The problem with drug prices isn't because of the drug manufacturers, it's with the middle-men and private insurance companies. At least, that's what the manufacturers are saying
For instance, with the manufacturers of insulin, none of them are American and they offer to sell the insulin to everyone at the same price.
The problem is that the large insurance companies use just three middle-men drug buyers called Pharmacy Benefits Managers (PBM) who DEMAND growing discounts every year from drug manufacturers, so the drug manufactures have to raise the prices to the US market every year to keep making a profit.
Novo Nordisk is willing to sell insulin much cheaper, but the drug buyers demand about a 75% discount off of the wholesale cost or they'll make the product not covered by the insurance companies they represent. To compensate, they raise the wholesale price in the US so after the forced discounts, they still make the same amount of money.
The people who suffer are the ones who don't have insurance.
The solution, at least in the case of insulin, isn't cheaper prices from the manufacturer, it's for the US to pass a law that prevents insurance companies from dropping a product based on the refusal to discount the product if it's under a certain price-per-month.
Two different things entirely. The fake “Discount off MSRP” demanded by the PBM has nothing to do with the profit margin of the PBM, that would be based on markup they charge to their customers above the price they actually pay.
But the regular uninsured consumer sure gets screwed.
I think this is why there are now self-pay “codes” you can give a pharmacy to get a significant discount off retail price. Sometimes less than your co-pay, but of course then it doesn’t count toward your deductible.
I wish they would simply ban these pricing gimmicks as part of a price transparency law.
There should be one price and one price only the manufacturer can charge in the USA per dose of an FDA approved medicine, with no ability to do price differentiation, period. No more negotiating, no more kickbacks. Insurance should have to show you the actual price they paid, and no other. And then you pay the patient responsibility of the bill based on your standard policy formula.
The same pricing transparency should be applied to labs and procedures where it should be illegal for a given facility to charge two different patients two different prices for the same product or service.
That 2-3% is for the insurance layer, not the parent organization.
Consider CVS Health which owns Aetna (an insurer), Caremark (a PBM) and CVS (a pharmacy). Aetna is required to spend 80% on premiums whereas Caremark and CVS face no such constraints on their profit margins.
There's a reason why there's so much M&A in this space while consumers are simultaneously facing higher premiums.
The 3% to 5% profit margin is for the whole company. For all the hate health insurers get as profiteering parasites, their owners sure aren’t pocketing much.
Similarly, Anthem at 4.22%, CVS at 3%, Cigna at 3.38%, Humana at 5.58%, Molina at 4.57%, Centene at 2.12%.
The reason there’s so much M&A in this space is because there’s no margins, so it’s either go big and win in economies of scale, or go home and go out of business. And people face higher premiums because more people are getting more access to healthcare. There’s no lifetime benefit maximums or pre existing condition exclusions anymore. And the highest premiums are capped at 3x the lowest premiums.
A similar situation in local political health care plans. I did medical billing. Our local govt agency (this was for medicaid level care) required that they only pay 25% of the price of the service. When 90% of your patients are on medicaid, you raise the price so that 25% of price is now what price should be.
But very funny when someone comes in and wants to pay cash. While that would be SO much easier than dealing with the agency - you got to charge them 4x so some politician and HN posters can go on about how much money the govt "saves".
I just wish prices (cash paid) had to be posted publicly.
I got a very nice discount on some dental work that was considered 'cosmetic' and not covered by my shitty dental insurance who thought amalgams were just fine for molars. They were going to pay like 25% or something silly like that.
So we went sliding scale uninsured, and despite being in the top end of the scale, I ended up paying about 1/3 less than I would have through insurance. I probably still ended up subsidizing some kid who needed fillings worse than I did, which was the only silver lining in that whole stupid affair.
How would forcing insurance companies to pay whatever drug companies ask not just raise insurance premiums? How do you differentiate dropping a drug because they're not willing to sell underpriced from dropping a drug because it's overpriced?
For instance, with the manufacturers of insulin, none of them are American and they offer to sell the insulin to everyone at the same price.
The problem is that the large insurance companies use just three middle-men drug buyers called Pharmacy Benefits Managers (PBM) who DEMAND growing discounts every year from drug manufacturers, so the drug manufactures have to raise the prices to the US market every year to keep making a profit.
Novo Nordisk is willing to sell insulin much cheaper, but the drug buyers demand about a 75% discount off of the wholesale cost or they'll make the product not covered by the insurance companies they represent. To compensate, they raise the wholesale price in the US so after the forced discounts, they still make the same amount of money.
The people who suffer are the ones who don't have insurance.
The solution, at least in the case of insulin, isn't cheaper prices from the manufacturer, it's for the US to pass a law that prevents insurance companies from dropping a product based on the refusal to discount the product if it's under a certain price-per-month.
This article seems to cover the finger-pointing between the manufacturers and PBM's and insurane companies very well: https://www.healthline.com/diabetesmine/pharmacy-benefit-man...?