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Unfortunately, this does not act as a price control. This just mandates that insurance companies cap the out-of-pocket expense; it does nothing to affect the re
by andrewla 7y ago
Unfortunately, this does not act as a price control. This just mandates that insurance companies cap the out-of-pocket expense; it does nothing to affect the retail or wholesale price of insulin except insofar as insurance companies can push back on drug manufacturers.
Net effect of this is yet to be seen, since it doesn't go into effect until 2021, but one possibility is that insurance companies will only cover variants of insulin that are cheaper than the allowed maximum, or the value that they calculate allows maximum extraction of value. Or, alternatively, the price of insurance will rise to spread the cost among all covered people.
The fundamental problem is that insulin should be a commodity, but it is not. Baseline human insulin is actually available fairly cheaply; ~$25 for a month's supply. But pharmaceutical companies have developed and sell a variety of faster-acting and longer-release insulin analogs of increasing price; and although many of them have technically fallen out of patent protection, generic makers have been slow on the uptake and manufacturers have done various tricks (relabeling, etc.) to ensure that they can maintain their effective monopoly.
There's something deeper that is wrong here that is preventing the market from working as it should be working; that is, generic makers making fast-acting insulin cheaply and driving the price down to the marginal price of production.
- choward 7y agoYou're right. This is terrible. Here's an excerpt from the bill: > Provides that insurers that provide coverage for prescription insulin drugs must limit the total amount an insured is required to pay for a covered prescription insulin drug to $100 This will create way more problems than it solves. It continues to hide the true cost from the consumer. This doesn't affect the pharmaceutical companies or insurance companies at all. What it will due is just make the insurance companies charge everyone a little more. The corporations are not affected whatsoever.
- jngreenlee 7y agoWouldn't it be much more meaningful for the Sate of Illinois to say they will buy a State-managed insulin supply, for which they will guarantee access by State residents at $x/Month? Easy to make something unallowed on paper. Much harder, and more meaningful, with Skin in the Game, to actually go out and do what they may think their rules will accomplish.
- jwbwater 7y agoThe politicians solution: create another law. The economists solution: create more competition, probably by getting rid of some laws. I guess JB Pritzker knows more about politics than about economics.
- vmchale 7y ago> The economists solution: create more competition, probably by getting rid of some laws. Or just set price controls (in the case of insulin)
- conanbatt 7y agoEconomics is strongly against price controls. It's very much against the core mechanics of micro-economics. If you put a price control, you limit supply.
- vmchale 7y ago> except insofar as insurance companies can push back on drug manufacturers. Can they? The insurance companies are mandated to buy it now