Well, if you needed any further proof that unchecked capitalism and health care are a toxic combo after Steven Brill’s exposé a few years back, add Mylan’s EpiPen price increase to the list of thousands of examples.
Mylan joins Turing Pharmaceuticals and a host of other big pharma villains to dramatically increase the price of life-saving drugs, with no justifiable cause other than that they have a monopoly and can get away with it. Since 2009, EpiPen prices have increased from under $100 per 2-pack to over $600 in the U.S. market (despite staying at below $100 elsewhere, such as Canada).
The EpiPen debacle is not quite as egregious as Turing’s 5000% price increase of an AIDS drug from less than $1 to $750 a pill overnight (while simultaneously staying at less than $1 in other markets), but it’s still similarly disgusting.
In both cases, the drugs have been around for a long time, have near monopolistic market power, underwent no noteworthy changes, and are necessary life saving drugs for their customers.
What did Mylan CEO, Heather Bresch, say to justify the price increase?
“I am running a business. I am a for-profit business. I am not hiding from that.”
“This system needs to be fixed. No one knows what anything costs.”
“Our health care system is in a crisis…This bubble is going to burst.”
“No one’s more frustrated than me.”
Ms. Bresch was so frustrated, in fact, that she went ahead and increased her compensation from $2.5 million to $19 million (over 700%) in the 7 years that she increased the price of EpiPen 600%. Poor gal.
This is where the mix of capitalism and health care become extremely toxic. You have:
- Necessary life-saving drugs with monopolistic powers (and built in protections on that power from all of their lobbying).
- CEO’s and executives whose already exorbitant pay will dramatically increase with price increases at the expense of patients who need the drugs to survive because they have no legitimate alternatives.
- The inability of Medicare to negotiate lower fair drug prices (they were literally barred from doing so by Congress).
- Smaller private insurers not having the clout to effectively negotiate lower drug prices.
- No price controls in the U.S. market, so U.S. patients subsidize profits, while the rest of the world pays just above cost.
And we wonder why our health insurance premiums have increased so much after the years?
While practices like this aren’t technically criminal (as was the case with the Volkswagen dieselgate case I previously ranted about), they belong somewhere along the spectrum of evil next to Amazon’s deplorable employer practices – a few very powerful and greedy people at the top gain at the vast expense of the powerless. Greed rules the day. There are some examples to the contrary (i.e. Chobani’s CEO), but they are exceedingly rare.
Here’s the thing – we’re not dealing with common consumer goods here with health care. We’re dealing with products and services that have life or death implications. Ms. Bresch wants to fix a broken system? Let’s help her do it. To fix this mess, there really needs to be a mix of the following, and we should start demanding it from our elected officials:
- Most developed countries regulate what drugmakers can charge, limiting them to certain profit margins if they want to sell their product in market. Why can’t we do the same? It’s insanity that a drug can profitably sell at $1 per pill in Canada, but cost us Americans $750 a pill.
- Medicare should be authorized by Congress to negotiate drug prices.
- A systematic removal of monopolistic competition controls that currently rule the market.
- An ACA exchange public insurance option, or better yet, single payer – to give public insurers more price negotiation clout that private insurers currently have, with the ability to negotiate lower drug prices.
Anything less, and we’ll soon all be beholden to our drug gods.
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My biggest beef with “Obamacare” was that it really didn’t address the high cost of health insurance. All it did was increase access to many who previously didn’t have access yet put a Band-Aid on everything else. JMHO
Problem remains that people vote with their wallets and young, healthy people won’t subsidize the elderly and sick.
It was a move in the right direction, but ultimately does not go far enough.
Well, I think it would have made more sense to address the cost of health care first. To the masses, not much has changed.
Plus, this new bureaucratic nightmare was done on the eve of the Recession, which appeared to be agenda-driven rather than carefully planned.
Yeah, but what is the fix? If you believe single payer, that would not have passed.
Unchecked capitalism? The FDA is the gateway to the market, and has seriously hindered EpiPen competitors from entering the market. All it takes is a couple key hires and golden parachutes from the FDA to Mylan and boom, no competitors. This is CRONY capitalism, not unchecked capitalism. Your opinions are usually better, but this is pretty far off. Look up the CEO’s MBA scandal if you get a chance; rules don’t apply to her; they’re for poor people.
Great point Matt!! This happens in many industries where key employees on regulating boards are influenced by various companies to “do the right thing” But yet provided compensation to look the other way. It sad that even in highly regulated industries such as were the FDA, DOT, EPA, FAA, SEC… the influence is in every industry.. It is Government Business Capitalism.
EXACTLY Matt. Plus, I am sure the fact that the CEO’s father is a Democratic Senator from WV plays(ed) no part in the FDA slowing/hindering generic competitors. /sarcasm
You can believe that health care shouldn’t be subject to capitalism all you want but this is not a case of unchecked capitalism. This is actually a perfect case of the government, or its agencies, picking favorites.
Uh, no. It’s not a case of picking favorites. It’s a case of legacy patent rules limiting competition and unchecked price control. The government did not say, “We choose Mylan.”.
Yeah, you should probably look up the lobbying they have done, the actions done to squash competition, and the role the FDA has had in holding up their competitors.
http://www.latimes.com/opinion/editorials/la-ed-epipen-gouging-20160826-snap-story.html
It’s amazing how wonderful the single payer system (cough Canada’s health care system cough) can control costs of medical care.
Amazing how no one actually says the words single payer system when they are talking about how the current thousand payer system. They only ever mention it as such when they are talking about the negatives of the system.
There are benefits to both systems and the cost benefit is with the single payer systems.
As with most problems in our country, it comes down to campaign finance reform. Any company can donate money to any politician. This includes pharmaceutical companies, health insurers, big banks, oil companies etc. They are able to get away with stuff like this because almost all politicians are in bed with some big company or another. Big companies run the show and until the public picks up on this and shows outrage, it will continue to be like this.
You nailed it.
i think its absurd that we as a society have come so far as to expect the government to regulate the price of things we don’t like paying for. pick any good or service offered for profit and tell me how the government should be able to knock on the door of that business and tell that owner/operator how much they are allowed to charge for said good/service. your pumpkin spice latte shouldn’t cost $5? what did it cost in 2009? do some quick math and come up with a number with a percentage sign after it that looks good in headlines and get people fired up. demand cheaper lattes!!! call your congressman/woman! how much has the CEO of starbucks raised his salary since 2009? where is the government? am i the only one outraged? how about cable tv? we (i know you don’t but the rest of the country does) pay $1500 a year for cable/internet without batting an eye but paying $600 a year to not die of a peanut allergy or bee sting is a crime worthy of being called before congress???
***disclaimer, i have not researched the above two examples enough to publish a blog about them but am confident they convey my position on the issue at hand for the purpose of this comment thread***
we pay more for drugs here for 2 reasons. #1 is BECAUSE other countries regulate prices. if we do the same and take the profit out of making drugs there is no incentive to research and produce drugs. #2 is because of insurance companies. they ARE paying for the drugs. that epipen is 600 bucks because aetna, humana, express scripts et al are willing to pay for it. prices are set by companies at whatever price the market will bear and insurance companies are bearing this price. take them out of the equation, let everybody pay out of pocket for their prescriptions and see how fast prices come down when mylan can’t sell their product because nobody can afford it. they conceded $300 or 50% in the first week of pressure via patient assistance cards. which by the way does not change the price insurance companies pay for it but it makes everybody feel good about those disadvantaged uninsured cash-paying customers.
unbridled capitalism is not why prices soar. double standards are why prices soar. your single payer solution would address this problem but create many more (albeit different) problems in its place. i say you refer everyone to your previous discussion on HSA accounts, the crossover point of being “self insured” and we make each american citizen their own single-payer microcosm
Pumpkin spice lattes is a straw man argument. We’re not talking about luxury coffee beverages, we’re talking about life or death medication.
Let me try another approach that I think you may be able to relate to better.
Pretend you need the aids drug from Turing (just an example, could be any life or death drug). You buying/not buying this drug is a matter of life or death. There are no legit cheaper alternatives. The cost of the drug wipes out all of your $20K in HSA savings (which is far more than most people have, and you worked hard to get there).
Next thing you know, you’re choosing between death or significant debt. You have a family that cares about you, so you choose debt. Then, lenders stop lending you money.
How did we get here? No competition and no price regulation paired with most other countries regulating prices essentially mounts to a massive tax on you and other Americans. Instead of the money going to the government, it goes to a corporation. You’re not taxed on income, but you’re taxed until bankruptcy for your desire to stay alive, while citizens in other countries pay less than $1 a day for the same damn drug (and the company still profits on it). Meanwhile, a very small percentage of the the proceeds of that tax are going towards research, but most is simply going towards lavish executive pay and bonuses and corporate bank vaults. And there’s not a damn thing you can do about it. You and other people are going broke and dying in the name of greed.
I hope you’re never in this situation, but if you are, I’m willing to bet you’d see things differently than you do from your current position in life.
Perhaps we should just opt for Venezualian style socialism (or USSR or N.Korean style) where things were kept artificially cheap. Of course, as we now see, Venezualans are dying for lack of food and medicine and N.Koreans have been dying of starvation for years – the inevitable fruits of Leftist central control.
Many on this site will not remember that while consumer goods were cheap in the USSR, they were nearly unavailable – unless waiting on a 6-hr line to buy a loaf of bread is an acceptable trade off.
And yes, American pharmaceuticals are artificially cheaper than in other countries due to non-US government regulation because we Americans bare the brunt of the development cost for so many of these advanced medications. However, it’s still a market and if you regulate down the retail prices of med’s here, you cut off the resources needed for the extremely expensive FDA approval protocols and eliminate the incentive for development of new and better drugs. Of course, if the rest of the world agreed to shoulder their “fair share” of drug development cost perhaps Americans could pay a lot less.
Until the FDA drug approval process is streamlined the price of drugs is likely to remain expensive for the American public.
In the case of EpiPen type anomolies, such price gouging cannot stand for long (unless protected by government edict) because pressure from the market and competition will eventually resolve the situation.
Also, if we are to have so much faith in government regulation, where were the government public health watchdogs as this monopoly developed and why didn’t they take action to foster competitive products? Perhaps they were asleep at the switch.
BTW what is the evidence for your statement, “Meanwhile, a very small percentage of the the proceeds of that tax are going towards research, but most is simply going towards lavish executive pay and bonuses and corporate bank vaults.” If you have realistic numbers, please share with your readers.
I think it’s time for your Thorazine.
I think its time for your manners.