How we used to think about medical costs
One of the most popular novels of the 1990s has a telling aside on the topic
I am working on a piece about Michael Crichton, his 1990 novel Jurassic Park, artificial intelligence, and the perils of advanced science (and scientists).
But along the way I wanted to highlight this passage midway through the novel. The visionary behind the park is telling one of his employees why he chose to use genetic engineering to build dinosaurs rather than medicines:
There are forces at work in the marketplace. Suppose you make a miracle drug for cancer or heart disease — as Genentech did.1
Suppose now you want to charge a thousand dollars or two thousand dollars a dose. You might imagine that is your privilege. After all, you invented the drug, you paid to develop and test it; you should be able to charge whatever you wish. But do you really think that the government will let you do that?
No, Henry, they will not.
Sick people aren’t going to pay a thousand dollars a dose for needed medicine — they won’t be grateful, they’ll be outraged. Blue Cross isn’t going to pay it. They’ll scream highway robbery. So something will happen. Your patent application will be denied. Your permits will be delayed. Something will force you to see reason — and to sell your drug at a lower cost.
From a business standpoint, that makes helping mankind a very risky business. Personally, I would never help mankind.
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A modern reader (modern!) can only laugh at this sentiment. Jurassic Park came out in 1990, not 1890, but its dinosaurs seem more real than this view of pharmaceutical or healthcare pricing.
A thousand dollars a dose?
Try a hundred thousand. Try a million.
A miracle drug?
Try a marginally effective drug. Or a drug that hasn’t been proven to work at all in patients, if the disease is bad enough.
Blue Cross isn’t going to pay it?
Blue Cross and every other insurance company will take it like a champ and ask for more, if they don’t want their executives to risk being killed in the street.
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(The original hardcover, from a lost world of computer graphic design)
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Crichton was no fool. The opposite, in fact.
But he obviously believed this explanation would be more than serviceable as an explanation for his villain’s decision to make dinosaurs instead of medicines.
He was right, too. Jurassic Park sold almost 10 million copies in its first three years and spawning a (now endless) movie and theme park bonanza.
These days, though, the idea that drug makers should face any constraints on their pricing is long gone. So is the flip side, that patients have even the slightest responsibility to consider the costs of their treatments (as they would for any other product, including food and shelter).
Instead, we have moved to a privately administered and run but government-backstopped system slowly collapsing under its own weight.
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(I don’t have a government backstop. I only have you.)
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John Hammond, Crichton’s villain, had no interest in risking profits to help mankind.
Crichton’s only mistake was imagining that drug companies might.
Genentech is a real biotechnology company, of course — the first company to use genetic engineering to create medicines. Interestingly, its first approved product, in 1985, was a growth hormone for dwarfism, which arguably is a cosmetic concern.
The line from the excerpt that caught my eye is one that I think has been proven true -- that people would balk at paying a thousand dollars for a miracle drug.
Health insurance has turned into "why should I have to pay anything for my health."
Health insurance should never have covered "everything" (unless you want to spend the money on a policy that covers everything.) Health insurance should be for major expenses -- what I call my "hit by a bus" policy. Just like auto insurance is for collisions, not maintenance.
Practically, my "hit by a bus" policy was cancelled because of Obamacare. I went from paying less than $800/month for my family of seven to over $3,000 a month in 3 years. I cancelled it. I went without insurance for years because there was no way I could pay $3,000 a month and my mortgage and my bills and raise my family. Yes, I was scared that something "bad" would happen and I would be stuck with hundreds of thousands of dollars of medical bills, but I wasn't paying over $36K a year (with a $10K deductible!) for insurance. It would have been nearly $40K before the insurance paid anything (unless I wanted birth control or vaccines or a $50 co-pay well-visit.)
I have my "hit by a bus" policy back because of Trump's first term, and I'm good with that.
Drug companies, medical device companies, healthcare providers, (even the insurance companies)...they all make money keeping us sick. The bureaucracy within these groups feed a hell of a lot of people, and quite nicely.
My daughter works for a cardio clinic. They keep a schedule book at the front desk so different drug or device reps can sign up for DAILY lunch catering for the entire office of 50 people. The rep then has 5 minutes with one of the docs during lunch to pitch some new $1200/dose drug.
Imagine if we went back to a system where people could ask how much something costs and get an actual answer. No, the bureaucracy in the insurance side of the equation won't let that happen either. Insurance is just a discount program now, and they force providers to jack up prices 10x so they can give us that 90% discount so we have to have the product.
Remember, the food industry is busy destroying our nutrition and health by limiting options to anything remotely healthy or appropriately caloric.
I don't know all the answers, and government run systems is not the answer, but nobody involved in the schemes is going to lead us out of this quagmire, that I am sure of.