Category: Government

Warren Buffett Said Obamacare Is “Two Thousand Pages of Nonsense”

Our health system is a mess. The latest major effort to “fix” it was Obamacare (the so-called “Affordable Health Act”)–two thousand pages cobbled together by lobbyists, deep state staffers, and legislative log-rolling that resulted in high costs, opaque rules, perverse incentives, and unintended consequences.

(p. A15) Medicare doles out reimbursements for services that may or may not be real, helpful to the recipient, or reasonably priced. It’s very hard to know. Congress doesn’t want doctors and hospitals back home closely policed. Result: Medicare controls spending, perversely, with blanket low reimbursement rates for necessary and unnecessary services alike.

. . .

. . . government programs are born in chaos—with congressional horse trading and payoffs to appease interest groups. That’s why government programs make so little organizational sense. Remember when we had to pass Obamacare to find out what was in it? (“Two thousand pages of nonsense,” said Warren Buffett at the time. “The problem is incentives.”)

For the full commentary see:

Holman W. Jenkins, Jr. “Business World; Elon Musk’s Useful Experiment.” The Wall Street Journal (Wednesday, Feb. 12, 2025): A15.

(Note: ellipses added.)

(Note: the online version of the commentary has the date February 11, 2025, and has the title “Business World; DOGE Is Elon Musk’s Useful Experiment.” In both the online and print versions, the phrase “born in chaos” appears in italics for emphasis.)

Obamacare (the So-Called “Affordable Care Act”) Has “A Complex, Often Byzantine, Eligibility and Enrollment System”

Obamacare, Medicare, and Medicaid are supposed to help the least-well-off. But the least-well-off are exactly those who are least able to navigate the red-tape of the bureaucracy. Signing up for Amazon Prime was far simpler than signing up for Medicare. (My source is personal experience.)

(p. A18) The Trump administration on Friday said that it would drastically cut annual spending on so-called navigator groups that help Americans enroll in Obamacare health insurance plans, from around $100 million to just $10 million.

. . .

The Trump administration on Friday [Feb. 14, 2025] noted that health insurance navigators enrolled only 92,000 people on the Affordable Care Act’s marketplaces last year, or less than 1 percent of plan participants, amounting to more than $1,000 per enrollment. During Mr. Trump’s first term, with funding levels similar to the one announced Friday, navigators enrolled people at “a far more efficient $211 per enrollment,” the Centers for Medicare and Medicaid Services said in its announcement.

. . .

“They are primarily there to help people navigate a complex, often byzantine, eligibility and enrollment system,” said Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms.

For the full story see:

Noah Weiland. “Administration Will Cut Funds For Navigators Of Obamacare.” The New York Times (Saturday, February 15, 2025): A18.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the date Feb. 14, 2025, and has the title “Trump Shrinks Funds for Navigators Who Help Americans Enroll in Obamacare.”)

Feds Set Up Perverse Incentives in Healthcare; Health Insurance Companies Do Not Rise Above the Incentives

Vertical integration is admirable when it results in efficiencies of production that in the end benefit the consumer. But the federal government has set up an opaque healthcare system with unintended perverse incentives for health insurance firms to vertically integrate–where the firms own pharmacies, pharmacy benefit managers (P.B.M.s), hospitals, and doctors practices. Reimbursement rates for drugs are set by P.B.M.s. So the insurance company’s in-house P.B.M. reimburses its in-house pharmacy generously, but reimburses outside independent pharmacies stingily–often so stingily that the outside independent pharmacies go bankrupt, increasing the customer flow to the insurance company’s in-house pharmacy. Consumers do not benefit.

I mainly blame the government. But I do not praise the insurance firms. Libertarian philosopher Robert Nozick in Anarchy, State, and Utopia argued that profit maximization was ethical and served the common good, as long as it was done subject to ethical side-constraints. The three big health insurance firms, and especially United Health, have NOT set a conspicuous example of following Nozick’s advice.

What a pitiful, frustrating, inefficient, unfair mess.

(p. D3) The small-town drugstore closed for the last time on a clear and chilly afternoon in February. Jon Jacobs, who owned Yough Valley Pharmacy, hugged his employees goodbye. He cleared the shelves and packed pill bottles into plastic bins.

Mr. Jacobs, a 70-year-old pharmacist, had spent more than half his life building his drugstore into a bedrock of Confluence, Pa., a rural community of roughly 1,000 people. Now the town was losing its only health care provider.

Obscure but powerful health care middlemen — companies known as pharmacy benefit managers, or P.B.M.s — had destroyed his business.

This has been happening all over the country, a New York Times investigation found. P.B.M.s, which employers and government programs hire to oversee prescription drug benefits, have been systematically underpaying small pharmacies, helping to drive hundreds out of business.

The pattern is benefiting the largest P.B.M.s, whose parent companies run their own competing pharmacies. When local drugstores fold, the benefit managers often scoop up their customers, according to dozens of patients and pharmacists.

The benefit managers’ power comes from two main sources. First, the three biggest players — CVS Caremark, Express Scripts and Optum Rx — collectively process roughly 80 percent of prescriptions in the United States. Second, they determine how much drugstores are reimbursed for medications that they provide to patients.

Pharmacies buy those drugs from wholesalers, in the hope that P.B.M.s will reimburse them at a profit when the medications are provided to patients. But the largest benefit managers have strong incentives to set those rates as low as possible. A key reason: They make money in part by charging employers more for certain drugs than what the P.B.M.s pay pharmacies for them.

P.B.M.s frequently pay the pharmacies at rates that do not cover the costs of the drugs, according to more than 100 pharmacists around the country and dozens of examples of insurance paperwork and legal documents.

To take just one example: For a month’s supply of the blood thinner Eliquis, several pharmacists in different states said, the big three P.B.M.s routinely paid them as much as $100 less than what it cost the pharmacies to buy the medication from a wholesaler.

By contrast, the P.B.M.s sometimes pay their own pharmacies more than what they pay local drugstores for the same medications.

Independent pharmacies are powerless to fight back. As the unprofitable transactions pile up, some are unable to stay afloat.

. . .

(p. 26) The evidence that P.B.M.s pay their own pharmacies more than independent drugstores for the same medications is not just anecdotal. One study, paid for by a pharmacy association, found that the markup that P.B.M.s were charging on brand-name drugs was 35 times higher when the drugs were sold through their own mail-order pharmacies than when the drugs were sold by independent drugstores.

Government studies have identified a similar phenomenon.

Those extra costs are borne by taxpayers or employers and can be passed on to patients in the form of higher premiums — at odds with the benefit managers’ mandate of lowering drug costs.

. . .

(p. 27) In Mississippi, . . ., the state board that regulates pharmacies said this month that Optum Rx paid independent pharmacies less than it paid itself to dispense generic drugs. On a single day in 2022, Optum Rx paid itself 22 times what it paid six independent drugstores to fill generic Prilosec, a heartburn medication. Optum Rx declined to comment on the audit.

For the full story see:

Reed Abelson and Rebecca Robbins. “Powerful Firms Driving Out Local Pharmacies.” The New York Times, First Section (Sunday, October 20, 2024): 1 & 26-27.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the story has the date Oct. 19, 2024, and has the title “The Powerful Companies Driving Local Drugstores Out of Business.” Where the wording of the two versions differs (sometimes considerably), the quotes above follow the online version.)

The academic article co-authored by Evans is:

Wu, Lingfei, Dashun Wang, and James A. Evans. “Large Teams Develop and Small Teams Disrupt Science and Technology.” Nature 566, no. 7744 (Feb. 2019): 378-82.

Otherwise “Savvy Consumers,” Mistakenly Trusting the F.D.A., Let Down Their Guard on Drug Quality

(p. 6) In the fall of 2012, a young consumer safety officer at the Food and Drug Administration volunteered for a job that few of his colleagues wanted: inspecting the Indian manufacturing plants that make many of America’s low-cost generic drugs.

In a world of drab auditors, Peter Baker stood apart.

. . .

America needs generic drugs. They make up 90 percent of the American drug supply. Without them, every large-scale government health program — the Affordable Care Act, Medicare Part D, the Veterans Health Administration, charitable programs for the developing world — would be unaffordable.

. . . what Mr. Baker uncovered in six years of doing foreign inspections exposed the dangerous compromises behind the production of generic drugs, and the F.D.A.’s limits as a global regulatory agency.

. . .

. . ., first in India and then in China, he uncovered fraud or deceptive practices in almost four-fifths of the drug plants he inspected. Some of the plants used hidden laboratories, secretly repeated tests and altered results to produce fake data that fundamentally misrepresented drug quality, then submitted that data to regulators.

. . .

The F.D.A. declares that “Americans can be confident in the quality of the products the F.D.A. approves.” Because of that reassurance, even savvy consumers — the sorts of people who are well versed in the quality distinctions between Velveeta and artisanal Cheddar — don’t think about how and where their drugs are made when they head to a pharmacy. Their only question usually is: Can they afford, or will their insurance cover, the drug being dispensed?

The F.D.A., which approved more than 1,000 new generic drug products last year, faces a vast challenge in safeguarding these medications. Nearly forty percent of all our generic drugs are made in India. Eighty percent of active ingredients for both our brand and generic drugs come from abroad, the majority from India and China. America makes almost none of its own antibiotics anymore.

. . .

In the United States, F.D.A. investigators typically show up unannounced to inspect plants. But overseas, the F.D.A. has opted to announce the vast majority of its foreign inspections in advance. Overseas plants even “invite” the F.D.A. to inspect; the investigators then become the company’s guests and agree on an inspection date in advance. Plant officials have served as hosts and helped to arrange local travel.

The F.D.A. has defended this system as the best way to ease the complex logistics of getting visas and ensuring access to the plants. But the resulting inspections are largely “staged,” say a number of F.D.A. staff members. With advance notice and low-cost labor, the plants can make anything look like anything. “You give them a weekend, they’ll put up a building,” as one F.D.A. investigator put it.

. . .

And there was an additional negative consequence to the F.D.A.’s system of advanced notice. With the companies serving as travel agents, F.D.A. investigators spoke of inappropriate perks: hotel upgrades, for which the investigators would never see a bill; golf outings, massages, and trips to the Taj Mahal. The result was what some F.D.A. employees referred to as “regulatory tourism.” The F.D.A. said in response that “any allegations of improper conduct by F.D.A. personnel are investigated.”

A new head of the F.D.A.’s India office, Altaf Lal, arrived in mid-2013. To tame the twin problems of company fraud and compromised investigators, Mr. Lal made a novel pitch to agency officials. He proposed a pilot program to make all inspections in India either on short notice or unannounced. By December 2013, he had a green light. The results were instantaneous.

In January 2014, the F.D.A. was planning an unannounced inspection at a plant in northern India on a Monday. Fearing that plant officials had heard they were coming, Mr. Baker and his colleague went a day early, unannounced. They proceeded to the quality control laboratory, expecting it to be quiet on Sunday morning. Instead, they were stunned to see a hive of activity. Dozens of workers hunched over documents, backdating them. On one desk, Mr. Baker found a notebook listing the documents the workers needed to fabricate in anticipation of the inspectors’ arrival. There were Post-it notes stuck to some surfaces, noting what data to change.

In large swaths of India’s generic drug industry, the pilot program uncovered a long-running machinery dedicated not to producing perfect drugs but to producing perfect data. At one plant, Mr. Baker went straight to the microbiology laboratory and found the paperwork for testing the sterility of the plant in perfect order: microbial limits testing, biological indicators, all the samples with perfect results. Yet most of the samples didn’t exist. The plant was testing almost nothing. The laboratory was a fake.

At the vast majority of the unannounced inspections, the investigators found things the plants no longer had time to fix: Infestations of birds and insects. A pile of critical manufacturing records, tossed in a trash bin. An employee bathroom near a sterile manufacturing area in one plant lacked drainage piping, so urine puddled directly onto the floor.

(p 7) Under the pilot program, the rate of inspections resulting in the F.D.A.’s most serious finding, “official action indicated,” increased by almost 60 percent, according to my own analysis of F.D.A. records. Before long, drugs from numerous plants in India had been banned from the United States market. Given these results, it seemed logical for the F.D.A. to make unannounced inspections or short notice the norm around the world. But in July 2015, F.D.A. officials decided to terminate the program and return to largely pre-announced inspections in India. When asked why, the agency declined to explain its reasoning and stated that “after evaluation of the pilot a decision was made to discontinue the pilot.”

For the full essay see:

Katherine Eban. “Can You Trust Generic Drugs?” The New York Times Sunday Opinion Section (Sunday, May 12, 2019 [sic]): 6-7.

(Note: ellipses added.)

(Note: the online version of the essay has the date May 11, 2019 [sic], and has the title “Americans Need Generic Drugs. But Can They Trust Them?” In the original of both print and online versions, the word “anything” is in italics both times it appears. In the quotes above where the online and print versions differ, the quotes follow the somewhat more detailed online version.)

The essay quoted above is adapted by Eban from her book:

Eban, Katherine. Bottle of Lies: The inside Story of the Generic Drug Boom. New York: Ecco, 2019.

F.D.R.’s Wage Controls Created a Wedge Between Patients and Doctors, With Awful Unintended Consequences

Under F.D.R.’s wage controls, firms competed for workers through perks, like healthcare benefits, since they could not legally compete by offering higher wages. That resulted in the first middlemen (in this case firms) between the customers (patients) and the suppliers (doctors). The result of adding the middlemen, and also adding a variety of regulations, is a “market” that is opaque, inefficient, and slow to innovate. Rather than drain the swamp, the response has been to add more middlemen (Medicare, Medicaid, Obamacare, and Pharmacy Benefit Managers, aka PBMs), that have only thickened the mire.

(p. B11) The roots of today’s fragmented system can be traced back to a quirk in U.S. history. Unlike most high-income countries, which created centralized government systems to ration care in the 20th century, the U.S. followed a different path shaped by historical circumstances. During World War II, wage controls prompted employers to offer health insurance as a tax-free benefit to attract workers.

Medicare and Medicaid, followed decades later by Affordable Care Act exchanges, were added over time to cover those who couldn’t get insurance through their job, creating a highly decentralized and convoluted system.  . . .

. . . the pressure to increase their earnings means insurers have looked for ways to overbill the government and skimp on patient care, always staying a step ahead of regulators. In recent years, they have become vertically integrated conglomerates, controlling doctors, pharmacies and payment-processing systems.

. . .

One of the most frustrating aspects of the system is a tactic called prior authorization, a process requiring providers to obtain insurer approval before delivering certain services. While that might be disagreeable, there is little public data on how often insurers deny care. This lack of transparency allows insurers to wield prior authorization aggressively, particularly when expensive treatments are recommended.

For the full commentary see:

David Wainer. “How to Fix Health Insurance.” The Wall Street Journal (Saturday, Dec. 21, 2024): B11.

(Note: ellipses added.)

(Note: the online version of the commentary has the date December 20, 2024, and has the title “How American Health Insurance Got So Infuriating.”)

Almost $2 TRILLION in Compliance Costs for Biden’s 1,213 New Regs over 10 Years

I am queasy about Trump’s tariffs but hopeful about his deregulation. Besides attacks on freedom of speech, regulations are currently the most binding constraint on innovation and flourishing in the U.S. I hope that the tariffs will be a bargaining ploy that in the long run will result in less protectionist policies for both us and our trading partners. But even if my hope is dashed and higher tariffs become a sustained policy, I believe (but cannot prove) that heavy regulations are the greater evil.

(p. A13) By the time Mr. Biden left office, his administration had issued 1,213 new regulations, according to the American Action Forum. The Washington think tank tracks federal regulations, their cost and added paperwork hours on its Regulation Rodeo website. Mr. Biden’s red tape will result in $1.9 trillion in compliance costs over the first 10 years the new rules are in effect, according to AAF.

By comparison, in Mr. Trump’s first term, his administration issued slightly more regulations—roughly 1,340—but many reduced costs to businesses and consumers. In total, they cost only $64.7 billion, less than 4% of Mr. Biden’s total.

Mr. Biden’s regulatory regime was far more expensive than even Barack Obama’s. Over two terms, the Obama administration issued 2,997 regulations, at a price tag of $870.5 billion. That’s less than 46% of the regulatory cost Mr. Biden racked up in four years.

For the full commentary see:

Karl Rove. “Trump Sets Out to Break Burdensome Rules.” The Wall Street Journal (Thursday, Jan. 23, 2025): A13.

(Note: the online version of the commentary has the date January 22, 2025, and has the same title as the print version.)

Dog Health Insurance Is Simpler and More Transparent Than Human Health Insurance

Why is dog health insurance simpler and more transparent than human health insurance?

Dog healthcare is mostly provided in a true marketplace, while human healthcare is provided in a hyper-regulated mishmash of market and government. Because there are more regulations and more risks of malpractice for human healthcare, more and more providers work for large healthcare firms. It’s much easier to have a small independent veterinary practice than a small independent human healthcare practice. So we find more competition in veterinary practices, resulting in prices that are lower and more transparent.

For humans the mega-providers gain with lack of transparency. Insurers are vertically integrated with hospitals, doctor practices, and obscure middlemen called Pharmacy Benefit Managers (PBMs). I would like to confirm my strong guess: few dog health insurance firms own veterinary practices.

(p. A24) I rushed around the patient as he lay motionless with his eyes closed in the emergency room. He was pale and sweaty, his T-shirt stained with vomit. You didn’t have to be a health-care worker to know that he was in a dire state. The beeps on the monitor told me his heart rate was dangerously slow. I told the man that he was going to be admitted to the hospital overnight.

After a pause, he beckoned me closer. His forehead furrowed with concern. I thought he would ask if he was going to be OK or if he needed surgery — questions I’m comfortable fielding. But instead he asked, “Will my insurance cover my stay?”

This is a question I can’t answer with certainty. Patients often believe that since I’m part of the health-care system, I would know. But I don’t, not as a doctor — and not even when I’m a patient myself. In the United States, health insurance is so extraordinarily complicated, with different insurers offering different plans, covering certain things and denying others (sometimes in spite of what they say initially they cover). I could never guarantee anything.

. . .

The killing of Brian Thompson, the chief executive of UnitedHealthcare, the country’s largest health insurer, has reignited people’s contempt for their health plans. It’s unknown if Mr. Thompson’s tragic death was related to health care, and the gleeful responses have been horrifying. But that reaction, even in its objectionable vitriol, matters for how it lays bare Americans’ deep-seated anger toward health care. Around the country, anecdotes were unleashed with furor.

Among these grievances is the great unknown of whether a treatment recommended by a doctor will be covered. . . .

Unsurprisingly, despite my platitudes, my patient did worry. Instead of resting on the stretcher, he and his wife began calling his insurance company. To keep him from leaving, I tried to be more persuasive, even though I didn’t know what kind of health plan he had: “I’m sure your insurance will pay. I’ll document carefully how medically necessary this admission is.” I added that social workers and other advocates could also assist in sorting out his insurance once he was admitted. And worst-case scenario, if they couldn’t, I crossed my fingers that the hospital’s charity care would help.

I said what I could to get him to stay, but I understood why he wanted to be certain. The average cost of a three-day hospital stay is $30,000.

. . .

My one family member with solid insurance is my dog. He got elective surgery recently, and I was astounded by the straightforward nature of his insurance. Once we meet the deductible, everything is simply covered by 80 percent. This is clearly described in a packet I received when I first signed him up. It’s an imperfect comparison to insurance for humans — I pay in full first, then get reimbursed — but it’s incredible to think that insurance for pets and possessions is easier to navigate and more consumer-friendly than insurance for people.

For the full commentary see:

Helen Ouyang. “What I Know About Americans’ Anger at Health Care.” The New York Times (Thursday, December 12, 2024): A24.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Dec. 8, 2024, and has the title “What Doctors Like Me Know About Americans’ Health Care Anger.”)

Mainstream Approach to Alzheimer’s Is Built on Doctored Data

Widespread fraud among highly credentialled, and richly financed, medical researchers results in fewer and slower cures. Many millions of dollars are required to bring a major drug to market, much of it due to the hyper-costly and mandated Phase 3 randomized double-blind clinical trials. There are more good ideas than can received such financing. The intense competition creates a temptation to cut various corners, as the book review quoted below emphasizes.

Aaron Rothstein, the reviewer of Piller’s Doctored book, emphasizes the sad revelation of widespread fraud. But in an earlier entry on this blog, I quoted an essay of Piller’s that suggests that Piller also has something substantive to say about how to cure Alzheimer’s. The current system is broken, vastly reducing the diversity of approaches to curing important diseases like Alzheimer’s. Piller suggests that the ruling clique among Alzheimer’s researchers may in effect be silencing other approaches that could bring us a better faster cure.

Rothstein downplays this substantive aspect of Piller’s book. (It probably reflects too much cynicism on my part to wonder how close Rothstein himself is to the ruling clique?)

I look forward to reading Piller’s book, both for what it has to say about widespread fraud and for what it has to say about Alzheimer’s. Doctored is scheduled for release in a few days, on February 4, 2025.

(p. C9) In 2023 my colleagues and I were preparing to enroll patients in a clinical trial of a new drug that promised to mitigate brain damage in stroke victims. The National Institutes of Health, a governmental organization that funds billions of dollars of research every year, had committed $30 million to the trial. The drug was, in part, the brainchild of Berislav Zlokovic, a neuroscientist at the University of Southern California.

Then, suddenly, the NIH paused the trial. Charles Piller, an investigative journalist for Science magazine, had published an article alleging that multiple papers from Dr. Zlokovic, including many supporting the new drug, contained seemingly altered data. Though Dr. Zlokovic disputed some of the concerns, this news stunned us. We might have put patients at risk, while offering groundless hope. A fraud of the sort Mr. Piller described would violate the basic ethics of clinical trials and overturn the presumption of trust on which the practice of medicine relies.

I thought of this episode often as I read Mr. Piller’s “Doctored,” which brings together his long-form journalism about neuroscience-research malfeasance, including that alleged of Dr. Zlokovic. Though the book sometimes attempts to do too much—diving into scientific theories about the causes of Alzheimer’s, for example—its strength lies in Mr. Piller’s dramatic and damning investigation of scientific transgression. The author’s reporting is largely based on the research of Matthew Schrag, a Vanderbilt neurologist who uses technical expertise to identify episodes of misconduct.

. . .

Mr. Piller thoroughly double checks Dr. Schrag’s work. He asks researchers and image analysts to confirm Dr. Schrag’s findings, and they concur.

. . .

“Doctored” demonstrates how some of the most accomplished and elite scientific gatekeepers may have lied, cheated, squandered trust and endangered lives. How did this happen? The temptations of ego and fame perennially entice humans, but our system of peer review, grant funding and administrative oversight is meant to check these temptations.

The scientific publication process does not contain all the safeguards one might expect. Peer reviewers do not always see the original data from authors. Thus they trust that numbers or images in a manuscript accurately reflect the experiment. And determining whether an image is fraudulent requires skilled image analysis that peer reviewers may not possess. Furthermore, digging for such mistakes is costly: It takes time away from other research, from teaching, from seeing patients and from home life.

What can be done about this? Making raw data available to peer reviewers and giving them time to review articles could help. Mr. Piller suggests a less professionally incestuous relationship between researchers, the Food and Drug Administration, the NIH and pharmaceutical companies could reduce favoritism in funding. A major overhaul of the finances and administrative swell of our system would help, as well.

For the full review see:

Aaron Rothstein. “Medical Promise Betrayed.” The Wall Street Journal (Saturday, Jan. 25, 2025): C9.

(Note: the online version of the review has the date January 24, 2025, and has the title “‘Doctored’ Review: Medical Promise Betrayed.”)

The book under review is:

Piller, Charles. Doctored: Fraud, Arrogance, and Tragedy in the Quest to Cure Alzheimer’s. New York: Atria/One Signal Publishers, 2025.

The Free Market Gets a Bum Rap When Blamed for High and Chaotic Drug Prices

The Law of One Price in economics says that in the absence of transaction costs, similar goods will have the same price. If the price of a Tesla truck is $100,000 in Omaha and $200,000 in Des Moines, some enterprising arbitrager will buy a few in Omaha for $100,000, and sell them for slightly less than the going price in Des Moines. As the arbitrager arbitrages, the price of the truck in Omaha will converge with that in Des Moines, a close-enough confirmation of the Law of One Price. If this does NOT happen then either transaction costs are very high or we are not dealing with a free market. As the article quoted below shows, prices of medical drugs vary widely and persistently. Medical drugs are NOT sold in a free market. Arbitrage is NOT allowed. Who can sell to whom is highly regulated. To blame the free market for high and chaotic drug prices is an outrageous bum rap.

(p. A1) The cost of prescription drugs in the U.S. isn’t like the tabs for other products. The price for a single medicine can range by thousands of dollars depending on the drug plan.

It is a symptom of America’s complicated—and costly—system for paying for medicines.

Medicare is paying wildly different prices for the same drug, even for people insured under the same plan.

. . .

Take commonly used generic versions of prostate-cancer treatment Zytiga. They have more than 2,200 prices in Medicare drug plans. The generics ring in at roughly $815 a month in northern Michigan, about half of what they cost in suburban Detroit, while jumping to $3,356 in a county along Lake Michigan, according to a recent analysis of Medicare data.

The same is true with other popular medicines such as psoriasis treatment Otezla, blood thinner Xarelto and generic versions of the cancer drug Tykerb, known as lapatinib, which has 460 prices, according to the analysis by 46brooklyn Research, a nonprofit drug-pricing analytics group.

. . .

(p. A2) The reason for the huge price differences: America’s complicated drug-reimbursement system, which uses middlemen to negotiate prices.

. . .

Not only is it confusing and costly for seniors, the wide range of drug prices costs Medicare. The program, which farms out drug-price negotiations to the firms, pays tens of millions of dollars extra for prescriptions.

“It’s a broken system. It’s really confusing for seniors. It’s really confusing for providers. It’s costing the government way too much,” said Dared Price, who owns eight pharmacies in the Wichita, Kan., area, and complains the stores are underpaid.

The middlemen [are] known as pharmacy benefit managers or PBMs, . . .

. . .

“The inconsistent and disconnected way that PBMs arrive at drug prices makes Medicare look less like a trustworthy marketplace intended to yield low, sober prices and more like a casino,” said 46brooklyn Chief Executive Antonio Ciaccia.

. . .

To find out the prices that the big three and other PBMs negotiated, 46brooklyn looked at what standalone Part D and Medicare Advantage plans say they will reimburse pharmacies on behalf of Medicare for branded and generic drugs during the second quarter. They reported the prices that Medicare would pay.

Some 61 drugs had monthly prices that diverged by at least $30,000, including a $223,037 range for a drug, called nitisinone and sold under the brand name Orfadin, treating a rare metabolic disorder. About 300 medicines had more than 1,000 monthly prices when the difference between the lowest price and the highest was more than $1,000.

It didn’t matter that the same PBM was negotiating the prices. Prices varied widely among health plans, even if a plan used the same PBM.

The 30 mg dose of Otezla had among the most different prices among branded medicines. It had 633 different prices across health plans that used Express Scripts, while Optum Rx carried 569 different prices and Caremark had 431.

The largest PBMs notched some of the biggest number of different prices for lower-priced copies of Zytiga, which is sold as a generic under the drug’s chemical name abiraterone acetate.

Caremark has logged 643 different prices for Zytiga generics, while Express Scripts has 500 and Optum Rx carries 445. By comparison, Capital Rx, a PBM with fewer beneficiaries than the three largest firms, had two prices.

Capital Rx had few prices—either $106 or $117—because it pegged them to the benchmark that the U.S. government uses to calculate drug costs, called the National Average Drug Acquisition Cost, which is based on a survey of retail pharmacy prices, said Chief Executive Anthony Loiacono. Capital Rx’s prices were much less than the sums that many other health plans reported.

“We don’t make money on drug spend, and I do not set prices. I use what CMS gives us as the starting point,” Loiacono said.

For the full story see:

Jared S. Hopkins and Josh Ulick. “Medicare Payouts Vary Widely for Same Drug.” The Wall Street Journal (Wednesday, Nov. 27, 2024): A1-A2.

(Note: ellipses, and bracketed word, added.)

(Note: the online version of the story has the date November 26, 2024, and has the title “Same Drug, 2,200 Different Prices.” Where there is a slight difference in wording between the print and online versions, the passages I quote above follow the online version.)

The Last Lonely Night Watchman Blows His Horn, “Signaling That All Is Well”

When I was a graduate student in philosophy and economics the exciting new read for the liberty-inclined was Robert Nozick’s Anarchy, State, and Utopia. I was at first rejected from the philosophy graduate program at the University of Chicago because I had the audacity to praise Ayn Rand in my application essay. The rejection decision was eventually reversed. But imagine my reaction when then-young Harvard philosophy professor Robert Nozick had the guts to write a paper evaluating the philosophy of Ayn Rand. My memory is that he did not praise all that is Rand. But that is not the point; the point is that Nozick took Rand seriously. Regardless of the contents of his main book, Nozick was my hero.

The book is pretty good too. I still ponder much that Nozick pondered. Should we eat animals that think and feel? Should a libertarian society approve of people who voluntarily join an authoritarian community? If we could plug ourselves into a machine that would give us the false illusion that all is well, should we?

Not everyone I admired totally admired Nozick’s book. I remember reading (or hearing) Milton Friedman say that it was good but “too Talmudic.” (I assume that Friedman meant that there was too much back and forth nit-picking on minor issues, and too little dispositive empirical evidence on big issues.)

The main constructive section of Nozick’s book defends the libertarian’s minimal state, what Nozick memorably calls “the night-watchman state”–the fundamental justifiable function of government is to act as a conscientious night watchman. (Today many who call themselves “libertarians” are anarchists which is why I now sometimes call myself a “classical liberal.”) (For fans of The Lord of the Ring: I think of the Rangers, the unappreciated protectors of the Hobbits, as kin to night watchmen.)

Nozick solidified the heroic image of the night watchman going about his job.

(p. A11) Mr. Stein, a journalist and editor for BBC Travel, has globetrotting in his veins, but this book is much more than a travelogue.  . . .  . . . under the drizzle of a wet November, he climbs 14 stories to the belfry of a Swedish church with Scandinavia’s last night watchman and listens to the watchman’s call, on a 4-foot-long copper horn, signaling that all is well.

. . .

In reading about the night watchman, alone in the dark tower above Ystad, along Sweden’s southern coast, I felt the wind and rain, I awed at the sacrifice, I understood the power of tradition. Those who listen to his horn night after night, even cracking open their windows in subzero temperatures for the comfort of its lonely bellow, know that the world would be different without it. It would be poorer, less a home to mankind.

. . .

Mr. Stein’s great gift—his sensitivity and his dedication to capturing joy and hope, however fleeting—is worth giving to others.

For the full review see:

Brandy Schillace. “Bookshelf; The Great Chain Of Humanity.” The Wall Street Journal (Friday, Jan. 3, 2025): A11.

(Note: the online version of the review has the date January 2, 2025, and has the title “Bookshelf; ‘Custodians of Wonder’: The Great Chain of Humanity.”)

The book under review is:

Stein, Eliot. Custodians of Wonder: Ancient Customs, Profound Traditions, and the Last People Keeping Them Alive. New York: St. Martin’s Press, 2024.

Nozick’s book, mentioned in my introductory comments, is:

Nozick, Robert. Anarchy, State, and Utopia. New York: Basic Books, Inc., 1974.

To Kill a Dam, Environmentalist “Scientists” Lied About the Existence of the So-Called “Snail Darter”

In the 1970s the building of a dam in Tennessee was delayed because environmentalists claimed that its construction would threaten the extinction of a small fish they called the “snail darter.” Now fish biologists have established that there is no snail darter. The fish previously identified as a “snail darter” has the DNA of a small fish called a “stargazing darter” which was not, and is not, endangered.

A co-author of a new study says that this was no innocent mistake.

Dr. Near, . . . a professor who leads a fish biology lab at Yale, and his colleagues report in the journal Current Biology that the snail darter, Percina tanasi, is neither a distinct species nor a subspecies. Rather, it is an eastern population of Percina uranidea, known also as the stargazing darter, which is not considered endangered.

Dr. Near contends that early researchers “squinted their eyes a bit” when describing the fish, because it represented a way to fight the Tennessee Valley Authority’s plan to build the Tellico Dam on the Little Tennessee River, about 20 miles southwest of Knoxville.

“I feel it was the first and probably the most famous example of what I would call the ‘conservation species concept,’ where people are going to decide a species should be distinct because it will have a downstream conservation implication,” Dr. Near said.

In other words environmentalist “scientists” deliberately lied in order to promote their political agenda of cutting energy production.

The New York Times article quoted above is:

Jason Nark. “How a Mistaken Identity Halted a Dam’s Construction.” The New York Times (Sat., Jan. 4, 2025): A13.

(Note: ellipsis added.)

(Note: the online version of The New York Times article was updated Jan. 4, 2025, and has the title “This Tiny Fish’s Mistaken Identity Halted a Dam’s Construction.”)

The academic paper co-authored by Near, that Nark summarizes in The New York Times article mentioned and cited above is:

Ghezelayagh, Ava, Jeffrey W. Simmons, Julia E. Wood, Tsunemi Yamashita, Matthew R. Thomas, Rebecca E. Blanton, Oliver D. Orr, Daniel J. MacGuigan, Daemin Kim, Edgar Benavides, Benjamin P. Keck, Richard C. Harrington, and Thomas J. Near. “Comparative Species Delimitation of a Biological Conservation Icon.” Current Biology. Published online on Jan. 3, 2025.