Product X, Last Chance

In an earlier post I described a product that is distributed through the same channels as prescription drugs, and shares the same pricing characteristics as a monopoly prescription drug, but neither requires a prescription nor is supplied by monopolists.

I took this as evidence that the high price of prescription drugs may not be the result of monopoly supply, but rather perversely may be the result of the market power of the purchasing agents for both government and private health insurance plans and their prescription drug benefit programs.

Limited supporting evidence for this view in the case of HIV drugs is given here.

If there is anyone who wishes to advance a guess as to what product X is, please enter a comment before all is revealed. The prizes for a correct answer have been repossessed, so the only reward will be self satisfaction.

Prior post on product X here.

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My guess: cigarettes.

My guess: cigarettes.

Unfortunately, I have been

Unfortunately, I have been privy to 'inside information' before the puzzle was posted, so I will have to abstain, lest I elicit an investigation from the SEC for the pseudo-crime of knowing something before someone else.

A couple of things come to

A couple of things come to mind. Cocaine and X. Sugar. Computer Software might fit (Windows in particular, especially the buyers and subsidization angle.)

Condoms. You get 'em at the

Condoms. You get 'em at the drugstore, you dont need a prescription, and they are priced high and low depending on what "niche" of the market they're supplying (cheap college students or rich consultants who have a high opinion of themselves... er...).

It looks like a hint is

It looks like a hint is required.

Product X is available in almost every drugstore from several makers. It is bought both with and without a prescription, but the only way to buy it and not pay a high price is to have a prescription written in conjuction with a health insurance plan with a drug benefit program. In spite of this, product X is NOT a drug, but it is effectively used in the treatment of a major disease.

Regards, Don



Or maybe contact lenses...

Or maybe contact lenses...

Further hints -- Product X

Further hints --

Product X is used (consumed, not reused) by individuals between 1 and 10 times per day. Over half of the Product X that is purchased is likely to be bought by, or in conjunction with, prescription drug benefit plans.

Regards, Don

Insulin or syringes?

Insulin or syringes?

Insulin is the closest

Insulin is the closest suggestion so far, disqualified only by the fact that it requires a prescription. However, this probably doesn't affect the economic situation, and insulin may well see a list price driven up by the market power of the prescription drug benefit programs.

Regards, Don

Nicotine gum/other

Nicotine gum/other stop-smoking aids.

Stop smoking aids might

Stop smoking aids might qualify, but I doubt if prescription drug plans dominate the sales, and thus drive up the retail prices.

Regards, Don

Nicotine gum was my guess

Nicotine gum was my guess too, but it's not quite right. Don told me the right answer but I won't reveal it.

What I will say is that I think Don's reasoning is spot-on. Though there must certainly be a monopoly component to drug prices, I think our f***ed-up insurance system bears the majority of the blame. I think in general, the fact that so many people have comprehensive health insurance is itself the reason that health care is essentially impossible to afford without such insurance. Moreover, though this is easy for economists to understand, it's extraordinarily difficult to explain to a layperson, which in turn is why we're all screwed.