12 ms·

The latest episode of Econtalk "Vincent Rajkumar on the High Price of Cancer Drugs" is relevant to this subject: http://www.econtalk.org/archives/2018/04/vincen

• deleted 9y ago
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• Aloha 9y ago
  In every US state that I know of - a generic will be substituted for a brand name drug unless the doctor specifically specifies that it should not be.
  • avar 9y ago
    I was unclear, the podcast discusses cases where there's no generic version of the latest drug, and the latest drug is marginally more effective than whatever the latest generic is. So the generic just doesn't get considered, even though it would be suitable for the patient at much lower costs. This is unrelated to the situation you're describing.
    • Aloha 9y ago
      Having a medical condition that requires long term medication maintenance - every single doctor I've had is very well aware of what is a generic and what is not - and tends to prescribe a generic, as they are often an ER version of the regular med, or a compounded version of two medications that can be taken separately.
      • cko 9y ago
        Former pharmacist here. I think most doctors do try to be cost conscious for the patient. But there are some who prescribe the newest and expensive brand name drug, and I can’t think of any reason why except some sort of incentive program. Many ophthalmologists will give the most expensive post surgical drops. When I called one to have him change it, he was like “uh, there’s no substitute.” I thought to myself, “then what did you guys do before these drugs came out a couple months ago?” Example: post cataract surgery people usually get an antibiotic, a corticosteroid, and an anti inflammatory. These generic drugs have been on the market for years. But new ones come out here and there that are hella expensive, we’re talking a copay of $5.00 vs $100+ per eye drop. Also there are prescribing guidelines called step therapy. For example for diabetes: https://emedicine.medscape.com/article/117853-treatment#d10 https://emedicine.medscape.com/article/117853-treatment#d10 doctors will skip the first few steps and prescribe a brand name drug immediately that’s like step 3. Insurance companies try to stop it by requiring authorization but... I feel like we’re fighting an uphill battle with perverse incentives.
        • refurb 9y ago
          In my former job, I talked to a lot of doctors about this stuff. What I found was that a lot of doctors look at the decision from a clinical lens only. Why not prescribe the latest branded product, even if it's only marginally better than the generic? Patients deserve the best, right? Making a cost vs. benefit trade off wasn't a universal process for many physicians.
        • darpa_escapee 9y ago
          I've actually run into a very similar example, I was prescribed a $400 dollar bottle of antibiotic eye drops, which my insurance fought and eventually paid for. I asked why that was chosen and if there were other options that I could pursue in the future. I was told that "these are your eyes and I'm not going to [fuck around] when it comes to your vision." I can't really disagree with that logic.
          • cko 9y ago
            True, but what did doctors do before these new drugs? “Fuck around” with “inferior” products... reason I’m cynical is because many new drugs that hit the market are not novel - for example loteprednol (older drug) vs difluprednate (newer): https://www.ncbi.nlm.nih.gov/m/pubmed/28628490/ https://www.ncbi.nlm.nih.gov/m/pubmed/28628490/ By the way, some of these newer drugs don’t have to be “superior” to be approved, they just have to be none-inferior to current therapy. https://www.raps.org/regulatory-focus™/news-articles/2016/11/when-can-non-inferiority-trials-establish-efficacy-fda-explains-with-guidance https://www.raps.org/regulatory-focus™/news-articles/2016/11...
  • cptskippy 9y ago
    And drug makers are aware of this fact thus they incentivize doctors to specify the brand name drug.
    • chimeracoder 9y ago
      > And drug makers are aware of this fact thus they incentivize doctors to specify the brand name drug. That's a bold and unfounded claim. Drug makers do not incentivize doctors to write DAW on a prescription.
      • cptskippy 9y ago
        > That's a bold and unfounded claim. Forbes and the New York Times have written articles on it. The Affordable Care Act has a provision that requires Doctors to disclose payments. Empirically, I dated a girl for about 2 years who was a sales representative for a major pharmaceutical company. When I asked about her job she said it was mostly dropping of brochures, swag, free lunches, and holding contests to promote products. Top producers (doctors) received all expense paid trips to medical conferences held in exotic locations or were invited to be paid speakers at said conferences. It was not too different from what the marketers did at the insurance broker I worked for at the time to cater Agents to write their lines.
        • chimeracoder 9y ago
          > Empirically, I dated a girl for about 2 years who was a sales representative for a major pharmaceutical company. When I asked about her job she said it was mostly dropping of brochures, swag, free lunches, and holding contests to promote products. Top producers (doctors) received all expense paid trips to medical conferences held in exotic locations or were invited to be paid speakers at said conferences. It was not too different from what the marketers did at the insurance broker I worked for at the time to cater Agents to write their lines. Your anecdote is about which drugs the doctors choose to prescribe. It has nothing to do with incentivizing doctors to prevent patients from filling generic versions of drugs and forcing them to purchase the brand-name version of the same drug, which is what this thread is about.
  • alistairSH 9y ago
    There's a subtle difference between what you're describing and what the parent post describes. You are correct - in cases where there is a brand-name version of a dug AND also a generic version of the same drug, the generic is usually provided unless the brand-name is specifically requested. But, the parent post is describing cases where there is a new, brand-name drug that fills the same niche as an existing generic. Two different drugs, but often only slightly differing results. MDs often prescribe the newest, assuming it's better than the generic. MDs receive much of their ongoing education about drugs from the pharmaceutical sales reps, so they are bombarded with ads and samples (just as consumers are with ads on TV). As an aside, my dermatologist has been good about ensuring the costs of any treatments I receive are managed. She's recommended specific pharmacies, brand-name vs generic, and other tips/tricks to reduce the costs. This despite the fact that I don't directly bear any of the costs because I have a decent medical plan.
    • LordKano 9y ago
      It sounds like your dermatologist is not just a good doctor but also a good person. Giving the same (high?) standard of care to patients without regard to their financial resources.
    • ubernostrum 9y ago
      MDs often prescribe the newest That is not always a correct assumption. Due to the way some programs like Medicare pay out, doctors are sometimes strongly incentivized to prescribe the most expensive drug. Ophthalmologists are the usual notorious example, prescribing for macular degeneration. Medicare's reimbursement for drugs administered in-office includes paying the cost of the drug plus an additional percentage. For macular degeneration, research showed Avastin and Lucentis are basically equally effective. But Avastin is ~$50/dose and Lucentis is ~$2,000/dose. If you're going to get a "bonus" payment equal to a percentage of the cost of the drug, which one would you use? Lucentis has at times accounted for 10% of the entire Medicare part B drug budget because of this.
      • alistairSH 9y ago
        Wow! I didn't know about that quirk of the Medicare system. That's a pretty horrific incentive to overspend. My comment was based on the more typical situation, where the physician sends the patient to a pharmacist.
  • kbart 9y ago
    "a generic will be substituted for a brand name drug" We had a similar corruption here, in Lithuania, until the law has been passed that pharmacist must offer a generic alternative. But there again, world is seen very differently in EU than USA, so I don't expect that to apply on the other side of the pond.
• rayiner 9y ago
  None of those points apply here, where the new branded drug is a revolutionary advancement over the previous drugs. (This non-profits new drug is something newer still). Saving a life creates some aggregate economic value (the person will not die and instead will continue contributing to the economy for X more years). Drugs are expensive because in the first world, that amount is a lot and the entity creating a cure can reasonably expect to capture a substantial portion of it, either because the person will pay it or because governments will. Neither is intrinsically a problem. $84,000 to cure HepC is a bargain, because people die from that quite young and on the other side of the equation is potentially millions of dollars of saved economic productivity. That’s not an argument for not charging $84,000 for HepC drugs. It may well be an argument for having the government foot the bill.
  • deleted 9y ago
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  • bradleyjg 9y ago
    It’s important that we incent what we actually want. As it stands the science is often done in universities funded by federal grants. The monopoly owner—which is allowed to capture much of the value—is responsible for the drug testing process and marketing. The drug testing process is no doubt important but is it so much more important than the initial drug discovery that the entity that funds it should be where all the profits go?
    • rayiner 9y ago
      That’s a misleading characterization of the industry. There is a huge gap between university research and products people can sell, and its not just drug testing and marketing. (Think of the difference between the Google patent developed at Stanford and Google’s real search engine.)
    • aaavl2821 9y ago
      The value of academic findings is only apparent in retrospect, after a drug has been shepherded through the development process by a biopharma company. The govt spends maybe $25-30B a year on drug research. The top 15 pharma companies alone spend like $70B a year on R&D It costs over $200M to take a drug from academia to market just including out of pocket costs. Including the drugs that fail at various stages within industrial drug dev -- 90%+ of drugs -- and the cost to get a drug approved is $2.6B, not including academic costs Compounds discovered in academia have like a 1 in 10,000 chance of getting approved. The group that analyzes which of those drugs have a shot at getting to market and funds the cost of that R&D are biopharma companies
• sandworm101 9y ago
  "Generic" is a legal term for a drug not subject to patent controls. "Alternative" is a medical/practical term for an alternative drug that may or may not still be under patent. Alternatives can be cheaper, or useful if a patient cannot tolerate the first choise.
  • tssva 9y ago
    Although most generics are for drugs no longer under patent protection this is not always the case. A more accurate definition of a generic is the one from Wikipedia, "A generic drug is a pharmaceutical drug that is equivalent to a brand-name product in dosage, strength, route of administration, quality, performance and intended use, but does not carry the brand name. The generic drug may differ from the original in non-essential characteristics such as color, taste and packaging."
• perseusprime11 9y ago
  Incentives! That is 100% the only right answer to healthcare problems in our country.
  • croon 9y ago
    Care to elaborate? Analogy: How do you get people to win the game? "Reward the winner". Sure, but what's the game, how do you win it, what's the reward, how do you distribute it.
    • Consultant32452 9y ago
      The best case scenario is that each person is empowered to answer those questions themselves. The worst case scenario is to have someone else define for you what winning is and how you should go about doing it.
      • croon 9y ago
        That's somehow even more vague than GP. I think the issue is pretty clear: The US has too expensive healthcare, and too low quality in relation to that price. The solution "incentives" isn't really constructive in solving that issue, if you don't suggest what those incentives are. And as for your comment: within this problem space, everyone defining their own healthcare system and solving it is even less constructive.
        • Consultant32452 9y ago
          The point is that the "healthcare system" should be an emergent one where each person is maximally in control of their own destiny. The idea that a few wealthy, connected, buyable people could get to "define the healthcare system" is terrifying.
          • croon 9y ago
            I think you're describing a separate problem, of campaign financing, lobbying and/or corruption. > The point is that the "healthcare system" should be an emergent one where each person is maximally in control of their own destiny. Again, this is a nice sounding platitude. What does it mean? Since you want everyone to be "maximally in control", does that mean Mad Max-style anarchy? Representative democracy ensuring everyone gets a voice and securing of rights? Both ensures freedoms, but in very different directions.
• jseliger 9y ago
  But some of it's because nobody in the system seems to have a real incentive to reduce costs, even when the benefits are worth it This is a really underrated point and part of the reason I'd like to start by seeing price transparency: http://seliger.com/2018/03/27/preventive-care-doesnt-save-money-bankruptcies-arent-widely-caused-lack-insurance-fqhcs http://seliger.com/2018/03/27/preventive-care-doesnt-save-mo... . Bizarrely (or at least, bizarrely to me) this doesn't seem to be part of the political discussion at all.
  • RodericDay 9y ago
    Price transparency is the crucial reason why markets can claim to propagate information quickly and lead to efficiency. The opacity in the labor market and the drug market is not an accident.
  • maherbeg 9y ago
    I am very strongly with you here. Why can’t we get an exact cost upfront before Abby services are rendered? A doctor can make orders and should be able to get the exact cost to you before submitting them. These prices should all be public and comparable. Common reasons to go to the doctor should be shown alongside their costs. We got a surprise $19k bill that we were told would be $160 and our insurance would cover the rest. We’re letting them fight it out but would be very disappointed if we had to pay that out of pocket. We would never have ordered the test then, or would have tried to shop around
    • makmanalp 9y ago
      Because hospitals use those prices to negotiate with insurance and other parties. I'm not saying it's right, but it's what happens in a broken system: https://en.wikipedia.org/wiki/Chargemaster https://en.wikipedia.org/wiki/Chargemaster
    • conanbatt 9y ago
      The doctor doesn't know what the claim is going to be. It takes sometimes weeks to know how much you charge at all. This is because insurance companies pay in base on what you did or how long you did it. You itemize each visit like a tax return that later gets reviewed. Then someone reads the return and thinks if it makes any sense. After that, they pay back the doctor, but according to the plan, they also have to charge the patient the copay. That said, a doctors office that is only cash will get very little patients. Because people that are employed will not go to a cash-only doctor's office.
• bluGill 9y ago
  In fact who care most about cost actually have a perverse incentive to increase costs! Health insurance is tied to your job, and your company pays most of the costs for you. If you choose to get your own insurance you don't get to take the amount your company pays, so you cannot afford to. This ties you to your company making it harder to just leave, first you have to find a new job. The more prices go up the harder it is to leave and live off your savings for a few months. Obama promised "if you like your insurance you can keep it". However what wasn't said is "if hate your insurance you have no choice but to keep it". I don't like my insurance, but since I otherwise like my job there is nothing I can do about it. Until the government changes the above prices will get higher.
  • darpa_escapee 9y ago
    The way the current tax regime and economic system are setup in the US, they both favor the employer-employee relationship heavily and, in a way, penalize a worker for existing outside of it. Personally, I don't think that's a coincidence.
    • snuxoll 9y ago
      See self-employment tax for a good example. Yes, it really is just the other 7% of the FICA (payroll) tax that an employer would normally pay, but I've seen people get thrown for a loop when another 7% of their 1099 or self-employment income gets taken away than they were "expecting" because it gets hidden from normal W-2 employees.
  • monocasa 9y ago
    And part of the ACA capped profit percentages of the insurance companies, meaning that in order to increase total profit they need to increase revenue and spending quarter after quarter.
  • NickM 9y ago
    Obama promised "if you like your insurance you can keep it". However what wasn't said is "if hate your insurance you have no choice but to keep it". I don't like my insurance, but since I otherwise like my job there is nothing I can do about it. To be fair, this was a worse problem prior to Obamacare. At least now we have the exchanges, and companies can't deny you coverage for preexisting conditions. I agree with what you're saying, and the current system certainly has big problems, I just don't think you can blame Obama for that.
• jeffreyrogers 9y ago
  > But some of it's because nobody in the system seems to have a real incentive to reduce costs And I think a large part of this stems from insurance companies paying for most of the cost of care (if you're insured) rather than the person who is receiving the care, which leads to a market failure because the insurance companies aren't incentivized to keep costs down like an individual would be.
  • my_first_acct 9y ago
    A couple of problems with the idea of "incentivizing" individuals to keep the cost down, by forcing them to pay more of the cost out-of-pocket (ignoring the moral question of whether people with less money should in fact receive inferior health care): People will pay almost anything to stay alive and healthy, or to keep their loved ones alive and healthy; few people are willing to turn down the more expensive option even if the increased benefits are minor, and even if it means going bankrupt in the process; Health-care costs are not very transparent, and bills are often computed after the fact; it is much easier to find out the price and quality of a washing machine, than the price and quality of a doctor. In other words, shopping around (assuming you have time and energy to do that while sick or dying) is not easy. Rich countries outside of the US manage to spend much less money per capita on health care than the US, with similar health outcomes, and with a much lower rate of people forced into bankruptcy by medical expenses. They don't do this by pushing more of the cost of care onto the patient. Perhaps we in the US should try to learn from them.
    • jeffreyrogers 9y ago
      Yes, I agree. I was just pointing out one reason the current system doesn't control its costs very well. There are lots of potential ways to improve the system, some of which are already implemented in other countries.
• inasio 9y ago
  In the US efficacy is typically measured through estimates of DALYs (disability-adjusted life years). Following WHO guidelines, cost of an intervention (or drug) up to three times the national per-capita GPD (~3x50K in the US) is considered to be cost-effective.
  • runamok 9y ago
    That is fascinating. Would love to read more about how this is determined and applied. To me a big issue is, does this drug cure a condition or merely treat and contain it...?