4 ms·

The cynic in me wonders if it is because people are able and willing to pay higher prices in America.

by 47 11y ago

abtinf 11y ago
No cynicism is required. All market prices are determined by demand, which is defined as the desire and ability to obtain a good at a given price. It is tautological to say that higher prices indicate a greater willingness and ability to pay.
ascorbic 11y ago
That's not cynical, that's exactly the reason. It's basic economics. If it cost thousands of dollars then virtually nobody in India would be able to afford it, whereas insurance companies in the US are willing to pay tens of thousands and don't try to negotiate prices. Medicare is even forbidden from negotiating prices. Rich countries with single-payer healthcare systems will lie somewhere in between. e.g. in the UK, there's an agency (NICE) that negotiates prices for drugs, and decides if they are worth the cost. They'll sometimes agree to pay massive prices if the drug is extremely effective and there are no substitutes, but if it's only a marginal improvement over an existing drug, or even if all it does is extend life by a month or two then they'll just refuse to allow it to be prescribed. Of course as you'd imagine, the prices quoted then have a habit of dropping. This is separate to the normal regulatory approval of drugs.
teslabox 11y ago
In America, we have insurance companies to pay the drug cabal on our behalf.
JacobJans 11y ago
It could be because the government is not allowed to negotiate drug prices. (Medicare.) They pay whatever the drug companies ask. Or, maybe because most individuals in the U.S. don't pay the full price. They pay a 'co-pay.' Insurance companies pay the rest. But, they can only make profit as a percentage of revenue. If they lower drug costs significantly, they significantly lower their potential profits. Why would they do that? From a shareholder's perspective, that's a very bad idea. In the U.S. relatively few people really know how much a drug costs, so why would price be taken into consideration?
- replicatorblog 11y ago
  Your first statement isn't accurate. I used to work at a startup that dealt with Medicare. They have a process where they put contracts out to bid. In my companies case their allowable reimbursement declined by 90% in a single year. They have plenty of power to put screws to suppliers and use their power effectively.
  - ascorbic 11y ago
    How can they put out to bid when a drug is patented with only one supplier?
  - JacobJans 11y ago
    > He has asked Congress to let Medicare officials negotiate prices with drug manufacturers — a practice explicitly forbidden by current law. http://www.nytimes.com/2015/04/28/us/obama-proposes-that-medicare-be-given-the-right-to-negotiate-the-cost-of-drugs.html?_r=1 http://www.nytimes.com/2015/04/28/us/obama-proposes-that-med...
- deleted 11y ago
  [deleted]

The cynic in me wonders if it is because people are able and willing to pay higher prices in America.

by 47 11y ago

The cynic in me wonders if it is because people are able and willing to pay higher prices in America.

No cynicism is required. All market prices are determined by demand, which is defined as the desire and ability to obtain a good at a given price. It is tautological to say that higher prices indicate a greater willingness and ability to pay.

ascorbic 11y ago

That's not cynical, that's exactly the reason. It's basic economics. If it cost thousands of dollars then virtually nobody in India would be able to afford it, whereas insurance companies in the US are willing to pay tens of thousands and don't try to negotiate prices. Medicare is even forbidden from negotiating prices. Rich countries with single-payer healthcare systems will lie somewhere in between. e.g. in the UK, there's an agency (NICE) that negotiates prices for drugs, and decides if they are worth the cost. They'll sometimes agree to pay massive prices if the drug is extremely effective and there are no substitutes, but if it's only a marginal improvement over an existing drug, or even if all it does is extend life by a month or two then they'll just refuse to allow it to be prescribed. Of course as you'd imagine, the prices quoted then have a habit of dropping. This is separate to the normal regulatory approval of drugs.

teslabox 11y ago

In America, we have insurance companies to pay the drug cabal on our behalf.

JacobJans 11y ago

It could be because the government is not allowed to negotiate drug prices. (Medicare.) They pay whatever the drug companies ask. Or, maybe because most individuals in the U.S. don't pay the full price. They pay a 'co-pay.' Insurance companies pay the rest. But, they can only make profit as a percentage of revenue. If they lower drug costs significantly, they significantly lower their potential profits. Why would they do that? From a shareholder's perspective, that's a very bad idea. In the U.S. relatively few people really know how much a drug costs, so why would price be taken into consideration?

replicatorblog 11y ago
Your first statement isn't accurate. I used to work at a startup that dealt with Medicare. They have a process where they put contracts out to bid. In my companies case their allowable reimbursement declined by 90% in a single year. They have plenty of power to put screws to suppliers and use their power effectively.
- ascorbic 11y ago
  How can they put out to bid when a drug is patented with only one supplier?
- JacobJans 11y ago
  > He has asked Congress to let Medicare officials negotiate prices with drug manufacturers — a practice explicitly forbidden by current law. http://www.nytimes.com/2015/04/28/us/obama-proposes-that-medicare-be-given-the-right-to-negotiate-the-cost-of-drugs.html?_r=1 http://www.nytimes.com/2015/04/28/us/obama-proposes-that-med...
deleted 11y ago
[deleted]