How Soaring Insulin Prices Are Costing the US Billions

Plus, hedge fund billionaire calls for reforming capitalism

Hedge Fund Billionaire Calls for Reform of American Capitalism

Billionaire Ray Dalio, founder of hedge fund firm Bridgewater Associates, said Thursday that capitalism isn’t working for most Americans and warned that the growing gap between the haves and have-nots is producing heightened conflict that could lead to revolutionary violence.

Dalio also critiqued both fiscal conservatives and spend-and-borrow liberals, saying that both sides fail to focus on the return on investments that the country needs.

Here are a few quotes from Dalio’s lengthy analysis of the American political and economic system, which he published as a blog post on LinkedIn:

• “I believe that all good things taken to an extreme become self-destructive and everything must evolve or die, and that these principles now apply to capitalism. … the system is producing self-reinforcing spirals up for the haves and down for the have-nots, which are leading to harmful excesses at the top and harmful deprivations at the bottom.”

• “It doesn’t take a genius to know that when a system is producing outcomes that are so inconsistent with its goals, it needs to be reformed.”

• "I think that most capitalists don’t know how to divide the economic pie well and most socialists don’t know how to grow it well, yet we are now at a juncture in which either a) people of different ideological inclinations will work together to skillfully re-engineer the system so that the pie is both divided and grown well or b) we will have great conflict and some form of revolution that will hurt most everyone and will shrink the pie."

• “Policy makers pay too much attention to budgets relative to returns on investments. For example, not spending money on educating our children well might be good from a budget perspective, but it’s really stupid from an investment perspective. Looking at the funding through a budget lens doesn’t lead one to take into consideration the all-in economic picture—e.g., it doesn’t take into consideration the all-in costs to the society of having poorly educated people. While focusing on the budget is what fiscal conservatives typically do, fiscal liberals have typically shown themselves to borrow too much money and fail to spend it wisely to produce the economic returns that are required to service the debts they have taken on, so they often end up with debt crises. The budget hawk conservatives and the pro-spending/borrowing liberals have trouble focusing on, working together for, and achieving good ‘double bottom line’ return on investments (i.e., investments that produce both good social returns and good economic returns).”

Chart of the Week: How Soaring Insulin Prices Are Hitting Medicare

Insulin prices have sparked outrage in recent months, with Congress holding hearings on the issue and launching bipartisan investigations into why the cost of the hormone used to treat diabetes — discovered nearly a century ago — has soared over the past two decades.

The House Energy and Commerce oversight subcommittee held a hearing on insulin prices this week and will hold another next week. Executives from the three companies that dominate the global insulin market — Eli Lilly, Novo Nordisk and Sanofi — are expected to testify at the upcoming hearing.

“We want to know why the cost of this life-saving drug has skyrocketed in recent years, and why they’re not offering more lower-cost alternatives to patients,” Rep. Diana DeGette (D-CO), who chairs the subcommittee, said this week.

Amid the increased pressure from lawmakers, Eli Lilly last month said it would begin selling a generic version of its insulin Humalog at half the retail price. And health insurer Cigna’s Express Scripts pharmacy benefit manager announced this week that it would cap the out-of-pocket copay for patients on insulin at $25 a month. "What we're hoping is that we're going to see more diabetics taking more insulin, [fewer] complications for those patients, and hopefully lower health care costs," Steve Miller, Cigna's chief clinical officer, told NPR.

Why it matters: The human toll of rising insulin prices — and diabetics rationing the drug as a result, sometimes with deadly consequences — makes this a crisis that desperately needs to be addressed. But there’s a fiscal element to the story, too: Total Medicare Part D spending on insulin grew from $1.4 billion in 2007 to $13.3 billion in 2017, an 840% increase, according to a report published this week by the Kaiser Family Foundation.

Pelosi Says She’s ‘Agnostic’ on Whether Medicare for All Is Better Than Obamacare

In an interview with The Washington Post, House Speaker Nancy Pelosi questioned whether Medicare for All would be better than the Affordable Care Act and suggested that Democrats should focus on building on the Obama health care reform.

“I’m agnostic. Show me how you think you can get there,” Pelosi told the Post. “We all share the value of health care for all Americans — quality, affordable health care for all Americans. What is the path to that? I think it’s the Affordable Care Act, and if that leads to Medicare-for-all, that may be the path.”

Pelosi, who was instrumental in passing the Affordable Care Act in 2010, also said she thinks that when most people say they want Medicare for All, they really mean health care for all and that many Americans like their employer-based coverage and the better benefits that the ACA delivered.

“So we’ll have hearings, again, let’s see what it is. Right now it’s a $30 trillion price tag. What do people get for that in terms of care, and what do they pay for that along the way?” Pelosi said of the Medicare for All proposals.

“Medicare is not as good a health benefit as the Affordable Care Act,” she added. “So, if you are to do Medicare for All you have to improve the package — and when you improve the package, you have to have more money.”

The Post also quoted Rep. Ro Khanna (D-CA), a liberal House leader and ally of Sen. Bernie Sanders (I-VT), saying that Pelosi is “just being pragmatic” and is “absolutely right” when she says Medicare needs to be improved to include things like dental and vision insurance and long-term care.

“I believe we will meet the high bar that Nancy Pelosi has set,” he said. “We can make the case.”

Brand-Name Drugs Nearly 20 Times as Expensive as Generics

Brand-name prescription drugs were, on average, more than 18 times as expensive as generics in 2017, according to a new report from the AARP Public Policy Institute.

The report finds that retail prices for 390 widely used generics fell by an average of 9.3% from 2016 to 2017. The average annual cost for a generic drug taken on a regular basis was $365, down dramatically from $751 in 2013. Brand-name drugs, meanwhile, saw retail prices rise by an average of 8.4% in 2017, based on 267 medications widely used by older adults. The average annual price for those drugs was $6,798.

The report also says that, of the 390 generic drugs it looked at, 297 went down in cost in 2017, while 90 saw a price increase. Six widely used generics had price increases of more than 70%, including an antidepressant called sertraline that rose in price by nearly 200%.

For more details, including price changes for the 25 top-selling generic drugs, see the full report.

Is the Tax System Fair? Democrats and Republicans Disagree More They Have in Decades

Partisan differences over the perceived fairness of the tax code have become far more pronounced since the passage of the 2017 tax law, which was signed into law by President Trump with no support from Democratic lawmakers.

While public opinions about taxes have changed only modestly overall since 2017, a new analysis from Pew Research finds that Republicans and Democrats now have sharply divided views on the issue.

“Two years ago, Republicans and Democrats had similar views of the fairness of the tax system,” Pew said. “Today, 64% of Republicans and Republican-leaning independents say the present tax system is very or moderately fair; just half as many Democrats and Democratic leaners (32%) view the tax system as fair.”

The divergence is most pronounced at higher income levels. More than two-thirds (68%) of Republicans with incomes over $75,000 now say the tax system is very or moderately fair — a big jump from 37% in 2017. Only 21% of Democrats with incomes over $75,000 agree, down from 40% two years ago.

The partisan divide can also be seen in questions about the fairness of the U.S. economy. “Currently, 63% of Americans say the ‘economic system unfairly favors powerful interests,’ while just 34% say it is ‘generally fair to most Americans.’ About twice as many Democrats (81%) as Republicans (40%) say the country’s economic system is unfair,” Pew said.

Your Prize for Making It Through the Week

With baseball in full swing and the Final Four ready to hit the court, Sunday seems like a good time to celebrate National Beer Day, which commemorates Franklin Delano Roosevelt’s decision on April 7, 1933, to legalize the sale of 3.2% beer, the first step toward ending Prohibition. If you feel the need to prepare for the blessed day, here’s a highlight reel of some world-class beer pong trick shots, and a NCAA-style bracket competition to determine the best craft brewery in America.

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