4 ms·

Setting aside what happens for the uninsured (which is important, I'm just trying to simplify for my own understanding), isn't this mostly the levying of costs

Setting aside what happens for the uninsured (which is important, I'm just trying to simplify for my own understanding), isn't this mostly the levying of costs of very expensive drugs onto the insurance providers, rather than the patient? Meaning the "victim" of the price gouging is the insurance company? If you have insurance with a yearly out of pocket max of say $8,000 and the drug you're taking has a very veiled and seemingly dubious cost of $80,000 - does that effect the patient? I assume it does somewhat directly in the form of higher monthly payments (for the patient and other customers of the insurance)? Can the insurance company deny access due to the high cost? If this is somewhat the case, I would sort of expect insurance companies to be lobbying for the system to be changed, and they seem to have the capital to actually make a difference in that "fight"? Maybe I'm misunderstanding something though.. it was an interesting article but it really just gave me even more insight into how confusing the US healthcare system is, even beyond what patients actually interact with.

dahinds 2y ago
The PBMs have mostly been captured by the insurance companies, so they're charging themselves and pocketing the profits themselves. Insurance companies just pass on the costs by charging higher premiums.
FireBeyond 2y ago
> isn't this mostly the levying of costs of very expensive drugs onto the insurance providers, rather than the patient? Meaning the "victim" of the price gouging is the insurance company? I feel there's the obligatory remark here of "and how exactly is the insurance company paying for it?". > I assume it does somewhat directly in the form of higher monthly payments (for the patient and other customers of the insurance)? Absolutely directly. > Can the insurance company deny access due to the high cost? They have little motivation to do so. They just up the premiums. They're limited by law on administrative overhead costs, and are mandated to return unspent premiums (or roll them over), so the only way to make more money is "increase premiums, so we're allowed higher administrative overheads". This was a hallmark of Martin Shkreli. He liked to paint a picture of "I'll ensure you're only paying a low copay while the insurance companies take the hit for this drug I'm charging exorbitant pricing[1] for", as if customers thought that insurance had a magical money fairy, rather than that money was coming from them (albeit usually indirectly through their employer). Sadly, he was often right - a non-negligible amount of people saw him as an everyday hero, sticking it to the man. [1] Yes, pharma has R&D costs. Shkreli's company didn't do much R&D though, mostly patent acquisition[2]. [2] "Fun" story about that. New drug comes before the FDA for approval, and it is opened up for comment. Shkreli lodges an objection to approval of this drug. Why? Because it's unsafe? No - trials thus far have shown it to be safer than the existing drug options. Why? Because it's less effective? No - it's also been shown to be more effective than existing drugs. Perhaps it's more expensive? No - cost of R&D and production, and estimated retail costs are expected to be lower than existing drugs. Huh, odd. So why in this case would Shkreli oppose this drug getting to the market? The only reason he lodged an appeal with the FDA had nothing to do with the drug, butbecause he and his company had just bought the patent to one of those 'existing drugs' referenced, and this new drug coming to market would crater the demand for his drug, and as a result torpedo the profitability of his investment/gamble. Fuck Martin Shkreli.
colechristensen 2y ago
>If this is somewhat the case, I would sort of expect insurance companies to be lobbying for the system to be changed, and they seem to have the capital to actually make a difference in that "fight"? Insurance companies have the opposite incentive. Their profit is, to simplify, a percentage cut of the total amount spent on medical care. If the cost of medical care goes up, they raise rates and the market pays for it (what else is it going to do?) the poor or underemployed or non-traditionally-employed suffer. They will fight a small amount to keep costs low, but only in a relative sense in that they want to beat their competitors or not pay for one off extremely expensive things. The middleman to which you give a fixed percentage isn't really all that motivated to get you your best price.
aidenn0 2y ago
> Setting aside what happens for the uninsured (which is important, I'm just trying to simplify for my own understanding), isn't this mostly the levying of costs of very expensive drugs onto the insurance providers, rather than the patient? Meaning the "victim" of the price gouging is the insurance company? The article touches on this, but perhaps doesn't spell it out sufficiently: 1. Insurance companies have their profits legally capped 2. To get around this: somehow (merger, purchase &c.) end up with Company X that owns both an insurance company and a PBM 3. The PBM price gouges the insurance company, increasing PBM profits (which is legal, unlike increasing the insurance company profits) 4. The Insurance company passes the price-gouging on in the form of increased premiums. 5. Company X makes more money by charging higher premiums, just like it would if it had (illegally) increased the profit margins of the insurance company.

dahinds 2y ago

The PBMs have mostly been captured by the insurance companies, so they're charging themselves and pocketing the profits themselves. Insurance companies just pass on the costs by charging higher premiums.

FireBeyond 2y ago

> isn't this mostly the levying of costs of very expensive drugs onto the insurance providers, rather than the patient? Meaning the "victim" of the price gouging is the insurance company? I feel there's the obligatory remark here of "and how exactly is the insurance company paying for it?". > I assume it does somewhat directly in the form of higher monthly payments (for the patient and other customers of the insurance)? Absolutely directly. > Can the insurance company deny access due to the high cost? They have little motivation to do so. They just up the premiums. They're limited by law on administrative overhead costs, and are mandated to return unspent premiums (or roll them over), so the only way to make more money is "increase premiums, so we're allowed higher administrative overheads". This was a hallmark of Martin Shkreli. He liked to paint a picture of "I'll ensure you're only paying a low copay while the insurance companies take the hit for this drug I'm charging exorbitant pricing[1] for", as if customers thought that insurance had a magical money fairy, rather than that money was coming from them (albeit usually indirectly through their employer). Sadly, he was often right - a non-negligible amount of people saw him as an everyday hero, sticking it to the man. [1] Yes, pharma has R&D costs. Shkreli's company didn't do much R&D though, mostly patent acquisition[2]. [2] "Fun" story about that. New drug comes before the FDA for approval, and it is opened up for comment. Shkreli lodges an objection to approval of this drug. Why? Because it's unsafe? No - trials thus far have shown it to be safer than the existing drug options. Why? Because it's less effective? No - it's also been shown to be more effective than existing drugs. Perhaps it's more expensive? No - cost of R&D and production, and estimated retail costs are expected to be lower than existing drugs. Huh, odd. So why in this case would Shkreli oppose this drug getting to the market? The only reason he lodged an appeal with the FDA had nothing to do with the drug, butbecause he and his company had just bought the patent to one of those 'existing drugs' referenced, and this new drug coming to market would crater the demand for his drug, and as a result torpedo the profitability of his investment/gamble. Fuck Martin Shkreli.

colechristensen 2y ago

>If this is somewhat the case, I would sort of expect insurance companies to be lobbying for the system to be changed, and they seem to have the capital to actually make a difference in that "fight"? Insurance companies have the opposite incentive. Their profit is, to simplify, a percentage cut of the total amount spent on medical care. If the cost of medical care goes up, they raise rates and the market pays for it (what else is it going to do?) the poor or underemployed or non-traditionally-employed suffer. They will fight a small amount to keep costs low, but only in a relative sense in that they want to beat their competitors or not pay for one off extremely expensive things. The middleman to which you give a fixed percentage isn't really all that motivated to get you your best price.

aidenn0 2y ago

> Setting aside what happens for the uninsured (which is important, I'm just trying to simplify for my own understanding), isn't this mostly the levying of costs of very expensive drugs onto the insurance providers, rather than the patient? Meaning the "victim" of the price gouging is the insurance company? The article touches on this, but perhaps doesn't spell it out sufficiently: 1. Insurance companies have their profits legally capped 2. To get around this: somehow (merger, purchase &c.) end up with Company X that owns both an insurance company and a PBM 3. The PBM price gouges the insurance company, increasing PBM profits (which is legal, unlike increasing the insurance company profits) 4. The Insurance company passes the price-gouging on in the form of increased premiums. 5. Company X makes more money by charging higher premiums, just like it would if it had (illegally) increased the profit margins of the insurance company.