It seems we really like to focus on "the evil" company, but it goes two ways.
Example:
A family member has serious adult scoliosis, which causes quite a bit of pain. For years she has taken Fentanyl Nasal Spray that was made by a compound pharmacist (e.g., they take the raw Fentanyl powder, and mix it with a liquid solution by hand). The retail cost of this is ~$3k for a 30 day supply. Her insurance brought that down to sub $100.
2 years ago, she received a letter from her insurance company stating that because the FDA refuses to guarantee compound (made by hand) drugs, they will no longer cover her current nasal spray and she must move to one of the alternatives.
One alternative was a lollipop, which she used to take but caused her teeth to rot and she now has dentures.
Another was different oral delivery system, but it was discontinued by the mfg less than 6 months after this.
So far her only option is a product called Lazanda, they are individually packaged and metered glass bottles of Fentanyl nasal spray. Each bottle is roughly half a day's dose, has it's own box, literature in EACH BOX, and a month's supply is 60 of these boxes.
The retail value of this? Last time I looked it was >$30,000. And the insurance just accepts it.
> 2 years ago, she received a letter from her insurance company stating that because the FDA refuses to guarantee compound (made by hand) drugs, they will no longer cover her current nasal spray and she must move to one of the alternatives.
I wondered who lobbied for the FDA to make such a refusal, and who lobbied the insurance companies not to cover such unguaranteed drugs.
Regulators have their own incentives, without being influenced by outsiders.
For the FDA employee, incentives are very strong to err on the side of banning something. If you ban something and 1000 people die as a result, nobody will care, but if you allow something and 10 people die as a result, heads will roll at the agency.
Of course, I know nothing about this specific decision, but it is consistent with this.
there are countervailing forces in the opposite direction too though. there's something of a revolving door between FDA and pharmaceutical companies. FDA bureaucrats are also implicitly incentivized (i.e. its not bribery or corruption, just systemic) to "help out" very large name brand companies where they may be offered employment in the future. they have no incentive to do this for the various local compounding pharmacists that compete with name-brand pharma products.
Often the "sticker price" is just a negotiating chip. Big drug co's and big pharma have a byzantine relationship of price hikes and rebates. I wouldn't be surprised if the price the insurer pays is not materially higher than the original $3K.
That could be true, she has chosen to pay for the compound version with cash more than once, and the price is $3k. It provides much more relief than the packaged version.
Obviously on the EOB from the insurer, they show they paid the same price the pharmacy communicates. That's pretty crazy if the TRUE price is obscure
Not sure on the packaged version price if cash was paid..
Never said I didn't, but you have to take everything in context.
If you take a pharmacist that has to be specially trained/certified to compound, plus one of the most potent/dangerous narcotic prescription painkillers out there and put them together, maybe $3,000 is the right price? I don't know how much any of those steps costs. Or what someone's time is worth there.
4-5 years ago, yes we thought $3k is obviously high, but then you put the fact that now her only answer is a $30k alternative?
Context matters.
The entire thing is madness back to how she ended up this way, but that's a longer story.
it was implied that that was the insurance co-pay. her own out of pocket expense was only $100, but the overall cost of the medication was still $3000, thus $100/dose x 30 days per month = $3000/mo.
I know this is beside your point and not to be the Coloradan in the room, but has she tested the efficacy of marijuana to ease her pain? I'm not a doctor, which is who she would want to talk to first, but from my understanding, pot is so harmless that can be taken in conjunction with Opiate pain killers. It's not addictive or potentially life threatening like opiates. There are strains that leave you mentally functional while killing pain. And depending on how much she needs, the retail cost would probably be in area of $70 - $200 a month and would be going to local entrepreneurs & farmers. If you grow it yourself, the cost goes down to maybe $10 - $30 a month depending on your state's MMJ regulations.
I live in MN, we just recently got a full medical marijuana program.. but the paperwork is quite extensive and the approval process long. There is already quite a wait.
But yes, I'm sure it would help her somehow. Although she is in remission from lung cancer as well and is on oxygen, I'm a bit ignorant to the side effects there.
As another Coloradoan there are extracts that can be inhaled in a vapor that could be useful if the smoke is an issue might be worth talking to your doctor.
When my mother was passing from cancer she didn't like the edible formats since they take a long time to kick in and it can be hard to determine an hour out how much pain or nausea she would be experiencing.
Vapor and smoking seemed to be a great way to get a fast dose to decrease suffering.
I very much like free market. But here, the final consumer is not in a position to bargain prices when getting sick, which is a pre-requisite for a free market to function. Single-payer system works way better in that very particular industry, because both parties can now effectively negotiate.
Example: GSK is selling Advair Diskus for $300 in the US, and the same Seretide Diskus for 30 euros in France. Because on one side, they negotiate, and on the other, the enact laws to prevent negotiations (see Medicaid). When you need that disk every month, it's a huge difference.
I understand why this system is better for GSK, their shareholders and management. But why is it better for American people to persevere with a system where you pay 10, 100 times the fair price?
And don't blame the lobbyists, they can lobby all they want, the voters are the boss. If the majority wants to stop paying 100 times what they should, if the majority is tired to go bankrupt when they get sick, it just takes to publically support a single-payer system, and to vote for that. Politicians will listen.
The problem is that it is not actually a free market. The government grants monopolies to prescribers, restricting access that way, and to drug manufacturers, through the FDA, directly or indirectly (it's crazy to me that the government grants these monopolies and then complains when businesses take advantage of them financially). Then you have the insurers, who are not actually the beneficiaries of the product and who are therefore not in a position to fully judge the benefit:cost ratios of the products.
To me, the problem is lack of competition. The government should remove or sharply curtail licensing laws, or expand them to other professions substantially, and eliminate or loosen drug schedules (the new kratom fiasco is just one example of many spanning decades of how inept the government is at regulating substances). Basically, decriminalize and deregulate drugs completely. Let the FDA focus on purity and rigorous testing and education, but take away its regulatory authority beyond that. Let pharmacies produce more drugs, and get the government in the business of producing drugs. Nothing will drive down drug prices faster than a public entity producing drugs in competition with private corporations. Give tax incentives to businesses for producing or researching drugs in the public interest.
It's madness to think that somehow problems with overregulation and monopolies are going to be solved by increasing regulation and monopolies.
"It's madness to think that somehow problems with overregulation and monopolies are going to be solved by increasing regulation and monopolies."
this is exactly how most people think.
i would rather say that it is madness to think that government will get into drug manufacturing (or manufacturing of anything for that matter) rather than quietly collect donations from interested parties in exchange for a signature.
The problem with the "can't negotiate" argument is that insurers have every incentive to negotiate on behalf of the patients they cover. And they have scale—United Healthcare covers more lives than the NHS.
I worked at a startup that dealt with international reimbursement and we accepted less in France because it was just how it was done. We got paid much more in Germany and the UK. In the US we got paid a lot from some people and sold a very similar product to Walmart for 1/5th the cost.
This was a small startup, not a global pharma company, though we worked with a few and saw similar patterns at play. History, as much as politics and economics, shapes the industry in profound ways.
The problem with the "can't negotiate" argument is that insurers have every incentive to negotiate on behalf of the patients they cover. And they have scale—United Healthcare covers more lives than the NHS.
You would think, but they don't. That's the problem. Why? I don't know.
Car insurance is a similar thing. My SO barely tapped the car in front of her at a stop light. No damage, even though the woman flew out of the car claiming her car was damaged (we have pics of no damage) and that her children were injured (two boys in the back seat without seat belts or car seats). My SO asked the boys if they were OK and they laughed and said "yes."
So, a month or so later I get a call from the insurance company they've settled for medical bills of > $10k and damage to the car for ~$4k. I was livid and told them I wanted them to fight this fraud. Nope, they wouldn't do it. I begged the agent for 20 minutes. It's cheaper to settle.
It would clearly be in the best interest of the insurance company to crack down on fraud, but they feel it's "cheaper" to settle and move on.
I think the same mindset exists in the medical insurance industry.
>>The problem with the "can't negotiate" argument is that insurers have every incentive to negotiate on behalf of the patients they cover. And they have scale—United Healthcare covers more lives than the NHS.
No, they don't. With ACA, insurance companies must spend 85% of their revenue on medical. This means that their profit margin is effectively capped and the only way for the industry to increase profits is to increase the amount they pay out to providers, pharma, etc. so, no, the insurance company does not have every incentive to negotiate. In fact, sadly, most of the time it's the opposite.
Interesting hypothesis, but if it's accurate, have we seen a change is pricing pre/post ACA implementation? Theoretically, insurers would have been more active negotiators prior to the ACA. If so, wouldn't that suggest that rising drug prices are more a problem of heavy-handed regulation than private profit motive?
25-50% of my 60-100 claims used to be denied every single year, I'd fight all of them and win. I had no claim denials in 2014 and a handful in 2015 with the same insurer. Pre-authorizations which used to be denied or delayed all now magically go through in 1-2 days.
For example, I needed a specialized MRI, doctor orders it at the hospital, approved in one day. Before I do it, I find out that the allowed amount is $30k, insurance will pay $27k and I will be responsible for $3k. Before insurance would've fought me tooth and nail on this. I eventually find a place that that tells me they'll bill $1.2k to insurance but can't tell me what insurance will allow. It takes them three times and two weeks to get the insurance approved. My final copay ends up being $55.
While healthcare has always outpaced consumer inflation, I have noticed a massive increase in the rate for hospitals and pharma, while my doctors are all actually being paid less than 5 years ago. In 2010 my doctor would get $100-120, now he gets $55-75 for the same visit. Meanwhile a simple blood test that would be $2 at my doctor or would have been $15 at hospital is now $50 at the hospital after the ACA. I think there's a lot more kickbacks and bribery going on.
> In 2010 my doctor would get $100-120, now he gets $55-75 for the same visit.
While not incorrect, the rates doctors get just for being in your insurance's network has gone up as well (doctors actually get paid to be in-network). A doctor might very well take a loss per visit but they get paid thousands (if they are in a very populous area with a big insurance company) to be in-network.
> why is it better for American people to persevere with a system where you pay 10, 100 times the fair price?
The ability to charge far more for a drug than pure manufacturing cost is what makes it possible to spend billions and decades researching and developing it.
That burden is mainly borne by US consumers, while the rest of the world mostly free-rides.
I always thought a simple solution to this would be that you cannot sell your drugs in the US for any higher than the lowest negotiated price the drug is sold for to the other rich western countries.
For example if Drug A is negotiated to be for sale to the socialized medicine systems in Canada and France for $30 it cannot be sold for more than that here.
This allows the company to set whatever price they think is reasonable but without the US subsitizing their costs. It also allows the companies to sell their drugs at low prices to developing economies so that the people living there can still have access to lifesaving treatments.
Not sure why this doesn't get voted up more... The money has to come from somewhere. If 90% of the countries are basically just squeezing the drug company, then they have to raise prices where they can. The U.S. subsidizes the rest of the world.
Most Americans believe in a single-payer system. However, even if the Democrats made it a solid goal, the Republicans would essentially convey the message: "Sure, you can vote for the Democrats if you want, but be prepared for them to take all of your guns, force you to pay welfare for Syrian immigrants, and use your taxes to pay for abortions."
Enough people would consider those things - even if they have an iota of truth - more important than universal health care, so they vote against the politicians who support it.
This assumes republicans do not adopt a single payer system in their party platform. I think that assumption is plausible.
The argument against government single-payer is to imagine the politicians you dislike the most in charge of your health care. Would Democrats still favor single-payer if they knew that Republicans would get to make all the policy decisions about what is covered?
more along the lines of: the government that can't seem to make anything cheap ever and that is mostly lying and full of shit all the time wants control of my WHAT?
If people could not bargain healthcare prices when sick then they could bargain food prices even less when hungry, yet somehow we managed to have more or less free market for food.
Let's not even go there. Let's look at a less regulated medical field of dentistry. Dentistry is relatively cheap and available because there is, while still heavily regulated, a market. I.e. you can call a doctor's office and get a quote for whatever procedures you want. Don't tell me that someone with acute toothache is in a superior bargaining position than someone with, say, elevated blood pressure.
So the market works pretty well when you don't over regulate it. I somehow doubt that bringing even more regulation in form of single payer will suddenly fix anything.
As you note, groceries are one of the most cut throat industries in the continental U.S. We import food from all other parts of the world and not end up paying through the nose for them. My belief is price transparency is party the reason for this, and we are utterly lacking that i nthis part of the world.
Example: GSK is selling Advair Diskus for $300 in the US, and the same Seretide Diskus for 30 euros in France. Because on one side, they negotiate, and on the other, the enact laws to prevent negotiations (see Medicaid).
As others have mentioned, there can be a big difference between the list price and the actual price the insurer pays. The asthma market is highly contracted with big rebates going to payers.
Second, Medicaid does negotiate. First off, Medicaid get 23.1% off of every drug, just to start with. Then they can negotiate supplemental rebates if there is a lot of competition in a therapeutic area.
When you add it all up, Medicaid pays some of the lowest costs for drugs of any payer.
So basically, with a high deductible plan, I am getting screwed by my insurance company, because I do pay $300 for Advair out of pocket, instead of the negotiated price.
Correct! You are typically responsible for the list price, not the net price the payer pays.
So, you pay $300 for the drug (list price). The insurance company uses that $300 to pay the drug company, which in turn, rebates $150 back to the payer. Pure profit!
If you are just responsible for the co-pay it works better. You pay $30, the payer pays $270 and the manufacturer rebates $150. Overall, the drug costs $150, $30 coming from you and $120 (net) coming from the payer.
I'm not sure that's true. In cases where I've had a deductible, I've always paid the lower negotiated price. The vendor (doctor or pharmacy) has always run the product through insurance first, then billed me whatever my insurer says is correct.
what you pay for advair should have little / nothing to do with your plan deductible. you should still get a negotiated, lower than retail price for drugs.
Medicare Part D (prescription drugs) is entirely run by commercial payers who are allowed to negotiate (and do). Only Part B is limited from negotiating price, but discounts do happen in competitive markets and CMS captures those savings.
I can't understand why this is downvoted. A product that can only be manufactured by one company due to patents does not have a free market.
That's not a value judgement of the patent system, it's just stating the obvious. A patent is a legally enforced monopoly, so of course there will be no competition while the patent is in force.
> I very much like free market. But here, the final consumer is not in a position to bargain prices when getting sick, which is a pre-requisite for a free market to function. Single-payer system works way better in that very particular industry, because both parties can now effectively negotiate.
I am sorry but you don't like Free market. That's like saying "I love Hillary Clinton and I am totally with her, but I think Trump would be a better President than Hillary in every way because he is not dying".
My friend describes this as a 'Sales Pitch argument' where you claim to support your opponent's position, but you actually don't. "I am all for Gays to be able to freely marry, but we gotta make sure that the kids they adopt aren't going to abusive homes because statistics say that kids raised by gay and lesbian couples don't do so well".
> the final consumer is not in a position to bargain prices when getting sick, which is a pre-requisite for a free market to function.
I don't know from where does this kind of faulty thinking originates. Lemme show you why it is faulty:
The final consumer of food is not in position to bargain prices when he is hungry, which is a pre-requisite for free market to function. Therefore a single payer food system works better than a private food system.
The final consumer of a gun is not in a position to bargain prices when his home is invaded, which is a pre-requisite for a free market to function. Therefore a single payer gun system works better than private market for guns.
The problem is, you're not suppose to look for food only when you get hungry, or buy a gun precisely when you're getting invaded, you're suppose to do these things BEFORE you actually need them.
And just like food (which you need daily multiple times) you buy in chunk. The whole system of food acquisition works out perfectly fine.
Your rest of the comment is more to the point, and the way things are in America are antithetical to a free market in healthcare and pharma industry.
I agree with this, and I'll add that the system we have now actively prevents me from trying to apply price sensitivity.
I have a chronic illness that requires me to take medicine every day; some prescription, some not.
For the prescription medicine I get a prescription from my doctor. It does not tell me the price of the drug, nor does it tell me whether there is a generic available, or another brand-name drug with similar effect. Even if I ask, the doctor typically has no idea how much the various drugs cost, and which are less expensive. They just say "your insurance will cover this."
I take it to the pharmacy. None of the pharmacies advertise their prices for this drug, so I have no reason to choose one over another.
I fill the prescription and go to checkout. The price will be different depending on which tier the drug is on at my insurance company, the copay for that drug, or whether I've yet satisfied my deductible. The only way to predict these things in advance is to read through dozens of pages of dense literature from my insurance provider. And by the way, I have no choice in insurance provider because my employer only offers one.
For the non-prescription medicine, the price is clearly marked in every store, and generics are clearly identified and merchandised right alongside the brand name. I have great opportunity to choose where and what to buy. And, no surprise, these are way cheaper than the prescription drugs.
Keep in mind that my need for, and usage of, these drugs is exactly the same. But the price is radically different depending on whether they come to through the clarity of the market or the opacity of the current health insurance system.
The problem is that people would have a lot of trouble swallowing some of the consequences of a true free market on medical care. From "patient dumping" cases (http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1305897/) to the very real possibility that a medication with horrible consequences will be put on the market (ala a Thalidomide -- https://en.wikipedia.org/wiki/Thalidomide), it is clear that some regulations are needed for moral and practical reasons in health care that would run against the spirit of free markets.
Part of that is that there is a very significant barrier in obtaining the knowledge needed in order for a consumer to be truly "informed", as medicine and chemistry etc. are hard subjects. Another problem is that a sick patient in need of medical emergency by definition is not going to be in the best place to make an informed decision -- and it's not like you always can chose things beforehand (example: what if you have a medical emergency while traveling?). So I don't think the gun / food comparisons are directly comparable, personally.
That being said, it is entirely possible to design a system that introduces plenty of competitive opportunities while keeping the above in mind. Personally, I think many single payer systems in the world are actually more free-market-friendly than the United States, in that there's provisions for competition from either/or private insurance and private health care facilities! Capitalism / free markets lose many of their advantages if they turn into monopolies that are able to strong-arm competition away with legislation... this pretty much is the situation with American pharmaceuticals, I'm afraid.
> The final consumer of food is not in position to bargain prices when he is hungry, which is a pre-requisite for free market to function.
You are ignoring the fact that consumers can pick from a plethora of food options. When you have sickness A the ONLY option you have is medicine X (take this medicine or you die), where is the market force to drive down the price? That isn't free market
> When you have sickness A the ONLY option you have is medicine X (take this medicine or you die), where is the market force to drive down the price? That isn't free market
Sure, but if a country suffers famine, do people (and you) suggest single payer food system?
So you think that people should stock up on meds before they get sick?
It's not an invalid argument to say you think markets are great excwpt where the preconditions for a well functioning market are not met. Many people think they are not met when it comes to healthcare, hence most of the developed world having socialised medical systems. The US is a weird outlier in that respect.
A huge amount (the majority, I believe) of health care costs in the U.S. are spent treating chronic illnesses. Chronic illnesses are like hunger--you know you have it, and you know you will need regular treatment for it. Buying medicine in advance is how chronic illnesses are treated.
Medical emergencies are a popular counter-argument to the idea of greater market clarity in health care, but the reality is that most people encounter the medical system in non-emergency situations. They have the opportunity to shop around for these--but often don't, because they don't have the information or incentive to do so.
As for emergencies or unexpected costs--that is what insurance is properly for.
Clarifying. Yes, I am in favor of free market, free entrepreneurship, and competition in most industries. E.g.: I favor free market for food, as opposed to Govt fixing food prices... and it seems to be very efficient, much better than Poland in the 80s!!
In a few limited industries, such as healthcare, I am much less in favor.
>you're suppose to do these things BEFORE you actually need them
Exactly. I paid full price in a single-payer system, not subsidized by anyone, where prices have been negotiated in advance, and it is a lot less costly. I paid even less than the co-pay in the US! I am insured here, so my insurance takes the rest, but it's super expensive for them. And therefore for me in my premium. The magnitude of the difference is insane, but it makes sense given the dynamics of that industry. Hence calling for a different system, just for that industry: it shows to be a more effective in many developed countries.
See you seem to think that when you say "I favor free market for food but not in healthcare", you're saying "I favor eating Chinese food today but last week I ate mostly Turkish food". Or "I don't drink coffee on the days I have to make a big presentation".
Whereas saying what you're saying is more akin to "I believe in science and reason as far as Christian god is considered, but in China I believe in Budda as the supreme deity".
My point is, that there is a reason why Free Market works, and government controlled economies don't. If you hold that model consistently you will find the reason why American healthcare system is so messy, and not that somehow govt controlled healthcare system works.
If govt controlled healthcare works, then govt controlled everything and anything could work.
> I paid full price in a single-payer system, not subsidized by anyone, where prices have been negotiated in advance, and it is a lot less costly.
Are you claiming that something fundamentally in free market which prevents you from doing that here?
Reading you, I feel you believe free market is some sort of God that cannot ever be contested, and everything should be the same/consistent. The real world is way more complex. Healthcare is not like food.
>if govt controlled healthcare works, then govt controlled everything and anything could work.
Absolutely not: we have enough examples showing the opposite. Govt-controlled food prices usually does not work, and bargaining drug prices betwen a state and private companies actually does, in many countries!!
Free market is a tool, very efficient to serve the people in most cases. But if that tool does not work very well for the people of the Unites States in a particular industry, why not change the rule in that industry?
Afraid of entering of world of complexity where free market is not the only, systematic solution?
Reality is diverse, even if it's annoying intellectually.
* Ridiculously long patent validity periods. Let's put aside the fact that patenting a fucking molecule is even a thing, 20+ years is way too long a term to guarantee profit to a private corporation. Enforced by governments.
* Heavily subsidized (read: price artificially propped up) by insurance laws. This is student loans all over again. Again, created by governments.
* Astronomically high R&D costs, most of which is the cost of obtaining regulatory approval. Enforced by government agencies.
Is 20 years actually that long for a drug? Drugs tend to have 12-15 years of actual patented time in market given the time eaten up the approval process. It's not like software where that time lag might make the patented drug obsolete by the time it becomes generic.
What "insurance laws" "subsidize" drug costs?
The cost of regulatory approval is high, but that's justified because the economic cost of a bad or even just ineffective drug piles up very quickly. Reduce the life expectancy of 1,000 people by 10 years (or give them an ineffective alternative to a drug that could extend their life by 10 years) and that's a billion dollars of damages right there. Is there a cheaper solution than extensive clinical trials that accomplished the same result?
It's not clear there is. Remember, what really makes approval so expensive is that most candidate drugs don't get approval. So the investment into all the drugs that don't work has to be recouped from the ones that do. But the fact that so many drugs fail at the clinic trial stage suggests we don't have better ways of predicting whether drugs will be safe and effective. Drug companies don't invest into drugs that don't pass approval for funsies. If they could determine a drug wasn't going to pass approval before the clinical trials, they'd do it. It'd be pure profit for them. Also, the fact that so many drugs don't pass approval suggests that the FDA is keeping a bunch of ineffective and harmful drugs off the market. The cost of getting rid of the FDA has to account for the cost of those bad and ineffective drugs.
Also, getting rid of these things would not make the drug industry a "free market." In any advanced society, the government will pay for drugs for elderly and poor people. That creates an entity that can exercise monopsony power. Get rid of patents on drugs, then you get the free rider effect undermining R&D. And get rid of the FDA, and you end up with a market with huge information asymmetries that allow drug manufacturers to sell products that don't work without customers having a way to know that. These would destroy any hope of a functioning competitive market. You can't talk about markets while pretending only the parts of economics that comport with your world view exist.
> The cost of regulatory approval is high, but that's justified because the economic cost of a bad or even just ineffective drug piles up very quickly
I wonder what the result would be of vastly reducing regulatory approval requirements, but in exchange giving pharmaceutical companies unlimited liability. So, sure, put that poorly-tested drug out there, but every person who has horrifying side-effects is going to sue you for millions
> I wonder what the result would be of vastly reducing regulatory approval requirements, but in exchange giving pharmaceutical companies unlimited liability
I don't think lawsuits are the best "first line of defense" for protecting consumers against harmful drugs. Because the usual measure of damages is the cost of harm, the actual recovery (once discounted by litigation risk and diminished by legal fees), is a fraction of the cost of the harm. That discount is particularly significant in medical cases, because proving causation is very difficult (how do you know that this drug caused your dad's heart attack instead of the three others he was taking?).
Moreover, drug-related litigation these days relies heavily on the factual record developed by clinical trials and FDA investigations. Class action lawsuits are often precipitated by an FDA action. E.g. major litigation like Fen-Phen and Vioxx, that netted tens of billions of dollars in recovery for consumers, were kicked off by FDA recalls. Individual litigants are poorly positioned to develop the scientific record necessary to support a lawsuit.
That's what we do, this generation buys drugs for the previous generation. We take advantage of economies of scale though by pooling a bunch of money together and paying some people to coordinate it for us because that's more efficient and effective than expecting 150million do it individually.
> That's what we do, this generation buys drugs for the previous generation.
Not really. Indeed, given voting patterns it's more like the older generation empowers enforcers to rob the younger generation and then empowers others to use those stolen funds to buy them drugs.
Note that companies have also been fighting for such standards in order to prevent new entrants and restrict competition. So it's not just governments at fault, there is complicity between the two.
It's the same in every regulated industry: auto, insurance, finance, education. All it does is drive up the cost like crazy which gets passed on and people still get scammed, but pay extra for the privilege.
It defaults to higher costs, but that's not enough to say it's worse. I don't care if milk could cost half as much if it has a significantly higher chance of making me sick.
On the other hand if I had less money I might be more willing to take risks. Thus, regulation is not an independent thing and depends on the economy it's operating in.
PS: Historically milk was surprisingly deadly. Without regulation it would likely be much safer than that today, but not as safe as it currently is.
You do realize that milk is heavily subsidized to be priced where it is, right? I would much rather pay a local farmer the market amount and have a relationship with him than to pay into the bureaucracy and support those subsidies with all kinds of taxes.
Because it's a discovery rather than an invention. Though the mere concept of patents is already a fraud, as is clear when you start to look closely the arguments. See http://hintjens.com/blog:31.
I would argue that any invention is a discovery of sorts. The inventor of the electric coffee maker didn't fundamentally alter the universe to cause it to be possible for a device to brew coffee.
And even if you don't buy that argument (it's admittedly tenuous) the fact that it's a discovery wouldn't convince me that the discoverer shouldn't still get exclusivity rights, given the amount of research involved in discovering new molecules and shepherding them through the approval process.
Could you possibly find something a little less conspiracy theory looking? Also something a little less manifesto.
It's my own blog. I spent two years fighting software parents in Europe as president of the largest NGO involved (FFII), and it was pretty clear that we were fighting a well organised and funded lobbying machine. After some years of analysis my conclusion was that software was not in fact a special case, and that all patents were a problem. Sorry to not have made it clear that I was linking to my own work.
The question is whether that reward benefits society or not. Do we get innovation without it? Are there studies that show patents preceding innovation rather than following it?
if you think finding out which molecule fights cancer cells vs kills you outright and how to produce it in controlled fashion is trivial, you're a moron.
if you think creating genetically enginnered bacteria to produce insulin is trivial, you're an utter moron. lest you like injecting harvested
insulin from pigs or dead
humans.
HN likes to pride itself on techie knowledge, but the cluelessness around actual hard tech is staggering. modern medicine is up there with rocket science, worthy of nobel prizes.
they just CURED hep C for FUCKS SAKE. but yeah, no reward for that, but sharing catpics - here, have billions.
Nobody's questioning whether these things are non-trivial or high-value. There are very legitimate questions to be asked, though, especially regarding patentability and profitability.
There are many other fields with very high barriers to entry and which require very large R&D budgets, but which - unlike the prescription drug market - nonetheless manage to attract competitiors: The semiconductor industry, for example, comes to mind.
pharma is full of competitors. exactly because it rewards risk. the whole point of the system. and the patent cliff hits and generics and biosimilars take over.
This is an absolutely incorrect assertion: drug discovery is but one part of the drug development process. You're ignoring (among other things) the work in medicinal chemistry, retrosynthesis, and scale up/chemical engineering that go into creating a drug. The compound at the end of the development process rarely looks like the one identified in initial screening, and the work done to manufacture it and bring it to market unquestionably count as inventive.
Great write-up. More as a reference work to draw on. There's simply too many angles and information in it. Do you mind if I present a condensed, high-impact version of it should I run into those that can influence the patent system? I'll credit you as the original source with mine being a re-hash or revision.
You patent the method of synthesis or extraction, and you patent the method for treating a human disease or ailment.
If you discovered a novel use for acetylsalicylic acid (aspirin), you could patent that. You are not re-patenting aspirin. It can still be used as an analgesic.
If you discovered a novel process to produce ethanol, you could patent that. You are not re-patenting alcohol. People could still use the traditional fermentation and distillation process. You could even patent a process step to remove the remaining water from azeotropic distilled alcohol.
Obviously, such patents are more monetizable if the molecule in question is expensive to produce by the public domain processes, has no other commonly known uses, or is a controlled substance.
That's perfectly in line with patenting inventions, but not discoveries, and implementations, but not ideas.
So in order for me to accept a patent on a molecule, it would have to be found nowhere else in nature or in prior art, and the applicant must have synthesized a measurable quantity of it.
In practice, this means patentable molecules have to be rather complex, because there are a ridiculous number of compounds that have been created once, for someone's dissertation, or to create catalog entries for boiling points, freezing points, dissociation constants, and such, and then never looked at again.
Quite a lot of "new" drugs were actually first described decades ago and then shelved. There are just too many possibilities in organic chemistry to examine each in detail without a specific application already in mind.
Not only it's expensive, but tons of existing drugs have been approved with loose standards (a single trial showing better efficacy than placebo, wow, big deal!). Every new drug should be benchmarked against the best drug in class, and period. Instead of that you end up with doctors who have no idea which drugs work the best and who rely on companies to "educate" them, with obvious conflict of interest.
"Best" is rarely a clear cut answers. There is pretty wide variation in the several billion people on the planet. Some have serious side effects, others have none. Some drugs work well as part of a cocktail, but not as stand alones. This idea of selecting a single best option and making everything relative to it would have a strong adverse impact on the market. It would be like saying we shouldn't clear a Ferrari when a Corolla can get groceries just fine at a lower cost.
That is the current standard (Ph 3 clinical trials against standard of care). There are rare exceptions to this, but the ones I can think of are drugs for which there is no current standard and drugs for which the current standard doesn't match the intended indication. In modern medicine, we don't just take diagnosed patients who meet criteria for a trial and let them progress without disease.
Yes; our system makes it very difficult to put horses back in the barn. I heard one physician say that Tylenol would not make it through today, or at the very least it would be prescription, because of the slim toxicity margin.
You think the drug approval process is only to justify the salaries of a few bureaucrats? there is no other reason? safety doesnt factor in at all? I must be misunderstanding you here
Don't forget to add stuff like banning Canadian drug imports. Medicine absolutely should be validated before being sold in a country, but other than that, I see no reason why Canadian companies, or companies from other countries, couldn't sell a competing drug in the U.S. for whatever price they want.
Obama played a big role in banning this type of imports. Just saying. And TPP/TTIP would make this problem much worse, and virtually irreversible, because then they can just say "well, we wish we could change the monopoly laws now, but it's in the treaty, you see...so tough luck."
There are ridiculous levels of regulatory capture. E.g. epi pens are off patent and there are many competing companies in Europe, but the FDA refuses to approve any of them. Or cancer drugs that have been used for decades in Europe very effectively with tons of data there to support them, but the FDA refuses to allow them. One time they even required a drug to have a trial with more patients than exist in the US with that disease. They kill way more people than they save by preventing terminally ill patients from getting life saving drugs. And raising the cost developing them.
The FDA needs to be shut down. Perhaps replaced with something like a prediction market, where people can bet on how likely a drug is to pass a trial or even work in specific patients.
It's not allowed in this case because the FDA, rightly or wrongly, wants the patient trained in the use of the specific injector they are being prescribed. Having never needed one I don't know what the practical differences between the operation of an Epipen injector and Adrenaclick injector are, but the FDA seems to think they exist.
One reason Pharma companies in other countries can sell drugs for far cheaper is that actual manufacturing costs of most drugs are pennies. Once an American company discovers a safe and effective drug, foreign companies can simply look at the publications on how to synthesize the drug and don't have to spend any cash on R&D.
I've heard that the approvals process eats up almost half of those years. (Or if not the approvals process, then something that's going on after they get the patent but before they're allowed to sell it.)
This is usually true. The patent is filed before you start clinical trials, because it must be described in publications. Those trials together often take 5 years or more. Only after that can you even file the New Drug Application or foreign equivalent.
Edited to add: Also, people often lump the market exclusivity extensions in with the patent. The FDA offers companies and incentive to try their drugs in children. Without this, almost nothing would be approved for kids because the trials are ridiculously expensive (even compared to adult trials).
> Astronomically high R&D costs, most of which is the cost of obtaining regulatory approval.
And yet, IIRC, pharmaceutical companies spend about 20% of their revenues on research, but about 40% or more on marketing. These costs are galaxonomical!
The average number of emails you must send before a subscriber starts to consider you safe to buy from.. Eight.
Assuming one's health has an even higher threshold, and that a pharma company can't exactly cold email everyone in the U.S, well... That's a lot of commercials to get the word out. That's 800,000+ doctors to educate on a new option..
Marketing always goes hand in hand with product development.
I'd rather have a pharma company that's still in business charging $30,000/mo for a solution vs a company that charged the minimum, and thus has thrown away any chances of making successful products in the future.
It would be illegal for the article to call lobbying a bribe, because lobbying is a legal form of bribery, while bribery is illegal form of the same. However they can argue that really there is no difference between the two, and that would be legal. The issue is that the majority thinks that lobbying is ok, while bribing is not. Once you fix that, then you can call it "bribing".
Most lobbying has nothing to do with campaign donations.
People have to register when they work as federal lobbyists. If you look through the rolls you will see that most lobbyists make few if any campaign donations. And most people making campaign donations (especially the big ones) are not lobbyists.
When you see a headline like "Google spent millions on lobbying", none of that money, not one cent, went to a politician or political campaign. The "lobbying spending" that gets reported for companies is the money that paid for salaries, technologies, office space, ads, printing costs, etc.
One of the challenges in the U.S. today is that so few people understand how this stuff actually works.
Part of the problem is that lobbying is explicitly protected by the 1st amendment.
"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances"
How would one prohibit lobbying without also prohibiting petitioning for a redress of grievances?
Many of us don't think lobbying should be illegal or wrong, just that the law accept that the "free speech" of a corporation and special interest groups will always overpower that of individuals.
1) Printing presses are expensive and always have been.
2) It is possible to be more effective at things in general by working in a group, especially one with division of labor. Can you imagine a world in which a disorganized mass of individuals without training was more effective at advocacy than the EFF?
> just that the law accept that the "free speech" of a corporation and special interest groups will always overpower that of individuals.
What about a body of individuals acting together — viz., a corporation? Do individuals lose their right to free speech in your world when they group together? If so, that seems like it would put power firmly in the hands of the already-powerful.
Every issue you care about is represented by a "special interest," including issues of individual liberty.
The idea that corporations always win is obviously wrong; the entire environmental and labor union movements are testaments to how citizen organizing can outweigh corporate interests before the federal government.
The problem is that the US Supreme Court said that money is free speech, so covered by the 1st amendment. So much corruption has flowed from that decision that it's almost unbelievable.
> the US Supreme Court said that money is free speech
That is untrue.
The court did not rule that "money is speech", nor did it rule that spending money is a protected activity. Rather, it ruled that spending money can facilitate a protected activity, and that laws which restrict people's ability to participate in protected activities are subject to scrutiny.
We can argue about exactly where the line should be drawn, but the framework is in my view obviously correct, and is one which we apply to every other right. Money is not abortion, but that doesn't mean Texas can pass a law saying no one can spend more than $5 on an abortion, because people have a right to choose an abortion, and exercising that right, in some cases, can cost money.
> So much corruption has flowed from that decision that it's almost unbelievable.
Actually, you're right: I don't believe it. In my experience the most strident critics of the decision rarely understand how limited it was, how little it changed, or how weird the rules were prior to the decision. If I had a dollar for every anti-Citizen's United rant that focused on behaviour which had been legal for decades...
> The Citizens United decision opened up a peculiar loophole for foreign money. Federal law prohibits “foreign nationals” — a legal term encompassing foreign individuals, corporations and governments — from putting money into the U.S. political process. But federal law also states that any company legally incorporated in the U.S., no matter its ultimate ownership, is a U.S. national.
> This was not a significant concern prior to the Citizens United decision, because corporations had been largely barred from spending money on federal elections. By lifting that ban on corporate political donations, Citizens United changed the equation and made it possible for a corporation that is 100 percent owned by foreigners to participate in U.S. politics.
> This was not a significant concern prior to the Citizens United decision, because corporations had been largely barred from spending money on federal elections
In a certain sense, that's technically kind of true. However, here's something else that's true:
Prior to Citizens United, any corporation (including a foreign corporations) could contribute unlimited funds to an American front-group which could then spend the funds on lobbying and massive advertising blitzes, subject to almost zero restrictions (and without disclosing the source of the funds!).
Basically: You couldn't run an ad that says "vote against Obama!", but you could run an ad that says "Obama is ruining America!", as long as it was more than 60 days prior to an election. Even within the 60 day window you could run ads that criticized his policies in detail so long as you avoided mentioning him by name.
The main impact of Citizens United was removing the 60 day window where you could run a massive shadowy ad campaign against, eg, health care reform or gun control so long as you didn't mention the name of the politician advocating for those policies. Now you can run the same ads, but actually say the politicians name.
Of course, under the law, a foreign company spending $50m on political ads hammering Obama (or Romney, or whatever) 61 days before the election wasn't "spending money on a federal election", they were just spending money on issue advocacy which happened to mention a candidate and just happened to be 61 days before an election due to a mysterious coincidence. But if the same ad ran two days later it would be a banned "electioneering communication", unless the same content runs without the name, in which case it's fine again.
In the real world, all those examples are 99.99% the same.
The result of the ruling, however, has put almost a billion dollars in SuperPACs (https://www.opensecrets.org/pacs/superpacs.php) just this election. It really doesn't matter what the details of the decision were--the outcome is selling our elections to the highest bidder.
> The result of the ruling, however, has put almost a billion dollars in SuperPACs.
Absolutely incorrect. There are two issues with your claim:
1. The overwhelming bulk of that money comes from individuals, not corporations, and thus was not restricted by the pre-Citizens United rules. (Billionaires have always been free to spend whatever they like.)
2) Much of that money is being spent on activities which did not count as "express advocacy" or "direct electioneering" under the pre-Citizens United rules, and were thus legal for corporate money to fund. (An ad that talks about Clinton being a terrible person but doesn't expressly tell you to vote for Trump was always legal, even if paid for by corporate money, so long as it ran more than 60 days before the election.)
Of the two issues, both undermine your point, but the first is by far the most important. Note, for example, that according to the WaPo, a full 41 percent of that "billion dollars" came from a mere 50 individuals. Corporate money is a sideshow; this election is all about billionaires. And Citizens United didn't change the rules governing individuals.
> the outcome is selling our elections to the highest bidder.
Has it occurred to you that much of the outrage over Citizens United has been cynically manufactured by the super-rich to distract you from the actual issue?
Fair enough. So you're saying that the outrage is manufactured to focus people's attention on how our elections are bought (post Citizens United) instead of how our elections are bought (pre Citizens United)? Or is the actual issue not the fact that our elections are bought? Because to me that seems to have always been the issue and Citizens United just added a littler more money to the pot.
I think the question of whether it's accurate to say our "elections are bought" is an open question, and a very subjective one. What I'm saying is that the things people talk about when they say "our elections are bought" have not changed in many years, and were entirely unaffected by Citizens United.
Prior to the decision billionaires could spend unlimited funds on almost any part of the electoral process except directly contributing to the actual campaigns of individual politicians, and did so regularly. After the decision, this was still true.
Conversely, I'm aware of no aspect of our political process which is 1) ethically troubling and 2) actually taking place in significant amounts that arose (or increased) only after the decision. The way our elections are bought after the decision(if they are bought, see above) is the same way they were bought before.
> Citizens United just added a littler more money to the pot.
I'm not even aware of evidence it did that to any meaningful extent. We're entering an era of $1 billion dollar campaigns (there was talk of Clinton running the first $2 billion dollar campaign), which is absurdly high, and clear evidence that more money is flowing into the system, but remember: Citizens United didn't change how campaigns are financed, and did not allow corporations to donate to campaigns. We're seeing a lot of extra money in the pot, and a lot of it is clearly not stemming directly from that decision. (I've seen it suggested that campaigns are having to raise more funds to compete with the "shadow" money coming from non-individuals, but as mentioned in an earlier comment, the shadow money is also overwhelmingly coming from individuals, so that doesn't seem to work either.)
> Money is not abortion, but that doesn't mean Texas can pass a law saying no one can spend more than $5 on an abortion, because people have a right to choose an abortion, and exercising that right, in some cases, can cost money.
Presumably OP is thinking of libel laws, because accusing someone of talking a bribe is tantamount to accusing them of breaking one of any amount of anti-corruption laws. I'm (extremely) doubtful of the claim since the plaintiff would have to prove in a court of law that bribery can only possibly refer to a specific action (breaking one of the above laws) that he did not commit.
I always have seen it as a legalized corruption. You can't buy a politician but if you give money to fund a campaign instead of giving it directly, it's not corruption. That's prostitution of a democracy.
You will find that the entirety of the legal system, the world over, is like this.
Asm/C/C++/similar programmers have no problem with the concept of pointers and one or more levels of indirection, but the gap between indirection abstraction and judicial practice likely stems from having to use statistical inference to apply the concept in law enforcement, and that's a judicial show-stopper for generally sound reasons in much of criminal law. We might be seeing some of the complexity of some classes of white collar crime and their fast-moving evolution vastly outstrip judicial concepts rooted in more prosaic criminal activities, with a simple single level of indirection capable of stymieing most laws aimed at sophisticated white collar crime.
Pretty much anytime you see laws and regulations erected to prevent white collar crime above a certain level of sophistication (perhaps way above check kiting, and somewhat below securities fraud), if you look for ways to factor responsibilities and roles between separated parties and add one or more levels of indirection, then you will have found a way to flout law with impunity. As long as you are familiar with the lay of the legal and regulatory land, it is (for programmers) a fairly simple algorithm to defeat these laws. It raises the buy-in cost of the scam, but that just raises barriers to entry to competitors for those who are in on the scam. The scammers are way faster adapting than the judicial system. It is analogous to the cat and mouse game between designer drugs versus drug enforcement agencies, but far more consistently profitable for the scammers, much, much faster evolution on the scammers' side of the equation, considerably more insurance/protection angles for the scammers (in both legal, regulatory and political forms), and immensely more damaging to average people.
"And it is illegal for Medicare to negotiate with drug companies. Private insurers do so instead, but the government binds their hands, for example by requiring them to pay for six broad categories of drugs, without exception. This suits pharmaceutical firms."
While requiring companies to pay for broad categories of drugs may suit pharmaceutical firms, I'm going to guess this was more to help folks that are sick. What they must cover include [1]:
1. HIV/Aids treatments
2. Antidepressants
3. Antipsychotic medication
4. Anticonvulsive treatments for seizure disorders
5. Immunosuppressant medications
6. Anticancer drugs (unless covered by Medicare Part B).
These are generally categories that people really do need a drug that works. Different antidepressants work for different people - the same with antipsychotic medication. Many of these make a huge difference in quality of life - or life itself.
The medicare regulations aslo state they must have a range of medications that are generally needed by the population it serves, insulin (even if available without prescription), and things only available by prescription (so some allergy medication won't be covered, for instance).
Yet the article proposes this is too much regulation: To me, these are very basic things one expects out of drug coverage. This sort of interpretation makes me question the objectiveness of the article itself.
> This sort of interpretation makes me question the objectiveness of the article itself.
Why does disagreeing with the article make you conclude that it's not objective? Can't you just, you know, disagree, without questioning the other side's motives, intelligence, objectiveness, etc?
> Yet the article proposes this is too much regulation:
Doesn't the article say it's just the wrong type of regulation, and compares to the US (weird regulation, expensive meds) to other countries (plenty of regulation, cheaper meds)?
It points it out as being an unwise regulation with bad price consequences.
It does state that other governments set price controls in various ways - like the UK refusing to pay for a drug if it doesn't meet cost-effectiveness.. though I'm not sure how exactly that winds up affecting which drugs are available and which aren't.
Then the actual reason for the listed example is that it makes sure folks are covered for some things. Rules for coverage in itself doesn't raise prices. And when these are the things they highlight as soft spots in the regulation system instead of focusing more on the non-negotiations, the systems itself, the money on advertising, and other such things, to me it comes down to having a weird slant or poorly thought out.
> UK refusing to pay for a drug if it doesn't meet cost-effectiveness.. though I'm not sure how exactly that winds up affecting which drugs are available and which aren't.
It means the supplier has a choice: meet the cost effectiveness model's price, or earn almost no money in that market. It's a powerful tool and run quite transparently. Look up the National Institute for Clinical Excellence.
There is occasionally some political blowback that distorts the purity of it, but generally it works pretty well.
> It does state that other governments set price controls in various ways - like the UK refusing to pay for a drug if it doesn't meet cost-effectiveness.. though I'm not sure how exactly that winds up affecting which drugs are available and which aren't.
The UK (strictly, English, because health is devolved in Scotland and in Wales) is tricky. There's an independent organisation called NICE who look at cost effectiveness.
I think Abraxane, a pancreatic cancer chemotherapy, is a useful example.
Currently there are two chemotherapies. Neither is particularly effective. One is slightly more effective, but has a lot of side effects. The other is slightly less effective, but has fewer side effects.
For Abraxane to get funding it has to be more effective than either of these meds. It isn't. Or it needs to have fewer side effects. It doesn't. It has the sub-optimal combination of the same high side effects as one of the existing meds with the reduced efficiacy of the other med, while being more expensive than both of them.
So, NICE recommend that it's not used.
That means that Clinical Commissioning Groups probably aren't going to pay for it.
That means that if people really want to use it they either pay for it privately, or they use their medical insurance (if they have any) to get it. But insurance companies probably aren't going to pay for it, because they're using similar cost effective calculations as NICE.
NICE gives special consideration to end of life medication, but even with these special considerations abraxane was not cost effective.
(There used to be a thing that people buying these very expensive and not effective cancer meds would have to also pay for the rest of their health care privately. I'm not sure if that's still the case. It was an attempt to stop abusive drug companies from exploiting dying people and their families who were sometimes selling their homes to pay for ineffective meds.)
It's not just America, there's a case in the EU right now where a company for some reason as gotten a 10 year exclusive on a drug that cost basically nothing. It has now gone up 4000% in price. This is for an out of patent drug.
That company for some reason got an exclusive, by using a law that was suppose to ensure that companies could recoup development cost. In this case it's a drug that pharmacies used to make, there's absolutely NO COST to recoup.
This also happens in the case of Shkreli-types. Part of the problem is that the market size for the drugs tend to be small, but the R&D and regulatory costs are high enough to keep out competitors so you have these "orphan drug" companies able to jack up prices even in the absence of patent protection.
There are many many reasons. IMHO medicare not being able to negotiate prices is silly and expensive but not the whole story.
If i could wave a magic wand and change any one thing, I'd require drugs and perhaps devices for clinical trials to be produced by the patent office, from the text of the patent. I think this would reduce the FDA approval for generics down to, Can the manufacturer make the drug correctly and consistently?
I don't have a problem with companies charging whatever they wish for the shiny new drug. But the transition to generic needs to be as simple, cheap and smooth as possible.
The epipen is a glib response. Biologics are pretty notorious for not being reproducible. Etanercept (Enbril) is the last one i looked at deeply. There winds up being some 'secret sauce' that doesn't quite make it into the patent.
edit
Enbril is around $2000/month, for what it's worth.
It's not hard to understand. Pick a medical commodity that costs a few dollars in Europe or anywhere else in the world but is exorbitant in the US. Could be insulin, an epipen - whatever. Try and bring some back in to the country with you. You're breaking the law. Try and bring back a whole box of it and you're off to jail. Without the government-backed threat of jail, the market would very quickly find the proper price.
Appeals to the "market" are baseless. There is no competitive "market" for drugs anywhere. In Europe, drug prices are artificially suppressed by central governments exercising buyer-side market power.
There is no competitive "market" for drugs anywhere.
I guess it depends on what you define as competitive. When hepatitis C competitors were launched, Gilead dropped their price really dam quick to keep market share.
I would call that a competitive pharmaceutical market.
On a recent vacation in the US a friend and I dropped into a pharmacy to pick up a relatively mundane and day-to-day pharmaceutical. In the UK this would cost around £5-£7.
We were told that it was available but we would need a doctor's appointment,a prescription and then to pay $100-$200 for the exact same product. They had a similar medication with a different active ingredient for around $20, but the price difference was astounding!
Many generic forms of prescription only drugs have a cost of $5-$10. Not after insurance or anything, the negotiated price.
For people without insurance it may be necessary to whisper magic numbers to receive a better price (I say that sarcastically because the pharmacy gives anyone access to better prices, so long as they simply ask for the better price):
So you might have a drug with a PBM negotiated price of $5 for the generic, a cash price of $40 for the generic and a cash price of $400 for the name brand drug.
In that situation the name-brand was the same in both countries! I had put the procing effect down to the fact that insurance companies get involved as soon as 'prescription' is mentioned, so prices can rise very high.
Sure, it depends on the drug. But lots and lots of them are inexpensive, the system isn't completely broken.
It's also often worthwhile to see what the price is with a discount card or at Walmart, as it can easily make a 90% difference in the price for someone with no insurance.
> We were told that it was available but we would need a doctor's appointment,a prescription
This goes both ways. There are over-the-counter drugs for sale in the US that are outright banned in some countries (I think Pseudoephedrine is a common one)
Oh sure, but that wasn't the surprising bit, the surprising bit was that the exact same thing (same brand, same ingredient, same strength) was 10x the price.
There's an excellent comment by the author on the predecessor post to the linked one (which is, in itself, quite excellent), elaborating on why regulation is actually a worthwhile target, and not just a convenient scapegoat -- worth quoting in full:
> I understand why you think it’s bad to lump all regulations together in the category “regulation”, but in this case, I think it sort of makes sense.
I think there’s a general principle that once you pass dumb regulations, it’s going to make bad things happen, and then if you try to solve those bad things by passing further regulations, you’re just going to get caught in an endless trap.
So first they regulate Mylan into a monopoly on EpiPens. Then they realize that made them too expensive, so they regulate that the government gets to set the price of drugs. Then drug companies stop making EpiPens to switch to more profitable unregulated drugs, so the government has to mandate that you’re not allowed to be a drug company unless you make a certain amount of EpiPens below cost. So drug companies leave the US and headquarter overseas to avoid that law, and then the government regulates that only drug companies headquartered in America can sell drugs in America. Then cheaper foreign drugs start coming in as contraband, so the government regulates that all packages must be inspected at the border. Then drug mules ingest contraband medications into their bodies, so now everyone entering the country needs to have an X-ray…
I realize some of these steps are probably stupid and would never happen, but I think there’s a risk of this general sort of thing, where you play Whack-A-Mole against the economy, and each mole you whack decreases efficiency and just makes another mole come up somewhere else.
or potentially more correctly, "the regulations" are the problem, since plenty of health care systems work much more efficiently with different regulations so saying that regulation is the problem is clearly incorrect
> Rather than lower prices, rules for Medicare help raise them. ... And it is illegal for Medicare to negotiate with drug companies.
> But [negotiating] would be effective only if the government could also refuse to pay for some medicines, ...
The spectre of so-called government “death panels” looms large.
What is to stop the Government from saying "we will buy this medicine at X$", where X is a fair price they could negotiate. And if negotiations fail just go "right, you are taking X$, or we are taking your patent in the name of public intrest".
I know this is a big no-no in American culture (and other parts of the world), but it is close to what say India and China are doing by ignoring patents on medicine that is needed but not affordable. To me, this is a much preferable solution to "death panels".
Some would argue that, for economic reasons, this would lead to less research or pharmaceuticals pulling out of the US market. But history has shown the opposite to be true. Again look at China and some of the heavy restrictions it puts on foreign companies there. Do they hurt their bottom-line compared to the 'American approach'? probably. Do they still turn a profit despite them? yes. And that's why many companies still try to get into the Chinese market. profit is profit and as long as they can get some, even if it's pennies, they'll stay in a market.
Let's also not forget that profits in the pharmaceutical industry are insanely high, even when taking into account the cost of research.
The cost of research is far lower than claimed. Tufts Center for the Study of Drug Development is heavily influenced by the pharmaceutical industry. Their estimates of drug development costs are arguably inflated. Or at least, they don't question the industry's creative accounting methods. In reality, it's arguably promotion and advertising that take the biggest chunk from profits.
Well, without promotion and advertising, they arguably would not have very much profit. But "take the biggest chunk from profits" wasn't clear. What I meant is that promotion and advertising comprise a substantially larger share of revenue than research and development do.
True. But it undercuts the argument that R&D costs are the primary driver for high drug prices. It's promotion and advertising that create the demand necessary for high prices.
edit: There are obviously sweet spots for all of those expenditures to maximize profits.
It simply sounds really hard to do it right. In the short term, it would be really easy to resolve disputes by just taking the IP, but that could lead to long term troubles as people drop out of the market. Disagreements between the best short term and long term strategies sound like a recipe for trouble. I'd bet it could work in theory, but I doubt we could get it right.
In the USA, if I have a potentially fatal medical problem and I can't pay for treatment (myself or via insurance) what are my options? I ask because I imagine I could not get treated which is the same outcome as 'death panels' but without the government bureaucracy.
It ends up being a really terrible game. You get treated, and then you get presented with an outrageously high bill.
You then have two options - negotiate with the billing company, or go bankrupt. A large number of people take the latter[1]. The result is that the hospital then has to eat the costs of the procedure... which it then responds to by jacking up the price even further for everyone else, knowing full well that most of the uninsured patients who get the even higher price won't be able to pay that, either. The hospitals then use this increased price to negotiate better rates with the insurance companies.
So, you do get the treatment you need, but it nukes your finances, and everyone else ends up paying for it anyway in this ad-hoc, incoherent, uncoordinated mess.
Well, you get the most basic treatment. If you are dying quickly, you can get treated. If you have a longer term issue or re-occuring issue, good luck. Hospitals don't have to treat everyone, they are legally able to stabilize you and let you die from complications.
More often, you slowly degrade due to lack of treatment. Then you can't work and end up on medicaid and get the treatments you need. However, now your disabled. It's a great system.
Upon reflection, it's just that you probably wouldn't get adequately treated. And if you managed to get adequately treated, you'd probably go bankrupt.
> The simple answer is because they can.
Americans social contract is more about money than about their fellow man. Case in point, Epi-pen, assumed actual cost $30, sale price $600. They would still be doing great if they only cost $50.
Yes, it's about money. Monetization of intellectual property. Whether it's entertainment, software, drugs or medical devices. Regarding EpiPen, epinephrine has been generic for many decades, but the device is still protected by patent.
SG&A is perhaps a broader category than most people understand it to be. Also, I assume that "R&D" does not include depreciation on all the assets necessary to actually perform the R&D.
So I think it's an interesting metric but perhaps not incredibly meaningful. Most companies spend a lot less on R&D as a percentage of revenue than pharma. Here's a similar chart for the big tech companies: https://www.theatlas.com/charts/N1Gs8E4v
There are articles that actually break out Sales & Marketing budgets (2013 numbers I am excluding J&J since they have a lot of consumer products)
"Next in line is Pfizer ($PFE), long known for its marketing muscle. The drugmaker plowed $11.4 billion into marketing in 2013, $4.8 billion more than it spent on R&D--a difference of 72%. AstraZeneca ($AZN) is close behind with a 70% difference. The U.K.-based company put $7.3 billion toward marketing last year, and $4.3 billion into R&D. AstraZeneca has been pumping up marketing behind products such as its blood-thinner Brilinta as it preps for the onslaught of Nexium copycats.
The next 5 range from a 47% difference in favor of R&D on the high end--Novartis ($NVS), with $14.6 billion in marketing spending--to 27% on the low end. The latter is Merck ($MRK), with $9.5 billion allocated to marketing and $7.5 billion to R&D.
Then there's Eli Lilly ($LLY), with a mere $200 million premium to the marketing side. Its marketing spending clocked in at $5.7 billion, compared with $5.5 billion for R&D. That's a difference of just 7%.""
I support moving R&D and early stage trials back to the government. Then pharmas place their bets by licensing the drugs to manufacture and bring to market. The earlier they license, the greater the risk, the lower the cost.
> These high prices support innovation, they argue—not just for America, but for the world. But it is unclear if firms’ profits need be so high to sustain research.
Thank fuck someone finally says that this isn't mostly about the US subsidising the rest of the world. (A nonsensical claim when you look at how much drug companies spend on marketing).
I wonder if we should (some day) gradually start to regulate marketing in some industries. Cannibalizing through marketing only increases prices for consumers, creates bullshit jobs and destroys the environment.
If it is about commodities, the increasing profits could then be taxed away until the product is virtually free for society. Not regarding the obvious opposition from shareholders a big problem seems to be to decide when something is really a commodity. Drugs are obviously not, we still seem quite mortal.
Consumer marketing for drugs is forbidden in many parts of the world, the US is more an outlier. However this still leaves marketing to doctors, which is a problem. There are some initiatives that reject that (e.g. there's a german group called Mezis).
It also completely makes sense. The decision for or against a drug should be guided by scientific evidence. So the only form of "marketing" that should be allowed are high quality scientific studies. And they shouldn't be delivered to the doctors or patients via marketing brochures, but via scientific articles and recommendations from independent organizations reviewing scientific articles.
> Consumer marketing for drugs is forbidden in many parts of the world, the US is more an outlier
Exactly right. Because consumer marketing of prescription drugs is an utterly crazy idea, both in general theory, and in its present unethical incarnation.
Last time I checked there were exactly two developed nations which allow so-called DTC (direct-to-consumer) advertising of prescription medications at all. Namely: USA and New Zealand. Apparently every other country got the memo. Not us!
Every few years they talk about getting rid of it here in NZ. As you'd expect, public heath officials tend to support that idea, and industry shills tend not to.
I mean it took Big Pharma until 2008 to even adopt some basic ethical guidelines in producing these ads. I'm talking things like not using actors to play doctors anymore, and making sure that endorsers who said they had used a particular drug had actually used it. Yep, those kindly old men in white coats telling you to "Ask your doctor if this drug is right for you" weren't even real doctors.
Moreover, surveys carried out in NZ and in the USA show that when a patient asks for a specific drug by name they receive it more often than not. "The truth is direct-to-consumer advertising is used to drive choice rather than inform it," says Dr Dee Mangin, associate professor at the Christchurch School of Medicine. "In an era of shared decision-making, it’s much more likely that general practitioners will just do what the patient asks."
Professor Les Toop from Otago University says: "Internationally there have been many reviews of DTCA from health professional groups, academic institutions, governments and importantly many independent (non industry funded) consumer and patient groups. Without exception they have come to the same conclusion: the partial and potentially misleading information and the accompanying medicalisation caused by DTCA is of net public harm."
The AMA says: "Direct-to-consumer advertising inflates demand for new and more expensive drugs, even when these drugs may not be appropriate."
> Last time I checked there were exactly two developed nations which allow so-called DTC (direct-to-consumer) advertising of prescription medications at all. Namely: USA and New Zealand. Apparently every other country got the memo. Not us!
I think when almost every other country does something different than you and it is not something you introduced first, you should have to prove why of all these you are the different one.
For Germany it is a general speed limit, but trying to introduce that would be like a general gun ban in the US: If you really think about it, probably a good idea, never going to happen.
> For Germany it is a general speed limit, but trying to introduce that would be like a general gun ban in the US: If you really think about it, probably a good idea, never going to happen.
And, most importantly, for now the speed limit isn’t even necessary – all the dangerous areas already have one, and the Autobahn is still one of the safest highway systems in the world.
(And as liability goes up a low the faster you go, there’s already a kinda speed limit anyway)
The AMA says: "Direct-to-consumer advertising inflates demand for new and more expensive drugs, even when these drugs may not be appropriate."
Doctors have the final say on whether or not a patient gets a drug. It's funny to hear the AMA say that it's a problem when they could stop overprescribing entirely on their own.
The AMA is part of the problem, sure. But advertising and the pleas of patients who have been 'educated' by those ads are always going to have some affect on doctors, even if they don't recognize it themselves.
If you stop this madness at the root, (consumer advertising of prescription drugs) the part that doctors play in this also dissapears.
It also completely makes sense. The decision for or against a drug should be guided by scientific evidence. So the only form of "marketing" that should be allowed are high quality scientific studies. And they shouldn't be delivered to the doctors or patients via marketing brochures, but via scientific articles and recommendations from independent organizations reviewing scientific articles.
You realize that the FDA closely regulates what pharma marketing can say about drugs, right? Unless it's supported by clinical trial data, the drug company can't say it.
Absolutely. I was including pharmaceutics only for the second part of my comment (essentially a way to gradually socialize commodities).
Marketing regulations can be great. In Germany (physical) mail and phone spam is already quite nicely regulated, but it could go even further, I think. I heard phone spam is a thing in the US.
But then you have pharma companies paying for research and these studies - but only if they yield favorable results. At least in Europe it is close to impossible doing a study or any other research without having a "sponsor", i.e. a big pharma company who pays for it. And why would they? Because good results are good for business. Everything else? Pay it yourselves. Oh, you had two PhD students working on it for 3 years? Not my problem.
Better than nothing, but a lot of people are screaming for all those unfavorable results, as the available publications obviously only paint a partial picture, one in favor of the sponsors.
I agree with everything you said, but it's a different set of problems.
Only publishing favorable results should be prevented with preregistration and requirements to publish. Ideally more (or all) pharma research should be done by independent researchers and not by pharma sponsors.
So these independent physicians are only paid for by pharma sponsors, but otherwise independent? Like with members of parliament? This concept of independence seems to catch on.
Its definitely not the research you pay for. Thats a small piece of the big picture. Marketing, lobbies, pseudo medical conferences in resorts, high salaries, you name it Big Pharma has it.
The research part sounds just like politicians justifying less Freedom because "terrorists".
You could make the case that the Epi-pen is just a form of marketing. As people have noted, the molecule is the same as other generic products, but the company developed a device that delivers substantial benefits to the customers and makes their molecule more important. Absent a free market and financial incentives it is very likely that the standard of care would be clumsy syringes.
I worked on a number of diabetes devices that greatly improved the quality of care for patients with diabetes and none would have been feasible as stand alone devices. They were marketing tools to make our test strips and insulins more attractive.
It's easy to criticize marketing, but the field goes far beyond tv ads.
Competition doesn't force prices down unless there are at least four suppliers. Two are not enough - price collusion, implicit or explicit, results. With three, some price competition may appear. An EU study indicated that it takes four before prices really get competitive and fall to near actual manufacturing cost.
There's a huge price difference between drugs where there are at least four suppliers (those are really cheap) and ones with fewer suppliers. When there's one name brand drug and one generic equivalent, the generic drug tends to be only slightly cheaper than the name brand. (Some of that comes from retail pharmacies, who tend to price that way. Costco doesn't; they just mark up everything they sell by about 15% over wholesale.)
almost 20 years old GSM market in Poland confirms that. Up to the moment we had 3 telcos, prices were stagnant. Introduction of fourth one (major three were prohibited to own/acquire it) driven prices down really fast. Market literally entered not-yet-ended downward trend (in terms of prices).
BTW, exactly 14 USD gives you today nolimit voice/text/inet plan. Dodge that AT&T ;)
I'm not sure an article about "drug prices" makes much sense; the reasons why an EpiPen is expensive have practically nothing to do with the reasons why Hervoni is expensive. If you lump it all together and start looking for reasons why both are expensive, I doubt the answers you end up with will get you very far
Could a reason also be that there's rarely a lot of competition between firms supplying the drugs? They basically get a state-sponsored monopoly through patents - not much of a market-dynamic.
That's true, but it's important to figure out how to increase competition without destroying expensive innovation and risk. It's arguably the most important question in any industry when regulation is discussed.
Everybody wants to maximize the value of their investment, or product.
To the consumers affected so much by the high price, this comes around as greedy. While to the business themselves, they see this as good business incentive.
Of course, there are other factors:
+ economics of how much people are willing to pay for, the scarcity of the product (and resources used to build it)
+ the derived (and perceived) value of the people taking the medication
+ politics and lobbying cost
In the end, it all comes down to the business' bottom line and the consumer's capacity to pay. It is very probable that the pharmaceutical companies have done a lot of calculations to ensure that their price point would be at the stage where they have balanced everything to lean on profit for their side.
An acquaintance of mine made quite a bit of money running a "compound pharmacy" for a few years. With his pharmaceutical degree, he was licensed to "compound" common combinations of prescription medication into a single dose. Insurance companies would consider the combination a separate drug (i.e. not just the sum of its parts). Therefore each new combination he made was a "new" drug and he was, quite literally, able to name any price. The insurance company would then pay for it.
He had a nice operation going, even shipping to multiple states. He eventually shut down the business when regulation tightened after a few compound pharmacy scares.
Whenever I see such articles, I attribute the cause to collective laziness not economics.
Why are health insurance costs high? Answer: Laziness
Why are drug prices high? Laziness
Why is higher education expensive? Laziness
Somebody is lazy and they don't want to do the important job of making these fundamental things cheaper and accessible. This somebody could be 'we' collectively or govt or companies or just our greed.
"But it is unclear if firms’ profits need be so high to sustain research."
It's very clear, and they don't. Profits are enormous. Profits are also calculated after the cost of R&D. So no, profits don't need to be astronomical for companies to still be profitable after the cost of R&D.
What they need is government enforced FRAND style patent licensing for prescribed medications and drugs that are to be covered by government programs, and all medications prescribed must have at least two sources... that would increase competition.
Because America refuses to swallow its pride and admit our health care system is flawed and completely inefficient. All we have to do is follow a health care system that actually functions, but we refuse and just keep doubling down on stupid. It's the sunk cost fallacy. It's just like Iraq, Afghanistan, Vietnam, and gun laws. America is in denial.
If you read many other posts in this thread, you will see it's the exact opposite. Unregulated markets nearly always result in lower prices. Pharmaceuticals are, by far, one of the most register markets.
Unregulated markets never stay unregulated for long. It's an unstable system. The biggest players in the market have incentives to create regulatory capture mechanism through influence on policymakers.
I was referring to industry specific factors that continually push prices up. In the medical industry insurance companies have market power but individuals do not. So providers see their prices slashed by insurance Companies. If their desired price is X and they know he insurance company will cut their price in half they charge 2X. To do so they also have to charge uninsured patients 2X. Because the uninsured have no market power they largely get stuck with 2X and the price sticks. Suddenly the listed price has less to do with the greater market than the specifics of the medical.
It's still anything but a natural free market... it's far more captive with motivated players all around. In reality what is needed is a FRAND-like compulsory licensing requirement for patent licensing as well as a gov't requirement of two manufacturers/distributors for approval, with limitations on exclusivity in contracts. That would afford some reduced patent protections, and ensure competition. That's the only way to drive prices down in the long term.
Because of a free market. And limited rules against making profit.
A CEO of a new drug company can legally set his salary at $10MM and have it be a part of the cost of running his business, hence selling drugs for $10MM+.
If the market were free drugs would be commoditized, like aspirin.
The reality is:
* As a pharma company you can't compete because another player is holding the patent for decades
* Governments around the world will indirectly spend trillions by way of social insurance on your products, so prices will balloon because that money has to go somewhere
* The barrier to entry is so high thanks to regulation
This is a made-up situation of artificially low supply coupled by propped up demand.
Research isn't cheap. Testing isn't cheap. Marketing isn't cheap. Manufacturing, distribution, the list goes on.
There has to be a financial incentive to build an infrastructure around a product.
Add in that access is highly controlled, meaning that there is significant IT and non-IT security infrastructure that needs to be in place throughout the life cycle of a given drug.
There will always be instances that are easy to politicize - pick your favorite disease and there's a company with an overly expensive drug on the market. But what happens when the financial incentive to innovate goes away?
There are cheap drugs all over the third world. Not too many of them were developed there.
A major change in how the industry worked would be a significant event that I'm not ready for, and I don't think the rest of the world is either. It will take years for new economic strategies to build - and not all of those strategies will be consumer friendly.
Today the solution is that access to expensive drugs is subsidized by insurance which is subsidized by law. It's not the best solution, but it's a working solution.
The political and economic climate that we have tells me that we'll talk about change for another decade and look to actually implement some sort of real change sometime 20-40 years from now as the industry ages and stabilizes.
You have to remember how young "modern medicine" actually is. Rabbit tests for pregnancy aren't that far back in our history. We're still at the point where compulsory sterilization is seen as a reasonable resolution to problems. We're mere decades away from a time when companies like Baxter and Abbot enjoyed an almost competition free environment and not too long before that, heroin was a common ingredient in cough remedies and parasites were commonly sold weight loss solutions.
Example: A family member has serious adult scoliosis, which causes quite a bit of pain. For years she has taken Fentanyl Nasal Spray that was made by a compound pharmacist (e.g., they take the raw Fentanyl powder, and mix it with a liquid solution by hand). The retail cost of this is ~$3k for a 30 day supply. Her insurance brought that down to sub $100.
2 years ago, she received a letter from her insurance company stating that because the FDA refuses to guarantee compound (made by hand) drugs, they will no longer cover her current nasal spray and she must move to one of the alternatives.
One alternative was a lollipop, which she used to take but caused her teeth to rot and she now has dentures. Another was different oral delivery system, but it was discontinued by the mfg less than 6 months after this.
So far her only option is a product called Lazanda, they are individually packaged and metered glass bottles of Fentanyl nasal spray. Each bottle is roughly half a day's dose, has it's own box, literature in EACH BOX, and a month's supply is 60 of these boxes.
The retail value of this? Last time I looked it was >$30,000. And the insurance just accepts it.
Madness.