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I just kind put together why this isn't free market. There's no incentive for anyone to push back on price. There's plenty of money to be made doctors make th

I just kind put together why this isn't free market. There's no incentive for anyone to push back on price. There's plenty of money to be made doctors make the same either way. People don't notice because they just want the best healthcare available regardless of cost. Pharmacy make more money with gouging. Drug companies do. Insurance companies make more with higher prices. Companies just pay what they have to show it as a benefit. Who in the entire system looks out for costs?

ma2rten 7y ago
At least in theory insurance companies should look out for price, because they want to be cheaper than other companies. But, free market just doesn't work for health care. In a life or death situation people would pay anything.
- mirajshah 7y ago
  Yep, also I think the barriers to entry for the insurance market are extremely high. Not only is there a huge fixed cost of actually negotiating rates with every individual doctor/hospital, there's also the fixed cost of getting individual employers to consider you for their business. These and some other factors leave the insurance market with just a few insurance providers, who can let prices run away and simply charge higher premiums/deductibles without fear of competition from a "start-up" insurance provider.
- ishjoh 7y ago
  FYI, in the US insurance companies are regulated such that: "No more than 20 percent of premium revenue can be spent on total administrative costs, including profits and salaries."[1] So the difficult thing is they are incentivized to increase revenue to increase profits, and cutting costs won't result in more profit. [1] - https://www.verywellhealth.com/health-insurance-companies-unreasonable-profits-1738941 https://www.verywellhealth.com/health-insurance-companies-un...
  - secabeen 7y ago
    Yep. And a lot of big companies are self-insured, so the "insurance company" is actually just an administrator for the big company's insurance pool. Thus reducing the cost incentive even more. Competition could help, but there just aren't a lot of insurance administrators that can run plans for the biggest companies, so there is little competitive pressure on price.
maxerickson 7y ago
Also, there's literally a government regulator that controls entry. It isn't just patents either, the FDA will grant exclusivity periods for other reasons, and so on, but it then doesn't have much power to examine pricing. It's because our Congress is stupid (I mean, that's the terse summary of it).
- fuzz4lyfe 7y ago
  They aren't stupid. It's completely on purpose and virtually anyone who has had a lengthy career in congress or the senate has voted in favor of this system many many times. That includes anyone you like.
  - maxerickson 7y ago
    "I mean, that's the terse summary of it."
b_tterc_p 7y ago
The insurance part is the most important. The more things cost, the more value insurance provides, which is especially valuable to insurance providers because they pay for things at a discounted cost. The more value it provides, the more they can charge. The economically rational consumer is best off getting drugs through insurance, but in doing so, builds a system that makes any alternative less affordable.
- mirajshah 7y ago
  I think you assume that the insurance market is competitive. In the U.S. it is not.
  - b_tterc_p 7y ago
    I’m not sure how that follows.
Akinato 7y ago
One thing that's always bothered me is that companies can make a ton of medications, such as those that treat depression and anxiety, that are incredibly difficult to get off of once you start with the medication. None of these companies are required to make any lower doses to help people "taper off" what's supposed to be a temporary medication. Most of the time your only option is to quit "cold turkey" which is straight up awful with brain zaps, nausea, trouble focusing, and often a complete spike in your previous symptoms from 0 to 100. Oftentimes quitting this way can make you feel like you need the drug to survive. I get it is not profitable to make doses that are only used temporarily when people quit your product, but this is definitely harmful to the consumer. I was stuck with one and I tried everything to find a lower dose. I had tried quitting cold turkey 3 separate times and I ended up a sobbing mess each time. Given that was just not working, I tried different pharmacies, I talked to them about liquid suspension ($200+ not covered) and more. I was fed up. Eventually, against the advice of my doctors, I just started cutting my pills into 1/4s and taking a 1/4 less every 2-4 weeks until I was off it. Doing it this way was utterly painless and I was able to continue working throughout. After that I didn't need it anymore. But this is a terrible practice, and won't work with all drugs -- especially delayed ones. This is why I think so many people are on these types of drugs. They are amazing short term and can help people work through some really difficult issues to get to a better place mentally -- but not everyone needs them long term. However when faced with the withdrawal symptoms, many people start to think they can't survive without it. Im not claiming some conspiracy, but the current strategy isn't the best for patients, that's for sure.
- imperio59 7y ago
  Don't be so sure. These companies have hidden the addictiveness and side effects of these pills for years: https://www.karger.com/Article/Pdf/501215 https://www.karger.com/Article/Pdf/501215 In fact, using anti-depressants is more likely to make you relapse after you are off of them, rather than if you got over the depression without drugs: https://www.karger.com/Article/Abstract/110056 https://www.karger.com/Article/Abstract/110056 There is definitely an interest from these companies to have people be on these drugs pretty much indefinitely. They have a host of side effects which the companies will also benefit from treating (obesity, sexual dysfunction, liver damage, etc...). It's pretty clear from what's coming out of the opioid trials that these companies conspire on a regular basis to do what's right for their bottom line, not what's right for people...
ishjoh 7y ago
As an FYI, this phenomenon is called the third-party payer problem in economics. https://mises.org/library/how-third-party-payers-drive-medical-costs https://mises.org/library/how-third-party-payers-drive-medic...
refurb 7y ago
You can't paint the entire pharmaceutical market as non-competitive. It really depends on the drug. Most of the egregious examples of raising prices happens in specific markets - ones where there are significant barriers to competition even in the absence of patent protection. These markets also tend to be on the smaller side - big enough to make a good profit, but not so big that it attracts a ton of competitors. There are examples of drug prices coming down because of competition. Hepatitis C drugs are a great example. Launched at almost $90K, they now hover around $40K because there are multiple companies competing on price (the drugs are all very effective). The other thing driving prices down are the insurance companies. Amgen dropped the price of their cholesterol drug Repatha by 60% because insurance companies said "yeah, we're not going to pay for that at that price".[1] [1]https://www.biopharmadive.com/news/amgen-cuts-us-repatha-price-60-amid-market-pressure/540517/ https://www.biopharmadive.com/news/amgen-cuts-us-repatha-pri...
- fucking_tragedy 7y ago
  > There are examples of drug prices coming down because of competition. Hepatitis C drugs are a great example. Launched at almost $90K, they now hover around $40K because there are multiple companies competing on price (the drugs are all very effective). That price is less than $500 in India. Generics in the US are estimated to cost the consumer $200[1]. [1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4946692/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4946692/
  - refurb 7y ago
    That's because the drug is priced based on relative purchasing power. If the drug cost $500 in the US, it would have been a net loss investment in the first place.
jjwhitaker 7y ago
That sounds somewhat inelastic. Like gas or basic needs, people will often still use/need healthcare regardless of price, at least as long as it is high quality care. If, say, knocked unconscious in an accident, you'll wake up in the ER regardless of price.
nabdab 7y ago
The producers don’t have market access and the middlemen have inverted normal market powers. If a producer lowers price, that means the PBMs percentage cut goes down. So they cut away market access. So the lower the price the less you sell. The higher the price the more you sell... The people in the middle of this getting shafted are uninsured who are forced to pay imaginary list prices and don’t get any rebates. Now the producers are trying to just sell generics at the post-rebate level, but the media field by lobbyist are calling them out like it’s a bad thing. Because it threatens the con game of the PBM/Insurance/Pharmacy cabal (yes they often end up all owned by the same corporation), while they are pointing fingers at the producers who just want market access and fair competition.

ma2rten 7y ago

At least in theory insurance companies should look out for price, because they want to be cheaper than other companies. But, free market just doesn't work for health care. In a life or death situation people would pay anything.

mirajshah 7y ago
Yep, also I think the barriers to entry for the insurance market are extremely high. Not only is there a huge fixed cost of actually negotiating rates with every individual doctor/hospital, there's also the fixed cost of getting individual employers to consider you for their business. These and some other factors leave the insurance market with just a few insurance providers, who can let prices run away and simply charge higher premiums/deductibles without fear of competition from a "start-up" insurance provider.
ishjoh 7y ago
FYI, in the US insurance companies are regulated such that: "No more than 20 percent of premium revenue can be spent on total administrative costs, including profits and salaries."[1] So the difficult thing is they are incentivized to increase revenue to increase profits, and cutting costs won't result in more profit. [1] - https://www.verywellhealth.com/health-insurance-companies-unreasonable-profits-1738941 https://www.verywellhealth.com/health-insurance-companies-un...
- secabeen 7y ago
  Yep. And a lot of big companies are self-insured, so the "insurance company" is actually just an administrator for the big company's insurance pool. Thus reducing the cost incentive even more. Competition could help, but there just aren't a lot of insurance administrators that can run plans for the biggest companies, so there is little competitive pressure on price.

maxerickson 7y ago

Also, there's literally a government regulator that controls entry. It isn't just patents either, the FDA will grant exclusivity periods for other reasons, and so on, but it then doesn't have much power to examine pricing. It's because our Congress is stupid (I mean, that's the terse summary of it).

fuzz4lyfe 7y ago
They aren't stupid. It's completely on purpose and virtually anyone who has had a lengthy career in congress or the senate has voted in favor of this system many many times. That includes anyone you like.
- maxerickson 7y ago
  "I mean, that's the terse summary of it."

b_tterc_p 7y ago

The insurance part is the most important. The more things cost, the more value insurance provides, which is especially valuable to insurance providers because they pay for things at a discounted cost. The more value it provides, the more they can charge. The economically rational consumer is best off getting drugs through insurance, but in doing so, builds a system that makes any alternative less affordable.

mirajshah 7y ago
I think you assume that the insurance market is competitive. In the U.S. it is not.
- b_tterc_p 7y ago
  I’m not sure how that follows.

Akinato 7y ago

One thing that's always bothered me is that companies can make a ton of medications, such as those that treat depression and anxiety, that are incredibly difficult to get off of once you start with the medication. None of these companies are required to make any lower doses to help people "taper off" what's supposed to be a temporary medication. Most of the time your only option is to quit "cold turkey" which is straight up awful with brain zaps, nausea, trouble focusing, and often a complete spike in your previous symptoms from 0 to 100. Oftentimes quitting this way can make you feel like you need the drug to survive. I get it is not profitable to make doses that are only used temporarily when people quit your product, but this is definitely harmful to the consumer. I was stuck with one and I tried everything to find a lower dose. I had tried quitting cold turkey 3 separate times and I ended up a sobbing mess each time. Given that was just not working, I tried different pharmacies, I talked to them about liquid suspension ($200+ not covered) and more. I was fed up. Eventually, against the advice of my doctors, I just started cutting my pills into 1/4s and taking a 1/4 less every 2-4 weeks until I was off it. Doing it this way was utterly painless and I was able to continue working throughout. After that I didn't need it anymore. But this is a terrible practice, and won't work with all drugs -- especially delayed ones. This is why I think so many people are on these types of drugs. They are amazing short term and can help people work through some really difficult issues to get to a better place mentally -- but not everyone needs them long term. However when faced with the withdrawal symptoms, many people start to think they can't survive without it. Im not claiming some conspiracy, but the current strategy isn't the best for patients, that's for sure.

imperio59 7y ago
Don't be so sure. These companies have hidden the addictiveness and side effects of these pills for years: https://www.karger.com/Article/Pdf/501215 https://www.karger.com/Article/Pdf/501215 In fact, using anti-depressants is more likely to make you relapse after you are off of them, rather than if you got over the depression without drugs: https://www.karger.com/Article/Abstract/110056 https://www.karger.com/Article/Abstract/110056 There is definitely an interest from these companies to have people be on these drugs pretty much indefinitely. They have a host of side effects which the companies will also benefit from treating (obesity, sexual dysfunction, liver damage, etc...). It's pretty clear from what's coming out of the opioid trials that these companies conspire on a regular basis to do what's right for their bottom line, not what's right for people...

ishjoh 7y ago

As an FYI, this phenomenon is called the third-party payer problem in economics. https://mises.org/library/how-third-party-payers-drive-medical-costs https://mises.org/library/how-third-party-payers-drive-medic...

refurb 7y ago

You can't paint the entire pharmaceutical market as non-competitive. It really depends on the drug. Most of the egregious examples of raising prices happens in specific markets - ones where there are significant barriers to competition even in the absence of patent protection. These markets also tend to be on the smaller side - big enough to make a good profit, but not so big that it attracts a ton of competitors. There are examples of drug prices coming down because of competition. Hepatitis C drugs are a great example. Launched at almost $90K, they now hover around $40K because there are multiple companies competing on price (the drugs are all very effective). The other thing driving prices down are the insurance companies. Amgen dropped the price of their cholesterol drug Repatha by 60% because insurance companies said "yeah, we're not going to pay for that at that price".[1] [1]https://www.biopharmadive.com/news/amgen-cuts-us-repatha-price-60-amid-market-pressure/540517/ https://www.biopharmadive.com/news/amgen-cuts-us-repatha-pri...

fucking_tragedy 7y ago
> There are examples of drug prices coming down because of competition. Hepatitis C drugs are a great example. Launched at almost $90K, they now hover around $40K because there are multiple companies competing on price (the drugs are all very effective). That price is less than $500 in India. Generics in the US are estimated to cost the consumer $200[1]. [1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4946692/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4946692/
- refurb 7y ago
  That's because the drug is priced based on relative purchasing power. If the drug cost $500 in the US, it would have been a net loss investment in the first place.

jjwhitaker 7y ago

That sounds somewhat inelastic. Like gas or basic needs, people will often still use/need healthcare regardless of price, at least as long as it is high quality care. If, say, knocked unconscious in an accident, you'll wake up in the ER regardless of price.

nabdab 7y ago

The producers don’t have market access and the middlemen have inverted normal market powers. If a producer lowers price, that means the PBMs percentage cut goes down. So they cut away market access. So the lower the price the less you sell. The higher the price the more you sell... The people in the middle of this getting shafted are uninsured who are forced to pay imaginary list prices and don’t get any rebates. Now the producers are trying to just sell generics at the post-rebate level, but the media field by lobbyist are calling them out like it’s a bad thing. Because it threatens the con game of the PBM/Insurance/Pharmacy cabal (yes they often end up all owned by the same corporation), while they are pointing fingers at the producers who just want market access and fair competition.