Top three insurers reaped $7.3B through their drug middlemen's markups, FTC says
nbcnews.com
nbcnews.com
"The FTC also said these so-called Big Three health care companies — which it estimates administer 80% of all prescriptions in the U.S. — are inflating drug prices “at an alarming rate, which means there is an urgent need for policymakers to address it.”"
These companies have agency and are choosing to act this way.
This beaks the human contract.
$7.3 billion, over 5 years = $1.46 billion per year
Technically this is extra revenue, and for example, taxes are due on it. But let's say it's pure profit. The three involved insurers (CVS health PLUS United Health PLUS Cigna make ~10 billion in profit on revenue of 300 billion)
So this would, generously, mean they make 11.5 billion profit on 300 billion in revenue, and the entire profit is 3% of your health insurance bill, with this representing about 0.5%.
Again, there's the justice aspect. This is not very honest of them, and should be changed. But it's a principle thing ... it won't make any real difference on your bill.
Am I calculating this wrong?
Let’s talk incentives. Pharmacies, insurers, and PBMs (pharmacy benefit managers) are in a tangled drug pricing system. PBMs get rebates from drugmakers for pushing their drugs, but when the PBM and insurer are part of the same company, things get questionable. Suddenly, there’s a clear incentive to favor expensive drugs with bigger rebates, even when cheaper alternatives would work just as well. You’re stuck paying a higher copay and, next year, likely higher premiums too—because, wow, these drugs are pricey! Meanwhile, the insurer isn’t concerned. They’re not covering the full cost of the drug or your copay, and they’re pocketing the rebate. The system works—just not for you.
These are generic drugs, so paying extra for the same amount is not creating any additional value for society, and in the short term this money could have paid for other things. It's a classic destructive enterprise, like putting a chain on a road and charging people a toll without doing any road maintenance.
> it won't make any real difference on your bill
It's actually insane that anyone could presumably finish middle-school math and think this. Just because you divide a number by a sufficiently large other number and arrive at a small number doesn't just mean the impact disappeared or was reduced. There are lots of people in a society. We aggregate or average out things to calculate.
It means you fudged the numbers and arrived at some nonsense instead. Is the education crisis really this bad that this needs explaining to an adult?
Obviously.
By the logic you implement in your comment these companies will have made 0.0005% profit before their 1000% price hikes.
Beyond that you are also ignoring that a lot of these companies are paying themselves these amounts so it’s Hollywood accounting all the way down.
Why spread back of the envelope misinformation like this for these corpos?