8 ms·

> It’s an off-patent, decades old drug ... It costs pennies to make and generates little profit. Only a few thousand patients need it each year. Sounds like th

by rb808 8y ago

> It’s an off-patent, decades old drug ... It costs pennies to make and generates little profit. Only a few thousand patients need it each year. Sounds like the old price of $13 was way too cheap. Given that its off patent and still no one else wants to make it I'd think the new $750 prices is probably not crazy.

hrktb 8y ago
For reference it's 13.55€ for a box of 20 in EU. http://www.lepharmacien.fr/produitafine/medicament/substance/1617 http://www.lepharmacien.fr/produitafine/medicament/substance...
- rb808 8y ago
  Nice. How come no one can ship it across the pond and stock it then?
  - chimeracoder 8y ago
    > Nice. How come no one can ship it across the pond and stock it then? Because reimporting prescription drugs (manufactured in the US and sold abroad) is illegal. There was a bill that would have allowed this, but it was voted down in the Senate last January. To be entirely honest, if that bill ever did pass, there would be serious pressure political pressure on European governments to ban re-exports of prescription drugs from the EU. The current barrier to trade is what enables European governments to set low prices for prescriptions while still maintaining the same level of profits for European pharmaceutical companies - the latter simply raise their prices in the US to make up the difference.
    - rb808 8y ago
      Reimporting ban makes sense. I figured Europe had a different manufacturer.
    - 0x4f3759df 8y ago
      So the examples of European healthcare working well are (somewhat) contingent on price gouging Americans?
      - billmalarky 8y ago
        America subsidizes more than just healthcare development for Europe. Our massive military budget provides global security/stability for all of our allies. No strong need to have a large expensive standing army if your ally has that covered. >So the examples of European healthcare working well are (somewhat) contingent on price gouging Americans? It's more related to the development of new healthcare technologies/medicine. Once a drug is developed it's super cheap to produce and distribute. Getting it developed is where $X billion is spent. If the US incentivized global pharmaceutical companies less by allowing for less profit, the drugs we have now would still exist but new development would probably decrease significantly. That said there are most likely solutions to this problem (government research into medicine instead of for-profit etc).
    - rescbr 8y ago
      Eh, you can find it in Brazil, made locally (so no reimporting issues), with no subsidies, for R$ 2,45 (around $0.70) for a box of 30 pills, retail.
      - chimeracoder 8y ago
        > Eh, you can find it in Brazil, made locally (so no reimporting issues), The US doesn't permit importing those drugs period (regardless of where they're manufactured). The topic is generally referred to as "reimporting", and in this case the drug is manufactured by a US company, but it doesn't matter if the drug was manufactured by a Brazilian company; it can't be imported from that manufacturer to the US.
chimeracoder 8y ago
> Sounds like the old price of $13 was way too cheap. Given that its off patent and still no one else wants to make it I'd think the new $750 prices is probably not crazy. On top of that, there was an investigative article a while back that tried to measure the actual effects on patients. Turns out, they weren't able to find any patients who themselves had to pay anything close to $750/pill for the drug. It's not prescribed that commonly in the US, and the only patients who needed it were all on insurance plans that covered it, subject to standard copays and deductibles. Many of the patients already meet their annual maximum deductible anyway, due to the other medical care they already have to receive, so the marginal cost to them was $0. In other words, raising the price of the drug literally did not increase the price that those patients had to pay by one cent. I'm aware that this has a complicated and implicit impact on prices elsewhere, but that's the real problem: medical billing is ridiculously convoluted, and focusing on the price of a single drug - especially the price that isn't actually paid by any consumer - is missing the real problem that needs to be fixed.
- monocasa 8y ago
  But they are still paying it, it's just obfuscated. Since the ACA capped profit percentages, the insurance companies have been looking for ways to increase pay outs, os they can increase total revenue, and then total profit. That perverse incentive is one of the reasons why insurance premiums have been going up so much the past few years.
  - chimeracoder 8y ago
    > But they are still paying it, it's just obfuscated. They're not still paying it. Collectively, yes, the insurers are passing the cost on to the insured population. But the number of people taking that drug is tiny[0], so it amortizes very quickly. For the patients taking the drug, the effect on their own premiums from that price increase is less than a penny. This is what I'm talking about when I say that medical billing is the real problem: the effects are non-obvious and highly-interconnected. You're right about the perverse incentive created by the MLR; and that's just the tip of the iceberg. [0] There were 500 pills sold in Dec 2015.
monocasa 8y ago
Or it's not worth spinning up another line for 50% of a small market. There's huge NRE costs to making that happen. When we're literally talking about medicine, I don't have a lot of patience for increasing costs to 'what the market will bear'. There's obvious market failures occurring.
- rb808 8y ago
  Maybe there should be a charity or government dept making this stuff. For those margins I'd expect a generic shop in India/China to be able to make them.
falcolas 8y ago
Assuming you're not one unlucky enough to need it, sure, it makes perfect sense. <blunt> But if you're unlucky enough to have a baby that gets toxoplasmosis, you're fucked. The people backing the insurance which is paying that new price are fucked. But it's OK that this is a net negative for society, because the company is now making a 'proper' amount profit off it, right? </blunt>
- loceng 8y ago
  The only argument I can see a company going towards is opportunity cost, where they could be using facilities to create more profit, however that simply continues to highlight a problem with how we allow things to be structured, a failure of or complete lack of necessary safeguards.
  - Consultant32452 8y ago
    When you write "more profit" I read "helps even more people."
    - monocasa 8y ago
      That's a big leap. The entire point of buying orphan drug companies like this is the rent seeking.
      - Consultant32452 8y ago
        The orphan drug company sold for a reason. It's a false assumption to assume the product would've continued to be available at the same price indefinitely.
        loceng 8y ago
        Which is what I am talking about regarding a lack of a fail-safe, whereby public intervention could takeover and maintain production - so either companies can be honest with their costs and take a reasonable profit, or things move to the fail-safe; what would trigger that mechanism would have to be figured out/decided.
hristov 8y ago
There are bigger problems in the system hidden here. Just because a drug is off patent, does not means anybody can make it. Each potential manufacturer has to still request and receive permission from the FDA to produce the drug. If you are exactly copying a drug that has already been proven, safe there shouldn't be much safety concerns. So the FDA approval is not supposed to test whether the actual chemical formulation is safe (as this is already proven) but that the process of manufacturing is safe and reliable. In a rational world, this should be a very quick approval. But in reality it is a very slow approval because congress and the FDA administration intentionally keep the department of the FDA that handles generic approvals understaffed. Thus there are massive backlogs and waiting lists to get a generic drug approved.

by rb808 8y ago

hrktb 8y ago

For reference it's 13.55€ for a box of 20 in EU. http://www.lepharmacien.fr/produitafine/medicament/substance/1617 http://www.lepharmacien.fr/produitafine/medicament/substance...

rb808 8y ago
Nice. How come no one can ship it across the pond and stock it then?
- chimeracoder 8y ago
  > Nice. How come no one can ship it across the pond and stock it then? Because reimporting prescription drugs (manufactured in the US and sold abroad) is illegal. There was a bill that would have allowed this, but it was voted down in the Senate last January. To be entirely honest, if that bill ever did pass, there would be serious pressure political pressure on European governments to ban re-exports of prescription drugs from the EU. The current barrier to trade is what enables European governments to set low prices for prescriptions while still maintaining the same level of profits for European pharmaceutical companies - the latter simply raise their prices in the US to make up the difference.
  - rb808 8y ago
    Reimporting ban makes sense. I figured Europe had a different manufacturer.
  - 0x4f3759df 8y ago
    So the examples of European healthcare working well are (somewhat) contingent on price gouging Americans?
    - billmalarky 8y ago
      America subsidizes more than just healthcare development for Europe. Our massive military budget provides global security/stability for all of our allies. No strong need to have a large expensive standing army if your ally has that covered. >So the examples of European healthcare working well are (somewhat) contingent on price gouging Americans? It's more related to the development of new healthcare technologies/medicine. Once a drug is developed it's super cheap to produce and distribute. Getting it developed is where $X billion is spent. If the US incentivized global pharmaceutical companies less by allowing for less profit, the drugs we have now would still exist but new development would probably decrease significantly. That said there are most likely solutions to this problem (government research into medicine instead of for-profit etc).
  - rescbr 8y ago
    Eh, you can find it in Brazil, made locally (so no reimporting issues), with no subsidies, for R$ 2,45 (around $0.70) for a box of 30 pills, retail.
    - chimeracoder 8y ago
      > Eh, you can find it in Brazil, made locally (so no reimporting issues), The US doesn't permit importing those drugs period (regardless of where they're manufactured). The topic is generally referred to as "reimporting", and in this case the drug is manufactured by a US company, but it doesn't matter if the drug was manufactured by a Brazilian company; it can't be imported from that manufacturer to the US.

chimeracoder 8y ago

> Sounds like the old price of $13 was way too cheap. Given that its off patent and still no one else wants to make it I'd think the new $750 prices is probably not crazy. On top of that, there was an investigative article a while back that tried to measure the actual effects on patients. Turns out, they weren't able to find any patients who themselves had to pay anything close to $750/pill for the drug. It's not prescribed that commonly in the US, and the only patients who needed it were all on insurance plans that covered it, subject to standard copays and deductibles. Many of the patients already meet their annual maximum deductible anyway, due to the other medical care they already have to receive, so the marginal cost to them was $0. In other words, raising the price of the drug literally did not increase the price that those patients had to pay by one cent. I'm aware that this has a complicated and implicit impact on prices elsewhere, but that's the real problem: medical billing is ridiculously convoluted, and focusing on the price of a single drug - especially the price that isn't actually paid by any consumer - is missing the real problem that needs to be fixed.

monocasa 8y ago
But they are still paying it, it's just obfuscated. Since the ACA capped profit percentages, the insurance companies have been looking for ways to increase pay outs, os they can increase total revenue, and then total profit. That perverse incentive is one of the reasons why insurance premiums have been going up so much the past few years.
- chimeracoder 8y ago
  > But they are still paying it, it's just obfuscated. They're not still paying it. Collectively, yes, the insurers are passing the cost on to the insured population. But the number of people taking that drug is tiny[0], so it amortizes very quickly. For the patients taking the drug, the effect on their own premiums from that price increase is less than a penny. This is what I'm talking about when I say that medical billing is the real problem: the effects are non-obvious and highly-interconnected. You're right about the perverse incentive created by the MLR; and that's just the tip of the iceberg. [0] There were 500 pills sold in Dec 2015.

monocasa 8y ago

Or it's not worth spinning up another line for 50% of a small market. There's huge NRE costs to making that happen. When we're literally talking about medicine, I don't have a lot of patience for increasing costs to 'what the market will bear'. There's obvious market failures occurring.

rb808 8y ago
Maybe there should be a charity or government dept making this stuff. For those margins I'd expect a generic shop in India/China to be able to make them.

falcolas 8y ago

Assuming you're not one unlucky enough to need it, sure, it makes perfect sense. <blunt> But if you're unlucky enough to have a baby that gets toxoplasmosis, you're fucked. The people backing the insurance which is paying that new price are fucked. But it's OK that this is a net negative for society, because the company is now making a 'proper' amount profit off it, right? </blunt>

loceng 8y ago
The only argument I can see a company going towards is opportunity cost, where they could be using facilities to create more profit, however that simply continues to highlight a problem with how we allow things to be structured, a failure of or complete lack of necessary safeguards.
- Consultant32452 8y ago
  When you write "more profit" I read "helps even more people."
  - monocasa 8y ago
    That's a big leap. The entire point of buying orphan drug companies like this is the rent seeking.
    - Consultant32452 8y ago
      The orphan drug company sold for a reason. It's a false assumption to assume the product would've continued to be available at the same price indefinitely.
      - loceng 8y ago
        Which is what I am talking about regarding a lack of a fail-safe, whereby public intervention could takeover and maintain production - so either companies can be honest with their costs and take a reasonable profit, or things move to the fail-safe; what would trigger that mechanism would have to be figured out/decided.

hristov 8y ago

There are bigger problems in the system hidden here. Just because a drug is off patent, does not means anybody can make it. Each potential manufacturer has to still request and receive permission from the FDA to produce the drug. If you are exactly copying a drug that has already been proven, safe there shouldn't be much safety concerns. So the FDA approval is not supposed to test whether the actual chemical formulation is safe (as this is already proven) but that the process of manufacturing is safe and reliable. In a rational world, this should be a very quick approval. But in reality it is a very slow approval because congress and the FDA administration intentionally keep the department of the FDA that handles generic approvals understaffed. Thus there are massive backlogs and waiting lists to get a generic drug approved.