Tuesday, September 6, 2016

We Don't Need No Regulations



Door

They were at it again. The politicians were railing against unnecessary regulations. Their #1 villains are those damn government bureaucrats who make our products uncompetitive and cost us jobs. They can pontificate for hours but become strangely quiet when pressed to address the benefits of regulation.

We aren’t going to waste time discussing the recent Olympics in Rio, the air quality in Beijing, or the new interest in earthquakes in Oklahoma. This being Health Insurance issues With Dave, we are going to look at prescriptions.

Insurance applications used to ask health questions. EpiPens, like inhalers, appeared on a few applications each year. That changed about ten years ago as more and more clients kept an EpiPen or inhaler just in case. The inhalers were for a sudden asthma attack. The EpiPen was designed to inject the generic hormone epinephrine to prevent anaphylactic shock from an allergic reaction.

What was once rare was now common. By 2013 the federal government was strongly encouraging schools to have an emergency supply of epinephrine (EpiPens).

We have a product that has been around for decades, cost next to nothing to make, and does great business. These things should sell for about the price of a bottle of ketchup. OK, it is a prescription so maybe the price of a case of ketchup.

The EpiPen is sold in two pen sets. Ten years ago a set was a little over $100. Today, over $600. Is the drug more effective? No. Are the ingredients more expensive? No. What changed?

The biggest single change was Medicare Part D (Rx). The 2003 law “exempts Part D drugs from ‘best price’ rebates that drugmakers have been required to give to the state Medicaid programs since 1991” (The Hill). While some may argue that this provision has caused a large increase in the development of senior-related medications, many of us have also noticed that there is a huge market for senior-related products since 10,000 baby boomers turn 65 daily. I believe that the R & D would have come with or without the government handing the pharmaceutical companies the keys to the vault.

The last thirteen years have given us drug company mergers, hostile takeovers, and even a hedge fund guy who increased a little known HIV drug by 5000%. And that takes us back to Mylan Pharmaceuticals and their EpiPen.

Did Mylan develop the EpiPen? Hell No. Mylan purchased a generic drug manufacturer in 2007. The EpiPen was just one of the products they acquired. R & D cost – Zero. Current price? Whatever the market will bear. There is very little that can be done about this. Oh sure, there will be a lot of harrumphing in the Senate. But in the end, there will be some coupons, a slightly lower price, and a promise from Mylan’s CEO to be a better corporate citizen.

What we need is both more and more effective regulation. There are thousands of generic drugs waiting for final approval. This is not effective regulation. And, at the very least, we need to create a pricing formula for decades’ old generic medications.

The EpiPen problem reminds us that we have no way to prevent price gouging and other unscrupulous business practices without regulations. Regulations can be the locked doors that keep honest people honest.

DAVE

www.cunixinsurance.com

3 comments:

  1. From the website:

    Susie in Shaker says:

    September 7, 2016 at 3:59 pm (Edit)


    The odd thing is, a vial of injectable epinephrine, an alcohol swab and a syringe costs less than $10. What’s all the fuss over an over-priced, pre-loaded syringe?

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    Replies
    1. I would like to see you crack an ampule, draw up the epi and inject yourself while you are going into anaphylaxis!

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