8 ms·

It's unfortunate the NYT story doesn't get into the billings process as part of the dysfunction. It makes me wonder how the pricing is then negotiated with the

It's unfortunate the NYT story doesn't get into the billings process as part of the dysfunction. It makes me wonder how the pricing is then negotiated with the insurance companies. Did they set the retail price so high because the insurance companies were refusing to pay a workable price? Mylan has already commented that most EpiPens are paid through insurance, and there's the "billed rate" and "paid rate" on claims reports which often shows outrageous retail prices by health providers and then the negotiated rate the insurance company actually paid. Mylan's "quick" offer of a $300 discount to individual payers appears to keep in line with this and potentially not impact the insurance claim issue, but does anyone have any evidence that this theory is mistaken?

cheriot 10y ago
If that's the case, then the market equilibrium makes un/underinsured patients collateral damage in a battle between pharmaceutical and insurance companies. That's a massive market failure that's killing its victims. Here's my capitalist suggestion: figure out how much the pharmaceutical company stands to earn from life saving medication. Then let the government purchase the rights and put them in the public domain. The variable costs of producing these things is so low that we can treat every one for nearly the same price as treating only the rich.
- JoeAltmaier 10y ago
  Lets go further: nationalize drug companies. Do this to all the drugs.
  - cheriot 10y ago
    Maybe someone more familiar with the biotech industry will comment, but it's my impression there have been some market success as well. Keeping that incentive to innovate is important.
    - JoeAltmaier 10y ago
      Ha! Like they've been innovating in antibiotics for 40 years? In case folks have not been paying attention, zero innovation occurred there. Currently its all about restless legs and secondary asthma relief and snake-oil mixtures of drugs rebranded under goofy names. The drug companies have largely abdicated their responsibilities. For profit. What remains are money-making shells. Can't we just do without them? They are adding friction at this point.
      - cheriot 10y ago
        Antibiotics do provide a good case for increased public research. I suspect medicine will always have parts that are done better publicly and others better in private hands. For example, a tour guide in one poor country I visited mentioned that he knew guides that were trained doctors. Because good tour guides there make more money than doctors. Coincidentally, they also have a shortage of doctors. Kind of like America having a shortage of teachers when governments set the salary.
  - GunboatDiplomat 10y ago
    I think it would make more sense to simply have a government owned corporation who's sole purpose is to produce generic drugs on which the patent has expired.
    - maxerickson 10y ago
      The market for drugs like that generally functions quite well. Like a cash price of ~$5 a month well. (The dustup over Martin Shkreli raising the price of Daraprim only happened because there were very few users of the drug)
    - cheriot 10y ago
      Some drugs, like the cure for Hepatitis C, need to be available more widely before the patent runs out. It's a cure and only people that can come up with $84,000 dollars.
  - ccvannorman 10y ago
    Hear, hear! One can argue against this saying Capitalism is the panacea of the market, but one only needs to look at ANY OTHER FIRST WORLD NATION (99% of them have nationalized health care and pay less to get better care than us) to see that we're CLEARLY doing it wrong here.
  - privateersman 10y ago
    I would be interested to see how the output of drug companies change after they are nationalised. Like would they focus on simple solutions that solve problems (rather than expensive solutions that hide problems)? And would they struggle at being yet another public service with a huge budget to be cut. Will their best staff move abroad for better salaries? Stuff like that.
    - shubb 10y ago
      I suspect surgery can give us some interesting insights here. My understanding is that surgery research mostly takes place at university hospitals. I think that, outside medical devices, there isn't the same kind of non-practising science industry behind surgery research - it's all done by surgeons at research hospitals. Research hospitals tend to be university hospitals and outside (and even inside) the US, university hospitals tend to be loosely government controlled. So if we want to know what state controlled medical research could look like, I guess we just look to surgery.
  - yostrovs 10y ago
    How about nationalizing all companies? Start with farmers since food is even more important than drugs. Make sure to throw away history books first.
- ende 10y ago
  This is not a market failure, it's a regulatory failure. The FDA has arbitrarily denied approval to alternative epinephrine delivery mechanisms and in doing so cemented Mylan's pricing monopoly. When the father of Mylan's CEO Heather Bresch is none other than Senator Joe Manchin (D-WV), who had helped along his daughter's career under a string of shady circumstances in the past, is it any wonder that the our market regulstors are being used to deny market competition? The government created this problem, not the market, and yet people again clamor for more government intervention.
  - maxerickson 10y ago
    I'm always clamoring for better government intervention. There's a whole bunch of places that have governments heavily involved in pricing Epipens, places that pay a lot less than the US.
  - etendue 10y ago
    I'm not clear as to why you say that alternative injectors were "arbitrarily denied approval": Auvi-Q was voluntarily recalled because it didn't reliably dispense an accurate dose, Teva's was rightfully rejected AB rating because it was not identical to the EpiPen in use, and the FDA is well within it's regulatory scope in requiring Adamis provide a usability study and stress-testing for their pre-filled syringes. The lack of competition to the EpiPen (note that there are other injectors, just not a generic to the EpiPen) is, as I see it, a statement that even simple medical devices are a hard problem. The problems that these companies have had are quality and design failures (in the PLM sense) that are on the companies to correct.
    - gwright 10y ago
      What seems to be missing is a more sophisticated understanding of risk and a legal framework that substitutes the risk assessment of individual patients (or parents) for a one-size-fits-all decision by a bureaucracy. We are hearing stories now of people going with fewer EpiPen's because of the cost. Is that a better situation than Auvi-Q's sometimes in-accurate dose? I don't know but it is a question that comes to mind. The government apparently requires purchase of two EpiPens to reduce the risk in case a single dosage is insufficient, but this doubles the cost. Now some people purchase two (one package) instead of four (two packages) and perhaps they won't have any EpiPen at all when they need one because they can't have one at home, at school, at camp, at Grandma's house and so on. Should pharmacists be able to substitute the AdrenaClick with the patients approval? The law prevents that. Perhaps trusting pharmacists (a highly regulated profession already) to make that decision would be better than patients purchasing fewer EpiPens due to cost.
- ende 10y ago
  This is not a market failure, it's a regulatory failure. The FDA has arbitrarily denied approval to alternative epinephrine delivery mechanisms and in doing so cemented Mylan's pricing monopoly. When the father of Mylan's CEO Heather Bresch is none other than Senator Joe Manchin (D-WV), who had helped along his daughter's career under a string of shady circumstances in the past, is it any wonder that the our market regulstors are being used to deny market competition? The government created this problem, not the market, and yet people again clamor for more government intervention.
- gwright 10y ago
  Why is this 'market failure'? It is government regulations and legal prohibitions that have created a situation in which there is no competition. The market didn't create that situation, the government did. It is no surprise the price goes up in a market where competition is effectively prohibited. There are a few solutions: * adjust the regulatory framework to allow competition to emerge * strengthen the regulatory framework and set a price by law * apply public pressure against the sole provider into modifying their pricing The last one is arguably the 'market' at work. The first two are just doubling down on a regulatory framework. In any case, 'regulatory failure' seems like a much better description of the situation than 'market failure'.
  - adocracy 10y ago
    I don't agree here. It's both. It's a market failure when the price point (or transparency around the prices) doesn't convince new entrants to persevere through the existing regulatory process. It's market failure when the interests of all stake holders aren't successfully incorporated into the pricing. It's not a regulatory failure that the FDA has higher standards than the offered alternatives - we can't lower standards just to encourage new entrants. But it IS a regulatory failure when the FDA doesn't communicate with the FTC such that unnatural monopolies aren't controlled for, or that the FDA/FTC isn't communicating to the pharma industry that new entrants are required in order to prevent such monopolies from occurring. The FTC should be more "cross-border" effective with the government's own agencies.
    - glenra 10y ago
      > we can't lower standards just to encourage new entrants. Why the heck not? Two obvious reform options are: (1) New rule: any medical device or medicine officially approved for use in any of (large list of countries deemed to have competent regulators) automatically is legal to use in the US as well. Seed the list with all of Europe and Japan, gradually consider adding new countries as seems appropriate. (2) Make FDA approval optional. If a manufacturer thinks a drug and/or device works and is willing to accept the standard liability risk of selling it they can automatically do so, with the only caveat that it must include a prominent "not yet approved by the FDA" label until the product actually has finished getting approved. This label can also include a paragraph or two of more specific warning text and/or a URL to find more info if the FDA has specific concerns.
- adocracy 10y ago
  It's an interesting concept to suggest an effective put option for the government, based perhaps on the auditable costs of successful R&D. But this would probably have to work both ways - also including a put option in favor of pharma for R&D that was unsuccessful. R&D spending would become more transparent as a result (inflated, perhaps, to try to hedge against the government intervening on a hugely profitable opportunity), but in any event still entirely recoupable. Different sort of risk/reward algorithm at play, but feasible.

cheriot 10y ago

If that's the case, then the market equilibrium makes un/underinsured patients collateral damage in a battle between pharmaceutical and insurance companies. That's a massive market failure that's killing its victims. Here's my capitalist suggestion: figure out how much the pharmaceutical company stands to earn from life saving medication. Then let the government purchase the rights and put them in the public domain. The variable costs of producing these things is so low that we can treat every one for nearly the same price as treating only the rich.

JoeAltmaier 10y ago
Lets go further: nationalize drug companies. Do this to all the drugs.
- cheriot 10y ago
  Maybe someone more familiar with the biotech industry will comment, but it's my impression there have been some market success as well. Keeping that incentive to innovate is important.
  - JoeAltmaier 10y ago
    Ha! Like they've been innovating in antibiotics for 40 years? In case folks have not been paying attention, zero innovation occurred there. Currently its all about restless legs and secondary asthma relief and snake-oil mixtures of drugs rebranded under goofy names. The drug companies have largely abdicated their responsibilities. For profit. What remains are money-making shells. Can't we just do without them? They are adding friction at this point.
    - cheriot 10y ago
      Antibiotics do provide a good case for increased public research. I suspect medicine will always have parts that are done better publicly and others better in private hands. For example, a tour guide in one poor country I visited mentioned that he knew guides that were trained doctors. Because good tour guides there make more money than doctors. Coincidentally, they also have a shortage of doctors. Kind of like America having a shortage of teachers when governments set the salary.
- GunboatDiplomat 10y ago
  I think it would make more sense to simply have a government owned corporation who's sole purpose is to produce generic drugs on which the patent has expired.
  - maxerickson 10y ago
    The market for drugs like that generally functions quite well. Like a cash price of ~$5 a month well. (The dustup over Martin Shkreli raising the price of Daraprim only happened because there were very few users of the drug)
  - cheriot 10y ago
    Some drugs, like the cure for Hepatitis C, need to be available more widely before the patent runs out. It's a cure and only people that can come up with $84,000 dollars.
- ccvannorman 10y ago
  Hear, hear! One can argue against this saying Capitalism is the panacea of the market, but one only needs to look at ANY OTHER FIRST WORLD NATION (99% of them have nationalized health care and pay less to get better care than us) to see that we're CLEARLY doing it wrong here.
- privateersman 10y ago
  I would be interested to see how the output of drug companies change after they are nationalised. Like would they focus on simple solutions that solve problems (rather than expensive solutions that hide problems)? And would they struggle at being yet another public service with a huge budget to be cut. Will their best staff move abroad for better salaries? Stuff like that.
  - shubb 10y ago
    I suspect surgery can give us some interesting insights here. My understanding is that surgery research mostly takes place at university hospitals. I think that, outside medical devices, there isn't the same kind of non-practising science industry behind surgery research - it's all done by surgeons at research hospitals. Research hospitals tend to be university hospitals and outside (and even inside) the US, university hospitals tend to be loosely government controlled. So if we want to know what state controlled medical research could look like, I guess we just look to surgery.
- yostrovs 10y ago
  How about nationalizing all companies? Start with farmers since food is even more important than drugs. Make sure to throw away history books first.
ende 10y ago
This is not a market failure, it's a regulatory failure. The FDA has arbitrarily denied approval to alternative epinephrine delivery mechanisms and in doing so cemented Mylan's pricing monopoly. When the father of Mylan's CEO Heather Bresch is none other than Senator Joe Manchin (D-WV), who had helped along his daughter's career under a string of shady circumstances in the past, is it any wonder that the our market regulstors are being used to deny market competition? The government created this problem, not the market, and yet people again clamor for more government intervention.
- maxerickson 10y ago
  I'm always clamoring for better government intervention. There's a whole bunch of places that have governments heavily involved in pricing Epipens, places that pay a lot less than the US.
- etendue 10y ago
  I'm not clear as to why you say that alternative injectors were "arbitrarily denied approval": Auvi-Q was voluntarily recalled because it didn't reliably dispense an accurate dose, Teva's was rightfully rejected AB rating because it was not identical to the EpiPen in use, and the FDA is well within it's regulatory scope in requiring Adamis provide a usability study and stress-testing for their pre-filled syringes. The lack of competition to the EpiPen (note that there are other injectors, just not a generic to the EpiPen) is, as I see it, a statement that even simple medical devices are a hard problem. The problems that these companies have had are quality and design failures (in the PLM sense) that are on the companies to correct.
  - gwright 10y ago
    What seems to be missing is a more sophisticated understanding of risk and a legal framework that substitutes the risk assessment of individual patients (or parents) for a one-size-fits-all decision by a bureaucracy. We are hearing stories now of people going with fewer EpiPen's because of the cost. Is that a better situation than Auvi-Q's sometimes in-accurate dose? I don't know but it is a question that comes to mind. The government apparently requires purchase of two EpiPens to reduce the risk in case a single dosage is insufficient, but this doubles the cost. Now some people purchase two (one package) instead of four (two packages) and perhaps they won't have any EpiPen at all when they need one because they can't have one at home, at school, at camp, at Grandma's house and so on. Should pharmacists be able to substitute the AdrenaClick with the patients approval? The law prevents that. Perhaps trusting pharmacists (a highly regulated profession already) to make that decision would be better than patients purchasing fewer EpiPens due to cost.
ende 10y ago
This is not a market failure, it's a regulatory failure. The FDA has arbitrarily denied approval to alternative epinephrine delivery mechanisms and in doing so cemented Mylan's pricing monopoly. When the father of Mylan's CEO Heather Bresch is none other than Senator Joe Manchin (D-WV), who had helped along his daughter's career under a string of shady circumstances in the past, is it any wonder that the our market regulstors are being used to deny market competition? The government created this problem, not the market, and yet people again clamor for more government intervention.
gwright 10y ago
Why is this 'market failure'? It is government regulations and legal prohibitions that have created a situation in which there is no competition. The market didn't create that situation, the government did. It is no surprise the price goes up in a market where competition is effectively prohibited. There are a few solutions: * adjust the regulatory framework to allow competition to emerge * strengthen the regulatory framework and set a price by law * apply public pressure against the sole provider into modifying their pricing The last one is arguably the 'market' at work. The first two are just doubling down on a regulatory framework. In any case, 'regulatory failure' seems like a much better description of the situation than 'market failure'.
- adocracy 10y ago
  I don't agree here. It's both. It's a market failure when the price point (or transparency around the prices) doesn't convince new entrants to persevere through the existing regulatory process. It's market failure when the interests of all stake holders aren't successfully incorporated into the pricing. It's not a regulatory failure that the FDA has higher standards than the offered alternatives - we can't lower standards just to encourage new entrants. But it IS a regulatory failure when the FDA doesn't communicate with the FTC such that unnatural monopolies aren't controlled for, or that the FDA/FTC isn't communicating to the pharma industry that new entrants are required in order to prevent such monopolies from occurring. The FTC should be more "cross-border" effective with the government's own agencies.
  - glenra 10y ago
    > we can't lower standards just to encourage new entrants. Why the heck not? Two obvious reform options are: (1) New rule: any medical device or medicine officially approved for use in any of (large list of countries deemed to have competent regulators) automatically is legal to use in the US as well. Seed the list with all of Europe and Japan, gradually consider adding new countries as seems appropriate. (2) Make FDA approval optional. If a manufacturer thinks a drug and/or device works and is willing to accept the standard liability risk of selling it they can automatically do so, with the only caveat that it must include a prominent "not yet approved by the FDA" label until the product actually has finished getting approved. This label can also include a paragraph or two of more specific warning text and/or a URL to find more info if the FDA has specific concerns.
adocracy 10y ago
It's an interesting concept to suggest an effective put option for the government, based perhaps on the auditable costs of successful R&D. But this would probably have to work both ways - also including a put option in favor of pharma for R&D that was unsuccessful. R&D spending would become more transparent as a result (inflated, perhaps, to try to hedge against the government intervening on a hugely profitable opportunity), but in any event still entirely recoupable. Different sort of risk/reward algorithm at play, but feasible.