1 00:00:00,200 --> 00:00:02,400 Speaker 1: Right now, we're joined by good friend of the Armstrong 2 00:00:02,440 --> 00:00:05,800 Speaker 1: and Getty show, Craig got Walls, Craig the healthcare guru, 3 00:00:06,200 --> 00:00:11,640 Speaker 1: attorney at law, benefits expert about the sixty minutes slash 4 00:00:11,640 --> 00:00:15,240 Speaker 1: Washington Post story slash virtually everybody reporting on the generic 5 00:00:15,480 --> 00:00:20,279 Speaker 1: drug cartel deal, the overpricing of generic drugs as the 6 00:00:20,280 --> 00:00:23,480 Speaker 1: big drug manufacturers were working with each other to screw 7 00:00:23,600 --> 00:00:27,720 Speaker 1: you and me. Craig joins us, Hello, Craig, how are you, sir? Um? Well, 8 00:00:27,760 --> 00:00:29,880 Speaker 1: how are you? Gentlemen? Terrific? Is this one of those 9 00:00:29,880 --> 00:00:32,040 Speaker 1: deals where you were watching sixty minutes and screaming at 10 00:00:32,040 --> 00:00:35,440 Speaker 1: your TV? Or did they mostly get it right? Now? 11 00:00:35,520 --> 00:00:38,240 Speaker 1: You know, I both the Washington Post in sixty minutes 12 00:00:38,479 --> 00:00:41,800 Speaker 1: generally got this one right. But they don't. They don't 13 00:00:41,880 --> 00:00:44,760 Speaker 1: understand exactly why. And you get then when I was 14 00:00:44,840 --> 00:00:47,840 Speaker 1: when I was listening to your interview yesterday on the radio, 15 00:00:47,920 --> 00:00:54,840 Speaker 1: and you listen to no because you actually I think 16 00:00:54,960 --> 00:00:56,880 Speaker 1: one of you asked the question. One of you said, 17 00:00:57,520 --> 00:01:00,320 Speaker 1: why two thousand and twelves and lo what happened? And 18 00:01:00,160 --> 00:01:02,960 Speaker 1: and he you know, his his answer was legitimate, and 19 00:01:02,960 --> 00:01:06,080 Speaker 1: that well, Medicare and Medicaid are the largest purchases of healthcare, 20 00:01:06,080 --> 00:01:08,360 Speaker 1: and they moved incredibly slow, and they're not catching fraud, 21 00:01:08,520 --> 00:01:12,240 Speaker 1: which was accurate. But there was something far more insidious 22 00:01:12,280 --> 00:01:15,240 Speaker 1: going on that I didn't expect your reporter to know. 23 00:01:15,280 --> 00:01:17,240 Speaker 1: But okay, so this, this is why, all of a 24 00:01:17,280 --> 00:01:20,600 Speaker 1: sudden two thousand twelve, these companies started rigging the market 25 00:01:21,080 --> 00:01:23,480 Speaker 1: to raise the prices on generic drugs just because they 26 00:01:23,480 --> 00:01:26,399 Speaker 1: wanted to make more money. Why did it happen then, Well, 27 00:01:26,720 --> 00:01:29,080 Speaker 1: it happened in two thousand twelve, and more importantly, the 28 00:01:29,160 --> 00:01:31,800 Speaker 1: reason it started to not be caught in two thousand 29 00:01:31,800 --> 00:01:35,640 Speaker 1: twelve was if you recall, um, we had a small, 30 00:01:35,800 --> 00:01:41,800 Speaker 1: little forty page regulation, federal law that mainly took effect 31 00:01:41,800 --> 00:01:45,800 Speaker 1: in two thousand twelve. We affectionately called that Obamacare. Hence 32 00:01:45,840 --> 00:01:47,720 Speaker 1: the artists that used to be known as Craig the 33 00:01:47,720 --> 00:01:53,760 Speaker 1: Obamacare lawyer. Um. Deep within, that's right, deep within, darkest, 34 00:01:53,920 --> 00:01:58,520 Speaker 1: dankest Obamacare is a price control mechanism. It's referred to 35 00:01:58,560 --> 00:02:01,920 Speaker 1: as the Medical Lost Race You mandate or MLR mandate. 36 00:02:02,000 --> 00:02:05,800 Speaker 1: And what that says, in effect is if an insurance 37 00:02:05,800 --> 00:02:08,400 Speaker 1: carrier takes a hundred dollars from you, they have to 38 00:02:08,480 --> 00:02:11,440 Speaker 1: spend eighty five of those dollars on medical claims, and 39 00:02:11,480 --> 00:02:14,800 Speaker 1: they only get to keep fifteen percent of those dollars 40 00:02:14,840 --> 00:02:18,280 Speaker 1: to pay their expenses and their profit margin. So it's 41 00:02:18,280 --> 00:02:22,200 Speaker 1: a price control mechanism. Okay. And in the past, prior 42 00:02:22,240 --> 00:02:26,640 Speaker 1: to Obamacare, insurance carriers used to care about keeping costs 43 00:02:26,720 --> 00:02:30,000 Speaker 1: down because the lower they kept cost, the more profit 44 00:02:30,040 --> 00:02:32,160 Speaker 1: they can they could keep, the more they could compete 45 00:02:32,200 --> 00:02:35,760 Speaker 1: on price with their competitors. However, once you put this 46 00:02:36,000 --> 00:02:39,920 Speaker 1: MLR mandate in their handcuffed, it's basically so simple as 47 00:02:40,000 --> 00:02:43,120 Speaker 1: to say, whatever you think this customer's claims are going 48 00:02:43,160 --> 00:02:46,080 Speaker 1: to be next year, you price their premium as fifteen 49 00:02:46,160 --> 00:02:48,239 Speaker 1: percent more than claims, and all you can keep is 50 00:02:48,280 --> 00:02:50,680 Speaker 1: fifteen percent. And oh, by the way, if you screw 51 00:02:50,760 --> 00:02:53,160 Speaker 1: up and you actually end up keeping seventeen percent, you 52 00:02:53,160 --> 00:02:56,400 Speaker 1: have to rebate two percent back to the policy holders. 53 00:02:56,440 --> 00:02:59,600 Speaker 1: So it's nothing but a price control mechanism. Now, if 54 00:02:59,639 --> 00:03:03,400 Speaker 1: you all your child you're only allowed thirty percent of 55 00:03:03,400 --> 00:03:05,280 Speaker 1: a bowl of ice cream, are they going to reach 56 00:03:05,320 --> 00:03:09,680 Speaker 1: for the large bowl or the small bowl? Right? Go on, 57 00:03:10,000 --> 00:03:12,640 Speaker 1: They're they're gonna grab for the large bowl, right so 58 00:03:12,680 --> 00:03:18,120 Speaker 1: there to spend more. It's an it's an incentive for 59 00:03:18,160 --> 00:03:21,560 Speaker 1: the insurance carriers to look the other way when claims 60 00:03:21,560 --> 00:03:23,919 Speaker 1: are higher, because they're only going to get to keep 61 00:03:24,880 --> 00:03:27,760 Speaker 1: more than claims. So if claims is a bigger number, 62 00:03:28,040 --> 00:03:31,040 Speaker 1: they're cool with it. So my starting go ahead. Well, 63 00:03:31,200 --> 00:03:35,360 Speaker 1: I was gonna say, so, is this a um the 64 00:03:35,400 --> 00:03:37,400 Speaker 1: people who wrote Obamacare? Did they know this was going 65 00:03:37,480 --> 00:03:39,280 Speaker 1: to happen and they were paid off or cool of it? 66 00:03:39,360 --> 00:03:41,600 Speaker 1: Or is this just one of those unintended consequences we 67 00:03:41,640 --> 00:03:44,080 Speaker 1: thought we the world and we just we're just smart 68 00:03:44,160 --> 00:03:45,760 Speaker 1: enough to figure out how we were going to get gamed. 69 00:03:46,360 --> 00:03:48,720 Speaker 1: Oh that's it that it's absolutely the latter. This is 70 00:03:48,760 --> 00:03:51,560 Speaker 1: a no good deed goes unpunished. Anybody who tries to 71 00:03:51,600 --> 00:03:54,680 Speaker 1: create a utopian heaven on earth always screws up. Well, 72 00:03:54,720 --> 00:03:58,080 Speaker 1: and this is go ahead, finish your your thought. Well 73 00:03:58,280 --> 00:04:01,120 Speaker 1: this is it. I mean you, when this first came out, 74 00:04:01,120 --> 00:04:02,560 Speaker 1: a lot of us even thought, well, that's not a 75 00:04:02,560 --> 00:04:04,240 Speaker 1: bad idea to keep, you know, to make sure that 76 00:04:04,320 --> 00:04:08,240 Speaker 1: insurance companies aren't those evil insurance companies aren't profiting more 77 00:04:08,280 --> 00:04:11,520 Speaker 1: than they should. But what happened was the unintended consequence 78 00:04:11,640 --> 00:04:14,360 Speaker 1: was oh okay, well then we don't really care about 79 00:04:14,680 --> 00:04:19,120 Speaker 1: fraud or customer service or airs or high claims. So 80 00:04:19,800 --> 00:04:24,760 Speaker 1: whereby prior to you would have had insurance carriers screaming 81 00:04:25,120 --> 00:04:27,520 Speaker 1: at the top of their lungs if they saw drug 82 00:04:27,560 --> 00:04:31,040 Speaker 1: manufacturers Quinn tupling the price of a of a generic 83 00:04:31,080 --> 00:04:36,040 Speaker 1: drug overnight after insurance companies really didn't care. In fact, 84 00:04:36,080 --> 00:04:37,880 Speaker 1: some of them might have saw it and thought, that's fine, 85 00:04:37,920 --> 00:04:41,000 Speaker 1: we can just price that much higher. That is clearly 86 00:04:41,160 --> 00:04:44,880 Speaker 1: a key, if not the key part of this whole story. Absolutely, 87 00:04:44,960 --> 00:04:47,800 Speaker 1: but it wasn't comfortable for the left leaning reporters to 88 00:04:47,839 --> 00:04:52,000 Speaker 1: dive into that, or perhaps they just didn't know. But yeah, obviously, 89 00:04:52,040 --> 00:04:55,120 Speaker 1: so the insurance companies are thinking, great, we get of 90 00:04:55,160 --> 00:05:00,279 Speaker 1: a much larger number. Go ahead and jam, jam people 91 00:05:00,320 --> 00:05:02,320 Speaker 1: all you want. We get more money that way. Craig 92 00:05:02,320 --> 00:05:04,719 Speaker 1: god Laws is Craig the healthcare guru. This is a 93 00:05:04,800 --> 00:05:08,080 Speaker 1: perfect time to reintroduce to folks who aren't familiar with it, 94 00:05:08,160 --> 00:05:11,760 Speaker 1: the term rent seeking, which is when you get government 95 00:05:11,800 --> 00:05:13,960 Speaker 1: involved in all these things, and these bureaucrats think they're 96 00:05:13,960 --> 00:05:16,240 Speaker 1: so clever and they try to build their utopia through 97 00:05:16,640 --> 00:05:20,400 Speaker 1: thousands of pages long legislation. The experts go to work 98 00:05:20,480 --> 00:05:25,080 Speaker 1: and between fifteen minutes and six months later, they figure 99 00:05:25,120 --> 00:05:27,800 Speaker 1: out how to game the system. So instead of spending 100 00:05:27,800 --> 00:05:31,359 Speaker 1: their time and energy to innovate, to better serve their customers, 101 00:05:31,400 --> 00:05:33,680 Speaker 1: to do their jobs better, they spend their time and 102 00:05:33,800 --> 00:05:36,560 Speaker 1: energy figuring out how to game the system and how 103 00:05:36,600 --> 00:05:39,480 Speaker 1: to rip off the government. You see it in folks 104 00:05:39,480 --> 00:05:42,560 Speaker 1: who came over from the Soviet Union. They are so 105 00:05:42,800 --> 00:05:45,000 Speaker 1: good at gaming the system because that was the most 106 00:05:45,040 --> 00:05:49,400 Speaker 1: important life skill. Yeah, that's well said, that's exactly right, 107 00:05:49,800 --> 00:05:52,799 Speaker 1: and and it's on the drug. So this is carriers, right, Okay, 108 00:05:52,960 --> 00:05:54,960 Speaker 1: so you know you say, well, who should have seen this? 109 00:05:55,040 --> 00:05:57,440 Speaker 1: You guys asked the question, Well, carriers would have seen this. 110 00:05:57,560 --> 00:06:01,160 Speaker 1: But see now you created a system where carrier don't care. Now, 111 00:06:01,400 --> 00:06:05,200 Speaker 1: even more insidious, you probably had very very smart generic 112 00:06:05,240 --> 00:06:09,799 Speaker 1: drug manufacturers pouring through Obamacare and realizing, wait a minute, 113 00:06:10,040 --> 00:06:12,320 Speaker 1: carriers aren't going to be as sensitive when we increase 114 00:06:12,400 --> 00:06:14,760 Speaker 1: prices because that just means their profits can go up 115 00:06:14,800 --> 00:06:17,719 Speaker 1: to So I don't think it's any accident that this 116 00:06:17,800 --> 00:06:21,200 Speaker 1: all started in Yeah, and obviously, like the first time, 117 00:06:21,240 --> 00:06:23,440 Speaker 1: the race prices and nobody said anything, and then you 118 00:06:23,480 --> 00:06:25,320 Speaker 1: all got to get them raise prices again even further, 119 00:06:25,360 --> 00:06:27,160 Speaker 1: and nobody said anything. Pretty soon you caught on, Hey, 120 00:06:27,160 --> 00:06:30,039 Speaker 1: we there's no market force stopping us from doing this, 121 00:06:30,279 --> 00:06:32,680 Speaker 1: no market force, are legal force stopping us from doing 122 00:06:33,160 --> 00:06:34,680 Speaker 1: So what do you expect to do with this? What 123 00:06:34,720 --> 00:06:36,680 Speaker 1: do you expect to happen now? I mean, now that 124 00:06:36,720 --> 00:06:39,279 Speaker 1: the jig is up, if this lawsuit ends up ending 125 00:06:39,360 --> 00:06:43,800 Speaker 1: up the right way, will generic drug prices just collapse overnight? 126 00:06:43,880 --> 00:06:46,480 Speaker 1: Because I mean they jammed them up for no reason 127 00:06:46,560 --> 00:06:49,839 Speaker 1: other than pure profit. Yeah, they're gonna drop. They're gonna 128 00:06:49,920 --> 00:06:52,800 Speaker 1: drop precipitously. Jack. I I heard your frustration with that 129 00:06:52,880 --> 00:06:56,760 Speaker 1: question yesterday too. And the only the only mechanism in 130 00:06:56,800 --> 00:06:59,400 Speaker 1: place that would that would cause them to maybe not 131 00:06:59,480 --> 00:07:02,560 Speaker 1: drop as dramatically as we would like, is that um 132 00:07:02,960 --> 00:07:06,279 Speaker 1: drug prices in general are the fastest growing component of 133 00:07:06,360 --> 00:07:09,400 Speaker 1: healthcare prices. So they're going up at twenty five percent 134 00:07:09,440 --> 00:07:12,840 Speaker 1: per year. Generic Yeah, generics aren't quite that bad. They're 135 00:07:12,880 --> 00:07:15,520 Speaker 1: more like ten percent per year. So if we've got 136 00:07:15,520 --> 00:07:18,880 Speaker 1: an inflation effect, a natural inflation effect of ten percent 137 00:07:18,920 --> 00:07:22,880 Speaker 1: per year going back to when when now seven years later, 138 00:07:22,960 --> 00:07:25,000 Speaker 1: we dropped those prices, we're not going to drop them 139 00:07:25,040 --> 00:07:28,280 Speaker 1: as low as they were in maybe you know, halfway 140 00:07:28,280 --> 00:07:30,680 Speaker 1: back kind of saying, so listen, we're running running out 141 00:07:30,680 --> 00:07:32,880 Speaker 1: of time, but let's spend like sixty seconds on this, 142 00:07:32,920 --> 00:07:34,760 Speaker 1: because I have a feeling you're familiar with this. I 143 00:07:34,840 --> 00:07:36,880 Speaker 1: just became hip to it when I can't remember. A 144 00:07:36,880 --> 00:07:39,720 Speaker 1: listener or somebody pointed it out to us that one 145 00:07:39,720 --> 00:07:44,120 Speaker 1: of the reasons a drunk drug company gets exciting new 146 00:07:44,200 --> 00:07:47,400 Speaker 1: approval lad for instance, you know, we'll call it uh 147 00:07:48,320 --> 00:07:52,240 Speaker 1: uh you know Armstrong and Gettysia, which has been a 148 00:07:52,280 --> 00:07:56,840 Speaker 1: baldness treatment. Turns out it helps with dry eyes. It 149 00:07:56,920 --> 00:07:59,720 Speaker 1: increases the tearing of your eyes. So they've sought FDA 150 00:08:00,000 --> 00:08:03,760 Speaker 1: oval as a dry eye remedy. That's to keep it 151 00:08:03,800 --> 00:08:07,160 Speaker 1: from going generic. I didn't know that, right. If they 152 00:08:07,200 --> 00:08:10,560 Speaker 1: if they can, if they can discover another valid purpose 153 00:08:10,600 --> 00:08:13,280 Speaker 1: for that drug, they can they can gain another allotment 154 00:08:13,320 --> 00:08:15,120 Speaker 1: of whatever it is six to eight years, where they 155 00:08:15,120 --> 00:08:16,960 Speaker 1: can keep it as a brand name drug under that 156 00:08:17,000 --> 00:08:20,640 Speaker 1: purpose as well. Now, and so I could see as 157 00:08:20,680 --> 00:08:22,640 Speaker 1: a drug company and their way ahead of me on this. 158 00:08:22,720 --> 00:08:25,960 Speaker 1: Obviously they do it for a living, but identifying a 159 00:08:26,240 --> 00:08:30,640 Speaker 1: side effect that some people might want it gives you. 160 00:08:30,960 --> 00:08:33,680 Speaker 1: It gives you hives. Some people like it gives you 161 00:08:33,760 --> 00:08:36,559 Speaker 1: severe headaches. What if you've never had a headache and 162 00:08:36,640 --> 00:08:40,680 Speaker 1: you wonder, what are they like my room hauler highs 163 00:08:40,760 --> 00:08:45,680 Speaker 1: Jack Exactly So Craig the healthcare guru, Craig got Walls. 164 00:08:45,720 --> 00:08:49,040 Speaker 1: If you need help with benefits for your largish company, 165 00:08:49,080 --> 00:08:53,280 Speaker 1: is happy to help you out at what benefit underscore 166 00:08:53,320 --> 00:08:57,760 Speaker 1: Revolution Revolution Revolution dot com. That's the one, I'm sure 167 00:08:57,760 --> 00:08:59,960 Speaker 1: of it. Or just email us we'll put you in touch. Craig. 168 00:09:00,040 --> 00:09:03,040 Speaker 1: It's always enlightening. Thanks budd Thank you, gentlemen. We'll talk 169 00:09:03,040 --> 00:09:05,560 Speaker 1: to you later. While so drugs, even on their own, 170 00:09:05,600 --> 00:09:11,960 Speaker 1: are going up per year. That's incredible. There are just 171 00:09:12,080 --> 00:09:16,200 Speaker 1: so many examples of these well meaning government policies that 172 00:09:16,240 --> 00:09:18,600 Speaker 1: are going to rein in these big, mean corporations. But 173 00:09:18,640 --> 00:09:23,560 Speaker 1: they find their way around it moments later. But those laws, 174 00:09:23,559 --> 00:09:26,679 Speaker 1: with all their unintended consequences and their costs and their 175 00:09:26,720 --> 00:09:30,760 Speaker 1: restrictions on freedom, they stick around forever. You know, there 176 00:09:30,760 --> 00:09:35,640 Speaker 1: there are solutions to America's health care problems. Gigantic one 177 00:09:35,720 --> 00:09:39,240 Speaker 1: size fits all ish legislation, that's not it.