Speaker 1: Right now, we're joined by good friend of the Armstrong
Speaker 1: and Getty show, Craig got Walls, Craig the healthcare guru,
Speaker 1: attorney at law, benefits expert about the sixty minutes slash
Speaker 1: Washington Post story slash virtually everybody reporting on the generic
Speaker 1: drug cartel deal, the overpricing of generic drugs as the
Speaker 1: big drug manufacturers were working with each other to screw
Speaker 1: you and me. Craig joins us, Hello, Craig, how are you, sir? Um? Well,
Speaker 1: how are you? Gentlemen? Terrific? Is this one of those
Speaker 1: deals where you were watching sixty minutes and screaming at
Speaker 1: your TV? Or did they mostly get it right? Now?
Speaker 1: You know, I both the Washington Post in sixty minutes
Speaker 1: generally got this one right. But they don't. They don't
Speaker 1: understand exactly why. And you get then when I was
Speaker 1: when I was listening to your interview yesterday on the radio,
Speaker 1: and you listen to no because you actually I think
Speaker 1: one of you asked the question. One of you said,
Speaker 1: why two thousand and twelves and lo what happened? And
Speaker 1: and he you know, his his answer was legitimate, and
Speaker 1: that well, Medicare and Medicaid are the largest purchases of healthcare,
Speaker 1: and they moved incredibly slow, and they're not catching fraud,
Speaker 1: which was accurate. But there was something far more insidious
Speaker 1: going on that I didn't expect your reporter to know.
Speaker 1: But okay, so this, this is why, all of a
Speaker 1: sudden two thousand twelve, these companies started rigging the market
Speaker 1: to raise the prices on generic drugs just because they
Speaker 1: wanted to make more money. Why did it happen then, Well,
Speaker 1: it happened in two thousand twelve, and more importantly, the
Speaker 1: reason it started to not be caught in two thousand
Speaker 1: twelve was if you recall, um, we had a small,
Speaker 1: little forty page regulation, federal law that mainly took effect
Speaker 1: in two thousand twelve. We affectionately called that Obamacare. Hence
Speaker 1: the artists that used to be known as Craig the
Speaker 1: Obamacare lawyer. Um. Deep within, that's right, deep within, darkest,
Speaker 1: dankest Obamacare is a price control mechanism. It's referred to
Speaker 1: as the Medical Lost Race You mandate or MLR mandate.
Speaker 1: And what that says, in effect is if an insurance
Speaker 1: carrier takes a hundred dollars from you, they have to
Speaker 1: spend eighty five of those dollars on medical claims, and
Speaker 1: they only get to keep fifteen percent of those dollars
Speaker 1: to pay their expenses and their profit margin. So it's
Speaker 1: a price control mechanism. Okay. And in the past, prior
Speaker 1: to Obamacare, insurance carriers used to care about keeping costs
Speaker 1: down because the lower they kept cost, the more profit
Speaker 1: they can they could keep, the more they could compete
Speaker 1: on price with their competitors. However, once you put this
Speaker 1: MLR mandate in their handcuffed, it's basically so simple as
Speaker 1: to say, whatever you think this customer's claims are going
Speaker 1: to be next year, you price their premium as fifteen
Speaker 1: percent more than claims, and all you can keep is
Speaker 1: fifteen percent. And oh, by the way, if you screw
Speaker 1: up and you actually end up keeping seventeen percent, you
Speaker 1: have to rebate two percent back to the policy holders.
Speaker 1: So it's nothing but a price control mechanism. Now, if
Speaker 1: you all your child you're only allowed thirty percent of
Speaker 1: a bowl of ice cream, are they going to reach
Speaker 1: for the large bowl or the small bowl? Right? Go on,
Speaker 1: They're they're gonna grab for the large bowl, right so
Speaker 1: there to spend more. It's an it's an incentive for
Speaker 1: the insurance carriers to look the other way when claims
Speaker 1: are higher, because they're only going to get to keep
Speaker 1: more than claims. So if claims is a bigger number,
Speaker 1: they're cool with it. So my starting go ahead. Well,
Speaker 1: I was gonna say, so, is this a um the
Speaker 1: people who wrote Obamacare? Did they know this was going
Speaker 1: to happen and they were paid off or cool of it?
Speaker 1: Or is this just one of those unintended consequences we
Speaker 1: thought we the world and we just we're just smart
Speaker 1: enough to figure out how we were going to get gamed.
Speaker 1: Oh that's it that it's absolutely the latter. This is
Speaker 1: a no good deed goes unpunished. Anybody who tries to
Speaker 1: create a utopian heaven on earth always screws up. Well,
Speaker 1: and this is go ahead, finish your your thought. Well
Speaker 1: this is it. I mean you, when this first came out,
Speaker 1: a lot of us even thought, well, that's not a
Speaker 1: bad idea to keep, you know, to make sure that
Speaker 1: insurance companies aren't those evil insurance companies aren't profiting more
Speaker 1: than they should. But what happened was the unintended consequence
Speaker 1: was oh okay, well then we don't really care about
Speaker 1: fraud or customer service or airs or high claims. So
Speaker 1: whereby prior to you would have had insurance carriers screaming
Speaker 1: at the top of their lungs if they saw drug
Speaker 1: manufacturers Quinn tupling the price of a of a generic
Speaker 1: drug overnight after insurance companies really didn't care. In fact,
Speaker 1: some of them might have saw it and thought, that's fine,
Speaker 1: we can just price that much higher. That is clearly
Speaker 1: a key, if not the key part of this whole story. Absolutely,
Speaker 1: but it wasn't comfortable for the left leaning reporters to
Speaker 1: dive into that, or perhaps they just didn't know. But yeah, obviously,
Speaker 1: so the insurance companies are thinking, great, we get of
Speaker 1: a much larger number. Go ahead and jam, jam people
Speaker 1: all you want. We get more money that way. Craig
Speaker 1: god Laws is Craig the healthcare guru. This is a
Speaker 1: perfect time to reintroduce to folks who aren't familiar with it,
Speaker 1: the term rent seeking, which is when you get government
Speaker 1: involved in all these things, and these bureaucrats think they're
Speaker 1: so clever and they try to build their utopia through
Speaker 1: thousands of pages long legislation. The experts go to work
Speaker 1: and between fifteen minutes and six months later, they figure
Speaker 1: out how to game the system. So instead of spending
Speaker 1: their time and energy to innovate, to better serve their customers,
Speaker 1: to do their jobs better, they spend their time and
Speaker 1: energy figuring out how to game the system and how
Speaker 1: to rip off the government. You see it in folks
Speaker 1: who came over from the Soviet Union. They are so
Speaker 1: good at gaming the system because that was the most
Speaker 1: important life skill. Yeah, that's well said, that's exactly right,
Speaker 1: and and it's on the drug. So this is carriers, right, Okay,
Speaker 1: so you know you say, well, who should have seen this?
Speaker 1: You guys asked the question, Well, carriers would have seen this.
Speaker 1: But see now you created a system where carrier don't care. Now,
Speaker 1: even more insidious, you probably had very very smart generic
Speaker 1: drug manufacturers pouring through Obamacare and realizing, wait a minute,
Speaker 1: carriers aren't going to be as sensitive when we increase
Speaker 1: prices because that just means their profits can go up
Speaker 1: to So I don't think it's any accident that this
Speaker 1: all started in Yeah, and obviously, like the first time,
Speaker 1: the race prices and nobody said anything, and then you
Speaker 1: all got to get them raise prices again even further,
Speaker 1: and nobody said anything. Pretty soon you caught on, Hey,
Speaker 1: we there's no market force stopping us from doing this,
Speaker 1: no market force, are legal force stopping us from doing
Speaker 1: So what do you expect to do with this? What
Speaker 1: do you expect to happen now? I mean, now that
Speaker 1: the jig is up, if this lawsuit ends up ending
Speaker 1: up the right way, will generic drug prices just collapse overnight?
Speaker 1: Because I mean they jammed them up for no reason
Speaker 1: other than pure profit. Yeah, they're gonna drop. They're gonna
Speaker 1: drop precipitously. Jack. I I heard your frustration with that
Speaker 1: question yesterday too. And the only the only mechanism in
Speaker 1: place that would that would cause them to maybe not
Speaker 1: drop as dramatically as we would like, is that um
Speaker 1: drug prices in general are the fastest growing component of
Speaker 1: healthcare prices. So they're going up at twenty five percent
Speaker 1: per year. Generic Yeah, generics aren't quite that bad. They're
Speaker 1: more like ten percent per year. So if we've got
Speaker 1: an inflation effect, a natural inflation effect of ten percent
Speaker 1: per year going back to when when now seven years later,
Speaker 1: we dropped those prices, we're not going to drop them
Speaker 1: as low as they were in maybe you know, halfway
Speaker 1: back kind of saying, so listen, we're running running out
Speaker 1: of time, but let's spend like sixty seconds on this,
Speaker 1: because I have a feeling you're familiar with this. I
Speaker 1: just became hip to it when I can't remember. A
Speaker 1: listener or somebody pointed it out to us that one
Speaker 1: of the reasons a drunk drug company gets exciting new
Speaker 1: approval lad for instance, you know, we'll call it uh
Speaker 1: uh you know Armstrong and Gettysia, which has been a
Speaker 1: baldness treatment. Turns out it helps with dry eyes. It
Speaker 1: increases the tearing of your eyes. So they've sought FDA
Speaker 1: oval as a dry eye remedy. That's to keep it
Speaker 1: from going generic. I didn't know that, right. If they
Speaker 1: if they can, if they can discover another valid purpose
Speaker 1: for that drug, they can they can gain another allotment
Speaker 1: of whatever it is six to eight years, where they
Speaker 1: can keep it as a brand name drug under that
Speaker 1: purpose as well. Now, and so I could see as
Speaker 1: a drug company and their way ahead of me on this.
Speaker 1: Obviously they do it for a living, but identifying a
Speaker 1: side effect that some people might want it gives you.
Speaker 1: It gives you hives. Some people like it gives you
Speaker 1: severe headaches. What if you've never had a headache and
Speaker 1: you wonder, what are they like my room hauler highs
Speaker 1: Jack Exactly So Craig the healthcare guru, Craig got Walls.
Speaker 1: If you need help with benefits for your largish company,
Speaker 1: is happy to help you out at what benefit underscore
Speaker 1: Revolution Revolution Revolution dot com. That's the one, I'm sure
Speaker 1: of it. Or just email us we'll put you in touch. Craig.
Speaker 1: It's always enlightening. Thanks budd Thank you, gentlemen. We'll talk
Speaker 1: to you later. While so drugs, even on their own,
Speaker 1: are going up per year. That's incredible. There are just
Speaker 1: so many examples of these well meaning government policies that
Speaker 1: are going to rein in these big, mean corporations. But
Speaker 1: they find their way around it moments later. But those laws,
Speaker 1: with all their unintended consequences and their costs and their
Speaker 1: restrictions on freedom, they stick around forever. You know, there
Speaker 1: there are solutions to America's health care problems. Gigantic one
Speaker 1: size fits all ish legislation, that's not it.