cupola2030Does Big Pharma gouge Americans?
https://www.economist.com/business/2025/10/02/does-big-pharma-gouge-americans
I'm surprised on the comments here that go: "I had to pay $$$$ for a medication when I could buy that same medication somewhere else for a fraction of it. Therefore Big Pharma gouges America".
That is not evidence that "Big Pharma gouges America". It is evidence that Americans pay a lot more than other countries. Only that. The conclusion doesn't necessarily follow from the premises.
Want to understand why? Read the article's last paragraph:
> The bulk of the rents is captured instead by providers of health-care services such as hospitals and the system’s true money-makers: insurers, pharmacy-benefit managers and other middlemen taking advantage of its opacity.
As always, no one reads anything.
Insurers make even less money than Pharma companies do. To a first approximation essentially all health care spending goes to companies that deliver health services directly.
> Insurers make even less money than Pharma companies do.
In the whole or in relative terms? Source, even if personal or anecdotal?
I am willing to consider your point because, to be fair, the article doesn't show any data that indicts the insurers. They just blame them at the end without any evidence.
> all health care spending goes to companies that deliver health services directly.
Well, that wouldn't explain why medication alone is more expensive in America, right?
But accepting your argument: is it because of greed and oligopolies, incompetence or excess of regulation?
No, he's right. Insurance profits are legally capped, and this keeps them from representing an outsized fraction of spending even in cases when they might partially be the driver behind it. They have to spend N% of their income on actual health care benefits. They're not absurdly high, you could look them up, but I don't think it's possible to exceed something like 10% profit.
This means the only way for insurance companies to increase profits is to increase the price of healthcare, and they have zero incentive to try and lower the amount of money they pay out for healthcare which might otherwise have been split between profits and lower premiums.
My guess is that if you found NHE data from before the ACA cap insurance would remain a small component of overall health spending (the ACA was very important and I am in no way downplaying it).
Mostly I'm saying: you don't have to axiomatically derive why this is. Medicare collects and synthesizes this data.
Yea in fact the ACA law caps insurers to a maximum of 15% profit. Anything extra must be rebated back to the customers.
The debatable part is the rebate is back to the employer who is allowed to simply pocket the money, though one could argue its returning the amount the employer is covering, often more than the employee. :shrug:
Believe or not, I get yearly notices from UHC about rebates for the prior year.