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Hospitals to launch their own drug company to fight high prices and shortages
- HillaryBriss 8y ago>Civica Rx will require hospitals to commit to long-term contracts to buy the medications at fixed prices, even if another generic company drops its prices lower. Liljenquist argues that the long-term stability will be more attractive than the short-term temptation of getting a deal. Just a guess: existing high-priced generic pharma companies will react by offering similar long-term contracts. They'll try to do an end run around Civica Rx. I will admit that I'm puzzled that the FDA has not reacted to the high prices and shortages by allowing more competitors to be licensed to create various drugs and to enter the market quickly and easily.
- pkaye 8y agoBeing a renal patient, I take a whole bunch of medications. One of the medicines I take became generic 1 year ago and now it is only $5/month under my insurance. Meanwhile another one became generic 4 months ago but it is still $90/month under my insurance. I just cant wait till next year when hopefully my insurer renegotiates the second one down. I think when 3-4 generics manufacturers start selling a medicine, the prices go down a lot.
- refurb 8y agoThe first generic drug approved gets 6 months of exclusivity where no other generic drug can be approved by the FDA. As such, the first generic is typically ~10-20% lower than the branded drug. Once the 6 months expire, other generic manufacturers pile in (assuming it's a big enough market) and the price drops 80-90%.
- chadash 8y ago> The first generic drug approved gets 6 months of exclusivity where no other generic drug can be approved by the FDA. Not quite. The first patent that files a lawsuit challenging a patent on the non-generic drug and wins said lawsuit gets 180 days exclusivity. This rule was established to incentivize generic companies to challenge drug patents and get their products to market sooner. In the case where the patents aren't being challenged, there's no exclusivity for generic drugs. In practice, this 180 day exclusivity is a very big deal to generic companies, because typically the first to market among the generics will have a big edge in capturing the market (once a drug has a generic, pharmacies will typically automatically fill prescriptions for the brand name drug with the equivalent generic unless the doctor specifies not to).
- jrowley 8y agoIn the state of California pharmacies are legally required to fill the generic unless the doctor specifies otherwise.
- refurb 8y agoYou can get 180 exclusivity even if you don't challenge the validity of the patent. From the FDA guidance[1 - page 6]: When filing an ANDA, the sponsor can do one of the following 4 things to gain 180 exclusivity: (1) indicate no patent exists in the Orange Book (paragraph I cert), (2) that the patent has expired (paragraph II cert), (3) that the patent will expire on said date (paragraph III cert) or (4) that the patent is invalid, unenforceable or will not be infringed (paragraph IV cert) But you are correct in that it's the status of the patent and how it relates to the filing that drives the 180 day exclusivity. My comment was a simplification, since I can't think of anyone who would file and not do that. [1]https://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM536725.pdf https://www.fda.gov/downloads/Drugs/GuidanceComplianceRegula...
- nharada 8y ago> Just a guess: existing high-priced generic pharma companies will react by offering similar long-term contracts. They'll try to do an end run around Civica Rx. If they do this then won't Civica Rx have done exactly what they wanted to do?
- HillaryBriss 8y agoyes, probably. but the situation makes me think about the way OPEC nations tried to fight back against Texas shale oil production: lower the price per barrel for a while and squeeze highly leveraged shale producers and their financiers -- make it more risky for them. I wonder about the longer term equilibrium.
- 2trill2spill 8y agoDoesn't stop the hospital from turning around and gouging their patients and leaving them a ridiculous hospital bill which seems to be the norm in this country[1]. [1]: https://www.forbes.com/sites/robertpearl/2017/09/05/3-ways-hospitals-overcharge-you-and-what-can-be-done-about-it/#824bf922f1d3 https://www.forbes.com/sites/robertpearl/2017/09/05/3-ways-h...
- stevetodd 8y agoIncidentally, one of the health systems (Intermountain) leading the initiative is itself also non-profit.
- 2trill2spill 8y agoNon profit hospitals overcharge just like for profit hospitals [1]. [1]: https://www.washingtonpost.com/news/to-your-health/wp/2015/11/13/how-nonprofit-hospitals-overcharge-the-under-and-uninsured/?utm_term=.c26748ea0ec0 https://www.washingtonpost.com/news/to-your-health/wp/2015/1...
- Retric 8y agoHospital funding is a mess in the US. The US government flat out gives money to for profit hospitals because of how messed up the system is. EX: https://www.hrsa.gov/rural-health/index.html https://www.hrsa.gov/rural-health/index.html Non profit's still need to play the game to stay in business because their costs are no lower.
- opportune 8y agoNon-profit does not mean non-corrupt. In particular, non-profits respond to having extra money not by returning money to donors/payers (because why would you do that??!) or paying shareholders (not possible) but by creating bloat and expanding exec/administrative compensation
- noelsusman 8y agoThe overwhelming majority of hospitals in the US are either state owned or non-profit.
- triangleman 8y agoThis was announced in January. Previous discussion: https://news.ycombinator.com/item?id=16182152 https://news.ycombinator.com/item?id=16182152
- RobertSmith 8y agoHow far they can succeed is a big question mark. It's not easy to compete with the mafias of the pharma industry
- deleted 8y ago[deleted]
- wpdev_63 8y agoCan we just get universal income and be done this?? Capitalism has to become obsolete at some point.
- modells 8y agoGiven that the raw materials are incredibly cheap compared to the resulting medications, charging often $10+ per pill for what costs a fraction of a cent with all costs included, patients ought to consider banding together and forming an employee- and customer-owned co-op generics pharmaceuticals co. that charges cost plus X%.
- airstrike 8y agoExcept they can't manufacture drugs if someone else owns the patents. Drug prices drop significantly after generics come into play, at least for those drugs that are very easy to produce.
- modells 8y agosmh. READ. Generics. There are overpriced generics which make absolutely no sense other than a lack of competition.
- airstrike 8y agoYeah, but Joe Startup can address that as much as these hospitals -- and will potentially be better at it since manufacturing drugs isn't the core business of these hospitals.
- markdown 8y agoI like this idea. If they only operated online (no brick-and-mortar), that'd cut costs even more.
- refurb 8y agoThe expensive generics are the ones where there isn't much demand and few patients. Not much of a population to develop a co-op from.
- airstrike 8y agoThe fact that hospitals are launching the drug company is irrelevant. The argument here seems to be that there aren't enough generics companies out there to compete for existing demand, leading to spotty supply (untapped demand) and high prices. Besides, generics aren't the "expensive drugs" most people think of when they talk pharmaceuticals. Hospitals will do nothing to fight those high prices because they can't -- pharma companies need to recoup their R&D. The alternative is having less R&D, which I believe nobody to be in favor of.
- earthtolazlo 8y agoWhy not publicly funded R&D?
- airstrike 8y agoDo you trust the government to spend money wisely (read efficiently) more than you trust investors?
- HarryHirsch 8y agoGoldman Sachs published a paper not too long ago about the unsuitability of pharma to deliver returns on investment. Do you trust Goldman Sachs? Public R&D is the only way forward.
- airstrike 8y agoI trust capitalism. I'm not saying we shouldn't have any Public R&D -- by all means, feel free to invest. Just don't make me pay more taxes than I already do, please.
- astrodust 8y agoThe government can afford to invest in things with no immediate commercial benefit, but which over time can pay off in huge ways. Nuclear power. Highways. Satellite communication. The internet itself. These are all products of long-term thinking, not short term profit. If you want lower taxes there's one thing you can do to cut them by half: Dramatically shrink the US military and stop building new nuclear weapons. The amount of money put into programs like pharma is a drop in the bucket.
- QuadrupleA 8y agoCry me a river. The more I've learned about it, the more it seems like hospitals are the ones making the majority of the profit in the US's strange and byzantine healthcare system. The cost of their services are generally absurd, and not adequately balanced by customers and competition because 'insurance will pay for it'.
- opportune 8y agohospitals are simply the PoS of many other overpriced goods and services, so that’s where you notice the bloat
- maxerickson 8y agoThere's also a weird dynamic where they deal with increasingly complex medicine. As the medical system has grown, care has moved out of hospitals, leaving them with the more complicated (and more expensive) cases.
- themodelplumber 8y agoYes, a friend of mine, a doctor at our local hospital, has shared his pessimism about the hospital's pricing and profit stance with me. In his mind they capitalize on our rural economy and only an idiot would get treated locally rather than drive to the bay area where the pricing is much more reasonable (!). Even worse (in my mind), the hospital bears the name of a major religion. As if God needed this kind of PR...
- WrtCdEvrydy 8y ago> the hospital bears the name of a major religion Islam? Joking. I wonder how well an islamic hospital would do in the US.
- maxxxxx 8y agoChristian Science hospitals would be pretty cheap.
- walrus01 8y agoAnother method is to declare at a nation-state level that you're going to ignore patents on certain pricey medicines, such as in India. https://www.google.com/search?q=india+drug+price+patents&oq=india+drug+price+patents&aqs=chrome..69i57j33.6516j1j7&sourceid=chrome-mobile&ie=UTF-8 https://www.google.com/search?q=india+drug+price+patents&oq=... India is big enough that it can push back against big pharma.
- opportune 8y agoThis only works if you can get private businesses in other parts of the world to do your R&D for you. Not a viable strategy for all of the world, tragedy of the commons, etc.
- 394549 8y ago> This only works if you can get private businesses in other parts of the world to do your R&D for you. Not a viable strategy for all of the world, tragedy of the commons, etc. That's assuming the prices set by those drug R&D organizations are fair and reasonable given the work they're doing. However, if they're engaging in predatory pricing in pursuit of maximum profit (which is almost certain), the world could probably get along just fine with all medical R&D being performed by nonprofits at-cost.
- analognoise 8y agoThis is why the USSR created the Polio vaccine, Venezuela created the MMR vaccine, and India leads the world in drug resistant antibiotics. OH WAIT.
- 394549 8y ago> This is why the USSR created the Polio vaccine, Venezuela created the MMR vaccine, and India leads the world in drug resistant antibiotics. > OH WAIT. The USSR actually did a lot of interesting work developing phage therapies which could become increasingly important as current antibiotics become more and more ineffective due to antibiotic resistant bacteria. https://en.wikipedia.org/wiki/Phage_therapy https://en.wikipedia.org/wiki/Phage_therapy And it's not like any of the vaccines you listed were developed by corporations following capitalist profit-motives. The ones I checked were developed by researchers focusing on contributing to the public good, for instance: > Salk [developer of the first successful polio vaccine] campaigned for mandatory vaccination, claiming that public health should be considered a "moral commitment."[7] His sole focus had been to develop a safe and effective vaccine as rapidly as possible, with no interest in personal profit. When asked who owned the patent to it, Salk said, "Well, the people I would say. There is no patent. Could you patent the sun?" (https://en.wikipedia.org/wiki/Jonas_Salk https://en.wikipedia.org/wiki/Jonas_Salk) But of course, you probably didn't know that. People who write comments like yours usually don't know much beyond certain ignorant dogmas.
- seibelj 8y agoI can’t recommend the book Overcharged enough if you really want to understand what is wrong with American healthcare. The answer is basically everything, but the fee-per-service billing model and third-party billing that obfuscates prices are the essential causes. https://www.amazon.com/Overcharged-Americans-Much-Health-Care/dp/1944424768 https://www.amazon.com/Overcharged-Americans-Much-Health-Car...
- HarryHirsch 8y agoDavid A. Hyman is an adjunct scholar at the Cato Institute Yes, if you are paid to argue against price caps you argue against price caps.
- seibelj 8y agoYes, it’s from Cato, but really it’s a whirlwind tour of what’s wrong with the system from a group that has no dog in the fight. But the democrats and republicans are very, very invested. If you are skeptical, read the book, and then make your decision. It has thousands of citations, it is more academic than opinion.
- HarryHirsch 8y agoIt's the Cato Institute, it's supported by the Koch Foundation, and the Koch Brothers are supporters of economic and individual liberty. Whoever is supported by someone's money is not going to argue against their dearly held viewpoints. An interesting question that a scientist would ask: how does that book argue against price caps and monopsony buyers, considering that that approach works extremely well in the civilized world. Health expenditures in all other OECD countries are about 1/4 of what they are in the US.
- seibelj 8y agoOne model suggested is we let people take the money they put into health insurance and instead put it into a health savings account. Given that family plus employer pays about $20k per year for a family of 4, the value adds up quite quickly. Then you let the family take as income any amount they don’t spend. This encourages frugality and price shopping for routine procedures. Additionally, the government should backstop everything with catastrophic insurance as is done in Switzerland, so if cancer hits you don’t go destitute. Also, we should drastically expand retail medical care, with advertised prices, as it has routinely been shown to reduce costs through competition and price shopping (LASIK, Botox, vasectomies, etc. all prove this out). They go in great detail about pharmaceuticals and the suggestion that a prize based system would be better than the current system of the government paying for all the research and then letting a private company gouge the consumers who paid for it with tax dollars. The book is very detailed, if you are interested in this subject I highly recommend it. Keep an open mind, clearly neither the American left or right has solved this issue and this book is very refreshing.
- opportune 8y agoIf you think about it, the entire US pharma industry paradigm doesn’t really make sense. A lot of exploratory research into drugs is publicly funded, but for some reason we then rely on private companies to pass FDA trials and bring the drug to market, at the cost of profits/subsidies/advertising/executive compensation/rent seeking IP. Why not publicly fund R&D all the way up to when a drug passes FDA trials, then allow any private company to produce a generic version of the drug? That way you have competition on the price of manufacturing without all the unnecessary costs involved with private IP
- jjoonathan 8y agoI've wondered the same thing. I suspect it was argued that people betting their own money will be better at choosing winners from the pool of results coming out of publicly funded labs. I doubt that this effect is large compared to the rent-seeking it enables, though.
- mjevans 8y agoThe argument would be much easier to make if the US had single payer healthcare as well. "We the people" already have to pay, it's just that the costs are hidden from us so the majority of the population gets to ignore that they're really paying even though it might not look like it.
- etrautmann 8y agowe're primarily paying for early stage basic science, which is the desired purpose of public funding. The huge investments in biotech and pharma (>$50M to bring a drug through clinical trials) are privately funded
- etrautmann 8y agowhich drugs do you fund? I doubt that public funding of drug R&D will be as efficient as a privately funded effort. If it were all publicly funded, the incentives for selecting drug candidates throughout all stages of the pipeline are shifted.
- deboboy 8y agoAFT
- zapita 8y agoFunny since US hospitals are just as guilty as the drug companies of gouging the public with abusive pricing ... I’m not sure consumers will see any of those cost reductions. More likely the hospitals will pocket the difference.
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