4 ms·

This is not a great fix. Almost all companies (not just drug companies) routinely find ways to segment the market into different groups with different abilities

by harryh 10y ago

This is not a great fix. Almost all companies (not just drug companies) routinely find ways to segment the market into different groups with different abilities to pay and then charge different prices for very similar products. That is the profit (or future research budget) maximizing strategy. The US is richer. It should be paying more. How much more is debatable.

RcouF1uZ4gsC 10y ago
The US is richer and should be paying more than say Kenya. However, you would be hard-pressed to explain why the US should be paying more than say Denmark or Sweden or Germany?
- harryh 10y ago
  The US is 8% richer than Denmark, 12% richer than Sweden and 40% richer than Germany on a per capita basis. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi... If you had said Luxembourg, Switzerland & Norway I would have agreed with you. That's only about 14 million people though.
  - hfourm 10y ago
    He still makes a point if for example country A is 8% poorer yet paying 40% less.
    - harryh 10y ago
      It's not obvious to me that expenditures on drugs should be a fixed % of one's income. It certainly seems like the % rises as people get richer.
  - doktrin 10y ago
    > The US is 8% richer than Denmark, 12% richer than Sweden and 40% richer than Germany on a per capita basis. This seems to ignore the obvious discrepancies between income inequality in the US vs. Sweden & Germany. Our Gini coefficient is higher than both, as is our poverty rate. Our high GDP masks the fact that our world's-highest drug prices have a disproportionately negative effect on our poorest citizens.
    - harryh 10y ago
      That is true but it's mostly an argument for higher taxes are more subsidized medical care (including drug purchases) not an argument that the US should pay less overall for drugs than poorer countries.
      - doktrin 10y ago
        > not an argument that the US should pay less overall for drugs than poorer countries. I never said that. My point is simply that pointing at nominal GDP paints an inaccurate picture. The US is a complex and extremely heterogenous market, and using a single economic measure to justify nationwide pricing is a bit like taking the temperature average of the man whose head is in the oven and feet in the freezer. It's feasible to imagine a world in which drug companies apply the same adjusted pricing to poorer segments of the US market as they do foreign customers. They don't in practice, allegedly, because of Medicaid regulations enforcing a lowest-in-country price [1]. Regardless of whether that particular explanation holds water, the idea of price discrimination within the highly unequal US market is reasonable. [1] https://object.cato.org/sites/cato.org/files/serials/files/regulation/2016/4/regulation-v39n1-2.pdf https://object.cato.org/sites/cato.org/files/serials/files/r...
        harryh 10y ago
        Ya, I generally agree that Mississippi run medicaid should probably be paying less for drugs than Connecticut run medicaid. I can see how that might be tricky to get to politically though.
        maxerickson 10y ago
        The federal share of Medicaid does vary by state: https://www.medicaid.gov/medicaid/financing-and-reimbursement/ https://www.medicaid.gov/medicaid/financing-and-reimbursemen... https://aspe.hhs.gov/basic-report/fy2017-federal-medical-assistance-percentages https://aspe.hhs.gov/basic-report/fy2017-federal-medical-ass...
- fleetingmoments 10y ago
  As a non-US citizen who as been to all the countries in question the answer seems obvious: Their citizens are much unhealthier.
throwawaydp535 10y ago
> The US is richer. It should be paying more. No, it shouldn't. There exists no objective moral obligation that would dictate that the US suffer the brunt of drug development costs for the benefit of the third world.
spangry 10y ago
The US spends 17.1% of of its GDP on healthcare. The 5 countries that are richer than the USA (GDP per capita) pay an average of 7.77%. Excluding Qatar, it's 9.03%. The top 10 richest countries (excluding the USA) spend an average of 8.03% of their GDP on healthcare, and I'm pretty sure at least a few of these have universal public health insurance. I really don't think it's a case of either the US being 'rich', or because the US is somehow subsidising the rest of the world. By any rational measure, you're simply getting hosed. These discussions are hilarious because I always hear the same domestic propaganda that's spread around by the pharmaceutical industry repeated verbatim, over and over again. You're paying more than DOUBLE compared to the 9 other richest countries in the world. You're getting gouged. If you can't even admit that maybe, possibly there's a problem here, it's unlikely anything is going to get solved. Data from here: http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS?end=2014&start=2014&view=bar&year_high_desc=false http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS?end=2014&... And here: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi... (using IMF GDP figures)

by harryh 10y ago

RcouF1uZ4gsC 10y ago

The US is richer and should be paying more than say Kenya. However, you would be hard-pressed to explain why the US should be paying more than say Denmark or Sweden or Germany?

harryh 10y ago
The US is 8% richer than Denmark, 12% richer than Sweden and 40% richer than Germany on a per capita basis. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi... If you had said Luxembourg, Switzerland & Norway I would have agreed with you. That's only about 14 million people though.
- hfourm 10y ago
  He still makes a point if for example country A is 8% poorer yet paying 40% less.
  - harryh 10y ago
    It's not obvious to me that expenditures on drugs should be a fixed % of one's income. It certainly seems like the % rises as people get richer.
- doktrin 10y ago
  > The US is 8% richer than Denmark, 12% richer than Sweden and 40% richer than Germany on a per capita basis. This seems to ignore the obvious discrepancies between income inequality in the US vs. Sweden & Germany. Our Gini coefficient is higher than both, as is our poverty rate. Our high GDP masks the fact that our world's-highest drug prices have a disproportionately negative effect on our poorest citizens.
  - harryh 10y ago
    That is true but it's mostly an argument for higher taxes are more subsidized medical care (including drug purchases) not an argument that the US should pay less overall for drugs than poorer countries.
    - doktrin 10y ago
      > not an argument that the US should pay less overall for drugs than poorer countries. I never said that. My point is simply that pointing at nominal GDP paints an inaccurate picture. The US is a complex and extremely heterogenous market, and using a single economic measure to justify nationwide pricing is a bit like taking the temperature average of the man whose head is in the oven and feet in the freezer. It's feasible to imagine a world in which drug companies apply the same adjusted pricing to poorer segments of the US market as they do foreign customers. They don't in practice, allegedly, because of Medicaid regulations enforcing a lowest-in-country price [1]. Regardless of whether that particular explanation holds water, the idea of price discrimination within the highly unequal US market is reasonable. [1] https://object.cato.org/sites/cato.org/files/serials/files/regulation/2016/4/regulation-v39n1-2.pdf https://object.cato.org/sites/cato.org/files/serials/files/r...
      - harryh 10y ago
        Ya, I generally agree that Mississippi run medicaid should probably be paying less for drugs than Connecticut run medicaid. I can see how that might be tricky to get to politically though.
        maxerickson 10y ago
        The federal share of Medicaid does vary by state: https://www.medicaid.gov/medicaid/financing-and-reimbursement/ https://www.medicaid.gov/medicaid/financing-and-reimbursemen... https://aspe.hhs.gov/basic-report/fy2017-federal-medical-assistance-percentages https://aspe.hhs.gov/basic-report/fy2017-federal-medical-ass...
fleetingmoments 10y ago
As a non-US citizen who as been to all the countries in question the answer seems obvious: Their citizens are much unhealthier.

throwawaydp535 10y ago

> The US is richer. It should be paying more. No, it shouldn't. There exists no objective moral obligation that would dictate that the US suffer the brunt of drug development costs for the benefit of the third world.

spangry 10y ago

The US spends 17.1% of of its GDP on healthcare. The 5 countries that are richer than the USA (GDP per capita) pay an average of 7.77%. Excluding Qatar, it's 9.03%. The top 10 richest countries (excluding the USA) spend an average of 8.03% of their GDP on healthcare, and I'm pretty sure at least a few of these have universal public health insurance. I really don't think it's a case of either the US being 'rich', or because the US is somehow subsidising the rest of the world. By any rational measure, you're simply getting hosed. These discussions are hilarious because I always hear the same domestic propaganda that's spread around by the pharmaceutical industry repeated verbatim, over and over again. You're paying more than DOUBLE compared to the 9 other richest countries in the world. You're getting gouged. If you can't even admit that maybe, possibly there's a problem here, it's unlikely anything is going to get solved. Data from here: http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS?end=2014&start=2014&view=bar&year_high_desc=false http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS?end=2014&... And here: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi... (using IMF GDP figures)