The Sudafed Security Trade-Off
This writer wrestles with the costs and benefits of tighter controls on pseudoephedrine, a key chemical used to make methamphetamine:
Now, personally, I sincerely doubt that the pharmaceutical industry has reliable estimates of how many of their purchasers actually have colds--or that they would share data indicating that half of their revenues came from meth cooks. But let's say this is accurate: half of all pseudoephedrine is sold to meth labs. That still wouldn't mean that manufacturers of cold medicines are making "hundreds of millions of dollars a year" off of the stuff--not in the sense that they end up hundreds of millions of dollars richer. The margins on off-patent medicines are not high, and in retail, 50% or more of the cost of the product is retailer and distributor markup*. Then there's the costs of manufacturing.
But this is sort of a side issue. What really bothers me is the way that Humphreys--and others who show up in the comments--regard the rather extraordinary cost of making PSE prescription-only as too trivial to mention.
Let's return to those 15 million cold sufferers. Assume that on average, they want one box a year. That's going to require a visit to the doctor. At an average copay of $20, their costs alone would be $300 million a year, but of course, the health care system is also paying a substantial amount for the doctor's visit. The average reimbursement from private insurance is $130; for Medicare, it's about $60. Medicaid pays less, but that's why people on Medicaid have such a hard time finding a doctor. So average those two together, and add the copays, and you've got at least $1.5 billion in direct costs to obtain a simple decongestant. But that doesn't include the hassle and possibly lost wages for the doctor's visits. Nor the possible secondary effects of putting more demands on an already none-too-plentiful supply of primary care physicians.
I like seeing the debate framed as a security trade-off.
Posted on February 15, 2012 at 7:09 AM • 63 Comments