> Gee, you get to just hand-wave an entire manufacturing process and supply chain into insignificance, but I need a model, huh?
Nope, for this you just need a number! (In my comment, the "model" part referred to how monopoly pricing was done.)
> So 11 cents/pill just to run a pill through the supply chain and then dispose of it.
Good, your estimate process is a reasonable one, and I accept this number.
> $330 million/year...I dunno, seems potentially significant, at least to an order of magnitude level.
Ok, let's compare to what the article says:
> Experts estimate such squandering eats up about $765 billion a year — as much as a quarter of all the country’s health care spending.
So we see that our cocktail napkin math has been extremely useful, and that the article has overstated the size of the issue by some three orders of magnitude! (25% --> 0.01%) The many suggestions in the article that this is important on the level of the entire health care system is absolute bunk.
$765B is their estimate for all waste, not just wasted pills:
ProPublica has been researching why the U.S. health care
system is the most expensive in the world. One answer,
broadly, is waste — some of it buried in practices that
the medical establishment and the rest of us take for
granted. We’ve documented how hospitals often discard
pricey new supplies, how nursing homes trash valuable
medications after patients pass away or move out, and how
drug companies create expensive combinations of cheap
drugs. Experts estimate such squandering eats up about
$765 billion a year — as much as a quarter of all the
country’s health care spending.
Later on they say:
Tossing such drugs when they expire is doubly hard. One
pharmacist at Newton-Wellesley Hospital outside Boston
says the 240-bed facility is able to return some expired
drugs for credit, but had to destroy about $200,000 worth
last year. A commentary in the journal Mayo Clinic
Proceedings cited similar losses at the nearby Tufts
Medical Center. Play that out at hospitals across the
country and the tab is significant: about $800 million
per year. And that doesn’t include the costs of expired
drugs at long-term care pharmacies, retail pharmacies
and in consumer medicine cabinets.
This isn't estimating the same thing as the GP's $330M (hospital waste instead of consumer waste) but $800M is on the same scale, suggesting to me that the marginal cost of drugs might matter some.
(I do agree with your point that most of the cost, and especially the most egregious examples like the wasted epi-pens, don't represent real costs because of monopolies.)
Hey thanks! This is a good clarification. I'm happy to modify my criticism from "the author is strictly off by a factor of 1000" to "the author strongly leads the reader to believe the size of the effect is 1000 times stronger than it really is, but he deftly avoids saying anything that's technically false, and in any case the reader shouldn't care about this since it represents an dead-weight loss of about $2 per person per year, which is less than the value of the reader's time spent reading this article".
Nope, for this you just need a number! (In my comment, the "model" part referred to how monopoly pricing was done.)
> So 11 cents/pill just to run a pill through the supply chain and then dispose of it.
Good, your estimate process is a reasonable one, and I accept this number.
> $330 million/year...I dunno, seems potentially significant, at least to an order of magnitude level.
Ok, let's compare to what the article says:
> Experts estimate such squandering eats up about $765 billion a year — as much as a quarter of all the country’s health care spending.
So we see that our cocktail napkin math has been extremely useful, and that the article has overstated the size of the issue by some three orders of magnitude! (25% --> 0.01%) The many suggestions in the article that this is important on the level of the entire health care system is absolute bunk.
Thank you for engaging in this exercise with me!