[OPE] The waste in US health care

I asked a pharmaceuticals guy once, why some pills I had to take for an
illness, which I thought would cost maybe a dollar, were charged at
something like 20 dollars. He said that yes there were these things like
patents, IPRs and the like, but that it was more complicated, and that I
failed to understand the cost structure properly, which involved the
research and permits to develop the medication to the point it could be
sold, packaging, marketing, distribution, transport, retailing, taxes and
subsidies, insurance and the like. It might be true that one pill cost a
matter of cents to produce, but to get it to the final consumer, cost a
whole lot more.

I then asked why the same pill costs a lot more in one country and a lot
less in another. He seemed to think it had to do a lot with the different
cost structures in different countries, different concepts of health
creating a different market demand, plus the fact that government regulation
& taxation could be more, or less. You might sell more for a lower price, or
sell less, at a higher price; and to establish a product in the market might
mean that for years it generated very little profit to start off with. He
compared it with a carton of milk - the cost of the milk itself was supposed
to be less than all the other costs involved in getting the milk to the
consumer.

He denied that a near-monopoly of supply necessarily meant a higher price,
arguing that if the company controlled the whole "value-chain" then this
would cut out a lot of intermediation, reducing costs, and enabling the
company to supply more volume, at a lower price. He said, some medicines are
essential, but others are more or less a consumer choice, which is very
price-sensitive, and thus higher prices would mean that many health products
would simply fail to sell. He smiled wrily though and said, paraphrase, "but
you wouldn't believe all the things people gobble, because they think it is
going to be good for their health, but that's their choice". There seemed to
be a certain amount of fideism in the health business, and cultural
differences in the interpretation of health and illness as well.

J.

(I won't insert a tag I had in mind here, that could create trouble for the
team :-)

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Received on Thu Oct 29 19:45:13 2009