Abstract question

I think I lack the vocabulary to say something. So, I’m gonna ramble here a bit and see if you guys help figure it out. I was discussing this a bit with my brother and that helped. We discussed the state of the healthcare marketplaces. There’s a problematic issue discussing PBMs and hospital consolidation and insulin price gouging (Federal Trade Commission has started to frame it as medical monopolies, similar to what they claim Amazon is doing with the online markets in their new lawsuit). That issue is some sort of intellectual door jam that forces people in the government to keep referring to the world in the context of the 1950’s - where the paradigm is either “free markets,” or communism.

It’s hard for me to know how to talk to people about the markets because I didn’t live through the 1950’s and when I say “free markets,” I kinda imagine a situation where we don’t have price fixing by the drug manufactures and the PBMs. Maybe a better 1970’s analogy would be the oil cartels?

The world has changed so much in the last 70 years. I don’t want to keep having conversations about markets reframed into the context of the 1950’s. It prevents any constructive problem solving on the practical problems that exist now. People my age have watched American institutions topple under the weight of this 1950’s paradigm - the banking system and international markets, understandings of the Nation-State, domestic political institutions.

How can I have a meaningful conversation about the medical markets with my representatives? I think they might be reframing things as “free markets” or “regulation.” I have no idea what that means, but I know that it is super triggering to people and there has to be a way around it.

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In the 50s and 60s the Markets were regulated so they could be free. Oh, that sounds like an oxymoron. How can markets be free if they are regulated?

The answer to that is in an unregulated libertarian dream the markets tend to devolve into trusts and monopolies. This is what we are seeing with the constant whittling of regulations beginning in the 70s.

My own industry was highly regulated by state and the federal governments, telecommunications. I will be the first to admit that this needed to be reworked because it was causing a dearth of innovations. Everything connected to the telephony network had to be consistent the the Bell Blue Book standards, and for the most part were owned by the local phone companies.

The advantage to this was all telephone networks were compatible with each other. The disadvantage was there was no incentive to come up with anything really new.

In the cell phone era we see an industry that is nearly free of regulations, The instruments are incredible, but as we in this community know that the various operating systems are not always compatible. Then there is the issue with every cell company having their own fiber backbones and towers.

In a more perfect world the transport of data and over the air signaling would be part of a common carrier scheme, where the towers and fiber networks would not be owned by any mobile company.

This would improve, in fact, make coverage more complete and dependable. To my knowledge cell companies are not required to have backup power at their tower sites as did/do landline companies. We had diesel back up generators that could run for days on the fuel in the tanks and batteries that would keep the network up for a minimum of 8 hours with a loss of power from the grid and the loss of the generators. This was mandated by regulation.

Most industry regulation came out of the debacle that was the free markets that lead to the Great Depression.Banking, Food and Drugs, Electrical power, Telecommunications and more were unregulated nightmares in the years prior to the 1930s. These things are as much to infrastructure of the nation as are roads and bridges. When they collapse - well I would say ask those who lived through the depression, but they have mostly left us.

If you want free markets there has to be some controls. In electronics we call this negative feedback. A portion of output is inverted and fed back to the input. This prevents the oscillations that happen with positive feedback. Think high pitched whistling and screaming feed back of a public address system when the microphones are picking up sounds from the loud speakers.

Too much negative feedback is detrimental, reducing the end results too much, but positive feedback is always harmful. Negative feedback is regulation, positive feedback is the unregulated market.

My use of the Bell Blue Book may be wrong. Maybe ours was in blue binders.


Thank you so much! That’s a very neutral, technical example that helps frame a discussion so that people don’t get triggered and fall into political party campaign propaganda. Your a genius and I’m gonna have follow up questions.

P.S. One guy suggested that conversations around drug pricing be framed around the concept on Onshoring. I think that could work, but the last time that I tried it, there was no such word as “Onshoring.,” so I sounded crazy. Now, it’s in the wind and there is common terminology to describe it. That means the time has come to bring those ideas forward.

It’s really hard to discuss ideas with people before the common terminology exists. We deal with a lot of ideas on this forum that don’t yet exist, but soon will. Talking to people about that stuff is always a nightmare. This was all true once for APS systems. Talking about that stuff was different before the word “APS” existed.

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And many are not aware of “APS”.

Brilliant question.

So, a lot of the diabetics, and the diabetics who were lobbying, and members of the government are still confused about PBMs. I am still confused about PBMs. You all have tried to explain it to me for years.

I’m convinced that if you want someone to explain PBMs, you ask a pharmacist. The pharmacists are more active on this issue than even the diabetics. This is a local guy who I saw providing comment during a public Federal Trade Commission meeting re: PBMs. He gives a good interview here:

The pharmacists aint gonna work on Maggie’s farm no more. It’s refreshing to see a leg of the healthcare system acting with integrity. I’m glad the diabetics have pharmacists working on this stuff too. Nationwide walkouts spotlight pharmacists' working conditions | kare11.com

Yes a good start with this recommendation. But in my limited experience PBMs are purposefully very vague and completely opaque about everything related to pricing which is, if I’m not mistaken, one of a couple principal missions they are tasked with. Nothing “free market” about it.

The 2019 T1D Summit had a great presentation on PBMs here are my notes:

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I’m an American (t1d since 1986) who migrated to New Zealand last year.

The way things work here is that there a govt agency called Pharmac decides which drugs will be funded by the public health system.

So when a new drug class comes to market (it must first be approved by by MedSafe, the FDA of New Zealand), Pharmac requests bids from all the companies that manufacture that type of drug.
The companies compete for the right to have their drug “funded” by the NZ health system. The drug(s) that is/are approved becomes free to all kiwis with a Rx, and the other companies must decide if they want to release their drug to the public without funding, knowing there competitor has an unbeatable price of “free”. So they either release it at a lower price than you would sell in America, for example, or they just don’t sell it on the kiwi market.

I only mention this to point out what an insanely different and larger obstacle there is in the US to achieve this type of coverage of an essential drug like insulin, which like all Pharmac funded drugs, is completely free. The prices in the US are so convoluted and impossible to navigate, but I think this is now by design. Too many vested, monied interests to see the whole thing dismantled and reassembled into something that is streamlined and works better for the people than the monied interests.


A small town pharmacy lobbyist or consultant or whatever assures me that the government is coming for the medical markets. I think he’s right. The newest strategy is to send that young, thirty-something head of the FTC into the ring to fight. She’s going antitrust all over the place.

I thought all the FTC’s time would get taken up w/ the amazon suits, but apparently not. They are coming for the medical monopolies. Look at her go!

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It’s as if I can hear the gunshots in the distance of a small, but fierce FTC army coming to save the diabetics from price gouging. Man this took a long time, but I think its happening. Give it two more years. Someone might finally fix something. There has been a lot of groundwork laid in order to fix the markets. They might do it.

Here is another perspective on how everything came to be. I just found it today. The second episode called The Paradox attempts to explain what happened, historically, in the 70s. I’ve heard the FTC commissioner mention that they made boo boos in the past, but I have never known what people were talking about until now. It was before I was born. Antitrust In America : Planet Money : NPR

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