The government in the past several years has seen fit to slap down that “moral hand”. If you were actually a “Capitalist” you would understand how the free market rewards morality. Try reading Hayek or von Mises and you might start to understand.
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I think you have it quite wrong. Unregulated free markets are not free but full of collusion. Adam Smith’s “invisible hand of the market” only works in game theory for an infinite number of both consumers and suppliers that all have the same information - that becomes false as soon as some players know more than others, or collude.
That is why trade exchanges are so tightly regulated - yet there still is plenty of dishonesty around.
It is really worth it to bone up on game theory - what governs both perfect and imperfect markets. If more voters did that, our government would be quite different.
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Adam Smith, as did Hayek and von Mises, did not advocate a completely unregulated free market. That would only work if all players were moral, and we know they are not. But the regulation proposed by those authors bare no resemblance to the cloddish and powerful hand of government, especially our recent government of the past decade.
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A friend of mine has as his personal lawyer the guy who won the $20 billion suit against the tobacco companies some years back. Be nice to see someone like that sink their teeth into this.
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Adam Smith, this great philosopher, who was way ahead of his time, died at the end of the 18th century. Ludwig von Mises, a great mind, peaked in the 1950s, and was known to be anti-scientific, ideological and inflexible. Hayek, also a great philosopher, less ideological, also peaked in the 50s. None of these belong to any of the modern schools of quantitative economics and risk management, or understood the modern scientific analysis of markets - they were developed after these men were past their peaks, or centuries after their death in the case of Adam Smith.
So it is fine to be inspired by their philosophies (I am). But let’s face it - their writings are not appropriate or direclty applicable to use for the regulation of modern markets, particularly complex ones. Criticizing someone who does not believe that Hayek’s and von Mises’ writings apply directly to modern markets is misguided I think. We simply know a lot more than they did. Nobody who has read anything about the unfettered capitalism of the 19th century (or about some of the ridiculous deregulation excesses we have seen in the past 30 years) can say that capitalism does not need tight regulations. But they need to be the right ones that won’t destroy the magnificent efficiency we can get when a market functions as well as it should.
What I am writing here should not be construed in any way to support big government - rather, to support strong, but efficient and well-enforced regulations. And, speaking as a capitalist, I think that, on the whole, while I don’t like either, the excessive regulations put in place by some recent Democratic administrations have been better than the insufficient and shockingly biased deregulations offered by recent Republican administrations. While an independent, I used to see myself close to a moderate Republican - but now, on some issues, such as health care, I feel more like a left-wing Democrat - and that’s not because I have changed:-)
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Enjoying the philosophical discussions here, as a person who doesn’t subscribe to either party, but rather as someone who will support anyone with good ideas I am always on the lookout. Some interesting ones crop up in these discussions from time to time.
Regulation is an interesting thing in the medical space. There are lots of regulations, but if you propose removing any of these regulations you will have people tell you that patients will be dying every second in an attempt to invalidate your proposal. Of note, is the difference between the EU regulatory body and the US. Unfortunately (in my opinion) the EU is moving to a more US based approach.
Ever since I caught the flu while in Germany and was given a medicine that wasn’t available in the US, but cured the symptoms of the flu in 24 hours, I have thought that the EU has a much better approach. What is this approach - Prove that the drug or device is safe in humans and get approval. Then the market decides if the drug or device has a place.
What does the US require, Safety + Efficacy. So not only do you have to prove that your drug or device is safe you also have to prove that it works. While many will say that is a much better system, I disagree. The science required to prove safety is relatively inexpensive and the market figures out pretty quickly if the drug or device works. Once you tack on efficacy, the costs skyrocket and only bigger, well funded ideas make it to market.
It will be interesting if a big idea such as this can be accomplished in the US, which would reduce the costs to bring a product to market, while still ensuring the therapy is safe. Wonder which direction we are headed in? I hope one where safety can be maintained, but innovative ideas thrive.
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@Chris72, I think this is a really interesting idea, with the caveat that I’d like some post-drug approval clinical trial data be obligatory. Companies need to work on some easy platforms for collecting reliable data via a smart phone, and I bet the whole process would be much easier and cheaper.
I can imagine a scenario where a company gets, say, a five-year license that can be revoked or downgraded to a “less effective” labeling scheme if they either do not provide effectiveness data on their drugs or trial data shows the drugs don’t work or the side-effects aren’t worth it. On the other hand, the classic case of thalidomide babies is one where Europe’s system was much less robust than the American one. And whether the reduced regulatory burden is worth it depends on WHAT’s holding back drug discovery. Certainly there are financial issues, but on the other hand some of this just has to do with where the basic science is. Even if companies have huge incentives to bet big on groundbreaking medicines, if the basic science isn’t there they will flounder.
The question is: what is the likelihood that a new drug is a game changer, versus the likelihood that its side effects largely outweigh its benefits. For a few decades now, I feel like we’ve been in a lull where most new drugs are follow-ons or “me toos” and too few offer a dramatic improvement in quality of life. But I suspect that once CRISPR-based gene therapy, immunotherapy and artificial intelligence really takeoff we will be in a different ballgame altogether.
Of course, at this point this is all pure armchair speculation because my goals for our government are exceedingly modest. A) DO NOT BLOW US UP! B) Do not dismantle our democracy C) Try, if possible, not to slide into epic levels of decadence and corruption.
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Nah your off by more than a few years, prices started creeping up mid 2000’s, before ACA came along.
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So I came across this article today, basically arguing that this system would be a disaster for the US. Not sure I agree, but I do think the onus should be on companies to prove a drug’s effectiveness eventually.
The Consumerist posted a PDF of the actual lawsuit here. I haven’t tried to read through many lawsuits before, but this is 169 pages with lots of detail (seems very repetitive, but I’m not a lawyer).
Enjoy!
Class Action Complaint agains Sanofi, Novo Nordisk, and Eli Lilly
Umm, I was uninsured in 2010 and 2011, and my checkbook says a Lantus vial was $82 and a 5 pack of novolog penfill cartridges was $117. I now pay 20% copay on my insurance and that copay is $85 for Toujeo (instead of lantus, but about the same number of units), and $349 for the novolog penfill. Was my pharmacist giving me a deep discount? I don’t think so.
What’s the difference between 2010 and today? You tell me.
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The ACA may have its issues, but the absurd price inflation in all things medical (drugs included) predates it by a good long way. There are numerous other factors at work.
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I tend to agree… although it appears the ACA may have added significant fuel to the fire
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Thanks for posting the link. I am a lawyer and took a very quick skim. I’m happy to see that the heart of the action appears to be premised upon the problem created by the use of pharmacy benefit managers (PBMs). The preliminary section of the Complaint includes a nice summary, including this paragraph:
11. Drug manufacturers, including Defendants, can manipulate this dynamic to the detriment of patient consumers. Where two or more drug manufacturers make largely interchangeable products, those companies would, in an ideal world, continuously drop their real prices to undercut the prices offered by their competitors. But the practice of publicly-publishing one price, while secretly offering another, has enabled drug manufacturers competing within the same therapeutic class to secure PBM business without significantly reducing their real prices. The drug companies know that the PBMs stand to profit from large spreads between real and benchmark prices. Inflated benchmark price increases do not cost the PBMs so long as real prices remain constant (after all, they pay the real price, not the benchmark price). Taking advantage of these realities, drug manufacturers competing with the same therapeutic class have begun to offer the PBMs higher benchmark prices instead of lower real prices. In other words, instead of marketing lower real prices to PBMs, they market the spread between prices. The drug manufacturer with the largest spread between benchmark and real price is more likely to secure a PBM’s preferred formulary position, and, as a result, the business of that PBM’s clients.
This causes the manufacturers to then increase their prices in lockstep:
14. All three Defendants have exponentially raised the benchmark prices of their medicines while maintaining constant (and even slightly lowering) their real prices. This behavior has enabled them to market larger spreads to the big PBMs in exchange for formulary status. Insidiously, an arms race in the escalation of reported benchmark prices—and consequently spreads—has ensued between Defendants: each Defendant raises its benchmark price just a bit more than its competitors, encouraging the large PBMs to keep its drug on formulary. And Defendants have done so in perfect lock step:
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Pretty telling that the actual final ‘secret’ price after rebates paid by the PBMs has remained steady or even gone down… yet the sticker price has escalated absurdly… being raised in perfect sync between ‘competitors’ If that’s not racketeering, I must not know what is.
If there is a way to donate towards the legal costs of this undertaking, I would be interested to learn how.
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Ooooh . . . a possible RICO predicate. Now there’s a happy thought.
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David, if you do not understand that the ACA is THE issue, then you have no idea of what has been happening in the medical/ pharmaceutical/insurance/government industry in the past eight years. The ACA is nothing more than a collusion between all the big players in those industries, designed to enrich those industries. The fact that it throws a bone or two to the populace is small comfort.
I am a doctor and I have suffered greatly in the past eight years because of this travesty. Practice used to be fun and rewarding, not so much anymore. It pains me to see how my patients have suffered.
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Sorry to disagree, but that view is far too shortsighted. The ACA is AN issue, and a terribly serious one. But it’s one of several. Costs were out of control long before the ACA came along and I have the bills to prove it. There are numerous other reasons why costs are high besides the (very recent) ACA. Or have your malpractice premiums remained steady and level? My doc’s certainly have not. And our town’s ambulance service is now being subsidized by the city because Medicare reimbursements have steadily shrunk for the past 15 years and are now substantially less than 50% on the dollar. I could go on at interminable length.
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I am not saying that there were not problems in the delivery of medical services pre ACA. But it truly rankles me how the medical/pharmacy/ insurance/government industries took advantage of those problems to enrich only themselves. Because that is exactly what the ACA did. And all of those entities worked very hard to make it fit their agendas, not ours.
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Big pharma is now trying to shake the Government down for larger subsidies. The ACA is a lifesaver.
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