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> This is OK as long as there is a sufficiently high floor on the quality of service that the poor receive. Someone has to pay for the advanced treatments, drug

> This is OK as long as there is a sufficiently high floor on the quality of service that the poor receive. Someone has to pay for the advanced treatments, drugs, machinery, and training. Yes, and that "somebody" is the US. Drug prices are high in the US because the US is responsible for funding the the majority of medical and pharmaceutical research for the entire world. Countries like the UK benefit from the research that is being paid by the US, while not actually having to find the R&D that goes into it.

jessaustin 9y ago
In a time when it is seriously proposed by high-ranking elected officials that e.g. South Korea pay for its own military defense, I think we can consider UK paying for its own drug research.
- smt88 9y ago
  > consider UK paying for its own drug research Because the UK is single-payer, they have enormous negotiating power -- and they use it[1]. They force drug companies to give them low prices, which means the US indirectly pays some of the costs of the research. However, drugs can be very profitable, so you could just as easily say that all the countries share the cost of the research, and the US subsidizes the profits of the private companies. 1. https://qz.com/509344/the-way-to-fix-outrageous-drug-pricing-in-the-us-is-simply-to-do-what-all-other-rich-countries-do/ https://qz.com/509344/the-way-to-fix-outrageous-drug-pricing...
  - chimeracoder 9y ago
    > However, drugs can be very profitable, so you could just as easily say that all the countries share the cost of the research, and the US subsidizes the profits of the private companies. Sure, though only if you assume that the companies would pursue the same research and achieve the same results without a profit incentive. Except, we have pretty clear empirical evidence that that isn't the case. The overwhelming majority of both medical research spending and clinical medical discoveries come out of organizations that pursue a profit motive. That's true globally - it's true in the US, in Europe, and in China and India. And even then, you can't say that companies "share the cost of research equally", because there is literally no objective metric under which European countries pay an amount of research proportional to how much they consume. Even European pharmaceutical companies obtain the bulk of their research funds from the US market.
    - vilmosi 9y ago
      >>> Even European pharmaceutical companies obtain the bulk of their research funds from the US market. Stop spreading nonsense. This is easily verifiable information and very easy to disprove. Take Norvatis for example: https://www.statista.com/statistics/294631/novartis-revenue-by-region/ https://www.statista.com/statistics/294631/novartis-revenue-... The US is definitely not the "bulk" of revenue for these companies. A big market? Sure. But nothing special when compared to other rich countries if you take into account population and wealth.
      - chimeracoder 9y ago
        > if you take into account population and wealth. Yes, if we normalize by the things we're measuring, we reduce the observed effect... but that's a statistical tautology. For example, take Western European country prices as a reference point, and assume that the difference in price to the US is entirely an excess premium. That's already a dramatic overestimate, because it assumes that the prices in Europe would still be as low even without the US market, which we already know is not the case. In that case, Norvartis earned $8.6 billion from inflated prices in the US in 2015. And in 2015, their entire R&D budget was $9.9 billion, on a net income of $6.7 billion. In other words, if US prices were magically brought down to European levels, Novartis would somehow have to find another way to make up a sum of money that accounts for almost their entire R&D budget. And even if you assume that the second largest pharmaceutical company in the world would operate the exact same way without an explicit profit motive, without the inflated prices in the US, they would literally be losing money. > Stop spreading nonsense. From the Hacker New Guidelines: > Be civil. Don't say things you wouldn't say in a face-to-face conversation. Avoid gratuitous negativity.
        jessaustin 9y ago
        Come on dude. "Stop spreading nonsense" reads pretty tame to me. Certainly nothing worth subjecting us to a scripture quotation.
- zip1234 9y ago
  A country can't really pay for it's 'own' drug research unless that research is never shared or the drugs never made available outside that country. Unlike defense, which requires physical presence in a place, once drugs are created and researched, the cost of production is often very low. With defense, the cost of organizing, training, and equipping troops will never go away.
smt88 9y ago
> US is responsible for funding the the majority of medical and pharmaceutical research for the entire world I believed this until very recently. I had a long discussion on Facebook with some friends in medical research and public policy. I learned that only a fraction of drug costs are due to this issue. Furthermore, slightly less than 10% of all health-care spending in the US is on drugs. It's an issue, but it's a relatively smaller one than I'd thought, and it's not as clear as "the US subsidizes other countries."
- chimeracoder 9y ago
  > I believed this until very recently. I had a long discussion on Facebook with some friends in medical research and public policy. I learned that only a fraction of drug costs are due to this issue. Literally 50% of medical research in the world happens in the US, and even more is funded (indirectly) by the US market. In the last two years, that number has dropped slightly below 50%, but only because of rapid growth in China and India. This is all medical research, not just pharmaceutical research. But yes, it is actually responsible for the bulk of drug prices in the US, through a combination of both direct and indirect effects. Even pharmaceutical companies based in Europe still use the US as the primary source of funding their research. Pharmaceutical companies reap their profits from the US because that's where it's easiest to do so, and because the US is the largest non-developing country. If, overnight, the US capped drug costs[0], a combination of two things would happen: pharmaceutical research would drop dramatically (some would move to China and India, but some would just exit the industry) and drug costs in other developing countries would skyrocket. Or in other words, for the US to pay less in drug costs, other developed countries have to be ready to pay more, and the world has to be ready to accept a decrease in medical research. > Furthermore, slightly less than 10% of all health-care spending in the US is on drugs. That doesn't contradict the original point; that's just looking at a different denominator. And again, this is all medical research, not just pharmaceuticals. [0] ignoring for the moment the mechanism of doing so
DarkKomunalec 9y ago
"Drug prices are high in the US because the US is responsible for funding the the majority of medical and pharmaceutical research for the entire world." A statement entirely unsupported by data. If pharmaceutical companies spent on R&D only the money earned due the inflation of US prices, they'd still have plenty left over: http://healthaffairs.org/blog/2017/03/07/rd-costs-for-pharmaceutical-companies-do-not-explain-elevated-us-drug-prices/ http://healthaffairs.org/blog/2017/03/07/rd-costs-for-pharma... You could just as well say the US funds the majority of drug advertising for the entire world - they spend more on ads than R&D: http://www.bbc.com/news/business-28212223 http://www.bbc.com/news/business-28212223 Not to mention everything from vital new medicine, to reproducing generics of other companies, and drug reformulations to prolong patents, gets thrown under R&D. If you only count the R&D spending that's not done solely to steal market share from other companies, the ads vs. R&D ratio is even more dire. So given they post more profits and more ad spending each than R&D spending, at what point would it be okay to stop raising drug prices? When profits are >10x their R&D?
- chimeracoder 9y ago
  You seem to be interested in arguing the statement "Pharmaceutical companies in the US spend too much on R&D". But that's not equivalent to the statement "The US provides the funding for the majority of R&D that the rest of the world benefits from". If you think that pharmaceutical companies should spend less of their money on R&D, or more on it, that's not really relevant. Whatever research pharmaceutical companies are doing, that's being disproportionately funded by the US market. That's a plainly evident statement; it's right there in their financial sheets. > You could just as well say the US funds the majority of drug advertising for the entire world No, because research is a wholly non-excusable good in the global market. Advertising is not. > they spend more on ads than R&D Again, not really the point.
  - DarkKomunalec 9y ago
    Sounds like as long as they spend some portion of their revenue on R&D, you'll argue inflated drug prices are good and necessary.

jessaustin 9y ago

In a time when it is seriously proposed by high-ranking elected officials that e.g. South Korea pay for its own military defense, I think we can consider UK paying for its own drug research.

smt88 9y ago
> consider UK paying for its own drug research Because the UK is single-payer, they have enormous negotiating power -- and they use it[1]. They force drug companies to give them low prices, which means the US indirectly pays some of the costs of the research. However, drugs can be very profitable, so you could just as easily say that all the countries share the cost of the research, and the US subsidizes the profits of the private companies. 1. https://qz.com/509344/the-way-to-fix-outrageous-drug-pricing-in-the-us-is-simply-to-do-what-all-other-rich-countries-do/ https://qz.com/509344/the-way-to-fix-outrageous-drug-pricing...
- chimeracoder 9y ago
  > However, drugs can be very profitable, so you could just as easily say that all the countries share the cost of the research, and the US subsidizes the profits of the private companies. Sure, though only if you assume that the companies would pursue the same research and achieve the same results without a profit incentive. Except, we have pretty clear empirical evidence that that isn't the case. The overwhelming majority of both medical research spending and clinical medical discoveries come out of organizations that pursue a profit motive. That's true globally - it's true in the US, in Europe, and in China and India. And even then, you can't say that companies "share the cost of research equally", because there is literally no objective metric under which European countries pay an amount of research proportional to how much they consume. Even European pharmaceutical companies obtain the bulk of their research funds from the US market.
  - vilmosi 9y ago
    >>> Even European pharmaceutical companies obtain the bulk of their research funds from the US market. Stop spreading nonsense. This is easily verifiable information and very easy to disprove. Take Norvatis for example: https://www.statista.com/statistics/294631/novartis-revenue-by-region/ https://www.statista.com/statistics/294631/novartis-revenue-... The US is definitely not the "bulk" of revenue for these companies. A big market? Sure. But nothing special when compared to other rich countries if you take into account population and wealth.
    - chimeracoder 9y ago
      > if you take into account population and wealth. Yes, if we normalize by the things we're measuring, we reduce the observed effect... but that's a statistical tautology. For example, take Western European country prices as a reference point, and assume that the difference in price to the US is entirely an excess premium. That's already a dramatic overestimate, because it assumes that the prices in Europe would still be as low even without the US market, which we already know is not the case. In that case, Norvartis earned $8.6 billion from inflated prices in the US in 2015. And in 2015, their entire R&D budget was $9.9 billion, on a net income of $6.7 billion. In other words, if US prices were magically brought down to European levels, Novartis would somehow have to find another way to make up a sum of money that accounts for almost their entire R&D budget. And even if you assume that the second largest pharmaceutical company in the world would operate the exact same way without an explicit profit motive, without the inflated prices in the US, they would literally be losing money. > Stop spreading nonsense. From the Hacker New Guidelines: > Be civil. Don't say things you wouldn't say in a face-to-face conversation. Avoid gratuitous negativity.
      - jessaustin 9y ago
        Come on dude. "Stop spreading nonsense" reads pretty tame to me. Certainly nothing worth subjecting us to a scripture quotation.
zip1234 9y ago
A country can't really pay for it's 'own' drug research unless that research is never shared or the drugs never made available outside that country. Unlike defense, which requires physical presence in a place, once drugs are created and researched, the cost of production is often very low. With defense, the cost of organizing, training, and equipping troops will never go away.

smt88 9y ago

> US is responsible for funding the the majority of medical and pharmaceutical research for the entire world I believed this until very recently. I had a long discussion on Facebook with some friends in medical research and public policy. I learned that only a fraction of drug costs are due to this issue. Furthermore, slightly less than 10% of all health-care spending in the US is on drugs. It's an issue, but it's a relatively smaller one than I'd thought, and it's not as clear as "the US subsidizes other countries."

chimeracoder 9y ago
> I believed this until very recently. I had a long discussion on Facebook with some friends in medical research and public policy. I learned that only a fraction of drug costs are due to this issue. Literally 50% of medical research in the world happens in the US, and even more is funded (indirectly) by the US market. In the last two years, that number has dropped slightly below 50%, but only because of rapid growth in China and India. This is all medical research, not just pharmaceutical research. But yes, it is actually responsible for the bulk of drug prices in the US, through a combination of both direct and indirect effects. Even pharmaceutical companies based in Europe still use the US as the primary source of funding their research. Pharmaceutical companies reap their profits from the US because that's where it's easiest to do so, and because the US is the largest non-developing country. If, overnight, the US capped drug costs[0], a combination of two things would happen: pharmaceutical research would drop dramatically (some would move to China and India, but some would just exit the industry) and drug costs in other developing countries would skyrocket. Or in other words, for the US to pay less in drug costs, other developed countries have to be ready to pay more, and the world has to be ready to accept a decrease in medical research. > Furthermore, slightly less than 10% of all health-care spending in the US is on drugs. That doesn't contradict the original point; that's just looking at a different denominator. And again, this is all medical research, not just pharmaceuticals. [0] ignoring for the moment the mechanism of doing so

DarkKomunalec 9y ago

"Drug prices are high in the US because the US is responsible for funding the the majority of medical and pharmaceutical research for the entire world." A statement entirely unsupported by data. If pharmaceutical companies spent on R&D only the money earned due the inflation of US prices, they'd still have plenty left over: http://healthaffairs.org/blog/2017/03/07/rd-costs-for-pharmaceutical-companies-do-not-explain-elevated-us-drug-prices/ http://healthaffairs.org/blog/2017/03/07/rd-costs-for-pharma... You could just as well say the US funds the majority of drug advertising for the entire world - they spend more on ads than R&D: http://www.bbc.com/news/business-28212223 http://www.bbc.com/news/business-28212223 Not to mention everything from vital new medicine, to reproducing generics of other companies, and drug reformulations to prolong patents, gets thrown under R&D. If you only count the R&D spending that's not done solely to steal market share from other companies, the ads vs. R&D ratio is even more dire. So given they post more profits and more ad spending each than R&D spending, at what point would it be okay to stop raising drug prices? When profits are >10x their R&D?

chimeracoder 9y ago
You seem to be interested in arguing the statement "Pharmaceutical companies in the US spend too much on R&D". But that's not equivalent to the statement "The US provides the funding for the majority of R&D that the rest of the world benefits from". If you think that pharmaceutical companies should spend less of their money on R&D, or more on it, that's not really relevant. Whatever research pharmaceutical companies are doing, that's being disproportionately funded by the US market. That's a plainly evident statement; it's right there in their financial sheets. > You could just as well say the US funds the majority of drug advertising for the entire world No, because research is a wholly non-excusable good in the global market. Advertising is not. > they spend more on ads than R&D Again, not really the point.
- DarkKomunalec 9y ago
  Sounds like as long as they spend some portion of their revenue on R&D, you'll argue inflated drug prices are good and necessary.