Insight, analysis & opinion from Joe Paduda

< Back to Home


REAL innovation in healthcare

What do these have in common?



Martin Shkreli


Answer – they are all on the leading edge of healthcare innovation.

More precisely, these examples show there’s no need to create really new products, develop new medicines, figure out how to keep people healthier longer, when you can just raise prices on your current product.  A lot.

Duexisis is just ibuprofen combined with an acid reducer, creating a brand medication that sells for about 50 times what it should.  Yep, you can just buy Advil and Pepcid instead of breaking your bank enriching Horizon Pharmaceuticals.

Valeant has made a business out of buying generic manufacturers and other pharma companies and jacking up the price of their medications, a practice that has earned the company the attention of the Department of Justice, presidential candidate Hillary Clinton, and the US House of Representatives.  Oh, its stock price has gotten hammered of late due to some of these issues.

Shkreli is the brilliant and totally tone-deaf former hedge fund exec who discovered it’s a lot easier to make billions by buying little-used drugs made by one company than raising the price by, oh, say 6000 percent.

Mylan makes Epi-pens, the life-saving devices used to prevent deadly allergic reactions. Altho late to the “let’s just increase the price by a gazillion dollars for our poorly designed device cuz people who need it HAVE to buy it” game, they’re making up time quickly. Mylan raised the price by 6 to 9 times recently, causing problems for paramedics, families with kids with deadly allergies while jacking up their profits.

There are many, many more examples, but you get the point.

For anyone looking to assign blame for our ludicrously high cost of health insurance and pathetically poor outcomes, there are plenty of convenient culprits; HMO executive salaries, mandated benefits under ACA, specialty physician income, device manufacturers, hospital inefficiency, stupid and counterproductive HHS regulations, legislators who bow before the PHARMA lobby, physicians who refuse to wash their hands.

But it all gets back to this – the US health care “system” is based on a capitalist ethos, one where the shareholder and profits are God.

These companies and people do this stuff for a very simple reason – because they can, and they are rewarded for doing so.  There’s no reason to spend millions innovating when you can make billions just by raising prices for your product or service.

What does this mean for you?

Reality sucks.

9 thoughts on “REAL innovation in healthcare”

  1. It’s also interesting that the 3 pharma companies cited pay no taxes in the US. Horizon is Irish and also makes Vimovo, which has it’s own price increasing story. Valeant is Canadian. Mylan is Dutch. They make money in the US but do not contribute to the US coffers.

    1. typical. All the benefits of doing business in the US, but none of the taxes. Time to ensure that if you do any business here, you’re taxed as an American company would be taxed.

  2. You hit the nail on the head, Joe. Capitalism, or rather our lack of sensible restraints on unbridled capitalism is to blame.

    I say that because all the countries that have public health care systems, are also capitalist; it’s just that Yankee stubbornness when it comes to making a profit from other people’s illnesses that prevents the US from having single payer health care.

    And now, this means more to me, because I’ve lost the substandard plan I was on because of our insistence that only certain people are “entitled” to public health care assistance, and many like me are not.

  3. I don’t think capitalism is the problem here. I would argue that it is the lack of capitalism. In true capitalism, market forces would correct for over pricing goods or services. However, since most health care is paid for by health insurers, the government (Medicare, Medicaid, VA), or workers’ compensation carriers, the “consumer” doesn’t have the same incentives to shop for a cheaper alternative. Having a third party payor–which is often required by law to pay whatever the asking prices is–is circumventing the normal market forces.

    1. Jennifer – thanks for the note.

      I’d suggest you are identifying a world that does not exist, and cannot. With insurance, there is never “true” capitalism as a third party covers claims costs. Insurance was created because individuals, families, and businesses could not afford to shoulder a financial loss on their own.

      In this instance, the vast majority of consumers long ago lost the ability to afford health care and the components thereof. However, via tiers, formularies, and other financial mechanisms consumers DO have quite a bit of influence on the care they get.

  4. Joe, since many of the drugs with newly jacked-up prices are generics, what’s to stop other manufacturers from entering the market with their own lower-priced generic and taking all the market share from the firms with excessive prices?

    1. Hi Mike – the issue appears to be getting those generics approved by the FDA. The process is cumbersome and needs streamlining.

      1. Aha– so it’s the cumbersome regulatory structure of the FDA that impedes the market from competing against the Shkrelis of the world, and (deservedly) putting them out of business. This probably happens way more than most people realize.

Comments are closed.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



© Joe Paduda 2024. We encourage links to any material on this page. Fair use excerpts of material written by Joe Paduda may be used with attribution to Joe Paduda, Managed Care Matters.

Note: Some material on this page may be excerpted from other sources. In such cases, copyright is retained by the respective authors of those sources.