The New Yorker: A couple of books on drug costs
A very interesting follow up to the point I raised a while ago about the cost of drugs. VERY interesting. Basically it concludes that medications are as high as they are not because people are gouging, it's because of the model we charge for drugs in America. Basically, we charge more up front for our drugs because the pharma's make much less on generics than they do in other countries. This further incents the pharmas to optimize their models for constantly milking the most out of existing drugs by making small modifications to existing drugs and repatenting. My favorite part about the article is that it has a very elegant market based way to improve the situation... change the buyer through educating a subset of people who would authorize the drugs available (they are called PBMs). Potentially each company would have a PBM or access to a PBM and would be able to judge the right way of treating a given illness. People would naturally be suspicious and, in my opinion, that's why the insurance industry should take steps NOW to market exactly how valuable these PBMs are. Otherwise they'll get painted by the exact same brush that doomed the HMOs in the late nineties. People need to understand that you cannot get everything for free forever. A 75 year old with heart trouble SHOULD be denied the heart over the 35 year old if she's not going to pay for it. Generics ARE as good as name brand. Until pharmas have no incentive to spend $0.5 Billion on advertising a new drug which is only 3% more effective than its previous isomer, we will be stuck in this death spiral of medical costs and limited innovation.