3 ms·

Some of this analysis may seem obvious, but it's really interesting to see how much prescription drug spending plays a role. Could a reason that U.S. healthcare

Some of this analysis may seem obvious, but it's really interesting to see how much prescription drug spending plays a role. Could a reason that U.S. healthcare spending is higher on average than other countries be partially due to us essentially subsidizing new drug development? It sort of leads into a question of how effective is our prescription drug spending?

howard941 7y ago
The pharmaceutical industry would have us believe the cost driver is R&D and the money well spent. Aside from patent regreening and out of control marketing [0] I think the change in pricing methodology from cost-plus to value-based [1] explains most all of the delta. [0] Advertising chemotherapeutic agents directly to the consumer ought to be disallowed as an expense under the tax code, IMO [1] https://en.wikipedia.org/wiki/Value-based_pricing https://en.wikipedia.org/wiki/Value-based_pricing Copyedited.
beatgammit 7y ago
I was always under the impression that it was a combination of the patent system (delays generics), the lengthy drug approval process, and doctors having loyalty to a particular drug brand (I don't know if this is a thing). I wonder if cutting patent durations (say 5 years) while also reducing FDA approval times (say by allowing human trials earlier with a waiver) would maintain innovation while reducing costs. For the doctor brand loyalty thing (or maybe it's patients asking about ads), one thing I find particularly interesting is insulin. There are several options that are much less expensive than their competitors, but doctors seem to push the more expensive options. Yes, the more expensive options are better in certain ways, but the less expensive options still work fine. Since I don't have diabetes, I don't know the whole situation, but I'd like to also have some figures for insurance coverage and costs the customer sees vs patient loyalty to specific brands/types of insulin and whether they're aware of less expensive options. I think it would be an interesting case study that may generalize to other types of drugs.

howard941 7y ago

The pharmaceutical industry would have us believe the cost driver is R&D and the money well spent. Aside from patent regreening and out of control marketing [0] I think the change in pricing methodology from cost-plus to value-based [1] explains most all of the delta. [0] Advertising chemotherapeutic agents directly to the consumer ought to be disallowed as an expense under the tax code, IMO [1] https://en.wikipedia.org/wiki/Value-based_pricing https://en.wikipedia.org/wiki/Value-based_pricing Copyedited.

beatgammit 7y ago

I was always under the impression that it was a combination of the patent system (delays generics), the lengthy drug approval process, and doctors having loyalty to a particular drug brand (I don't know if this is a thing). I wonder if cutting patent durations (say 5 years) while also reducing FDA approval times (say by allowing human trials earlier with a waiver) would maintain innovation while reducing costs. For the doctor brand loyalty thing (or maybe it's patients asking about ads), one thing I find particularly interesting is insulin. There are several options that are much less expensive than their competitors, but doctors seem to push the more expensive options. Yes, the more expensive options are better in certain ways, but the less expensive options still work fine. Since I don't have diabetes, I don't know the whole situation, but I'd like to also have some figures for insurance coverage and costs the customer sees vs patient loyalty to specific brands/types of insulin and whether they're aware of less expensive options. I think it would be an interesting case study that may generalize to other types of drugs.