The latest way that the sickest get shafted by Insurance Companies.

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Kikaku21

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http://www.nytimes.com/2008/04/14/u...b4567bbd&ex=1365912000&partner=rssnyt&emc=rss

April 14, 2008
Co-Payments Soar for Drugs With High Prices
By GINA KOLATA
Correction Appended

Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases.

With the new pricing system, insurers abandoned the traditional arrangement that has patients pay a fixed amount, like $10, $20 or $30 for a prescription, no matter what the drug’s actual cost. Instead, they are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month.

The system means that the burden of expensive health care can now affect insured people, too.

No one knows how many patients are affected, but hundreds of drugs are priced this new way. They are used to treat diseases that may be fairly common, including multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers. There are no cheaper equivalents for these drugs, so patients are forced to pay the price or do without.

Insurers say the new system keeps everyone’s premiums down at a time when some of the most innovative and promising new treatments for conditions like cancer and rheumatoid arthritis and multiple sclerosis can cost $100,000 and more a year.

But the result is that patients may have to spend more for a drug than they pay for their mortgages, more, in some cases, than their monthly incomes.

The system, often called Tier 4, began in earnest with Medicare drug plans and spread rapidly. It is now incorporated into 86 percent of those plans. Some have even higher co-payments for certain drugs, a Tier 5.

Now Tier 4 is also showing up in insurance that people buy on their own or acquire through employers, said Dan Mendelson of Avalere Health, a research organization in Washington. It is the fastest-growing segment in private insurance, Mr. Mendelson said. Five years ago it was virtually nonexistent in private plans, he said. Now 10 percent of them have Tier 4 drug categories.

Private insurers began offering Tier 4 plans in response to employers who were looking for ways to keep costs down, said Karen Ignagni, president of America’s Health Insurance Plans, which represents most of the nation’s health insurers. When people who need Tier 4 drugs pay more for them, other subscribers in the plan pay less for their coverage.

But the new system sticks seriously ill people with huge bills, said James Robinson, a health economist at the University of California, Berkeley. “It is very unfortunate social policy,” Dr. Robinson said. “The more the sick person pays, the less the healthy person pays.”

Traditionally, the idea of insurance was to spread the costs of paying for the sick.

“This is an erosion of the traditional concept of insurance,” Mr. Mendelson said. “Those beneficiaries who bear the burden of illness are also bearing the burden of cost.”

And often, patients say, they had no idea that they would be faced with such a situation.

It happened to Robin Steinwand, 53, who has multiple sclerosis.

In January, shortly after Ms. Steinwand renewed her insurance policy with Kaiser Permanente, she went to refill her prescription for Copaxone. She had been insured with Kaiser for 17 years through her husband, a federal employee, and had had no complaints about the coverage.

She had been taking Copaxone since multiple sclerosis was diagnosed in 2000, buying a 30 days’ supply at a time. And even though the drug costs $1,900 a month, Kaiser required only a $20 co-payment.

Not this time. When Ms. Steinwand went to pick up her prescription at a pharmacy near her home in Silver Spring, Md., the pharmacist handed her a bill for $325.

There must be a mistake, Ms. Steinwand said. So the pharmacist checked with her supervisor. The new price was correct. Kaiser’s policy had changed. Now Kaiser was charging 25 percent of the cost of the drug up to a maximum of $325 per prescription. Her annual cost would be $3,900 and unless her insurance changed or the drug dropped in price, it would go on for the rest of her life.

“I charged it, then got into my car and burst into tears,” Ms. Steinwand said.

She needed the drug, she said, because it can slow the course of her disease. And she knew she would just have to pay for it, but it would not be easy.

“It’s a tough economic time for everyone,” she said. “My son will start college in a year and a half. We are asking ourselves, can we afford a vacation? Can we continue to save for retirement and college?”

Although Kaiser advised patients of the new plan in its brochure that it sent out in the open enrollment period late last year, Ms. Steinwand did not notice it. And private insurers, Mr. Mendelson said, can legally change their coverage to one in which some drugs are Tier 4 with no advance notice.

Medicare drug plans have to notify patients but, Mr. Mendelson said, “that doesn’t mean the person will hear about it.” He added, “You don’t read all your mail.”

Some patients said they had no idea whether their plan changed or whether it always had a Tier 4. The new system came as a surprise when they found out that they needed an expensive drug.

That’s what happened to Robert W. Banning of Arlington, Va., when his doctor prescribed Sprycel for his chronic myelogenous leukemia. The drug can block the growth of cancer cells, extending lives. It is a tablet to be taken twice a day — no need for chemotherapy infusions.

Mr. Banning, 81, a retired owner of car dealerships, thought he had good insurance through AARP. But Sprycel, which he will have to take for the rest of his life, costs more than $13,500 for a 90-day supply, and Mr. Banning soon discovered that the AARP plan required him to pay more than $4,000.

Mr. Banning and his son, Robert Banning Jr., have accepted the situation. “We’re not trying to make anybody the heavy,” the father said.

So far, they have not purchased the drug. But if they do, they know that the expense would go on and on, his son said. “Somehow or other, myself and my family will do whatever it takes. You don’t put your parent on a scale.”

But Ms. Steinwand was not so sanguine. She immediately asked Kaiser why it had changed its plan.

The answer came in a letter from the federal Office of Personnel Management, which negotiates with health insurers in the plan her husband has as a federal employee. Kaiser classifies drugs like Copaxone as specialty drugs. They, the letter said, “are high-cost drugs used to treat relatively few people suffering from complex conditions like anemia, cancer, hemophilia, multiple sclerosis, rheumatoid arthritis and human growth hormone deficiency.”

And Kaiser, the agency added, had made a convincing argument that charging a percentage of the cost of these drugs “helped lower the rates for federal employees.”

Ms. Steinwand can change plans at the end of the year, choosing one that allows her to pay $20 for the Copaxone, but she worries about whether that will help. “I am a little nervous,” she said. “Will the next company follow suit next year?”

But it turns out that she won’t have to worry, at least for the rest of this year.

A Kaiser spokeswoman, Sandra R. Gregg, said on Friday that Kaiser had decided to suspend the change for the program involving federal employees in the mid-Atlantic region while it reviewed the new policy. The suspension will last for the rest of the year, she said. Ms. Steinwand and others who paid the new price for their drugs will be repaid the difference between the new price and the old co-payment.

Ms. Gregg explained that Kaiser had been discussing the new pricing plan with the Office of Personnel Management over the previous few days because patients had been raising questions about it. That led to the decision to suspend the changed pricing system.

“Letters will go out next week,” Ms. Gregg said.

But some with the new plans say they have no way out.

Julie Bass, who lives near Orlando, Fla., has metastatic breast cancer, lives on Social Security disability payments, and because she is disabled, is covered by insurance through a Medicare H.M.O. Ms. Bass, 52, said she had no alternatives to her H.M.O. She said she could not afford a regular Medicare plan, which has co-payments of 20 percent for such things as emergency care, outpatient surgery and scans. That left her with a choice of two Medicare H.M.O’s that operate in her region. But of the two H.M.O’s, her doctors accept only Wellcare.

Now, she said, one drug her doctor may prescribe to control her cancer is Tykerb. But her insurer, Wellcare, classifies it as Tier 4, and she knows she cannot afford it.

Wellcare declined to say what Tykerb might cost, but its list price according to a standard source, Red Book, is $3,480 for 150 tablets, which may last a patient 21 days. Wellcare requires patients to pay a third of the cost of its Tier 4 drugs.

“For everybody in my position with metastatic breast cancer, there are times when you are stable and can go off treatment,” Ms. Bass said. “But if we are progressing, we have to be on treatment, or we will die.”

“People’s eyes need to be opened,” she said. “They need to understand that these drugs are very costly, and there are a lot of people out there who are struggling with these costs.”

This article has been revised to reflect the following correction:

Correction: April 15, 2008
An article on Monday about a large increase in insurance co-payments for high-priced drugs misstated the way the multiple sclerosis drug Copaxone is administered. It is injected, not taken in pill form.
 

MilkmanAl

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I work in a pharmacy, but I have yet to see any insurance plans using this percentage system. I think it's good to remember that while it sucks that insurance companies are suddenly deciding to jack up copayments, the root of the problem is pharmaceutical companies charging insane prices for their medications.
 
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Smiley2012

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Meanwhile, Target and I think Walmart have $4 prescriptions and have over 300 medications on the list....which is great! How are they doing that?
 
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lord_jeebus

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Meanwhile, Target and I think Walmart have $4 prescriptions and have over 300 medications on the list....which is great! How are they doing that?

By not offering $4 Copaxone.

Although I think pharm companies bear some of the blame, I have to say the insurance industry is mostly to blame. The truth is that drugs like Copaxone are expensive to develop, and because sales are not that high for rare disease treatments, you have to charge a lot to recoup your costs.

The purpose of insurance is to spread risk among all customers. You don't know if you're going to be healthy for your whole life or if you'll get a weird disease requiring expensive payment that few could afford. To spread that risk, people pay similar premiums (with some adjustments for age and such, admittedly) and get equal coverage.

What the insurance companies are doing is shifting more risk to the consumer. If you are unlucky and get a disease they consider "rare," you will pay a lot more.

The best solution would be for consumers to vote with their wallets and cancel these policies. Unfortunately, even this is limited because people with these chronic illnesses are never going to be able to get private insurance from another insurance company.

If societal good is to be achieved through a for-profit insurance system, it will need a lot more consumer protections through legislation. Too bad this kind of thing is too complicated for the American public to be a major campaign issue or focus of TV news coverage...
 

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I'm predicting a response of "That's life, Deal with it" really soon.
 

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If the need for tier 4 drugs is so "rare", then hitting the individuals who need them with the huge costs makes a negligible difference in reducing the cost of insurance to others in these large plans. The cost savings per person is minuscule, while a heavy burden is placed on a few.

I was shocked when I picked up my own prescriptions in January, because our insurance, one of the largest in the country, had instituted a tiered system. Fortunately (?), my meds were only teir 3. Still, that approximately quadrupled the cost.
 

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Although I think pharm companies bear some of the blame, I have to say the insurance industry is mostly to blame. The truth is that drugs like Copaxone are expensive to develop, and because sales are not that high for rare disease treatments, you have to charge a lot to recoup your costs.

I disagree, pharmaceutical companies make sickening profits and are responsible for the high costs of drugs.

The fact is both drug companies and insurance companies are for-profit in the United States. They do not care about the lives they affect, just the money that person's wallet contains.
 

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I'm predicting a response of "That's life, Deal with it" really soon.

I certainly hope not.

If your insurance company does this and you don't like it, change insurance companies. If they all do it and this is such a terrible and unnecessary thing, why won't anyone start an insurance company that doesn't do it? If an oligopoly is ruling the industry, the FTC will take care of it. I know it's a simplification, but there isn't a massive conspiracy to take over the world - people are free to open insurance companies in their own state. The rules making it difficult to open national companies will hopefully be resolved in the next decade.

Money doesn't magically appear when people aren't feeling well - someone has to pay for it.
 

PreMD86

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Although I think pharm companies bear some of the blame, I have to say the insurance industry is mostly to blame. The truth is that drugs like Copaxone are expensive to develop, and because sales are not that high for rare disease treatments, you have to charge a lot to recoup your costs.

I disagree, pharmaceutical companies make sickening profits and are responsible for the high costs of drugs.

The fact is both drug companies and insurance companies are for-profit in the United States. They do not care about the lives they affect, just the money that person's wallet contains.

Perhaps, dare I say it, you're both correct?
 

LizzyM

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Good news: Only 10% of insurance companies are doing business this way.

Law of unintended consequences: If the chronically ill leave that insurance company, then it wins (cherry picking at its best to give the ill a good reason not to be insured by that company-- then the insurer has only generally healthy folks in its pool).

However, I don't blame people for kicking up a fuss and I'm glad to hear that those responsible for government employee health care coverage are getting this reversed for their people.

Given the nature of R&D, drugs for rare conditions are generally very expensive (to make back one's return on investment). The conditions are very rare, too, so in a perfect insurance world the cost is spread over all of us so that for the one out of 3,000 (an approximation of prevalence of the disease) who have the disease we each throw in $100/yr.
 

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If your insurance company does this and you don't like it, change insurance companies. If they all do it and this is such a terrible and unnecessary thing, why won't anyone start an insurance company that doesn't do it?

To quote Dr. Cox: "People are bastard coated bastards with bastard filling".

People will always choose the cheaper companies even if they are only a few dollars cheaper. The fact walmart exists is proof positive. The companies that operate under these standards keep the premiums of the vast majority of their customers lower. Since most people are not exactly concerned with aquiring a rare disease when choosing insurance, people won't proactively seek an alternative insurance company. By the time you're concerned enough with these policies, you've likely already aquired the disease and are short of luck. Oh, and by then you're considered high risk to any company- good luck finding a better rate.

If an oligopoly is ruling the industry, the FTC will take care of it.

Kind of like how the FAA and FEMA will take care of technical malpractices and natural disasters, respectively?
 
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I disagree, pharmaceutical companies make sickening profits and are responsible for the high costs of drugs.

I agree that the profits are sickening, but even if they weren't for profit, a drug like Copaxone would still be very expensive due to its limited sales and high research costs. Even if you prohibited drug marketing (which is a big part of drug costs) it would be quite costly.
 

lord_jeebus

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If your insurance company does this and you don't like it, change insurance companies.

This would be ideal, but how many insurance companies will sell insurance (at any price) to someone with a chronic illness requiring ultra-expensive treatment?
 

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This would be ideal, but how many insurance companies will sell insurance (at any price) to someone with a chronic illness requiring ultra-expensive treatment?

Would you want an insurance company that would do that? When you got sick a few years later they'd just say, "Sorry, we've been feeling charitable with your premiums and taking care of people we knew would be huge losses for us - we don't have any of the money you paid in anymore to . . . well, to take care of you."

I'm not saying that the insurance industry has a heart of gold. But no one is ever realistic about what they face. Starting an insurance company requires raising billions in reserves from investors. Those investors expect a return on their investment - or else they're not handing over any cash. If they don't deny people according to the rules by which they make their premiums, they will run out of reserves and no one will have coverage. Their CEOs get paid millions upon millions, but every multi-billion dollar corporation pays their CEOs millions of dollars - its how you get the best person to run your company. It's not a magic, evil conspiracy - it's basic economics.

Anyone who comes out ahead (gets more in services than they pay in premiums) is a loss to insurance companies. If there aren't an offsetting number of people coming out at a loss, there's no money. As we all know, people getting less in services than they pay for constantly bitch that their premiums are too high.
 
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lord_jeebus

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Would you want an insurance company that would do that? When you got sick a few years later they'd just say, "Sorry, we've been feeling charitable with your premiums and taking care of people we knew would be huge losses for us - we don't have any of the money you paid in anymore to . . . well, to take care of you."

I'm not saying that the insurance industry has a heart of gold. But no one is ever realistic about what they face. Starting an insurance company requires raising billions in reserves from investors. Those investors expect a return on their investment - or else they're not handing over any cash. If they don't deny people according to the rules by which they make their premiums, they will run out of reserves and no one will have coverage. Their CEOs get paid millions upon millions, but every multi-billion dollar corporation pays their CEOs millions of dollars - its how you get the best person to run your company. It's not a magic, evil conspiracy - it's basic economics.

Anyone who comes out ahead (gets more in services than they pay in premiums) is a loss to insurance companies. If there aren't people coming out at a loss, there's no money. As we all know, people getting less in services than they pay for constantly bitch that their premiums are too high.

My point is that if you "don't like it," "change insurance companies" is not an option. The idea that someone will start an insurance company that doesn't do this practice is not a solution because they are changing the terms of the agreement after these patients have gotten their diagnoses and are no longer able to switch to a competitor. Thus there is no true competition - the insurance company can alter its terms because they know that the consumer has no recourse, plus the fact that the consumer is still likely costing them money and they would like nothing better than to be rid of the ill patient.
 

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He was nailed for something completely unrelated, though his price gouge made the government look more deeply into his ****.
 
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ChillDawg

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Somebody's gotta pay for the R&D, folks...

Also, the NYT could've chosen a more sympathetic case. Wondering if you'll able to afford a vacation isn't exactly moving, particularly for those readers who've never had enough disposable income to afford one. Then again, we're talking NYT readers....
 
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DokterMom

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Yeah, that R&D... It's that great big pale yellow slice.

ScreenShot2014-01-28at12.14.16PM.png
 
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bumblebee611

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Yeah, that R&D... It's that great big pale yellow slice.

ScreenShot2014-01-28at12.14.16PM.png
Not to mention ... we might ask how much of the basic science research that underlies the ability to develop a new drug today was funded by the taxpayer (NIH, NSF, etc.). I suspect a HUGE amount that likely dwarfs corporate R&D budgets ... and without that taxpayer funded foundation, big pharma would be achieving little or nothing with respect to new drugs. Not to mention all of the incredibly expensive new drugs that arguably don't offer notable improvement over the older, cheaper meds. (I'm sure someone will chime in about how stupid I am because I haven't started med school yet, but whatever.)
 
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ChillDawg

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Yeah, that R&D... It's that great big pale yellow slice.

ScreenShot2014-01-28at12.14.16PM.png

Sure, not all the cost goes to R&D, but combined with Cost of Goods Sold, Taxes, and Other (whatever that is) gets 51.8%.
I don't think anyone would reasonably suggest denying a company the ability to make a profit, and administration is, of course, a necessary expense.
Now, it's debateable whether or not 18% profit is fair, but I would hardly call it obscene. Perhaps we could compare it to profit margins in similar industries.
It doesn't seem to make sense to lump in admin costs with marketing. It would be nice to see how much is actually spent on marketing alone.
A pharmaceutical companies marketing budget seems to be the biggest villain these days, but is it not essential to inform healthcare providers and patients of availability of new drugs and treatments?
Nobody can really argue that marketing is somehow an unnecessary expense, leaving the breakdown of each pharmaceutical dollar looking a lot less like the highway robbery it is fashionable to portray it as.
 

ChillDawg

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Not to mention ... we might ask how much of the basic science research that underlies the ability to develop a new drug today was funded by the taxpayer (NIH, NSF, etc.). I suspect a HUGE amount that likely dwarfs corporate R&D budgets ... and without that taxpayer funded foundation, big pharma would be achieving little or nothing with respect to new drugs. Not to mention all of the incredibly expensive new drugs that arguably don't offer notable improvement over the older, cheaper meds. (I'm sure someone will chime in about how stupid I am because I haven't started med school yet, but whatever.)

Taxpayer funds going to the greater good of all (finding and developing treatments and cures), what's a better use of tax dollars than that?
'Big Pharm' is hardly alone in directly or indirectly receiving taxpayer funds.

Is there a specific policy you'd prescribe (haha) to take this into account? In other words, what's your point?

Edit: You do have a point about the new drugs that are of dubious improvement, but what do you propose be done about that? How much 'better' would a drug have to be to justify marketing it?
 

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Are you guys actually this naive? Do you think linking to a pie chart with a sizeable marketing budget = "hook, line and sinker?"

These are massive companies that are competing on a global market for the eyes of patients and doctors. What do you expect Johnson and Johnson to do, stop marketing their products?

Google probably spends more on marketing than pure R&D, that has zero implications on their cost to do business. Marketing isnt something that is a luxury.
 
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bumblebee611

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Taxpayer funds going to the greater good of all (finding and developing treatments and cures), what's a better use of tax dollars than that?
'Big Pharm' is hardly alone in directly or indirectly receiving taxpayer funds.

Is there a specific policy you'd prescribe (haha) to take this into account? In other words, what's your point?

Edit: You do have a point about the new drugs that are of dubious improvement, but what do you propose be done about that? How much 'better' would a drug have to be to justify marketing it?
The principle here is that if you are utilizing a public resource -- the knowledge that the public paid to acquire -- the public/government might have a little more authority to regulate your actions. If the government exercises eminent domain to acquire land to build a pipeline, no one would say that the pipeline builder gets to charge whatever the hell they want once it's built ... they're going to be under some obligation to serve everyone, and that is effected in different ways in different industries. So even if you think an 18% profit margin is reasonable (it might be very high), maybe pharmaceutical companies are actually entitled to LESS of a profit margin than a business that makes that money without utilizing billions of dollars worth of taxpayer investment over decades.

As far as how much better a drug has to be ... it's not how much better it has to be to justify *marketing* it. Market whatever junk you want. It's how much better it has to be to justify an astronomical cost that is then chalked up to R&D. Maybe their R&D stinks and they shouldn't be spending so much on it if what they come up with are drugs that are far more expensive than the old drugs but that hardly work any better. E.g. http://www.nytimes.com/2012/11/09/b...-sloan-kettering-balks-at-paying-it.html?_r=0
 

ChillDawg

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The principle here is that if you are utilizing a public resource -- the knowledge that the public paid to acquire -- the public/government might have a little more authority to regulate your actions. If the government exercises eminent domain to acquire land to build a pipeline, no one would say that the pipeline builder gets to charge whatever the hell they want once it's built ... they're going to be under some obligation to serve everyone, and that is effected in different ways in different industries. So even if you think an 18% profit margin is reasonable (it might be very high), maybe pharmaceutical companies are actually entitled to LESS of a profit margin than a business that makes that money without utilizing billions of dollars worth of taxpayer investment over decades.
\

What industry doesn't utilize a public resource?
 

bumblebee611

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What industry doesn't utilize a public resource?
Of course. Just like Mitt Romney gets more than his fair share of government resources and handouts. But it's a question of degree, and also, of course, the fact I (and many other folks) believe we should do more as a society to ensure that anyone can get decent treatment for serious illness, so we think lifesaving medicine should not be priced far higher than it needs to be (whereas we're not so worried about whether the pricing of a BMW is extortionate, because we don't care to ensure that everyone can afford one). Not to mention that it seems the original claim that OMG THE MEDICINE NEEDS TO COST SO MUCH BC R&D has been rebutted, so of course the defenders of extortionate pricing are moving the goalpost and saying "well they are entitled to make 18% and what about MARKETING?!"

But aren't you the one who recently made some grossly thoughtless comment about sex reassignment surgery? Whatevs.
 
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ChillDawg

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Of course. Just like Mitt Romney gets more than his fair share of government resources and handouts. But it's a question of degree, and also, of course, the fact I (and many other folks) believe we should do more as a society to ensure that anyone can get decent treatment for serious illness, so we think lifesaving medicine should not be priced far higher than it needs to be (whereas we're not so worried about whether the pricing of a BMW is extortionate, because we don't care to ensure that everyone can afford one). Not to mention that it seems the original claim that OMG THE MEDICINE NEEDS TO COST SO MUCH BC R&D has been rebutted, so of course the defenders of extortionate pricing are moving the goalpost and saying "well they are entitled to make 18% and what about MARKETING?!"

But aren't you the one who recently made some grossly thoughtless comment about sex reassignment surgery? Whatevs.

No need to move the goalposts; R&D is still a significant portion of the budget. I don't think anybody claimed it was the only one, or even the largest expense, but often the one that isn't considered when young idealists scream about PROFITS and MARKETING.
If you want to debate whether or not 18% profit is fair, or if the marketing budget is justified, we can do that, but it looks like you'd rather become shrill and resort to ad hominem.
Please note that it was you who started throwing barbs.
Perhaps a civil discussion can still be had with others in the thread. @DokterMom ?
 
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Of course. Just like Mitt Romney gets more than his fair share of government resources and handouts. But it's a question of degree, and also, of course, the fact I (and many other folks) believe we should do more as a society to ensure that anyone can get decent treatment for serious illness, so we think lifesaving medicine should not be priced far higher than it needs to be (whereas we're not so worried about whether the pricing of a BMW is extortionate, because we don't care to ensure that everyone can afford one). Not to mention that it seems the original claim that OMG THE MEDICINE NEEDS TO COST SO MUCH BC R&D has been rebutted, so of course the defenders of extortionate pricing are moving the goalpost and saying "well they are entitled to make 18% and what about MARKETING?!"

But aren't you the one who recently made some grossly thoughtless comment about sex reassignment surgery? Whatevs.

Grossly thoughtless comment about sex change surgery? I see what you did there cowboy;)
 

DokterMom

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No need to move the goalposts; R&D is still a significant portion of the budget. I don't think anybody claimed it was the only one, or even the largest expense, but often the one that isn't considered when young idealists scream about PROFITS and MARKETING.
If you want to debate whether or not 18% profit is fair, or if the marketing budget is justified, we can do that, but it looks like you'd rather become shrill and resort to ad hominem.
Please note that it was you who started throwing barbs.
Perhaps a civil discussion can still be had with others in the thread. @DokterMom ?

I can be civil on this, but don't think I have the answers... I'm all for private industry, but also for public good -- and I think drug companies (among others) have tipped the scales out of balance. I think allowing Medicare to negotiate the prices it pays for drugs would make a huge difference, as would fully legalizing sales from a select list of countries meeting stringent safety requirements (ex. Canadian) pharmacies.

Transparency in drug effectiveness would also be great. An unbiased report comparing the effectiveness of patented new drugs to off-patent older drugs would also be wonderful. But those things cost money, and can only really be done by the government -- which means higher taxes and higher gov't spending...

Bottom line - I think there's a better way to allocate the dollars spent on new drug development -- but I'm not holding my breath.
 

7331poas

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If the government exercises eminent domain to acquire land to build a pipeline, no one would say that the pipeline builder gets to charge whatever the hell they want once it's built

Those are not equivalent AT ALL. I really suggest you read up on IP law before posting something like this.

Based on your analogy we could extend this to all kinds of things on this planet. Perhaps the US government should be allowed to price fix the iPhone because it is built on transistors (which are developed in the private Bell Labs....but they went to a public school at some point right???). Perhaps the US government should be able to price fix Google Maps even because their contain technology which hinges on the discovery of GPS technology by NASA.

EVERYTHING in this country could be rationalized in terms of some sort of public research that discovered something. Your assertion that this alone should justify the government to price fix the cost of goods is plain wrong.

The only reason why we are even talking about the possibility of price fixing a private company's product is because it happens to be in the business of healthcare and since it has the potential to save lives, our expectation is that we deserve it for cheap.
 

bumblebee611

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Those are not equivalent AT ALL. I really suggest you read up on IP law before posting something like this.

Based on your analogy we could extend this to all kinds of things on this planet. Perhaps the US government should be allowed to price fix the iPhone because it is built on transistors (which are developed in the private Bell Labs....but they went to a public school at some point right???). Perhaps the US government should be able to price fix Google Maps even because their contain technology which hinges on the discovery of GPS technology by NASA.

EVERYTHING in this country could be rationalized in terms of some sort of public research that discovered something. Your assertion that this alone should justify the government to price fix the cost of goods is plain wrong.

The only reason why we are even talking about the possibility of price fixing a private company's product is because it happens to be in the business of healthcare and since it has the potential to save lives, our expectation is that we deserve it for cheap.
Actually I didn't advocate price fixing in this context. What I did say is that in different industries, we regulate this in different ways--for example, we sometimes use antitrust law. Other times we may have requirements about how widely services must be offered (where profit motive alone doesn't drive businesses to offer a service universally). This isn't an "IP law" question (are you an attorney? I am). That's why I pointed to an article about doctors working together to get a drug company to lower the price of a drug ... there was no price limit set by the government ... a group that effectively functions as the consumer instead got the company to lower the price by making it less profitable for the company to jack up the price outrageously. Note the company didn't just say, "Oh, we can't afford to lower the price because we really spent it all on R&D and this is the minimum we must charge to stay in business." Instead they realized they'd make more money by charging a more reasonable price, so more doctors would prescribe the drug. Again, giving the lie to the idea that big pharma simply HAS to charge so much to make enough money to stay in business, or to market (and supposedly "inform" people about a medicine).
 

bumblebee611

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No need to move the goalposts; R&D is still a significant portion of the budget. I don't think anybody claimed it was the only one, or even the largest expense, but often the one that isn't considered when young idealists scream about PROFITS and MARKETING.
If you want to debate whether or not 18% profit is fair, or if the marketing budget is justified, we can do that, but it looks like you'd rather become shrill and resort to ad hominem.
Please note that it was you who started throwing barbs.
Perhaps a civil discussion can still be had with others in the thread. @DokterMom ?
I believe you first comment on this was "Somebody's gotta pay for the R&D, folks..."

I don't think it is uncivil to call attention to something else you have said. If I am wrong and you didn't say it, I apologize. But it's legitimate for other people to conclude, based on your prior statements that show a lack of empathy, compassion, or sense of justice; that it's not worth a huge effort to convince you of the justice or moral rightness of another thing.
 

7331poas

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Actually I didn't advocate price fixing in this context. What I did say is that in different industries, we regulate this in different ways--for example, we sometimes use antitrust law. Other times we may have requirements about how widely services must be offered (where profit motive alone doesn't drive businesses to offer a service universally). This isn't an "IP law" question (are you an attorney? I am). That's why I pointed to an article about doctors working together to get a drug company to lower the price of a drug ... there was no price limit set by the government ... a group that effectively functions as the consumer instead got the company to lower the price by making it less profitable for the company to jack up the price outrageously. Note the company didn't just say, "Oh, we can't afford to lower the price because we really spent it all on R&D and this is the minimum we must charge to stay in business." Instead they realized they'd make more money by charging a more reasonable price, so more doctors would prescribe the drug. Again, giving the lie to the idea that big pharma simply HAS to charge so much to make enough money to stay in business, or to market (and supposedly "inform" people about a medicine).

The difference is that these private companies can charge whatever they want. You can be as persuasive as you want, at the end of the day if a drug is going to save your life, you are going to pay an exuberant amount to get it. You are going to pay an amount far above whatever keeps them in business.

My frustration stems from this idea that companies need to be charging just enough to stay in business or to make a reasonable profit. These companies, as the CEO, should be charging the max possible that will give them the most revenue.

Apple would not mark down the iPhone so more people can have it, neither should a drug company. l
 

bumblebee611

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The difference is that these private companies can charge whatever they want. You can be as persuasive as you want, at the end of the day if a drug is going to save your life, you are going to pay an exuberant amount to get it. You are going to pay an amount far above whatever keeps them in business.

My frustration stems from this idea that companies need to be charging just enough to stay in business or to make a reasonable profit. These companies, as the CEO, should be charging the max possible that will give them the most revenue.

Apple would not mark down the iPhone so more people can have it, neither should a drug company. l
I think you mean exorbitant not exuberant. Also charging the max doesn't produce the most revenue or gross profit. You have to optimize the price for that, and that's not always done by raising it. Finally, it is simply not true that everyone will just pay the price for a lifesaving drug. Have you ever known anyone who is actually poor and very sick? Some people cannot pay these prices. So as a society, we try to make it possible for folks to get these medicines because we don't want them to just die. Often that means that insurers or sometimes government pick up all or part of the tab. This actually allows the company to charge more than they would otherwise. So when we see cases like the Zaltrap case I cited, the point is that the company finally realized if it prices the drug too high, it will in fact NOT maximize profits. Maximizing profits would be achieved by making it more affordable. And of course, the company didn't come to this conclusion because they are good people ... It's because Sloan Kettering corrected for some of the price distortion by refusing to prescribe something that was unreasonably priced for the benefit it offered.
 

7331poas

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I think you mean exorbitant not exuberant. Also charging the max doesn't produce the most revenue or gross profit. You have to optimize the price for that, and that's not always done by raising it. Finally, it is simply not true that everyone will just pay the price for a lifesaving drug. Have you ever known anyone who is actually poor and very sick? Some people cannot pay these prices. So as a society, we try to make it possible for folks to get these medicines because we don't want them to just die. Often that means that insurers or sometimes government pick up all or part of the tab. This actually allows the company to charge more than they would otherwise. So when we see cases like the Zaltrap case I cited, the point is that the company finally realized if it prices the drug too high, it will in fact NOT maximize profits. Maximizing profits would be achieved by making it more affordable. And of course, the company didn't come to this conclusion because they are good people ... It's because Sloan Kettering corrected for some of the price distortion by refusing to prescribe something that was unreasonably priced for the benefit it offered.

Not every case is like that. It is easy to imagine that if a company prices out the poor, they can still maintain their revenue by charging the middle class and rich.
 

ChillDawg

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I believe you first comment on this was "Somebody's gotta pay for the R&D, folks..."

Again, I said this as a reminder that R&D costs are something pharm has to swallow, but is often ignored when talking about prices. Perhaps I could have taken a more constructive tone, though.

I don't think it is uncivil to call attention to something else you have said. If I am wrong and you didn't say it, I apologize. But it's legitimate for other people to conclude, based on your prior statements that show a lack of empathy, compassion, or sense of justice; that it's not worth a huge effort to convince you of the justice or moral rightness of another thing.

If you want to know what I think about that issue, read my post in that thread. Here, we're talking about drug prices.
A lawyer justifying ad hominem, interesting...

You're being called out for demonizing pharm companies like they're a bunch of fat cats in top cats conspiring to rip off American consumers while stealing taxpayer money. The industry isn't perfect, but their practices aren't any different from any other major industry.

Also, nobody here is condemning what Sloan Kettering did, and I, in fact, commend them for making a stand. Drug prices are sometimes too high, the point of contention is whether or not government should regulate prices.

What Doktermom said was reasonable, but I'm not sure what exactly you're calling for.
 

bumblebee611

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Again, I said this as a reminder that R&D costs are something pharm has to swallow, but is often ignored when talking about prices. Perhaps I could have taken a more constructive tone, though.



If you want to know what I think about that issue, read my post in that thread. Here, we're talking about drug prices.
A lawyer justifying ad hominem, interesting...

You're being called out for demonizing pharm companies like they're a bunch of fat cats in top cats conspiring to rip off American consumers while stealing taxpayer money. The industry isn't perfect, but their practices aren't any different from any other major industry.

Also, nobody here is condemning what Sloan Kettering did, and I, in fact, commend them for making a stand. Drug prices are sometimes too high, the point of contention is whether or not government should regulate prices.

What Doktermom said was reasonable, but I'm not sure what exactly you're calling for.

I did read your posts in the thread on transgender folks and I read (and remember) enough to be disgusted. My referring to what your prior statements demonstrate is not an ad hominem attack, it's my drawing a conclusion about your views based on your past statements, and guessing that I'm not going to convince you of anything, so I don't think it's worth spending a ton of time arguing with you or trying to persuade you.

I also didn't "demonize pharm companies like they're a bunch of fat cats ...." Actually, all I did was start off by noting that in addition to what is illustrated by DokterMom's pie chart, we should consider what a tiny fraction of the total R&D expenditure the pharmaceutical company is likely making, and what a large fraction of it was made by the taxpayer. In other words, I am simply advocating for considering historical and social context.

I didn't say you were condemning what Sloan Kettering did. I don't even think 7331poas is doing that; he's just making random remarks about "exuberant" pricing and, well, I'm not sure exactly what he's trying to achieve. It seems like he's just repeatedly asserting that pharm companies deserve to make money in a manner that is no different from how Apple makes money by selling iPhones. That is of course one moral stance but he hasn't really offered any reasons that I can see.
 
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