3 ms·

People more articulate than me have pointed this out before, but it seems like a huge conflict of interest that CVS simultaneously controls: - Caremark (pharma

People more articulate than me have pointed this out before, but it seems like a huge conflict of interest that CVS simultaneously controls: - Caremark (pharmacy benefits management) - Aetna (insurance provider) - CVS Pharmacy (the actual pharmacy that sells/dispenses drugs)

sega_sai 2y ago
The question is how one would fix this in practice. Make drug ordering/buying by companies an open bidding process/auction? Or just force the companies to disclose who they buy from for what money?
- lotsofpulp 2y ago
  This has nothing to do with drug ordering or buying. Pharmacies buy medicines from medicine distributors, namely McKesson, Cardinal, and AmerisourceBergen. It is literally all just “paperwork” between pharmacies and insurers. The PBM is just the department of an insurance company that “negotiates” pricing for medicine.
- candiddevmike 2y ago
  Have a Medicare equivalent for those three that people can buy into. Have the government provide a cost competitive offering for insurance to create competition. Allow Medicare to negotiate for lower drug costs in line with other countries. No one in the healthcare stack is incentivied to lower the cost of care, at least in a way that reduces the payer cost.
  - lotsofpulp 2y ago
    When an insurer dictates a lower price with a pharmacy less, or for a doctor (the same as a physician assistant or a nurse practitioner or a naturopath or a chiropractor), that is reducing the payer cost. Healthcare has a few main vendors. Doctors, pharmacies, hospitals, drug manufacturers, and then the vendors’ vendors, like EMR software (epic, Athena, etc), equipment, liability insurance, etc, In this chain, the least squeezable are drug manufacturers, because they own the patent and the insurer has to pay. Hospitals are sort of next, and then doctors, and then finally pharmacies must be the easiest to squeeze based on them having been squeezed nearly to death over the last 15 years. You can see this in publicly listed company profit margins: Pharma companies - highest profit margins, 20%+ Hospitals - 10% Pharmacies and health insurers - less than 5% Doctors are probably below Pharma, above hospitals if they are earning $150+ per hour. Epic and other EMR software is probably even higher profit margin than Pharma.
  - mindslight 2y ago
    For drugs one of the fundamental problems is that there is close to zero competition. Getting FDA approval to manufacture an already-approved drug should be much closer to a rubber stamp. Patent lifetime should be closer to 3-4 years instead of 20+, and that whole hack of a superficial tweak renewing the patent needs to be eliminated. Then things wouldn't be so bad if drug manufacturers charged whatever the market would bear (there should also be one transparent price, none of this opaque "negotiated" price fixing). The 3-4 year period where a new life saving drug has been created and approved but is still cost prohibitive for most many would be gristly, but the impedance mismatch has to accrue somewhere and the current solution we've defaulted into is to claim wide access while allowing drug companies to perform wealth extraction (modulo what the "insurance" cartel can be guilted into paying for).
lotsofpulp 2y ago
Kaiser Permanente does the same thing.

sega_sai 2y ago

The question is how one would fix this in practice. Make drug ordering/buying by companies an open bidding process/auction? Or just force the companies to disclose who they buy from for what money?

lotsofpulp 2y ago
This has nothing to do with drug ordering or buying. Pharmacies buy medicines from medicine distributors, namely McKesson, Cardinal, and AmerisourceBergen. It is literally all just “paperwork” between pharmacies and insurers. The PBM is just the department of an insurance company that “negotiates” pricing for medicine.
candiddevmike 2y ago
Have a Medicare equivalent for those three that people can buy into. Have the government provide a cost competitive offering for insurance to create competition. Allow Medicare to negotiate for lower drug costs in line with other countries. No one in the healthcare stack is incentivied to lower the cost of care, at least in a way that reduces the payer cost.
- lotsofpulp 2y ago
  When an insurer dictates a lower price with a pharmacy less, or for a doctor (the same as a physician assistant or a nurse practitioner or a naturopath or a chiropractor), that is reducing the payer cost. Healthcare has a few main vendors. Doctors, pharmacies, hospitals, drug manufacturers, and then the vendors’ vendors, like EMR software (epic, Athena, etc), equipment, liability insurance, etc, In this chain, the least squeezable are drug manufacturers, because they own the patent and the insurer has to pay. Hospitals are sort of next, and then doctors, and then finally pharmacies must be the easiest to squeeze based on them having been squeezed nearly to death over the last 15 years. You can see this in publicly listed company profit margins: Pharma companies - highest profit margins, 20%+ Hospitals - 10% Pharmacies and health insurers - less than 5% Doctors are probably below Pharma, above hospitals if they are earning $150+ per hour. Epic and other EMR software is probably even higher profit margin than Pharma.
- mindslight 2y ago
  For drugs one of the fundamental problems is that there is close to zero competition. Getting FDA approval to manufacture an already-approved drug should be much closer to a rubber stamp. Patent lifetime should be closer to 3-4 years instead of 20+, and that whole hack of a superficial tweak renewing the patent needs to be eliminated. Then things wouldn't be so bad if drug manufacturers charged whatever the market would bear (there should also be one transparent price, none of this opaque "negotiated" price fixing). The 3-4 year period where a new life saving drug has been created and approved but is still cost prohibitive for most many would be gristly, but the impedance mismatch has to accrue somewhere and the current solution we've defaulted into is to claim wide access while allowing drug companies to perform wealth extraction (modulo what the "insurance" cartel can be guilted into paying for).

lotsofpulp 2y ago

Kaiser Permanente does the same thing.