expensive drugs

[gusl]

Medical care in this country is insanely expensive. I used to blame this on liability insurance, which is in turn due to million-dollar compensation claims and an excess of litigation (lots of patient want their chance to hit the jackpot).
huge awards -> risk-aversion -> willingness to settle out of court -> more litigation

But I've just realized that drugs in this country are (even more) insanely expensive.

I occasionally need steroids like Flonase and Nasonex (it's unclear when I should use one or the other: I suspect each doctor prefers one or the other).

But they are both insanely expensive at the pharmacy, even though Flonase's patent expired in 2004.

It would take some work to compare them side-by-side, but here's a rough idea:

at kiwidrug.com, 1 bottle of Flixonase (50mcg fluticasone proprionate): $21.94
Net.nz (also from NZ) Flixonase / Flonase 50mcg x3pk 24Hr: USD $48.88
Flixonase (Flonase) Nasal Spray - 120 doses x 1: USD $ 13.92
(I haven't been able to find out how much it costs at a US pharmacy, but my impression is that it's >$50 per bottle)

http://www.healthpricer.com/ doesn't seem to work that well. Their best price for Flonase is $31.38.

Comments

[cdtwigg.livejournal.com]

You got sold a bill of goods dude, you need to stop hanging out with libertarians so much. There's no way that the high cost of US health care is due to malpractice premiums given that total malpractice costs amount to less than 2 percent of US health care costs, which is (I might add) significantly less than the cut that insurance companies are scooping off the top.

[gustavolacerda.livejournal.com]

As I said, I *used* to think that. There's clearly a lot going on that I don't understand.

So what's your explanation?

[cdtwigg.livejournal.com]

It's a horrendously complicated subject, and there certainly aren't any easy answers, but frankly the incentives are all screwed up.

• Doctors are paid by the procedure, so the incentive is for them to substitute very expensive invasive protocols in favor of cheap, effective treatments. Oh, and the AMA is made up of doctors who have already gone to med school, so to keep salaries up they try to induce scarcity by artificially limiting the number of people who can go to med school.
• Patients are increasingly ending up in high-deductible plans which charge them big co-pays for simple doctor visits, discouraging them from getting things treated in the cheap, early stages (not to mention the information asymmetry which basically forces patients to do what their doctors tell them, regardless of what economists will tell you about the free market).
• And insurance companies, in addition to skimming a pretty sizeable chunk off the top, are basically looking for any way to avoid paying bills whatsoever, which means that the most successful insurance companies can spend massive amounts on bureaucracy and lawyers as long as it saves them an even larger amount in denied claims.
• Drug companies (you mentioned) don't really do any basic research any more but instead scoop drugs out of university and government research labs for relatively small licensing fees and then spend ridiculous amounts of money on advertising trying to pump up demand.

While there aren't any "great" solutions, the best one we've got is to incentivize based on patient outcomes, particularly focusing on really effective, cheap interventions. And this is why countries where health care is run by the government consistently have cheaper, more effective health care and better outcomes (even in places where the government is relatively inefficient, like Britain).

[cdtwigg.livejournal.com]

Should be "for" rather than "in favor of" above.

[gustavolacerda.livejournal.com]

* your first point is that the AMA lobby is evil. (I think "all" "libertarians" agree with you here)

* your second point is that people here end up in expensive treatments, because they neglect preventive care. But this doesn't explain why the same operation is more expensive here than elsewhere. I don't know any other country where a simple GP visit costs >$100.


<< While there aren't any "great" solutions, the best one we've got is to incentivize based on patient outcomes, ... >>

This reminds me of:
Buy Health, Not Health Care


<< particularly focusing on really effective, cheap interventions. And this is why [emphasis mine] countries where health care is run by the government consistently have cheaper, more effective health care and better outcomes (even in places where the government is relatively inefficient, like Britain). >>

How does this follow? Are you saying that when the government pays the bills, it focuses on patient outcomes? (unlike when individuals / insurance companies pay the bills?)

[cdtwigg.livejournal.com]

Stuff in hospitals is insanely expensive because we are paying for the care of the uninsured through the back door. We as a society have decided (rightly, I believe) that we will not allow people to die on the doorsteps of our emergency rooms for lack of health insurance, but we (again as a society) have decided to make it impossible for many people to get said insurance. Therefore, hospitals end up eating those bills. If health care was universal, that wouldn't be an issue, since everything would be automatically covered. Not to mention that a visit to the emergency room for almost any condition is a lot more expensive than it would have been to have things looked at earlier before they became life-threatening.

As for why a visit to a GP is so expensive, it's probably not paying for the 15m of the doctor's time you get but rather for the enormous overhead that is entailed when billing -- and fighting with -- the various insurance companies. At least, that's what doctors seem to spend a lot of time complaining about. (People who think that government is inherently inefficient have clearly not spent enough time in the private sector -- actually, an awful lot of those libertarian economists who dominate our discourse are suckling at the government's teat; makes you think, hm?)

And as for your last question, the answer can be found by looking at any of the dozens of industrial nations that have significantly better, cheaper, and universal health care. Or if you prefer a domestic take on it, you can find one here.

That "Health not health care" is a cute concept, and is sort of getting at what I'm talk about w.r.t. incentives. Except that it doesn't solve the problem where once you have any sort of chronic health issue it suddenly becomes impossible to get any sort of coverage (good luck finding life insurance once you've been diagnosed with cancer). I'm sure the libertarian answer is "you should have bought in before you got diagnosed" but what are babies born with BRCA1 supposed to do? It would also, like you would expect from something published in a CATO rag, tend to exacerbate the inequality that already exists in the system, and that has enormous hidden costs that people don't like to talk about since they aren't easily priced.

[kartiksg.livejournal.com]

It's sad why the prices don't come down because if I need to get cavities filled here (I have a number of them developing for a while) that require some fairly elaborate work, it cost close to $1000. It occurred to me that the cost of a round ticket to Dubai is ~$800, and he cost of all my dental treatments there is $120. Hmmm... So its very close, plus visa and stay costs and what not. But otherwise, we have the same medical facilities and medical expertise and the hospitals here... I would assume that anyone with the need for non-critical surgery or procedures would just fly out and carry out the surgery.

[brianfey.livejournal.com]

Many reasons....

-Barriers to entry to provide medical care. Doctors get their big cut for stuff a nurse actually does.

-Insurance. Removing the customer from paying for the transaction causes them to care less about the costs. In fact when I had surgery, I couldn't even get anyone to tell me what things would cost. I am sick and scared, but would have to go to other buildings to track people down to find that out. So the hospital happily goes along charging for things. I even even later saw stuff on the bills which never happened. "Don't worry, your insurance will pay for it!" Removing the costs from the customer also radically increases use of medical services.