For a fantastic discussion about the Byzantine process for generic drug approval, I recommend a recent episode of EconTalk[0]. The guest wrote a book called "Drug Wars: How Big Pharma Raises Prices and Keeps Generics off the Market"[1]. When up to half a billion dollars of revenue is at stake, the drug companies have incredible incentives to delay or prevent generics coming to market. Believe or not, they often simply refuse to give a sample of the old drug to the generic company. No sample to compare, no FDA approval. It is illegal to dispense a drug without a prescription, and the sample is not for a patient, so it can take some maneuvers to get a legal sample. Or the drug company can change a tiny feature of the drug, re-patent the new drug, and then destroy/withhold all the old drug. No old drug sample, no FDA approval of an "identical" generic. The drug companies will contract with a generic company that never, actually gets to production (wink, wink). Those contracts are finally being understood by judges, so now they are going to a second level of contract obfuscation that is even harder to notice, but still keeps the generic off the market.
I live in Brazil and generics for drugs which patents are expired are widely available, accounting for 30~40% of all drug market. If I'm not mistaken, we even broke patents in some cases (HIV drugs), which is cool.
It's difficult. On one hand, the pharmco needs to make money to continue on their mission. (What their mission is is another difficult problem, I believe is isn't "shareholder value", that is a cancer on society.) On the other hand, the product alleviates human suffering, sometimes on a large scale.
A case study that everyone should be aware of is the story of Praziquantel in South Korea.
Praziquantel is about the only thing that works against schistosoma, a very debilitating condition. The compound was discovered in the early 1970s in a joint venture between Bayer and Merck KGA. At that time South Korea had a major schistosoma problem, but Merck could not supply at a price Korea was willing to pay (at that time Park Chung-Hee was in power, it was a military dictatorship).
Korean leadership declared praziquantel a national security issue (true) and started manufacturing their own, and in a collaboration between KIST and Shinpoong Pharmaceuticals developed their own process, which was much cheaper than the original Merck isoquinoline route.
The effort was a major part of the development of a domestic pharmaceutical industry. Shinpoong still hold 50 % of the market in praziquantel.
Maximizing profits for shareholders is not the only motivation that we as humans have for creating life saving medicines. There are countless examples throughout history of new drugs being invented without IP laws. This is akin to how advertisers say the internet wouldn't exist without them.
The people who do the actual discovery are not paid an exorbitant amount of money. They mostly just want to do research and solve problems while living a comfortable life. A pharma company making billions in profit isn’t necessary. It’s just the common way it currently is done. There are other ways to accomplish the same goal. We could try to replicate Jonas Salks’ way Of doing things.
I work in drug discovery. You're right that the bench-scientists don't usually get rich. But it's an extraordinarily risky, expensive, and unpredictable business and for every billion dollar drug there's a graveyard of failed companies and projects that didn't make it. The only business reason to take those risks are for a chance at patent-protected profit. And those bench scientists wouldn't have labs to work in if investors and rich companies weren't willing to pay for it.
What about government funding research? It doesn’t have to be just rich people or corporations. It could be all of us in the form of government. I believe that most of a drug’s overall cost is marketing. I might be wrong on this but it is a significant, useless expense. Remove filthy rich profit motive and we might get drug companies that don’t resort to shenanigans.
In an ideal world, I'd agree with you. In the real world, government funding (at least in the US) is often administered by bureaucrats without relevant scientific expertise to ensure proper oversight. Furthermore, the checks and balances for grant awards are lacking at the NIH/NSF/etc. The panels who decide who gets funding and who doesn't comprise researchers who are far from disinterested judges. Some grant approvals are less about scientific merit and more about rubbing elbows with the right people, which ultimately means that political capital becomes more important than substance in a lot of cases. I've seen large grants funded for experiments that from a methodological standpoint, made no sense, and yet the PIs who submitted the proposal were well-established and had connections.
Corporate science, in contrast, just wants results that work and earn money and as a result is more geared towards weeding out fruitless avenues of research. My general impression is that this is sometimes at the expense of creativity, since companies are more risk-averse generally speaking, which limits what is discovered to mostly non-sexy stuff. I also suspect (but am not certain) that replications are performed more routinely, and are just file-drawered / kept as trade secrets and that the current reproducibility crises in some fields (such as cancer research) have been known about for a while in industry.
Rich people just want to cure cancer, childhood obesity, condition X that afflicts them personally. It's hard to get funding for just basic research because philanthropists generally lean towards the applied side of things as well and don't go for the moonshots. It's not the best, but typically there's some common ground for researchers to get money out of them (or some way to make basic research look applied to an undiscerning eye).
You are simply wrong on this. It costs hundreds of millions of dollars to develop a new drug, prior to approval and marketing. What percent of a companies budget is spend on marketing versus R&D at a given time is kind of irrelevant because (1) the development costs occur before market and (2) often drugs are in-licensed or acquired after significant expense towards R&D has been expended. They don’t buy all the companies whose products fail (most of them) so that cost isn’t factored in. Making new drugs is very expensive and risky.
Edit: I’m describing the development of novel drugs here. “Me-too” drugs are significantly less risky and probably less costly but there’s still a lot of risk amd expense.
>We found that the premiums pharmaceutical companies earn from charging substantially higher prices for their medications in the US compared to other Western countries generates substantially more than the companies spend globally on their research and development. This finding counters the claim that the higher prices paid by US patients and taxpayers are necessary to fund research and development. Rather, there are billions of dollars left over even after worldwide research budgets are covered. To put the excess revenue in perspective, lowering the magnitude of the US premium to a level where it matches global R&D expenditures across the 15 companies we assessed would have saved US patients, businesses, and taxpayers approximately $40 billion in 2015, a year for which the Centers for Medicare and Medicaid Services (CMS) reported that total US spending on pharmaceuticals was $325 billion.
I think you're seriously underestimating how much thought goes into the risk-benefit analysis during drug development. The FDA does create some regulatory burden but they certainly aren't the main driver of why drugs fail. Drugs fail because they don't work or they cause unintended toxicity.
I consider myself libertarian to the point where I'm willing to accept the uncomfortable extremes of the ideology that many people have issues accepting. I vehemently defend the right of a corporation or person to do shitty things that I do not necessarily agree with. However, abusing/commandeering regulatory processes to chokeslam competitors out of the market is a clear cut case of a business or individual using government power to engage in practices that would otherwise be impossible.
Because with patents the IP eventually wears out, and IP = expensive drugs = less customers = more ill people = less productive society. I know, I know, the reality is more nuanced, but thus is the core of the counter-argument.
It's definitely a US only problem. There are, for instance, multiple competing competing brands of EpiPen competitors in Europe. In the US the FDA's mandate concerns safety only and private entities can sue it to force it to do its job if they think it isn't. Which makes it easy for big companies to launch lawsuits alleging that their potential competition can't prove that they can produce drugs as safely as the incumbents.
There are companies which have patented drugs in India, but do not make their drugs available in India. The Indian Patent Law allows for compulsory licensing of such drugs to another manufacturer under certain conditions which meet public interest. This is not a free for all - there are significant legal tests that the manufacturer has to meet to get the CL, and i think only one or two cases have been granted. This provision of indian IPR laws has led to having India being put on an IP watchlist in the USA, though India's laws are compliant with the TRIPS agreement.
This article makes it seem like drug companies alone are responsible for predatory pricing in US healthcare, with hospitals being somehow on the consumer's side of the issue. In reality US hospitals are just as guilty of predatory behavior. If they do achieve lower costs through a new generics company, I do not trust them one bit to pass on the savings to patients. Why would they?
Now I’m European so bare with me and my “Stalinist” ways, but I don’t see why something so essential to society is in the hands of corporations rather than the public.
Research? You could buy a lot of research for the amount of money we’re currently spending on medicine in healthcare and right now we’re really just paying a corporate tax to save lives so that some 1%’et can get even richer.
> Research? You could buy a lot of research for the amount of money we’re currently spending on medicine in healthcare and right now we’re really just paying a corporate tax to save lives so that some 1%’et can get even richer.
You're absolutely, completely, 100% right. That amount of money could buy an incredible amount of research!
Right now, the American government institutions that fund this kind of research are infamous for being very risk-averse. They fund research, but do so in a way that takes few chances. Younger researchers get shut out. Researchers chasing novel ideas often get shut out. After all, why fund some moonshot when there's someone with a good track record of results to fund instead?
Basically, there's ample reason to doubt that the American institutions in question could actually do better if they were handing out the funding. Oh, and the grant-giving bureaucracy is also infamous.
Assuming you're referring to the general development and supply of all drugs (in particular new drugs, as well as generics) the simple answer is that the process of discovering and developing new drugs is both high-risk and also heinously expensive. As such, whoever approaches it needs to have many billions to spend and --very likely-- lose. The current capitalist Pharma model has developed to suit: investors in Pharma essentially take on the risk, and the 'downside' is high drug prices to pay back the investors for their investment and its risk.
Are there alternatives? Well...
* Large charities (the Gates Foundation, for example) might be able to fund development of drugs, but would be most likely to focus on a limited number of high-return, lower-risk opportunities. The Foundation's annual total spend ($4.6Bn in 2016) is roughly half of one large Pharma company's R&D spend (https://www.roche.com/research_and_development.htm), so they've clearly not got the clout to enter general drug development.
* Governments might be able to enter this space, but then you're betting that a government can do it cheaper/better than big Pharma, which is a major gamble, even before you get into arguments about public- vs. private-sector efficiency. You then also run into the challenge of governments not being great at making major long-term visionary investments in a 4/5-year election cycle, the electoral unpopularity of such an approach if drugs fail, and the ethical requirement of firewalling the government development arm from the drug approval (i.e. public-health-safeguarding) arm. And again, you've got to find the money: sure, Roche's drug development spend per year is only ~a tenth of the UK NHS's annual budget... but that's a super-cash-strapped health service - diverting 10% of its budget to maybe improve things in 10 years would be a tough sell.
Any avenues I'm missing?
(Now... fully agree that it would be possible for government or non-profits to enter the generic space, but... the majority of generics make pennies, if anything, and are certainly not cash cows. For every one 'bad' case that's brought to the public attention, be it a rare antibiotic, or the price of adrenaline pens, there are countless thousands of other examples which aren't a problem. So you'd need a very flexible generics strategy to only focus on these rare 'problem' cases... and this might not even always be scientifically or legally possible.)
Research from the Pew Charitable Trusts shows that in 2012 alone 27 Billion dollars was spent by US Pharmaceutical companies to promote their drugs to doctors and patients.
Pharma researcher here (on the early science side, not market research or that kind of thing)
I think people vastly overestimate their physicians' ability to stay on top of newly published research, and that includes new drugs' safety and efficacy profiles. If I want the stuff I work on to reach patients (and I do), then I want doctors to know about it. In the absence of pharma marketing dollars aimed at doctors and patients, I would like if there were some way to bring doctors the new information. Maybe that should be handled by a third party that doesn't have the interests of pharma companies in mind, funded by all of the drug companies at the time of a new drug approval.
In Britain, we rely more on guidance from the National Institute for Health and Care Excellence (NICE). It does comparative reviews to make recommendations on the most suitable drugs to use.
Motivation is primarily to restrict crazy-expensive drugs to those situations where they're actually going to represent value for (the public's) money, but also to point clinicians towards new approaches which can improve the quality of treatment.
So hugely expensive advertising towards physicians is not the only way to do it.
To support the commenter you're replying to, I have seen --first hand-- examples of patients receiving better treatment with very cost-effective drugs (which sailed through NICE) due to the efforts of staff from pharmaceutical companies.
Don't assume that all doctors are committed to making the latest advances (or even older advances) available to patients. They are human, just like all of us, and you'll find stubborn doctors on the conservative (or laggard) end of the spectrum just as much as within any other group or career.
In the United States, policy debates about implementing this sort of body led to them being referred to as a "death panel".
There is no logical reason why we shouldn't prefer an older generic medication if it treats the symptoms of a condition just as effectively and with fewer side effects than a newer option that is no more effective and has more side effects, but doing what is best for patients has to compete against the profit motive of our pharmaceutical companies.
> There is no logical reason why we shouldn't prefer an older generic medication if it treats the symptoms of a condition just as effectively and with fewer side effects than a newer option that is no more effective and has more side effects
There are checks on this, and I'm not sure if you are thinking of a particular case, but I can't really see how this would happen. In order to get approval, a new drug almost always has to demonstrate that it is at least "non-inferior" to the standard of care. Additionally, there is a lot of pressure in the United States from payers. Insurance companies just won't pay for a drug that is in no way better than the previous standard of care with more detrimental side effects. There are definitely cases where the FDA made a mistake for one reason or another (allowed an entity to move through the wrong approval mechanism, were duped by fraudulent AE reports and didn't catch it, failed to require the appropriate screens for AEs, etc), but the system has some checks on drug companies.
Oxycontin was certainly profitable, but it was not good for patients with chronic pain.
This is a case where a Pharma company deliberately misled doctors, patients and regulators because doing so was exceptionally profitable.
>The company that makes the narcotic painkiller OxyContin and three current and former executives pleaded guilty today in federal court here to criminal charges that they misled regulators, doctors and patients about the drug’s risk of addiction and its potential to be abused.
That's an incredibly naive take and one that completely fails to understand the realities of the economics of drug development.
Considering that in 2010, Forbes estimated that the cost of bringing a single drug to market, was between $4-11 billion dollars, you are buying between 2-6 extra drugs per year.
But that fails to account for the fact that the number of drugs doctors and patients have to choose from currently is staggering, and both groups have proven hesitant to switch to new therapies, and so by not advertising new drugs, the amount of money that can be made dramatically decreases, which further impacts the ability for pharma companies to invest in R&D.
No one thinks it is ludicrous for Google or Apple to throw as much money as they do at marketing. Its capitalism, and if you have a problem with it fine, but it isn't evil for pharma companies to work under the same model that every other industry on the planet has and which has been the driving force of the planet for the last several centuries.
We don't need 20 additional drugs that sort of treat one condition (albeit with serious side effects) that the pharmaceutical company prefers we use because the profit margin is higher on new formulations with no generic equivalent.
We need one additional drug that treats said condition better than the existing options, but with less side effects.
The profit motive distorts what is best for patients.
You've got an overly negative and simplistic view of the Pharma industry.
For sure, there are plenty of examples (do we need that many statins? do we need so many beta blockers?) to suit your narrative, but you're also missing the huge sums spent and strides taken in other areas, such as oncology. If you don't show a meaningful benefit here, your drug is a failure - it's that simple.
As much as I understand your underlying horror that so much money is spent on promotion, I think you're missing a major point.
Let's assume, for a moment, that the people running these Pharma companies aren't stupid. We can therefore assume that they will mostly make sensible decisions on how to spend money. It therefore follows that a company calculates that by spending $X on promotion, they'll recoup $X+$Y, where Y is the additional revenue thanks to their promotion, over and above what they'd have made without promotion - i.e, their promotional spend is a worthwhile investment for them.
For each company individually, therefore, promotional spend can be reasonably assumed to generate greater revenue and profit, some of which will be used to fund research into new medicines.
Now, like you, I'd much rather live in a world where there was no promotional spend, and correspondingly lower drug prices... but that's not the current world. And pointing a finger --'but, marketing, sales reps'-- at promotion is not the full story.
Having the pharmaceutical industry arrange everything around the notion of "what is more profitable to us" leads them to ignore the notion of "what is best for patients with this condition".
If unbiased studies show that their treatment is more effective and has less side effects than existing options, then it should become the usual treatment for that condition.
Otherwise, no amount of advertising and promotional activity on their part makes sense when approached from the notion of what is best for patients.
In the case of promoting Oxycontin to treat chronic pain, real harm has been done.
I understand the drug companies ("pharmaceutical industry" in the link below) pay about 60% of the research costs. It's a lot of it, but it's not orders-of-magnitude bigger than the public contribution.
It's not clear from the first article what sort of "research" is covered by the calculation, nor how they've come up with these figures. Lots of basic research is done which furthers our understanding of biology; whether this research results in new drugs is unclear.
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There are different routes by which new drugs are discovered, but very simplistically, we can break them down to two:
1) a researcher somewhere (not in Pharma) comes up with some positive research that might eventually result in the new drug for some disease. To develop this finding, often they will create (spin off) a new private company, and somehow generate funding. The extent to which the original funding institution benefits from this research is likely variable, based on the legal framework and contracts under which the researcher was operating. (And frankly, if a university or other institution doesn't benefit from such a discovery it funded in its labs... they're not doing something right.)
2) a pharmaceutical company funds its own discovery operations, which work to discover new targets and/or drugs for those targets
--
#1 is unpredictable, but can result in great new discoveries which are brought to market --and thus patients-- relatively cheaply (like in the hundreds of millions, rather than billions)
#2 is difficult, and very expensive, but mostly works - some pharmaceutical companies grind out drug after drug. However, ultimate success is less certain, and cumulatively, considering the cost of discovery operations as well as subsequent development, the cost is usually in the billions per successful new drug.
This is also why we're seeing a switch to a mixed model: big Pharma is increasingly spending big on smaller biotech operations with promising drug candidates, as a way of minimising risk.
Even if they do not directly pass this on to patients, cheaper generics will benefit patients in terms of their availability. I recently was involved in a case where a flucytosine (an old, generic anti-fungal) was considered for a patient, but the cost of treatment was $7,000 (as an outpatient) and therefore not considered (despite this being the best option). For an interesting analysis of this, see [1].
"Due to generic drug manufacturer monopolization, flucytosine currently costs approximately $2000 per day in the United States, with a 2-week flucytosine treatment course costing approximately $28 000. The daily flucytosine treatment cost in the United Kingdom is approximately $22."
Would it be permitted to travel to the UK (or somewhere closer) and buy the medicine, then bring it back? Or even order online, there's at least one British pharmacy that can deliver abroad.
I was in San Diego some time ago, and went for a walk to Tijuana, Mexico. I noticed a flourishing pharma business there ;-). Not only Viagra but also seemingly normal pharmaceuticals and services like dentists and doctors. They seem to have found a market there...
Getting through the border and back on foot was a bit of a hassle, and it's probably not a good idea to "bring" too much stuff, but it was a fun experience anyway :-)
> I was in San Diego some time ago, and went for a walk to Tijuana, Mexico. I noticed a flourishing pharma business there ;-). Not only Viagra but also seemingly normal pharmaceuticals and services like dentists and doctors. They seem to have found a market there...
And many, if not most, of these medicines are fake. Especially Viagra.
If you get medicine in Mexico, you have to bring your old prescriptions and compare the two. Luck for me, my regular medicine is a cream for my psoriasis that comes in a box that I can take down there and compare the two. If the boxes look too different, I pass on it.
> Why are hospitals doing the opposite to offering the best care possible to all citizens? Are they for-profit in the US?
Contrary to sibling comments, no, they generally are not. Most (58.5%) US hospitals are private nonprofits, and another 20.2% are public. Only 21.3% are private, for-profit. [0]
Contrary to your comment, yes, they generally are; they're just using Hollywood accounting and referring to their profits as "excess earnings".
"A study published in the May issue of Health Affairs revealed that in 2013, seven of the top ten most profitable hospitals in the United States were nonprofit hospitals, with each earning over $163 million in profits from patient care."
That article links to a CBS "investigation" into the University of Pittsburgh Medical Center, which claims to be a nonprofit but made $948 million from 2011 to 2012, pays its CEO $6 million a year, gets a private chef, chauffeur, and a jet for additional compensation, and has a dozen other administrators each making over a million dollars a year.
Claiming themselves to be a nonprofit saves them about $200 million in state and federal taxes. So, they're just an "accidentally profitable" nonprofit.
But yeah, sure, let's just keep taking the health care industry at its word when it says it's not profitable.
edit: more, because why use a scalpel when a hammer will work just as well?
"Many nonprofit hospitals calculate their charitable care by using something known as “charge master” pricing; exorbitant, non-negotiated prices which are inflated many times higher than what private insurance or Medicare would pay. This allows facilities to overstate their provision of “charity care,” calculated as revenue loss by the hospital in exchange for their lucrative tax exemptions. In a patient evaluated with chest pain, the allowable for Medicare is $3600; however, in an uninsured patient, the hospital may “write-off” an inflated $25,600 in uncompensated costs, which is 8 times higher than actual cost of care provided."
"But even many hospitals that showed losses on patient care had positive margins overall. The study found that median net income per adjusted discharge from all activities—including investments, charitable contributions and space rental—was $353 for all hospitals and $178 for hospitals with 50 or fewer beds."
"Non-profit is instead simply a tax status, and specifically, it exempts hospitals from paying real estate and other taxes in exchange for contributing a fixed portion of their revenues to ‘community benefit’ rather than paying dividends to shareholders. ... Cleveland Clinic, one of the largest health systems in the country, was held up as an example of a wildly profitable non-profit in a recent article in Politico."
(read that one, it's a good breakdown of the accounting that hospitals use to maintain their nonprofit status while behaving in every other way like any other for-profit business.)
> Contrary to your comment, yes, they generally are;
No, they're not.
> they're just using Hollywood accounting and referring to their profits as "excess earnings".
No, they aren't. Excess earnings are the correct technical term. Non-profit status, even in theory, has nothing to do with whether you earn more in revenue than you expend in costs, it has to do with whether there are stockholders or others who have a claim on accumulated returns.
More specifically, charitable nonprofits (which non-profit hospitals are) have a wide variety of additional requirements and restrictions (both in general, and specific additional requirements for hospitals, including several added by the ACA.)
> read that one, it's a good breakdown of the accounting that hospitals use to maintain their nonprofit status while behaving in every other way like any other for-profit business.
No, it's just a bunch of dishonest, or perhaps merely clueless, mischaracterizing; the most obvious example being considering money expended in providing Medicaid services but not covered by Medicaid reimbursement as money the hospital “paid to itself” rather than an external benefit. This isn't money the hospital paid to itself, it's money the hospital paid out to provide services under a public program providing healthcare to the medically indigent but which was not reimbursed by that public program (in general, Medicaid is a money-losing program for providers, as—while there are some exceptions—reimbursement is generally at the lowest of three things: a state set rate, the actual cost of providong the service, or the provider's usual and customary charge for the same or substantially similar service. This is at best break even, but over all, across all providers, it's always going to be, in practice, below actual cost.
In my area, the non-profit (in name only) hospital system uses aggressive pricing, advertising, and takeover tactics to drive existing hospitals out of business, buy them out, dump unprofitable patient groups, recruit profitable ones, and then hold their medical care hostage while renegotiating higher reimbursement rates with the insurance company, with no accountability and giant compensation packages for their executives.
You can deny things all you want. The behavior of some "non-profit" hospital chains is out of line with what the public and the government considers appropriate for non-profits, and constitutes tax abuse.
With revenue in the billions that doesn't represent a significant cost (Say 1% on the higher side).
I'm pretty convinced the market for CEOs in general is broken, but it's also the case that largely eliminating CEO compensation wouldn't move prices much in any business.
I have no idea about CEO compensation in general, but I'm curious what would be a reasonable salary/compensation for someone who manages several large facilities and thousands of staff, some of whom make 7 figures for their expertise. $6M plus perks doesn't seem that high to me, but maybe I'm desensitized by seeing so many other executives make gobs of money.
1) Properly healing people reduces your customer base. 2) Yes (with some exceptions).
The other aggravating factor is that most mutual insurance companies have also converted to a for profit model that reinforces the incestuous coupling between pharma and medical providers. There is no voice left who has an interest in lowering costs.
American hospitals do offer the best care possible to patients. Thats actually the problem. Much has been made recently of the tendency of hospitals (in the US) to overdiagnose/overtreat patients, which is driving up the overall cost of healthcare. In other countries like the UK, I think that there is more caution regarding prescribing costly, unnecessary procedures. The result is that, yes, the actual healthcare is probably better than anywhere in the world, but the additional quality compared to countries like the UK or Australia is marginal considering the added cost, which for anyone with bad/no insurance, is insurmountable.
Here's how this goes: "But if they weren't for-profit, then it would be more like Canada's or England's health care, and I've heard you have to wait months for anything over there. Also it would mean they wouldn't have as much money for innovation, and, y'know, the US has the best health care technology in the world. Oh, sure, only the rich can afford it, but if you're poor you can still go to a hospital and they won't turn you away."
There, that's every single defense of our system, in one paragraph. I don't think I missed anything.
If you want to go down that road, probably you mean the United Kingdom.
And you may not be aware but “Each of the UK's health service systems operates independently, and is politically accountable to the relevant government: the Scottish Government; Welsh Government; Northern Ireland Executive; and the UK Government, responsible for England's NHS.”
Not to get excessively meta-pedantic, but the constituent countries of the UK each run their own independent health services. The difference in wait times is currently quite a hot topic of discussion!
If anything, a comparison with England is probably more appropriate :)
Its probably necessary but not sufficient for there to be more competition in this area. That there are nationwide shortages of saline bags and sodium bicarbonate indicates massive market failure, without evening considering more complex drug politics.
You raise a good point about drug companies not being the sole source of predatory pricing in US healthcare. US healthcare is in the neighborhood of $3T whereas drug spending is around $300B, though drug spending is going up faster than health spending overall.
For one, a significant number of of hospitals are non profit. Excess earnings must be invested into hospital itself in the form of capital improvements and additional staff. Controlling costs is a way of reducing their own need to spend this excess money.
Those hospital systems are non-profit. Not that there aren't ways to spend new revenue on buildings and equipment, but at least there's less profit motive.
Medical Devices use the exact same play book. Small improvements + patents and new FDA approvals. You can use the old design, but there may be a flaw. Not to mention distribution strongholds and salespeople in the operating room with doctors.
Never forget being charged 14.99 for one Acetaminophen while in a hospital, and this was years ago.
My father had good insurance. He went in for a spider bite. He needed to stay the night. I arrived and he thanked me for Teddy Bear, and flowers. I told him I didn't send you anything. He said, "Well someone did?"
Weeks later he called me up, and said the gift shop on the hospital send the gift, and charged the Insurance company $230. Billed under something like "psychological affirmations".
Any who--they are thieving entities. It kills me when I meet people, with no assets, who pay their inflated hospital bills out of American pride? They are so strong in their convictions, I don't even bring up a chapter 7. I understand they save live, but don't financially ruin patients.
One other memory. I went in for something. I had great insurance, so I didn't worry about the bill. They gave me a blood test. A week went by, and I got a bill for $900. I called my union, and they the hospital didn't know I had insurance.
My union said my bill would be $10. She said the hospital sent them the bill of $100, and I would pay my 10 percent. I asked, "Why do they only charge you $100?" She said, "It's about Collective Bargaining. Yea--I find it shocking too."
One of the best rules for US hospitals (other than universal care) would be for all hospitals to publish prices annually and charge one set price, be it a walk in patient or large union.
This should be a reasonable rule if people want to keep capitalist system healthcare. Its not stopping them competing, only applying a transparent and level playing field to the market.
Yep, transparency and charging all patients the same should be regulated. Then it barely matters if the system is private or public, because it would be so cheap that even the uninsured wouldn't go bankrupt from a surgery.
I don't understand how charging different prices for the same service is legal. If that would be declared illegal (as it is in many other countries) it would probably already fix a lot. Some insurances would pay more but people without insurance vastly less.
I always assumed it would be CVS that got into the game. There are are probably a dozen or so drugs that account for the majority of consumption. Flu vaccines, blood pressure, cholesterol, thyroid, insulin, asthma, progesterone, beta-blockers, gerd, etc. Providing these at minimum cost, as well as community public health services. Could be enormously cost effective. And extend general wellness and productivity many times over.
>>> "the trick will be in selecting the right third-party manufacturer to ensure good quality"
Obvious subtext here is outsourcing mass market generics to be produced in India, China and other emerging markets. "Pharma-security" might be a popular way to phrase it today. Quality is undoubtedly reflected in price. And there is enormous opportunity in exponentially reducing R&D costs and finding efficiencies.
I they seem to be explicitly targeting generics, so R&D doesn't come into play. It's really just find someone who can build a known compound and press it into a pill. This has the potential to be massively disruptive.
There is still a significant R&D element in that "press it into a pill" step. This is manufacturing and process R&D. For example, continuous (rather than batch) manufacturing is the big hotness at the moment. Also new techniques, such as 3D printed pharmaceuticals, involve plenty of R&D effort.
Yes, but compared to R&D for creating a new drug, it's a fraction of the cost. Also, I would think to save costs, they would do it the cheapest way that is proven and reliable.
And in order to get that approval, you will likely need a sample of the product that you intend to demonstrate equivalence to. Good luck getting that sample from the maker of the incumbent product who has nothing to gain and much to lose if your product were to get approved.
Not being able to get a sample to prove bioequivalence is typically very easy. There are a handful of drugs that have a REMS program whereby the manufacturer is required to restrict access. We're talking maybe a few tens of drugs.
And yes, drug companies playing the game of "I'm not allowed to give you a sample" is super shady and ridiculous. Wouldn't surprise me if this gets fixed super fast.
FDA could give overriding authority to oblige manufacturers to provide a sample to the generic manufacturers for drugs older than <x>. Of course this is bad for business.
Alternatively the generic manufacturer would have to run a phase 1 and 2 trial. (Skip requirement for phase 3)
Expensive, but much less than full R&D.
I would not think that CVS, as a retailer, has much incentive - it is not paying the cost of the branded drugs. It is the insurance companies that I half-expected to make this move, unless there are anti-trust issues, or specific legislation (bought by the drug companies) to prevent them from doing so.
Aside from generics, Boots in the UK used their patent on ibuprofen to dominate their market.
I’m always surprised there isn’t more pharmacy-driven research or investment into exclusive over-the-counter medicines to mimic that strategy, or bidding wars to get exclusive pharmacy rights to new drug patents so that firms can get halo effect shopping.
(Not that I endorse this sort of corporate lechery, I’m just surprised, is all)
As for the exclusive pharmacy arrangements, that already happens. Some drugs are only available at one pharmacy. That may mean more business for the pharmacy, but manufacturers also extract more concessions because of it.
i was thinking the same thing, but i was thinking that it was going to be Walmart who got into the game first, especially since they were starting to get into the clinic gig already.
Let's say they succeed in launching a new generics company. Ten years down the line they will divest in order to build each hospital a shiny new geriatrics wing. Within six months the spun-off drug company will jack up prices and the cycle will continue.
This is all nice and cynical sounding like HN loves when it comes to big companies, but even then: is that such a bad thing? You have ten years of a lot of people getting cheaper and better access to drugs, and you have a bunch of hospitals getting much-needed capacity increases with state-of-the-art facilities, and you have a proven business model for someone else to come in and take their turn at the money-making wheel.
It's like saying nobody should start a new company cause "best case they'll be another evil surveillance company like Google/Facebook/Microsoft/Amazon, worst case they'll lose all their money."
Concur with maj maj maj maj... additionally, the the cynisism ignores the introduction of new competitive forces with a different moral vector in a largley unchecked market, the repurcussions of which are certainly uncertain, for certain.
I agree with you that more competition is a good thing, but I don't think you can say that hospitals have a different moral vector than drug companies. Hospitals are as much huge corporations trying to please stockholders as big pharma is, they just happen to have people working for them who have a different moral vector. But I wouldn't put much hope in hospitals making a huge investment like this for the good of their patients
That's pretty much the case with all of the economy, though. Industry is dominated by big companies that are overpriced and consumer-hostile; new startup enters that actually delivers a decent product at a decent price; startup becomes wildly popular because it's better than entrenched encumbents; startup founders/investors/early employees want liquidity and either sell to big competitor or go public and are forced to be responsive to shareholders; startup jacks up prices and cuts costs; everybody starts to hate the new big company; the cycle repeats.
Think of it as the full-employment theorem for entrepreneurs, or the social-mobility conveyor belt, or the way in which society stays dynamic & responsive. At least savvy customers get a decade of decent service at reasonable prices, and people (from all backgrounds!) with chutzpah and persistence have a shot at becoming fabulously wealthy.
From that perspective, does any country have their own publicly owned pharmaceutical manufacturer? It's the kind of thing the NHS should do, since they control most other aspects of health care, but I don't think they do.
There's so little benefit to competition with generics, you may as well have that vertical integration to at least provide what hospitals need.
That's an over simplification. Sure Medicare and Medicaid don't negotiate directly. Instead they impose discounts by fiat (no discount, no gov't business).
Look up the 340B program and mandatory Medicaid rebates. They add up to huge discounts.
In most cases Medicaid pays the lowest price of any customer and Medicare often pays the same as private insurers.
It's a fallacy to say the gov't is getting screwed over by not negotiating over drug prices.
To show that it is a fallacy you would need to compare the final drug costs after rebate with an average of foriegn govs that do negotiate rather than private insurers.
the government is not allowed to negotiate at all on drug prices (utterly insane, thank you W. Bush) but insurance companies can, and do, negotiate as a group.
Country-owned means of production have usually not fared well vs competitive forces in the past. And it could be considered as unfair competition: a state-owned manufacturer could basically have a blank check from the government for any kind of investment and would not have to worry at all about profitability. It sounds very nice as a thought exercise, but economical incentives are very tightly linked with productivity.
The problem is anti-competitave behavior though, right? The pharmacutical market is highly consolidated. Trying to rely on some startup to successfully compete in a highly consolidated market that requires a lot of capital and specialized labor isn't going to work, only the government can compete at that level so they should - especially when it is so clearly in the public's best interest for everyone to have access to the services provided by the market.
>Country-owned means of production have usually not fared well vs competitive forces in the past
Currently in the exact markets being discussed ISP markets are in a similar situation. If you look at municipal broadband providers, they has fared very well - providing better service (fiber) for lower costs while protecting the public interest by opting in to net neutrality. Outside of ideological concerns it's hard for me to the problem with the government intervening in stagnant markets by competing directly.
Thinking of it as “unfair competition” implies that companies have some sort of entitlement to a market. They don’t.
If my town wants to have its own fire department, it’s not “unfair” to privately owned fire departments anymore than working on my own car is “unfair” to professional mechanics.
Nationalized production is usually something to discourage for the same reason monopolies and oligopolies should be discouraged--they are insulated from competition in special ways, and as a result in the long run they tend to become inefficient (which in the worst case translates to basically extorting customers).
The root of the problem with American drug companies is that they're insulated from open market competition by a government approvals process that costs billions--only a few companies have enough money to take a new drug to market. The government could reform this process but chooses not to, claiming it's necessary for consumer safety (certainly some kind of approvals process is).
Nationalized producers are generally considered "unfair" because they're usually (always??) tax subsidized in some way. As such, they're not competing on a level playing field with the other players. In fact, the other players are being taxed... to pay for subsidizing their direct competitor!
Now if you wanted to setup a nationalized producer, put a "chinese wall" between it and the State and force it to compete without subsidies or special (favourable) regulations, sure, go for it. But then what's the advantage of it being nationalized to begin with? Anybody could start a non-profit corporation and do the same thing.
Because of the purchasing power of the NHS (enormous) they don't usually run into many problems like described in this thread, although they do happen here. Drug company monopolies need a drug purchasing monopsony to keep them in check.
That would be an interesting cycle. Perhaps the hospitals could document the process of setting up the drugs company, so that as soon as the prices are jacked up, they can start up another one. It could be quite a profitable business model: starting up and selling drugs companies.
Agree, however the market would have an additional significant competitor, as well as a blue-print and success example for others to emulate if they decide not to defend their value prop.
The problem is that the most effective way to defend your value proposition seems to be buying laws that protect you against new competition. Entrenched players might compete with each other, but they can all agree to crush the new guy together.
When there's lack of competition, one needs to look for artificial barriers.
Ah, found it:
"Intermountain executives said that they would seek approval to manufacture the products from the Food and Drug Administration, which has vowed to give priority to companies that want to make generics in markets for which there is little competition."
No, but a more reasonable level of regulation like the EMA uses would make things a lot better. There are levels of regulation between Anarchy and Stalinist 5 year plans.
For emissions, but not for safety. My understanding is the NTHSA does not actually approve a car for sale in the US, it just requires that the manufacturer certify it meets the regulations.
Your car needs to be certified to not spew shit everywhere in the same way your drug needs to be certified to not harm people who take it. For obvious reasons, one is far more expensive to test and certify.
Is the food in your local supermarket certified to not harm people to eat it? It's regulated, and the FDA can inspect to verify compliance with regulations, but suppliers do not have to get approval from the FDA to ship.
The problem here is the scale of harm and manufacturing of inert or ineffective products, not even too mention harmful ones. This is why every formulation has to be approved.
GMP etc. Requirements have been added after some scandals with tainted stuffs making people sick instead of better.
This would be not compared to mom and pop food stand but a big supermarket chain or food manufacturer.
I am not sure if patients will see any of the savings though. I view hospitals as fundamentally dishonest organizations after a few experiences. Their medical treatment is fine but their financial practices are borderline fraudulent.
You'd be hard-pressed to make a system that keeps hospitals from being abusive. Your BATNA to accepting their terms is literally dying, and especially the older folks who need more care have giant piles of cash. The cynical profit-maximizer in that position will raise uninsured prices high until the losses due to "eff this, I'm declaring bankruptcy and my various creditors can squabble over my assets" outweighs the increased collection from payment plans.
62% of bankruptcies in the US are caused by medical debt.
The only saving grace in this all is that you can save enough for retirement in creditor-protected retirement accounts, and can otherwise secure yourself financially while telling your creditors to pound sand if they're being ridiculous.
I could design such a system overnight. Starting tomorrow instead of paying for medical care the US Medicare and Medicaid programs will simply cut a check to the people who they were previously funding care for. Then those people may choose to spend the money on anything they wish, healthcare or otherwise. The days of not being able to price shop are over, competition will drop prices through the floor.
The hospital can try to be as evil as they want, but their ability to do so in a market that has actual price and service competition will make it very difficult to do so.
“Let me price compare my heart attack operation before I decide on which hospital I want this ambulance I found on Expedia to take me to before I die.”
The other poster is exactly right, the type of emergency life or death situation you're describing is a very small percentage of medical care, even within hospitals.
Some, if not most, of this is a result of the insurance system. The insurance companies only pay x% of any given item, therefore the hospitals have to jack prices through the roof to collect enough to survive.
The problem with our healthcare system is that too much money goes to drug companies, medical device makers, and insurance companies and not enough makes it to the people actually providing the care. Its a bit more complicated than that, I'd admit, but that's the TLDR version.
Hospitals are every bit as cynically abusive as the other players. They ratchet up prices as high as they can get away with while blaming insurance companies, the only party in the system with enough leverage to negotiate prices down, they demand huge kickbacks before giving drug companies access to patients (the #1 cost in drug development) and put gigantic markups on drugs they give to patients while pretending drug companies are the sole responsible party for high drug prices, they act like non-profits when asked to pay taxes but for-profits when they decide on executive compensation or location strategy (i.e. close hospitals in poor neighborhoods, open in rich neighborhoods), and they house a guild that has had such diabolical success in "managing" its training pipeline that it publicly condemns the policies it itself put in place to do so.
In general: If you ask the insurance companies who the problem is, they point at hospitals and drug companies. If you ask hospitals who the problem is, they point at insurance companies and drug companies. If you ask drug companies who the problem is, they point at insurance companies and hospitals.
If you look at patient costs in the three sectors compared to other countries, you see a remarkably even division of the spoils between the three heads of the beast.
Health insurance companies have taken to denying almost every claim that hospitals file. This overtaxes the hospitals claims denial departments and costs hospitals millions in lost revenue because they don't have the staff to properly review and resubmit every claim (which has to be done by a clinical specialist).
It's like taking your car to a mechanic, and once it's fixed, refusing to pay, claiming car didn't need THAT repair in the first place. Then getting away with it because you have an arbitration agreement in place with the shop. So the shop needs to employ an entire separate department of ASE certified mechanics that are dedicated to documenting that the repairs performed on customer cars were necessary. But the kicker is, YOU GET TO DECIDE IF YOU'RE CONVINCED THE REPAIR WAS NECESSARY.
Hospitals used to have small (1 person per 10k beds) claims denial departments and use outsourcing firms if case loads increased. Now they are acquiring all the outsourcing firms and increasing their staff to like 100 people per 10k beds. It's insane.
I like to retell a particularly awful denial my partner had to deal with, which was a patient had their open heart surgery claim denied by the insurance company because they determined that the patient's condition only warranted observational care (that's right, the insurance company determines what care you need/get). The hospital eventually won that claim, but they routinely lose $100k+ claims and have to eat the cost.
True story: my partner's department can't just sort denies by highest cost because they literally do not know how much the procedure actually costs and nobody in billing/finance can tell them either.
She came home one day feeling pretty good about overturning a $180k denial. She checked back a few weeks later, and found the paid in full amount to be in the neighborhood of $10k after "negotiated discounts."
The system is fucked. Had the denial gone through, that person would have been on the hook for the full 180k. (Or, to be more accurate, the hospital would have negotiated for $10k from the patient and written the remaining 170k off of their taxes)
The people I've known who needed expensive care (high-5-figures or 6-figures) were made well aware of the costs in advance, because at that point the facility wants to make sure your insurance will cover it beforehand. But it doesn't do that much for the patients - comparison shopping doctors and facilities is extremely stressful stuff and a lot of people would rather not think about it, even when some outcome info is available. And the exact details are never known up front, so then you're dealing with "it'll probably cost X more to do it at Y but there's probably a Z percent higher chance of a good outcome..." no-right-answer type serious business decisions.
Emergency care is a different matter, I imagine, insurance-coverage-wise, but pre-approval seems to be fairly widespread for planned stuff these days.
Except that medical providers don't honor the estimate in the same way an autoshop typically does and is required to do in many jurisdictions. They treat it as just that -- an estimate. You still get charged for whatever procedures are performed, which can change from the estimate when situations change or they deem something to be medically necessary in the moment.
> Your car is unlikely to experience life-threatening complications with a nearly unbounded upper cost while it's being fixed.
If you bring your car in for repair and tell them that you need to have the car's brake rotors and pads replaced, the shop can tell you that the parts will cost X and the labor will be Y hours at Z cost per hour and give you a relatively accurate estimate. They may later tell you that there were some bolts that had to be drilled out before they could remove some parts and that may increase the labor cost somewhat.
Why can't that be the same case if I go to get a chest X-ray with posterior-antierior and lateral views? If you have the CPT code(s) and the insurance information, it should not be difficult or time consuming to get the cost estimate.
> Why can't that be the same case if I go to get a chest X-ray with posterior-antierior and lateral views? If you have the CPT code(s) and the insurance information, it should not be difficult or time consuming to get the cost estimate.
It is both difficult and time consuming [0], and, moreover, often distant from the provider, because medical billing is quite often outsourced.
[0] Perhaps not in the median case, but there are plenty of complex cases, which is one of the reasons this is outsourced.
In Canada, developing an accidental MRSA infection after a routine surgery will trivially turn a $5000 procedure into a $25,000 package of life-saving treatment and associated hospital stay.
When things go bad in medicine, your bill grows really, really, really fast.
Also, unlike a mechanic with a car, your doctor can't stop working on you after they blow through their quoted budget and ask if you still want to pay for treating the complications. I mean, they can, but unless you've got a death wish, you're not going to say 'no.'
I certainly don't get more money if I accidentally introduce critical crash-to-desktop bugs, and then spend more time fixing them. I get paid to do the job to a minimum standard of quality. The customer is paying for the outcome they want, not for the amount of work it takes to get there. The Labor Theory of Value rears its ugly, no-good keister again.
If an actuary can quote me the price of a life insurance premium 40 years before a person is expected to die, such that the company doesn't lose money, a hospital can figure out how to price its services such that it doesn't go bankrupt. Those wailing about too many uncontrolled variables are just trying to suck the last available penny out of the patients. How can they possibly nickel-and-dime people to death on their itemized bills if they don't know exactly how many cm of plastic tubing will be needed for the surgery?! How can they charge $25 per 500mg analgesic pill if that is already included in the published price of the procedure?! It's really only a problem if your mission is to suck out all the consumer benefit of trade via price discrimination.
If my auto mechanic blows past their original quote, they don't stop work and ask for more money. They fix the danged problem, charge what they said they would, and try to estimate better on the next job. And they certainly don't plow ahead, replace the engine and transmission and exhaust system, laser-scour the rusted body panels, put on new tires, repaint the exterior, reupholster the interior, clean all the crap out of the trunk, fill up the gas tank, and then try to charge me $120k to get my 2001 Civic back. The doctor can't stop working, but they can stop charging extra for it. If I knew ahead of time that it would have cost that much, I probably would not have consented to the procedure in the first place.
Ah, but your chances of an MRSA infection aren't the same everywhere. Some hospitals are far better than others at preventing infection, while others are far worse. In a bill per procedure world, like in US medical billing, while I'd not expect anyone to do it badly on purpose, lax procedures that lead to more care are paid by the patient's insurance. In a government owned hospital, or if billing is done up front, it's the hospital's problem. American billing leads to no incentive to saving money, so guess what? US hospitals charge a lot more per procedure and perform somewhat more procedures than everyone else, so ultimately the price is higher.
Even if nobody had insurance and shopped around, the US style of billing would lead to very little downward pressure on prices, as it's impossible to have a clue of what you are going to pay.
Many businesses, including freelance developers, will not charge per hour, but by job. You jack up the price to end up ahead in the case of typical complications, but there are cases where you lose money, and that's on you being bad at estimates and billing. Billing by procedure in the medical system is just setting the wrong incentives, and a recipe for maximum waste, if not downright fraud.
> Doctor associations all across the country create enormous barriers to the opening of new medical schools to avoid competition.
similar to how nursing unions band together and squash efforts for community paramedicine (many of the same services at a way lower cost) to expand. "they'll be taking our jobs!" is what it boils down to.
>
Some, if not most, of this is a result of the insurance system. The insurance companies only pay x% of any given item, therefore the hospitals have to jack prices through the roof to collect enough to survive.
To clarify: Medicare reimburses rates that are below COGS, so hospitals have to increase the amount they charge private insurers in order to make up the loss.
The grandparent is describing a separate issue - note that not all hospitals will serve Medicare-receiving patients beyond their federal requirements.
Insurers negotiate reimbursement rates with hospitals, with both parties being able to leverage their size/social cachet to extract favorable terms. This contributes to the availability of certain hospital chains in the preferred networks vs. the non-preferred networks of particular insurers.
It's actually the same issue - the way the contracts are structured, insurers agree to pay X% of what Medicare charges, where X is typically something like 200% or 300%.
If Medicare rates are actually below cogs, why do hospitals accept Medicare patients? I know some don't, but the vast majority do. Something about that explanation feels off.
Some private facilities don't, but in general it's cheaper and easier to provide preventive care than it is to try to collect from these patients after they admit to the ER with a complication (where you are mandated by law to treat them).
One of the reasons hospitals accept discounted rates for insured patients in general is ease of reimbursement vs trying to chase the patient for money.
If you serve a certain rate of medicare patients, you get additional funding. It's set up this way for 'political' reasons. Like most of us politics, it's a mess.
> If you serve a certain rate of medicare patients, you get additional funding. It's set up this way for 'political' reasons. Like most of us politics, it's a mess.
That's not an incentive for hospitals to serve Medicare patients; it's compensation for the fact that the hospital sees so many Medicare patients (and therefore so few privately-insured patients, by portion) that it can't make up the difference solely from overcharging private insurers.
"The problem with our healthcare system is that too much money goes to drug companies, medical device makers, and insurance companies and not enough makes it to the people actually providing the care. "
The surgeons I see through work have very nice houses and 100k+ cars so they are part of this.
You can thank the American Medical Association for their work on artificially limiting the number of doctors. I've read some accounts that they're now trying to fix this, but it's not something you can just fix in a year or two.
> The problem with our healthcare system is that too much money goes to drug companies,
Erm no, actually you pay a lot more for pure hospital services all things considered than whatever is paid for the price of drugs. I totally agree that drugs should be cheaper for patients, but pretending drug manufacturers are the only/main problem is just far from the reality of the market. Every intermediate is inflating their prices as well.
The real root problems with the system are that a tiny minority of very sick patients account for an overwhelming majority of treatment costs; that it's difficult to prevent this from happening; and that the current care structures make it hard to take early action to incentivize these patients to improve.
It also is almost impossible to have a real discussion about this fact because it makes people uncomfortable.
There's a lot of moralizing in this, without numbers justifying it. Show me the evidence that an overwhelming majority of costs come from few recalcitrant bad actors vs things like cancers, expensive surgical or drug remedies of rare diseases, or just plain expensive end-of-life care (a somewhat separate discussion from the others, but a conversation that'll have to be had sometime).
Without that... the costs will always be unevenly distributed due to the nature of illness, that's why the only sane first-step health policy is mandated universal insurance coverage, public or private, since the main question is who is going to get the bad news that they've got the unlucky genes/mutated cells/whatever. Everyone pays in, everyone gets covered if/when they need it.
And if you pay in your whole life and never get seriously ill? That's not a reason to complain, that's a reason to thank your lucky stars you didn't have to deal with being seriously ill or injured! It's not fucking fun, like sick people are trying to get a free ride here.
The parent comment was correct when they said this:
"The real root problems with the system are that a tiny minority of very sick patients account for an overwhelming majority of treatment costs"
It's impossible to tell exactly what the parent comment meant any more precisely without clarification, whether they were talking about unnecessary over-consumption of resources (Americans have been over-healthcare'd for decades), or that eg cancer patients or elderly consume vast resources (as one would expect). However, it is of course the case that a tiny percentage of the population produces a very large share of the cost. The bottom 50% of healthcare consumers, are a mere 3% of the cost in the system. I don't know what the point of any of that is however, there are only ultimately two choices: go back to the old system that was far less expensive for the majority, but didn't properly cover about 1/3 of the population; or continue to shift toward universal healthcare with a fully distributed cost (which means significantly raising taxes on the middle class, as in every universal healthcare system).
"When it comes to America's spiraling health care costs, the country's problems begin with the 5%. In 2008 and 2009, 5% of Americans were responsible for nearly half of the country's medical spending. ... In 2009, the top 1% of patients accounted for 21.8% of expenditures."
> You can do the NHS way and forbid paying for unwarranted procedures for life extension.
Please cite which of these procedures are forbidden.
> NHS adopts this measures in the so called death panels
The US has these too, in the form of insurance companies.
I think if you're going to have them it's better to ahve them be publically owned not for profit organisations under intense government regulation, rather than profit making companies.
NHS guidelines is to not extend a terminal patient's life indefinitely. Not sure the explicitly reason is costs but having people months on intensive care is pretty darn expensive
Your first link refers to the Liverpool Care Pathway. This was only for people with end stage terminal illness. It doesn't happen anymore -- the Liverpool Care Pathway has been stopped in all hospitals in England.
Your second link is even weirder. Firstly you've linked to a local organisation that covers a population of 250,000 people. Milton Keynes CCG is not a national organisaton. Secondly, you've said this is about not funding some treatments, but you've linked to the page where people can request funding for those treatments. Thirdly, You think US insurance companies fund anything and everything?
Some treatments are very expensive and also do not work. We see this most commonly with cancer drugs. To ease the burden for CCGs there's a national "Cancer Drugs Fund", set up to provide access to the latest cancer drugs.
They do not work. They do not work, and they cause harm, and they are very expensive.
> The Cancer Drugs Fund, set up by the government to pay for expensive medicines that the NHS would not normally finance, failed to benefit patients and may have resulted in some of them suffering unnecessarily from toxic side-effects, experts say.
> An analysis in a leading cancer journal has found that the fund paid out £1.27bn from 2010 to 2016 – an amount that would have paid for an entire year of mainstream cancer drugs for the NHS.
> But medicine it paid for was not worth the money, the report concluded. The analysis in the Annals of Oncology journal looked at 29 cancer drugs approved for 47 different types of treatment (known as indications), some of which were approved to treat more than one cancer. They found that only 18 of the 47 treatments prolonged the patient’s life, and then only by an average of three months.
But assuming someone still wants it, and they apply for individual funding and don't get it, they're now in the same position as many Americans: they can crowd-fund and go private.
Mostly the expensive people are, as you say, the ones screwed by fortune or those whose health declined in the past for whatever reason and their present behavior is not going to be able to fix things even if it contributed to their present poor health. Still it doesn't make much difference to the hospital when they have to explain why a routine knee replacement is going to cost 20k.
Depends on what the market conditions are. If there is a lot of competition from hospitals then the payer may just refuse to include the hospital in network if they aren't willing to play ball, meaning they lose all the prospective business.
Well, some hospitals are honest, and dedicated to patient care. And some are dishonest, and only in it for the money. But whatever, none of them are as evil as most drug companies.
Good Lord, people truly just don't get it. Hospitals are not evil; they are tasked with saving people's lives. People who nobody else can save. All the worst medical problems in the world--sometimes sudden trauma, sometimes a festering problem left to burst--they all end up on the doorstep of the hospitals, full of doctors, nurses, and technicians who are humans just like you and me. And they work ridiculous hours saving as many of us as they can, dragging bodies back from the footsteps of Death itself. Some of them making great money doing it, but others just because it's not in their nature to do anything but help. And yes, like any organization, hospitals scramble for cash to keep the lights on and keep operations going for a mission they hold sacred. But you show up at an ER, and you will get a minimum standard of care, no questions asked. And that's pretty amazing.
Disclaimer: None. I don't work in the medical industry.
> Good Lord, people truly just don't get it. Hospitals are not evil; they are tasked with saving people's lives. People who nobody else can save. All the worst medical problems in the world--sometimes sudden trauma, sometimes a festering problem left to burst--they all end up on the doorstep of the hospitals, full of doctors, nurses, and technicians who are humans just like you and me. And they work ridiculous hours saving as many of us as they can, dragging bodies back from the footsteps of Death itself. Some of them making great money doing it, but others just because it's not in their nature to do anything but help. And yes, like any organization, hospitals scramble for cash to keep the lights on and keep operations going for a mission they hold sacred. But you show up at an ER, and you will get a minimum standard of care, no questions asked. And that's pretty amazing.
I don't think people are complaining about the doctors and nurses. They're complaining about the institutional billing & pricing practices -- and not just the exorbitant prices. Americans have trouble even getting price quotes for routine procedures [1]... a problem that, as I understand, many other countries simply don't have. How can you completely miss these fundamental problems and then claim "people truly just don't get it"?
I work for a hospital and I agree with you that the billing practices are shitty, but I couldn't tell you what a procedure will cost you even if ordered to. At best I could give you an average for a procedure but if you're in for a few days you may see dozens of doctors and have hundreds of procedures including an operating room procedure or two and a whole lot of blood tests, imaging, poking and prodding (e.g. assessing your risk of pressure ulcers). Each of these has a base cost and then each insurance company has a different amount they're willing to cover of that base cost and an discount rate that varies by company. Many of these factors will also depend on your personal history of diagnosis and treatment.
It's a big mess and I don't see billing practices improving significantly until the reimbursement system changes. Single payer could really simplify things for the end user.
It's not only that. Our local hospitals can't give us prices for procedures that other places can.
We tried price shopping an hsg test because we had to out of pocket it. Hospitals took hours on the phone and multiple call backs. Other places could give us a quote in minutes.
We chose a hospital based on price. The morning of the procedure they told us it doesn't include everything. But they said we were wrong and our insurance covered it, so we didn't worry. But it got denied, and then we had to pay their shitty insurance inflated price.
An HSG test at a private hospital in the UK is about £400, if you'd like to compare. That's according to forum posts, the provider's websites are mostly referring to a newer procedure now, with a similar cost. (Just search HSG test UK private.)
I think private healthcare in the UK would have very clear pricing. They have to compete with "free" (in this case, "free but not urgent, so your appointment is in six weeks") and deceiving patients is not going to attract further custom.
It's frustrating. Neither the hospital nor the insurer typically has sufficient information to give you an answer. It's even worse when your information like age or diagnosis history factors into it.
Somehow they can figure it out after the procedure. They could easily give you the cost for each billing code upfront but they choose to hide the information from the patient;
Last time I had a procedure done it took 9 months before a bill showed up. It's a many to many communication problem so they only bother to figure it out when they need to, and then it can take a while for the hospital and insurer to hash things out. I'm not saying 9 mos is typical, but I wouldn't wait anywhere near that long to get an answer on how long something will cost me. They just don't have the incentives to form all the necessary lines of communication among themselves prospectively.
That's the thing. They don't even give averages. In my view they should have to publish all costs for procedures they have done. The current system is totally opaque and as patient you are often forced to do something hoping it won't ruin you but you have no way get something concrete upfront.
> I couldn't tell you what a procedure will cost you even if ordered to.
Is that the case even if I give you the exact CPT code (or possible set of codes) for a given imaging or lab procedure? That is, could you not provide the out-of-pocket and insurance covered rate if I provide my health insurance information?
For what it's worth, the last time I tried this, I still had to wait for several days to get an estimate of cost. But I don't really see why it should be the case provided that the information I mentioned above is available.
In that case I may be able to look it up. Granted this isn't the area I work in but in theory I have access to the necessary data. The people who do work in this area should be able to tell you, at least for some outpatient procedures. But more to the point if you have an inpatient stay or show up in the ER it's pretty uncertain what procedures you'll actually wind up having, which is where the price opacity really comes in.
Well, some of us blame the whole thing. Why shouldn't healthcare be a government service? Why is that less appropriate than police and military? Or roads?
The same reason any industry benefits from being privatized: to incentive innovation. The antibiotics revolution would never have happened, at least not in America, had there not been a profit incentive.
The other services you listed are less dependent on innovation.
You can call it dogma. I think of it as a fundamental principle of human nature. Balancing creativity and efficiency effectively is quite the trick, and capitalism actually pulls it off. People and companies who take risks are the ones that thrive. Those that don't "fade away". It uses survivorship bias to our advantage.
Fading away used to mean dying in the streets. Sometimes it still does, but much more rarely. It's a dearly paid price for the innovation that brought us the world as it is today.
That's certainly true for many hospitals, even most. And for most of their staff. But some of the profit-driven chains are nowhere that idealistic. And some physicians are jerks.[0]
Savings, no. But benefit, surely: patients might actually be able to be prescribed melatonin (http://slatestarcodex.com/2013/09/28/sleep-now-by-prescripti...) if there was a hospital-demand-driven drug-lab producing and bottling it to clinical standards.
The entire market for drugs like Ramelteon—drugs that only exist because doctors can't prescribe the generic, because hospital and pharmacy suppliers don't carry the generic, because no drug lab finds it profitable to sell the generic, despite FDA approval—would collapse overnight.
This is happening in my country and the government has said they'll back any pharmacy deciding to mix the drugs themselves. Healthcare costs are spiralling out of control.
It'll lead to a metric ton of courtcases all the way to Strasbourg and beyond though. The Americans may threaten to invade.
Just offer to let Trump put his name on a hotel there, or a condo building attractive to Russians wanting to launder some money. Tada, no risk of a US invasion and you may even get better trade deals.
People don't seem to understand how prohibitively expensive it is to develop new drugs and get them approved for use.
Yeah, drug companies charge huge premiums, and they don't like generic versions of their product, but with a good reason: they spend huge amounts of money not just to make the drugs, but also to make the process more efficient, and before they even know whether a product will be successful, they spent a fortune on research and development.
Take for example the case of Matuzumab, a medicine which was to be used against various forms of epidermal cancer. In 2007 a clinical trial failed and they had to give up on the idea. This company spent tens millions of dollars on the costs of this research, only for it to fail.
A lot of people here seem to conflate the pharmaceutical companies causing the issue with the entire pharmaceutical industry. Even in the article, the hospital reps say they are specifically targeting the handful of bad actors, like Valeant Pharmaceuticals and Martin Shkreli types, who specialize in buying up cheap/old drugs and jacking up the prices. This is not a group of hospitals trying to take on the entire industry. Nor is it an entire industry taking advantage of hospitals/patients.
It will be interesting to see which side Amazon takes. In theory, it would seem to be these hospitals. However, Big Pharma has the (financial and political) muscle (and will) to add friction to any Amazon.
It's really not click bait. Kaiser Permanente already operates under that model with a single organization acting as an insurer and owning hospitals. Other payers are moving in the same direction by acquiring or creating provider organizations. In some markets all of the major providers have merged together in order to gain more negotiating power so the only way payers can get some leverage back is by having providers as employees instead of vendors.
Kaiser only operates in this manner in certain of the 8 regions they service. Mostly on the west coast. In the regions on the east coast Kaiser contracts with existing hospitals.
HMOs. Direct employment of physicians by payers used to be a popular thing until people realized that the incentive structures were conflicting. More money for providers means less for the parent payer etc.
[0]http://www.econtalk.org/archives/2017/06/robin_feldman_o.htm...
[1]https://www.amazon.com/Drug-Wars-Pharma-Raises-Generics/dp/1...