Jewish World Review April 11, 2002 / 30 Nisan, 5762
http://www.NewsAndOpinion.com | All of us know how capitalism is supposed to work. Thanks to free-market competition, you can't stay in business unless you make a decent product and sell it at a reasonable price. Otherwise, someone else will come along to make it better or sells it more cheaply, and you'll go out of business. The self-interest of the people who produce things and the self-interest of people who buy them coincide.
But sometimes we get slapped by the invisible hand. Let me draw your attention to an 80 million dollar anti-trust suit now taking place between a New Orleans entrepreneur and a health industry Goliath in the Federal Court in the Eastern District of Louisiana.
In the mid-nineties, Sue Jernigan set up a company to distribute insulin pumps, devices that diabetics wear and which infuse insulin into their systems like an artificial pancreas. The pump saves lives; it saves limbs; it saves vision. As the therapy was then new, Jernigan and other independent distributors dedicated themselves to educating diabetics, doctors, nurses, and insurance companies about it; Jernigan's company sponsored support groups all over the country.
Doctors quickly got the message: 90% of MDs who have diabetes now use pumps, though "- oddly -- only 12% of their diabetes patients have them. Perhaps some of the reason for that discrepancy is contained in the following sad tale.
The vast majority of the pumps once marketed by Jernigan's company, Insulin Infusion Specialties, were manufactured by Minimed, a firm that controlled 80% of the market and has since been bought by Medtronics, the largest medical device company in the world. However, some doctors preferred and prescribed a lesser-known device made by a Swiss company for patients with special needs, and Jernigan obliged them.
In response, Minimed/Medtronics tried to force Jernigan only to sell only their products, regardless of patient needs or doctor preferences. Ultimately, they drove Jernigan out of business by buying the two other largest distributors, then eliminating Jernigan's discount. Once competition was gone, they raised prices. (Jernigan had doubly earned their ire by actually lowering prices to insurance companies, reducing the cost of the therapy.) And though Jernigan is now trying to bring to market a less expensive Korean pump, the Dana Diabecare, she does not have the resources to get past the stranglehold.
As diabetes is the leading cause of blindness, amputations, kidney failure, and heart disease in this country and the pump is more effective than other therapies in controlling it, the price of the pump is a critical health issue. Insurers such as Arkansas Medicaid, for example, set a limit. They will not pay more than $4000 per pump. Jernigan met their price. Medtronics did not. So Arkansas diabetics are out of luck, while Minimed recently posted a 50% increase in profits.
A good analogy for Jernigan's suit against Medtronics is the anti-trust action against Microsoft. No one in their right mind believes that Windows is a better piece of software than the Mac operating system or even than Linux. Internet Explorer is no better than Netscape or Word than Wordperfect. Windows, in fact, is buggier than a rain forest and seems to get buggier with each new release. Yet control over the operating system allows Microsoft to impose its products on us whether we like them or not.
Microsoft's monopoly is annoying and stupid. But computers are one thing and human beings are another. While we seem to have been intimidated into letting Microsoft sell us their bill of goods, we cannot allow monopolies to prosper by exploiting the sick.
Adam Smith, phone