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  • Price Fixing Causes Greek Medicine Shortage

    January 12, 2012 12:21 PM

    Greece is rapidly degenerating into third-world status. The UK's Daily Mail reports:

    Youngsters are being dumped by their parents who are struggling to make ends meet in what is fast becoming the most tragic human consequence of the Euro crisis. It comes as pharmacists revealed the country had almost run out of aspirin, as multi-billion euro austerity measures filter their way through society.

    If you only read this much of the article, you would assume that the country’s “austerity measures" are responsible for the medicine shortage, but if you’ve ever opened an economics textbook, you’d know this can’t be the case. Shortages occur when prices aren’t able to readjust to higher demand. Why aren’t prices able to adjust? Keep reading.

    Further evidence of Greeks feeling the pinch of austerity measures is the lack of aspirin and other medicines now available in the country.

    Actually, that’s more inaccurate information. Keep reading further.

    Pharmacists are struggling to stock their shelves as the Greek government, which sets the prices for drugs, keeps them artificially low. This means that firms are turning to sell the drugs outside of the country for a higher price - leading to stock depletion for Greeks. Mina Mavrou, who runs one of the country's 12,000 pharmacies, said she spent hours each day pleading with drug makers, wholesalers and colleagues to hunt down medicines for clients. And she said that even when drugs were available, pharmacists often must foot the bill up front, or patients simply do without.

  • Obamacare Causes Layoffs in Medical Device Industry, Harms Medical Innovation

    January 3, 2012 6:50 PM

    Ramesh Ponnuru writes about the layoffs and lost jobs resulting from Obamacare's new tax on medical devices at Bloomberg News:

    A year from now, the federal government will start collecting a new tax on medical devices from tongue depressors to imaging machines, thanks to the sweeping health-care overhaul that Democrats enacted in the spring of 2010. People in the industry say it’s already having an effect.

    In November, citing the new tax, Stryker Corp. (SYK), whose products include artificial hips and knees, announced that it would let go about 1,000 of its workers. Earlier last year, Covidien Plc (COV), maker of surgical instruments, said it would lay off 200 workers in the U.S. and move production to Costa Rica and Mexico. It, too, cited the tax.

    Other companies in the field have announced similar measures -- or plans to expand production overseas but not in the U.S. -- without mentioning the tax. The sluggish economy is clearly part of the explanation, but the medical-devices industry had been a relative bright spot within U.S. manufacturing, losing only 1.1 percent of its employees during 2007-2008 while manufacturing as a whole lost 4.8 percent. A study done for AdvaMed, a trade association for the industry, claims the tax could ultimately cost more than 45,000 jobs.

    Medical-device companies employ more than 400,000 Americans. Their wages are higher than the national average. The U.S. is a net exporter of medical devices.

    The tax will change these numbers for the worse. It will be levied at 2.3 percent of sales; on average, profits make up less than 4 percent of sales in the industry. The AdvaMed study concludes, “The new 2.3 percent excise tax will roughly double their total tax bill and raise the average effective corporate income tax rate to one of the highest effective tax rates faced by any industry in the world.” . . .Richard S. Foster, the Medicare chief actuary, has estimated that if the tax is passed on to consumers it will raise national-health costs by $18.2 billion in 2018.

  • Obamacare Stifles Job Creation, Causes Layoffs

    December 28, 2011 2:17 PM

    At Bloomberg News, Andrew Puzder, CEO of CKE Restaurants, Inc., explains how the 2010 healthcare law is preventing jobs from being created and resulting in layoffs.

    For example, Puzder notes, CKE Restaurants, which operates Hardee's and Carl's Jr. restaurants, “will have to cut spending on new restaurant construction," in order to “offset higher health-care expenses," even though "building new restaurants is how" the company creates jobs.  Puzder argues that the increase in the company's healthcare costs will “more than consume" the amount it "spent on new restaurant construction last year, leaving nothing for growth."  It “will also need to reduce" its "capital spending," even though such spending creates jobs and enables the restaurant company to improve its infrastructure and maintain its business. Thus, its “ability to create new jobs could vanish."

    Puzder also points to the similar situation of "Grady Payne, chief executive officer of Connor Industries Inc., a supplier of cut lumber and assembled wood products" with 450 employees, who has laid out the unpleasant options facing "his company under the health-care law, each of which would cost $1 million or more,"  which is "'more than the company makes.' [Payne] concluded that his company’s goals have turned “from ‘hire-and-grow’ to ‘cut-and- survive.’”

    Puzder also documents the complaints of Victoria Braden, the president and CEO of Braden Benefits Strategies Inc., "a corporate employee-benefits adviser":

    "[Braden] said adoption of the law led to immediate job cuts at her company as she scaled back an expansion into a new line of business. Obamacare 'is devastating to my business, expensive for me and my clients to administer, and works against our goals of helping businesses to expand, and putting people back to work,' she said."

  • Businessmen: Obamacare Stops Them from Hiring

    December 23, 2011 11:48 AM

    Journalist John Stossel describes how "three successful businessmen came on" his TV show last week "to explain how Obamacare is a reason that unemployment stays high. Its length and complexity make businessmen wary of expanding." "An owner of 12 IHOPS told me that he can’t expand his business because he can’t afford the burden of Obamacare." Others complained that even experts admit they "can't tell you" how much Obamacare will cost them. "Brad Anderson, CEO of Best Buy, added that Obamacare makes it impossible to achieve even basic certainty about future personnel costs."

    Stossel agrees with Robert Higgs of the Independent Institute, who says that "if you wonder why businesspeople are not investing and reviving the economy, the answer lies in all the question marks that Obamacare and other new regulations confront them with." Higgs calls this “regime uncertainty." As Stossel notes, "it’s also what prolonged the Great Depression."  Obamacare also contains work disincentives that the Congressional Budget Office says will shrink the size of the economy and the workforce.

  • FDA Needs to Act on Internet and Social Media Policy

    December 16, 2011 9:39 AM

    Way back in September 2009, the Food and Drug Administration announced that it would begin using the social media site Twitter to share news and other information about drug safety and regulation. "Messages on Twitter provide consumers, healthcare professionals, the pharmaceutical industry, and others with timely information on new drug approvals, safety alerts, compliance actions, and consumer information," the announcement said.

    It was curious that FDA mentioned the pharmaceutical industry. You see, drug and device companies have been feeling their way around the Internet and other new media, including Twitter, for several years without substantive guidance from the FDA. That's important because, under the Food, Drug and Cosmetic Act, there's a lot that's not permitted, but nobody's quite sure what is and what isn't. And if the industry guesses wrong, they could subject themselves to some pretty harsh civil and criminal penalties.

    As Ed Silverman at Pharmalot explained in an op-ed posted yesterday, the agency has been promising for years that it would develop of a formal policy on the matter. As early as 1996, the FDA held a public meeting (see reference at the bottom of this document) to discuss issues related to the advertising and promotion of medical products on the Internet. Then, in November 2009, the agency held another public meeting, with the promise that it would soon thereafter develop guidance or other policies that addressed Internet promotion and social media. But, as Silverman notes:

    "the guidelines didn't appear in the wake of the meeting. And they didn't appear by the end of 2010, despite an unofficial FDA deadline to push something out by New Year's Day. And then the agency missed another deadline, this one on March 31. By mid-year, FDA officials said they would stop setting deadlines."

  • Over-The-Counter Plan B? What Would Jed Bartlet Do?

    December 8, 2011 1:35 PM

    Back in March 2009, President Obama issued a memorandum on scientific integrity to the heads of executive branch agencies and departments. It announced that “[s]cience and the scientific process must inform and guide decisions of [his] Administration on a wide range of issues.” And in a statement to the press, Obama insisted that “Our government has forced what I believe is a false choice between sound science and moral values.” Previous administrations (and one in particular -- nudge nudge, wink wink … Know what I mean?) had let politics interfere with what should have been purely science-driven decisions by expert agencies. But that just wasn’t going to happen in the Obama administration.

    I guess Kathleen Sebelius didn’t get the memo.

    Yesterday, HHS Secretary Sebelius publicly overruled a decision by the Food and Drug Administration to make the Plan B emergency contraceptive available to girls under age 18 without a prescription. According to The New York Times, “Dr. Margaret Hamburg, the F.D.A.’s commissioner, issued a lengthy statement saying it was safe to sell Plan B over the counter, while Ms. Sebelius countered that the drug’s manufacturer had failed to study whether girls as young as 11 years old could safely use Plan B.” Commissioner Hamburg's public letter on the decision explains that:

    “Our decision-making reflects a body of scientific findings, input from external scientific advisory committees, and data contained in the application that included studies designed specifically to address the regulatory standards for nonprescription drugs.  [FDA’s Center for Drug Evaluation and Research] experts, including obstetrician/gynecologists and pediatricians, reviewed the totality of the data and agreed that it met the regulatory standard for a nonprescription drug and that Plan B One-Step should be approved for all females of child-bearing potential.”

  • Good News/Bad News on Compensating Bone Marrow Donors

    December 7, 2011 5:21 PM

    By now, there's been plenty of news highlighting last week's decision by the Ninth Circuit Court of Appeals that the National Organ Transplant Act of 1984 (NOTA) does not forbid compensation for the majority of bone marrow donors. That's great news for patients needing marrow transplants. And the non-profit Institute for Justice deserves a tremendous amount of applause for arguing the case. Unfortunately, the decision is far narrower in scope than it has been portrayed by some news outlets. And, although there is plenty here to celebrate, it neither "deregulates the bone marrow market" nor paves the way for compensating organ donation more broadly.

    AEI's Sally Satel had a good piece in yesterday's Wall Street Journal discussing some of the nuances of the issue. Unfortunately, the headline on Dr. Satel's op-ed misrepresents the nature of the ruling. (For the record, neither the author nor the primary editor of most newspaper articles has any control over the headlines.) So, here's a bit more context.

    Until recently, bone marrow donations could only be performed by having a large, thick, and very very painful needle pierced through your pelvic bone in order to suck out the liquid marrow. Today, however, the majority of marrow donations are not actually donations of marrow at all. Instead, peripheral blood stem cells are isolated from circulating blood, and those stem cells develop into bone marrow in the new patient. That means that most "marrow" donations can be as simple (more or less) as giving blood at your office's annual blood drive. (It's a slightly more extensive process than that. But you get the point.) That's been a tremendous boon to patients needing marrow transplants, since the process is now far less invasive, less painful, and less risky in the majority of cases.

  • Reforming Medical Malpractice Law: Interesting Discussion about Damage Limits in Malpractice Cases

    December 7, 2011 1:24 PM

    Point of Law has an interesting debate over whether medical-malpractice noneconomic damage caps hurt consumers, between Ted Frank and Shirley Svorny. As Frank notes, "medical malpractice awards are" often "haphazard," failing to distinguish between negligent and non-negligent physicians (jurors are, after all, not experts in medicine, and may be unable to understand scientific concepts that undergird some malpractice lawsuits). As Svorny notes, however, malpractice verdicts are not purely random, and thus provide some disincentive for negligence.

    In a rational world, we would have specialized health courts to decide malpractice disputes, the way many other civilized countries do, since such tribunals are better able to see through unfounded malpractice claims and detect genuine negligence by doctors than are uninformed juries of laypeople. But state constitutional rights to jury trials often exist in state courts, and in federal courts, the Seventh Amendment right to jury trial applies, making it impossible to totally abolish such trials in malpractice cases despite their often erroneous results. (By contrast, in most states, legislators could toughen up limits on junk science in malpractice cases, although liberal activist judiciaries in a few states have thwarted legislative attempts to do so.) Perhaps legislators could impose stringent caps on malpractice cases tried in regular court, while giving specialized administrative tribunals more leeway to award damages. That way, people who have genuinely suffered lots of damages due to doctors' negligence could do so before a tribunal of experts that has the expertise to distinguish between meritorious and meritless claims, while people with weak claims who wish to play litigation lottery would remain free to seek lesser amounts of damages in regular court before a jury of their (often uneducated) peers.

  • Legalizing Kidney Sales Would Save Thousands of Lives, Save Taxpayers a Bundle

    December 6, 2011 4:15 PM

    Kidney sales should be legal, explains kidney donor Alexander Berger in The New York Times. Berger is a research analyst for GiveWell, a nonprofit that helps charitable donors decide where to give. As Berger notes, allowing kidney donors to be compensated would save countless lives by providing people with an incentive to donate their kidneys. Right now, you have to be unusually altruistic to donate a kidney, since you have to spend several days in the hospital to donate one, take off a lot of time from work, and run a tiny, tiny risk of death from surgery. Most people just aren't that altruistic. Allowing kidney sales would also help the poor, who currently often unable to obtain kidneys: as Berger notes, people unable to get kidney transplants now are "disproportionately African-American and poor." 

    If kidney sales were legal, the taxpayers would save money, too, since the government would be able to give kidneys to poor people and elderly people who need them, with the increased number of kidneys that would become available due to kidney sales, rather than paying for incredibly costly and debilitating dialysis treatment, which has consumed billions of tax dollars over the years. It would be much cheaper for the government to buy a kidney for a poor or elderly person rather than paying for years and years of dialysis. As Berger notes, paying for kidneys would likely "save the government money; taxpayers already foot the bill for dialysis for many patients through Medicare, and research has shown that transplants save more than $100,000 per patient, relative to dialysis."

  • Obamacare Attacks Your Flex Account -- Minimize Damage in 2013 by Doubling Up for 2012

    November 21, 2011 10:52 AM

    Hey Joe and Jane Citizen, concerned about the future of your country and your family. Please step away for five minutes from the nonstop TV coverage of the supercommittee. You are being told that if the House-Senate committee, created as a compromise in the debt ceiling fight, doesn't reach a "solution" by Thanksgiving, there will be dire consequences as government spending  has to be "sequestered" from the budget in 2013.

    But the real dire consequences you should be worried about in 2013 is the permanent sequestration of your flexible spending account due to the stealth tax hikes of Obamacare. Back in 2010 when she was Speaker of the House, Rep. Nancy Pelosi said Congress had to pass the health care bill into law, so the public could know what's in it. And it won't be until the beginning of 2013 that most of the public will know that one of the things in the bill was a cap on flex account deductions, which are currently unlimited, to just $2,500 per year. Especially for large families, this is in effect a marginal tax hike on health expenses of as much as 40 percent!

    This is one of the gimmicky "revenue enhancements" that allows Obamacare supporters to say it reduces the deficit. Other accounting trick include the now-repealed 1099 mandate, which required firms to report to send a form to the IRS everytime they bought a good or service valued at $600 or more. Starting in 2011, the "medicine cabinet tax," which applies to both flex accounts and health savings accounts, put in the additional headache of getting a prescription for every over-the-counter medicine bought with the account. This short-term tax saving will almost certainly end up resulting in higher costs in the long run, as more patients needlessly visit the doctor for OTC prescription or just buy more expensive prescription medications.


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