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The Insulin Racket


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2019 Jun 25, 7:10am   1,177 views  16 comments

by Patrick   ➕follow (55)   💰tip   ignore  

https://prospect.org/article/insulin-racket

In the United States, drug companies have near-unilateral power to name their own price, and insulin manufacturers don’t face significant competition that might compel them to lower prices. In other industrialized countries, regulatory bodies are more stringent when it comes to which drugs they approve for sale, and aggressively negotiate prices with manufacturers. In the United States, drugmakers need only to prove their drug effective against a placebo rather than existing products, and the government is far less involved in pricing. In the case of Medicare Part D, government negotiating of drug prices is explicitly illegal.

Instead, U.S. drug-pricing negotiations are the responsibility of individual insurance plans, of which there are thousands. Each of them has relatively little leverage against price hikes, which drug manufacturers have every reason to push as high as possible to pay off shareholders, whose investments were predicated on the promise of some of the highest returns in the stock market. If you’re a pharma exec whose goal is to maximize short-term profits, then jacking up prices on a drug like insulin—whose millions of patients are practically captive—is a sensible strategy. ...

At this point, defenders of the pharmaceutical industry would likely point out that high drug prices are a necessary evil to recoup R&Dcosts and facilitate innovation. Extremely high industry profit margins, the fact that pharmaceutical marketing budgets exceed those for R&D, and the relative lack of genuine drug innovation in recent years all cast doubt on this argument. But Lipska is particularly skeptical of it when it comes to insulin. “We’re not even talking about rising prices for better products here,” she said. “I want to make it clear that we’re talking about rising prices for the same product … there’s nothing that’s changed about Humalog. It’s the same insulin that’s just gone up in price and now costs ten times more.”

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1   GNL   2019 Jun 25, 8:40am  

I've long believed greed is more destructive than envy.
2   zzyzzx   2019 Jun 25, 11:38am  

Regular Humulin R or N insulin is $25/bottle at Walmart, and no prescription required in some states (I don't need one in MD)! It works great on avatar cat. He's been it it for around 5 years.
3   Reality   2019 Jun 25, 11:58am  

WineHorror1 says
I've long believed greed is more destructive than envy.


Envy is very much what led to the current medical pricing disaster in the US. The real situation is even worse than what the article suggested: because ObamaCare has MLR ("Medical Loss Ratio"; i.e. payout percentage) requirement, a form of profit margin cap on insurance companies . . . therefore it is not at all in the interest of the insurance companies to negotiate for lower prices, but instead they would negotiate for higher prices! 15% profit cap on $100 spent is only $15 . . . whereas if the same drug costs $10,000, the profit allowed would be $1500. Since pre-existing conditions account for the overwhelming majority of insulin purchases, the total dosage and therefore total payout and total profit can be easily calculated ahead of time: the more insurance companies "force" themselves to pay for those pre-existing purchases by the 5-10% of the insured pool, the higher they can charge for insurance premium for the remaining 90-95% of the insured pool, thereby generating more profit!

The entire 3rd-party pay and government-pay scheme for medicine is the result of Envy. Technology product prices per performance have dropped by 90+% in the last half century, yet medical tech prices have gone up instead! If there had been a policy of government ensuring everyone getting computer process power since the 1970's (paid by government for those who need it but can't afford it), we'd all be paying $10,000/hr for IBM mainframe hours instead of mobile phones that can process much faster than those ancient mainframes.
4   mell   2019 Jun 25, 12:03pm  

Reality says
WineHorror1 says
I've long believed greed is more destructive than envy.


Envy is very much what led to the current medical pricing disaster in the US. The real situation is even worse than what the article suggested: because ObamaCare has MLR ("Medical Loss Ratio"; i.e. payout percentage) requirement, a form of profit margin cap on insurance companies . . . therefore it is not at all in the interest of the insurance companies to negotiate for lower prices, but instead they would negotiate for higher prices! 15% profit cap on $100 spent is only $15 . . . whereas if the same drug costs $10,000, the profit allowed would be $1500. Since pre-existing conditions account for the overwhelming majority of insulin purchases, the total dosage and therefore total payout and total profit can be easily calculated ahead of time: the more insurance companies "force" themselves to pay for those pre-existing pu...


Mostly agreed. Look at typically not covered procedures such as Invisalign, Invisalign is now 2 months rent and Lasik can be had for under $500. If these were products ran by government regulated insurance they would both cost 10 - 100 times more easily - gotta pay the middle-men and bureaucrats.
5   RC2006   2019 Jun 25, 1:52pm  

Like everything else in healthcare its a scam. Same reason no new antibiotics are being made can't make a profit on something that cures people.
6   GNL   2019 Jun 25, 3:02pm  

mell says
Reality says
WineHorror1 says
I've long believed greed is more destructive than envy.


Envy is very much what led to the current medical pricing disaster in the US. The real situation is even worse than what the article suggested: because ObamaCare has MLR ("Medical Loss Ratio"; i.e. payout percentage) requirement, a form of profit margin cap on insurance companies . . . therefore it is not at all in the interest of the insurance companies to negotiate for lower prices, but instead they would negotiate for higher prices! 15% profit cap on $100 spent is only $15 . . . whereas if the same drug costs $10,000, the profit allowed would be $1500. Since pre-existing conditions account for the overwhelming majority of insulin purchases, the total dosage and therefore total payout and total profit can be easily calculated ahead of ti...

So how is that not greed?
7   GNL   2019 Jun 25, 3:03pm  

RC2006 says
Like everything else in healthcare its a scam. Same reason no new antibiotics are being made can't make a profit on something that cures people.

Is a scam greed or envy?
8   Shaman   2019 Jun 25, 3:52pm  

WineHorror1 says
I've long believed greed is more destructive than envy.


Yah that’s not true.
An envious man will tear down his neighbor’s house if it’s better than his own. Net result: fewer nice houses. A greedy man will find a way to make more money to build a bigger house than his neighbor. Net result: more nice houses.

Played out in political philosophy, Socialism and Communism are the ideologies of envy. They’ve cause poverty and misery wherever they’ve been implemented, and stunted progress and innovation and production.
Free markets rely on innate human greed, and they’ve been responsible for all the advances in innovation and production and prosperity.

So yah, your statement couldn’t be more false.
9   Shaman   2019 Jun 25, 3:54pm  

WineHorror1 says
RC2006 says
Like everything else in healthcare its a scam. Same reason no new antibiotics are being made can't make a profit on something that cures people.

Is a scam greed or envy?


A scam is theft by trickery. A crime, as defined as such by every civilization that’s ever been.
10   Shaman   2019 Jun 25, 3:56pm  

WineHorror1 says
So how is that not greed?


If anyone was able to set up their own insulin factory, this wouldn’t be a problem as consumers would just choose the cheapest well-made product. But since the government sets hurdles for this process and regulates who gets to make it, this protects the monopolists and enables them to be as greedy as they like without the intervening market forces that would mitigate the effect.
11   CBOEtrader   2019 Jun 25, 4:27pm  

I sell Obamacare health policies , and make good money doing it.

Strategy is simple: 1) find a town/area/county with mostly tons of poor people 2) convince them to sign up to Obamacare for Free (to them) 3) collect commission checks.

When a family of 4 costs $2600/month, these are large commission checks w/o the consumer ever caring enough to pull out their credit card.

With many of these policies , the cost of insurance can dwarf the entirety of all annual economic activity in the house. Ex: family makes $28000/yr, but gets $32k/yr of "free" insurance .

None of it makes sense at all. The money I'm paid to do sales on the front line is hush money so I don't go write articles about how stupid it all is, and how the taxpayer is getting FUCKED for billionaire healthcare executive profits.

Thanks Obama, fucking crook
12   Patrick   2019 Jun 25, 6:05pm  

@CBOEtrader this is amazing.

Sales people are getting commissions to get people to sign up for a government benefit?

Can you give a URL with some documentation of that? Thanks!
13   LastMan   2019 Jun 25, 6:53pm  

CBOEtrader says
I sell Obamacare health policies , and make good money doing it.


CBOEtrader says
Thanks Obama, fucking crook


Who's the crook?
14   CBOEtrader   2019 Jun 25, 7:38pm  

Patrick says
Can you give a URL with some documentation of that? Thanks!




https://www.healthcare.gov/agents-and-brokers-register/

"5 great reasons to sell Marketplace health insurance plans
Help your clients save money – and collect full commissions. Your customers may qualify for premium tax credits that lower their monthly premiums — but only through the Marketplace. By selling them a Marketplace plan, you help them save money. But your commission is based on the full, undiscounted price of the plan."


Some carriers pay $15/month/policy. I find the carriers that pay 3 to 5% and rep those, since I can make up to $3600/sale (my largest single sale Obamacare commission. Average sale is $600.

86% of total premiums paid for my clients is covered by taxpayers, not even including cost saving provisions.

Trump is doing everything he can to fix the situation,but Obama screwed this up royally. Most likely on purpose.
15   CBOEtrader   2019 Jun 25, 7:40pm  

Patrick says
Sales people are getting commissions to get people to sign up for a government benefit?


How do you think medicare works?

I know agents who hang outside of govt Medicaid offices to pick up the lowest of the low cases. They pay nothing, and the agent can make $500 first year, $250 annually thereafter on one client.
16   Reality   2019 Jun 25, 7:45pm  

WineHorror1 says

So how is that not greed?


They are playing by the rules set up by the Envy crowd.

Do you live in a cardboard box under the bridge? Of course not.

Do you not take the standard deduction and other deductions allowed in the tax return? Of course you take the deductions to minimize your tax burden.

Do you give your employer back all the money beyond what you need to live in a cardboard box under the bridge? Of course you don't.

If you call profit-motive and self-interest "Greed" then "Greed" is the reason why people get out of bed every day and why you can have food to eat at all, or even water to drink, or even a tin can to piss in or to collect rain water!

Envy is the real reason why all the laws regarding medical pricing in this country are so screwed up and incentivizing people to maximize self-interest at other people's expense at 5x, 10x or 100x what would cost in normal self-pay / consumer responsibility / individual market choice.

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