Monday, July 2, 2012

Drugs and devices: expensive. Hubris: priceless.

This morning I was listening to the Morning Edition on NPR, and heard a story about the tax on medical devices that is written into the healthcare law. As you can imagine, there is opposition to such a tax by the manufacturers, as they are concerned about the usual, "stifling innovation" (yawn). It's hard to be amused by anything to do with healthcare these days, but here is a part of the conversation that had me in LOLZ (my 14-yo's expression):
ARNOLD: Okay. So here's how this new tax works. When a medical device gets sold, there will be a 2.3 percent sales or excise tax. Now, people who support this tax say that the medical device makers are exaggerating about the impact. Paul Van de Water is an economist with the left-leaning Center on Budget and Policy Priorities. He says that this tax is basically the same as a sales tax that you pay at the grocery store.
PAUL VAN DE WATER: The grocery store is collecting the tax. The grocery store is the institution that sends the tax to the state government, just the way the medical device manufacturer is going to write the check to the Treasury.
ARNOLD: Van de Water says that the tax doesn't really target the medical device makers that much. They'll just pass most of the cost along to their customers, who are mostly big hospitals, the same way a grocery store charges their customers. But the industry disagrees. David Nexon is with the medical device trade group called AdvaMed.
DAVID NEXON: There's a difference between a tax that, you know, an individual consumer pays as opposed to one that you're negotiating a price with a large, sophisticated buyer.
ARNOLD: In other words, Nexon says a hospital chain will push back and resist paying anything extra.
NEXON: In this very competitive market, it's extremely difficult for our members to raise prices.
Hah! Is he saying what I think he is saying? That because individual consumers are too dumb to understand about externalizing additional expenses, such as taxes, it is easier to put one over on them than on the savvy hospitals? Could he possibly mean that only "large, sophisticated buyers," and not ordinary consumers, would never stand for the information asymmetry they thrive on? That the individual consumers just don't have the power that hospitals do to push up against potentially predatory pricing? 

The last time I heard or read anything this blatant was in this New York Times piece from December 2009. This is a company executive talking about the rationale for the company's cancer drug's disproportionately steep price:
Mr. Caruso also said the price of Folotyn was not out of line with that of other drugs for rare cancers. Patients, moreover, are likely to use the drug for only a couple of months because the tumor worsens so quickly, he said. So the total cost of using Folotyn will be less than for many other drugs with lower monthly prices.
Wow, do these people get paid to advance their organizations' agendas? For my money they are not doing such a hot job at anything other than confirming all the societal views of them. Are they too stupid to realize that, even if you think stuff like this, you shouldn't say it out loud? How embarrassing.

Bottom line? Their drugs and devices: expensive. Their hubris: priceless.


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