Drugs, Profits and the Eternally Rising Cost of Health Care

This morning I awoke to this wonderful opinion piece in the New York Times called Drugs and Profits.  The article discusses a cancer treatment called Avastin produced and marketed by a company called Genentech.

Let’s breakdown the facts:

1. This drug is a treatment and not a cure for any type of cancer.
2. The following quote from another NYT article F.D.A. Rejects Use of Drug in Cases of Breast Cancer:
• However, Avastin did not prolong lives by a statistically significant amount.
3. Sales of this drug top $6,000,000,000 per year – that’s 6 billion dollars a year and it is, according to the above mentioned NYTs article, the worlds best-selling cancer drug.
4. Close to $1 billion dollars of those annual sales were to treat around 15,000 breast cancer patients.
5. The drug retails at about $90,000 per year for treatment but it is discounted to $57,000 per year for people who earn less than $100,000 per year.
6. The drug was approved for use against breast cancer as part of accelerated approval program back in 2008 but continued studies have failed to show that the drug  even prolongs life.  Note – that the drug would cure cancer is not even on the table.
7. Even if the FDA pulls the drug for breast cancer it will remain approved for treating a number of other cancers to the tune of over $5 billion dollars per year.

Imagine the following conversation with a doctor:

Patient:  “So will this drug cure me?”

Doctor: “No.”

Patient: “Will it help me to live longer?’

Doctor: “Not likely.  This drug can’t beat a placebo in helping patients live longer.  What that means is that I could feed you a sugar pill and tell you it would help you live longer and that would have a better chance of increasing your life simply by the hope it would give you than this drug will.”

Patient: “How much does it cost?”

Doctor: “$57,000 to $90,000 per year, depending on your income.”

I think you can imagine the conclusion of this conversation if the patient had to shell out the money to pay for this themselves.

But let’s examine things in the real world where doctors are enticed by pharmaceutical reps and the costs are covered by health insurance programs.

Patient:  “So will this drug cure me?”

Doctor: “Unfortunately there is no cure for cancer.  The best we can do is offer treatments and hope for the best.”

Patient:  “Will it help me live longer?”

Doctor: “There are studies that show that this drug, along with chemo therapy, helps to inhibit the growth of metastatic cancers but the exact effects of that on the patient are undetermined.”

Patient:  “How much does it cost?”

Doctor: “Don’t worry about that – this drug would be covered by your insurance, especially if you have Medicare and if you have no insurance Medicaid will cover it.”

Just to back up my little theater above here are some more quotes from the NYTs article:

Dr. Janet Woodcock, director of the Center for Drug Evaluation and Research at the F.D.A., said cost was not a factor. She said that Medicare and Medicaid would not consider changing reimbursement policies until a final decision was rendered.

Dr. Edith A. Perez, a breast cancer specialist at the Mayo Clinic, said she was shocked and saddened by the decision, saying the option should remain open to patients.

“It’s like any other drug I have in oncology,” said Dr. Perez, who consults for Genentech but whose fees go to her hospital, not her. “I never know if the patient in front of me will benefit.”

I don’t know how many people out there are not as stunned as I am that a drug that doesn’t cure and can’t even be shown to have a statistically significant effect on the life expectancy of a patient is the best-selling cancer drug in the world at around $6 billion in annual sales.  I didn’t even get into the side effects which are no walk-in-the-park either.

It costs $57,000 a year with a discount.

That is insanity.

A consumer who would have to pay for this out of pocket wouldn’t even consider this treatment.

But when a drug is approved by the FDA and thus covered by Medicare and Medicaid this then sets the stage for coverage by all other insurance companies, often by the state legislatures passing laws requiring the insurance companies that operate in their states to cover the drugs covered by Medicare and Medicaid.  These costs are passed on to our insurance premiums and Federal and state deficits which will ultimately come to us via taxation.

Of Republican Senate Hope-Fools and the Separation of Church and State

Last Tuesday in a debate with her Democrat opponent Chris Coons, Republican and Tea Party favorite Christine O’Donnell said “Where in the Constitution is ‘separation of church and state?’” once again showing what the mainstream press and establishment politicians knew all along: The Tea Party is full of nothing but racist conspiracy theory nut jobs and tax protestors.

Chris Coons, who is Ivy League educated like our esteemed President Obama, of course found this statement by O’Donnell quite laughable.  He and Wolf Blitzer exchanged knowing glances like two parents dealing with a three year old.  After all the separation of church and state is clearly written in the First Amendment:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

No question about that…

Consider this: 

The definition of religion -

“a specific fundamental set of beliefs and practices generally agreed upon by a number of persons or sects: the Christian religion; the Buddhist religion.” – dictionary.com

Definition of ‘belief’:

“confidence in the truth or existence of something not immediately susceptible to rigorous proof” – dictionary.com

Charles Darwin regarding his theory of evolution by natural selection:

Quoted from the book "On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life," 1859, p. 155:

"To suppose that the eye with all its inimitable contrivances for adjusting the focus to different distances, for admitting different amounts of light, and for the correction of spherical and chromatic aberration, could have been formed by natural selection, seems, I freely confess, absurd in the highest degree."

Fact

Molecular biology, biochemistry and genetics has already confirmed the even the tiniest bacterial cells are far more complicated machinery than anything built by man.  The idea that living organisms simply evolved randomly without any intelligent guidance is nothing short of a statistical impossibility.

Evolution exclusively by natural selection and random mutation as the origin of life and humanity as we know it is nothing more than a belief and, due to the complexity of even the smallest living organism, is about as close to impossible a belief as you can get requiring as much faith as believing God created the universe.

That living organisms evolve is not in question.  However ideas about how it happens and what drives and causes it to happen is definitely in the realm of religion – even when that religion is materialism.

Coons vs. O’Donnell on the First Amendment

Coons would support what legislators in several states have already done by outlawing the instruction of the idealist intelligent design theory of evolution in public schools while the materialist theory of evolution by natural selection remains sanctioned by the government.

Legislative condemnation of one while sanctioning the other is exactly what the First Amendment is there to protect against.  Separation of Church and State does not mean the Government is to respect materialistic explanations over anything else.

Materialism as a basis for the origin of life and the universe and all its phenomena is far from proven fact.  People who believe that all life and living organisms are no more than meat bags animated by chemical reactions are as much taking a leap of faith and subscribing to a religion as are Christians, Jews, Muslims, Hindus and others.

Either outlaw teaching any of it in public schools because the government cannot respect one over the others or permit teaching it all in the name of freedom to exercise all religions.

When Republican O’Donnell told Democrat Coons"Talk about imposing your beliefs on the local schools. You've just proved how little you know not just about constitutional law but about the theory of evolution," she was actually right on the money.

Of Mosques and Men: A Conspiracy Theory

I have been watching in horror some Republicans loudly make an issue out of a mosque being built somewhere near Ground Zero.  The reason this horrifies me is because Republicans often come close in their platform to what we really need right now:

• Repealing this new health care legislation and bringing true reform to our health care industry by bringing true free market competition to this sector of our economy.
• Lowering taxes and getting government spending under control so that the people and private industry can get back to creating economic activity.
• Government support of the free market instead of falsely vilifying it.
• Respecting the citizens that empower them with rule of law that safeguards our Bill of Rights.

OK – so that’s not really the Republican platform-but they do seem to be the closest to it.  That is until some of their members decided to express themselves about the Ground Zero mosque.

The Ground Zero mosque is such a non-issue it is jaw-droppingly absurd how much press it is getting.  Is there any consensus of real citizens that give a crap whether this mosque gets built near Ground Zero?!?!? 

I get out and come in contact with a lot of people from various walks of life and there are plenty that are up in arms about the horrible health care legislation, the bailouts and the stimulus.  But I don’t know anyone who was going around saying “Muslims should not be allowed near Ground Zero”.

That’s how I come to my conspiracy theory.  There are some extremely influential interests that have attached themselves like parasites sucking obscene amounts of wealth from the American citizens.  They are able to do this by manipulating the power that has concentrated in Washington over the years even though their power is dwarfed by the voting and tax paying power of the American People.

How do they keep us from rising up and destroying them?  By dispersing us with the belief that we cannot reach a political consensus.  Right now there is the appearance of widespread discontent and intolerance amongst our ranks over this issue.  It gives the majority of us who understand the law in this country – private property, freedom of religion – the idea that there are others among us who don’t understand and are intolerant bigots.  And guess what these intolerant bigots are positioned with?  The policies we do agree on – real healthcare reform, lower taxes, less government spending and intervention.

Economics and Idiots

This past week it seems that the idiots in the field of economics have been particularly vocal.

Namely Nobel Laureate Paul Krugman demonstrated that winning a Nobel Prize basically shows that you are either well connected or duly shilling the appropriate political message.  Paul gleefully announces that unless we engage in more wasteful government spending (aka “stimulus spending”) we are heading for a terrible depression.  He uses the specious argument that it is spending that will prevent us from falling into a horrible abyss never to return for years and it is the government who is the right entity to do that spending.

President Obama in his weekly address announced how $2 billion dollars will be siphoned from the pockets of each and every tax payer into the coffers of two profit making companies so that they will grace us with their business.  Does this mean I will get some solar panels in return for my and my children’s investment in this?  Will I get some free electricity from that power plant?  Probably not and it begs the question “Why won’t the companies come and create these plants here on their own?  Is it because the fact is what they are doing actually isn’t profitable and thus we just spent $2 billion on businesses that will shut down after that money runs out?"

Paul Krugman and President Obama both know that we need economic activity but are sorely misguided on how to make it happen.  It seems they believe it is the governments job to create that economic activity and the way to do that is to spend.

Well lets take a look at our economy and the argument of “spend vs. don’t spend”.  We are being told that someone needs to be spending and since private citizens won’t do it then the government will borrow on our behalf and use force of law to make us spend.  The government spending will put money into the economy and voila – economic recovery.  Right?!?  Our government of about 500 bureaucrats are very highly educated and they know what the “industries of the future” are so they will spend this money well.  But don’t even worry about that – it doesn’t really matter what the money is spent on – just spend it.

Wrong.  Spending on things that do not add value to the economy will result in inflation and oxygen depleting tax burdens on the true engine of our economy.  That kind of spending will cause the economy to sputter and lose power and that is exactly the kind of spending that is most likely to occur when the government does the spending.

Does anybody think that a group of about 500 people will correctly use hundreds of billions of dollars to add the necessary value to an economy of 300 million people?  That these 500 people won’t waste the money or spend it on stupid things to help out their buddies?  They won’t bicker among each other trying to get money for their own special interests which will, in and of itself, waste not only money but time?  They won’t make mistakes and spend a couple billion on things that look good through academic glasses from Washington but in reality are useless?

What we need is spending on things that add value to the economy.  How do we do that?  Who is to judge what “adds value”?  If you are an Eskimo what would add value for you? Perhaps more portable and cheaper sources of heat and a sauce that makes arctic eel taste like ambrosia.  If you live Florida you want better air conditioning and a new sauce that makes gator taste like ambrosia.  In other words each and every individual makes those decisions and value is relative so 500 people will never ever be able to get it right for a population of 300 million people.  Sorry Barack and Paul.

So what should the government do?  Cut their own spending and “grant giving” to the point that we can eliminate both corporate and individual income tax and get rid of our sovereign debt.  Then stop making excuses that there isn’t enough regulation while not even doing the job of enforcing the regulation that does exist.  The economy needs stable rule of law and not a shifting landscape.  Remove those regulations that give advantages to certain interests and simply enforce an honest business climate.

It’s not hard and it’s not complicated.  In the end we the people are responsible for this mess because we do not hold our politicians accountable and we have been complacent.  But it is never too late.

The Lessons of Obama’s Deal

Just finished watching the PBS special Obama’s Deal on demand and I am now enlightened:

Big Pharma Trumps Big Insurance

That’s right people, in case you were curious, its OK to make Big Insurance your enemy but don’t f*ck with Big Pharma.  Just ask the Obama administration.  From an article published on the Fox Business web site published four days after the new health care (cough) reform was passed:

"I was unable to find anything in there that would cause me to have anxiety if I were a shareholder in a pharmaceutical company," said Ira Loss, a senior health-care analyst at the research firm Washington Analysis.

Of course not Mr. Loss!  Early in the health care reform process Obama’s administration made a deal with big pharma including:

1. Americans will be prevented from buying cheaper pharmaceuticals imported from Canada (or any other country).
2. Pharmaceutical Companies have been given 12 years exclusive rights on medications before alternative (a.k.a. generic) drugs can hit the market and bring prices down.
3. The Federal Government will be prevented from using its immense buying power through Medicare and Medicaid from negotiating lower prices on pharmaceuticals.

The last one is the real kicker.  That’s right folks, we gave a no holds barred route to pharmaceutical companies right into the pocket of every single tax paying American.  Consider the following from an article by The Center for Public Integrity:

Securing approval of the Medicare Prescription Drug Improvement and Modernization Act of 2003, legislation termed "historic" and "breakthrough" by PhRMA, is considered to be among the pharmaceutical industry's most substantial victories. The law yielded the first prescription drug coverage under Medicare — a benefit that according for 2006 through 2015 is likely to cost the government more than $1 trillion according to March 2006 Congressional Budget Office estimates. The legislation was passed after a sustained lobbying campaign in the states and in Washington, D.C.

But wait,  the plot sickens…

One of the law's controversial aspects is a provision that bars the federal government from negotiating price discounts with drug companies. An October 2003 study by two Boston University researchers found that 61 percent of Medicare money spent on prescription drugs becomes profit for pharmaceutical companies.

I have a feeling that the pharmaceuticals will be making a crap load more than $1 trillion over 9 years.  Oh – by the way – when the article says “will cost the government $1 trillion” they mis-spoke.  Legislation never costs the government anything – it costs the American tax payer. 

Interesting how legislation aimed at controlling the cost of healthcare aims at slowing the increase in insurance costs but does nothing to containing the much larger cost of prescriptions.  As a matter of fact, between the Bush legislation from 2003 and Obama’s vast expansion of it, everything has been done to ensure we will all be paying much more for prescription medications – even if you don’t take any!

When do we get the change we can believe in?

Boo Hoo for British Pensions or Any Other Investors in BP

You Have Got to Be Kidding

1. How ridiculous is it to hear British politicians and the PR about how we should go easy on BP because of all the pensions that are invested in BP and all the people they employ.

Here is where we can see true capitalism at work and can see how that is different from a free market system.  No matter what else you may have heard or seen defining capitalism in a positive free market light – capitalism is not the same as a free market.  Capitalism is the idea that money or capital rules.   It has the concept that you can accumulate money and then once you have it you can then put it in a bank or some other investment and get a return for being nice enough to give your money to someone else.  Your money will “work for you”. 

The sad and unfortunate truth is that money has never done a days work for anyone.  I invite you to lay a stack of 20’s on your kitchen sink and see if it will do the dishes for you.  True that you can take your stack of 20’s, go find someone who knows how to wash dishes and probably get them to do the dishes for you.  This is not the same as your money working for you – this is using your money to increase the amount of work that you can get done in a given period of time.  That is the correct use of capital and it involves responsibility on your end: You have to find the right person, ensure the job is done correctly etc.

British pensioners should have known that prior to this tragedy BP had over 700 safety violations at other facilities (vs Exxon that only had 1 in the same time period).  I am sure there were other signs of gross incompetence and negligence that the pensioners, their representatives and BP employees should have been on top of.

But they weren’'t and now they should suffer the consequences just like the banks and their investors should have.  In a truly free market, where those with capital are treated the same under the law as anyone else, there would be no caps or other legal protections on the damage claims against BP.  As a matter of fact if this were true the lawsuits from this could be enough to put BP out of business or cause enough serious harm that would be enough to deter any oil company from failing to take the proper steps to ensure something like this does not happen again.

Stealing My Freedom Softly with Entitlements

Reading this recent article about the situation in Greece is really a wake up call.  Greece just had its national sovereignty usurped by the European Central Bank.  The people of Greece gave up their democracy for early retirement, health care benefits, pensions, vacation bonuses, allowances and who knows what else in trinkets and niceties.

And what is the real kicker here?  That the Greek government in the name of helping to “manage the economy” and save the consumers from the evil of Capitalism became the biggest facilitators of greedy Capitalism by taking bribes and funneling business to the big companies that paid them.  The consumer who forfeited his/her rights in hopes that the government would take care of them gets royally screwed in the end.    A great quote from this article in Der Spiegel says it all

"Anyone who pays bribes to get a government contract can pad his margin with a few extra million," says one investigator. "The excessive prices are of course shouldered by taxpayers."

Here is how it works fellow Americans:  The government takes control of a market in the name of protecting it’s citizens from greedy corporate interests.  Something like…um…health care – just as an example.   Citizens are now paying for the services via a series of taxes and have totally lost control over where the money gets spent or how much gets spent on what. 

Now that control of the market is in the hands of a relatively small number of politicians the big corporations move in to bribe those politicians with hundreds of thousands or even millions of dollars to gain access to hundreds of millions to hundreds of billions of tax payer dollars.  Funds that used to be controlled by the hundreds of millions of consumers and had to be competed for now just requires the bribing of maybe a maximum of 60 Senators, a couple hundred Representatives and one President. 

But wait – the plot sickens…

Now consumers are being forced to overpay for some service and the real damage gets done.  With the politicians deciding how much the populace should pay for something and who they should pay it to they ALSO decide whether or not the citizens should borrow money to pay for it.  This now adds debt interest to the cost of services.

Guess what - banks make a lot of money off of lending money.  How much interest do you think a bank can make off of a couple hundred billion dollars?  As a banker,  wouldn’t it be nice if instead of having to convince a hundred million people to buy beyond their means and borrow from you to do it you just had to deal with a few hundred?  Even if you had to give them each a million dollars so they would take out a hundred billion dollar loan on behalf of the people of an entire country it would easily be worth it.

Another great quote from Der Spiegel:

“According to statements made by company executives involved in the payoffs, up to 2 percent of the revenues from the Siemens Hellas telecommunications division were paid to the two main political parties, the Panhellenic Socialist Movement, better known as PASOK, and the conservative New Democracy.”

In Greece now the austerity measures have to do with cutting back the retirement age, vacation bonuses etc.  For what?  To pay the debt that has been basically accrued by politicians giving money to corporations on behalf of their citizens for bribes.

Americans – lets not make the same mistakes.