6 ms·

> These high prices support innovation, they argue—not just for America, but for the world. I suspect this is in fact somewhat true, but how is it a coherent a

by doktrin 10y ago

> These high prices support innovation, they argue—not just for America, but for the world. I suspect this is in fact somewhat true, but how is it a coherent argument in favor of higher prices? The American people / American elderly (obviously) don't have some unspoken moral obligation to subsidize pharmaceutical R&D for the whole world. Governments around the world are able to negotiate affordable rates for their citizens, yet in the US we have to listen to these completely insane justifications? IMO if the US government (who presumably agree with the drug companies on this) feels this strongly about subsidizing research they could always expand federal research grants and/or NIH funding. Yet I suspect that's a non starter for political reasons.

ferentchak 10y ago
This. Do we need to subsidize Sweden and Germany? I have wondered for a while why we don't make a law saying the highest price you can sell a drug for in the US is no higher than the lowest negotiated price that drug is sold to in other rich countries. So if Canada negotiates a drug for $10 then that is the highest price you can sell it for here etc. That way they can set the prices however they want but collective buying agreements that are a part of socialized healthcare don't end up shifting the burden of cost to the US.
- themihai 10y ago
  Something tells me this would be against some WTO rules. The US gov could simply negotiate a better deal just like Germany, Sweden or any other country does but...I guess the lobby plays a important role in the grand scheme of things so unless the US electorate puts pressure on the government you won't see a better deal.
- chimeracoder 10y ago
  > I have wondered for a while why we don't make a law saying the highest price you can sell a drug for in the US is no higher than the lowest negotiated price that drug is sold to in other rich countries. You don't need a rule to enforce that. You just need to allow the US to reimport prescription drugs that were originally exported from the US. It would be far and away the simplest solution and would have the same end result[0]. Unfortunately, Congress has voted against that, so we're stuck with the status quo. [0] The difference between the prices charged in the US and the prices charged in any other country could be no greater than the costs of reimporting the drugs from that country - or else people would just buy the reimported versions instead of the domestic ones[1]. This has the desired outcome of equalizing the prices [1] Which, remember, are literally the same drugs manufactured at the same plants by the same company.
  - ferentchak 10y ago
    It's a nit pick but those prices would always be a bit higher after the effort to import them and source them etc. Of course this will never happen. No politician wants to have her name tied to the bill that allowed all those dangerous drugs into the country that killed kids. One mistaken import or a badly made counterfeit being imported would be a media frenzy.
    - chimeracoder 10y ago
      > It's a nit pick but those prices would always be a bit higher after the effort to import them and source them etc. That's what I said: > The difference between the prices charged in the US and the prices charged in any other country could be no greater than the costs of reimporting the drugs from that country As for: > Of course this will never happen. No politician wants to have her name tied to the bill that allowed all those dangerous drugs into the country that killed kids. That's not true at all. The Senate voted on this exact proposal on Jan 17th (not for the first time). The measure failed, but only by a few votes[0]. > One mistaken import or a badly made counterfeit being imported would be a media frenzy. We're talking about importing drugs only from countries which recognize US patent laws, such as Canada. The risk of counterfeit drugs entering the supply from reimporting is no greater than the risk of counterfeit drugs entering the supply domestically in either US or Canada. Besides, this is already done for other drugs, just not prescription drugs that are on patent. [0] https://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=115&session=1&vote=00020 https://www.senate.gov/legislative/LIS/roll_call_lists/roll_...
- bermanoid 10y ago
  This really doesn't need to be that complicated. The US could quite easily negotiate lower drug prices with drug companies, without setting up a convoluted scheme that references other countries, by simply doing so. There's just no political will, because strong negotiation would hurt drug companies in the US. And unless that political will somehow materializes, the situation won't change.
Symmetry 10y ago
Milton Freidman's solution was to allow re-importation of drugs from countries where they were less expensive. Either the drug companies could raise prices abroad, accept lower prices domestically, not sell abroad, or some combination of all of the above.
- criddell 10y ago
  This seems like something that shouldn't upset many Republicans. Remove artificial barriers and open the markets. This could apply to a lot more than just drugs. For example, it would be nice if region restrictions were removed from digital goods.
  - chimeracoder 10y ago
    > This seems like something that shouldn't upset many Republicans. You'd think so, but they voted against it on Jan 17th (along with nine Democrats).
  - RightMillennial 10y ago
    The problem is many Republicans claim to be proponents of open markets and less regulation. But when it comes down to voting on bills, they generally do the opposite.
    - dreamcompiler 10y ago
      Exactly. I'm a big believer in capitalism. But capitalism requires competition, transparent markets, and allowing corporations to fail. What Republicans tend to prefer are monopolies, opaque markets, and corporate welfare. That's not capitalism.
mikeash 10y ago
I don't know if the R&D argument even works. Just how much are we overpaying for our drugs? It looks like American pharmaceutical R&D is about $60 billion/year, or roughly $200 per capita. Is that really all we're losing to these high prices?
- Retric 10y ago
  Drugs are 10% of US healthcare spending so the gains are not that huge. However, ~200$ per capita is only part of the costs as profit and advertising also increases drug prices. Further cost is concentrated onto a small fraction of the population. So, while I might not care about 20$/month I would care about a 1% risk of 2,000$ per month.
dv_dt 10y ago
The R&D argument would be much stronger if pharma companies didn't spend more in marketing than R&D in the US.
- refurb 10y ago
  Marketing budgets pay for themselves. Why else would you market something?
  - dv_dt 10y ago
    Customers pay for marketing budgets in the end - that by itself is a big contributor to higher US drug costs.
    - refurb 10y ago
      Pricing in the US is not cost-based. That's not how it works. If you price a drug at $100, you can't raise it to $110 to pay for marketing. You set the price at $100, then decide what to do with the profit. If marketing costs $10, but increases your sales by 15%, then you have a positive ROI.
      - dv_dt 10y ago
        > Pricing in the US is not cost-based I think this speaks for the whole issue ... there are some markets where this makes sense. I don't believe that it makes any sense in the healthcare market - and per-capita US healthcosts vs other nations would seem to bear that out.
        refurb 10y ago
        Pricing isn't cost based in any developed country. It's value based. The only market that is cost based are generics.
        dv_dt 10y ago
DanBC 10y ago
> I suspect this is in fact somewhat true, but how is it a coherent argument in favor of higher prices? The American people / American elderly (obviously) don't have some unspoken moral obligation to subsidize pharmaceutical R&D for the whole world. The pharma companies also have enormous advertising budgets in the US, so you could stop that to save the old people some money.
Pigo 10y ago
My first job out of college I worked for a company that looked for new ways to get sample vouchers into people's hands. There was so much money in finding gray areas to hand out samples. The only job I've had that made me feel worse about what I did was insurance, but that didn't last long. I suppose we did innovate, but I didn't get paid enough to out-weigh the damage done to my soul.
andrewla 10y ago
It seems even odder considering that many of the pharmaceutical companies are not US based, so it doesn't seem to make sense even from a protectionist standpoint. Just as an exercise in cherry-picking, I grabbed the first drug from [1], "Relvar Ellipta", which apparently costs 6.3 times more in the US than the UK. This is despite the fact that the drug is manufactured by GSK [2], which is UK-based. It was developed by Innoviva, though, which is US-based [3]. What this means in terms of price-setting agreements and licensing, though, is not easy to see, and whether research grants would substitute for the expected profits from the pricing discrepencies. [1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5023951/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5023951/ [2] https://en.wikipedia.org/wiki/Fluticasone_furoate/vilanterol https://en.wikipedia.org/wiki/Fluticasone_furoate/vilanterol [3] http://www.inva.com/contact-us/ http://www.inva.com/contact-us/

by doktrin 10y ago

ferentchak 10y ago

This. Do we need to subsidize Sweden and Germany? I have wondered for a while why we don't make a law saying the highest price you can sell a drug for in the US is no higher than the lowest negotiated price that drug is sold to in other rich countries. So if Canada negotiates a drug for $10 then that is the highest price you can sell it for here etc. That way they can set the prices however they want but collective buying agreements that are a part of socialized healthcare don't end up shifting the burden of cost to the US.

themihai 10y ago
Something tells me this would be against some WTO rules. The US gov could simply negotiate a better deal just like Germany, Sweden or any other country does but...I guess the lobby plays a important role in the grand scheme of things so unless the US electorate puts pressure on the government you won't see a better deal.
chimeracoder 10y ago
> I have wondered for a while why we don't make a law saying the highest price you can sell a drug for in the US is no higher than the lowest negotiated price that drug is sold to in other rich countries. You don't need a rule to enforce that. You just need to allow the US to reimport prescription drugs that were originally exported from the US. It would be far and away the simplest solution and would have the same end result[0]. Unfortunately, Congress has voted against that, so we're stuck with the status quo. [0] The difference between the prices charged in the US and the prices charged in any other country could be no greater than the costs of reimporting the drugs from that country - or else people would just buy the reimported versions instead of the domestic ones[1]. This has the desired outcome of equalizing the prices [1] Which, remember, are literally the same drugs manufactured at the same plants by the same company.
- ferentchak 10y ago
  It's a nit pick but those prices would always be a bit higher after the effort to import them and source them etc. Of course this will never happen. No politician wants to have her name tied to the bill that allowed all those dangerous drugs into the country that killed kids. One mistaken import or a badly made counterfeit being imported would be a media frenzy.
  - chimeracoder 10y ago
    > It's a nit pick but those prices would always be a bit higher after the effort to import them and source them etc. That's what I said: > The difference between the prices charged in the US and the prices charged in any other country could be no greater than the costs of reimporting the drugs from that country As for: > Of course this will never happen. No politician wants to have her name tied to the bill that allowed all those dangerous drugs into the country that killed kids. That's not true at all. The Senate voted on this exact proposal on Jan 17th (not for the first time). The measure failed, but only by a few votes[0]. > One mistaken import or a badly made counterfeit being imported would be a media frenzy. We're talking about importing drugs only from countries which recognize US patent laws, such as Canada. The risk of counterfeit drugs entering the supply from reimporting is no greater than the risk of counterfeit drugs entering the supply domestically in either US or Canada. Besides, this is already done for other drugs, just not prescription drugs that are on patent. [0] https://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=115&session=1&vote=00020 https://www.senate.gov/legislative/LIS/roll_call_lists/roll_...
bermanoid 10y ago
This really doesn't need to be that complicated. The US could quite easily negotiate lower drug prices with drug companies, without setting up a convoluted scheme that references other countries, by simply doing so. There's just no political will, because strong negotiation would hurt drug companies in the US. And unless that political will somehow materializes, the situation won't change.

Symmetry 10y ago

Milton Freidman's solution was to allow re-importation of drugs from countries where they were less expensive. Either the drug companies could raise prices abroad, accept lower prices domestically, not sell abroad, or some combination of all of the above.

criddell 10y ago
This seems like something that shouldn't upset many Republicans. Remove artificial barriers and open the markets. This could apply to a lot more than just drugs. For example, it would be nice if region restrictions were removed from digital goods.
- chimeracoder 10y ago
  > This seems like something that shouldn't upset many Republicans. You'd think so, but they voted against it on Jan 17th (along with nine Democrats).
- RightMillennial 10y ago
  The problem is many Republicans claim to be proponents of open markets and less regulation. But when it comes down to voting on bills, they generally do the opposite.
  - dreamcompiler 10y ago
    Exactly. I'm a big believer in capitalism. But capitalism requires competition, transparent markets, and allowing corporations to fail. What Republicans tend to prefer are monopolies, opaque markets, and corporate welfare. That's not capitalism.

mikeash 10y ago

I don't know if the R&D argument even works. Just how much are we overpaying for our drugs? It looks like American pharmaceutical R&D is about $60 billion/year, or roughly $200 per capita. Is that really all we're losing to these high prices?

Retric 10y ago
Drugs are 10% of US healthcare spending so the gains are not that huge. However, ~200$ per capita is only part of the costs as profit and advertising also increases drug prices. Further cost is concentrated onto a small fraction of the population. So, while I might not care about 20$/month I would care about a 1% risk of 2,000$ per month.

dv_dt 10y ago

The R&D argument would be much stronger if pharma companies didn't spend more in marketing than R&D in the US.

refurb 10y ago
Marketing budgets pay for themselves. Why else would you market something?
- dv_dt 10y ago
  Customers pay for marketing budgets in the end - that by itself is a big contributor to higher US drug costs.
  - refurb 10y ago
    Pricing in the US is not cost-based. That's not how it works. If you price a drug at $100, you can't raise it to $110 to pay for marketing. You set the price at $100, then decide what to do with the profit. If marketing costs $10, but increases your sales by 15%, then you have a positive ROI.
    - dv_dt 10y ago
      > Pricing in the US is not cost-based I think this speaks for the whole issue ... there are some markets where this makes sense. I don't believe that it makes any sense in the healthcare market - and per-capita US healthcosts vs other nations would seem to bear that out.
      - refurb 10y ago
        Pricing isn't cost based in any developed country. It's value based. The only market that is cost based are generics.
        dv_dt 10y ago

DanBC 10y ago

> I suspect this is in fact somewhat true, but how is it a coherent argument in favor of higher prices? The American people / American elderly (obviously) don't have some unspoken moral obligation to subsidize pharmaceutical R&D for the whole world. The pharma companies also have enormous advertising budgets in the US, so you could stop that to save the old people some money.

Pigo 10y ago

My first job out of college I worked for a company that looked for new ways to get sample vouchers into people's hands. There was so much money in finding gray areas to hand out samples. The only job I've had that made me feel worse about what I did was insurance, but that didn't last long. I suppose we did innovate, but I didn't get paid enough to out-weigh the damage done to my soul.

andrewla 10y ago

It seems even odder considering that many of the pharmaceutical companies are not US based, so it doesn't seem to make sense even from a protectionist standpoint. Just as an exercise in cherry-picking, I grabbed the first drug from [1], "Relvar Ellipta", which apparently costs 6.3 times more in the US than the UK. This is despite the fact that the drug is manufactured by GSK [2], which is UK-based. It was developed by Innoviva, though, which is US-based [3]. What this means in terms of price-setting agreements and licensing, though, is not easy to see, and whether research grants would substitute for the expected profits from the pricing discrepencies. [1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5023951/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5023951/ [2] https://en.wikipedia.org/wiki/Fluticasone_furoate/vilanterol https://en.wikipedia.org/wiki/Fluticasone_furoate/vilanterol [3] http://www.inva.com/contact-us/ http://www.inva.com/contact-us/