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Pharma companies continue to raise drug prices at rates well above inflation

282 points by pera 7y ago

jngreenlee 7y ago
I'm sure a lot of folks will pile in here about evil, etc. But I do appreciate the fact that some market incentives (profits) exist to encourage greedy companies to come out with new drugs. I fear lower innovation in its absence. THAT SAID...obviously a big problem (like software) with the way we handle intellectual property. Just like IBM/x86, there's no philosophical reason why one shouldn't be able to derive a generic and produce it. That's the real issue. We issue "king's crown" (gov't) monopolies on these products. The ONLY advantage I am okay with is first mover advantage. Similar corollary to toll road and broadband concessions...stop protecting these giants and allow REAL PvP competition!
- spullara 7y ago
  We issue these monopolies because discovering new drugs and putting them through patient trials is expensive and actually manufacturing the drugs after you discover them is cheap. Not sure how you can solve the pricing problem without reducing innovation in the space.
- Alex3917 7y ago
  > But I do appreciate the fact that some market incentives (profits) exist to encourage greedy companies to come out with new drugs. I fear lower innovation in its absence. There were more new drugs released before Bayh-Dole. If anything, the fact that you can now make a lot of money creating new drugs is probably reducing innovation.
- _edo 7y ago
  Governmental regulations (safety, etc.) make the cost of developing a new drug extraordinary. Without exclusive patents on the back end companies won't have a reason to foot the bill on the front end. Even without regulations developing and testing a new drug wouldn't be economical if somebody else could steal your formula the moment you figure out that it works.
  - entee 7y ago
    This dynamic already exists in diagnostics. There's a huge second mover advantage in diagnostics because it's relatively hard to patent a diagnostic effectively. I know a few people in diagnostic companies that have very much soured on the industry as a result.
  - brightball 7y ago
    Yep. These realities exist in so many other industries too. Entire businesses are setup as fast followers.
  - breck 7y ago
    It turns out that most of these new drugs have done more harm than good. See Purdue, for example. With very few exceptions, new drugs != better health. Our healthcare industry is a disaster and intellectual monopoly laws are a big reason why. We need to ditch those and focus on good outcomes, which does not mean focusing on giving vast rewards to some novelty regardless of efficacy.
    - entee 7y ago
      Purdue's new delivery mechanisms were actually a huge benefit to the right patients. The problem is they abused it and actively sold the drug to the wrong patients repeatedly and worked hard to push back oversight.
      - breck 7y ago
        The problem was you could make unnatural "lottery-winnings" money selling OxyContin, and people respond to incentives. Ditch the incentives for selling novelties and the boring businesses focused on the actual health outcomes of the patient will thrive.
    - _edo 7y ago
      If a new drug isn't useful it doesn't matter if the manufacturer has exclusive rights to it. If people are buying/being prescribed drugs that don't improve their health that's a different problem that won't be solved by changing intellectual property law.
- thaumaturgy 7y ago
  > But I do appreciate the fact that some market incentives (profits) exist to encourage greedy companies to come out with new drugs. I fear lower innovation in its absence. I think of this as a "prayer to innovation", in the cargo-cultism sense. Like tax relief for the wealthy, the prayer goes that "if we can just give these people more money, they'll improve our lives". Multiple studies have found links between drug pricing and the development of new drugs, but it doesn't work in the obvious way. Large pharmaceutical companies often rely on purchasing smaller startups who do the actual research into developing new drugs [1] but don't have the expertise in bringing the new drug to market and making it successful. The larger pharma companies need financial capacity for this, but since the patents have expired on a lot of other successful drugs before the companies recovered the profits they wanted, they're relying on captive markets for the monopolies they still have in niche pharmaceuticals [2]. These companies are profit-motivated. They aren't working for the public interest. They have no particular desire to "innovate"; their business model instead relies on identifying innovators, buying them, and then selling the product of their research at high prices for as long as possible. Price controls for pharmaceuticals would ultimately reduce the funding available for the R&D startups, which would limit the creation of new drugs. But it's not clear that allowing big pharma companies to continue charging extortionate rates for life-saving medicines is a good solution to this, nor is it a guarantee for future innovation. It seems like single-payer insurance and more federal funding for pharmaceutical R&D would be a far better solution than defending predatory drug pricing. [1]: https://www.forbes.com/sites/stanfleming/2019/06/20/the-relationship-between-drug-prices-and-innovation/ https://www.forbes.com/sites/stanfleming/2019/06/20/the-rela... [2]: https://www.healthaffairs.org/do/10.1377/hblog20190228.636555/full/ https://www.healthaffairs.org/do/10.1377/hblog20190228.63655...
  - rayiner 7y ago
    > They have no particular desire to "innovate"; their business model instead relies on identifying innovators, buying them, and then selling the product of their research at high prices for as long as possible. Isn't that to a great degree how Silicon Valley works too? Google didn't develop Android, for example. It acquired Android, Inc. and then plugged it into the Google ecosystem. Such acquisitions are a fundamental pillar of R&D. They enable startups to do what they do best, and allow big companies to take over when it is time to try and bring a product to market.
- breck 7y ago
  We need to stop using the phrase IP. It’s an illogical euphemistic marketing term invented by the industry. More accurate phrases are intellectual monopoly laws or intellectual slavery laws. They have done horrible things for the drug industry. The root cause of the opioid crisis is patent law. You made 100x+ more money selling patented drugs, even if the patented drug is worse for the patient. We need to ditch these laws. Perhaps you could switch the system to where you get a bonus check for a novel patent; but we gotta ditch the monopoly rights aspect of these laws as they are horrible for 99% of the population.
  - rhino369 7y ago
    All property is a monopoly. Is it slavery that I can't grow some crops on your lawn.
    - breck 7y ago
      No, because if you were to do that you preclude me from using my lawn. It is intellectual slavery that you are telling me I can’t copy your book that i bought from you on my lawn, even though you are not affected.
      - tathougies 7y ago
        You are allowed to copy other's books. You just can't derive a revenue from them.
        breck 7y ago
        > You just can't derive a revenue from them. I wish this were the case, but you cannot distribute them either. I would love to collaborate with a team on an app that let's you instantly query all books ever published and revenue from that is the least of my concerns and it would be easy to do if we weren't forbidden from doing that by intellectual slavery laws.
        tathougies 7y ago
- rhino369 7y ago
  First mover advantage isn't worth much for generic drug manufacturing. The product is a commodity at that point. It wouldn't be worth much in tech either if you were allowed to clone a product 100%. Intellectual property even protects things that copyright and patents don't. Like you can't commit industrial espionage and steal the secret codebase of a SAAS company that keeps its software on its own servers. That's just as artificial as a patent. Even real estate property is artificial. You didn't make the land that your house is on. Why should you have a monopoly on it? Because someone government issued someone else a piece of paper 300 years before either one of us were born?
TazeTSchnitzel 7y ago
https://www.youtube.com/watch?v=ylLTMYt24lA https://www.youtube.com/watch?v=ylLTMYt24lA
techntoke 7y ago
But the President says they are the lowest they've ever been.
- derision 7y ago
  They have been declining if you look at the prescription drug CPI[1], which is more closely related to what people are actually paying, rather than this article which references a document that only lists increases of wholesale prices. I'd like to see a comparison of increases and decreases. If 3 drugs increased an average of 300%, but 10 drugs decreased an average of 300%, for example. https://data.bls.gov/timeseries/CUSR0000SEMF01?output_view=pct_3mths https://data.bls.gov/timeseries/CUSR0000SEMF01?output_view=p...
i_am_nomad 7y ago
I’ve worked in pharma for much of my career, but will never go back. At one point I was working for a company that continues to milk profits off of a drug that was developed in the 1950s - the company doubled the price over the span of a few years in the late 2000s, for no reason besides the P in P&L. And that company is generally considered one of the “good guys” in the industry, spending proportionally more on R&D than almost anyone else. You could argue that the outrageous profits made off a 70 year old drug are funding that research, but (a) that’s just not the case, and (b) why should one group of patients and their insurers have to shell out for another? Isn’t that what financing is for?
- rob-olmos 7y ago
  Out of curiosity, why do you feel (a) is not the case? Are the profits going to salaries instead?
  - spsful 7y ago
    I think he reasons that a drug so old would have no debt left over from its research expenses.
    - rayiner 7y ago
      Imagine if we applied this rule to Silicon Valley. Once you recouped your R&D expenses, you weren't allowed to make any more money (or only a token profit above cost). Do you think Silicon Valley would be the same? Better? Worse? (Yes, people don't die if they don't have Facebook. That's not relevant to the R&D process. The mechanics of developing pharmaceuticals is the same as developing software. You take large amounts of capital and throw it at highly skilled and scarce labor.) EDIT: That does not mean there are no problems. There's lots of real problems, such attempts to keep things from going out of patent, how to handle orphan drugs and drugs for rare diseases, etc. My point is simply that we have proven principles for how to enable innovation, and they apply to pharmaceuticals as much as to web tech. Of course, we can make different trade-offs within that analytical framework--e.g. trade future innovation for lower short-term costs. But we can't apply a wholly different set of principles for thinking about the costs of those trade-offs.
elthor89 7y ago
Correct me if I am wrong, but the report is talking about wholesale prices. I would be more interested in the price after the expected discount that the pharmaceutical companies give. If the price increase is still high then it is newsworthy.
- nabdab 7y ago
  This is hitting the nail right on the head. People are blaming “greedy Pharma companies” but at the same time companies are taking lower and lower net prices while the rebates that the purchasers are taking home are absolutely absurd rebates. I get it, some people don’t feel phama companies should still be able to profit on a drug invented 50years ago. But I just can’t take any discussion about that serious when we are also in an environment where the purchasers take literally twice the profits on all drug sales without having invested a penny in research or having spent a penny in production distribution or marketing. They eat up all that money all by abusing their position of “representing the buyers”, but at the same time since their rebates are percentage cuts they are just pushing pharma companies to increase prices over and over again. The American model is rotten and someone has to stop the madness.
  - Zelphyr 7y ago
    Genuine question: what's the purpose of raising the wholesale prices like this if so few people, if anyone, are paying that pirce? Is it so they can claim a higher tax deduction? Because, honestly, I don't see how that's much better.
    - pkaye 7y ago
      The drug companies are trying to price differentiate. They want to charge the insurance company a lot more but not make the end user feel the pinch of the copay that makes them consider alternatives. Its kind of like on business trips, people spend a lot more than they usually do because its not their money. Being in dialysis, I take a bunch of medicines. One was very expensive buy the drug company put lots of effort to make sure I got the copay reimbursed. Again they were after the insurance money and were willing to reimburse 10% of an inflated cost. After the patent expired and generics were available, my copay went down by 90%.
entee 7y ago
There's a huge issue with pricing today. It used to be that drug companies were ethical about the "your money or your life" nature of medicine. Merck once even gave a drug away for free because it was the right thing to do [1]. Nowadays it's about charging what the market can bear. The trouble is that drugs have gotten way more expensive to develop for a variety of mostly scientific reasons. This means a "prize" mentality has developed where each drug is like a lottery ticket, and you best get the most out of that ticket if it wins. There's also a sense across the industry that price controls are going to come, so ramp the prices up now so when the controls arrive they won't gut the industry. Also sometimes drugs have to cost as much as they do because they're just very hard to make (see gene therapy), but at this point the pharmaceutical industry has squandered all the public trust they had with recent rapacious practices (see insulin, opioids). Fundamentally there are good reasons drugs cost a fair amount of money, but it's not necessarily clear that costing this much money is justifiable. I believe drug companies can do good while doing well, but that it takes a leadership interested in more than boosting the margins as high as possible. We need a code of ethics for drug and med device companies, maybe something along the lines of the hippocratic oath. [1] https://www.nytimes.com/1987/10/22/world/merck-offers-free-distribution-of-new-river-blindness-drug.html https://www.nytimes.com/1987/10/22/world/merck-offers-free-d...
- deleted 7y ago
  [deleted]
1000units 7y ago
Shkreli Did Nothing Wrong
hilbert42 7y ago
We've now long reached the point where we can give the market a free hand/carte blanche in pharma matters. Now it's time for Government to act and to do so urgently. If ethics ever played a role in pharma—which I doubt [remember thalidomide]—then it certainly does not do so now. As health and lives of its citizens are at stake then it's the responsibility of Government to rectify this situation. After all, the first responsibility of government is to protect the security and well-being of its citizens. If it fails to do so here then it's abrogating its responsibility.
- decoyworker 7y ago
  I agree. The free-market did not work, time for regulations.
  - hilbert42 7y ago
    Dead on!
- hilbert42 7y ago
  Above, I should have added that in times past, when it comes to pharma, we did have government regulators who had decent, first-class ethics, and it's a damn shame that we do not have more of them now (as they need to be pressuring government to regulate this issue). Perhaps it's a timely reminder to remember the marvelous woman, Frances Kelsey, who single-handed saved the US from the thalidomide scourge: https://en.wikipedia.org/wiki/Frances_Oldham_Kelsey https://en.wikipedia.org/wiki/Frances_Oldham_Kelsey
drak0n1c 7y ago
For those who have pricey prescriptions, look into pharmacy coupon databases like GoodRX. Some drugs are 95% cheaper with these private coupons (pharmacies do not advertise them), and sometimes cheaper than buying them through your insurance.
Zelphyr 7y ago
I've said it before that the pharmaceuticals, hospitals, and insurance companies are signing their own death warrants. They keep (in my opinion) colluding to charge outrageous prices for life-saving things and at some point we're all going to get fed up with it enough to elect someone that will shoe in legislation that turns them all into state-owned or, at the very least, highly regulated. I personally don't feel like that's what we really want but damn these companies are just being abusive now.
- mlevental 7y ago
  didn't we already elect someone like that (Obama vis-a-vis ACA)? and yet the monied interests have undone most of the work.
  - Zelphyr 7y ago
    Yes but I think we're nearing a point where the lobbyists won't be able to overcome millions of pissed off citizens who feel like they're getting screwed by an entire industry.
  - dlp211 7y ago
    No? What part of the ACA was intended to upend the pharma industry? The ACA was specifically designed to work within the system as it existed in 2008/9.
    - Zelphyr 7y ago
      If I recall, originally it was supposed to be more drastic in its changes in an attempt to introduce more efficiencies into the system. But then they realized that they could create a lot of jobs in healthcare (remember, we were smack in the middle of the recession) so they opted to do that instead. That’s not any kind of commentary as to whether their decision was good or bad but it does appear to have resulted in making the system less efficient in many ways.
- mrtksn 7y ago
  Would the C level executives give back the money they made when pushing the companies into their death? If not, it’s not their problem. The argument against short term incentives is not limited to pharmaceuticals.
tathougies 7y ago
So the 'whopping' 667% increase is not on Prozac as a whole, but actually only on a liquid version of the drug. Prozac is a generic medication, so there is competition here. For example, according to GoodRX, 30 capsules of fluoxetine are $4 at walmart: https://www.goodrx.com/fluoxetine https://www.goodrx.com/fluoxetine
- hristov 7y ago
  Yes, and in the second arm of the scam, the drug companies will send out their army of salespeople to convince doctors and hospitals to prescribe the more expensive version. Because of small differences between the drugs (maybe the liquid version is easier on the stomach) they will decide that the solid generic is not equivalent to the liquid. Then the patients will all buy the expensive version, as ordered by their doctors, and charge it to their insurers. The insurers will look at the cost going up and will raise insurance rates. If you have been paying attention to what has been happening to insurance rates for the past several years you can easily see the result.
  - tathougies 7y ago
    I mean, the obvious answer there is to educate doctors on what is actually scientifically proven. If doctors (who ought to be one of the most scientifically minded professionals engaged with on a regular basis) are susceptible to salespeople selling them false science, then we should probably not allow them to be doctors anymore. The lack of critical thinking in that profession then ought to alarm us, and ought to be the first thing that's fixed. On the other hand, if it is actually a superior product, then I don't see what the issue is in it costing more. Doctors would know about the cheaper version and prescribe it if the patient wanted it? Of course, given that insurance for everyday needs screws up the pricing dynamics, I do think the alienation of pricing from the consumer, thus reducing demand for the lower priced versions, is a valid criticism.
    - hristov 7y ago
      It is not that much about education. Currently there exists a complex system of various incentives to convince doctors to prescribe more pills and to prescribe certain types of pills. The pharma companies have installed their people in hospital management and various medical boards all over the place, and they are constantly pushing for more drugs and more expensive drugs. The pharma companies can make it worthwhile for a hospital group to prescribe more drugs. The hospital group management can in turn incentivize their doctors to do it. It is even in the insurance companies benefit, because there really isn't a competitive market for medical insurance. Insurance companies actually welcome higher costs, because they raise their rates accordingly, which actually make their profit dollars go up. It is only us ordinary users of medical services that are paying the bill. The underlying problem is that there isn't any mechanism for a cost benefit analysis in the doctor patient relationship. The modern medical insurance system was set up to assure the customer that he would get the best medical care he needs without worrying about cost. It is a perfect system for gouging and everyone has started gouging.
corndoge 7y ago
Everyone wanted to crucify Shkreli for the toxo drug price hike. Where is the outrage for the mentioned 667% hike on generic Prozac? Or did people just target Shkreli because they didn't like his views on other things?
- FireBeyond 7y ago
  Well, Shkreli was an easy target: 1) he repeatedly took us for saps. "People are angry at me because I'm raising the price of this drug when most of them will still pay the same $20 copay". Except we're paying for the full cost of the drug. The fact that the cost is "invisible" because it comes out of our insurance pool was the issue, and he genuinely acted victimized because people could see past that. 2) On at least one occasion, he/his company opposed FDA approval of a new drug. Not on the basis that there was risk/danger/issues of efficacy, indeed, the new drug was less risky and more efficient. It just didn't belong to his company. i.e. if you thought re-patenting drugs was bad, this guy was literally doing the things the worst "Big Pharma conspiracy theorists" were saying - opposing the introduction of new, better drugs for no reason other than "threat to corporate profit".
- ssully 7y ago
  Everyone wanted to crucify Shkreli because of the drug price hike stuff, and because he was incredibly visible on social media trolling people.
- lacker 7y ago
  “667%” is not a great way to describe that price hike. It went from $9 to $69. If some critical drug costs $69, that doesn’t seem all that bad. Using the number “667%” is actually losing accuracy, for the sake of a big scary number.
InvisibleCities 7y ago
I truly do not understand the purpose of a free market for pharmaceuticals. The demand for these drugs is almost completely inelastic, as it is driven by the statistical incidence of the underlying medical conditions. This makes central planning remarkably easy compared to typical consumer goods. The government already sponsors the vast majority of exploratory, pre-clinical, and early-phase clinical research; all it would take to expand that program to include later-phase clinical trials would be increased funding. A nationalized pharmaceutical industry that provides drugs at cost seems like it would be a tremendous boon to our society, only requiring the "sacrifice" of the opulent lifestyles of the executives and investors profiting off the extortionate practices of our current system.
- the_cat_kittles 7y ago
  you are correct
- droffel 7y ago
  The big issue I see here is the proper allocation of this earmarked funding. Would all of it go to aids research? Maybe half to aids, half to schizophrenia treatments? But then what about [insert condition here]? The 'free' market may have a lot of perverse incentives in this environment, but I'm not sure how else you could prioritize which drug research has the most impact (without it turning into a capital sink that has severely diminishing returns due to limitations of the skilled humans necessary to do the job)
  - fallingfrog 7y ago
    Can’t possibly be any worse than it is now, with Lyme disease still having no vaccine while billions of dollars are plowed into boner pills.
    - ChrisLomont 7y ago
      Maybe one is harder to solve?
    - mattkrause 7y ago
Symmetry 7y ago
Well, with the GDUFA each genetic manufacturer has to pay the same large inspection fee regardless of how much a drug they produce and they have to pay it far ahead of the time they start selling the drug. This has driven a dramatic consolidation that's resulted in things like the recent bospirone shortage in addition to the recent sudden spike in generic prices.
xhruso00 7y ago
I like Slovakian approach. Price of drugs can't be higher than average of 5 cheapest EU countries where the drug is being sold. However we face re-exporting and sometimes unavailability. Also we have a new law where distributor will lose licence if the drug is un-available (recent update). https://www.ncbi.nlm.nih.gov/pubmed/29073987 https://www.ncbi.nlm.nih.gov/pubmed/29073987
rdlecler1 7y ago
One of the problems is cost of development. We invested in an incredible company called Brightseed that looks at each of the tens of millions of small molecules in our food supply and uses AI to predict how those interact with metabolic networks associated with health. Because everything they discover is implicitly regarded as safe (GRAS) there’s the potential to develop products much more rapidly and cheaply. While we may not find something that optimizes on efficacy there’s the potential to get very close.
pro_scrunchies 7y ago
Thanks Nancy. :)
drugsupplychain 7y ago
This is incorrect and a giant red herring. Pharma is not "raising prices" in the implied sense, and pharma is not the cause of drug prices being high in the US. Pharma is increasing the "gross price" of a drug in order to increase the rebate going to the PBM (Pharmacy Benefit Manager) so that they maintain their position on the formulary (to be "covered by insurance"). The "net price" of drugs (what pharma makes) is overall growing at the pace of inflation, not above. There's obviously exception cases, and plenty of small biotech firms launch questionable products with high prices that then get covered. But this is a result of this rebate system that prioritizes covering drugs with large rebates (since PBMs monetize rebates), not the most cost effective drug.
refurb 7y ago
I’ll start by stating the companies who are taking these egregious price increases are only shooting themselves in the foot. They’ll end up in front of a Senate committee before long. That said, profit attracts investment. The rare diseases are a great example. Who wants to spend $50M creating a drug for a disease with so few people you’d only lose money? Genzyme started the trend of charging a lot, with the caveat than any insurer might have a handful of patients. The cost per member might be $0.10. Insurers said ok and investment flood the rare disease space. We’re talking hundreds of billions. Now some people with a rare disease have treatment.
rossdavidh 7y ago
They are raising prices because, uh, wait...what was supposed to stop them from raising prices, again? Oh, that's right. "Nothing". There's nothing broken here, because there's nothing present to discourage them from raising prices in the first place. No market mechanism, and also no regulatory mechanism. They raise prices because...they can.
- interlinkedcell 7y ago
  That's right. The system is working as intended. As guaranteed by lobbyists and big donors having undue influence on public policy.
dekhn 7y ago
I worked at Genentech when it was purchased by Roche. We frequently had Roche execs visit to understand "what it was you crazy californians are doing that makes Genentech our most profitable investment." One exec said the right way to think about Swiss pharma like Roche is that they aren't in the pharma business, they are wealthy families who invest in pharma because it's a consistently profitable sector. If you look, all the pharmas in CH are basically co-owned by each other.
- chance_state 7y ago
  >If you look, all the pharmas in CH are basically co-owned by each other. Sorry if I'm missing this, but what is CH?
  - dekhn 7y ago
    Confederation Helvetique.
  - umanwizard 7y ago
    Switzerland
loorke 7y ago
I believe that as always problems like this one may be solved only through erasing privatized monopolies from the market. The civilized way to achieve this is to raise number of competitors on the market. And there's a plenty of available options. E.g. cut subsidies and raise taxes for big pharmaceutical companies, make additional subsidies and cheap loans to small ones, give students extra grants for pharmacology courses at universities (in order to increase number of specialists), abolish or at least change patent laws for drugs, support public pharmaceutical researches funding by government and involved companies with results available to everyone. I guess in modern world one of the primary economic responsibilities of government is providing an environment in which not only large business may start to do high-tech.
vmurthy 7y ago
From the article: "The median price increase overall was 25.8%. Generic drugs, specifically, had higher increases, with a median rise of 37.6%" Given that the US inflation levels are single digits, this obviously looks egregious but I'd be a lot more satisfied with the article if it gave data on/considered the following: - Typically inflation takes into account goods. What about the R&D costs which are driven by both goods, people's salaries and other factors? Were they well above inflation? - It might be that conditions were favourable for a big increase and the costs will stay flat for a few more years (I won't bet on this!) - Finally, any company which prices its goods and services just above inflation is bound to be held in low esteem by its shareholders. After all, if investors wanted returns just above inflation, they'd be buying bonds! The risks associated with equity should be well compensated by the company and this might have prompted the companies to take this course of action.
jdkee 7y ago
Normative: Healthcare should not be subject to the strictures of profit making entities. See insulin prices in the United States vs. elsewhere.
ddingus 7y ago
Of course they are! They have a captive, increasingly needy market. Go big I say. That will force better policy. Hate that idea, but little else has worked.
mensetmanusman 7y ago
The rest of the world has figured this out, people in the US are just willing to pay more (as in, not protesting en masse to lower costs). Also, drug spending is proportional to the % of elderly, which is growing faster than inflation as a %.
tracker1 7y ago
Need to do the following: * Eliminate extension patents. * Add dual sourcing requirements for drugs * Add fiduciary responsibility to insurance co reqs * Govt backed non-profit insurance corp replacing Medicare, Medicaid, VA Ret medical covering federal employees * Single-account billing * Published rates, rates between payees cannot be more than 20% variance in a single calendar year. Extension patents on medications are generally not great and minimal actual value, in fact, the entire Patent system largely deserves to be broken apart entirely. Dual sourcing requirements would ensure licensing arrangements and at least some level of competition for drug companies. Making insurance companies have a fiduciary responsibility in negotiating on client behalf would also help undo the effects of the profit caps from Obamacare without further checks in place. Gov't non-profit covering those currently covered by federal programs and employees would add a baseline of competition without a profit incentive. Not seeing a dozen different bills from one visit would help. Localized state billing agencies would help too, but not a fan of this, better than federal level here. Eliminating the massive difference between insurance and private pay rates is another important step. Combined would see massive pushback, but all are really needed to bring effective change to the medical care system as a whole, while not significantly effecting federal funding. I've given the above list time and time again, but nobody really seems to listen.
jayalpha 7y ago
What is inflation? Seriously.
vertis 7y ago
I'm in Bangkok at the moment and there are billboard/bus shelter advertisements from the USPTO encouraging people to 'Only buy from licensed pharmacies'. I'm not sure exactly what they're targeting. The pharmacies that will sell without a prescription, or the IRL spammers trying to sell viagra by the side of the road. Regardless, it seems strange for the US patent office to meddle in local food and drug administration. I shared a pic on twitter: https://twitter.com/vertis/status/1183986568857440256?s=20 https://twitter.com/vertis/status/1183986568857440256?s=20

282 points by pera 7y ago

I'm sure a lot of folks will pile in here about evil, etc. But I do appreciate the fact that some market incentives (profits) exist to encourage greedy companies to come out with new drugs. I fear lower innovation in its absence. THAT SAID...obviously a big problem (like software) with the way we handle intellectual property. Just like IBM/x86, there's no philosophical reason why one shouldn't be able to derive a generic and produce it. That's the real issue. We issue "king's crown" (gov't) monopolies on these products. The ONLY advantage I am okay with is first mover advantage. Similar corollary to toll road and broadband concessions...stop protecting these giants and allow REAL PvP competition!

spullara 7y ago
We issue these monopolies because discovering new drugs and putting them through patient trials is expensive and actually manufacturing the drugs after you discover them is cheap. Not sure how you can solve the pricing problem without reducing innovation in the space.
Alex3917 7y ago
> But I do appreciate the fact that some market incentives (profits) exist to encourage greedy companies to come out with new drugs. I fear lower innovation in its absence. There were more new drugs released before Bayh-Dole. If anything, the fact that you can now make a lot of money creating new drugs is probably reducing innovation.
_edo 7y ago
Governmental regulations (safety, etc.) make the cost of developing a new drug extraordinary. Without exclusive patents on the back end companies won't have a reason to foot the bill on the front end. Even without regulations developing and testing a new drug wouldn't be economical if somebody else could steal your formula the moment you figure out that it works.
- entee 7y ago
  This dynamic already exists in diagnostics. There's a huge second mover advantage in diagnostics because it's relatively hard to patent a diagnostic effectively. I know a few people in diagnostic companies that have very much soured on the industry as a result.
- brightball 7y ago
  Yep. These realities exist in so many other industries too. Entire businesses are setup as fast followers.
- breck 7y ago
  It turns out that most of these new drugs have done more harm than good. See Purdue, for example. With very few exceptions, new drugs != better health. Our healthcare industry is a disaster and intellectual monopoly laws are a big reason why. We need to ditch those and focus on good outcomes, which does not mean focusing on giving vast rewards to some novelty regardless of efficacy.
  - entee 7y ago
    Purdue's new delivery mechanisms were actually a huge benefit to the right patients. The problem is they abused it and actively sold the drug to the wrong patients repeatedly and worked hard to push back oversight.
    - breck 7y ago
      The problem was you could make unnatural "lottery-winnings" money selling OxyContin, and people respond to incentives. Ditch the incentives for selling novelties and the boring businesses focused on the actual health outcomes of the patient will thrive.
  - _edo 7y ago
    If a new drug isn't useful it doesn't matter if the manufacturer has exclusive rights to it. If people are buying/being prescribed drugs that don't improve their health that's a different problem that won't be solved by changing intellectual property law.
thaumaturgy 7y ago
> But I do appreciate the fact that some market incentives (profits) exist to encourage greedy companies to come out with new drugs. I fear lower innovation in its absence. I think of this as a "prayer to innovation", in the cargo-cultism sense. Like tax relief for the wealthy, the prayer goes that "if we can just give these people more money, they'll improve our lives". Multiple studies have found links between drug pricing and the development of new drugs, but it doesn't work in the obvious way. Large pharmaceutical companies often rely on purchasing smaller startups who do the actual research into developing new drugs [1] but don't have the expertise in bringing the new drug to market and making it successful. The larger pharma companies need financial capacity for this, but since the patents have expired on a lot of other successful drugs before the companies recovered the profits they wanted, they're relying on captive markets for the monopolies they still have in niche pharmaceuticals [2]. These companies are profit-motivated. They aren't working for the public interest. They have no particular desire to "innovate"; their business model instead relies on identifying innovators, buying them, and then selling the product of their research at high prices for as long as possible. Price controls for pharmaceuticals would ultimately reduce the funding available for the R&D startups, which would limit the creation of new drugs. But it's not clear that allowing big pharma companies to continue charging extortionate rates for life-saving medicines is a good solution to this, nor is it a guarantee for future innovation. It seems like single-payer insurance and more federal funding for pharmaceutical R&D would be a far better solution than defending predatory drug pricing. [1]: https://www.forbes.com/sites/stanfleming/2019/06/20/the-relationship-between-drug-prices-and-innovation/ https://www.forbes.com/sites/stanfleming/2019/06/20/the-rela... [2]: https://www.healthaffairs.org/do/10.1377/hblog20190228.636555/full/ https://www.healthaffairs.org/do/10.1377/hblog20190228.63655...
- rayiner 7y ago
  > They have no particular desire to "innovate"; their business model instead relies on identifying innovators, buying them, and then selling the product of their research at high prices for as long as possible. Isn't that to a great degree how Silicon Valley works too? Google didn't develop Android, for example. It acquired Android, Inc. and then plugged it into the Google ecosystem. Such acquisitions are a fundamental pillar of R&D. They enable startups to do what they do best, and allow big companies to take over when it is time to try and bring a product to market.
breck 7y ago
We need to stop using the phrase IP. It’s an illogical euphemistic marketing term invented by the industry. More accurate phrases are intellectual monopoly laws or intellectual slavery laws. They have done horrible things for the drug industry. The root cause of the opioid crisis is patent law. You made 100x+ more money selling patented drugs, even if the patented drug is worse for the patient. We need to ditch these laws. Perhaps you could switch the system to where you get a bonus check for a novel patent; but we gotta ditch the monopoly rights aspect of these laws as they are horrible for 99% of the population.
- rhino369 7y ago
  All property is a monopoly. Is it slavery that I can't grow some crops on your lawn.
  - breck 7y ago
    No, because if you were to do that you preclude me from using my lawn. It is intellectual slavery that you are telling me I can’t copy your book that i bought from you on my lawn, even though you are not affected.
    - tathougies 7y ago
      You are allowed to copy other's books. You just can't derive a revenue from them.
      - breck 7y ago
        > You just can't derive a revenue from them. I wish this were the case, but you cannot distribute them either. I would love to collaborate with a team on an app that let's you instantly query all books ever published and revenue from that is the least of my concerns and it would be easy to do if we weren't forbidden from doing that by intellectual slavery laws.
        tathougies 7y ago
rhino369 7y ago
First mover advantage isn't worth much for generic drug manufacturing. The product is a commodity at that point. It wouldn't be worth much in tech either if you were allowed to clone a product 100%. Intellectual property even protects things that copyright and patents don't. Like you can't commit industrial espionage and steal the secret codebase of a SAAS company that keeps its software on its own servers. That's just as artificial as a patent. Even real estate property is artificial. You didn't make the land that your house is on. Why should you have a monopoly on it? Because someone government issued someone else a piece of paper 300 years before either one of us were born?

TazeTSchnitzel 7y ago

https://www.youtube.com/watch?v=ylLTMYt24lA https://www.youtube.com/watch?v=ylLTMYt24lA

techntoke 7y ago

But the President says they are the lowest they've ever been.

derision 7y ago
They have been declining if you look at the prescription drug CPI[1], which is more closely related to what people are actually paying, rather than this article which references a document that only lists increases of wholesale prices. I'd like to see a comparison of increases and decreases. If 3 drugs increased an average of 300%, but 10 drugs decreased an average of 300%, for example. https://data.bls.gov/timeseries/CUSR0000SEMF01?output_view=pct_3mths https://data.bls.gov/timeseries/CUSR0000SEMF01?output_view=p...

i_am_nomad 7y ago

I’ve worked in pharma for much of my career, but will never go back. At one point I was working for a company that continues to milk profits off of a drug that was developed in the 1950s - the company doubled the price over the span of a few years in the late 2000s, for no reason besides the P in P&L. And that company is generally considered one of the “good guys” in the industry, spending proportionally more on R&D than almost anyone else. You could argue that the outrageous profits made off a 70 year old drug are funding that research, but (a) that’s just not the case, and (b) why should one group of patients and their insurers have to shell out for another? Isn’t that what financing is for?

rob-olmos 7y ago
Out of curiosity, why do you feel (a) is not the case? Are the profits going to salaries instead?
- spsful 7y ago
  I think he reasons that a drug so old would have no debt left over from its research expenses.
  - rayiner 7y ago
    Imagine if we applied this rule to Silicon Valley. Once you recouped your R&D expenses, you weren't allowed to make any more money (or only a token profit above cost). Do you think Silicon Valley would be the same? Better? Worse? (Yes, people don't die if they don't have Facebook. That's not relevant to the R&D process. The mechanics of developing pharmaceuticals is the same as developing software. You take large amounts of capital and throw it at highly skilled and scarce labor.) EDIT: That does not mean there are no problems. There's lots of real problems, such attempts to keep things from going out of patent, how to handle orphan drugs and drugs for rare diseases, etc. My point is simply that we have proven principles for how to enable innovation, and they apply to pharmaceuticals as much as to web tech. Of course, we can make different trade-offs within that analytical framework--e.g. trade future innovation for lower short-term costs. But we can't apply a wholly different set of principles for thinking about the costs of those trade-offs.

elthor89 7y ago

Correct me if I am wrong, but the report is talking about wholesale prices. I would be more interested in the price after the expected discount that the pharmaceutical companies give. If the price increase is still high then it is newsworthy.

nabdab 7y ago
This is hitting the nail right on the head. People are blaming “greedy Pharma companies” but at the same time companies are taking lower and lower net prices while the rebates that the purchasers are taking home are absolutely absurd rebates. I get it, some people don’t feel phama companies should still be able to profit on a drug invented 50years ago. But I just can’t take any discussion about that serious when we are also in an environment where the purchasers take literally twice the profits on all drug sales without having invested a penny in research or having spent a penny in production distribution or marketing. They eat up all that money all by abusing their position of “representing the buyers”, but at the same time since their rebates are percentage cuts they are just pushing pharma companies to increase prices over and over again. The American model is rotten and someone has to stop the madness.
- Zelphyr 7y ago
  Genuine question: what's the purpose of raising the wholesale prices like this if so few people, if anyone, are paying that pirce? Is it so they can claim a higher tax deduction? Because, honestly, I don't see how that's much better.
  - pkaye 7y ago
    The drug companies are trying to price differentiate. They want to charge the insurance company a lot more but not make the end user feel the pinch of the copay that makes them consider alternatives. Its kind of like on business trips, people spend a lot more than they usually do because its not their money. Being in dialysis, I take a bunch of medicines. One was very expensive buy the drug company put lots of effort to make sure I got the copay reimbursed. Again they were after the insurance money and were willing to reimburse 10% of an inflated cost. After the patent expired and generics were available, my copay went down by 90%.

entee 7y ago

There's a huge issue with pricing today. It used to be that drug companies were ethical about the "your money or your life" nature of medicine. Merck once even gave a drug away for free because it was the right thing to do [1]. Nowadays it's about charging what the market can bear. The trouble is that drugs have gotten way more expensive to develop for a variety of mostly scientific reasons. This means a "prize" mentality has developed where each drug is like a lottery ticket, and you best get the most out of that ticket if it wins. There's also a sense across the industry that price controls are going to come, so ramp the prices up now so when the controls arrive they won't gut the industry. Also sometimes drugs have to cost as much as they do because they're just very hard to make (see gene therapy), but at this point the pharmaceutical industry has squandered all the public trust they had with recent rapacious practices (see insulin, opioids). Fundamentally there are good reasons drugs cost a fair amount of money, but it's not necessarily clear that costing this much money is justifiable. I believe drug companies can do good while doing well, but that it takes a leadership interested in more than boosting the margins as high as possible. We need a code of ethics for drug and med device companies, maybe something along the lines of the hippocratic oath. [1] https://www.nytimes.com/1987/10/22/world/merck-offers-free-distribution-of-new-river-blindness-drug.html https://www.nytimes.com/1987/10/22/world/merck-offers-free-d...

deleted 7y ago
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1000units 7y ago

Shkreli Did Nothing Wrong

hilbert42 7y ago

We've now long reached the point where we can give the market a free hand/carte blanche in pharma matters. Now it's time for Government to act and to do so urgently. If ethics ever played a role in pharma—which I doubt [remember thalidomide]—then it certainly does not do so now. As health and lives of its citizens are at stake then it's the responsibility of Government to rectify this situation. After all, the first responsibility of government is to protect the security and well-being of its citizens. If it fails to do so here then it's abrogating its responsibility.

decoyworker 7y ago
I agree. The free-market did not work, time for regulations.
- hilbert42 7y ago
  Dead on!
hilbert42 7y ago
Above, I should have added that in times past, when it comes to pharma, we did have government regulators who had decent, first-class ethics, and it's a damn shame that we do not have more of them now (as they need to be pressuring government to regulate this issue). Perhaps it's a timely reminder to remember the marvelous woman, Frances Kelsey, who single-handed saved the US from the thalidomide scourge: https://en.wikipedia.org/wiki/Frances_Oldham_Kelsey https://en.wikipedia.org/wiki/Frances_Oldham_Kelsey

drak0n1c 7y ago

For those who have pricey prescriptions, look into pharmacy coupon databases like GoodRX. Some drugs are 95% cheaper with these private coupons (pharmacies do not advertise them), and sometimes cheaper than buying them through your insurance.

Zelphyr 7y ago

I've said it before that the pharmaceuticals, hospitals, and insurance companies are signing their own death warrants. They keep (in my opinion) colluding to charge outrageous prices for life-saving things and at some point we're all going to get fed up with it enough to elect someone that will shoe in legislation that turns them all into state-owned or, at the very least, highly regulated. I personally don't feel like that's what we really want but damn these companies are just being abusive now.

mlevental 7y ago
didn't we already elect someone like that (Obama vis-a-vis ACA)? and yet the monied interests have undone most of the work.
- Zelphyr 7y ago
  Yes but I think we're nearing a point where the lobbyists won't be able to overcome millions of pissed off citizens who feel like they're getting screwed by an entire industry.
- dlp211 7y ago
  No? What part of the ACA was intended to upend the pharma industry? The ACA was specifically designed to work within the system as it existed in 2008/9.
  - Zelphyr 7y ago
    If I recall, originally it was supposed to be more drastic in its changes in an attempt to introduce more efficiencies into the system. But then they realized that they could create a lot of jobs in healthcare (remember, we were smack in the middle of the recession) so they opted to do that instead. That’s not any kind of commentary as to whether their decision was good or bad but it does appear to have resulted in making the system less efficient in many ways.
mrtksn 7y ago
Would the C level executives give back the money they made when pushing the companies into their death? If not, it’s not their problem. The argument against short term incentives is not limited to pharmaceuticals.

tathougies 7y ago

So the 'whopping' 667% increase is not on Prozac as a whole, but actually only on a liquid version of the drug. Prozac is a generic medication, so there is competition here. For example, according to GoodRX, 30 capsules of fluoxetine are $4 at walmart: https://www.goodrx.com/fluoxetine https://www.goodrx.com/fluoxetine

hristov 7y ago
Yes, and in the second arm of the scam, the drug companies will send out their army of salespeople to convince doctors and hospitals to prescribe the more expensive version. Because of small differences between the drugs (maybe the liquid version is easier on the stomach) they will decide that the solid generic is not equivalent to the liquid. Then the patients will all buy the expensive version, as ordered by their doctors, and charge it to their insurers. The insurers will look at the cost going up and will raise insurance rates. If you have been paying attention to what has been happening to insurance rates for the past several years you can easily see the result.
- tathougies 7y ago
  I mean, the obvious answer there is to educate doctors on what is actually scientifically proven. If doctors (who ought to be one of the most scientifically minded professionals engaged with on a regular basis) are susceptible to salespeople selling them false science, then we should probably not allow them to be doctors anymore. The lack of critical thinking in that profession then ought to alarm us, and ought to be the first thing that's fixed. On the other hand, if it is actually a superior product, then I don't see what the issue is in it costing more. Doctors would know about the cheaper version and prescribe it if the patient wanted it? Of course, given that insurance for everyday needs screws up the pricing dynamics, I do think the alienation of pricing from the consumer, thus reducing demand for the lower priced versions, is a valid criticism.
  - hristov 7y ago
    It is not that much about education. Currently there exists a complex system of various incentives to convince doctors to prescribe more pills and to prescribe certain types of pills. The pharma companies have installed their people in hospital management and various medical boards all over the place, and they are constantly pushing for more drugs and more expensive drugs. The pharma companies can make it worthwhile for a hospital group to prescribe more drugs. The hospital group management can in turn incentivize their doctors to do it. It is even in the insurance companies benefit, because there really isn't a competitive market for medical insurance. Insurance companies actually welcome higher costs, because they raise their rates accordingly, which actually make their profit dollars go up. It is only us ordinary users of medical services that are paying the bill. The underlying problem is that there isn't any mechanism for a cost benefit analysis in the doctor patient relationship. The modern medical insurance system was set up to assure the customer that he would get the best medical care he needs without worrying about cost. It is a perfect system for gouging and everyone has started gouging.

corndoge 7y ago

Everyone wanted to crucify Shkreli for the toxo drug price hike. Where is the outrage for the mentioned 667% hike on generic Prozac? Or did people just target Shkreli because they didn't like his views on other things?

FireBeyond 7y ago
Well, Shkreli was an easy target: 1) he repeatedly took us for saps. "People are angry at me because I'm raising the price of this drug when most of them will still pay the same $20 copay". Except we're paying for the full cost of the drug. The fact that the cost is "invisible" because it comes out of our insurance pool was the issue, and he genuinely acted victimized because people could see past that. 2) On at least one occasion, he/his company opposed FDA approval of a new drug. Not on the basis that there was risk/danger/issues of efficacy, indeed, the new drug was less risky and more efficient. It just didn't belong to his company. i.e. if you thought re-patenting drugs was bad, this guy was literally doing the things the worst "Big Pharma conspiracy theorists" were saying - opposing the introduction of new, better drugs for no reason other than "threat to corporate profit".
ssully 7y ago
Everyone wanted to crucify Shkreli because of the drug price hike stuff, and because he was incredibly visible on social media trolling people.
lacker 7y ago
“667%” is not a great way to describe that price hike. It went from $9 to $69. If some critical drug costs $69, that doesn’t seem all that bad. Using the number “667%” is actually losing accuracy, for the sake of a big scary number.

InvisibleCities 7y ago

I truly do not understand the purpose of a free market for pharmaceuticals. The demand for these drugs is almost completely inelastic, as it is driven by the statistical incidence of the underlying medical conditions. This makes central planning remarkably easy compared to typical consumer goods. The government already sponsors the vast majority of exploratory, pre-clinical, and early-phase clinical research; all it would take to expand that program to include later-phase clinical trials would be increased funding. A nationalized pharmaceutical industry that provides drugs at cost seems like it would be a tremendous boon to our society, only requiring the "sacrifice" of the opulent lifestyles of the executives and investors profiting off the extortionate practices of our current system.

the_cat_kittles 7y ago
you are correct
droffel 7y ago
The big issue I see here is the proper allocation of this earmarked funding. Would all of it go to aids research? Maybe half to aids, half to schizophrenia treatments? But then what about [insert condition here]? The 'free' market may have a lot of perverse incentives in this environment, but I'm not sure how else you could prioritize which drug research has the most impact (without it turning into a capital sink that has severely diminishing returns due to limitations of the skilled humans necessary to do the job)
- fallingfrog 7y ago
  Can’t possibly be any worse than it is now, with Lyme disease still having no vaccine while billions of dollars are plowed into boner pills.
  - ChrisLomont 7y ago
    Maybe one is harder to solve?
  - mattkrause 7y ago

Symmetry 7y ago

Well, with the GDUFA each genetic manufacturer has to pay the same large inspection fee regardless of how much a drug they produce and they have to pay it far ahead of the time they start selling the drug. This has driven a dramatic consolidation that's resulted in things like the recent bospirone shortage in addition to the recent sudden spike in generic prices.

xhruso00 7y ago

I like Slovakian approach. Price of drugs can't be higher than average of 5 cheapest EU countries where the drug is being sold. However we face re-exporting and sometimes unavailability. Also we have a new law where distributor will lose licence if the drug is un-available (recent update). https://www.ncbi.nlm.nih.gov/pubmed/29073987 https://www.ncbi.nlm.nih.gov/pubmed/29073987

rdlecler1 7y ago

One of the problems is cost of development. We invested in an incredible company called Brightseed that looks at each of the tens of millions of small molecules in our food supply and uses AI to predict how those interact with metabolic networks associated with health. Because everything they discover is implicitly regarded as safe (GRAS) there’s the potential to develop products much more rapidly and cheaply. While we may not find something that optimizes on efficacy there’s the potential to get very close.

pro_scrunchies 7y ago

Thanks Nancy. :)

drugsupplychain 7y ago

This is incorrect and a giant red herring. Pharma is not "raising prices" in the implied sense, and pharma is not the cause of drug prices being high in the US. Pharma is increasing the "gross price" of a drug in order to increase the rebate going to the PBM (Pharmacy Benefit Manager) so that they maintain their position on the formulary (to be "covered by insurance"). The "net price" of drugs (what pharma makes) is overall growing at the pace of inflation, not above. There's obviously exception cases, and plenty of small biotech firms launch questionable products with high prices that then get covered. But this is a result of this rebate system that prioritizes covering drugs with large rebates (since PBMs monetize rebates), not the most cost effective drug.

refurb 7y ago

I’ll start by stating the companies who are taking these egregious price increases are only shooting themselves in the foot. They’ll end up in front of a Senate committee before long. That said, profit attracts investment. The rare diseases are a great example. Who wants to spend $50M creating a drug for a disease with so few people you’d only lose money? Genzyme started the trend of charging a lot, with the caveat than any insurer might have a handful of patients. The cost per member might be $0.10. Insurers said ok and investment flood the rare disease space. We’re talking hundreds of billions. Now some people with a rare disease have treatment.

rossdavidh 7y ago

They are raising prices because, uh, wait...what was supposed to stop them from raising prices, again? Oh, that's right. "Nothing". There's nothing broken here, because there's nothing present to discourage them from raising prices in the first place. No market mechanism, and also no regulatory mechanism. They raise prices because...they can.

interlinkedcell 7y ago
That's right. The system is working as intended. As guaranteed by lobbyists and big donors having undue influence on public policy.

dekhn 7y ago

I worked at Genentech when it was purchased by Roche. We frequently had Roche execs visit to understand "what it was you crazy californians are doing that makes Genentech our most profitable investment." One exec said the right way to think about Swiss pharma like Roche is that they aren't in the pharma business, they are wealthy families who invest in pharma because it's a consistently profitable sector. If you look, all the pharmas in CH are basically co-owned by each other.

chance_state 7y ago
>If you look, all the pharmas in CH are basically co-owned by each other. Sorry if I'm missing this, but what is CH?
- dekhn 7y ago
  Confederation Helvetique.
- umanwizard 7y ago
  Switzerland

loorke 7y ago

I believe that as always problems like this one may be solved only through erasing privatized monopolies from the market. The civilized way to achieve this is to raise number of competitors on the market. And there's a plenty of available options. E.g. cut subsidies and raise taxes for big pharmaceutical companies, make additional subsidies and cheap loans to small ones, give students extra grants for pharmacology courses at universities (in order to increase number of specialists), abolish or at least change patent laws for drugs, support public pharmaceutical researches funding by government and involved companies with results available to everyone. I guess in modern world one of the primary economic responsibilities of government is providing an environment in which not only large business may start to do high-tech.

vmurthy 7y ago

From the article: "The median price increase overall was 25.8%. Generic drugs, specifically, had higher increases, with a median rise of 37.6%" Given that the US inflation levels are single digits, this obviously looks egregious but I'd be a lot more satisfied with the article if it gave data on/considered the following: - Typically inflation takes into account goods. What about the R&D costs which are driven by both goods, people's salaries and other factors? Were they well above inflation? - It might be that conditions were favourable for a big increase and the costs will stay flat for a few more years (I won't bet on this!) - Finally, any company which prices its goods and services just above inflation is bound to be held in low esteem by its shareholders. After all, if investors wanted returns just above inflation, they'd be buying bonds! The risks associated with equity should be well compensated by the company and this might have prompted the companies to take this course of action.

jdkee 7y ago

Normative: Healthcare should not be subject to the strictures of profit making entities. See insulin prices in the United States vs. elsewhere.

ddingus 7y ago

Of course they are! They have a captive, increasingly needy market. Go big I say. That will force better policy. Hate that idea, but little else has worked.

mensetmanusman 7y ago

The rest of the world has figured this out, people in the US are just willing to pay more (as in, not protesting en masse to lower costs). Also, drug spending is proportional to the % of elderly, which is growing faster than inflation as a %.

tracker1 7y ago

Need to do the following: * Eliminate extension patents. * Add dual sourcing requirements for drugs * Add fiduciary responsibility to insurance co reqs * Govt backed non-profit insurance corp replacing Medicare, Medicaid, VA Ret medical covering federal employees * Single-account billing * Published rates, rates between payees cannot be more than 20% variance in a single calendar year. Extension patents on medications are generally not great and minimal actual value, in fact, the entire Patent system largely deserves to be broken apart entirely. Dual sourcing requirements would ensure licensing arrangements and at least some level of competition for drug companies. Making insurance companies have a fiduciary responsibility in negotiating on client behalf would also help undo the effects of the profit caps from Obamacare without further checks in place. Gov't non-profit covering those currently covered by federal programs and employees would add a baseline of competition without a profit incentive. Not seeing a dozen different bills from one visit would help. Localized state billing agencies would help too, but not a fan of this, better than federal level here. Eliminating the massive difference between insurance and private pay rates is another important step. Combined would see massive pushback, but all are really needed to bring effective change to the medical care system as a whole, while not significantly effecting federal funding. I've given the above list time and time again, but nobody really seems to listen.

jayalpha 7y ago

What is inflation? Seriously.

vertis 7y ago

I'm in Bangkok at the moment and there are billboard/bus shelter advertisements from the USPTO encouraging people to 'Only buy from licensed pharmacies'. I'm not sure exactly what they're targeting. The pharmacies that will sell without a prescription, or the IRL spammers trying to sell viagra by the side of the road. Regardless, it seems strange for the US patent office to meddle in local food and drug administration. I shared a pic on twitter: https://twitter.com/vertis/status/1183986568857440256?s=20 https://twitter.com/vertis/status/1183986568857440256?s=20