5 ms·

Because that's how the rich get richer

hinkley 3y ago
Because the thing that makes them an extra 5% is what will be done. If we reward people 5% for cutting to the bone, they will, every time. See also perverse incentives. For medical supplies there should be a specific tax exemption for maintaining emergency supplies. Or a law, or both.
- hammyhavoc 3y ago
  You'd get my vote.
- jjeaff 3y ago
  No deduction. Just a law. If you want the regulatory privilege of providing important medications to the public, you must be able to continue to provide said medications during supply issues for national security purposes.
  - MichaelZuo 3y ago
    A law enacted with what votes?
  - hinkley 3y ago
    So that would have to be something contingent on FDA approval for your factory? I could see that. I would also expand that to include any drugs that require a tapering off period should require an emergency supply as well. We can't have people keeling over from methadone withdrawals because you decided to piss off your only vendor. In fact I might go so far as to say that you can't institute a price hike without a grace period either, which may or may not include one final prescription renewal at the old price.
    - devilbunny 3y ago
      Price hikes got a bad rap because of a few egregious examples, but they've been responsible for shortages, too. I'm an anesthesiologist. Almost all of our drugs are generic. But there have been shortages of one or another for most of the last 15 years. Why? Among other things, the federal government limited price hikes to a percentage per quarter that Medicare and Medicaid would pay (gross oversimplification, but close enough). This sounds like a great idea. But when you can't do a 100% price hike on a drug that sells for 40 cents per ampule, you can't pay overtime and do increased-tempo maintenance to keep a line running almost 24/7. So if one generic manufacturer quits making a drug that only has 2-3 sources, the others simply can't fill in the gap. Sometimes they stop making it because it's no longer profitable, sometimes because other factors (failing to pass an inspection, e.g.) cause a temporary shutdown. But if you can't double the price of a dirt-cheap drug, you often can't double your output (because the drug is cheap - it's the labor, packaging, and regulatory compliance that are expensive, and they scale per dose, not per kg made). This is a very different world from the famous cases you see in newspapers about huge increases in price for medications that have been generic for a long time, but it is there and it really does hit us.
      - youainti 3y ago
        As an economist, thanks for using a proper price/shortage example.

Because the thing that makes them an extra 5% is what will be done. If we reward people 5% for cutting to the bone, they will, every time. See also perverse incentives. For medical supplies there should be a specific tax exemption for maintaining emergency supplies. Or a law, or both.

hammyhavoc 3y ago
You'd get my vote.
jjeaff 3y ago
No deduction. Just a law. If you want the regulatory privilege of providing important medications to the public, you must be able to continue to provide said medications during supply issues for national security purposes.
- MichaelZuo 3y ago
  A law enacted with what votes?
- hinkley 3y ago
  So that would have to be something contingent on FDA approval for your factory? I could see that. I would also expand that to include any drugs that require a tapering off period should require an emergency supply as well. We can't have people keeling over from methadone withdrawals because you decided to piss off your only vendor. In fact I might go so far as to say that you can't institute a price hike without a grace period either, which may or may not include one final prescription renewal at the old price.
  - devilbunny 3y ago
    Price hikes got a bad rap because of a few egregious examples, but they've been responsible for shortages, too. I'm an anesthesiologist. Almost all of our drugs are generic. But there have been shortages of one or another for most of the last 15 years. Why? Among other things, the federal government limited price hikes to a percentage per quarter that Medicare and Medicaid would pay (gross oversimplification, but close enough). This sounds like a great idea. But when you can't do a 100% price hike on a drug that sells for 40 cents per ampule, you can't pay overtime and do increased-tempo maintenance to keep a line running almost 24/7. So if one generic manufacturer quits making a drug that only has 2-3 sources, the others simply can't fill in the gap. Sometimes they stop making it because it's no longer profitable, sometimes because other factors (failing to pass an inspection, e.g.) cause a temporary shutdown. But if you can't double the price of a dirt-cheap drug, you often can't double your output (because the drug is cheap - it's the labor, packaging, and regulatory compliance that are expensive, and they scale per dose, not per kg made). This is a very different world from the famous cases you see in newspapers about huge increases in price for medications that have been generic for a long time, but it is there and it really does hit us.
    - youainti 3y ago
      As an economist, thanks for using a proper price/shortage example.