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3.29.2017 - Financial Intelligence Report Bookmark

Insurance Round Two
 
Last week I wrote an article about the difference between Healthcare and “insurance” and it stirred a lot of conversation. I believe that one aspect of the insane cost of so called insurance is that it has morphed into something different than insurance.  It’s a health maintenance, all you can eat buffet of “tune ups” masquerading as insurance.
 
But there’s a more sinister side to our cost structure and you and I both know it. We are gouged at every angle.  I grabbed this from CNN Health:

According to the International Federation of Health Plans, Americans pay anywhere from two to six times more than the rest of the world for brand name prescription drugs. Specialty and cancer drugs tend to be the most expensive, but the sky-high prices can be found in commonly used meds as well. For example:
-- Gleevec (a cancer treatment): $6,214 (per month/per customer) in the United States, compared to $1,141 in Canada and $2,697 in England.
-- Humira (for rheumatoid arthritis): $2,246 in the United States, compared to $881 in Switzerland and $1,102 in England.
-- Cymbalta (for depression): $194 in the United States, compared to $46 in England and $52 in the Netherlands. In fact, there is also a generic version of Cymbalta so these prices reflect having a cheaper alternative.
 
So when we ask why does the US pay so much more than these other nations, the answers border the absurd.
 
According to PhRMA, the pharmaceutical trade group, high prices are a reflection of the research and development costs it takes to bring a drug to market. PhRMA cites that on average, it takes more than 10 years and $2.6 billion dollars to bring a drug to market. They also point out that for every successful drug, there are handfuls of drugs that never make it to market.

But, Dr. Peter B. Bach, director of Director of Memorial Sloan Kettering's Center for Health Policy and Outcomes, says that pharmaceutical companies charge high prices simply "because they can." Bach added. "We have no rational system in the U.S. for managing prices of drugs."

But it gets even better. The drug companies say they must impose higher prices in the U.S. to pay for research that enables them to innovate and develop new drugs that save our lives. What??  Half of the scientifically innovative drugs approved in the U.S. from 1998 to 2007 resulted from research at universities and biotech firms, not big drug companies, research shows. And despite their rhetoric, drug companies spend 19 times more on marketing than on research and development.  Read that last line again. It was NOT a misprint.
 
 
But wait a minute. It gets worse. One of America's largest provider of medications, the federal government-run Medicare cannot, by law, negotiate with pharmaceuticals. Are you following along with that??  Oh yeah, way back in 2003 the IDIOTS and bought and paid for politicians (sort of redundant I know) passed a law that Medicare could NOT negotiate with the pharmaceutical companies for lower prices. Now, why on earth would or could that happen??
 
The fact that Medicare is forbidden in the law that created Medicare Part D to negotiate lower prices is NO accident.  The drug lobby worked hard to ensure Medicare wouldn’t be allowed to cut into the profits which would flow to big Pharma thanks to millions of new customers delivered to them by Part D.

Rep. Walter Jones from North Carolina and Dan Burton from Indiana weighed in on this disaster at the time:

"The pharmaceutical lobbyists wrote the bill," says Jones. "The bill was over 1,000 pages. And it got to the members of the House that morning, and we voted for it at about 3 a.m. in the morning," remembers Jones.
 
Why did the vote finally take place at 3 a.m.?
 
"Well, I think a lot of the shenanigans that were going on that night, they didn't want on national television in primetime," said Dan Burton from Indiana.
 
So let’s be clear. The Pharma’s lobbied HUGE money to the blood sucking organism called Congress and they folded like an old cheap camera. Screw the American public, we’ll make it ILLEGAL to negotiate lower prices. 
 
And how much lobbying have they done?  Billions. Yes you read that right. The pharma companies like buying politicians. In 2014 they spent $230,596,000 dollars lobbying. In 2015 it was 241 million. In 2016 it was 244 million.
 
So, they gouge us on the prices, and lobby Congress to keep negotiations off the table. But the fact is, it isn’t just the pricing that’s an issue. The pharmaceutical industry has something very few other industries enjoy. The power of your life. They know that if you’re sick badly, you will pay anything to be “not sick”.
 
Which brings me to the evil games they play with people’s lives. I’m not asthmatic, but I know people that are. For years, these people ( actually over a million of them) could control their asthma with an over the counter spray called Primatene Mist. I’m sure you all remember the ads for it. Primatene Mist was the #1 over the counter medicine to help treat bronchial asthma. It was very helpful in quickly treating asthma attacks. It was marketed by Armstrong Pharmaceutical Inc. It helped relieve shortness of breath, chest tightness and wheezing that was related to bronchial asthma, emphysema and other breathing problems that were diagnosed by a doctor. It widened the airway to make it easier to breathe.


Then one day “something” changed. In December of 2011they were pulled from the shelves. Over a million bottles sat idle in a warehouse. Ut oh, was there a bad batch?  Nope. Did someone die? Nope. So why was this universally loved medication that so many relied on to open their breathing passages suddenly removed?
 
Well, according to them....because of global warming. Don't laugh. The FDA  banned all asthma inhalers which contained chloroflouorocarbons (CFCs). BUT, this ban only affected Primatene Mist because it is the only asthma inhaler that had been approved by the FDA to be sold without a prescription. CFC is used as a propellant to force the medication out of the container, creating the "Mist."
 
Are you following along? The ONLY over the counter inhaler without a prescription was 20 dollar Primatene Mist, a remedy that worked and was the number one seller.  Yet the FDA banned it because the “mist” was a CFC and somehow this mist would eat the Ozone layer. Remember that boogeyman hysteria?
 
But wait! They had OTHER options for you. Yes, you could go to your doctor and spend 100 bucks, get a prescription and buy the 60 dollar junk that most say does NOT work as well. Or the 100 dollar junk where the inhaler gums up inside a week and you throw it away. Oh and by the way, very few people had any problems with side effects on Primatene. But MANY have almost been killed or screwed up with the new “latest greatest” garbage.
 
The Inhaler business is now a 4 BILLION dollar business. You see the ad’s for them all day. Everyone on earth now ( according to the pharma ad’s) seems to have some form of COPD. And boy do they have nice new high powered high priced drugs you can buy to combat it.
 
The FDA is a bought and paid for shill. Congress is bought and paid for. The Pharma companies do not care a lick if you were doing great on a 20 dollar gizmo and now have to shell out 80 for one that doesn’t work.
 
And we wonder why our so called insurance is more than my first two mortgages? I don’t wonder at all. It’s as crooked as the stock market. It’s all about money, and they all want it. Not so long ago, you could buy certain drugs from Canada and have them shipped to you here in the States for about 50% less. When that got popular, guess what our slimy FDA/politicians did? Oh, they outlawed it. No way are you going to pay LESS for your life saving medications, they want your money and you’ll pay it.
 
The whole industry makes me vomit. Sorry, I just had to vent.
 
The Market...
 
We wondered on Monday if they were going to allow an 8 day stretch of red for the DOW. We opened poorly, very poorly, quickly losing 190 points on the DOW and it looked like maybe the wheels were finally going to fly off. But no, we inched our way back and despite the S&P being down 21 points early on, by 3:15 it had actually gone green by a bit. What a “stick save!” ( hockey term)
 
But we still ended red on the DOW and the S&P Granted it wasn’t “big red” just red. We lost about 45 on the DOW and 3 on the S&P.  So, coming into Tuesday morning the futures were flattish, and again we wondered “ is today the day they end the losing streak?”  My bet was yes.
 
Well that was a decent bet. After some morning wobbles, they got their act together and jammed the market higher. By 2:30 we were up 180 DOW points and 20 on the S&P.  When the final bell rang we had 150 green DOW points and 15 on the S&P.
 
Hoping for some follow through, the futures this am were a disappointment. Sure enough we opened mixed with the DOW off 54, the S&P trying for green and the NASDAQ up a point or two. Three hours later it didn’t look much different. DOW down 47, S&P up 0.55, NASDAQ up 11. 
 
But the market “had” been higher. It looked like they were going to take the shackles off and let it run, when TWO of the idiot Fed heads came out and said that they think FOUR rate hikes this year is a good idea. That dented the market and we gave up the previous gains.
 
We saw them fight back and heading into the last half hour we had the S&P up 4 and the DOW down just 22. It was But we went out with the DOW off 40 and the S&P up 2.
 
So today was a “non event”. While they didn’t pull any plugs and send it crashing, they didn’t rush in to buy much either. More like a ‘holding pattern”. Sure there was some action in certain sectors like retail and some energy. But all in all, it was a quiet session.
 
What’s next? Well, I’ve been telling my members that we’re looking at 3 levels ahead of us. First we need to get up and over 20750. On Tuesday we made it to 20735 and couldn’t hold. Then if we can get a close over that, we need to attack 21000 again. Then finally that 21115 all time high.   Are we going to get there?
 
On the fundamental side, no way. We don’t even belong where we are now. When the best defense of a bloated market is “where else can you go and get a return?” that’s not a good reason to be crowded into stocks. Yes it’s true bonds don’t pay. Yes it’s true savings doesn’t pay. But... they forget to tell folks that stocks can and do go down.
 
But we don’t operate on fundamentals any more. They tell you we do, but we don’t. We operate on printed money, QE, plunge patrol teams, etc. So the market really can’t fall if they’re all in the house doing their thing. In reality, if they weren’t influencing things, we’d be lower.
 
We’re about to come up on earnings season again. If they’re not wonderful what happens? Then we have the seasonality ahead of us. The market often fades off some after April 15th.  So there are some pressures ahead that they’ll have to fight off.  My bet is that if we can’t get back up and over 21000 fairly quickly ( next couple weeks) we might actually see this market fade for a bigger correction.
 
After the bell LULU is getting pounded on poor guidance. I suppose we’re going to see a lot more of that sort of thing in the near future. The market manipulators are going to have their work cut out for them to keep this overall market up.

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