The High Price of Monopoly Prescription Drugs (?)

Imagine a prescription drug made by a monopoly drug supplier that is both safely and effectively used in the treatment of a major disease.

The dosage typically varies from 4 to 10 pills per day, and the pills cost consumers $0.80 apiece. This works out to $96 to $240 per month, or $1152 to $2880 per year.

If the consumer belongs to either a government or a private health insurance plan with a drug benefit program, the consumer may instead typically pay up to a $25 per month co-pay, or $300 per year, while the insurance plan may contract to pay for the pills at a discount rate that could range all the way from 25% to 75%, for example. Of course, someone, somewhere, will end up paying the insurance premiums, but we won't even try to quantify that here.

There can be little doubt that a consumer cost of up to $2880 per year for a single drug would be a financial burden for anyone, but this just serves to prove that it is a national priority to get everyone enrolled in a drug benefit program to overcome the outrageous prices set by monopoly drug suppliers protected by US patents.

Uh ..., not exactly.

While all of the prices and usages above are either real or reasonable estimates, and drug benefit programs are fully involved, almost everything else is a lie.

The product involved is not a drug or a pill. Let us call it product X. If you didn't pop the lid off the container, nothing in the way it was sold or supplied or how it was priced would have hinted that it was not a prescription pill produced by a monopoly drug company.

However, no prescriptions are actually required for its purchase, and its manufacturers not only are not monopolists, but are actually involved in one of the most competitive market segments in the economy.

The very existence of this product X, by itself, tends to refute the idea that the actual high prices of drugs are the result of supplier monopolies, and it tends to suggest that it may be the existence of the drug benefit programs themselves that results in high prices, at least for consumers not in the drug benefit programs. - to be continued -

What is product X?

More on product X here.

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I know! I know! But I don't

I know! I know! But I don't want to ruin the fun for anyone else, so I will wait a while before giving it away.

Unless there is a prize, of course. I like prizes.

Micha, Priority for prizes


Priority for prizes will be established by private email. Of course, there may not be a unique answer.

Regards, Don

Cross-threaded widgets!

Cross-threaded widgets!

Cross-threaded widgets! No,

Cross-threaded widgets!
No, no, those are used hundreds per day, sometimes thousands, and only by overpaid academic economists. :-)

I'm stumped. Not any kind of pill, but packaging is similar enough to not tell the difference?