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> government negotiated prices That's what we don't have in the US. You can certain make the case that we should, but that's a separate argument. Now we hav

> government negotiated prices That's what we don't have in the US. You can certain make the case that we should, but that's a separate argument. Now we have a situation where we have a flat out price control, and it's going to have unintended consequences written all over it. All these arguments for "look at Europe" doesn't fly in health economics. There are not subtle differences in the US legally, infrastructurally, and culturally.

mattrp 7y ago
Along similar lines, I read a study nearly twenty years ago and I wish I could find it for these very recurring government vs market debates. The study evaluated prices between single payer countries and found that it wasn’t the collective bargaining that reduced prices in those countries. They observed that there was no correlation between the size of the single payer and pricing. Rather, it was that the pharma adjusted price to minimize counterfeiting and black markets. In countries where black markets and counterfeiting risks were high, the price was lower. Ironically the decision to lower gave some single payers added incentive to participate in arbitrage. One country would be so low the country itself decided they could arbitrage their Higher priced neighbors by selling off their excess through undisclosed side deals. You see a variant of this example playing out between Canada and US. The article talked about individual black markets and state backed black markets that would emerge as a result of these single payer deals... which were supposed to be confidential but of course the black markets allowed pricing information to leak causing everyone to demand lower prices... everywhere except the US which essentially subsidized all of these below market deals that give the appearance that collective bargaining is superior. Edit: another thought comes to mind - has anyone compared the size of health insurers in the US and compared their purchasing power to government run single payers? I’d hazard a guess that United Health for example probably dwarfs entire single payers of some governments.
- snapetom 7y ago
  > pharma adjusted price to minimize counterfeiting and black markets I'd totally believe it. It occurs across all markets, with all actors. Market prices isn't simply supply and demand. It's many things like black markets. Another example is public bonds in the US. Why are their yields under what it should be from the interest rates? It's because the earnings are tax free. The market has already adjusted for that.
- chimeracoder 7y ago
  > Edit: another thought comes to mind - has anyone compared the size of health insurers in the US and compared their purchasing power to government run single payers? I’d hazard a guess that United Health for example probably dwarfs entire single payers of some governments. Medicare alone covers more patients than NHS England does. (Very few countries in Europe actually have single-payer healthcare; the four UK countries are the exception, not the rule).
  - marriedWpt 7y ago
    Medicare isn't one gigantic entity though. You get a Medicare provider, with an insurance company that you work with. Yeah there's lots of layers of bureaucracy.
    - chimeracoder 7y ago
      > Medicare isn't one gigantic entity though. Correct > You get a Medicare provider, with an insurance company that you work with. Well, no, the majority of Medicare patients still receive their inpatient and outpatient benefits through Medicare. A (growing) minority receive their Medicare benefits through a private insurer.
chimeracoder 7y ago
> All these arguments for "look at Europe" doesn't fly in health economics. There are not subtle differences in the US legally, infrastructurally, and culturally. Not to mention: European countries wouldn't be able to negotiate those prices if the US market didn't exist. Pharmaceutical companies - many of whom are based in Europe - know that they'll make most of their revenue from the US, which is not only the single largest market by number of patients[0], but also a disproportionately lucrative market, because the expected per-patient revenue is also higher. If the Netherlands (a country whose population is lower than the state of New York alone) decides to "negotiate" a few extra Euro off the price of a particular drug, AstraZeneca doesn't care, because they know they'll more than make it up in the US market. If the US passed a "most favored nation" law with respect to drug pricing, or allowed pharmaceutical imports from Europe/Canada (as has been proposed in the past), we'd see drug prices in the US drop dramatically, but drug prices in Europe would also increase. [0] China and India are in a totally different category, because of their respective patent laws (whereas the US and Europe have harmonized patent treatment)
- snapetom 7y ago
  Yes, very true. Further, in general, the drug release schedules are US -> Europe -> Asia. This is primarily for two reasons - the FDA approval process is the most rigorous in the world. It would not be outrageous to classify European drug approval process as "rubberstamping" if the drug has already received FDA approval. Essentially, the US pays the R&D of the drug costs for the rest of the world. The second reason is that without price controls, the US price is the closest thing to a market price for that drug. Sorry, but ultimately the prices of the drug comes down to how much a life is, or more accurately, how it affects the quality of life. When price negotiations between pharma and European governments start, both sides use that data. It would be very interesting if the US went single payer to see how it would affect the European drug prices (my guess it goes up). Side note: Asia has always been third due to underdeveloped markets and legal systems. Further Japan has in the past (I think they just got rid of it in the last 5 years) a law where drugs need to be tested on Japanese citizens before approval.
  - snapetom 7y ago

mattrp 7y ago

Along similar lines, I read a study nearly twenty years ago and I wish I could find it for these very recurring government vs market debates. The study evaluated prices between single payer countries and found that it wasn’t the collective bargaining that reduced prices in those countries. They observed that there was no correlation between the size of the single payer and pricing. Rather, it was that the pharma adjusted price to minimize counterfeiting and black markets. In countries where black markets and counterfeiting risks were high, the price was lower. Ironically the decision to lower gave some single payers added incentive to participate in arbitrage. One country would be so low the country itself decided they could arbitrage their Higher priced neighbors by selling off their excess through undisclosed side deals. You see a variant of this example playing out between Canada and US. The article talked about individual black markets and state backed black markets that would emerge as a result of these single payer deals... which were supposed to be confidential but of course the black markets allowed pricing information to leak causing everyone to demand lower prices... everywhere except the US which essentially subsidized all of these below market deals that give the appearance that collective bargaining is superior. Edit: another thought comes to mind - has anyone compared the size of health insurers in the US and compared their purchasing power to government run single payers? I’d hazard a guess that United Health for example probably dwarfs entire single payers of some governments.

snapetom 7y ago
> pharma adjusted price to minimize counterfeiting and black markets I'd totally believe it. It occurs across all markets, with all actors. Market prices isn't simply supply and demand. It's many things like black markets. Another example is public bonds in the US. Why are their yields under what it should be from the interest rates? It's because the earnings are tax free. The market has already adjusted for that.
chimeracoder 7y ago
> Edit: another thought comes to mind - has anyone compared the size of health insurers in the US and compared their purchasing power to government run single payers? I’d hazard a guess that United Health for example probably dwarfs entire single payers of some governments. Medicare alone covers more patients than NHS England does. (Very few countries in Europe actually have single-payer healthcare; the four UK countries are the exception, not the rule).
- marriedWpt 7y ago
  Medicare isn't one gigantic entity though. You get a Medicare provider, with an insurance company that you work with. Yeah there's lots of layers of bureaucracy.
  - chimeracoder 7y ago
    > Medicare isn't one gigantic entity though. Correct > You get a Medicare provider, with an insurance company that you work with. Well, no, the majority of Medicare patients still receive their inpatient and outpatient benefits through Medicare. A (growing) minority receive their Medicare benefits through a private insurer.

chimeracoder 7y ago

> All these arguments for "look at Europe" doesn't fly in health economics. There are not subtle differences in the US legally, infrastructurally, and culturally. Not to mention: European countries wouldn't be able to negotiate those prices if the US market didn't exist. Pharmaceutical companies - many of whom are based in Europe - know that they'll make most of their revenue from the US, which is not only the single largest market by number of patients[0], but also a disproportionately lucrative market, because the expected per-patient revenue is also higher. If the Netherlands (a country whose population is lower than the state of New York alone) decides to "negotiate" a few extra Euro off the price of a particular drug, AstraZeneca doesn't care, because they know they'll more than make it up in the US market. If the US passed a "most favored nation" law with respect to drug pricing, or allowed pharmaceutical imports from Europe/Canada (as has been proposed in the past), we'd see drug prices in the US drop dramatically, but drug prices in Europe would also increase. [0] China and India are in a totally different category, because of their respective patent laws (whereas the US and Europe have harmonized patent treatment)

snapetom 7y ago
Yes, very true. Further, in general, the drug release schedules are US -> Europe -> Asia. This is primarily for two reasons - the FDA approval process is the most rigorous in the world. It would not be outrageous to classify European drug approval process as "rubberstamping" if the drug has already received FDA approval. Essentially, the US pays the R&D of the drug costs for the rest of the world. The second reason is that without price controls, the US price is the closest thing to a market price for that drug. Sorry, but ultimately the prices of the drug comes down to how much a life is, or more accurately, how it affects the quality of life. When price negotiations between pharma and European governments start, both sides use that data. It would be very interesting if the US went single payer to see how it would affect the European drug prices (my guess it goes up). Side note: Asia has always been third due to underdeveloped markets and legal systems. Further Japan has in the past (I think they just got rid of it in the last 5 years) a law where drugs need to be tested on Japanese citizens before approval.
- snapetom 7y ago