Posts Tagged price gouging
Mylan is the company that makes EpiPen(R). It was one of those “inversion” companies that started in the US but is incorporated in the Netherlands to avoid taxes. Yet, the administrative offices are in Pennsylvanian in the US. It sells EpiPen(R) all over the world. In Australia a subsidiary called AlphaPharm sells the product. It’s a handy plastic syringe device that allows a person with a severe allergic reaction to grab the device and give an injection quickly.
It’s so handy that the company can sell the $1 device containing 3 cents of epinephrine for $697. That’s the price quoted by Costco. The same drug can be purchased online through Canadadrugs.com for $112.71 and through Kiwidrug.com for $122.51.
It’s not clear why other companies that package injectable drugs don’t supply prefilled syringes for this purpose — probably a very aggressive legal department or the acquisition of competing suppliers. The device is not something novel — it’s just a syringe — so it should never have received a patent.
Emergency Rooms and doctor’s offices don’t fool around with the EpiPen(R). They just purchase cheap vials of epinephrine and cheap syringes to give the dose for a few dollars. A patient could do this with a little training — it would save a lot of money. The cost of an EpiPen(R) so high the people who need the medication don’t buy it — so the few seconds a patient might take to draw up the medication in a syringe is better than no medication at all.
The Mylan company is a good example of why drug companies should be more regulated and have profits limited.
Mylan purchased the decades old EpiPen(R) rights from Merck in 2007. The consumer price in 2007 was about $60. With a major marketing effort (basically convincing patients, schools and healthcare facilities to always have the product available) the price is now about $700 accounting for about 50% of company profits. Teva Pharmaceuticals is working on a generic epinephrine injector but it probably will not be available until 2018. A startup company Windgap Medical has invented a device using powdered epinephrine but it may be many years, if ever, before the device arrives on the market — but, the device promises to extend the shelf life from 18 months (for the EpiPen) to several years.
Here are some good references about EpiPen(R) and Mylan
There is a perfectly acceptable (FDA approved) alternative to EpiPen in the form a competing product called Adrenaclick which costs only about $140 (according to GoodRx) for a two pack. This product does little advertising — certainly not as much as EpiPen. But, advertising does not equate to product superiority. To get the less expensive product:
- If the prescriber wrote a prescription in a generic format (Epinephrine auto-injector 0.3 mg (or 0.15 mg) for injection in case of allergic emergency) then a patient should simply call the pharmacy to obtain the lower cost alternative.
- If the prescriber wrote the prescription for the easy-to-remember brand name a patient should simply call the prescriber’s office and ask that a replacement prescription be sent to the pharmacy for the Adrenoclick in the same dose as for the EpiPen.
- The two devices are not exactly the same but the technique is very similar. The patient should read the directions very carefully to understand the small differences — read this when the medication arrives, not when an emergency is present. The pharmacist is required to provide personal instructions and answer questions about products they sell.
Although the Adrenoclick is less expensive it is still much too expensive. The manufacturing price is probably less than $10 each. Also, keep in mind the shelf life — liquid epinephrine only has a shelf life of 18 months — so even if the medication is not used there is a recurring cost for replacement.
Asthmatic abuse: (definition) The systematic and intentional market manipulation of asthma medication prices resulting in large corporate profits and financial ruin for people with asthma (see also: racketeering, theft, extortion, corruption, complicity and congress).
Price gouging of people with asthma by U.S. pharmaceutical companies is legendary (New York Times). Now some of those same companies want to move their corporate offices to other countries to avoid U.S. taxes. RIPOFF is the technical term.
An inhaler is a pressurized gadget to make a mist of a medication so a person can inhale the mist (see the picture at the right). It should have never been patented: it is useful, but it is trivial and certainly not novel. Now, through patent manipulations and suits there are NO GENERIC INHALERS FOR ASTHMATICS; there are only high priced brand name products — despite the fact this type of sprayer and medication has been available for 40 years.
Albuterol is the most common anti-asthma inhaler. The drug is easy to manufacture (costs a few cents) and the inhaler is trivial (costs less than a dollar). The US price listed below is from Costco (considered the lowest price source in the US). The Indian price quoted below is from allmedsdeal.com (this is not an endorsement, just an example).
- The US price: PROAIR HFA 90 MCG INHALER (TEV) $55.46
- The Indian price: Ventorlin CFC Free Inhaler / Salbutamol 100mcg (GSK) $4.40
These are the same drugs: US price $55, Indian price $4. GSK is a reputable UK company that manufactures albuterol, sells it worldwide, but not in the US. Without the unreasonable market restrictions and nearly insane FDA rules asthmatics would be able to purchase albuterol for about $4 per inhaler.
Patents should be allowed to exist, but consumer prices must be limited. Countries other than the US exercise this control. Citizens fight price-gouging companies — why not fight price-gouging drug companies? Medicare insists doctors accept payment at the lowest rate offered, so why should Medicare fail to insist on the lowest price drug companies offer elsewhere in the world?
The current laws for pharmaceuticals are so complicated it defies understanding. If you like complexity, like laws and like legal suits then continue the current system. Instead, consider the following:
What part of this simple rule would be difficult to understand:
THE RETAIL PRICE OF ALBUTEROL INHALER SHALL BE $4.
That’s the kind of pharmaceutical control the US needs.
Elisabeth Rosenthal reported “Patients’ Costs Skyrocket; Specialists’ Incomes Soar” in the New York Times today 1/19/19. She particularly targets one of the most popular specialties for US trained physicians, dermatology. Good hours, great pay, and compared to other specialties, easy to learn.
A highly trained thoracic surgeon can only do 2 bypass surgeries per day but a dermatologist can to 20 lesion removals per day and make almost as much money. Patients choose to go to a dermatologist when most primary care doctors can just as easily solve the problem at a fraction of the cost (like benign skin lesions, sun related pre-cancers, and acne). And, when infection sets in on the weekend the dermatologist’s answering machine says to go to the emergency room ($300 co-pay).
She describes a situation where a woman had a facial skin cancer removed at a cost of $26,014. The astounding cost was the result of a dermatologist removing a lesion and then being unable or unwilling to close the wound — but still billing for the procedure. And, the patient also received bills from the doctors that actually fixed the problem (perhaps they should have billed the dermatologist). Sadly, a bad system is more profitable than a good system.
It is easy to see why the patient and Ms. Rosenthal believe there is a problem with US healthcare. Because, THERE IS A PROBLEM!
Rather than complain about the problem, what is the solution? It is not rocket science. The dermatologist, surgeon, operating room personnel and anesthesologist all need to be employed by an accountable care organization (ACO)– that way there is just one predetermined fee for taking care of the whole patient for a year. If the system does the work correctly they make some money, if they goof-it-up (as in this case) they lose money. The incentive should be to do good and efficient work. Not to make money by making mistakes.
This solution is extremely easy yet extremely unpopular with hospitals, surgeons, anesthesiologists, pathologists, radiologists, ophthalmologists and dermatologists. The reasons are obvious — they make less money and must follow quality guidelines. Given the low quality and extreme high cost of US healthcare is that really a problem? A few more articles by Ms. Rosenthal and a few thousand letters to congress might help. Sadly, one industry lobbyist equals one journalist in this battle.
By the way, the lesion at the top is a benign seborrheic keratosis — harmless, but gladly removed by dermatologists ($250).
The PBS NewsHour reported on 12/23/13 an astounding survey — they found a generic medication for breast cancer (letrozole) ranged in price from $9 to $400 dollars for a 30 day supply. Even more surprising the company that charged $400 dollars agreed to match the $9 price at a competitor.
Not only do pharmacies price gouge so do insurance companies. Almost uniformly insurance drug plans add $20 to every generic prescription. So a typical $10 generic prescription without insurance involvement will cost you a copay of $30 with insurance. And, do you think the pharmacist will suggest you avoid using insurance — not usually, since the $20 copay is for them!
What should you do?
- Shop around — check prices at several pharmacies
- ASK if there is any program the pharmacy has to lower that price (sometimes if you get a shoppers card you get better prices)
- You don’t need a membership to get prescriptions from Costco. Consumer Reports rated them as having the best generic prices.
- Here is a great place to check prices: goodrx.com (and they will print coupons for free!)
- You can get mail order generics here with free shipping. Usually their prices are good: healthwarehouse.com
- Don’t involve your insurance plan if it costs you more out of pocket than just outright paying for the prescription.
- Insurance plans often limit the prescription to 30 days (with a copay every time). Getting your prescription in 90 day amounts saves trips to the pharmacy and often improves the discount.
- Pharmaceutical companies often make a long-acting medication just before the patent runs out on the short-acting form. Ask your doctor if the long-acting medication is absolutely needed. Sometimes taking a medication twice a day at a generic price is much less expensive than once a day at a brand name price.
The price gouging is astounding. Patients often think a pharmacy just adds a small amount to the wholesale price. Not so. They often set the price at some percentage less that the brand name — hugely more profitable for them and devastating for consumers.
The price gouging makes you understand better why the UK and other countries have legislated a solution — they negotiate a country-wide price for each generic medication and allow only a few dollars to be charged as a dispensing fee. The US has a long way to go to protect consumers and reduce health care costs.
Again, Steven Brill of Time Magazine twists the knife in the hospital chargemaster with his article “Bungling the Easy Stuff” published 12/16/13. Uninsured patients continue to suffer hospital price gouging and personal bankruptcy even though legislative relief was passed years ago when the Affordable Care Act was enacted.
Mr. Brill explains that the ACA prevents hospitals from collecting fees based on the chargemaster (the discredited fee schedule of astronomic charges). But, because no rules were published in the Federal Register no legal help is available to victims of the practice.
How could this happen? Because the work to implement the rules to prevent overcharging did not seem worth the effort, after all, in 2014 everybody will have insurance! Sadly, during the 4 years up to the time when everybody supposedly will have insurance legal enforcement was sidelined.
Although Mr. Brill piles blame on the Obama administration one must also blame those in congress who pass bill after bill to try to stop the ACA — this is unbelievable — one side not implementing the law and the other side trying to kill the law both without regard to the finances of the vulnerable uninsured while hospitals ignore the will of congress and continue an unethical practice.
Mr. Brill has been hammering on the problems of the chargemaster. It’s time to listen and help your fellow citizens — hospital boards need to stop the practice immediately. Citizens need to ask hospital board members why they stand for such a cruel and unethical practice? Perhaps they should give the money back. However, the current plan is to use the money to buy ads to extol the caring nature of hospitals — that will make us all feel better.
Elisabeth Rosenthal of the New York Times is the author of the lead story on 8/4/13 “For Medical Tourists, Simple Math” about the high cost of hip surgery in the US with an astounding comparison to the low cost in Belgium. She quotes US orthopedic surgeon Rory Wright saying that joint makers keep prices high “because they can”, not because of research and development or liability costs. Once again, the Times presents strong evidence of price gouging in the US health care system.
Below is the cost information presented in the article in US dollars in 2012 — the fees presented reflect the repudiated “chargemaster” fees for uninsured individuals Belgium has national health insurance with some basis in reality for payments (and some national price and profit restrictions)
Below is a table from the Commonwealth Fund on fees paid to doctors by public payers (like Medicare) and private payers (like private insurance)
The US makers of knee and hip implants (Zimmer and OrthoWax) pay their CEO’s in excess of $8 million dollars per year each. In 2007 device makers had to pay $311 million to settle a claim of kickbacks to surgeons. Artificial hips cost about $350 each to manufacture but hospitals and insurance companies usually pay between $4,500 and $7,500 each.
- People in the US without insurance are at a tremendous disadvantage.
- Hip and knee implant manufacturers make huge profits in the US. Other countries solve the problem with price controls and limits on profits placed on the very US companies that freely gouge US customers and damage the US economy. Does congress care?
- If you live in the US, need surgery, don’t have insurance, and do have enough money for an airplane ticket then: go to another country for your surgery (Belgium has a lower infection rate than in the US as another advantage).
- Lack of insurance should be a vanishing problem in the US with ObamaCare but the high cost paid by insurance (ultimately paid by everybody) is far too high.
- The work of surgeons is undeniably valuable. Somehow many other products and services associated with surgery seem to get paid high fees for no reason. An operating room is not surgery, a metal implant is not surgery, and a hospital room is not surgery. Those associated services are hugely overpriced and need price controls and profit limitations.
- Surgeons get paid much more than primary care providers, which makes sense based on the years of training and experience. If surgery is really needed then health systems and patients gladly pay for the talent.