11 ms·
The problem is not that one company attempts to raise its prices, the problem is that it is very difficult for competitors to undercut them. The FDA has made it
by nickff 6y ago
The problem is not that one company attempts to raise its prices, the problem is that it is very difficult for competitors to undercut them. The FDA has made it very expensive to introduce and support products in the US pharmaceutical market; it has imposed huge compliance costs, and helped drug companies sustain those costs through exclusivity arrangements.
Moralizing about health issues feels good, but these issues are created by simple economics (market and regulatory issues), not ethical deficiencies.
- a_humean 6y agoOr you could do what literately every other country in the world does, and have price controls.
- tastygreenapple 6y agoThere's a huge hidden cost to price controls through - they don't promote innovation as much as markets do. The US develops over half the world's new pharmaceuticals, if we imposed price controls today, we would have fewer life saving medications tomorrow because the companies couldn't afford to do as much R&D.
- watwut 6y agoI think that there are Americans who don't feel like volunteering to pay money they don't have food drugs they need for that.
- deleted 6y ago[deleted]
- gmadsen 6y agowell considering we already subsidize the early R&D for these companies with our University system, and insulin hasn't changed in 50 years, I see no reason we can't price control certain drugs. Could even use this as a guide https://en.wikipedia.org/wiki/WHO_Model_List_of_Essential_Medicines https://en.wikipedia.org/wiki/WHO_Model_List_of_Essential_Me...
- RHSeeger 6y ago> insulin hasn't changed in 50 years That is false. The insulins sold today are MUCH better than the ones sold 50 years ago. They're much better than the ones sold 25 years ago. Admittedly, the ones sold 25 years ago are effective, but it is much more convenient using an insulin that kicks in in 15-20 minutes and has a relatively short peak than one that kicks in in 30-60 minutes and has a long peak. It's doable either way, but the quality of life is much different.
- renewiltord 6y agoTrivially untrue, right? Recombinant DNA technology is younger than 50 years so we used porcine insulin before that. It'll still work, honestly, if you're up for it.
- Reason077 6y agoIf drugs are too expensive, then at some point more lives/quality of lives are lost because people can't access them than are saved from more drug development. A balance must be found between ensuring fair access at affordable prices, and ensuring fair returns to the pharma industry. This is precisely the goal of pharmaceutical price regulation in the UK: https://en.wikipedia.org/wiki/Pharmaceutical_Price_Regulation_Scheme https://en.wikipedia.org/wiki/Pharmaceutical_Price_Regulatio...
- heavyset_go 6y agoMuch of drug R&D is funded through the NIH.
- tshaddox 6y agoLet's make sure people in their 20s aren't dying because they can't afford insulin before we start worrying about how to promote innovation in the insulin market.
- golemiprague 6y agoMore people will die if you don't have medicines to solve their issues, blood sugar level is not the only problem young people have. Other countries don't solve the issue by putting an artificial price on it, they just import cheap generic alternatives and use their negotiation power because they buy it for the whole country which is universally insured. The US got bigger insurance pools than many other countries just because of the country size but as people explained before, due to regulations and inefficiencies in the market they can't utilise other cheaper suppliers. At the end of the day, medicines got certain costs to develop and produce and people who buy it have to pay this cost one way or another plus some profit.
- badrequest 6y agoWhat innovation does insulin production for diabetics require?
- nickff 6y agoYou're talking about introducing another layer of complexity on top of an already Byzantine system. Price controls come with many issues, such as incentivizing lobbying & corruption, as well as dis-incentivizing market entry & long-term investment, resulting in a lack of capital expenditures which causes inefficient production. Healthcare is complicated, and we need to simplify it as much as possible; this is a great example of a situation where we could use 'simple rules for a complex world'.[1] [1] https://hbr.org/2012/09/simple-rules-for-a-complex-world https://hbr.org/2012/09/simple-rules-for-a-complex-world
- jakelazaroff 6y agoSure, our healthcare system is crazy. But is healthcare really inherently complicated? This is a solved problem basically everywhere else in the world.
- heleninboodler 6y agoThe problem is that everywhere else in the world doesn't have the delusion that unfettered capitalism and healthcare are compatible. The US manages to pick and choose socialistic policies in some areas, and I'm more or less just waiting for them (us) to come around to the view that basic healthcare is just one of those things that everyone needs in order to have a decent shot at life so you might as well just provide it as a blanket service.
- marcusverus 6y agoThe US system is far from perfect, but blaming its dysfunction on 'unfettered capitalism' is absurd. The US healthcare system is among the most heavily regulated industries in the US economy. Among those regulations are FDA policies that give Big Pharma monopolies on new drugs. The FDA extends these monopolies for decades, allowing companies to operate as state-created monopolies. Once the state-created monopoly times out, competitors face a years-long approval process before they can market a generic version of an already approved drug.
- gridlockd 6y agoThose compliance costs are in the best interest of large pharmaceutical companies, they lobby for it. If these regulations did not exist, small companies would be destroying the disproportionate profits to be made from generic drugs. I wouldn't otherwise argue for price controls, but if you give these companies the gift of keeping competition from the bottom out, you need to account for that, because competition is the only thing keeping a lid on prices in a free market.
- nickff 6y agoI'm not arguing that the pharmaceutical companies are 'good guys', just that the situation was created by the FDA. I think the simplest and safest solution is to reduce compliance costs (which are extremely high in the USA), and allow the new entrants (initially small companies) to rectify the situation. This is not an instantaneous fix, and I will admit that it is a bit unsatisfying, but it's a robust solution.
- gridlockd 6y agoFair enough, but with that proposal you have the FDA and pharmaceutical companies positioned against you. Price controls - at least with a Democratic administration - are more realistic, because the FDA doesn't care about that and the pharmaceutical companies at least get to keep their moat, which they will prefer over some lost profits from generics.
- nickff 6y agoI completely agree that the pharmaceutical companies will lobby to keep the current regulatory barriers. 'Big Pharma' has specialized in regulatory compliance, not drug development and production, so they'll fight to protect the barriers. I don't think price controls will work quite as well as you do, and I disfavor solutions which require a benevolent bureaucracy (and executive branch).
- pacamara619 6y agoYes, they are indeed created by ethical deficiencies. There is nothing in the way of the legislators to pass a law which says insulin and similar substances created to treat diabetes cannot cost more than 100$ a vial. The only thing in their way is their greed. Their greed for sweet lobbying money.
- Gibbon1 6y agoThe Supreme court ruled that cross marketing agreements were okay. Which allows a drugs companies to buy off generic competitors. Also generic drug companies are colluding on prices and the government just occasionally fines the companies instead of throwing corporate officers in prison.
- mft_ 6y agoOn the scale of a market in the many many billions, the costs imposed by FDA aren’t even a rounding error. That’s not why drugs are expensive. Generally, Pharma companies charge a lot for medications in the US _because they can_ - because no one stops them. Lots of other countries have systems which limit price, or set drug prices according to value, or similar. Why doesn’t the US? Fundamentally, it’s got to come back to allowing money and thus big business to influence the US political system so directly. Until this is fixed, sadly little is likely to change.
- nickff 6y agoYour comment seems to suppose that basic economics do not apply to healthcare; do you believe that it's a 'special case'? I see healthcare as being similar to every other market, and think that the cost issues are driven by regulations and incentives.
- Xylakant 6y agoHealthcare is an inelastic market. If the new iPhone is too expensive, keep an old one, of buy a used one. If your insulin dose is too expensive, you die. Normal market rules of supply and demand do not entirely apply to Health care markets.
- nickff 6y agoThere are lots of inelastic markets, and I'd agree they do often suffer from short-term price volatility, but the US healthcare market suffers from longer-term price 'anomalies', which I believe are a product of its unique regulatory landscape.
- Xylakant 6y agoOther markets with inelastic demand and/or supply also suffer from long-term price anomalies: take housing/rental in SF. There’s certainly some more contributing factors that make an inelastic market turn into a problem, but it’s fairly obvious that it’s not governed by the regular “simple” market explanation of supply and demand converging to a price point if the demand is essentially fixed.
- tshaddox 6y ago> these issues are created by simple economics (market and regulatory issues), not ethical deficiencies I don't think that "because economics" is a card that can be played to completely nullify any questions about ethics. We can and do make decisions at many different levels (from individual to nation-state) over how the economy works and how markets are regulated, and ethics are relevant any time decisions are made which affect other people.
- StreamBright 6y agoAbsolutely. Just like most of the bad situation in the US, it was created by a regulatory body or the government directly.
- api 6y agoThis is regulatory capture. The moralizing still applies, but it just applies to more people.
- throwawaymanbot 6y agoIncreasing the Price of something by 1000s of % IS an ethical deficiency. Its a legal ethical deficiency, but its an ethical deficiency, nonetheless. The GOP will allow anything marketing rigging rules you want. also, compliance costs for a drug already on the market cannot be blamed for a random price increase. (Particularly increases in that % price increase range) - Other countries have solved this issue, while facing the same issues. They just have more ethical leadership I guess.
- silexia 6y agoI agree, get rid of patents to allow anyone to compete. Then shut down the FDA (which has been subject to regulatory capture), and create a new smaller regulatory agency.