particular drug) end up paying these high prices through their premiums.

monocasa 8y ago

But they are still paying it, it's just obfuscated. Since the ACA capped profit percentages, the insurance companies have been looking for ways to increase pay outs, os they can increase total revenue, and then total profit. That perverse incentive is one of the reasons why insurance premiums have been going up so much the past few years.

chimeracoder 8y ago
> But they are still paying it, it's just obfuscated. They're not still paying it. Collectively, yes, the insurers are passing the cost on to the insured population. But the number of people taking that drug is tiny[0], so it amortizes very quickly. For the patients taking the drug, the effect on their own premiums from that price increase is less than a penny. This is what I'm talking about when I say that medical billing is the real problem: the effects are non-obvious and highly-interconnected. You're right about the perverse incentive created by the MLR; and that's just the tip of the iceberg. [0] There were 500 pills sold in Dec 2015.
- monocasa 8y ago
  The issue is systemic. Yeah, this drug only has a few people, another drug only has a few other people, etc. But looking at it from a per drug perspective is not seeing the forest through the trees. Seriously, average premiums increased in my state 26.7% last year. It's because of systemic issues that this a perfect example of a facet of. https://www.thedenverchannel.com/news/politics/colorados-2018-health-insurance-premiums-finalized-267-average-increase-in-individual-plans https://www.thedenverchannel.com/news/politics/colorados-201...
  - blackbrokkoli 8y ago
    Yes, that is true. The problem is that the media coverage of the issue is like 99,5% Shrkeli, his smug face and lacking social skills. Look at the title of this post alone - and we're on the rational, reflecting side of the internet here
    - monocasa 8y ago
      And even with that, we couldn't even manage a societal patch fix to this one drug.
  - chimeracoder 8y ago
    > The issue is systemic. Yeah, this drug only has a few people, another drug only has a few other people, etc. But looking at it from a per drug perspective is not seeing the forest through the trees. I don't understand, because it sounds like you're trying to argue with what I'm saying, but we're literally making the same point. Shkreli makes for an easy target because he's the absolute caricature of a villain. But at the same time, focusing on this drug misses the point. Even if Shkreli cut the price of the drug to $0, there would be no measurable effect on patients. And while not everyone is as overtly malevolent as Shkreli is, the incentives that cause this sort of behavior aren't caused by the pharmaceutical companies (nor can they really be fixed by the pharmaceutical companies - at least not systemically - because they're just responding to the incentives that have already been created).
hristov 8y ago
Insurance premiums have been going up long before the ACA was passed into law.
- chimeracoder 8y ago
  > Insurance premiums have been going up long before the ACA was passed into law. They've gone up much faster after the ACA has gone into effect.
  - zzzeek 8y ago
    please cite your sources. Here's one that contradicts this directly: https://www.forbes.com/sites/robbmandelbaum/2017/02/24/no-obamacare-hasnt-jacked-up-your-companys-insurance-rates/#4f22443a3a01 https://www.forbes.com/sites/robbmandelbaum/2017/02/24/no-ob... > Except that it doesn't seem to be true. Health insurance premiums have been rising for decades, almost (though not quite) as stubbornly reliable as an eastern sunrise. And it turns out that these increases actually slowed after the Affordable Care Act became law in 2010. That's according to data collected by the U.S. Department of Health and Human Services, which tracks a range of topics around spending on health care in its Medical Expenditure Panel Survey. The survey tracks the health insurance offered by private firms big and small, and in all cases, the average rate of premium growth from the time the law passed in 2010 through 2015 was actually lower than from 2004 to 2010. And premium growth was lowest for firms with fewer than 50 employees.
- cosmie 8y ago
  True, but there was at least an attempt before at cost containment, as they could directly capture that revenue and increase their profitability. Now there's both no incentive for cost containment measures beyond what's needed to hit their maximum allowed profitability percentage and a direct disincentive to spend more than is needed in this area, since it'd eat into the limited amount administrative overheard allowed by the MLR[1]. [1] http://thehealthcareblog.com/blog/2012/02/04/does-obamacare-limit-profits-for-health-insurance-companies-in-your-state/ http://thehealthcareblog.com/blog/2012/02/04/does-obamacare-...
cosmie 8y ago
This is a point I don't see raised nearly often enough. If their profit potential is capped at a percentage of total revenue, they have absolutely no incentive to truly attempt to reign in costs. As out of control costs can be used as evidence that, through no fault of their own, they need to increase rates substantially year after year.
liveoneggs 8y ago
my insurance went down and I got a refund the first year of ACA. the accountants eventually figured it out, I guess. There was no incentive before ACA to control prices either.
- chimeracoder 8y ago
  > There was no incentive before ACA to control prices either. Sure there was. Profit = revenue - costs. Previously, lowering costs - particularly claims - was a direct way to improve profits. Now, the formula is more complicated, because 80% of costs must be spent on claims. Lowering claims directly reduces the maximum amount of profit you can make. There's still an incentive to reduce non-medical costs, but there's an incentive to increase medical costs, or shift non-medical costs to medical costs, in order to satisfy the 80% rule.
  - liveoneggs 8y ago
    if you say so. I find for-profit insurance morally untenable regardless.

tpush 8y ago

Can you link to that article?

zzzeek 8y ago

> Turns out, they weren't able to find any patients who themselves had to pay anything close to $750/pill for the drug. It's not prescribed that commonly in the US, and the only patients who needed it were all on insurance plans that covered it, subject to standard copays and deductibles. it's not uncommon for a doctor to ask, "are you on insurance? otherwise this drug would be too expensive for you". there is no statistic on how often this happens.

busterarm 8y ago

And he went on record saying that if anyone couldn't afford the drug and asked him for it, he would give it to them for free. Some villain.

hristov 8y ago

This kind of thinking is wrong, stupid and dangerous. Yes we still pay $750. If someone's insurance pays $750 for a pill then all the people on that policy will end up paying it. This is true whether these people use one of the ACA insurance plans or not. Saying "oh duh medical billing is just so complicated and convoluted, i guess the money just comes out of the ether." is wrong. It is actually not that complicated. If a drug company charges medical insurance companies really high prices, all people that pay medical insurance (even those not using that particular drug) end up paying these high prices through their premiums.