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Thursday, July 12, 2012

Doctors Selling Drugs

In yesterday's NYT, Barry Meier and Katie Thomas report that doctors are increasingly setting up in-house pharmacies, and dispensing drugs to their patients at a cost of ten times that charged by pharmacies.  See Insurers Pay Big Markups as Doctors Dispense Drugs.  The problem seems to be particularly acute in the area of workers' compensation insurance, which apparently in some states contains loopholes that actually require the insurance companies to pay these marked-up prices.  It's probably a problem in other areas as well though -- there's an inherent conflict of interest in allowing a doctor to profit from his or her own prescriptions.

While ordinarily I would welcome more competition in the pharmacy market (as we've seen from the example of CVS, it's possible for a pharmacy to engage in all kinds of price gouging), this sounds doesn't seem like the kind of competition that will result in lower costs to consumers.  Quite the contrary.

I wonder if ObamaCare will fix that.

Probably not, since ObamaCare doesn't have a whole lot to do with cost control, and controlling this would distress at least one faction of health-care profiteers.

When I look at these drug prices, it just reminds me of how little it costs per pill to actually manufacture a drug compared to how much they sell for when on-patent.  While the patent system has done a decent job of getting new and useful drugs created, tested, and marketed, it has also been incredibly inefficient and costly.  And the potential for markups like these tends to create more and more pockets of inefficiency up and down the distribution chain.  There may well be a better way.

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