4 ms·

What you're saying makes perfect sense on paper, but unfortunately reality is as always slightly more complex. Such simple thinking is full of the holes for ex

by gdrulia 11y ago

What you're saying makes perfect sense on paper, but unfortunately reality is as always slightly more complex. Such simple thinking is full of the holes for exploitation and there will always be someone who will exploit them. Medicine is especially sensitive, because medicine can be priceless in value for the human who needs it, but that same human might not be able to pay that much. You can introduce government help, but if such exploitation is allowed, it would simply end up in a waste of tax money. One thing is to allow companies who invest into products creation to receive the profit from it by using monopoly and charging as much as they like, and completely another is buying the company and starting to charge many times higher for the medicine that was available for years. This might not be a popular view, but I can see no reason to think that such an exploitation should be tolerated. I simply cannot see how such things benefit humans as a society. I might be missing here something and if I do, please let me know.

ikeboy 11y ago
The question is how we can fix this systematically without making bigger problems. Should a government agency set prices? What if the company stops making the drug, then? The price is high because no other companies are willing to make it for lower, after all. Note that the drug in question is not under patent. I don't think you'd advocate for literally forcing the company to make it and sell it for a specific price. There's also the concerns I went over here: https://news.ycombinator.com/item?id=10248817 https://news.ycombinator.com/item?id=10248817
- toomuchtodo 11y ago
  > Should a government agency set prices? Yes. > What if the company stops making the drug, then? A non-profit government sponsored entity manufactures the drug at cost.
  - ikeboy 11y ago
    Why not skip step 1, then? Let the company sell it for however much it wants, and the non profit competes them out of business?
    - toomuchtodo 11y ago
      Supply chain stability. Availability is sometimes more important than cost, and if you have a government non-profit producing the drug, you're not wasting any money on the profit that a private company is extracting. Drugs should be priced based on their cost to produce and whatever R&D needs to be amortized, not by how much value you can extract.
      - ikeboy 11y ago
        I still don't understand. Why do you need to set prices for private companies if you're competing with them yourself?
        toomuchtodo 11y ago
        Because the free market doesn't work when there's inelastic demand, or when supply chain disruptions cost people their life.
        ikeboy 11y ago
        If you think the government making the drug is a viable solution, there's no need to set prices. If you think the government making the drug is not a viable solution, then you shouldn't set prices for fear of the drug being cancelled. Could you point out the flaw here?
        jgoewert 11y ago
        The government (FDA in this case) doesn't make the medication. They just get someone else to make it. They tell company X "You F'ed Up. Give us all your documentation and we will take it to company Y to make." I'm trying to remember the name of the company that this happened to. It was like 8 years ago and I think I remember them being a cardiac arrest medical. Anyhow, the company CEO flat out refused the FDA regulators demands that they get their manufacturing process up to standards. The FDA went to another manufacturer (I believe Johnson and Johnson) and asked if they would make the medication and they accepted. The FDA then shut down the prior company. When lives are impacted, the FDA doesn't mess around. They put CEOs in prison for the crappy decisions they make.
  - randyrand 11y ago
    The only way to properly do this would then be to have the government become the only R&D and pharma company. Doable. But I think you put too much faith in the government. The government is a natural monopoly itself. If they're doing a shitty job you don't get any other options.
    - toomuchtodo 11y ago
      > Doable. But I think you put too much faith in the government. The government is a natural monopoly itself. If they're doing a shitty job you don't get any other options. Disagree. A government can be held accountable. Some asshole ex-hedge fund manager attempting to corner the market on a drug can't be.
      - randyrand 11y ago
        > A government can be held accountable. Accountability is not really the main measure we care about (though it's related to it). It's efficiency. We only really care about accountability because its supposed to increase efficiency. People are supposed to get punished when things are running poorly. The problem is, no one really gets punished when large government organizations are running inefficiently. The business does not go out of business. There is no competition. There is no real incentive to innovate and beat your competitors. I think we need to reevaluate pharma law. But I don't think replacing the current monopoly with a government one will do much good of anything. I've long held the belief that whenever there is a supposed failing of private enterprise- it's almost always actually a failing of government. I've yet to be proved wrong. Government makes the barriers of entry too high in the drug market. It's way too easy to have a monopoly because the government basically grants you one.
        toomuchtodo 11y ago
        I am willing to trade some efficiency/cost effectiveness for price and availability stability.
        11y ago
- pixl97 11y ago
  >What if the company stops making the drug, then? The price is high because no other companies are willing to make it for lower, after all. Nope, don't force the company to make it. Force the company to give the formulation to another company that will. This article states the reason it is able to be priced so high, at least for a time, is that other companies will have to reverse engineer it and get a line running. Take out the time of getting the product formulated right and the original holder has to think about the ramifications of any shenanigans they will attempt to pull.
  - ikeboy 11y ago
    The composition is public, and needs to be disclosed when patented. In order to get FDA approval for a generic drug, you need to show that it performs as well as the actual drug (not really, but that's a different issue [0]). In order to do that, you need to have samples of the actual drug. [0] http://fortune.com/2013/01/10/are-generics-really-the-same-as-branded-drugs/ http://fortune.com/2013/01/10/are-generics-really-the-same-a...
- adwf 11y ago
  Government setting prices works for the NHS in the UK. If a drug is too expensive it just doesn't get authorised as a treatment and we go with something else. The collective bargaining power of the nationalised system effectively forces the pharmaceutical companies to the table everytime. They'd rather sell for some profit than no profit. It's only because the pharma companies can deal with consumers in the US on an individual basis that you guys get screwed over so much on your pricing.
  - refurb 11y ago
    It's only because the pharma companies can deal with consumers in the US on an individual basis that you guys get screwed over so much on your pricing. That's not true at all. The biggest private insurance companies in the US are what? 30-40M lives? That's bigger than Canada. They routinely negotiate for lower drug prices.
  - ikeboy 11y ago
    If the proposal is "set up a single payer system in the US", this may be relevant. Do you know where I could find out whether the NHS is covering Daraprim at the new prices?
- gdrulia 11y ago
  First I will say that I'm not an expert in these questions, so my thoughts might be off, but that's probably the reason we are discussing it. The closest to perfect solution in my mind would include all the details to make the medicine in the patent itself (I'm not sure how detailed patents has to be today). This would make it easy for other companies to create a competition once the patent expires and essentially would create a free market. In the scenarios when it happens that there is only a single player in the market for one or another reason, things get a little trickier. I guess one of the solutions could be a commitment by government to buy/prescribe certain amount of medicine. The price of a unit should be predetermined in such cases to avoid exploitation. Overall the actual knowledge of how to make a medicine and having a market for it, should make such situation pretty rare when only a single player is left in the market.
  - ikeboy 11y ago
    Should all trade secrets be outlawed, then? Or only in medicine?
    - gdrulia 11y ago
      I believe that if you want the protection of patent, you should disclose everything and it not suppose to be a secret. If you want to keep it as a secret, don't patent it. Isn't that is the reason behind the patent system? Inspire people to create things by providing certainty that no one will be allowed to reproduce their creations until patent expires. The only reasonable thing after that is to make the patented technology (including all the bits and pieces) a public knowledge.
- darklajid 11y ago
  I'm confused. The article is about a drug that was sold at price X (13.5) that is now offered at price Y (750). Now, in my world every rational person has to see that this is insane. There's no way that the previous price was even remotely possible (even with a loss) that requires the new price. I don't see any data that supports your 'no one would be willing to make it for less' argument. The only reasons that doesn't seem to happen are either technical (the monopoly on the drugs manufacturing process) or legal (can't do that or you have to pay for .. creating cheaper drugs). Can you back your unlikely scenario? Looking at the article in question, is 750 the 'right' price and no one's willing to create the drug for less? Were they losing about 700 a pop before they increased the price? What. The. Hell?
  - ikeboy 11y ago
    I don't see any data that supports your 'no one would be willing to make it for less' argument. There are currently no other companies that are willing to make and sell the drug. * The only reasons that doesn't seem to happen are either technical (the monopoly on the drugs manufacturing process) or legal (can't do that or you have to pay for .. creating cheaper drugs).* The patent is expired, and saying "monopoly" is describing an outcome, not an input. Yes, it's a monopoly, because no other company is willing to go into that market right now. Looking at the article in question, is 750 the 'right' price and no one's willing to create the drug for less? I would deny that any price is "right". If you want to refer to "right", define it and give a way to calculate what price can be right. As I said in the other comment, there's no good system to determine who should capture the value from a product that costs less to make than it's worth to purchasers, other than a free market.
    - darklajid 11y ago
      Let's take this apart. I'm not an expert, not on drug creation nor on .. 'free market' theories. 1) I'm not convinced that no one is interested to create the drug. Numerous people in this very discussion list issues to create a 'replacement' drug, even if the patent is expired. If they are correct (see disclaimer above) that might be a reason why others haven't tried it - or why they haven't succeeded yet. 2) 'Right' price is ambiguous, I agree. In my world, drug prices are ethic problems and have no connection to the so-called free market. No, a working, helping, proven drug cannot cost hundreds of $currency. We can discuss about the need to offset the R&D costs and I'm fine with drugs that costs my health insurance a ~largish~ sum, as long as the end user can get instant and easy access to the drug. Your comments about putting a price on a person's life and your opinions on drug prices - as far as I can follow! - are impossible to understand from this person's pov. The lack of empathy and the trust in random business/market theoretical stuff to find a reasonable solution for the access to drugs that might very well save lives - that just doesn't compute, doesn't make sense in my world. I don't believe in free markets. I certainly don't believe in free markets when we're talking about the basic needs of each and every human (for the sake of the argument let's limit this to nutrition and health for now). Health care should be free. Drugs should be affordable. Changing the price of a drug that was obviously doing okay (it was on the 'free market', right?) and multiplying the price by 65, because .. why not? .. is immoral and should be illegal. There's no 'value' to 'capture'. We're talking about a product that the company obviously produced with some sort of margin for ~13.5~ and that benefits the population at large - or at least the subset of the population that requires the drug. There is _no_ reason to increase the price, especially by that ridiculous value, other than inhuman greed. But maybe (see disclaimer) that's what a 'free market' is about - I wouldn't know.

by gdrulia 11y ago

ikeboy 11y ago

The question is how we can fix this systematically without making bigger problems. Should a government agency set prices? What if the company stops making the drug, then? The price is high because no other companies are willing to make it for lower, after all. Note that the drug in question is not under patent. I don't think you'd advocate for literally forcing the company to make it and sell it for a specific price. There's also the concerns I went over here: https://news.ycombinator.com/item?id=10248817 https://news.ycombinator.com/item?id=10248817

toomuchtodo 11y ago
> Should a government agency set prices? Yes. > What if the company stops making the drug, then? A non-profit government sponsored entity manufactures the drug at cost.
- ikeboy 11y ago
  Why not skip step 1, then? Let the company sell it for however much it wants, and the non profit competes them out of business?
  - toomuchtodo 11y ago
    Supply chain stability. Availability is sometimes more important than cost, and if you have a government non-profit producing the drug, you're not wasting any money on the profit that a private company is extracting. Drugs should be priced based on their cost to produce and whatever R&D needs to be amortized, not by how much value you can extract.
    - ikeboy 11y ago
      I still don't understand. Why do you need to set prices for private companies if you're competing with them yourself?
      - toomuchtodo 11y ago
        Because the free market doesn't work when there's inelastic demand, or when supply chain disruptions cost people their life.
        ikeboy 11y ago
        If you think the government making the drug is a viable solution, there's no need to set prices. If you think the government making the drug is not a viable solution, then you shouldn't set prices for fear of the drug being cancelled. Could you point out the flaw here?
        jgoewert 11y ago
        The government (FDA in this case) doesn't make the medication. They just get someone else to make it. They tell company X "You F'ed Up. Give us all your documentation and we will take it to company Y to make." I'm trying to remember the name of the company that this happened to. It was like 8 years ago and I think I remember them being a cardiac arrest medical. Anyhow, the company CEO flat out refused the FDA regulators demands that they get their manufacturing process up to standards. The FDA went to another manufacturer (I believe Johnson and Johnson) and asked if they would make the medication and they accepted. The FDA then shut down the prior company. When lives are impacted, the FDA doesn't mess around. They put CEOs in prison for the crappy decisions they make.
- randyrand 11y ago
  The only way to properly do this would then be to have the government become the only R&D and pharma company. Doable. But I think you put too much faith in the government. The government is a natural monopoly itself. If they're doing a shitty job you don't get any other options.
  - toomuchtodo 11y ago
    > Doable. But I think you put too much faith in the government. The government is a natural monopoly itself. If they're doing a shitty job you don't get any other options. Disagree. A government can be held accountable. Some asshole ex-hedge fund manager attempting to corner the market on a drug can't be.
    - randyrand 11y ago
      > A government can be held accountable. Accountability is not really the main measure we care about (though it's related to it). It's efficiency. We only really care about accountability because its supposed to increase efficiency. People are supposed to get punished when things are running poorly. The problem is, no one really gets punished when large government organizations are running inefficiently. The business does not go out of business. There is no competition. There is no real incentive to innovate and beat your competitors. I think we need to reevaluate pharma law. But I don't think replacing the current monopoly with a government one will do much good of anything. I've long held the belief that whenever there is a supposed failing of private enterprise- it's almost always actually a failing of government. I've yet to be proved wrong. Government makes the barriers of entry too high in the drug market. It's way too easy to have a monopoly because the government basically grants you one.
      - toomuchtodo 11y ago
        I am willing to trade some efficiency/cost effectiveness for price and availability stability.
        11y ago
pixl97 11y ago
>What if the company stops making the drug, then? The price is high because no other companies are willing to make it for lower, after all. Nope, don't force the company to make it. Force the company to give the formulation to another company that will. This article states the reason it is able to be priced so high, at least for a time, is that other companies will have to reverse engineer it and get a line running. Take out the time of getting the product formulated right and the original holder has to think about the ramifications of any shenanigans they will attempt to pull.
- ikeboy 11y ago
  The composition is public, and needs to be disclosed when patented. In order to get FDA approval for a generic drug, you need to show that it performs as well as the actual drug (not really, but that's a different issue [0]). In order to do that, you need to have samples of the actual drug. [0] http://fortune.com/2013/01/10/are-generics-really-the-same-as-branded-drugs/ http://fortune.com/2013/01/10/are-generics-really-the-same-a...
adwf 11y ago
Government setting prices works for the NHS in the UK. If a drug is too expensive it just doesn't get authorised as a treatment and we go with something else. The collective bargaining power of the nationalised system effectively forces the pharmaceutical companies to the table everytime. They'd rather sell for some profit than no profit. It's only because the pharma companies can deal with consumers in the US on an individual basis that you guys get screwed over so much on your pricing.
- refurb 11y ago
  It's only because the pharma companies can deal with consumers in the US on an individual basis that you guys get screwed over so much on your pricing. That's not true at all. The biggest private insurance companies in the US are what? 30-40M lives? That's bigger than Canada. They routinely negotiate for lower drug prices.
- ikeboy 11y ago
  If the proposal is "set up a single payer system in the US", this may be relevant. Do you know where I could find out whether the NHS is covering Daraprim at the new prices?
gdrulia 11y ago
First I will say that I'm not an expert in these questions, so my thoughts might be off, but that's probably the reason we are discussing it. The closest to perfect solution in my mind would include all the details to make the medicine in the patent itself (I'm not sure how detailed patents has to be today). This would make it easy for other companies to create a competition once the patent expires and essentially would create a free market. In the scenarios when it happens that there is only a single player in the market for one or another reason, things get a little trickier. I guess one of the solutions could be a commitment by government to buy/prescribe certain amount of medicine. The price of a unit should be predetermined in such cases to avoid exploitation. Overall the actual knowledge of how to make a medicine and having a market for it, should make such situation pretty rare when only a single player is left in the market.
- ikeboy 11y ago
  Should all trade secrets be outlawed, then? Or only in medicine?
  - gdrulia 11y ago
    I believe that if you want the protection of patent, you should disclose everything and it not suppose to be a secret. If you want to keep it as a secret, don't patent it. Isn't that is the reason behind the patent system? Inspire people to create things by providing certainty that no one will be allowed to reproduce their creations until patent expires. The only reasonable thing after that is to make the patented technology (including all the bits and pieces) a public knowledge.
darklajid 11y ago
I'm confused. The article is about a drug that was sold at price X (13.5) that is now offered at price Y (750). Now, in my world every rational person has to see that this is insane. There's no way that the previous price was even remotely possible (even with a loss) that requires the new price. I don't see any data that supports your 'no one would be willing to make it for less' argument. The only reasons that doesn't seem to happen are either technical (the monopoly on the drugs manufacturing process) or legal (can't do that or you have to pay for .. creating cheaper drugs). Can you back your unlikely scenario? Looking at the article in question, is 750 the 'right' price and no one's willing to create the drug for less? Were they losing about 700 a pop before they increased the price? What. The. Hell?
- ikeboy 11y ago
  I don't see any data that supports your 'no one would be willing to make it for less' argument. There are currently no other companies that are willing to make and sell the drug. * The only reasons that doesn't seem to happen are either technical (the monopoly on the drugs manufacturing process) or legal (can't do that or you have to pay for .. creating cheaper drugs).* The patent is expired, and saying "monopoly" is describing an outcome, not an input. Yes, it's a monopoly, because no other company is willing to go into that market right now. Looking at the article in question, is 750 the 'right' price and no one's willing to create the drug for less? I would deny that any price is "right". If you want to refer to "right", define it and give a way to calculate what price can be right. As I said in the other comment, there's no good system to determine who should capture the value from a product that costs less to make than it's worth to purchasers, other than a free market.
  - darklajid 11y ago
    Let's take this apart. I'm not an expert, not on drug creation nor on .. 'free market' theories. 1) I'm not convinced that no one is interested to create the drug. Numerous people in this very discussion list issues to create a 'replacement' drug, even if the patent is expired. If they are correct (see disclaimer above) that might be a reason why others haven't tried it - or why they haven't succeeded yet. 2) 'Right' price is ambiguous, I agree. In my world, drug prices are ethic problems and have no connection to the so-called free market. No, a working, helping, proven drug cannot cost hundreds of $currency. We can discuss about the need to offset the R&D costs and I'm fine with drugs that costs my health insurance a ~largish~ sum, as long as the end user can get instant and easy access to the drug. Your comments about putting a price on a person's life and your opinions on drug prices - as far as I can follow! - are impossible to understand from this person's pov. The lack of empathy and the trust in random business/market theoretical stuff to find a reasonable solution for the access to drugs that might very well save lives - that just doesn't compute, doesn't make sense in my world. I don't believe in free markets. I certainly don't believe in free markets when we're talking about the basic needs of each and every human (for the sake of the argument let's limit this to nutrition and health for now). Health care should be free. Drugs should be affordable. Changing the price of a drug that was obviously doing okay (it was on the 'free market', right?) and multiplying the price by 65, because .. why not? .. is immoral and should be illegal. There's no 'value' to 'capture'. We're talking about a product that the company obviously produced with some sort of margin for ~13.5~ and that benefits the population at large - or at least the subset of the population that requires the drug. There is _no_ reason to increase the price, especially by that ridiculous value, other than inhuman greed. But maybe (see disclaimer) that's what a 'free market' is about - I wouldn't know.