Interesting story. Glad that you got the treatment that you needed.
Personally, I believe that all medical providers should be required to post a simple, transparent price for every appointment and procedure in their front office and on a public website.
Even better, the should be required to post their prices to a public-facing API so patients anywhere in the country can price shop for any procedure or treatment on third-party websites. It is ridiculous how hard it is to find a true price in the medical sector, though I must admit it is getting easier.
Mandatory, transparent, and automated prices would do wonders for the American health care system.
Excellent idea, Michael. May I suggest that Uncle Sam could fund health savings accounts for everyone starting at birth. Then people can shop as you suggest and turn medicine into a free market. Imagine the impact of that!
I am not opposed to that idea, but I think a better idea is to make employer health insurance voluntary and let employees receive the difference in extra salary.
It certainly sounds good, but I think there are complexities when you get to things like pharma where there are huge capital costs and low incremental costs. It seems to be settled that pharma companies need to get $1 billion to $2 billion in sales in order to pay off the development costs of medicines. That works fine if you can get 100 million people to take your drug regularly, over 10 years that's only $1 per patient, over and above manufacturing costs of the drug.
But if the number of patients is small, it gets harder to set a price that enough patients can/will pay that will recover the $1 billion. Eventually you have to get into the realm of "price discrimination", https://en.wikipedia.org/wiki/Price_discrimination Of course, the pharma companies try to do price discrimination regardless of whether they "need" to do it or not for a particular drug.
It wouldn't actually destroy anything if the pharma companies had to be transparent about this, but it would get a lot harder -- if a big insurer of well-employed people found that Mississippi's Medicaid was getting a big discount, they'd push hard to get the same discount, despite that it's the "big insurers of well-employed people" who *have* to pay for a drug in this sort of situation.
I have a similar story, but it's around Type 1 Diabetes and an amazing therapy... inhaled insulin. Literally 100% of the type 1 diabetics I know have never heard of it. It's truly a game-changer, and most doctors won't mention it...or even prescribe it! It's wild and ridiculous, and supports free and fair advertising of pharmaceutical therapies so that people get a chance to see what's available to them.
Absolute nonsense. In each of the “single payer” healthcare systems in Europe, the wealthy or the insured have the option to go “private”, which will deliver a similar degree of incentive to scientists developing new treatments. The only difference is that the European system protects those who cannot afford to insure themselves!
Well, the *truly* wealthy can go private. But in most of those systems, the merely affluent -- ranging from the 50th to the 99.5th percentile, say -- are *forbidden* from obtaining insurance that gets them better medical care. They are, after all, the people onto whom the costs are being redistributed.
There is an out, which I've heard of in Canada and the UK, that the well-insured can purchase insurance that gets them not better *medicine* but *more pleasant* care, such as private room in hospitals. But it doesn't expand which medicines/procedures you can get nor does it move you up in the queues.
This is an interesting anecdote, I’m happy for Hanania, and I agree with the broader point that huge sums of money going to Pharma R&D (mostly on the backs of the US middle class, either through premiums or taxes) should be seen as a genuine charitable service the US provides to the rest of the world.
But this account does kind of elide what exactly is going on with the pricing and the interactions between the pharmaceutical company and the insurer. Maybe that’s a conversation for another day. But there is considerable grumbling about the role of PBMs, and how the prices paid often don’t make sense. The “prior authorization” system is an administrative headache for doctors, pharmacists, and likely the insurance companies too. Hanania is equipped to navigate those hurdles, and it sounds like Skyrizi has people making that a fairly painless process. But I’ve seen people for whom that isn’t true. They see one scary price and give up altogether. They don’t seek out coupon codes or discount programs from the manufacturer. Their doctors either don’t know how to navigate the system, don’t have the time, or don’t care to do labor that they don’t see reimbursement for. Why don’t other drugs have the same wraparound services like Skyrizi? Maybe they can’t expect the kind of eventual financial return that Skyrizi can get. Maybe they just aren’t as skilled or aggressive. I don’t know. I guess my point is that yes, getting new, expensive, and effective drugs is easy when you have a free concierge and your insurance plays ball. But those two things don’t always happen.
I know about Skyrizi from the many, many direct-to-consumer commercials they run on various streaming services. Your story suggests that many doctors do need nudges from their patients with psoriasis asking about this drug they’ve seen on TV. The Trump administration is making noises about banning such ads.
Thanks for writing this, Richard! I build health economic models for pharma companies and I recently had the pleasure of running an analysis for a client who was second to market in a rare cardiac indication. Their drug is both cheaper and more effective than the other option on the market at the time of launch. Amazingly, we had to account for a third treatment entering the market within the time frame of our analysis (only five years.)
The disease was only regularly diagnosed from the early 2010s, so I see it as a stunning success to go from "newly understood disease" to "three treatment options" in a little over a decade.
It's disheartening to me that an industry that so regularly delivers miracles (Ozempic, anyone?) is met with so much hostility by the public...
The experience you described is very similar to the experience I had last year with a drug called XYWAV for Narcolepsy. It was a weird experience that felt off and suspicious from the start. The quoted price for the drug was astronomical, but there was a large team of people working to push it through my insurance. They assured me that my costs would be minimal. The pharmaceutical company gave me my first month for free while they worked on my insurance. In the end, the side effects were not worth the minimal benefit I got from the drug, so I stopped taking it after a couple of months.
I agree that the American Medical System is both amazing and clunky. There is VERY BIG money pushing Big Pharma to produce. But the easy drugs have been done, and the researchers are under intense pressure to push the envelope for drugs that will give high ROI.
XYWAV is a weird drug with complicated dosage requirements, lots of side effects, minimal benefit, based on shaky research with a huge team of people financially invested in getting patients to take it.
I question the ethics of the Mayo Clinic doctor who cold-called me, suggesting the drug after finding my condition in a medical records search. He was on the research team for XYWAV. He was professionally and financially connected to the success of a questionable drug.
This is a potentially dangerous situation, and I'm not sure the safeguards in place are strong enough.
All of this is good to read. But ... I get the feeling of reading one of those "hick visits the big city, is amazed by skyscrapers, elevators, and subways" stories from the 1920s. That is, it is indeed as amazing as described but it doesn't reveal any of the critical details of how it all works behind the scenes.
This is particularly critical because what makes the situation good is that (1) despite that AbbVie needs to get in $1-2 billion to pay off the development costs (mostly clinical studies) it has somehow arranged that (2) nobody pays a big price out-of-pocket. It seems to be a vaguely-Marxist "from everybody according to how good his insurance is, to everybody who needs it".
Now I'm sure that Hanania can't discover the actual details of the cash flows, contracts, and negotiations behind Skyrizi. But all the big pharma companies seem to be "using the same playbook" for all the new, incredibly expensive drugs. So none of this can be a secret in the pharma industry; indeed, there are likely consultants that can explain exactly how it's done.
I had a torn rotator cuff, and got an appointment with an orthopedist in a couple weeks. He sent me for an MRI, which got done a week later. Then he scheduled my surgery for about three weeks later.
How long would all that take in your Free Health Care Paradise, Euro snobs?
Appreciate the story. Perhaps you can follow up with a deeper analysis why a $20,000 drug is essentially given away? If the marginal costs were much lower, why wouldn’t it make more sense to sell more units at a lower price? Is it a tax write-off
I have to believe we as a society can fund medical innovation while not having such an odd jerry rigged system.
Prices should be transparent and the effort companies spend on price discrimination pushes people to socialism. If you make the world too hard for stupid people to navigate you will get pushback. This kind of thing makes people unhappy, it's like immigration, looking at it from a numbers perspective more is usually better, but you need to stop abuses or a backlash will end the whole thing.
Here the marginal cost is near 0. So all the profit comes from charging each customer as much as they can handle. They have people there to help you but if you say I can't do it, they put you off on another person, it might take a number of calls, but you can probably get it for $1 if you are poor enough. They will let you trade time for Money. On some sense this is great. Making life complicated has a cost though, and this type of thing just makes life suck. We all have cable companies or mobile providers adding a $1 to every bill, but lowering it again if you call to complain. All of the costs of this land on old people and dumb people. It's smart people with spreadsheets preying on the weak. It makes people hate capitalism. So maybe transparency needs to be a core value in addition to liberty.
Feeling like you are getting ripped off makes people into zero sum thinkers. Colleges also should not be able to do this kind of thing either. You don't get to ask my parents income when I buy a car and adjust the price. That has to stop. Trust is important in a society, and we have to have some consumer protection to increase trust.
In terms of funding there are other ways. Taxes that pay prizes are fine.
Good article and every point you made is something I strongly agree with. That being said I would still be willing to contribute some of my taxes to supporting public healthcare, both so that more people can access these incredible cures and so that drug companies can be rewarded further for their development.
If the United States is responsible for 68-74% of pharmaceutical industry profits, surely there's room to spread that profit incentive across a developed world I keep being told is much larger than that proportion would suggest. I really hope this MFN status for drug prices ends up being more than just an FDA shakedown, and actually is signed into concrete law.
You can cure psoriasis with diet. Who knows what else that shot is doing to you? Watch Jordan Peterson talk about diet and his skin. My eczema flares up when I eat too many carbs. Lower carbs = no eczema.
So I have two choices: I could get an injection once every 12 weeks, or I could constantly monitor my diet to avoid eating too many foods that taste wonderful. I'll take the shot, thank you very much.
Eczema ≠ psoriasis. Eczema is an atopic reaction, similar to allergies or asthma. Psoriasis is a much more severe autoimmune disease that can lead to joint damage and cardiovascular issues. I would not trust diet alone as a treatment.
Interesting story. Glad that you got the treatment that you needed.
Personally, I believe that all medical providers should be required to post a simple, transparent price for every appointment and procedure in their front office and on a public website.
Even better, the should be required to post their prices to a public-facing API so patients anywhere in the country can price shop for any procedure or treatment on third-party websites. It is ridiculous how hard it is to find a true price in the medical sector, though I must admit it is getting easier.
Mandatory, transparent, and automated prices would do wonders for the American health care system.
Excellent idea, Michael. May I suggest that Uncle Sam could fund health savings accounts for everyone starting at birth. Then people can shop as you suggest and turn medicine into a free market. Imagine the impact of that!
Thanks.
I am not opposed to that idea, but I think a better idea is to make employer health insurance voluntary and let employees receive the difference in extra salary.
I go into more detail in this article:
https://frompovertytoprogress.substack.com/p/employer-health-insurance-plans-should
And I go into more detail on transparent pricing:
https://frompovertytoprogress.substack.com/p/medical-treatment-should-have-a-transparent
It certainly sounds good, but I think there are complexities when you get to things like pharma where there are huge capital costs and low incremental costs. It seems to be settled that pharma companies need to get $1 billion to $2 billion in sales in order to pay off the development costs of medicines. That works fine if you can get 100 million people to take your drug regularly, over 10 years that's only $1 per patient, over and above manufacturing costs of the drug.
But if the number of patients is small, it gets harder to set a price that enough patients can/will pay that will recover the $1 billion. Eventually you have to get into the realm of "price discrimination", https://en.wikipedia.org/wiki/Price_discrimination Of course, the pharma companies try to do price discrimination regardless of whether they "need" to do it or not for a particular drug.
It wouldn't actually destroy anything if the pharma companies had to be transparent about this, but it would get a lot harder -- if a big insurer of well-employed people found that Mississippi's Medicaid was getting a big discount, they'd push hard to get the same discount, despite that it's the "big insurers of well-employed people" who *have* to pay for a drug in this sort of situation.
I have a similar story, but it's around Type 1 Diabetes and an amazing therapy... inhaled insulin. Literally 100% of the type 1 diabetics I know have never heard of it. It's truly a game-changer, and most doctors won't mention it...or even prescribe it! It's wild and ridiculous, and supports free and fair advertising of pharmaceutical therapies so that people get a chance to see what's available to them.
Absolute nonsense. In each of the “single payer” healthcare systems in Europe, the wealthy or the insured have the option to go “private”, which will deliver a similar degree of incentive to scientists developing new treatments. The only difference is that the European system protects those who cannot afford to insure themselves!
Well, the *truly* wealthy can go private. But in most of those systems, the merely affluent -- ranging from the 50th to the 99.5th percentile, say -- are *forbidden* from obtaining insurance that gets them better medical care. They are, after all, the people onto whom the costs are being redistributed.
There is an out, which I've heard of in Canada and the UK, that the well-insured can purchase insurance that gets them not better *medicine* but *more pleasant* care, such as private room in hospitals. But it doesn't expand which medicines/procedures you can get nor does it move you up in the queues.
This is an interesting anecdote, I’m happy for Hanania, and I agree with the broader point that huge sums of money going to Pharma R&D (mostly on the backs of the US middle class, either through premiums or taxes) should be seen as a genuine charitable service the US provides to the rest of the world.
But this account does kind of elide what exactly is going on with the pricing and the interactions between the pharmaceutical company and the insurer. Maybe that’s a conversation for another day. But there is considerable grumbling about the role of PBMs, and how the prices paid often don’t make sense. The “prior authorization” system is an administrative headache for doctors, pharmacists, and likely the insurance companies too. Hanania is equipped to navigate those hurdles, and it sounds like Skyrizi has people making that a fairly painless process. But I’ve seen people for whom that isn’t true. They see one scary price and give up altogether. They don’t seek out coupon codes or discount programs from the manufacturer. Their doctors either don’t know how to navigate the system, don’t have the time, or don’t care to do labor that they don’t see reimbursement for. Why don’t other drugs have the same wraparound services like Skyrizi? Maybe they can’t expect the kind of eventual financial return that Skyrizi can get. Maybe they just aren’t as skilled or aggressive. I don’t know. I guess my point is that yes, getting new, expensive, and effective drugs is easy when you have a free concierge and your insurance plays ball. But those two things don’t always happen.
I know about Skyrizi from the many, many direct-to-consumer commercials they run on various streaming services. Your story suggests that many doctors do need nudges from their patients with psoriasis asking about this drug they’ve seen on TV. The Trump administration is making noises about banning such ads.
Yes, I’m grateful for Skyrizi because it indirectly supports my beloved ad-tier streaming services
Thanks for writing this, Richard! I build health economic models for pharma companies and I recently had the pleasure of running an analysis for a client who was second to market in a rare cardiac indication. Their drug is both cheaper and more effective than the other option on the market at the time of launch. Amazingly, we had to account for a third treatment entering the market within the time frame of our analysis (only five years.)
The disease was only regularly diagnosed from the early 2010s, so I see it as a stunning success to go from "newly understood disease" to "three treatment options" in a little over a decade.
It's disheartening to me that an industry that so regularly delivers miracles (Ozempic, anyone?) is met with so much hostility by the public...
The experience you described is very similar to the experience I had last year with a drug called XYWAV for Narcolepsy. It was a weird experience that felt off and suspicious from the start. The quoted price for the drug was astronomical, but there was a large team of people working to push it through my insurance. They assured me that my costs would be minimal. The pharmaceutical company gave me my first month for free while they worked on my insurance. In the end, the side effects were not worth the minimal benefit I got from the drug, so I stopped taking it after a couple of months.
I agree that the American Medical System is both amazing and clunky. There is VERY BIG money pushing Big Pharma to produce. But the easy drugs have been done, and the researchers are under intense pressure to push the envelope for drugs that will give high ROI.
XYWAV is a weird drug with complicated dosage requirements, lots of side effects, minimal benefit, based on shaky research with a huge team of people financially invested in getting patients to take it.
I question the ethics of the Mayo Clinic doctor who cold-called me, suggesting the drug after finding my condition in a medical records search. He was on the research team for XYWAV. He was professionally and financially connected to the success of a questionable drug.
This is a potentially dangerous situation, and I'm not sure the safeguards in place are strong enough.
All of this is good to read. But ... I get the feeling of reading one of those "hick visits the big city, is amazed by skyscrapers, elevators, and subways" stories from the 1920s. That is, it is indeed as amazing as described but it doesn't reveal any of the critical details of how it all works behind the scenes.
This is particularly critical because what makes the situation good is that (1) despite that AbbVie needs to get in $1-2 billion to pay off the development costs (mostly clinical studies) it has somehow arranged that (2) nobody pays a big price out-of-pocket. It seems to be a vaguely-Marxist "from everybody according to how good his insurance is, to everybody who needs it".
Now I'm sure that Hanania can't discover the actual details of the cash flows, contracts, and negotiations behind Skyrizi. But all the big pharma companies seem to be "using the same playbook" for all the new, incredibly expensive drugs. So none of this can be a secret in the pharma industry; indeed, there are likely consultants that can explain exactly how it's done.
Okay, but most Europeans don’t go private, right? So, the incentive for pharmaceutical research is greatly reduced
(California here)
I had a torn rotator cuff, and got an appointment with an orthopedist in a couple weeks. He sent me for an MRI, which got done a week later. Then he scheduled my surgery for about three weeks later.
How long would all that take in your Free Health Care Paradise, Euro snobs?
Appreciate the story. Perhaps you can follow up with a deeper analysis why a $20,000 drug is essentially given away? If the marginal costs were much lower, why wouldn’t it make more sense to sell more units at a lower price? Is it a tax write-off
rationale at work.
I have to believe we as a society can fund medical innovation while not having such an odd jerry rigged system.
Prices should be transparent and the effort companies spend on price discrimination pushes people to socialism. If you make the world too hard for stupid people to navigate you will get pushback. This kind of thing makes people unhappy, it's like immigration, looking at it from a numbers perspective more is usually better, but you need to stop abuses or a backlash will end the whole thing.
Here the marginal cost is near 0. So all the profit comes from charging each customer as much as they can handle. They have people there to help you but if you say I can't do it, they put you off on another person, it might take a number of calls, but you can probably get it for $1 if you are poor enough. They will let you trade time for Money. On some sense this is great. Making life complicated has a cost though, and this type of thing just makes life suck. We all have cable companies or mobile providers adding a $1 to every bill, but lowering it again if you call to complain. All of the costs of this land on old people and dumb people. It's smart people with spreadsheets preying on the weak. It makes people hate capitalism. So maybe transparency needs to be a core value in addition to liberty.
Feeling like you are getting ripped off makes people into zero sum thinkers. Colleges also should not be able to do this kind of thing either. You don't get to ask my parents income when I buy a car and adjust the price. That has to stop. Trust is important in a society, and we have to have some consumer protection to increase trust.
In terms of funding there are other ways. Taxes that pay prizes are fine.
Good article and every point you made is something I strongly agree with. That being said I would still be willing to contribute some of my taxes to supporting public healthcare, both so that more people can access these incredible cures and so that drug companies can be rewarded further for their development.
If the United States is responsible for 68-74% of pharmaceutical industry profits, surely there's room to spread that profit incentive across a developed world I keep being told is much larger than that proportion would suggest. I really hope this MFN status for drug prices ends up being more than just an FDA shakedown, and actually is signed into concrete law.
It’s “signs,” not “symptoms.” Just sayin’.
You can cure psoriasis with diet. Who knows what else that shot is doing to you? Watch Jordan Peterson talk about diet and his skin. My eczema flares up when I eat too many carbs. Lower carbs = no eczema.
I find that the most effective cure is to don a hat fashioned from tin foil and do a rain dance
So I have two choices: I could get an injection once every 12 weeks, or I could constantly monitor my diet to avoid eating too many foods that taste wonderful. I'll take the shot, thank you very much.
Eczema ≠ psoriasis. Eczema is an atopic reaction, similar to allergies or asthma. Psoriasis is a much more severe autoimmune disease that can lead to joint damage and cardiovascular issues. I would not trust diet alone as a treatment.
Jordan Peterson cured his psoriasis through diet and so have many others. Treating symptoms rather than the underlying cause isn't a true solution.
Blocking the signals that cause an autoimmune reaction is treating the underlying cause.
That is 100% incorrect lol.
Has anyone done a reasonably large-scale study to confirm that this diet really works for typical patients?
For keto yes (NIH, etc). For carnivore no, unfortunately. But carnivore is a keto diet so it's very likely results will be similar.