Miguel has touched on this twice, but I wanted to poke at it too.

This is a real Tweet from Presidential Candidate Robert Francis “Beto” O’Rourke:

It is a Hallmark of the Left that they have no, I mean absolutely zero, none-what-so-fucking-ever, understanding of economics.

They are governed entirely by emotion.  That is why a guy like Beto feels entirely comfortable saying something like this.  Because he feels that insulin should be cheaper and guns should be more expensive because he likes when diabetics get insulin and he hates guns.

The reality of the pricing of each has no bearing at all on the other.

Let us explore this, shall we?

Why are AR-15’s so cheap?

Once upon a time, they were not.  Let us not forget the bad old days of the AR market when a cheap AR-15 was in the $700 or $800 range.  There were only a few AR-15 Makers and most of them began with ‘C’ ended with ‘t’ and had a dancing horse engraved on them.

Then three things happened right about the same time.  The Clinton AWB ended and the wars in Iraq and Afghanistan began.  The ATF also had a bit of a culture change under the GW Bush administration.  For most people, they might not have noticed, but for the industry, they became more of a regulatory body like the FDA and became a lot less antagonistic to gun makers.  It became considerably easier to become a manufacturer.

Then some economic magic kicked in, three little words “economy of scale.”

If you think that AR-15 manufacturers make all the parts of their guns, you are wrong.  There are several forging houses that slam out uppers and lowers.  There are quite a few barrel makers.  There are lots of machine shops that can make the little parts in the fire control and bolt group.  Even more heat treaters to heat treat them.

Most current AR-15 makers are really assemblers, making just receivers with an FFL and buying the rest of the parts.  The big names will also make barrels, bolts and a few more of the “core competency parts.”

It only requires an FFL to work with serialized components, so there are a lot of places than are subcontracted out to make parts that don’t require an FFL.

So, the AWB ended and people wanted “pre-ban” configurations.  There were lots of parts makers making huge volumes of parts for military contracts.  There was an explosion in small machine shops that got an FFL and could take a forging, turn it into a receiver, buy the rest of the parts from subcontractors and start making AR-15’s.

Think about all the smaller AR makers that took off in recent years: Bravo Company, Daniel Defense, Double Star, Anderson Manufacturing, etc.  There is a glut of makers that do only AR-15’s.

This high demand drove an even bigger supply and the price went down.

When Obama got elected and the demand exceeded the supply, prices went up.  When Trump got elected, the supply which had gone up to match the Obama demand, now exceeded the demand under Trump and prices bottomed out.

It’s simple supply and demand economics.  How much some politician thinks an AR-15 should cost because they hate guns has nothing to do with it.

Now, what about insulin?

It’s the same thing, economics.

Good Rx has an article on the costs of 22 different brands of insulin.  Miguel was right about the cost of insulin:

Prices of Novolin and Humulin (traditional short- and intermediate-acting insulins) have turned south, while prices of modern rapid- and long-acting insulins continue to go up. On average, traditional insulins now cost less than half of what modern insulins cost.

Why? Understandably, traditional insulins have always been cheaper than their newer competitors. Modern insulins offer better blood sugar control but are synthetic analogs of traditional insulins, which makes them more difficult to produce.

Additionally, when patents on Humulin and Novolin expired around 2000—after protecting these brands from competition for nearly 40 years—manufacturers Eli Lilly and Novo Nordisk have had to test new pricing strategies to remain competitive.

Last March, for example, Novo Nordisk partnered with CVS to offer Novolin at roughly 80% less than its normal list price. Both Novo Nordisk and Eli Lilly have also worked with Walmart to heavily discount Novolin and Humulin under Walmart’s ReliOn line of insulin products.

Economic competition at it’s finest.

The newer stuff is much more expensive.  It’s also still being protected by patents and the extra features, such a the high concentration stuff that allows the use of the tiny “pain-free” needles add considerably to the cost.

If you are willing to use a syringe you fill yourself from a glass vial you have to keep in the refrigerator, insulin can be cheap.

Here is the kicker, that stuff still works and is still good for most patients.

Doctors are reluctant to prescribe older insulin products — the ones that are eligible for generic competition, according to the American Medical Association. That’s despite the fact that research shows that many people with diabetes respond just as well to older insulins, according to research published in the journal Diabetes Care. A 2014 study from the Institute for Clinical and Economic Review also found that there’s adequate evidence to suggest older insulins are just as effective as newer insulins for people with type 2 diabetes.

There are a few problems that cause this.  One is that doctors get a lot of perks from pharmaceutical companies for prescribing the latest and greatest in drugs.  It’s not exactly “kickbacks” because it’s not money, it’s just the rep ordering a catered lunch for a 15 minuted presentation in the office.

Another one is a form of patent abuse called “evergreening.”  This allows a pharmaceutical company to renew a patent by changing a minor secondary chemical in a drug (a buffer or something like that) without affecting the primary formulation.

As an R&D engineer, I believe deeply in the need for patents and intellectual property to promote research.  That doesn’t excuse patent abuse which drives up prices without the accompanying R&D improving the quality of the product.

There is also the issue with just how long and how much it costs to get the FDA to approve a drug.  Even generics have to go through an approval process to make sure that the final product meets FDA standards.

New drugs can take 12 years to hit the market and cost a few billion dollars.  Even something like clinical trials is up to $20 million.

So…

If you want to lower the cost of insulin for patients, what can you do?

The answer is: take a page out of the playbook for making AR-15’s so cheap, i.e., economic competition.

Rewrite patent law for pharmaceuticals that protects R&D but prevents evergreen patent abuse.

Ease the burden of going to market, including on generics from off-patent drugs.  Make the process faster and cheaper so smaller drug companies, or even startups – can have a higher ROI and would be willing to get into the patent game.

Tighten rules for doctor kickbacks, go so far as preventing pharmaceutical companies from tracking which doctors prescribe their name brands the mosts.

Give more leniency to pharmacists to vary prescriptions.  Allow the pharmacist to work with a patient on choosing insulin that best fits their budget, and explaining to the patient how that form of insulin works.  If a patient can’t afford the expensive long-acting insulin, let the pharmacist change the script to a cheaper short-acting vial form, and not require the patient to have to go back to the doctor.  Remember that a pharmacist (not a pharma-tech) is a Ph.D. and usually knows more about the drug than the MD.

What made AR-15’s drop by half in price over the same period that insulin doubled in price is the same thing, supply and demand.  The gun market a loosely regulated free market system driven by supply and demand and prices went down.  The insulin market didn’t have that and prices went up.

Macroeconomics is not a hard subject to learn.

Of course, Beto being a hard Leftist doesn’t know macroeconomics so he things that the government should be able to specify prices at a whim.

He will make insulin cheaper by fiat, which will only lead to shortages.

He will try to make AR-15 more expensive (and probably will) with a ban, which is nothing more than an artificially imposed market shortage.

Neither idea will save lives, and in the case of creating an insulin shortage, will cost more lives.

The Soviet Union decided what prices would be and people went hungry and stood in breadlines without shoes.  Venezuela did the same thing and history repeated itself.

Anybody with an understanding of macroeconomics gets that.  Beto doesn’t and his feelings about how much things “should” cost will only cause more problems.

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By J. Kb

11 thoughts on “The Left and how much things “should” cost”
  1. There is another, and less obnoxious, reason that doctors will sometimes prescribe the “new improved” version of the medication. Free samples.

    Back when I lived south of Mordor(MA) in MD, I had a couple of occasions to take a friend with no medical insurance to the urgent care facility.

    For $100 bucks they ran diagnostics, met with them, decided on a course of treatment. And 5 out of 5 times prescribed the latest and greatest antibiotic or other med. And then reached into the supply cabinet and handed enough to cover the ‘script. “The rep’ was here last Thursday and dropped off a couple of boxes of …, I know you don’t have insurance so here.”

    He had to write the ‘script but then filled it for us.

    I had insurance and my doctor did the same thing, saved us a few bucks. It helped him feel better. Caused no harm.

    So sometimes those doctors scratching the parma’s back is because the parma’s are coming around and helping those that can’t afford the meds.

    Reminds me of the big BS round with the Fluck(?) who was demanding free birth control because she couldn’t afford it as a collage student, at a time when WalMart had BC pills for $7/month.

    Yeah, you can buy the best and pay a lot more, or you can buy a bit older and pay a bit less.

    A new Remington 700 is going to cost you a bit more than a WWII bolt action but you might find that one is just as good as the other for most jobs. And that $350 AR from PSA is going to be a bit more work to put together than the $500 S&W at my local FFL.

    1. I had that happen — just changed jobs, insurance hadn’t kicked in yet, I caught pneumonia. My doctor gave me a stack of free samples of an antibiotic, got me through it.

    2. But putting together the $350 PSA will teach you a lot more about how ARs work – and what can go wrong – than paying $500 for the complete rifle.

    3. Since Insulin gores my personal ox, I’m going to speak out here. This is a huge issue with T1 (insulin dependent) diabetics and both the JDRF and ADA have active campaigns because the major reason for high insulin costs is the drug companies jacking up prices because they can. Consider Humalog, one of the most common synthetic insulins. It’s been on the market since 1996 when it was $20 a vial. Currently it’s $275 a vial, over 10 times more expensive and nothing has changed except the price. Adjusting for inflation only gives you a generous figure of $30 a vial. This isn’t financing R&D or even rising costs, this is flat out greed ala Martin Shkreli.

      And yeah I think Insulin should cost as much as one of those plastic boxes of Federal .223, not more than a PSA AR. Too much of our healthcare system is a racket run by rent seekers and condoned by health insurers unwilling to risk their profits by controlling costs and actually investigating fraud.

  2. it is actually much easier to drastically reduce the cost of life saving insulin and it can be done very quickly.
    Have Medicare put beef and pork insulin’s back on their formulary and remove all “modern” insulins. In addition, create an exception in FDA regs allowing generic manufacturers to utilize proven insulin formulas without going through the approval process.

    As far as Pharmacists, most are not Pharm.Ds. Last I checked, most attend a 2 year pre-pharm course, which includes such light topics as Organic Chemistry, and then 3 years of pharmacy school. In contrast, MDs get a whole entire 1 semester class on pharmaceuticals.

    Many pharmacy technicians have extensive knowledge of pharmaceuticals.

    1. A licensed pharamcist is a Pharm.D. That’s a requirement. The two year program is a “Pharmacy technician.” They are still knowledgeable, but a Pharma.D. should be able to change a script within the confines of form one drug to another.

      Like if a patient has an allergy to an antibiotic, the Pharma.D. should be able to change the scrip to a different antibiotic with similar potency.

  3. It is built on a lie. Insulin costs an average of $75 per month. ($25 per vial) Ask your doctor for a cheaper alternative to brand names like Humalog.

  4. I’m not going to get into the medical stuff, but one of the main reasons that the AR is so inexpensive now is that it is designed for modern manufacturing.

    1. Being a garage Machinist, I can tell you the most expensive processes are work holding and tool changes. Assuming the lower comes out with all of the external features there, you only need to remove material.

      There is one long reach hole to the bolt catch. That is special purpose tooling but easy to make. The rest of the holes on the side are easy to place once you have your datums.

      Maybe a few extra tool changes to ream holes to size.

      That leaves milling the trigger pockets and the mag well. Push a custom broach through the mag well.

      There is nothing difficultly in the entire process
      Compared to the m1 Garand where I still don’t know where to start….

  5. Beto: Insulin costs $450 a month. An AR-15 costs $395 for a lifetime. It shouldn’t be more affordable to kill than to stay alive.

    Setting aside the brand-name-versus-generics debate….

    Insulin-dependent diabetes affects around 0.3% of the U.S. population (according to NIH: about 300k-1m people). A population that small is trivially easy to gouge — especially for life-saving drugs and/or devices — without upsetting the rest too much.

    Defensive gun uses (DGUs) number anywhere between 108k/year (even the VPC grudgingly admits this) and 5m/year. The actual number is probably between 2m and 3m, each and every year.

    It’s a safe bet that there are more gun owners who will use their guns for lawful self-defense (as in, will use their guns to defend against a violent criminal, whether or not shots are fired) in a given year than there are Americans with insulin-dependent diabetes.

    So Beto should save the “cheaper to kill than stay alive” schtick. Tell that to the potentially 2-3 million people who had legal DGUs last year and are still alive because of it.

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