Do you believe?

Do you believe in communism? In its most technical sense, communism is the idea that bureaucrats can reasonably control production and distribution to provide adequate supply and avoid shortages. At this point, most people say no, they don’t believe, and for good reason. The quest to find a sustainable government system of production that didn’t break down has consumed decades, untold lost production, and created a river of blood as the need for scapegoats of this system’s failure consumed millions of lives.

Do you believe that there is an exception for drug production communism? The US Government thinks there is. In the 1970s it established the current production quota system, a system that is currently in the middle of breaking down as shortages pile up. It is unabashedly communistic with the Attorney General in charge of both overall production numbers of Schedule I and II drugs and List 1 chemicals as well as assigning individual company quotas on a yearly basis.

As virtually anyone with a brain could predict, the system lasted for a while and is now breaking down amidst a growing number of shortages. About 1 in 5 medical practitioners knows of circumstances where these increased shortages have adversely affected patient outcomes. It is unlikely we are going to ever get an accurate body count of this drug communism. Nobody is going to want to open themselves up for liability if they are a private practitioner and no bureaucrat is going to want to turn over this rock because of its political implications.

Fortunately, over the next two years, these regulations are going to finally come under review. So as a practical matter we’re going to have an answer to my title question, do you believe?

Well, do you?

20 thoughts on “Do you believe?”

  1. Where there is no reasonable belief, look for benefits and feigned belief, or pure cynicism. Who makes money from the status quo? Who gains political advantage from the status quo? If something makes no apparent sense, there is a concealed sense. Cui bono?

  2. As a general rule anything the govt tries to run they screw it up.

    I am reading an interesting book – The Forgotten Man by Amity Shlaes. ( It is about the Great Depression of 1929 – 1941 (?) and she dispels a lot of long standing “assumptions”. Although I am just starting I am starting to see a theme – that the more govt intervention the longer the Depression went – not allowing natural market corrections to occur.

    And Roosevelt was a master at activist government.

    On a lighter note, supposedly the owner of the Mustang Ranch (a legal brothel) in Nevada got into big trouble for back taxes – and the IRS seized the brothel.

    Story is they even managed to lose money running that – with a bar and liquor license.

    I would think that would be difficult to do ;-)

  3. Tell us more about this quota system. How does it work? What drugs are in short supply? Which drugs have quotas? Please avoid jargon like “schedule I” etc. I am neither a drug dealer nor a narc so I haven’t a clue. I suspect by “communism” you mean the practice of central planning utilizing “crony capitalism” reinforced by timely murders. I’d be interested in the murders of drug company execs. Also who are the crones?

  4. Sol – I cannot help if you are unaware of the basic terms of how drugs are classified in the USA and what that means. You need to educate yourself on what the law is. In any case, the DEA has the lists online. They do change over time.

    The American Society of Health-System Pharmacists shortages page may be a good place to start on the shortage issue. They have an RSS feed of the current shortages. In fact, they have a number of feeds.

    There is also a PDF article I recommend from the FDLI. I do not endorse its recommendations but it lays the issues out clearly enough.

    I happen to agree that you can legitimately call the system corporatist/fascist but right there 3/4 of the audience turns right off because they just reject fascism as a technical term for economic organization. Communism is the next closest word available.

  5. Most people don’t know anything about drug classification, unless it is part of their professional expertise.

    It is sufficiently compacted that it would be hard to make a political issue out of it.

  6. You are right that the drug schedules are not household names. It is sad that in 2011 organizing a sector on central planning lines is still not self evidently wrong. One still has to work through the details as if there were still a chance central planning might work this time.

    I guess an update is in order.

  7. “… organizing a sector on central planning lines is still not self evidently wrong.”

    Not exactly. The people for whom it is self-evidently wrong are already on your side.

    Most people don’t know what “central planning” means, or how communist societies were organized, or why they did not work, or in many cases, that there even was something called communism or that it was bad. People in their 20s have no recollection of the Cold War and often have no idea when it happened, which countries were involved in it, or what it was about.

    How do you make the issue simple and clear for the masses of people who have not thought about these issues?

    That is an interesting challenge.

  8. TM:

    Most people don’t know the real details of how things work. We no longer self govern to a certain extent because so much is in the hand of credentialed government bodies. We have to educate peoople because our partisan political process is more interested in ephemera and epiphenomena. Details matter but who will patiently educate over the years?

    How can people understand that thinking which they have never encountered?

    My afpak blotting has been an attempt at understanding how our institutions are so badly educated on the subject. Every FP canard must be systematically dismantled.

    – Madhu

  9. “crony capitalism” existed under Mao, it existed under Deng, it existed under Stalin et seq. The terms “capitalist” are/were anathema in these societies. However party members (the Cronies) exploited the workers in order to gain and keep power (another word for money because you can use it to get anything you want – which they did/do).

    I will remind you that both the communist party and the national socialist workers party were Socialists. There is no difference between Communism and Facism except in Communist propaganda. What most people do not realize is that socialism is simply a form of Medieval Feudalism. Personal loyalties are the basis for social oganization. The party member is above the law (legibus solutus est) and the law is what he says it is (quod principi placuit leges habet vigorem). The serf are tied to their factory or to the soil. What social mobility there is exists through force and violence.

    A major problem in central planning and regulations involves justice and courts. In Socisalist countries stare decisis is honored most often in the breach. Disputes are resolved based on who has the most friends in power. This often rewards inefficient use of scarce resources and is the principle reason central planning fails.

    The Seven Wonders of Socialism
    1. Everybody is employed.
    2. Although everybody is employed, nobody works
    3. Although nobody works, everybody fulfills the plan.
    4. Although everybody fulfills the plan, there are no goods.
    5. Although there are no goods, everybody has everything.
    6. Although everybody has everything, nobody is satisfied.
    7. Although nobody is satisfied, the Communist party always gets 100% of the vote.

  10. A large part of the problem, as I understand it, is with price controls in Medicare. Many of the shortages are with injectables used mostly in hospitals and the drugs are mostly generics, which are the cheaper ones.

  11. Michael – I have read that many doctors want to drop out of the Medicare are program. When the government wants to control prices – but of course they don’t control costs – I can certainly understand the doctor’s reasoning.

    That is the problem of govt intervention in nutshell – be it rent control, Medicare, anything they do to “help” the people.

    “Anonymous” – in the old USSR the people had a saying: “We pretend to work and the Government pretends to pay us”

  12. Leonid Brezhnev was General Secretary of the Communist Party and supreme leader of the Soviet Union from 1964 until his death in 1982. He produced my favorite quote at the Soviet Union Communist Party Congress in 1972: “The fundamental problem we face is that we can only distribute and consume what is actually produced.”

    Imagine the grandeur of the event. Communist Party leaders from throughout the Soviet Union were seated before Brezhnev in a large convention hall. This was similar to a US national political convention, but somber and powerful. The Party controlled all aspects of Soviet economic life. They listened in deep respect to every word of their totalitarian ruler.

    Brezhnev made the above statement. It was the equivalent of saying with heavy meaning, “Gentlemen, the fundamental problem we face is that 2 + 2 = 4”.

    It illustrates the amazing fact that entire countries go crazy, unable to see the reality that is plainly in front of their eyes.

    George Orwell: We have now sunk to a depth at which the restatement of the obvious is the first duty of intelligent men.

    Stimulus Produces Stagnation

  13. Bill, I’ve done a couple of blog posts on the phenomenon of doctors dropping Medicare. Most of them are older without debt. Most are primary care but some are surgeons. You can tell it is growing because some states are trying to make it illegal. There are a few misleading articles in the media, some absolutely inaccurate. For example, the NYT had a piece that said rich Medicare beneficiaries could get extra services by paying doctors extra. This would be a felony by the doctors as the Medicare law bans any extra charge. Doctors must drop out of the Medicare program and forgo any payment from Medicare to legally charge patients privately.

    One area where this is growing is geriatrics. There is no private geriatrics practice in the US. Medicare does not pay enough. All are research programs. I spoke to one geriatrics specialist in Iowa who dropped out because she was seeing her patients at home more frequently than Medicare allowed. She is charging private fees and making a living. The big misunderstanding of this trend is about the charges being high. They aren’t. Medicare pays about 20% of billed charges. Sometimes 10%. People don’t know how to read the Explanation of Benefits from Medicare.

    The busiest total hip surgeon in Orange County CA has dropped out. He charges what Medicare pays. Cash. He has eliminated about 75% of his overhead.

  14. Michael – a few years ago a distant cousin of mine, a brilliant neurosurgeon, was killed in a head on crash coming back from work. She got tired of the medical malpractice lawsuits for the industry in general and decided to get a law degree to testify as an expert witness for defendants (insurance companies) , in addition to her medical practice. (just to give you a background of her academic accomplishments)

    BTW she herself was never sued for medical malpractice –

    Another cousin of mine became executor of her estate and like all businesses, discovered that not keeping accounts receivable in control will doom you.

    My late doctor-cousin had tried to do her own billing.

    I was astounded at insurance companies that hadn’t paid 2nd or 3rd installments – she was supposed to “remind them” and the “statute of limitations” had passed – the slowness of the government to pay – even after you have jumped through the hoops sending in the paperwork. It seems to me that relying predominately on Medicare would give a practice a slow financial death –

    Speaking from some personnel experience, having had a few minor operations in the past 5 years I was talking with some of the medical personnel and a nurse told me that she spends half her time now filling out forms that are required by the govt. All to get a slow paying check that may or may not cover all the expenses for the work.

    I would love a system where it is cash up front or a payment plan set up by the doctor – keeping the govt out of it. If we had that combined with limits on medical malpractice think how much better our system would be. Just getting the govt out and limiting the liability.

  15. Bill Brandt: This is one reason why my brother, like a great many other physicians these days, was happy to sell his practice to a hospital, and become their employee.

  16. The trend of physicians selling their practices to hospitals is an Obamacare development that is unlikely to be reversed anytime soon. The problem is that many hospital administrators dislike doctors intensely. We are too independent and demanding. Most of the demands are concerning patients and this is not a good trend. Most medical students I have encountered in teaching the past 15 years, are not the entrepreneurial type that I was and that most of my colleagues were. We looked to fill a demand and spread out in the community. Most young physicians I have come to know are interested in security, including salary and vacations. Some of this is probably due to the changes in medical schools, which are now 60% women students. They also know that they will not make the money to justify the risks we took. “Lifestyle” specialties are all the trend now. Emergency Medicine, which did not exist when I was a student (a friend of mine, Gail Anderson actually began the specialty) is very popular because it is shift work with no overhead. Ditto for Trauma Surgery, although I began one of the first trauma centers in California and we ran our practice at the same time. Now, almost all the doctors are hospital employees.

    I don’t blame the young docs. I might do the same. Still, if I was affected by a chronic disease, I would be thinking about one of the “retainer practices.”

  17. How successful are “concierge” business models where doctors continue to accept third-party payment but charge patients an annual fee? I would think such models would work OK as the fees would compensate for patients who left, and with fewer patients there would be less overhead.

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