Why Medical Bills are Killing Us, by Steven Brill - Page 21

On February 28 2013 11:23 LosingID8 wrote:
btw i just wanted to clarify Dr Roger's 4th statement for those who don't know how the drug patents work



the part in bold is the key part. there are a lot of different cases and scenarios, but i'll talk about the most common way. the way it works now is that drugs have exclusivity for 7 years. this means that the company has sole rights to market this drug, without the threat of generics developed by other companies. 7 years sounds quite reasonable, when factoring in the considering R&D costs associated with developing a drug.

however, the drug approval process by the FDA is very lengthy. the 7 years of exclusivity begins while the drug is still in clinical trials (aka the company can't profit off of it because doctors can't prescribe it, since it isn't FDA-approved). these clincial trials and the resulting FDA approval process can take years, and meanwhile the 7 year profit window is ticking.

let's say it took 3 years for the FDA to approve a drug. now that company only has 4 years to profit off of that drug until a bunch of generics spring up. i think it's pretty clear why they would charge a greater amount than what the "real" cost of the drug is.

what dr. rogers suggests is starting that 7 year countdown after FDA approval. now the developing company has 7 full years to profit off of the drug, which would hopefully lower costs for the american citizen.

On February 28 2013 12:08 ShadowDrgn wrote:


Utility patents are granted for 20 years from the date of the patent application filing. After the FDA approval process, there may only be 7 years left if the drug took an exceptional amount of time in trials, but that wasn't the starting point.

I don't think changing this would have any long-term effect on drug prices anyway. The patent-protected brand name drugs might be a bit cheaper if the patent life were longer because the drug company could stretch their profits out, but the delay in access to generics caused by the longer patent term would make up for that, and then some. Even if we did want to make this change, it would require a new worldwide patent treaty to be enforced, otherwise Americans would just get fleeced even more than we already are.

On February 28 2013 12:31 Chemist391 wrote:
Having seen a glimpse into what it's like to actually synthesize a compound library for pharmacological screening, I can see why drug companies are trying to squeeze every last dollar out of their protected 7 years of market exclusivity, especially when their margins are capped in other nations. Since many other countries control the costs of medicine, companies will jack up prices where they are free to do so.

On February 28 2013 14:16 screamingpalm wrote:
I was under the impression that the pharmaceutical industry is massively subsidized by taxpayers for R&D. Is this not the case?

On February 28 2013 15:58 Chemist391 wrote:


There is public investment towards the discovery of treatments for so-called "orphaned diseases": conditions that effect a small enough population that developing a drug for them could never be economically viable. Left to the whim of the markets, many people would suffer and die from potentially treatable conditions because no company is willing to throw away its profits on developing that treatment.

There is also public investment towards treatments for diseases that are very challenging to treat, such as many cancers. No private company would be willing or able to toss money away into the gaping maw that is cancer/alzheimer's/diabetes/etc research.

On February 28 2013 13:30 Danglars wrote:

Put another way, the American drug market is subsidizing the cost of prescription medication abroad. They aren't allowed to make a profit there, so they lobby to protect the second price here..

On February 28 2013 23:10 yOngKIN wrote:
What about Obamacare?
I read this in Time a week ago. Doctors are sick!

On February 26 2013 18:38 theinfamousone wrote:
The problem with health care and free market are so numerous I could be here all night. For one, people just won't stomach the idea of citizens getting turned away bleeding or not helping someone who's not breathing, or whatever it may be when there's people like Kim Kardashian that make millions of dollars for ditzing through life and blow it on gold lamborginis or whatever. It's just not going to happen. So if you accept that fact, you have to realize right away that we'll never have 100% of the population able to afford their health care no matter how reasonable it is. Therefore a true free market will never work.

Currently about 50% (and falling as a trend for the last 20 years) of Americans have medical coverage through their work. The other 50% either don't have any insurance or the government pays for it either through medicare or medicaid or whatever. So when I say we'll never reach 100%, I mean closer to 50%.

Here's a few problems with US healthcare. The government is forcing doctors and hospitals and pharmacies to work at a loss when providing care for people on medicare/medicaid. The problem with that is that then people who are NOT on medicare/medicaid must make up the difference. A friend I know told me the hospital he's an accountant for loses as much as a million dollars a month, and overall are operating on a .5% profit. But when 70% of their work is either government or uninsured people and they're losing money serving these people, the insured have to make up for it. As more baby boomers retire, there's more on the government health plans and less with traditional insurance so profit is getting whittled at both ends. On top of that, the baby boomer generation is getting old which means they need many times the healthcare that young people do.

This is why we're seeing health care expense rise at several multiples of the inflation rate. My accountant friend told me just in in the last 5 years it's gone from 70% commercial work (insured) and 30% government funded to 30% commercial and 70% government funded.

So even though 50% of the population has insurance, it's the healthy 50% which means they don't use it all that much. For example, more than 50% of babies are born under medicaid (healthcare for the poor) because the child bearing age group is likely to need it even though much less than 50% of the population is on medicaid.

One MAIN problem with healthcare the way it is in the US is that people just don't buy insurance until they need it. You can't just expect insurances to start paying for sick people who's not paying in their share without raising everyone else's rates. Obamacare will kind of solve this, although it's a really dumb way to do it.

Insurance companies are a clinic (pardon the pun) in bureaucracy that end up adding at least 20% (on a good day) dead weight to the whole thing.

Now, when you figure how much money goes into a hospital's billing department to keep track of thousands of patients, thousands of insurance policies and programs and all of the time it takes to negotiate (it took me 6 months to get a bill from a clinic I got a shot at because they were negotiating with my insurance for that long and they told me it can take up to a year). The billing department can add as much as 30% to the medical bill compared to a hospital in Canada with a single payer system.

Then you've got tort issues like people that sue a hospital for $30 million (guess who's pocket that comes out of?). I could go on.

On March 13 2013 12:58 W2 wrote:


This guy knows what he's talking about. I knew he worked in healthcare as I was reading this (which he later confirmed in a subsequent post). In an idealized scenario we wouldn't have excessive administration staff and insurance "middle-men" acting as dead weight in the system whilst demanding salaries and benefits.

How do insurance companies make profit? They make sure to set their premiums and expenses at a rate that allows them to siphon the maximal amount. And they hire people to crunch these numbers day by day. If we are in a budget crisis, these middle men who contribute nothing to the care of patients are the first that need to go.

Instead, it's been doctors and nurses thrown under the bus time and time again. The government is basically forcing them to offer services at an enforced reimbursement rate using the weight of the 58 million people on medicaid, some sort of a "collective bargaining".

In essence, politicians think that the healthcare cost problem can be solved by forcing doctors to take smaller pay per patient. However at the same time they expect nationwide coverage and healthcare for all. So you are cutting the incentives for a profession and at the same time expecting them to produce more work. I think we can all see the problem with that. Sure, technically we'd be able to get everyone insured and we'd have a great superficial statistic to show. But what good is your piece of paper when there's no one willing to treat you?

To everyone; I know the trend has been to "hate on the rich", and being a doctor has an image of a lucrative profession. Next time you are at the doctor's, strike up a conversation with them. You'll realize many are driving Toyotas and retiring at 70+. At the end of the day, if you are sick, doctors are going to treat you because a life is a life. But wouldn't you want the one who is participating the most in your care to receive the most incentives from your insurance? I have no trouble with that philosophy, and would rather the government direct the cuts towards the lesser-needed requirements of the healthcare business.