One issue I have with our modern lifestyle – of many — is the emphasis on perfection. Newer, slimmer, bigger, better, faster: the message of perfection screams out to us from glossy magazines, slick television ads and popup ad after popup ad. (Or purrs, cajoles, teases, and smothers.)While I do believe fundamentally in pursuing whatever your […]
Franklin Delano Roosevelt famously used the term “forgotten man” in a 1932 speech to describe those at the bottom of the economic pyramid who, he felt, government should aid.But the originator of the phrase “forgotten man” had a whole different meaning in mind. He aimed to expose the seeming good intentions of government to reveal […]
In September 2009, when President Obama made a primetime speech pitching his not-yet-passed health care overhaul, he made the following promise: “I will not sign a plan that adds one dime to our deficits — either now or in the future. Period.” To prove his seriousness, he further promised that “there will be a provision […]
What’s the #1 reason a start-up fails?It runs out of money!And why would it run out of money?Because nobody wants the product it’s selling!For early-stage investors, this presents a bit of a conundrum:If a product doesn’t exist yet, how do you figure out if there’s demand for it?And how do you figure it out before […]
Biotech breakthroughs and other transformative innovations are a few of the brightly shining spots in the U.S. economy. In fact, Paul Mampilly believes this is the golden age of biotech investing, and that you can earn massive returns while investing in companies with drugs that benefit all of humanity. Read on for his latest example...
Obama recently claimed this was the “Decade of the Brain”. But it not the first time the government made that promise. The last time they did it, they wasted millions of your tax dollars. Now they’re back for round two. But this time, their failure could mean more than squandered money. It could mean making Alzheimer’s even worse for those who suffer from it.
Why Is U.S. Health Care So Much More Expensive?After years of research and many conversations with health policy experts, I see three key culprits of expensive health care in the U.S.In no particular order, they are the third-party payer system (i.e., employer-provided health care), malpractice suits, and administrative support costs/paperwork.The unintended consequence of institutionalized employer-provided […]
Back in the 1980s, John Nestor became infamous for single-handedly causing massive traffic jams on the Capital Beltway. But in his professional life, he created a completely different kind of traffic jam... one that may have contributed to the deaths of thousands of innocent people. Juan Enriquez has the full story. Read on...
The Food and Drug Administration will tell you they’re there to protect you. To make sure the food and medicine you put in your body won’t hurt you. But good intentions and actual results rarely match up. Instead, the FDA’s drug certification process has made it easy for business to corner drug markets, and jack up prices. In the end, the only thing the FDA protects are these companies’ profits.
Given the insane amount of time, effort and money it costs to bring a drug to market, it's no wonder why drugs are so expensive in America. And even when a drug comes along that IS cost effective, you can count on the FDA to play its part in jacking up the price. Mark Thornton explains...
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Too many people think that long-term care planning is just a decision about whether to purchase long-term care insurance. However, long-term care planning is so much more. It is a discussion about how you will fund this expense, where you will receive long-term care, and who will provide the care.
Politicians talk about the uninsured. Special interests argue on behalf of those with pre-existing conditions. But why is no one wondering how doctors are affected by the new law? They’re the ones on the frontlines dealing directly with new patients, as well as the red tape that makes bureaucracies go round.
Just because you’re retired doesn’t mean you have to stop working. Especially now that you have all the time in the world to do what you really want. Entrepreneurs don’t only come out of Silicon Valley. They come from all walks of life, from all different ages. If you’re retired and want to stay active while you relax, then find out the steps you need to take in order to start, manage, and grow your next small business.
The U.S. dollar has been the world's reserve currency for almost a century, and already there are signs it may be in decline. But that doesn't mean it's not still valuable. On the contrary... As Chris Mayer explains, there are many reasons the U.S. dollar will remain relevant on the world stage for years to come. Read on...
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When government expansion is allowed to continue unabated or when it casts a heavy regulatory shadow on America’s entrepreneurial spirit, the freedoms that we’ve come to know, and perhaps take for granted, slowly begin to slip away.
The new reality of Obamacare’s tax credits has left finance reporters to pen articles warning readers to “take care” when considering a tax credit and providing strategies for how best to “protect yourself.” So what do finance reporters know that the White House doesn’t?
As full implementation of the Affordable Care Act (ACA) approaches, every doctor, research professional, and health administrator I talk to tells me the same thing: Obamacare is going to reduce the quality of care and cost you more… in some cases, a lot more.
This technology is not simply for modeling and prototyping, either. TV personality Jay Leno uses a 3-D printer to make custom and hard-to-find parts from scratch for his collection of classic cars. Entrepreneurs have been using these printers in a myriad of ways, and the trend is speeding up.
The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.But our systems of state charity — aka welfare — have too frequently had the opposite effect: They have actually created dependency. It is time to rethink the way we help people.I’m going to […]
Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the HealthCare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor supply issues. Given the mounting difficulties with and growing concerns about the […]
Do you trust your doctor? Most patients assume their doctor is working in their best medical interests whenever he or she orders a diagnostic test or recommends a particular treatment. Customers might wonder whether an unscrupulous auto mechanic is being truthful when he recommends a brake job or a new transmission. But most patients trust […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
Every time you buy a drug at a pharmacy — be it by prescription or over the counter — there’s a middleman that makes a huge profit…
And it doesn’t matter what pharmacy you go to, either. It could be Walgreens, Rite Aid or part of a larger, more integrated health care network… Regardless, the middleman, called a pharmacy benefit manager (or “PBM”), is there taking his cut.
While most PBMs are privately held firms (such as Benecard Services, Innoviant Inc. or WellDyne Inc.), some are publically traded… they could turn out to be the safest way to make money in America over the coming years…
If you haven’t heard of this industry, you may be surprised to find out how tied in it is with individuals and companies — big and small. They are the hustlers of the U.S. healthcare system.
According to BusinessWeek:
“America’s pharmacy benefit managers (PBMs) administer prescription drug benefits for more than 210 million Americans, whose health coverage is provided by Fortune 500 employers, health insurers, labor unions and Medicare Part D.”
Here’s how these companies make their money…
Whenever you go to the pharmacy, you take a special card in order to get your prescription filled. That card, depending on your company’s health benefit package, grants you access to your medication.
The pharmacist checks out your card, figures out which pills your package covers and — under pharmacy guidelines — determines which pill to offer you at what price.
What you’re not told is that the PBM, contracted by companies or health insurers to manage the pharmacy benefits of your health plan, makes all the decisions.
And their decisions are guided by one goal: They want to keep your company’s or health insurer’s spending on pharmaceuticals low.
The best way to do that — and the best way for them to make money themselves — is simple: They issue cheaper generic drugs to you.
Most people tend to be brainwashed by superficial brand loyalty, when they could be getting the exact same thing generically for a huge discount.
Take the example of a cholesterol-lowering drug. It’s basically the same case. You’ll be asked if you want to pay $30 and get a generic cholesterol-lowering pill or you could pay $200 to get something like Lipitor.
Again, generic drugs are tested, and for most people, they provide the same benefit. So unless your doctor insists on the specific brand, you’re going to choose generic.
PBMs love generics because they can aggregate the demand for various cholesterol-lowering drugs based on all the contracts they have with their clients. Then they buy generics in bulk at dirt-cheap prices, mark them up 20-50% and resell them to you.
This is actually a win-win scenario. And if you’re invested in a PBM, it’s a win-win-win scenario. Here’s why…
First, the PBM is saving your company money through lower pharmaceutical spending. Second, your copay is much cheaper than if you were forced to buy the branded pill. And third, the PBM makes a nice profit for itself and its shareholders by reselling the generic drug to customers.
Any PBM that’s looking to increase the number of generics that its customers use translates to higher profits.
Now, let’s review this in the context of tomorrow’s trends…
There are fewer generic drugs coming over the next two years. Last year, for example, according to The New York Times:
“More than 40 brand-name drugs — valued at $35 billion in annual sales — lost their patent protection, meaning that generic companies were permitted to make their own lower-priced versions of well-known drugs…”
But next year…
“the value of drugs scheduled to lose their patents and be sold as generics is expected to decline by more than half, to about $17 billion, according to an analysis by Credit Agricole Securities. ‘The patent cliff is over,’ said Kim Vukhac, an analyst for Credit Agricole. ‘That’s great for large pharma, but that also means the opportunities theoretically have dried up for generics.’”
That’s good news for large generics company Watson Pharmaceuticals, which just merged with and is renamed Actavis…launching it from the fifth to the third-largest generic drugmaker worldwide.
Any PBMs that can claim a large share in the shrinking generics supply could do very well.
Other PBM’s, like the company Actavis, could do very well by developing biosimilars, or generic biotech drugs. Biotech drugs are more expensive than pharmaceuticals. That means that generic biotech drugs have the potential to be more profitable than generic pharmaceuticals. The first of these new drugs will be showing up soon.
Teva Pharmaceuticals, which formed a partnership with Swiss company Lonza, is another example of a company on the road to develop biosimilars.
Two other big reasons these PBMs could become cash cows… If you’re an avid Tomorrow in Review reader, you know about them already: Obamacare and baby boomers.
Obamacare is going to bring another 38 million-some people into the health care system. Many will start using prescription drugs, and they’ll be put on generics through a PBM.
Plus, 76 million-some baby boomers are going to become senior citizens in the next 20 years. They’ll use more prescription drugs as they get older. Lots of generics are going to be used by baby boomers.
For more publically traded PBMs, you can check out the three largest: Caremark (NYSE: CVS), and Express Scripts (NASDAW: ESRX), and Catamaran Corp. (NASDAQ: CTRX).
Article originally appeared here.