I took only one marketing course in college, but it taught me a vital lesson.
The instructor asked us how a company determines the price it will charge its customers.
Among the students’ guesses were: the price of materials; the cost of labor; the complexity of distribution; the cost of research and development; even all the above. My own guess was, “The quality of the product?”
The professor laughed at my naivety, then assured me quality has nothing to do with a product’s cost.
Then he revealed the answer: “Whatever the market will bear.”
Thirty-five years have passed, but the lesson still applies.
Last week this column discussed the predicament facing insulin-dependent diabetics. They need insulin to live. Insulin is available, but for many folks unaffordable.
About 20% of users reportedly ration their supplies, sometimes with lethal consequences.
The insulin manufacturers that have jacked up the price deny responsibility for the fiasco while thumping their own chests for creating convoluted systems of granting partial rebates on insulin.
But they never lower the price. They keep charging whatever the market will bear.
To some extent, the meshuga health-insurance system inflates what the market will bear. The cost to a consumer depends on whatever special “deal” the insurance provider can make with the supplier. Because the insurers need these “deals” to justify their existence, the manufacturers inflate their prices so that a seemingly larger “discount” can be granted.
Nowadays, more and more diabetics are looking toward Canada. There, insulin is about one-tenth the price and doesn’t even require a prescription.
Insulin is not a pill. It must be injected and requires refrigeration to maintain its efficacy. Ordering insulin from Canada is difficult if not impossible.
So people are starting to cross the border to buy Canadian insulin in person.
This past summer, a chartered bus traveled from Minneapolis to Ontario, carrying insulin seekers. Some had health insurance, some didn’t. One had lost insurance because of a job change. One had “aged out” of coverage – once you turn 26, you can no longer be included on your parents’ policy. For those without insurance, a typical month’s supply – at least here in Claremont – costs $450. But even those with insurance usually end up paying hundreds of dollars a month.
Even if you scrape up the money, things can go wrong. A deliveryman can leave the package in the hot sun, and it will be ruined. Or a power outage in one’s house can lead to the same heartbreaking result. Or a dropped vial can break. One must pay for the insulin, ruined or not, insured or not.
Many U.S. doctors frown on the Canada option, saying drugs produced here are more trustworthy. My own doctor tried to dissuade me from getting an inhaler by mail through a Canadian company. I pointed out that the version she had prescribed, and which I had bought locally, was made in Singapore. Whether you buy from Canada or the United States, your medicine might have been made in England, Turkey, Israel, or countless other places (the ones I am naming are the countries my family’s medicines have come from).
And even if made in the USA, the ingredients might be coming from nations with less trustworthy business practices, such as China.
So I disagree with doctors who say buying local has to be safer.
Reputable sources say a typical vial of insulin that will last a diabetic about ten days costs about $300 without insurance in the United States. In Canada, one can get the exact same product for $30.
In 2012, U.S. patients needing insulin typically spent about $2,800 annually; by 2016, that had ballooned to $5,700.
One member of the Minneapolis caravan paid $268 for insulin in Canada that she said would have cost her $4,123 back home. Another traveler paid $40 per vial for insulin that would have cost $380 per vial back home.
This isn’t a column on math. It doesn’t matter exactly how much money was saved (and looking solely at uninsured people might skew the figures).
But this is a column on consumerism, and it should be clear that every consumer on that bus saved a bundle (though lost a lot of time) traveling to Canada for insulin.
Visiting Canada for insulin is not a long-term solution. But if I were a diabetic, I would be tempted to move there.
Because the U.S. health system is failing us.
Remember – the makers and sellers of insulin in Canada are still making a profit. Just not the outrageous profit made by their U.S. cousins.
It goes back to what my marketing professor said: A company will charge whatever the market will bear.
A lot of U.S. businesses are putting profits ahead of patients.
If you have consumerism questions, send them to Arthur Vidro in the care of this newspaper, which publishes his column every weekend.