3 ms·

Part of this is because the US prices of drugs, subsidize the development of drugs around the world. Pharmaceutical companies rely on the US market to offset th

Part of this is because the US prices of drugs, subsidize the development of drugs around the world. Pharmaceutical companies rely on the US market to offset the R&D of the drugs, while then providing other countries with drugs above the marginal costs (which is still profitable). In this scheme, the pharma company benefits (they increase their profits) as do the other countries (they get cheap drugs). The loser in this arrangement is the US consumer who gets to pay high costs so everyone else can have ground-breaking drugs at low cost.

acdha 8y ago
Those companies spend far more money on marketing than R&D an they’re heavily reliant on US funded research — almost every erything they do starts with NIH funding.
- Varcht 8y ago
  Source?
  - acdha 8y ago
    See e.g. https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p... - it’s improved a little since then but it’s still nowhere near an explanation, especially since it’s not like drugs produced by non-US companies are massively cheaper in the US.
    - Varcht 8y ago
      Not quite the proof I'd like to see. Johnson&Johnson sells a lot of things, the more purely pharmaceutical companies are closer to 1:1 in the graphic. Then we have, Most of this marketing money is directed at the physicians who do the prescribing, rather than consumers. As Oliver pointed out, drug companies spent more than $3 billion a year marketing to consumers in the U.S. in 2012, but an estimated $24 billion marketing directly to health care professionals. $27B in marketing but the graphic shows over $65B in R&D?
tdb7893 8y ago
They can only do that because the US system is so broken so you are just reinforcing what the parent comment is saying (which may have been your intention but I was a little unclear on that)
octonion 8y ago
R&D for insulin?
- gdy 8y ago
  Yes. https://news.ycombinator.com/item?id=19166595 https://news.ycombinator.com/item?id=19166595
maxxxxx 8y ago
Please stop believing this self-serving bullshit propaganda by the companies. If other countries raised their prices, prices in the US wouldn't go down a single bit. They would just make more profits. The problem is that the US allows these insane and corrupt billing practices.
mikeash 8y ago
Total medical R&D spending in the US is a few hundred dollars per year per person, out of about $10,000 in total health care costs. That’s everything, not just private drug research. Research does not explain the huge discrepancy in costs.
- refurb 8y ago
  For the big pharmaceutical companies, about 20% of revenues are spent on R&D. So you just paid $1000 out of pocket for a drug? About $200 of that is funneled back into R&D.

acdha 8y ago

Those companies spend far more money on marketing than R&D an they’re heavily reliant on US funded research — almost every erything they do starts with NIH funding.

Varcht 8y ago
Source?
- acdha 8y ago
  See e.g. https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p... - it’s improved a little since then but it’s still nowhere near an explanation, especially since it’s not like drugs produced by non-US companies are massively cheaper in the US.
  - Varcht 8y ago
    Not quite the proof I'd like to see. Johnson&Johnson sells a lot of things, the more purely pharmaceutical companies are closer to 1:1 in the graphic. Then we have, Most of this marketing money is directed at the physicians who do the prescribing, rather than consumers. As Oliver pointed out, drug companies spent more than $3 billion a year marketing to consumers in the U.S. in 2012, but an estimated $24 billion marketing directly to health care professionals. $27B in marketing but the graphic shows over $65B in R&D?

tdb7893 8y ago

They can only do that because the US system is so broken so you are just reinforcing what the parent comment is saying (which may have been your intention but I was a little unclear on that)

octonion 8y ago

R&D for insulin?

gdy 8y ago
Yes. https://news.ycombinator.com/item?id=19166595 https://news.ycombinator.com/item?id=19166595

maxxxxx 8y ago

Please stop believing this self-serving bullshit propaganda by the companies. If other countries raised their prices, prices in the US wouldn't go down a single bit. They would just make more profits. The problem is that the US allows these insane and corrupt billing practices.

mikeash 8y ago

Total medical R&D spending in the US is a few hundred dollars per year per person, out of about $10,000 in total health care costs. That’s everything, not just private drug research. Research does not explain the huge discrepancy in costs.

refurb 8y ago
For the big pharmaceutical companies, about 20% of revenues are spent on R&D. So you just paid $1000 out of pocket for a drug? About $200 of that is funneled back into R&D.