Chiming in as someone who works at an insurer in clinical analytics.

There's a few ways we can pay less for a compound where there are generics/biosimilars. We could contract with a hospital group saying we will pay a small % markup on the cheapest drug to treat each condition - i.e. they can use the cheapest generic/biosimilar and make profit, or use a more expensive one and make a loss. They naturally shift all volume to the cheaper one. That then makes demand very elastic to price, and so encourages a lower price from manufacturers. We do see some compounds all sit at the same lowest price and not shift - that does suggest collusion - potentially tacit collusion though. An alternative is to contract with one pharma company to get a rebate if we push volume to their drug. We could then mandate to providers that we'll only pay for that drug.

So why not do this? Seems low risk, and these drugs are regulated to be identical. Plus you aren't the govt - you are allowed to pick winners.

They do that, or contract with companies (like PBMs) to do so. That's been the way this works forever. Asymptotically no one pays the ~$40k+/mo list price.

You mean no one that has insurance pays that price. Those without insurance don't have anyone making these agreements and are SOL.

Not necessarily true. I know a diabetic who gets her insulin for free through hardship programs she qualifies for with the drug manufacturers.

You just have to live in poverty, one way or the other.

Its also the same direction government funded healthcare would need to go. Ultimately if one or two companies captured the entire market like this, then we socialized medicine by having the government pay these companies, I'm actually curious how that's practically different than government owned entities doing the same thing.

The large mountains of cash that gets smoke screened as "profit" to be redistributed as campaign contributions, executive compensation, and "research and development" costs; like researching how hiring ex strippers as sales reps increases sales of drugs.

Games theory is pretty clear about how this all ends... Badly.

Right, because the government official is corrupt so the private entity gets to be a bad actor. But if the private entity is instead also a corrupt politician owning a government controlled entity... why would that be different? (to be clear, I'm not arguing private is better or worse, I'm actually curious if there's any reason to believe it would be meaningfully different either way).

If they are competent at making drugs, would they simply be competition? How would it be more dystopic?

If they manage to undercut gouging, that should lead to lower insurance costs and put pressure on the rest of the industry to control costs too...

I think this is just extending the HMO model a bit further. So yes, they'd be competition.

> I know that some insurance companies are starting to run medical practices and pharmacies

They are? Where is this happening? This could be a good thing, but I doubt it since the regulations on such entities will likely be warped in their favor.

Kaiser Permanente is doing that in California. I was very happy with their healthcare when I lived there.

Kaiser's cool until you try to get mental health treatment through them. Then they become a comedy of cynical errors.

First, they make you get evaluated by one of their psychs. Take depression for this example. Unless you're having suicidal thoughts, according to Kaiser, you don't have depression. So no, therapy is not covered.

So, you say "no really, I am demonstrating every symptom of depression other than suicidal tendencies, I just want a therapist." ok fine we've got a troublemaker over here demanding the healthcare they pay for, stick'm in a room with 10 other patients and an unconcerned therapist, call it "group therapy," done.

"But I don't want a room full of random people to know about the shit I go through in my life or my past abuse. I have depression, I want therapy." Fine, you have overcome the requisite 3 months of phone calls and bullshit that filters out 90% of our insurees, so you get to be on the waiting list for one of the five Kaiser approved therapists in the bay area. Next appointment: 2021.

Of course, you could always just pay out of pocket, between 100$ and 200$ a session...

The backend of this isn't any better.

They've been outsourcing significant amounts of this to secondary companies (e.g. Easter Seals, BHPN), which then outsource the work to smaller agencies. This turns into the smaller agencies fighting for basic services on behalf of clients.

There are regular mandatory meetings (monthly I think) where execs from Kaiser and the intermediaries announce breaking changes, or straight out berate the group of providers for doing their job, or for not doing things that aren't their job. They like to change coding rules without telling people and then blaming them for not coding properly. They also like to force companies to follow rules, especially when it doesn't particularly make sense (like carrying insurance for injuries to customers when customers aren't allowed on-site).

Then after all of that they'll arbitrarily hold payment as long as the possibly can. A couple of the smaller agencies in our area have gone under because they couldn't pay staff while they waited for checks. We've seen them delay payment by over a year after services were billed.

The only real strategy in this case is to spread out your customers by insurance provider. Unfortunately that means turning very needful customers away, because you can't become too reliant on any one funding source.

Source: I provide support to a mental health services agency in my off time.

> Unless you're having suicidal thoughts, according to Kaiser, you don't have depression.

Which is insane. Even I know that the DSM's definition of major depressive disorder includes numerous other criteria besides suicidal ideation, and I ain't even got a psychology degree (I did ace my AP Psych exam, though). That actual licensed psychologists/psychiatrists (and/or the representatives thereof) would pretend otherwise is surreal.

Yeah the issue is that therapy is very expensive compared to medication and mental health is so common it's hard for insurance to pay for it without raising rates even higher. I currently spend ~$800 a month on my wife's therapy. It's basically impossible to get insurance to pay for and the condition has a very high mortality rate(for a mental health condition) and has no drug options for treatment.

That’s a shame. Therapy can be such a useful tool for anybody.. mild to serious symptoms. I suppose their issue must be one of supply though because finding therapists in SF taking new patients on a more typical insurance plan was also a pain.

As well as Colorado where, to my understanding, use a hospital to house their own doctors and their own pharmacy (not sure if they own the hospital).

Same in Georgia. I loved Kaiser (but my current employer doesn't offer it).

It was great being able to go to one facility to see a doctor, a specialist, get tests, and fill a prescription.

Aetna owns with CVS.

https://prospect.org/article/why-aetna-and-cvs-merger-so-dan...

It could be a bad thing, since their in house medics have an incentive to avoid necessary but expensive treatments.

Better to remove the profit motive from most of the healthcare economy rather than move it around.

Rite aid is currently piloting RediClinic which will be basically a mix between yoga classes and urgent care.

Essentially they want to get you having more than your blood pressure checked and enjoy some other things they can throw at your insurance.

Healthpartners, an insurance company in Minnesota, runs their own pharmacies, as well as Virtuwell.

CVS owns Aetna, for one.

The pharmacies aren't the point where price is inflated. It's the pharmaceutical companies, which make the drugs, not the stores that sell them.

Actually it's both. As well as pharmacy benefit managers, doctors, hospitals, and insurance companies. They all inflate prices. See http://truecostofhealthcare.org/conclusion/ (scroll to the "Where is all this money going" section)

The idea is their pharmacy can negotiate with drug companies. "Give us a good deal on everything or we get generics instead of you for everything we can get elsewhere" (that is but one type of negotiation)