Are Medical Insurance/Big-Pharma Company Profits… Evil?

R & D Costs for “Big Pharma”

This comes via ChEMBL-og:

Came across a link on Google+ to a post to a Forbes article (via Greg Landrum) and thought I would post a link here. It’s a simple economic analysis of the costs of Large Pharma drug discovery. Very simple, money in vs. drugs out. There is however a lot of complexity behind the numbers, for example – quite a few of the drugs will have been licensed in, the transaction costs for these in-licensing events have probably been factored in, but what about all the other burnt capital in the biotech companies that supplied the in-licensed compounds – this will inflate the numbers further. Of course the majority of these costs are incurred on the failed projects, the wrong targets, the wrong compounds, or the wrong trials.

To put the AstraZeneca number of $11.8 billion per drug in some national context (equivalent to £7.5 billion) – this is almost 17 years of the entire BBRSC budget (£445 million in 2011), or only two drugs from the entire investment portfolio of the mighty assets of the Wellcome Trust (~£14 billion in 2011) – that’s right, not two drugs from their annual research budget, but two drugs by shutting down the investment fund and putting it all into drug discovery and development (at Astra Zeneca ROI levels).

Scary numbers, eh? Are public funding agencies up to the task? Do we really know what to do differently? There’s also a POST on the same Forbes article on the In THE PIPELINE BLOG.

(An updated Forbes article is HERE)

Scandinavian Socialism

(Jump to the challenges directed at me dealing with America protecting these smaller countries)

The Myth

Gay Patriot introduces us to the myth often put forward by the left. This post by Gay Patriot will add to the video by Bill Whittle that follows it:

One of the myths Progressive Leftists elevate to “fact” by constantly repeating it to each other is the idea that Scandinavian countries are the closest on Earth fulfillment to their socialist dream utopia. ~ Gay patriot


Scandinavian Hell

Kyle Smith, writing in the NY Post, digs a little deeper and discovers that, like almost everything Progressive leftists believe, the Myth of Scandinavian Utopia really is as much a myth as the college rape epidemic, the genius of Barack Obama, or the popularity of gun control.

Visitors say Danes are joyless to be around. Denmark suffers from high rates of alcoholism. In its use of antidepressants it ranks fourth in the world. (Its fellow Nordics the Icelanders are in front by a wide margin.) Some 5 percent of Danish men have had sex with an animal. Denmark’s productivity is in decline, its workers put in only 28 hours a week, and everybody you meet seems to have a government job. Oh, and as The Telegraph put it, it’s “the cancer capital of the world.”

So how happy can these drunk, depressed, lazy, tumor-ridden, pig-bonking bureaucrats really be?

I think my favorite paragraph is where he cites the Scandinavian Social Contract as the “Ten Commandments of Buzzkill.”

“You shall not believe that you are someone,” goes one. “You shall not believe that you are as good as we are,” is another. Others included “You shall not believe that you are going to amount to anything,” “You shall not believe that you are more important than we are” and “You shall not laugh at us.”

They read like the 10 Commandments of Progressive Leftism…

…read it all…

Economics 101

In an excellent Bloomberg article entitled, “Booming Sweden’s Free-Market Solution,” the myth is dismantled in toto by Anders Aslund. Here is a snippet:

…From 1970 until 1989, taxes rose exorbitantly, killing private initiative, while entitlements became excessive. Laws were often altered and became unpredictable. As a consequence, Sweden endured two decades of low growth. In 1991-93, the country suffered a severe crash in real estate and banking that reduced GDP by 6 percent. Public spending had surged to 71.7 percent of GDP in 1993, and the budget deficit reached 11 percent of GDP.

The combination of the crisis and the non-socialist government under Carl Bildt from 1991 to 1994 broke the trend and turned the country around. In 1994, the Social Democrats returned to power and stayed until 2006. Instead of revoking the changes, they completed the fiscal tightening. In 2006, a non-socialist government returned, and Finance Minister Anders Borg, with his trademark ponytail and earring, has led further reforms. Sweden successfully weathered the global financial crisis that started in 2008, and the Financial Times named Borg Europe’s best finance minister last year.

Before 2009, Sweden had a budget surplus, and it has one again. For the past two years, economic growth has been 4 percent on average, and the current-account surplus was 6.7 percent in 2011. The only concerns are the depressed demand for exports caused by the current euro crisis and an unemployment rate that is about 7.5 percent.

Sweden’s traditional scourge is taxes, which used to be the highest in the world. The current government has cut them every year and abolished wealth taxes. Inheritance and gift taxes are also gone. Until 1990, the maximum marginal income tax rate was 90 percent. Today, it is 56.5 percent. That is still one of the world’s highest, after Belgium’s 59.4 and there is strong public support for a cut to 50 percent.

The 26 percent tax on corporate profits may seem reasonable from an American perspective, but Swedish business leaders want to reduce it to 20 percent. Tax competition is fierce in some parts of Europe. Most East European countries, for example, have slashed corporate taxes to 15-19 percent…. Weighs in on the “Swedish” experiment, how it got its wealth, noting how it squandered it, and how it is returning to the pre-70’s ideology:

  • Sweden is a powerful example of the importance of public policy. The Nordic nation became rich between 1870 and 1970 when government was very small, but then began to stagnate as welfare state policies were implemented in the 1970s and 1980s. The CF&P Foundation video explains that Sweden is now shifting back to economic freedom in hopes of undoing the damage caused by an excessive welfare state.

And do not think for a moment that the free-market has not allowed Sweden or other Nordic nations to get back on their feet. This is is pointed out in the following “101” presentation on economics:

The Above Video Description via

For those of us who place more trust in free markets than state-directed economies, we must inevitably (and repeatedly) confront the skeptical interlocutor who details the “successes” of Swedish social democracy. “If state intervention into the economy is so bad, high taxes so destructive, then why is Sweden such a success?” It’s an irritatingly simple question with a incredibly complicated answer, though I do recommend pointing out, when the conversation turns to health care and secondary education, that nothing, in a state the confiscates a massive portion of your income, is “free.” But as many have pointed out, during its boom years, Sweden was a pretty free market place; from the 1970s through the 1990s—when taxes and regulation dramatically increased—the economy slowed until it spun out in the early 1990s…


…So here is my bottom line: When some American pundit, with expertise is everything, explains why some European welfare state “works,” or how everything you know is wrong about taxing income at 75 percent, do a little digging, make use of Google Translate, and don’t trust that, because Swedes and Danes tell researchers that they are happy, the United States should introduce “daddy leave” and provide subsidies to syndicalist newspapers.

The best English-language explication of the Swedish model comes from my pal Johan Norberg, who wrote this brilliant piece for The National Interest a few years back. And watch my interview with Norberg on Swedish welfare politics here and on Naomi Klein here.

The following interview is Johan Norberg, author of In Defense of Global Capitalism, sits down with’s Michael C. Moynihan to sort out the myths of the Sweden’s welfare state, health services, tax rates, and its status as the “most successful society the world has ever known.”

National Review seems like a good place to continue the theme of showing how the Nordic countries have used the free-market system to recoup what it has lost with previous regulations that crippled free-enterprise. Here is a comparison between Sweden and Venzuala that was helpful in explaining how Sweden has less regulations that us in many places (a recent phenomenon BTW):

Talk to a Bernie Sanders voter about “socialism” — and they can be very insistent about using the word — and you’ll get paeans to Sweden, which is not a socialist country but a country with large, expensive welfare state. The distinction is not trivial: There is relatively little in the way of state-run enterprise in Sweden; the Swedish government is in fact only a 60 percent partner in the postal service. The Swedish government is, alas, in the casino business, albeit in a more transparent way than American government is. On the Heritage economic-freedom rankings, Sweden isn’t that far behind the United States. It has very high taxes, but taxes are not the only burden that governments put on the economy, not necessarily even the most important, and Sweden outscores the United States on a number of important metrics: free trade, property rights, freedom from corruption, investment freedom, monetary policy, etc. The United States’ small edge in the rankings comes mainly from relatively low taxes and a much less regulated labor market. again weighs in on whether Sweden is the right model for the U.S. to emulate:

The Above Video Description:

To the American mind there may be nothing more quintessentially Swedish than the leggy, blond supermodel.

But there’s another Swedish model that inspires almost as much admiration—the Swedish economic model. With a generous welfare state and high living standards, Sweden seems to prove that socialism works. Much of the hope that swept Barack Obama into the White House rests on the belief that America could reach new heights under a regime of enlightened progressivism, that we could be more like the Swedes.

Not so fast, warns Stockholm University sociologist Charlotta Stern: “If an American told me that the US should be more like Sweden I would say I don’t think it’s possible.” The United States can centralize its health care system and pass other laws that mimic Sweden’s welfare state polices, says Stern, but it’s impossible to replicate a culture that allows those policies to operate about as smoothly as possible. Swedish bureaucracies inspire trust, but their American counterparts (DMV, TSA, IRS) inspire punch lines, if not outrage.

But America could emulate some of the Swedish policies that don’t require extensive bureaucracies. Take school vouchers. Teachers unions in America regard the idea as free-market radicalism, but families in Sweden enjoy universal school choice. Sweden adopted its famously progressive policies during the 1970s, but after years of sluggish economic growth the land of ABBA altered its course in the 1990s, adopting a host of free-market reforms, from deregulation to tax cuts.

Although much of the disco-era welfare state remains, economist Andreas Bergh credits the free market reforms with reviving his nation’s economy. “Sweden is moving in the market economic direction,” says Bergh, “but that does not mean America should be moving in the socialist direction.”

What if the two nations continue on in different directions? Maybe some day when America is looking for a way to rejuvenate its economy, pundits will point to a different kind of Swedish model. One that increases individual choice and competition.

“Sweden—A Supermodel for America?” is produced by Daniel B. Klein, and written and produced by Ted Balaker, who also hosts. Shot by Jonathan Liberman and Henrik Devell, with additional production support by Zach Weissmueller and Sam Corcos and post production by Hawk Jensen and Austin Bragg. Special thanks to Niclas Berggren, Martin Borgs, Nils Karlson, and the Ratio Institute.

A Challenge Directed At Me

In conversation about an audio upload to my YouTube Channel of Dennis Prager discussing Bernie Sanders, I was challenged with this:

  • Sweden is not a Nato member so how does the US pay for Sweden defense? Pointing at Whittle and saying “because he say they do” won’t cut it.

To which I responded with a quote from an International Business Times article:

Finland is joining military exercises with other Scandinavian countries, as well as several members of NATO, in late May, Finnish media report. The maneuvers called Arctic Challenge will span 12 days, starting May 25, and include nine countries and close to 100 planes. The drills, over Sweden and northern Norway, come amid increased tensions between Russia and its Baltic and Nordic neighbors.

Sweden and Switzerland, which like Finland are not members of NATO, are expected to join the exercise, along with NATO members Norway, the Netherlands, Britain, France, Germany and the United States. Finland plans to send 16 F-18 Hornet fighter jets, while the other countries will supply Gripen “multirole” fighters, F-16s, Eurofighters and Jet Falcons, as well as transports and tankers, Russian news agency Sputnik reported. The Norwegian armed forces said the purpose of the Arctic Challenge exercise is to “learn to coordinate efforts in complicated flight operations conducted in cooperation with NATO.”

Russia has ramped up military activity along its borders with northern Europe, causing consternation in several Baltic and Nordic countries and pre-emptive actions to head off — or prepare for — a possible military crisis. Latvia, which reported a Russian submarine near its coast in mid-March, is beefing up security on its eastern border, while Finland recently began a letter campaign notifying some 900,000 reservists of their duties in a potential crisis. Sweden also intercepted four Russian planes flying over the Baltic Sea in March with their radios off. Russian jets have been intercepted in other instances while flying in European international airspace….

I also pointed out that this promise went back to the Cold War, and was not known about till a Swedish defense think-tank/security firm uncovered the agreements in 1994. The original story’s link has been lost, but it is here on FOI’s site. FOI’s “about us” page has this:

  • FOI is one of Europe’s leading research institutes in the areas of defence and security. We have 1,000 highly skilled employees with various backgrounds. At FOI, you will find everything from physicists, chemists, engineers, social scientists, mathematicians and philosophers to lawyers, economists and IT technicians…. The Armed Forces and the Swedish Defence Material Administration are our main customers. However, we also accept assignments from civil authorities and industry. Our clients from the defence sector place very high demands on advanced research, which also benefits other customers.

Here is the info from the old article via WIKI:

Initially after the end of World War II, Sweden quietly pursued an aggressive independent nuclear weapons program involving plutonium production and nuclear secrets acquisition from all nuclear powers, until the 1960s, when it was abandoned as cost-prohibitive. During the Cold War Sweden appeared to maintain a dual approach to thermonuclear weapons. Publicly, the strict neutrality policy was forcefully maintained, but unofficially strong ties were purportedly kept with the U.S. It was hoped that the U.S. would use conventional and nuclear weapons to strike at Soviet staging areas in the occupied Baltic states in case of a Soviet attack on Sweden. Over time and due to the official neutrality policy, fewer and fewer Swedish military officials were aware of the military cooperation with the west, making such cooperation in the event of war increasingly difficult. At the same time Swedish defensive planning was completely based on help from abroad in the event of war. Later research has shown that every publicly available war-game training, included the scenario that Sweden was under attack from the Soviets, and would rely on NATO forces for defence. The fact that it was not permissible to mention this aloud eventually led to the Swedish armed forces becoming highly misbalanced. For example, a strong ability to defend against an amphibious invasion was maintained, while an ability to strike at inland staging areas was almost completely absent.

In the early 1960s U.S. nuclear submarines armed with mid-range nuclear missiles of type Polaris A-1 were deployed outside the Swedish west coast. Range and safety considerations made this a good area from which to launch a retaliatory nuclear strike on Moscow. The submarines had to be very close to the Swedish coast to hit their intended targets though. As a consequence of this, in 1960, the same year that the submarines were first deployed, the U.S. provided Sweden with a military security guarantee. The U.S. promised to provide military force in aid of Sweden in case of Soviet aggression. This guarantee was kept from the Swedish public until 1994, when a Swedish research commission found evidence for it. As part of the military cooperation the U.S. provided much help in the development of the Saab 37 Viggen, as a strong Swedish air force was seen as necessary to keep Soviet anti-submarine aircraft from operating in the missile launch area. In return Swedish scientists at the Royal Institute of Technology made considerable contributions to enhancing the targeting performance of the Polaris missiles.

Some More Discussion

In this first back-and-forth, I noted some of the above and got this response:

  • Seems Sweden is searching for the viable balance of Capitalism and Socialism. Good for them. Bernie Sanders seeks the same.

To which I respond:

They want [and have] a lower tax rate than Sanders wants. They dumped their “wealth tax” and “death tax.” They lowered their corporate tax-rate and want it at 20% and below. Lessened regulations on businesses… on-and-on.

Bernie wants the 70’s through 90’s Sweden… I am down with the 2006 and beyond Sweden.

Someone else joined the discussion, and mentioned the following:

  • My family is Swedish and I can tell you with 100% accuracy they are way better off than we are…. Across the board pretty much.

Again, I respond:

There is a Swedish economist in the post that from first hand experience (and expertise in his field) telling you they are where they are because of the free market and a reduction [greatly] of the welfare state/socialism enterprise. [And, BTW, they use the many life saving drugs produced by the profit motivated “Big Pharma” spending on R&D to extend the lives of their fellow Swedes.]

When you get all these health care services for “free” then people start taking them for granted, calling ambulances without second thoughts, and going to the doctor for simple things that you don’t really need to see a doctor for… False alarms for ambulances and fire trucks end up costing the government and indirectly tax payers huge amounts of money every year. Which is why Sweden has as of late started to reform its health care system by privatizing parts of it. Mind you, these are somewhat limited in scope, but people are able to pay now for private care (1-in-10 now have private insurance/health-care).

…The paradox is that America has been doubling down on government authority over healthcare with the Affordable Care Act, just as more and more European governments, including Denmark, England, Finland, Ireland, Italy, the Netherlands, Norway, Spain, and Sweden, have been forced by public outcry to address the unconscionable waits for care by introducing new laws. But it is even more essential for American voters to realize, and for our government leaders to acknowledge, what other countries are beginning to recognize all over the world. These governments have started to understand that the cure for their failed nationalized health systems is a shift to privatization. And citizens under government-dominated health systems are increasingly circumventing their own systems, pursuing private healthcare to solve the uniformly poor access to care and limited choices.

Let’s consider Sweden, often heralded as the paradigm of a successful welfare state. The facts tell a very different story. Having failed its citizens in healthcare access, the Swedish government has aggressively introduced private market forces into healthcare to improve access, quality, and choices. Although once entirely public, over a quarter of Swedish primary care clinics are now run by the private sector. Sweden’s municipality governments have increased spending on private care contracts by 50% in the past decade. Private nursing facilities now receive substantial public funding to care for patients. Widespread private sector competition has also been introduced into pharmacies to tear down the pre-2009 monopoly over all prescription and non-prescription drugs. Since the Swedish government sold over half of its pharmacies to private firms in 2009, 20 private firms entered the market and over 300 new pharmacies opened, not only improving accessibility but providing the first pharmacies ever to many small towns.

Moreover, despite the fact that an average Swedish family already pays nearly $20,000 annually in taxes toward healthcare according to Swedish economist Per Bylund, about 12% of working adults bought private insurance in 2013, a number that has increased by 67% over the last five years. Half a million Swedes now use private insurance, up from 100,000 a decade ago, even though they are already “guaranteed” public healthcare….

(Hoover Insitute, “Defining Ideas: The Surprising International Consensus on Healthcare“)

Gay Patriot ends the beginning of this post well:

…In the pre-Reagan Era, the media was just as left-leaning and reluctant to discuss the poverty and oppression that permeated the Soviet Union. But there were enough people willing to talk about it outside the media for the truth to get out. The pervasiveness of social media should make it easier, not harder, for conservatives to get a message out around the media gatekeepers. Millennials should be told what happened in Venezuela after his ideological brother Hugo Chavez took over; they should be told how toilet paper became a black market commodity and supermarket shelves became bare. And they should be made aware that Sweden is not quite the utopia they’ve been taught it is, either.

PASSES SENATE: Ca Senate Passes Single Payer…

…Still Has No Plan To Get $400B A Year For It (HOTAIR).

I bet people are scratching their heads thinking, “wait… 400-billion a year? I though it would be free?” Now it is headed to the Assembly:

  • …The measure would have died if it failed to clear the Senate this week. Democrats said they wanted to keep it alive as the Assembly tries to work out a massive overhaul of the state health care system.

More from BREITBART:

California Democrats made a surprise move late Friday to foil President Trump’s promise to repeal ObamaCare—by introducing a stand-alone, single-payer healthcare system in California.

The Mercury News reported that two California lawmakers Friday introduced legislation to replace private insurance with a government-run health care system covering all 38 million Californians—including its undocumented residents.


….After a week that has brought California’s crumbling infrastructure into focus—as back to back storms threatened the nation’s tallest dam in Oroville, California, and forced Gov. Brown to request Federal Emergency Funds from President Trump— Brown and Democrat legislators have come under scathing criticism for squandering money on benefits for illegal aliens and public sector unions at the expense of critically-needed infrastructure.

Only California Democrats would launch a new social program with no specific details or any identifiable funding source in a state that is perpetually broke, and where ObamaCare is unpopular with over 46% of voters—including a lot of Democrats.

Nicole Gelinas On Free-Market Capitalism vs. “State Capitalism”

In an excellent article entitled:

(Via CITY JOURNAL), it is noted [well] that what many people THINK is the free market is anything but that:

…Free-market capitalism isn’t the same thing as radical libertarianism. Stan Veuger, an American Enterprise Institute scholar and economics lecturer at Harvard, dismisses what he calls “the anarcho-capitalist ideal”: an economy with no regulations and zero taxation. “There are places like Somalia that score well” on such purist definitions of free markets, he points out. To work well, capitalism needs “an environment where people can concentrate on being productive,” rather than, say, having private armies to assure personal safety. Free-market capitalism requires laws and rules, more than ever, now that more people live in close proximity in dense cities than ever before. Human activity leads to disputes, and disputes can be solved, or at least moderated, by resolutions that govern behavior. We often forget that markets don’t make broad public-policy decisions; governments do. Markets allocate resources under a particular policy regime, and they can provide feedback on whether policies are working. If a city, say, restricts building height to preserve sunlight in a public park, free-market actors will take the restricted supply into account, raising building prices. This doesn’t mean that the city made the wrong decision; it means that the city’s voters will risk higher housing prices in order to preserve access to sunlight. By contrast, a city that restricts housing supply and restricts prices via rent regulation is thwarting market signals—it takes an action and then suppresses the direct consequences of that action.


In critical areas of the economy, though, markets are in retreat. Behind the veneer of free-market governance is a deep expanse of government involvement in massive areas of the economy, such as the housing market and health care. People don’t make decisions on housing and health-care concerns every day, but when they do, they would benefit from the information that markets provide about whether they can afford a large house or whether a particular drug is worth the price. Government distortion of these key markets has scrambled these signals.

An annual congressional report, “Estimates of Federal Tax Expenditures,” gives insight into how Washington manipulates supply and demand in these sectors. Consider house prices. This year, Washington will pay homeowners $99 billion in forgone taxes to borrow money to purchase or refinance a house or to sell that house and reap the profit. Americans will buy or sell about $600 billion worth of houses this year. Government subsidy, then, represents nearly one-sixth of this market. The federal government also provides a guarantee for most mortgages, thanks to Fannie Mae and Freddie Mac, the two government-supported mortgage companies that benefited for decades from an implicit government guarantee before they got an explicit guarantee during the 2008 financial crisis.

These subsidies have fired the growth of the housing industry. Between 1975 and 1979, the U.S. Treasury paid out $102.6 billion in mortgage-interest breaks in today’s dollars. Between 2015 and 2019, the Treasury will pay out $419.8 billion in such tax favoritism—a more than fourfold rise, nearly ten times the population increase. The hike is particularly extraordinary, considering that in the late 1970s, the annual interest rate on a mortgage was 9 percent, twice what it is today. Taking today’s lower rates into account, Washington has increased the mortgage subsidy more than eightfold.

It’s no surprise that mortgage debt has soared, to $9.5 trillion, from $2.6 trillion in inflation-adjusted dollars in 1981. Back then, mortgage debt constituted 31 percent of our nation’s GDP. Today, it makes up nearly 53 percent. McCloskey, who thinks that free markets are generally healthy, acknowledges that “there are examples of the price signal not coming through.” The mortgage-interest deduction is “a silly idea,” she says, yet “very hard to change.”

Indeed, government subsidy is a critical factor in whether families can afford to purchase a home, and what kind of home, how large, and in what zip code. The home-mortgage deduction, then, helps determine how people live—yet we barely notice. Few of us consider how the government shapes one of the biggest decisions we’ll ever make, or how the U.S. government’s presence in the housing market maintains the value of our homes.

Housing subsidies that distort individual decisions also affect the biggest investment market in the world: the American housing market is worth $27.5 trillion—more than a tenth of the world’s $250 trillion in total wealth. The government, not capitalism, has determined the value of this market, which, in turn, helps determine the value of other markets: money that goes into this 11 percent of the global asset market can’t go into the other 89 percent. Home values also affect consumer spending. Someone whose home value is rising will feel freer to take on credit-card debt, for example.

Perhaps American house prices should be lower, and people should put their savings into companies that create products and jobs. Or perhaps house prices should be higher, accounting for a growing population, and people should live in smaller homes, spaced more closely together. In turn, perhaps the price of Chinese stocks would be higher, reflecting future growth, if Chinese investors did not divert money into U.S.-backed American housing debt. No one knows, because market signals get obscured.

One can agree or disagree with government jiggering of the housing market. What one cannot do is call it “free-market capitalism.” It is better described as democratic socialism. Americans have embraced government control of one of the world’s most important economic activities.

Free markets are under attack in health care, too, and the trend began long before Obamacare. Critics of our dysfunctional health-care system often blame capitalism for its excesses and distortions. But the health-care “market,” like the housing market, is responding rationally to government signals.

Washington provides massive tax breaks to health care. This year, as noted in Congress’s tax-expenditure report, the government will provide $143.8 billion in federal tax breaks for employers’ coverage of workers’ health insurance—more than the housing-tax break. The health-care subsidy has increased ninefold after inflation since the late 1970s. This tax break means that workers don’t see the full cost of their health-care coverage and thus cannot respond, when the price of health care rises, by demanding lower costs.

In providing Medicare to seniors and Medicaid to poorer people, Washington is the nation’s largest health-care customer, accounting for more than 30 percent of the United States’ annual $3 trillion in health-care spending. The largest customer in any market affects the entire market. Medicare and Medicaid stipulate how much the federal government will pay to hospitals and doctors for visits and surgeries. If hospitals and doctors can’t recover their costs and make an adequate profit under this price schedule, they charge private customers more. Medicare also distorts the price that drugmakers can charge for prescription drugs. Pharmaceutical companies know that their biggest customer is the government of the world’s richest sovereign nation. They have no way of setting market prices.

This past summer saw a health-care episode that, depending on your point of view, might have looked like an example of successful free-market capitalism or uncontrolled capitalist greed. Drugmaker Mylan said that it would increase the price of a decades-old product, the EpiPen allergy shot, to $600. That was the latest in a string of price hikes that have made the EpiPen 400 percent more expensive than when Mylan purchased the product a decade ago. Mylan has quintupled EpiPen’s revenues during that period, Bloomberg News reported, partly through savvy marketing. At one time, doctors prescribed EpiPens only to people with histories of severe allergic reaction. Now, people with more moderate allergies ask their doctors for EpiPens as a preventive measure.

The would-be free-market defense is that Mylan is making a decent profit, giving some people what they need (a lifesaving drug and medical device) and giving others what they want (a sense of security). Under this argument, Mylan can take that profit and invest it in new drug development. The would-be free-market criticism is that Mylan is enriching its executives by taking advantage of people who have no choice but to buy this product.

The reality: Mylan doesn’t operate in a free market, so one can neither praise nor blame markets for the EpiPen price. Mylan could increase prices and sales over a decade because its “customers” weren’t directly paying—most people buy their EpiPen through subsidized private insurance or through Medicare or Medicaid. Mylan could also boost EpiPen sales by petitioning the government for special benefits. Through lobbying, as Bloomberg notes, the company pushed 47 states to stock the pens in schools. And when federal regulations decreed that people should carry EpiPens in packs of two, the company stopped selling single EpiPens.

Lastly, Mylan lacks a competitor. If Mylan were operating in a competitive market, it could not have imposed these price increases, regardless of whether it wanted to invest the profits in new drug research or line its executives’ pockets. If Penguin Books tried to charge $300 for a copy of A Tale of Two Cities, another bookseller would price the tome at $8, and that would be the end of that.

Just as political forces helped shape Mylan’s pricing, politics, not markets, made the company retreat from its latest price increase. Democratic presidential nominee Hillary Clinton singled out the drugmaker as “the latest troubling example of a company taking advantage of its consumers.” But Mylan wasn’t exploiting consumers; it was only responding to perverse government signals.

Just as in housing, one can agree or disagree with the U.S. government’s policies in health care. One can argue that the government should pay high prices for drugs to signal to global investors that they can expect big payoffs for taking risks. Or, one can maintain that the government should use its negotiating power to lower prices, as European nations do. One cannot claim that either policy is a free-market one; both are social-democratic positions.

The government’s hand is increasingly busy in other areas of society, too, preventing market signals from coming through. In life’s decisions, getting an education is right up there with buying a house or choosing the right cancer medicine. Yet prospective students don’t determine the free-market value of a particular school’s curriculum through the amount that they are able and willing to pay. Instead, the government distorts this market. Washington provides $2.1 billion a year in tax subsidies for student loans. Just as important, it keeps the interest rates on these loans low by directly lending money to students. This cheap money has inflated the cost of education by giving students more borrowed money with which to pay and by removing any incentive for schools to control expenses. Over the past decade alone, the amount of debt that students owe has more than doubled after inflation, from less than $600 billion in 2005 to $1.4 trillion in mid-2016.

Just as in health care, America saw a striking example of how government, not the market, governs education over the summer. Just before the start of the fall term, ITT, a for-profit college with 35,000 students, said that it was going out of business. It wasn’t for a lack of customers; rather, it was for a lack of federal money backing those customers. Washington had demanded that the company pay much more to participate in the federal student-loan program, to account for, as the government put it, “significant concerns” about ITT’s “integrity, financial viability, and ability to serve students.” The college couldn’t pay, and it shuttered its classrooms. When a school cannot stay open without ceaseless infusions of government-guaranteed tuition payments, it is not operating in a free-market environment (and neither are its for-profit and nonprofit competitors). Just as with housing and health care, one can agree or disagree with government control of the higher-education market. One just can’t call it a free market….

(read the WHOLE article… it is worth it)

Is the Increase of Women In Medicine Good or Bad for Society? (Dennis Prager)

Dennis Prager deals with the outcomes of forced fairness, pointing out that this egalitarianism never produces equality or “good” for society on a whole. In my in-depth dealing with the mantra/myth of the glass ceiling, I quote that older NYT’s and L.A. Times articles mentions in the above audio:

(NYT – 2011) …..But the productivity of the doctors currently practicing is also an important factor. About 30 percent of doctors in the United States are female, and women received 48 percent of the medical degrees awarded in 2010. But their productivity doesn’t match that of men. In a 2006 survey by the American Medical Association and the Association of American Medical Colleges, even full-time female doctors reported working on average 4.5 fewer hours each week and seeing fewer patients than their male colleagues. The American Academy of Pediatrics estimates that 71 percent of female pediatricians take extended leave at some point — five times higher than the percentage for male pediatricians.

This gap is especially problematic because women are more likely to go into primary care fields — where the doctor shortage is most pronounced — than men are. Today 53 percent of family practice residents, 63 percent of pediatric residents and nearly 80 percent of obstetrics and gynecology residents are female. In the low-income areas that lack primary and prenatal care, there are more emergency room visits, more preventable hospitalizations and more patients who die of treatable conditions. Foreign doctors emigrate to the United States to help fill these positions, but this drains their native countries of desperately needed medical care.

If medical training were available in infinite supply, it wouldn’t matter how many doctors worked part time or quit, because there would always be new graduates to fill their spots. But medical schools can only afford to accept a fraction of the students who apply…..

(LA TIMES — 2011) ….The answer, they speculate, is that women are choosing lower-paying jobs on purpose because they offer greater flexibility in hours and are generally more family-friendly. The researchers acknowledge they don’t have the data to prove that this is the case, but the data they do have is consistent with this theory.

If so, they say, that would be a victory for women (and even men.) Studies show that many doctors are burned out and would rather take jobs that allow them to have a good quality of life. Now — thanks in large part to the growing ranks of female doctors — such jobs are available. They just come with lower salaries.

“Instead of being penalized because of their gender, female physicians may be seeking out employment arrangements that compensate them in other — nonfinancial — ways, and more employers may be beginning to offer such arrangements,” the researchers wrote…..

Government Run Health Care Postponed Operation for 9-months~Death Ensued

Here is a great example of what we should expect from government run healthcare, via NewsBusters:

Long Wait for Operation Fells UK Health Director

James Taranto at the Wall Street Journal editorial page caught this story about Britain’s National Health Service.

“A former NHS director died after waiting for nine months for an operation–at her own hospital,” London’s Daily Mail reports:

Margaret Hutchon, a former mayor, had been waiting since last June for a follow-up stomach operation at Broomfield Hospital in Chelmsford, Essex.

But her appointments to go under the knife were cancelled four times and she barely regained consciousness after finally having surgery.

Her devastated husband, Jim, is now demanding answers from Mid Essex Hospital Services NHS Trust–the organisation where his wife had served as a non-executive member of the board of directors.

He said: “I don’t really know why she died. I did not get a reason from the hospital. We all want to know for closure. She got weaker and weaker as she waited and operations were put off.”

It would be cruel to put this down to karma, so instead we’ll just note that it can’t possibly be true. After all, as New York Times star columnist Paul Krugman has observed, “In Britain, the government itself runs the hospitals and employs the doctors. We’ve all heard scare stories about how that works in practice; these stories are false.”

Will the progressive lefts health care plan allow for choice or job growth?

In the above video we see Obama saying the following:

“IF you are already getting health insurance on your job, then, that doesn’t change. Health insurance reform passed was passed six months ago. I don’t know if anybody here has gotten a letter from their employer saying, ‘you have to go on government health care’….”

This statement is just false. I have posted in the past on this topic of companies dumping their plans because it will be cheaper for them just to dump their employees onto the government plan. Here is a recent example exemplified over at HotAir – 3M to dump retirees from medical coverage:

Remember when Barack Obama repeatedly promised that no one’s current coverage would have to change if Congress approved the health-care overhaul he demanded?  When the ObamaCare bill passed, the Associated Press suddenly discovered that the change of tax law that would supposedly generate billions of dollars to pay for the costs of the bill would also drive companies to dump retirees from their existing drug coverage and push them into Medicare.  Minnesota-based 3M became one of the first large corporations to do just that — and push retirees off of all their plans as well:

3M Co., citing new federal health laws, said Monday it won’t cover retirees with its corporate health-insurance plan starting in 2013.

Instead, the company will direct retirees to Medicare-backed insurance programs, and will provide reimbursement for that coverage. It’ll also reimburse retirees who are too young for Medicare; the company didn’t provide further details.

The company made the changes known in a memo to employees Friday; news of the move was reported in The Wall Street Journal and confirmed Monday by 3M spokeswoman Jackie Berry.

The ObamaCare bill created a fund to subsidize employers who didn’t dump their retirees, but the WSJ notes that it simply wasn’t enough to change the negative incentives created by the government interventions:

The changes won’t start to phase in until 2013. But they show how companies are beginning to respond to the new law, which should make it easier for people in their 50s and early-60s to find affordable policies on their own. While thousands of employers are tapping new funds from the law to keep retiree plans, 3M illustrates that others may not opt to retain such plans over the next few years. …

Democrats that crafted the legislation say they tried to incentivize companies to keep their retiree coverage intact, especially until 2014. The law creates a $5 billion fund for employers and unions to offset the cost of retiree health benefits. More than 2,000 entities, including many large public companies, have already been approved to submit claims for such reimbursement. 3M did not apply.

How did Democrats come up with the $5 billion figure for subsidies to protect retirees from losing their plans?  From the looks of it, they simply made it up.  They also didn’t do much calculation to determine whether the subsidies would actually incentivize employers into rejecting this strategy for cost savings.  To some extent, they may not have been able to make that calculation, because thanks to the massive amount of ambiguity in the bill, no one can really say for sure what the future costs would be.  And of course, that’s why 3M chose now to dump the retirees.

3m has 23,000 retirees, many of them likely to be living in Minnesota.  They’re also likely to vote in the upcoming midterms, perhaps even more likely now than ever.  That won’t be good news for House Democrats in the Minnesota delegation hoping to win a new term in four weeks.

We already know we will not know the ultimate costs… and going off of experience, we know all government programs are always more than what we are told:

This is a concern for the Dems and will be a losing issue (among the many others). Here are a couple examples of the impact this ridiculous bill has had on business:

A Culture Crisis-NOT a Health Care Crisis

I “Snoped” this and it checks out. A friend passed this onto me via FaceBook, and so I reproduce it here. It if an open letter to the President and makes some of the points needed to be heard… heard and the ramifications of such actions on society by said persons. This open letter is written by a young physician by the name of Dr. Roger Starner Jones. His short two-paragraph letter to the White House accurately puts the blame on a “Culture Crisis” instead of a “Health Care Crisis.” Bingo!

Dear Mr. President:

During my shift in the Emergency Room last night, I had the pleasure of evaluating a patient whose smile revealed an expensive shiny gold tooth, whose body was adorned with a wide assortment of elaborate and costly tattoos, who wore a very expensive brand of tennis shoes and who chatted on a new cellular telephone equipped with a popular R&B ringtone.

While glancing over her patient chart, I happened to notice that her payer status was listed as “Medicaid”! During my examination of her, the patient informed me that she smokes more than one pack of cigarettes every day, eats only at fast-food take-outs, and somehow still has money to buy pretzels and beer. And, you and our Congress expect me to pay for this woman’s health care? I contend that our nation’s “health care crisis” is not the result of a shortage of quality hospitals, doctors or nurses. Rather, it is the result of a “crisis of culture” a culture in which it is perfectly acceptable to spend money on luxuries and vices while refusing to take care of one’s self or, heaven forbid, purchase health insurance. It is a culture based in the irresponsible credo that “I can do whatever I want to because someone else will always take care of me”. Once you fix this “culture crisis” that rewards irresponsibility and dependency, you’ll be amazed at how quickly our nation’s health care difficulties will disappear.



Obama-Care Loosing Support

Just as a side-note: Almost no one thought the earth was flat in Columbus’ day. Talk about misinformation… jeez! I wrote Leslie Marshall in the hopes she would forgo such use of non-history in the future:

Just an FYI, almost no one (including who was funding and sending Columbus to explore) believed the earth was flat. People from early Grecian days knew it was round. In other words, you were talking about misinformation and gave a misinformed analogy. Even Stephen Jay Gould said, “there never was a period of ‘flat earth darkness’ among scholars.” I suggest two books on the subject, one in-depth, the other a short chapter. The sorter read in entitled, Not So! Popular Myths About America from Columbus to Clinton. The more in-depth book, Inventing the Flat Earth: Columbus and Modern Historians.

I hope this helps,