Bob Hayes Online

Drug reimportation is a hot idea these days.  It doesn’t work.  Here’s why.

Say you are a textbook publisher.  You have a line of college textbooks that you produce.  This is a complex and expensive process; you hire high-level scientists and academics to write the books, editors to fix their dreadful writing, fact-checkers to make sure it doesn’t say “e=mc³“, artists to create the thousands of diagrams and charts and pictures.  You pay for printing and warehousing and distributing.  You pay IT companies big bucks to maintain your catalog and run your online order system.  In short, every textbook represents quite a large investment of resources on your part.

You sell these books for $65 apiece to university bookstores across America.  You make decent money; some years you lose a little, most years you make a nice profit.  All is well.

Then one day you get a call from a university in Australia.  They’ve heard about your line of textbooks, which it turns out are better than the textbooks that they can print in Australia.  The university wants to buy books from you.  Hooray, you think.  Now, the problem arises that the Aussies don’t have as much money sloshing around their public university system as we do.  There’s no way, in fact, that they can afford to spend $65 per book.  They can give you $30 per book, no more than that.  You talk things over with your accounting folks, and they tell you:  good news.  It turns out that the marginal cost of producing another textbook and shipping it to Australia is $27.50.  Selling books to Australia won’t make you a fortune, but it will improve your bottom line somewhat without hurting your core business.  Everybody wins, and so the freighters loaded with copies of “Sociology And You” start steaming for Perth.

Until one day you come into your office and on your computer screen there appears a web ad offering copies of “Sociology And You” for $45.  You click on the ad, and it’s a company in Australia that is buying the books from you wholesale, and then reselling them to American college students over the Internet retail. 

Is this a problem?  Well, it’s not much of a problem if these folks are moving 10 books a week.  It’s a huge problem if they’re selling 10,000 copies a day.  As you’re preparing to address this problem, you turn on the TV and hear presidential candidates saying that the high cost of textbooks in America is an outrage, and that what we need to do is reimport these books from Australia, where they’re cheap.

But they’re only cheap in Australia because you are selling them to Australia as a marginal, peripheral business.  The main market for your product is the one subsidizing all the fixed costs of book production; those Aussie dollars are just a little bit of icing on the cake. 

So what happens if the government follows through on its promise of cheap textbooks for everyone?  Well, they pass a law making it legal and easy to reimport these books directly without tiresome Internet runarounds.  Eager wholesalers line up to make a fortune on this book bonanza…only to discover that there aren’t any books available from Australia.  Why are there no books available from Australia?

Because you, not being a complete idiot, have stopped selling Australia textbooks for $30 apiece.  Every book you sold to Australia would end up costing you a sale here in the US, and the US sales are where you make your margin.  Since the Australian sales are jettisonable from the point of view of your core business, you jettison them to save what’s important, the U.S. market. 

Drug reimportation works the same way.  The issues about safety and provenance are purely side issues.  The core of the problem is an economic question:  what does it cost to get this particular product?  It may be that the price is different in one place than another.  Price differentials do create a potential for arbitrage, but they don’t create a reality that the lower price is somehow the right price, or that everyone can get the lower price.  Attempts by government to get the lower price for everyone will simply end up removing the lower price option for the people who had it before.

All drug reimportation laws can do is hurt the availability of American pharmaceuticals in other countries.  You won’t sell textbooks to Australia when those textbooks are destroying your profit center in America; Pfizer isn’t going to sell drugs to Canada if the Canadian drugs are going to destroy their profits here.  It’s as simple as that.

Why are our health costs so high? In part, because people spend large amounts of money on futile care - care for someone who has no chance of recovering, or only a very small chance. (For example, when someone is told they only have a few weeks to live and that there is essentially zero chance of recovery. There COULD be a miracle, though.)

It usually makes emotional and spiritual sense for individual people to make that spending decision. The emotional cost of not doing so would be far higher than the fiscal cost of going to the limit. However, this is not a policy that we can put in place for everyone, because the emotional calculus is different. I will mortgage my future and sell my soul to gamble on keeping my baby alive; I will not do so to gamble on an abstract group of strangers. Neither will anyone else; although levels of altruism will vary, and some people will cut deeper than others for strangers’ welfare, few-approaching-none will make the sacrifices for strangers that they will make for kin.

From a humanitarian point of view, then, it seems logical for decisions about such extreme measures to be left in the hands of individuals. Resources being equal, more sacrifices will be made and more care will be provided in desperate cases when decisions are made closest to the patient. This is undoubtedly a major component of why our health care costs are systemically higher than those of nations with single-payer or nationalized health care; Britain’s NHS isn’t spending a million dollars trying to keep Grandma alive, but in the US, Grandma’s kids are.

At the other level of care, I think the decision calculus might actually work the other way. Some individuals show a reluctance to rationally budget for preventative and maintenance-type healthcare; members of a more distant group, aware that they have a good chance of being stuck with the eventual enormous bill when Joe keeps skipping the physical exams (”that shooting pain in my left arm will go away if I just have another beer”), are probably more willing to pay for Joe’s doctor visit than Joe is.

On that humanitarian basis, I’d probably be more receptive to a public health policy that supported preventative and maintenance-type care, and left big-ticket items up to individuals to deal with.

A couple weeks ago, 3rd of 3 developed a high fever. Stoic dad wanted to let her gut it out on the couch, and save a few hundred dollars. Soppy mom insisted that she go to the ER (it was 9 PM). Guess who won that one.

The ER said she was coming down with a virus, beat them what it was because she didn’t have any other symptoms. They gave her Tylenol to get the fever down and recommended advanced medical treatments like keeping her comfortable and giving her plenty to drink. I brought her home a couple of hours later, having successfully shielded her from comprehending why the streetwalker in the next room was slurring her speech and talking about it hurting to pee.

A few days ago, we get the bill from the ER doctor. (I don’t know why, but this hospital separates the bills out, one for the ER itself, one for the doctor you end up seeing.) It was $204 - more than I want to pay, but in line with historical experience. I waited for the ER bill, which in the past has been around $100.

Today we get the ER bill. $1540. But, because the hospital loves us and wants to work with our financial situation, if we pay them by the 19th of March they’ll take 40% off, leaving it around 900 something. Cue my head exploding, wife quietly freaking, chaos reigning supreme.

So I get on the phone with the nice, calm lady at Centura who, I suspect, gets about fifty of these “wtf?” calls a day. She says the $1500 is for the ER service, is not a mistake, and that she can’t give me an itemized bill over the phone because of privacy regulations. But she can send me one - it will take a mere two business weeks to arrive. In the meantime, they want their money.

(Which, yeah. That’s going to happen. I wouldn’t pay $1500 for a whole child, let alone one ER visit. I won’t pay $1.50 to someone who hasn’t yet billed me.)

So a few questions for the hive mind.

1) Has something happened in the year since she last went to the ER, that the customary walk-through-the-door charge has increased fifteen-fold?

2) What’s my legal recourse here? In my surly 20-something days, I would have laughed and tell them to f*** off, and good luck collecting. (And the next time I visit the ER, it will be as Raoul Rodriguez, and try to prove different.) But these days I’m trying to buy a house, and trying to make all the red lines on the credit report read yellow or green instead.

3) Anybody got $1500 lying around they don’t need? (Oh, well, $950 if you can get it to me by 3/19.)

4) How is it possible for a commercial enterprise to legally demand money from people without presenting an itemized bill? (Technically, it’s not a demand. It’s an OFFER. That seems like thin cheese; if I were a judge in petty court I’d throw it out post-haste.)

5) WTF? I mean, what the F-ing F?

A remarkable treatment for Alzheimer’s Disease. Miraculous if it pans out.

I instinctively understood this as a child. Now there’s science to back me up!

Dirt don’t hurt.

Want a new hip? Quit smoking first, so that we aren’t wasting taxpayer money on someone who’s going to die anyway. Want fertility treatment? Lose weight until you reach the government’s target for you.

It’s perfectly rational, and entirely predictable. Pay the piper, call the tune: if the government is in charge of your health care, the government is charge of you.

(Hat tip, The Right Coast)