7 ms·

Transatlantic divide: how U.S. pays three times more for drugs

22 points by brianclements 11y ago

bediger4000 11y ago
This is what "Globalization" looks like: use laws and captured regulatory agencies to segment the world into markets by ability to pay. Charge more where you can. At the same time, use cheap communications to hire the lowest-cost labor to develop and create the product. Humbug. This kind of information puts a huge damper on the arguments about "Intellectual Property" and "piracy" and stuff, at least to me. Why not segment the labor market, too, and enforce that. High priced pharmaceuticals? They have to be developed and made by high-priced labor, thank you very much.
- ptaipale 11y ago
  No, this is what the world was before globalization, which has dampened such regulatory capture effects - people just don't remember the bad old times. Price levels of e.g. medicines have always varied between countries and continents. Some people (often in a privileged position, possibly resulting from corruption) made lots and lots of money from things like monopoly selling rights of a particular brand in a country. Think of telecommunications infrastructure, for instance. With POTS (plain old telephone system), each and every country had their own voltage and current level specifications, ringing cadences and whatever. Companies were able to extort ridiculous amounts of money for a simple telephone connection, and you maybe had to wait years before you could even get a phone. Then came a globalized system where mobile phones bypassed this regulatory capture.
- icebraining 11y ago
  This is what "Globalization" looks like: use laws and captured regulatory agencies to segment the world into markets by ability to pay. Charge more where you can. No, charge less where you can. Why would you assume the companies would choose a low price if forced to have only one globally? Do you think they'd rather lose the tremendous margins when selling to richer countries, just so that they could get some more sales in poorer ones? The laws that keep prices high are the ones that prevent competition, not the ones that enable price segmentation.
  - bediger4000 11y ago
    Why would you assume the companies would choose a low price if forced to have only one globally? Why would I assume that workers would choose a low wage if force to have only one globally? I can assure you that the "worker" part is true, because I've had to train my Indian successors at least once. This is indeed a fine example of "Globalization", where large corporations rig the laws so that markets can be artificially segmented, and prices kept high in North America and to some extent Europe, with lower prices elsewhere. It's Globalization for the 1%.
brianclements 11y ago
I was asked to repost this as part of the new HN reposting experiments. Original located here[1], thought it was a good original comment and wanted to carry it over. [1]https://news.ycombinator.com/item?id=10375093 https://news.ycombinator.com/item?id=10375093
- dang 11y ago
  Ok, we merged the threads.
  - brianclements 11y ago
    Meta: I didn't know if that was an option technically on your end, but my two cents is that should be default behavior for this repost experiment.
    - dang 11y ago
      Usually the earlier post doesn't have any comments, since we only invite reposts when a story hasn't had significant attention yet.
forrestthewoods 11y ago
The rest of the world is so damn proud of their cheap universal health care. Little do they realize how much of it is subsidized by Americans. You're welcome world. You're welcome.
- justthistime_ 11y ago
  Yeah, because the price people are paying is related to the actual costs of researching and producing it. Hint: No, it's not.
  - pixie_ 11y ago
    Biotech is a goldmine. Hint: It's not. R&D isn't guaranteed to pay off. Why even do it or invest in it if the chance of success is so low?
    - mikeyouse 11y ago
      This would be easier to swallow if pharma companies weren't some of the most highly and consistently profitable companies on the planet. Or if they spent magnitudes more on research than they do on marketing, PR, and lobbying.
    - jsprogrammer 11y ago
      >Why even do it or invest in it if the chance of success is so low? Because the payoff is high?
    - DasIch 11y ago
      Medical research is heavily government funded. I would be surprised, if the majority of the investment actually comes from pharma companies. Any R&D pharma companies invest in is also going to be heavily focused on areas that have a high likelyhood of paying off reasonably soon, much like R&D in any other company.
    - justthistime_ 11y ago
      They own more of your government than any other industry, which is incidentally how they managed to create their hyper-inflated prices in the first place. Their chance of success doesn't depend on R&D. God, some Americans are really cringe-worthy. Is it really necessary to get defensive just because other governments are more interested in representing the interests of their people?
marcoperaza 11y ago
I posted this in a previous thread: By centralizing all procurement of a drug for an entire country through a single contract, of course countries are able to negotiate better prices than what Americans pay in a more free market. This is especially true given the structure of the pharma business, with massive up-front costs and almost-zero marginal costs. You could do the same with countless products. But this is it's own kind of abuse. Instead of being paid the market price, pharma companies are paid the lowest-price they could absolutely tolerate. They also have to worry about the political fallout of walking away from a deal when the government tries to blame them for the lack of a deal. There's definitely ways in which drug pricing can become abusive and needs to be regulated, especially because government intervention via patents is partially responsible for enabling these abuses. But let's not throw out the baby with the bath water. A free market for drugs makes sure that companies can recoup their investments and make a reasonable profit. If pharma companies don't feel that they can do that, they won't invest in new drugs. Also, I don't want to live in a place where the availability of a treatment is determined by some government committee that determines what the value of a month of my life is. A final thought, sticker prices for drugs are thrown around as evidence that drugs are overpriced, but 1) no one ever pays the sticker price, it's almost always negotiated way down and 2) these drugs provide immense value. Antiretroviral drugs, for example, turn HIV from an imminent death sentence into a very manageable disease like diabetes. Thousands of dollars a month is pretty reasonable when you consider that. Insurance makes sure that individuals can afford it.
- DanBC 11y ago
  > They also have to worry about the political fallout of walking away from a deal when the government tries to blame them for the lack of a deal. This is rare, but when it happens drug companies have no problem blaming the government for killing people. See, for example, abraxane. This is a chemo used for pancreatic cancer. There are two other chemos currently used. Abraxane isn't as good at extending life as the main med, and it has more side effects than the second. So it's not available under the cancer drugs fund. Celgene (partially) fund a pancreaticcanceraction.org group to campaign to get abraxane re-instated as a treatment. This involves them running misleading petitions ("abraxae extends life by two years" - celgene's own data show a median extension of two months; "the only pancreatic cancer drug" - it's the newest drug, but there are teo others, one of which extends life more, another has fewer side effects). It's pretty cynical to use dying people, and the relatives of dead and dying people, to campaign for your meds.
madaxe_again 11y ago
Not to worry, they'll cost the same everywhere in a few years, when tpp and ttip are ratified and enforced - everyone's prices will go up to match the US's.
- chad_oliver 11y ago
  I live in New Zealand, which has a centralised purchasing agency for pharmaceuticals (called Pharmac). The TPP doesn't require New Zealand to disband Pharmac. It can still negotiate reduced prices on behalf of the Kiwi public. The only change is that there is a more rigorous feedback and appeal process, which seems perfectly reasonable to me.
  - x5n1 11y ago
    Most of that money is wasted on marketing, like over 50%. As a part of the TPP or future agreements there should be a requirement to stop all drug marketing expenditure and instead reinvest that into research. Also I wonder if arguments like similar drugs cost 55x as much so this should too would fly.
mipapage 11y ago
> "Manufacturers say decent returns are needed to reward high-risk research and prices reflect the economic value provided by medicines." Contrast this market or model with mining, where small junior companies raise investment capital from people who want to take the risk of the junior actually finding a profitable deposit to mine. It seems this is more what markets were made for; people who want to take the risk and get the reward foot the bill for that risk. Removing that cost from the cost of the product makes the product more accessible, and the financing comes from those who want to finance.
mrlyc 11y ago
The price difference can be a lot more than three times. For example, the cheapest U.S. price of Ventolin is $36.99. It costs us $4.45 in Australia.

22 points by brianclements 11y ago

This is what "Globalization" looks like: use laws and captured regulatory agencies to segment the world into markets by ability to pay. Charge more where you can. At the same time, use cheap communications to hire the lowest-cost labor to develop and create the product. Humbug. This kind of information puts a huge damper on the arguments about "Intellectual Property" and "piracy" and stuff, at least to me. Why not segment the labor market, too, and enforce that. High priced pharmaceuticals? They have to be developed and made by high-priced labor, thank you very much.

ptaipale 11y ago
No, this is what the world was before globalization, which has dampened such regulatory capture effects - people just don't remember the bad old times. Price levels of e.g. medicines have always varied between countries and continents. Some people (often in a privileged position, possibly resulting from corruption) made lots and lots of money from things like monopoly selling rights of a particular brand in a country. Think of telecommunications infrastructure, for instance. With POTS (plain old telephone system), each and every country had their own voltage and current level specifications, ringing cadences and whatever. Companies were able to extort ridiculous amounts of money for a simple telephone connection, and you maybe had to wait years before you could even get a phone. Then came a globalized system where mobile phones bypassed this regulatory capture.
icebraining 11y ago
This is what "Globalization" looks like: use laws and captured regulatory agencies to segment the world into markets by ability to pay. Charge more where you can. No, charge less where you can. Why would you assume the companies would choose a low price if forced to have only one globally? Do you think they'd rather lose the tremendous margins when selling to richer countries, just so that they could get some more sales in poorer ones? The laws that keep prices high are the ones that prevent competition, not the ones that enable price segmentation.
- bediger4000 11y ago
  Why would you assume the companies would choose a low price if forced to have only one globally? Why would I assume that workers would choose a low wage if force to have only one globally? I can assure you that the "worker" part is true, because I've had to train my Indian successors at least once. This is indeed a fine example of "Globalization", where large corporations rig the laws so that markets can be artificially segmented, and prices kept high in North America and to some extent Europe, with lower prices elsewhere. It's Globalization for the 1%.

brianclements 11y ago

I was asked to repost this as part of the new HN reposting experiments. Original located here[1], thought it was a good original comment and wanted to carry it over. [1]https://news.ycombinator.com/item?id=10375093 https://news.ycombinator.com/item?id=10375093

dang 11y ago
Ok, we merged the threads.
- brianclements 11y ago
  Meta: I didn't know if that was an option technically on your end, but my two cents is that should be default behavior for this repost experiment.
  - dang 11y ago
    Usually the earlier post doesn't have any comments, since we only invite reposts when a story hasn't had significant attention yet.

forrestthewoods 11y ago

The rest of the world is so damn proud of their cheap universal health care. Little do they realize how much of it is subsidized by Americans. You're welcome world. You're welcome.

justthistime_ 11y ago
Yeah, because the price people are paying is related to the actual costs of researching and producing it. Hint: No, it's not.
- pixie_ 11y ago
  Biotech is a goldmine. Hint: It's not. R&D isn't guaranteed to pay off. Why even do it or invest in it if the chance of success is so low?
  - mikeyouse 11y ago
    This would be easier to swallow if pharma companies weren't some of the most highly and consistently profitable companies on the planet. Or if they spent magnitudes more on research than they do on marketing, PR, and lobbying.
  - jsprogrammer 11y ago
    >Why even do it or invest in it if the chance of success is so low? Because the payoff is high?
  - DasIch 11y ago
    Medical research is heavily government funded. I would be surprised, if the majority of the investment actually comes from pharma companies. Any R&D pharma companies invest in is also going to be heavily focused on areas that have a high likelyhood of paying off reasonably soon, much like R&D in any other company.
  - justthistime_ 11y ago
    They own more of your government than any other industry, which is incidentally how they managed to create their hyper-inflated prices in the first place. Their chance of success doesn't depend on R&D. God, some Americans are really cringe-worthy. Is it really necessary to get defensive just because other governments are more interested in representing the interests of their people?

marcoperaza 11y ago

I posted this in a previous thread: By centralizing all procurement of a drug for an entire country through a single contract, of course countries are able to negotiate better prices than what Americans pay in a more free market. This is especially true given the structure of the pharma business, with massive up-front costs and almost-zero marginal costs. You could do the same with countless products. But this is it's own kind of abuse. Instead of being paid the market price, pharma companies are paid the lowest-price they could absolutely tolerate. They also have to worry about the political fallout of walking away from a deal when the government tries to blame them for the lack of a deal. There's definitely ways in which drug pricing can become abusive and needs to be regulated, especially because government intervention via patents is partially responsible for enabling these abuses. But let's not throw out the baby with the bath water. A free market for drugs makes sure that companies can recoup their investments and make a reasonable profit. If pharma companies don't feel that they can do that, they won't invest in new drugs. Also, I don't want to live in a place where the availability of a treatment is determined by some government committee that determines what the value of a month of my life is. A final thought, sticker prices for drugs are thrown around as evidence that drugs are overpriced, but 1) no one ever pays the sticker price, it's almost always negotiated way down and 2) these drugs provide immense value. Antiretroviral drugs, for example, turn HIV from an imminent death sentence into a very manageable disease like diabetes. Thousands of dollars a month is pretty reasonable when you consider that. Insurance makes sure that individuals can afford it.

DanBC 11y ago
> They also have to worry about the political fallout of walking away from a deal when the government tries to blame them for the lack of a deal. This is rare, but when it happens drug companies have no problem blaming the government for killing people. See, for example, abraxane. This is a chemo used for pancreatic cancer. There are two other chemos currently used. Abraxane isn't as good at extending life as the main med, and it has more side effects than the second. So it's not available under the cancer drugs fund. Celgene (partially) fund a pancreaticcanceraction.org group to campaign to get abraxane re-instated as a treatment. This involves them running misleading petitions ("abraxae extends life by two years" - celgene's own data show a median extension of two months; "the only pancreatic cancer drug" - it's the newest drug, but there are teo others, one of which extends life more, another has fewer side effects). It's pretty cynical to use dying people, and the relatives of dead and dying people, to campaign for your meds.

madaxe_again 11y ago

Not to worry, they'll cost the same everywhere in a few years, when tpp and ttip are ratified and enforced - everyone's prices will go up to match the US's.

chad_oliver 11y ago
I live in New Zealand, which has a centralised purchasing agency for pharmaceuticals (called Pharmac). The TPP doesn't require New Zealand to disband Pharmac. It can still negotiate reduced prices on behalf of the Kiwi public. The only change is that there is a more rigorous feedback and appeal process, which seems perfectly reasonable to me.
- x5n1 11y ago
  Most of that money is wasted on marketing, like over 50%. As a part of the TPP or future agreements there should be a requirement to stop all drug marketing expenditure and instead reinvest that into research. Also I wonder if arguments like similar drugs cost 55x as much so this should too would fly.

mipapage 11y ago

> "Manufacturers say decent returns are needed to reward high-risk research and prices reflect the economic value provided by medicines." Contrast this market or model with mining, where small junior companies raise investment capital from people who want to take the risk of the junior actually finding a profitable deposit to mine. It seems this is more what markets were made for; people who want to take the risk and get the reward foot the bill for that risk. Removing that cost from the cost of the product makes the product more accessible, and the financing comes from those who want to finance.

mrlyc 11y ago

The price difference can be a lot more than three times. For example, the cheapest U.S. price of Ventolin is $36.99. It costs us $4.45 in Australia.