One thought on “Trending Today … FORBES: ‘Proof Of The Failure Of Free Markets In Medicine’ « Concierge Medicine Today

  1. With all due respect to Rick Ungar, whom I do not know, his premise is flawed and his solutions not sustainable for his goals; which are indeed worthy. Let’s look at some of the inconsistencies in his fourth paragraph:

    “With methotrexate having been around long enough to no longer qualify for the patent protections that permit drug manufacturers to charge big prices as a result of their exclusive ownership of a protected formula—and with the generic version of the drug unable to produce enough profit to inspire drug companies to manufacture this critical chemotherapy—the nation now faces a deadly shortage of this drug. This means that kids are dying —and will continue dying— because the money just isn’t what it used to be for the five manufacturers who have long supplied the critical medicine.”

    So, let’s break it down. He criticizes the developer/parent company of the drug for charging “big prices as a result of their exclusive ownership” (ownership is the key word here, folks); then he laments the fact the generic manufactures, and I quote, are “unable to produce enough profit to inspire drug companies to manufacture this critical chemotherapy.” Huh, interesting that profit is an essential driver, and apparently acceptable for generic manufacturers that didn’t have any risk or expense in getting the drug to market, but for the developing company profit is bad?

    Here is another idea: What is the upfront cost of getting it to market were significantly lower across the board? What if prices weren’t supported by “artificial” contracts and formularies? What if there was some true tort reform so that that loser pays and there is no settlements allowed? What is our corporate tax structure enticed many pharma companies to relocate here on a level playing field? Guess what, the protection time would be less, the incentives to keep costs and production going to meet demand at reasonable profit would be insured due to healthy competition.

    There is a tendency to view profits and “private sector / publically traded companies as synonymous with the free-market. This is just not the case in our pseudo-free market crony capitalistic economy. I contend we haven’t given a true free-market a fair shake at trying to help solve this price / supply issue. This brings us to the realization that there really isn’t a healthy free-market in healthcare today.

    The “free market” works well in all other major sectors & industries within our economy (except healthcare and higher education). What makes these two industries, specifically health care different? It is because it is so heavily paid for with third-party monies, both government and private health plans, that there is virtually no way to interject consumer price pressure on the supply / demand curve. Our highly regulated pharma industry, oppressive tax structure, and drug price regulation by fiat (or contract) in most other countries causes cost-shifting to newer products to generate profits. For a free-market to work laws must be simple, easy to enforce and regulations must be marginal to the point of the public/business rights protection, but not otherwise excessive.

    So, why is the default reaction always to blame “the free market” when it comes to healthcare? The market, if allowed to react correctly is not moral or immoral; it is amoral. It has no agenda. If the proper incentives are in place, without excessive outside political or regulatory forces that pervert rational business decisions, the market works very well. So I would ask, are political, regulatory, or bureaucratic self-interests any more noble than economic self-interest? If the free-market is so bad, how and why did /does the cost of IT and communication technology continue to fall virtually always to the point of being affordable to the masses?

    I could go on, but I can’t say it as well as in the following video where Phil Donahue interviews Milton Friedman about the “injustices and evils” of the free-market.

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