Epipen Controversy Is One Symptom of What’s Wrong with Our System

I listened with interest to the recent news stories about the exorbitant inflation in the price of the Epi-pen.  The “breaking news” reported that this medication had increased in cost by about 500% in a short time. I really wish I could say I was shocked by this news. I wasn’t.  I continue to be incredulous at our system and how it is so poorly understood by the public and even our policymakers.

Back to the Epi-pen.  Apologists for the pharma industry explained that this is a “for profit” business and not a charity.  Therefore they can charge whatever the market will bear.  A few days into the 24 hour news cycle, the public understood that this Epi-pen is not a one-time prescription.  In fact, most people that have them, need to have several of them located at home, work, the school nurse’s office, the car, etc.  Also, they need to be replaced annually even if they are not used. It could be a matter of life and death.

At that point, the manufacturer came out with a new spin.  They would offer coupons that would reduce the super inflated cost by about half.  It reminded me of the old ski store in Redding that would mark up their inventory on the tag, then cut it in half to demonstrate what a deal you were getting.

But in the case of this medication, these discounts were for uninsured patients only.  The thought that kept running through my head was “Ask me again why your insurance premiums are so high!”

Is it even possible that the public still doesn’t get it?

Say what you want about the Affordable Care Act (ACA also known as Obamacare), but do not forget that one of its key provisions was to regulate the loss ratio.  It states that the insurance company must pay 80-85% of your premium dollar in claims directly to providers. It’s very important that the public understand this.

Simply put, 85 cents of every $1 paid in premiums must go to providers; i.e. doctors, hospitals, labs, pharmacies. So every time a vendor price gouges, make no mistake, you are paying for it whether you are insured or not.

On the campaign trail, Hilary Clinton promised that consumers would have lower prices for medications.  This  sounds terrific.  But I can assure you that without skin in the game, consumers simply do not make cost effective choices.

I continue to be a bit amused by those folks who are leaving a school district or large employer plan.  In preparing for retirement, they must look at Rx costs under Part D of Medicare or if under age 65, what it will cost under a new health plan.

I ask them to provide a complete list of medications so we may estimate their future costs.  More often than not, the list includes a myriad of expensive brand name drugs.  When I inquire as to the cost of the medication, all they can tell me is the copay.  They (and apparently their doctors) have no clue as to the cost of the medicine.

When we show them the costs that will now be out of their pocket, they are more than willing to consider a generic alternative to the medicine if it is available. I caveat my remarks every time, reminding them to check with their doctor before changing their medicine.  But I can’t help but wonder how much the group’s premium would have decreased had they and their peers done this sooner.

Prior to 2005, Medicare did not pay for prescription drugs at all.  Seniors simply paid for medications out of pocket. Under George Bush’s administration Medicare Part D came into effect, providing a four tiered Rx program that is primarily famous for its donut hole.  The lowest cost plan originally cost $5 monthly.  Now it costs $18.40-a 368% increase.

To keep pace, the $5.15 minimum wage of 2005 should be about $18.95 today.

Big pharma is very good at manipulating the market and using a myriad a strategies to increase profit. In one scheme, a drug company simply bought up the supply of the generic drug to control the market.

This is like Borden’s buying up all the dairy cows in the country, then setting the price for milk.  Or what if PG&E bought up all the power sources and did the same.  Oh wait, milk prices are regulated.  Oh, energy prices are regulated too.  Hmmm something to think about?

Margaret R. Beck
Margaret Beck  CLU, ChFC, CEBS started her insurance practice in Redding in 1978. As an insurance broker/consultant,  she represents businesses and individuals as their advocate.  She assists in choosing proper products, compliance with complex benefit laws and claims issues once coverage is placed. All information in her column is provided to the best of her knowledge, subject to final regulation by the respective agencies. Questions to be answered in this column can be submitted to info@insuranceredding.com. Beck's column is also published in the Redding Record Searchlight.
Comment Policy: We welcome your comments, with some caveats: Please keep your comments positive and civilized. If your comment is critical, please make it constructive. If your comment is rude, we will delete it. If you are constantly negative or a general pest, troll, or hater, we will ban you from the site forever. The definition of terms is left solely up to us. Comments are disabled on articles older than 90 days. Thank you. Carry on.

3 Responses

  1. JeffG says:

    Alternatively, you could loosen the regulations to allow mere mortals to carry an old-fashioned $20 kit with epinephrine & a syringe — like folks used to do before 1987…

  2. JeffG says:

    On the subject of regulated markets, some humor from Warren Buffett:   “The joke in the industry was that a utility was the only business that would automatically earn more money by redecorating the boss’s office”

  3. Rod says:

    Here in America we have required insurances.  They seem to be the major problem.  Greedy lawyers!!!

    Our Bill Of Rights states that we have freedom of/from religion……freedom from state mandated medical care should be included.  End of problem.

     

     

Leave a Reply

Your email address will not be published. Required fields are marked *