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posted by Fnord666 on Monday April 13 2020, @10:30AM   Printer-friendly
from the abiding-by-the-contract dept.

Company prioritizes $15k ventilators over cheaper model specified in contract:

The Dutch company that received millions of taxpayer dollars to develop an affordable ventilator for pandemics but never delivered them has struck a much more lucrative deal with the federal government to make 43,000 ventilators at four times the price.

The US Department of Health and Human Services announced Wednesday that it plans to pay Royal Philips N.V. $646.7 million for the new ventilators—paying more than $15,000 each. The first 2,500 units are to arrive before the end of May, HHS said, and the rest by the end of December.

Philips refused to say which model of ventilator the government was buying. But in response to questions from ProPublica, HHS officials said the government is purchasing the Trilogy EV300, the more expensive version of the ventilator that was developed with federal funds.

The deal is a striking departure from the federal contract Philips' Respironics division signed in September to produce 10,000 ventilators for the Strategic National Stockpile at a cost of $3,280 each.

"This kind of profiteering—paying four times the negotiated price—is not only irresponsible to taxpayers but is particularly offensive when so many people are out of work," said Dr. Nicole Lurie, who served as the HHS assistant secretary for preparedness and response during the Obama administration. "And besides, most of these ventilators will come too late to make a difference in this pandemic. We'll then 'replenish' the stockpile at a ridiculously high price."

"What else," she asked, "won't we be able to buy as a result?"


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  • (Score: 2) by Hartree on Monday April 13 2020, @10:57PM (3 children)

    by Hartree (195) on Monday April 13 2020, @10:57PM (#982283)

    Companies who make scientific and medical gear have some of the most outrageous overcharging and anticompetition practices. In the medical world, they use the willingness of insurance companies to pay high prices and the fact that if you don't use their product you suffer or die.

    For research, they rely on there not being a voting block to get away with overcharging and outrageous business practices. If this were for, say, automotive related items where a fair bit is known about the goods by the consumers and there is a large base of voters concerned with it, they would get reined in. Look at what happened with the scanner codes for ODBC II. When the manufacturers wouldn't release them, thus locking individuals and independent mechanics out of working on their cars, laws were passed to open up at least some of the codes.

    We're currently fighting that battle on right to repair for items like tractors and electronics. The reason it gets at least some notice is there is a voting block (though not as big as motorists) involved.

    For research, there is no appreciable voter base involved and the manufacturers can just say it's "special" for research and the eyes of everyone from the public to the lawmakers glaze over. And, it's often bullshit of the first order. A bearing from some of these manufacturers is often 10 to 20 times as much as it would be to buy the same bearing from the same maker (Timken or NTN, for example) with exactly the same specs and sizing. But, it's "special" for research whenever they get called out on it. I've made custom gear, and if you make only 5 of something a month you have to charge a lot. But these are for items they sell thousands of a year.

    In at least one case, a coworker of mine stopped recommending a particular brand to his users due to such problems. In a meeting with his supervisors the sales rep for this company asked "how can we get rid of this guy" for giving valid advice to the researchers he supported. Fortunately, the supervisors relied heavily on this person's work and told the rep to stuff it. But this sort of thing happens more often than you think. And the amounts of money involved can be very large.

    I don't name the companies involved, not because they shouldn't be called out for it, but rather because of retaliations of discounts somehow not being available to the department I work for, or things like the shenanigans mentioned above.

    Lest I give the impression that all are like that, there are many companies that are quite reasonable, helpful and provide quality goods. But, the history is that they get bought out by larger companies that obtain their portfolios and often shut the line down. Those who work in the scientific industry can fill in the several blanks as to who that would be.

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  • (Score: 0) by Anonymous Coward on Tuesday April 14 2020, @08:22PM (2 children)

    by Anonymous Coward on Tuesday April 14 2020, @08:22PM (#982761)

    Medical gear also has some of the biggest liability exposure of any class of products. Watch TV for some of the ads proving this.

    Got news for you, sunshine. Insurance doesn't pay more than one goddamn dime than they have to. Their business is not paying doctors and hospitals, their business is MAKING MONEY. The way they make money is to manage risk in a population of people paying the premiums in order to maximize the amount of premiums paid and NOT healing as many of those people as possible. If you are expected to be able to pay $50,000 in premiums over your life and your procedure is going to cost $200,000 the odds of getting that procedure approved isn't very likely. Now, they do actually aggregate the populations for total income and aggregate the total expense, except that they moderate procedure approvals based on how much improvement it gives for the cost. But people can and do die because insurance companies will not approve the procedures which would save the person's life because it is too expensive. It happens. And sometimes a caring physician will go ahead and do that treatment anyway, insurance be damned. And sometimes the physician will say, "If I did that for every patient who needed it I'd be broke."

    Anyway, if insurance can work a price down by applying science... they will. If a new procedure comes up if it doesn't cost less than what is being done now you won't see that procedure getting approved and it will stay "experimental" forever.

    • (Score: 2) by Hartree on Wednesday April 15 2020, @05:39AM (1 child)

      by Hartree (195) on Wednesday April 15 2020, @05:39AM (#982943)

      Oh please.

      Let's start with the idea that a procedure that costs more than you pay into insurance lifelong will nearly always be denied. Are you joking? Seriously? The original raison d'etre for insurance was to spread risk out over large groups rather than it hitting one target. If what you said was even remotely true, there would never be organ transplants, much of cancer therapy, etc.

      About the only things I can agree with in what you say is that the insurance companies are in the business of making money and that medical gear has high liability. Are you SERIOUSLY arguing that they are an effective force for cost containment in our system? I suspect you don't really have that simplistic an outlook but are using it as an arguing stance. It's not about one entity, it's the entire system including government regulation.

      Of course they minimize their expenses in specific cases and love to insure populations that are preselected to use little healthcare. That's standard business 101. But, they, like much of the rest of the US healthcare industry are well aware that the more money that circulates through the chain of healthcare supply provider, healthcare provider, insurance company, drug/research company, medically related lobbyist, the higher the amount each of the components of the healthcare system takes in.

      And this idea that new therapies are always cheaper than the existing ones or don't get approved is laughable. It could only be put forward by someone doing PR with a very naïve audience. How many times have drug manufacturers tacked on some chemical moiety to an existing drug that adds a minor advantage so they can continue to charge patented rates for a drug that otherwise goes generic?

      New therapies will be developed if the drug manufacturers/med equipment suppliers believe they will on average make more than they cost to develop. Note the "on average". They assume many won't, but the ones that will pay for the others. One Lipitor, Prozac or Nexium can pay for a lot of lackluster sellers or outright failures.

      • (Score: 0) by Anonymous Coward on Wednesday April 15 2020, @03:16PM

        by Anonymous Coward on Wednesday April 15 2020, @03:16PM (#983085)

        Yes. It is kind of elementary that if a person takes more out of the system than they put in then the insurance company makes no profit off that person. Do that enough times and they don't make a profit, period. Then you don't have an insurance company. And insurance companies, back in the day, could and did go bust when they screwed up their estimates of the risk pool. Does that mean that person A will absolutely be denied a life-saving procedure? No. But insurance companies will not pay for therapies that will ultimately cost them in the long run.

        Now... new therapies. Yes, that is exactly the way that insurance companies work, and I have first-hand industry knowledge of this. Do you? If a procedure cannot be shown to improve outcomes (i.e. patients get better with less ultimate cost than what is currently done) the procedure will NOT be approved for payment generally. A good practitioner will follow what is and is not approved for payment, and you may not even hear about the alternative that you'd have to out of pocket for. You're supposed to, but probably won't.

        Therapy (and equipment) developers pay to have their equipment approved for safety and efficacy, but then studies are performed (usually by an independent subsidiary of the insurance company) to find out if that therapy is in fact less expensive than what is being done now. THOSE are the studies that insurance companies will use as to whether or not a procedure can be approved or denied for treatment of a given diagnosis. That's how the system works. And in terms of drugs, that Lipitor, Prozac, or Nexium (interesting you chose Nexium, since ranitidine was just recalled...) but anyway drugs are different but even more obvious. Get a drug that works nicely and cheaply and it will make the formulary list for reduced price. Pick one that might actually be more efficacious in a specific case but not in aggregate and it will be off-formulary. You get to pay more for it even though it may be better for you.