12 ms·
There is also a third issue: The high cost of medicines that are low cost to produce, and are sold at low cost elsewhere
by hyperhopper 5y ago
There is also a third issue:
The high cost of medicines that are low cost to produce, and are sold at low cost elsewhere
- AnthonyMouse 5y agoThis one is particularly prickly because the high cost paid in the US funds medical R&D and extremely expensive clinical trials which other countries are free riding on by imposing price controls. We still need to fund the R&D and clinical trials (unless they could be made less expensive somehow), so the most obvious solution would be to have other countries pay their fair share so the US could stop subsidizing everybody else. But that's hard to get.
- philjohn 5y agoNot necessarily - look at Valeant Pharmaceuticals. They bought smaller Pharma co's, gutted R&D, and jacked up prices of the medications they sold.
- TearsInTheRain 5y agoIdk why any politicians arent picking up on foreign price controls as a means of lowering costs in the US. It should be a part of the discussion during any trade talks with Europe.
- nemo44x 5y agoThe problem is chemistry isn’t that different from software. Once you publish the idea it isn’t too difficult to derive the chemical composition. Replication is the easy part. Design and testing cost money. So in essence we’d have to design drugs and not publish the chemistry which would be uncovered soon enough anyways. This leads to a situation where investment dollars go into other things and human health suffers, especially with so-called rare diseases. Not to mention the USA loses hegemony. The USA provides Europe with a great deal of military technology and protection as well as medicine but it isn’t for free. The EU exchanges agency in many ways important strategically to American interests. It’s mainly a fair deal.
- dmitriid 5y agoWhat you're literally saying is: instead of ending predatory pricing, enforce it for the rest of the world. Here's a novel idea: cut military spending in half, and you can provide all the free medicine to all Americans for the rest of their lives. All the while making the world a safer place.
- l33t2328 5y agoAre you aware that the US government already spends far more on health care than it does on the military? Half the US defense budget is no where near the amount spent on healthcare in the private sector.
- bryanrasmussen 5y agoI wasn't, so I went and looked it up and you were right from what I found - Healthcare: The federal government spent nearly $1.2 trillion in fiscal year 2019. In addition, income tax expenditures for health care totaled $234 billion. https://www.taxpolicycenter.org/briefing-book/how-much-does-federal-government-spend-health-care https://www.taxpolicycenter.org/briefing-book/how-much-does-... Defense: Defense spending amounted to $714 billion in FY 2020—and is expected to increase to $733 billion in FY 2021. https://www.gao.gov/products/gao-21-415t https://www.gao.gov/products/gao-21-415t
- bryanrasmussen 5y agoalthough I guess it is true the U.S could cut defense spending less than in half and pay 234 billion for everyone, so the original comment isn't totally off.
- l33t2328 5y agoThat’s not accounting private insurance, which is more than a trillion per year[1] [1] https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet https://www.cms.gov/Research-Statistics-Data-and-Systems/Sta...
- Glawen 5y agoHow on earth would that happen? It will just be as expensive in Europe as in the US. You really think that nobody outside the US are making drugs? Like no drugs are ever developed in Europe??
- perryizgr8 5y ago> It will just be as expensive in Europe as in the US. Cost can be shared among the US and Europe populations. So per user cost would come down by a lot.
- sre79chn 5y agoThis is an unfortunate moral hazard due to the petrodollar.
- wvenable 5y agoIn 2018, the average insulin price in the US was $98.70, compared to $6.94 in Australia, $12.00 in Canada, and $7.52 in the UK. This is a 100 year old drug.
- pkphilip 5y agoCorrect. The price of Insulin has nothing to do with "funding research." It is simply price gouging - that's it.
- fennecfoxen 5y agoThe price of insulin specifically is largely a consequence of perverse regulatory incentives, particularly the Obamacare-related expansion of the 340B Drug Pricing Program and its mandatory, byzantine, opaque rebate structures. Don't think it's just the manufacturers who are at the center of this price gouging, not by a long shot; hospitals and pharmacies are all too happy to ride that gravy train.
- spicyramen 5y agoWhere can I find out more information about it.?
- AnthonyMouse 5y agoIt isn't a 100 year old drug. There are newer formulations that are faster acting, longer lasting, easier to administer, etc. They're newer so they're still under patent so they're a lot more expensive (because the rest of the world makes the US pay to develop the newer formulations). When insurance is paying for it, people prefer the newer formulations. Then, since most people have insurance, there wasn't enough of a market for the older formulations for anybody to bother making them for the margins you get for making a generic. So the prices were high for people paying out of pocket.
- prestigious 5y agoAt least give the option of the old shit
- legulere 5y agoPharmaceutical companies spend even more on advertising than on R&D and still highly profitable though.
- RomanAlexander 5y agoIt could easily be the case that without the advertising spend they would not be profitable. Do you think these publicly traded companies are wasting tons of money on advertising? Where is the shareholder outrage?
- legulere 5y agoIt could also be tragic of the commons effect though. High ad spend is necessitated by the high ad spend of competitors.
- 1auralynn 5y agoI worked in pharma advertising for a little bit: There are two sides, consumer and clinical which I believe are about equal spends (might be wrong, but it's significant anyway). Clinical advertising is mostly used to recruit doctors to recruit patients to take part in clinicial trials, and is a necessary component of R&D. Think lots of tradeshows with fancy signage, interactive touchscreens, apps, etc.
- nerfhammer 5y agoAccording to one google search result total pharma ad spend was $6.58 billion in 2020. According to the CBO pharma R&D was $83 billion in 2019. References: https://www.fiercepharma.com/special-report/top-10-ad-spenders-big-pharma-for-2020 https://www.fiercepharma.com/special-report/top-10-ad-spende... https://www.cbo.gov/publication/57126 https://www.cbo.gov/publication/57126
- diffeomorphism 5y agoYou are off by a factor 10. The 1 billion is in total over all the time needed to produce the drug (about 10 years), while ads are per year.
- andyferris 5y agoEurope does drug R&D and still manages to sell their drugs at a reasonable price to sick people (generally because their governments utilize their buying power for the good of their citizens). It seems to me that US people have been sold FUD by there own pharma companies, if I’m honest.
- JumpCrisscross 5y ago> Europe does drug R&D and still manages to sell their drugs at a reasonable price to sick people Most novel R&D, in America and Europe, happens in biotech. (“Big” pharma does trials, manufacturing scaling and distribution.) The investment thesis for most of this research does not work without the American market. This doesn’t mean high drug prices are a necessity. Just that the funding needs to be replaced if we want to preserve innovation.
- bigbizisverywyz 5y agoMY understanding (at least in the UK) was that hospitals and universities also do a lot of research (often cutting-edge), and are often the source of innovation. These entities are largely publicly funded.
- pclmulqdq 5y agoMost drugs appear first in publicly-funded research, but so does every other compound that can get past a p value of 0.05. The main value proposition of big pharma is that they take those results, find the ones that actually work (very few of them do), study them for side effects, and characterize them. There is a LOT of work between the published research and an actual drug (there is actually significantly more risk and cost to go from a paper to a drug than to write the initial paper).
- simonh 5y agoThat's fair enough, maybe Europeans should pay more than they do for pharmaceuticals and get away with paying less due to the huge profits Pharma makes out of the US health care system. That's not really on Europe though. It's for the US to sort out it's horrifically dysfunctional health care system, if it chooses to. Honestly I don't know if what Biden plans to do, particularly in relation to Big Pharma is reasonable. I suspect it's likely to be treating the symptoms with regulation rather than the disease through reform, but maybe that's what you do when treating the disease runs into insurmountable political resistance.
- adrianN 5y agoI wonder why we don't fund drug development directly, using tax money and then let companies produce the drugs for a reasonable fee. I feel like drug development shouldn't be prioritized by the estimated amount of profit one can get from the drug.
- nradov 5y agoIs there reason to think that government bureaucrats would do a better job at efficient resource allocation? I expect they would channel funding based on politics with little regard for outcomes.
- adrianN 5y agoIs there a reason to think that government bureaucrats would do a worse job? I mean, generally I trust the government to run things like building roads, or taking care of security and education reasonably well. At least as well as a private organization would. "Efficient" resource allocation strongly depends on your performance measure. I don't think that "maximize shareholder value" is necessarily the best measure to use for healthcare.
- amelius 5y ago> Is there reason to think that government bureaucrats would do a better job at efficient resource allocation? Yes. Government institutions (academia, DARPA, CERN, etc.) created the original internet! And then companies messed it up.
- cycomanic 5y agoDo you have any data to back up that claim? Traditionally US pharma has had lower R&D budgets than their international competitors.
- diffeomorphism 5y agoThat is a common talking point, but I don't know of any data actually backing that up. It just sounds nice like "they hate freedom". No, nobody does, try again.
- jpttsn 5y agoWould you know of the data if it existed? Absence of evidence is a low bar for disbelieving a proposition.
- deleted 5y ago[deleted]
- JumpCrisscross 5y agoI’ve been a fan of increasing tax credits for medical R&D in exchange for price limits along, or simply, with a limit on the ratio a drug can be sold domestically versus overseas.
- jeeeb 5y agoI’ve seen this claim made a few times. If this is true then surely it would be in the US’s interest to stop doing it! Stop us freeloaders from mooching off your drug development! Personally I’m doubtful that this claim is broadly true though. I think it should at least be backed by some decent analysis.
- IfOnlyYouKnew 5y agoThe US does pay about twice as much per capita for healthcare, while getting rather mediocre results. No, it's not in the country's best interest as any normal person would understand it. But there's a large segment of the US population that has very strange priorities. They are willing to pay a bit extra to avoid the possibility of, say, poor people getting healthcare. (They also pay 5x as much for their military, compared to their NATO peers. It's the export version of their particular brand of sadism.)
- spfzero 5y agoThere is a reason Americans are willing to pay more for the system we have now, though it's not the one you mentioned. The U.S. health system is considered willing to go farther in treatment than socialized systems are. For example, say, giving 10 patients MRIs to detect one disease. If you're that 10th person, it worked out well for you, and if you're one of the other nine, you just had to pay more. Anecdotally, a co-worker told me he had moved here from Canada so he could bring his father here to be treated for some form of cancer. He was not going to get that particular treatment in Canada, no matter what he was willing to pay. I am in no way saying that this treatment was necessary or helpful, though it might have been. But my friend perceived that he had more options for treatment here. Second anecdote, a friend died of pancreatic cancer last year. Her doctor told here it was inoperable, and she had 8 months to live. She went to two other doctors and found one who was willing to put her through intensive chemo; she wanted to fight it. She still only lived 8 months. In another country, she would not have that option, and maybe she shouldn't have had, because it was very expensive and it had less than zero benefit. People can get more treatment options here, at a higher cost, for better or worse.
- anthony_barker 5y agoI would argue Big Pharma free rides its self on research from universities around the world which are mostly publicly funded and not for profit. The US represents less than 34% of global research. https://pubmed.ncbi.nlm.nih.gov/17354441/ https://pubmed.ncbi.nlm.nih.gov/17354441/
- chii 5y ago> The US represents less than 34% of global research and yet, the US has about 5% of the world's population. So proportionally, they are punching way above their weight.
- hnbad 5y agoAnd 25% of the world's prison population. Do we want to keep this stats dump going or did you have a point?
- din-9 5y agoIt would be fairer to compare by wealth, where the USA is at 30.2% https://en.wikipedia.org/wiki/List_of_countries_by_total_wealth https://en.wikipedia.org/wiki/List_of_countries_by_total_wea...
- jpadkins 5y agoif you use wealth, we are a back at why americans spend more on per captia than any other countries: because they can (because they are wealthier). Healthcare, especially in older population, starts to behave like a luxury good at upper ends of cost / care.
- dwaltrip 5y agoUS healthcare costs are similar to other developed countries once normalized by per capita GDP? I thought they were still higher.
- simonh 5y ago
- onion2k 5y agoI always assumed a fairly significant chunk of that research is to find minor modifications to existing drugs in order to maintain patents that are about to expire. It certainly feels like that happens a lot.
- NicoJuicy 5y agoThen why is every covid vaccine ouside the US, if other countries are "free-riding" the US R&D?
- watwut 5y ago> This one is particularly prickly because the high cost paid in the US funds medical R&D Most of those money goes on marketing. Moreover, I think that US citizens did not signed up to pay medical R&D for whole world while they are sick. In fact, US citizens tend to have issues with paying researcher, social support and so on from their money. R&D paid from taxes or insurance makes way more sense then paid by those who already deal with health crisis.
- PaywallBuster 5y agoare the clinical trials more expensive in the US than anywhere else?? Maybe that's part of the reason medicines cost multiple times more?
- furyg3 5y agoYou're putting the cart before the horse here. The reason why the other developed nations get cheaper access to to medicine is because of collective bargaining from more organized insurance schemes (e.g. single payer), or because of price capping by governments. Not 'because' the US subsidizes R&D through high prices. The US pays high prices because it chooses as system in which that's acceptable, and the pharmaceutical companies design their own pricing around it. If the US stopped the madness, the companies would rebalance their pricing systems. If what you say is true, maybe every other developed nation would have to pay more. I'm skeptical of this entire theory, however. It's not like major pharmaceutical companies just barely breaking even, and are selling their products at a loss in Europe. There is a lot of room for profit margins to be squeezed.
- tigerBL00D 5y agoIsn't part of the problem that the US/FDA trial and certification process is designed to be very expensive? And who benefits from a moat created by high cost of R&D if not big pharma? I seriously doubt that pharma lobby would be thrilled if costs of bringing new drugs to market suddenly fell by several orders of magnitude, so it's not going to happen.
- onethought 5y ago“Imposing price controls” !? Couldn’t the company just not sell at that price… it is obviously still profitable to them.
- snarfy 5y agoI was under the impression a large amount of medical R&D is paid for by taxes and done by university students. We pay for it and private industry benefits.
- Cthulhu_ 5y agoThat does not compute though. If prices are lowered, sales volumes will go up because people (and insurance companies) can afford it. I'm no economic, but we've seen time and time again that lowering prices boosts volume sold to the point where eventual profit is much higher. I mean the government can pitch in via subsidies for medicine R&D if it's really necessary, but honestly the pharma companies are swimming in money, they can afford to funnel money into R&D and pay their taxes instead of pushing it upwards to shareholders and foreign bank accounts.
- koolba 5y ago> I'm no economic, but we've seen time and time again that lowering prices boosts volume sold to the point where eventual profit is much higher. The current system has whoever can afford it pay the high price, whoever can afford less pay a lower price, and whoever can’t pay anything doesn’t pay anything. Lowering drug costs won’t change the number of people taking drugs. That already based on need. All that changes is the amount of total profits. The only politically and morally acceptable answer for this is to raise the price of drug costs globally to soften the change in profits.
- Nasrudith 5y agoAmusingly I would have expected the opposite in terms of what people find acceptable. Trying to charge say $200 for HIV medication to subsistence farmers in Sudan would be viewed as unconscionable. In a period of unemployment I found that my medications basically operated on the afford less lower price - they gave coupons usable without insurance to far more reasonable prices. I can see clear brand promption and price discrimination here - they don't want to surrender market mindshare and brand name recognition by giving up the low end or their margins by cutting the cost across the board. So they give discounts that usually only the low end could or would take. Ironically such slightly sleazy behavior fits with one hypocratic oath vow to only charge what was within their ability to pay. Or course "globally" probably means more charge other first world nations so it would be more "splitting the check among coworkers" than "demand the penniless man in the breadline pay a dollar". Still a position I expect to be US popular only. As far as I can tell drug prices are driven by mainly one thing, realpolitik. Hepatitis C cures are targetted based upon organ transplant costs because that is the only alternative so it still helps but they make huge profits as say $75k drug treatments are still a big improvement over $150k of transplant costs. Unified blocs can twist arms to a certain degree, tiny blocs pay more for reasons beyond just spikey risk pools and meta-insurance, and companies will accept lower profits from some sales if it helps maintain higher profit sales.
- mucholove 5y agoThe rising price of Insulin is not funding the R&D of new drugs.
- matt_s 5y agoWe're also funding massive advertisement campaigns, those can simply go away with a couple Thanos-like snaps as far as I care. There is zero need to advertise drugs to potential patients which need a doctors prescription.
- slumdev 5y agoIf American drug makers fired all the young ladies whose job is to bring coffee and donuts to your internist's office, and they stopped sending your internist away for golf weekends to learn more about why they should be prescribing Rosuvamax instead of Crestulon, I think they could probably bring costs in line with those in other countries...
- FooBarWidget 5y agoI've heard of this argument before but I think it really needs some evidence. Is there a study that corroborates this claim? Even if the US really "subsidizes" medicine for the rest of the world, what motives do pharmas have to sell medicine at lower-than-production/R&D-cost to the rest of the world? Couldn't they just sell to the US exclusively, let the rest of the world rot, and then sit on a bigger pile of cash as a result?
- naasking 5y ago> This one is particularly prickly because the high cost paid in the US funds medical R&D and extremely expensive clinical trials This is what pharma wants you to believe because it's a positive spin on their pricing. I suggest watching Rep. Porter grilling these pharma CEOs if you want to understand the true costs: * https://www.youtube.com/watch?v=wpdhD4ZLBxc https://www.youtube.com/watch?v=wpdhD4ZLBxc * https://www.youtube.com/watch?v=n0L0XbnvJ6I https://www.youtube.com/watch?v=n0L0XbnvJ6I TLDR: marketing alone outweighs R&D investment, and stock buybacks often account for more than both combined.
- Notanothertoo 5y agoExcept these companies spend more on marketing than rnd.
- passivate 5y agoFor vaccines, most major countries want trials repeated with their local population before approving them. Ironically, in the US, many/most(?) core-science phds and post-docs are immigrants who are used as "cheap labor". For double irony, they're often from countries that have price controls on pharma/biotech products.
- Sophistifunk 5y agoThis is mostly what I meant by the first issue, sorry I wasn't clearer. And that was after re-writing that sentence a few times, even :-/
- H12 5y agoI think it's fair to characerize this as a symptom of the emplyment/insurance/hospital loop outlined in issue #1 of the original comment. That relationship between those three parties is the root cause of the messed up incentive model responsible for the ridiculously high costs of all products/services in US healthcare; pharma included.
- silexia 5y agoThe true root cause of high pharmaceutical costs in the United States is our competition crushing patent system. If we eliminate patents, we open up the market completely to competition. More competition will bring extremely low prices. Innovation will not be harmed as most innovation is done in universities and is government funded, in the private innovation will happen anyways as the first mover advantage in these markets is huge.
- cloverich 5y agoit’s been a long while but i remember it takes ~15 years and 500 million to push a major drug through fda testing. The argument was who would do that if a competitor could just copy it at the end? has that situation changed? What other changes would need to be included with removing patents to alleviate that issue. genuine question, even 10 or more years since i read up on this.
- fulafel 5y agoPharma regulators in many countries recognize testing done by selected other countries. It's called "mutual recognition" in the lingo.
- silexia 5y agoDo we really need the FDA? What if we created a agency that simply does independent testing but leaves it up to the consumer to make their own choices?
- coolgeek 5y ago
- whoooooo123 5y agoAs a non-American, this is the only thing I think of when the prompt is "Big Pharma", and OP's original two points went right past me.