I think it is. There is no such thing as a free market. They are all gamed. The free market is an abstract idealisation like “assume a frictionless vacuum” when doing laws of motion calculations. In real life you better factor in both friction and air resistance or your stuff won’t work.
It’s a supreme reification, kind of like what David Graeber described as the greatest success of classical economics: the invention of itself, the economy, the market…
But they don’t. You have a deductible. And you pay a copay for nearly everything. That copay is often scaled, and some procedures and drugs often cost quite a lot in terms of what the patient pays. Anethesia being a famous example.
More over even with high copays for certain drugs the cost to insurance is often incredibly high. That hundreds of dollars copay might be connected to a thousands of dollar price for the drug to insurance. Where as costco’s price for the drug is probably in the single digits.
While pressure to negotiate may be reduced by copays. Its not non-existent as a result. And those pricing structures and copay systems are not exclusive to drugs.
You’re assuming they can do that but its highly, highly unlikely Costco as the licensing neccisary to wholesale prescription drugs. And since costco’s goal is to bring people into theit stores, and sell memberships by offering these low prices at their pharmacy. They’d be unlikely to do so if they could. Perscription drugs are not frozen taquitos. You can’t just to wholesale them and not just anyone can buy them at wholesale. Notice you don’t see your local, independant pharmacist swinging by costco to load up on cost effective viagra.
More over the insurance company is not buying or supplying drugs that way. They dont buy stuff atva price and distribute it to policy holsers. They pay out a pre negotiated reimbursal rate, based on the drugs cost. To the providers you chose, if they accept/participate with the insurance.
So you see insurers requiring patients to fill certain perscriptions in those places that have better cost, and not providing reimbursal to providers (doctors, pharmacies) outsode their network.
My mother has to get her thyroid pills via mail, from a specific company. The cost per pill to the insurance is much lower. And as a result she gets it without her usual script copay. Buy if she gets pills locally (even at costco, since they dont accept most insurance policies), she pays out of pocket. In an emergency she can use CVS and pay a higher bracketed copay.
We tend to see those sorts of things as onerous. Insurance companies screwing customers, but theyre very much exactly the sort of negotiating and sourcing strategies your suggesting. Just you know possible.
Pharmacist here. A couple things are going on in this story -
The patient initially obtained a 90 day supply via Express Scripts Mail Order Pharmacy, using her prescription insurance. She paid $285. Obtaining a first fill of a maintenance medication via mail order is, to me, an exceptionally foolish thing to do. Express Scripts (ESI) makes most of its money via dispensing of generic medications. ESI also is the Pharmacy Benefits Manager (PBM) for Anthem - so they are paying themselves for the medication. Is anyone surprised that they marked it up by $240?
Her insurance refused to fill a vacation supply because she was refilling too soon. She therefore obtained the same 90 day supply via Costco Pharmacy. Costco’s CASH price (not on insurance) was $40.04.
90+% of prescriptions today are filled with generic medications. Prescription insurance for generics is in most cases just silly. Almost never do I see the insurance pay anything for a generic prescription. If you are taking an exceptionally expensive medication (read: brand name) then using your insurance is not a bad idea. Otherwise, ask what your cash price would be - you’ll likely save money. The secret that we don’t usually tell you is that the pharmacy’s cost of the medication (for a generic) is often ~$0.01-$1.00 per tablet. The rest of the price is the markup to pay the employees, pay for the vial, the label, etc.
Everything all you guys said in defense of the insurance company MIGHT be true.
They can be a defense in court.
In the end, jail time solves this problem.
In the UK there is a NHS campaign against getting generic drugs on prescription. You can get your doctor to prescribe you a box of aspirin tablets, and it ends up costing the local health service £10 instead of costing you less that £1. The NHS apparently pays more for things like rubber gloves then you can buy them over the counter. For the aspirins on prescription, the overheads are perhaps to cover administration for an unusual special case. I suspect the rubber gloves are an unhealthy relationship between the buyer and the seller.
I am not suggesting this is the same thing. But it may be parallel evolution like US badgers, and the UK badgers.
How about that libertarians are dead set against the type of rent-seeking that resulted in pharmacists being forbidden from telling their patients about cheaper alternatives?
Those would be small-l libertarians. They’re not the ones who show up here to whinge about the slippery slope to tyranny.
I went to CVS pharmacy with a prescription a while back, and the pharmacist explained that my insurance would not cover it, and the cost to me would be something like $650 for six doses. I was kind of gobsmacked, and after a slackjawed moment said “I’m sorry, but I can’t afford that, I’m sorry to have wasted your time”. She said, “well, wait a minute, let me see what I can do” and went in the back room. A minute later she came back and charged me about $300.
Laissez faire ruthlessness or regulatory capture? Mostly the latter, I think - under laissez faire capitalism I could make (for example) opiates trivially from poppies grown in my garden, but physicians’ trade organizations have successfully co-opted taxpayer funded thugs to harshly punish that sort of free enterprise. Unauthorized attempts at healing and medication are criminal acts; only the (often hereditary) caste of physician-hierophants are permitted to prescribe, and the factions of the medical trade (homeopaths, osteopaths, allopaths, et cetera ad infinitum) all have their fanatic devotees who’ll wage proxy wars for their priesthoods in Internet forums like this one without ever considering that they are just arguing for different flavors of government-enforced aristocracy.
Checks out. I get an rx at Costco for $37/mo, versus paying half of the insurance company price of $625. Even with the lack of progress toward my deductible I am way ahead. The Costco pharmacist was cool enough to find a goodrx competitor that beat goodrx’s $60 price and definitely beat Costcos regular price of $467. I was very lucky to have a doctor who knew the best way to get the four drugs i have taken with him. Two ended up cheapest through my 90 day insurance with drug co discount cards the doc has, and one was cheapest ordering directly through the drug co 800 number. Trying to figure this out on my own I would surely have overpaid, or more likely just given up on the unaffordable medical care.
The trouble is that, while by definition deviations from ‘free market’, these sorts of things are the deviations from ‘free market’ that always crop up when a bunch of profit maximizing entities with superior information realize that competing until their price is equal to their marginal cost of production kind of sucks compared to putting some effort into changing the rules.
It is true that a system’s degenerate case is not identical to that system; but, in practice, one cannot evaluate a system without considering the likelihood, and severity, of it slumping into one of it’s degenerate cases.
Enlightened monarchs tend to spawn crueld idiot children sooner or later, aristocracies have a habit of slouching toward oligarchy. “Free market” arrangements tend to explore the opportunities of regulatory capture(if there are enough regulators to be worth capturing them); or rather feudal looking operations smeared with a thin layer of potempkin contract law, if not. Sometimes you even get both.
Aspirin is an over the counter medicine. Not a generic (though it also happens to be generic). When we talk about generics we’re talking about prescription only meds that aren’t protected by patents. So anyone can manufacture them. Not a situation where you can walk out and by them for cheaper than you’re insurance pays. And doctors here don’t typically prescribe or distribute OTC meds except for clinical reasons.
Though there are rare examples of OTC drugs that are also available in prescription form where its cheaper for the patient to get the script. Friend has GIRD. The co-pay for 500 script pills was less than a bottle of 50 store brand famotidine/pepsid OTC. BUT bulk packs of 1000 pils from Costco are cheaper than the copay for the script.
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