Service of How Do They Do It?

April 15th, 2010

Categories: Food, Marketing, Medical, Opportunity, Restaurant, Retail, Value Added

headscratching

There’s a Chinese restaurant in midtown Manhattan, around the corner from my office. I just bought a portion of won ton soup in a sturdy container–the expensive kind. It came with five HUGE, tasty dumplings, a bag of fried noodles and a smile. Cost, including tax: $1.85. Most soup in the neighborhood starts at $3.85+ for a smaller portion.

mugsSome of the bargains at TJ Maxx also make you wonder: How can the store pay someone to open a shipping container, unwrap and place an attractive ceramic bowl, dish or mug on a shelf, keep displays neat and clean, and when someone goes to buy the breakable item, wrap it up, take a credit card or cash-all for as little as $2.95?

Meanwhile at Yankee Stadium a hot dog costs upwards of $6 and at a major department store, the online price of a square 3.5-inch ceramic dish costs $20, plus tax and shipping.

Imagine going to a baseball game with a few teens and not offering them more than one hot dog–and we didn’t mention anything about the hefty price of drinks?  The cost of such a snack, while part of the ballpark experience, is a sure indigestion-inducer.

While this is going on, there are drug companies that seem to be playing games resulting in just the opposite. In Monday’s Wall Street Journal, Jonathan D. Rockoff wrote “An Old Gout Drug Gets new Life and a New Price, Riling Patients.” The game was to gain exclusive marketing rights on a drug that has worked for 100 years. The FDA is at fault here as well. They didn’t know the drug was safe and effective after a century? I digress.

pillsThe company ran the drug through clinical trials to [further] prove that it’s safe and effective and then raised the price to $5/a Colcrys tablet from a few cents that the generic colchicine pill cost. In addition, the company is trying to stop the competition from selling the generic version. Is this the time and place?

How do these companies sleep at night? What do the first two do to keep their prices so low and still make a living ? [I don’t think I want to know in the case of the restaurant.]

Department stores formerly wrapped gifts beautifully and today, with a nod to do-it-yourself, customers are most often handed a box and tissue paper in a bag along with the gift. So what’s the point?

How can the drug company keep a straight face knowing the zero value added it provided to sick people by going through some paces not to prove that an innovation works and is safe,  but simply to be able to overcharge for its tablets?

 straightface

6 Responses to “Service of How Do They Do It?”

  1. Debby Brown Said:

    The drug companies have double faces. On the one hand, their public relations message: “If you need help paying for your medicine, call 1800-etc.” When you call, you eventually get a live person who asks you a list of questions, just waiting to find the one that makes you “exempt” from their drug-assistance. I have confirmed this is their MO with a family member who is a physician.

    I recently received a coupon from my medigap insurance company saying I could receive 20% off an allergy medicine when presented with a new prescription from my MD. When the coupon was input into their system it was rejected as “already used” and therefore declined. I could have taken the time to call the drug company and jump through hoops, but have chosen not to waste the energy.

    It’s all about the money.

    The drug company people sleep fine at night! Unless they’re staying up trying to figure out new ways to screw us!

    Debby Brown

  2. Jeanne Byington Said:

    Debby,

    Makes you wonder how their drugs work when they can’t get a simple coupon program going. Wouldn’t it be funny if they found out that the coupon deal was an inside scam, where an employee handed out the discounts to family and friends before sending out the coupons? I think I’ve been watching too much Law & Order.

  3. Simon Carr Said:

    This is an enormously complicated subject. Despite the extraordinary explosion in the technology available to marketers, people still remain largely unpredictable.

    At what price point will somebody buy something? It depends on the buyer. There is stuff that I wouldn’t buy at any price that others would grab up hungrily, and visa versa. An accomplished merchant knows, almost instinctively, what he can buy cheap and sell dear, or in volume at a slim mark up, or what he can buy high and sell even higher.

    Medicine is quite different. Free market forces don’t play much of a role in the selling of medical services. Whether because of religious training that we have a duty to stay alive, effective brainwashing by societal forces or medical marketers, or our instinctive desire to survive, we all seek the “best” medicine. What’s best? Obviously, it’s what costs the most. For this reason, the drug selling business has always been one of the most profitable around since the beginning of mankind.

    Rare indeed is the doctor, like the one I spoke to on the phone this morning, who said when asked, “Don’t take anything for that cold. Let it run its course.”

    I’ve taken that gout medicine. It works great, and used to cost less than $10 a cure. I’ll go on taking it even if it costs $500 a cure, and the drug company knows that. I can’t blame them. Unlike my doctor, the people who run it are charged with making as much money as possible and not with trying to cure people.

    What is the answer? There isn’t one. Have the government get into the medicine business on a not-for-profit basis? All you’ll get is lousy medicine at an even greater cost, for it is the nature of bureaucrats, first and foremost, to protect their jobs and avoid taking risk. (I know. I used to be a bureaucrat.) You don’t get medical breakthroughs with outtaking risk.

  4. Jeanne Byington Said:

    Simon,

    I asked a fellow in a truck selling soft ice cream on a mid-Manhattan side street on Thursday what he charged for a milk shake. There were no prices in evidence. He said $5. There was not a soul around his truck and hadn’t been one as I walked towards him so business wasn’t good–and he didn’t get mine. This smacked of rip off.

    I didn’t need a milk shake and instead ended up getting something far healthier for lunch elsewhere.

    But people need medicine and some who might be able to cover $10 for the gout cure don’t have $500–so they become crippled because of greed? This drug company in the WSJ article didn’t add an iota of innovation to make the drug more effective. I see your point about government intervention but if an industry rides willy nilly over innocent victims who else is charged to protect them?

    I had a choice when I passed on the milk shake. But someone with a crippling disease doesn’t.

  5. Lucrezia Said:

    Over 40 years ago, a recently widowed friend whose husband died from a long and painful disease, voiced suspicion that his suffering and those of countless others was due to the greed of the drug companies. The voice of grief might have been speaking, but it seems heavily laced with truth as well. Over four decades later, thousands continue to die of the same thing, while said companies make billions dispensing non curative wares. A cure for what killed my grandma over 60 years ago remains hidden. The equation appears to be painfully simple: A cure for cancer would cut heavily into profits. Same goes for a number of ailments from heart disease to depression. Sad, isn’t it?

  6. Jeanne Byington Said:

    Lucrezia,

    Years ago, I might have reacted to your comment in a totally different way, but I have become cynical of much that goes on in big business. I wish you were exaggerating, but who can tell?

    Between cigarette execs who swore that smoking isn’t harmful [we’ve known it is forever], Enron and Bernie Madoff and investment banks that sell to the public a product they know is a loser with one hand and sell it short with the other, I wouldn’t put it past pharma for pulling a fast one.

    The only weakness in the argument is that to save people, they’d be selling new drugs and the people would last longer and eventually need still other drugs for what broke next.

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