4 ms·

> If we could make things cheaper by passing a law we’d do it for everything. Price controls for medicine are proven to work, based on single payer European sy

> If we could make things cheaper by passing a law we’d do it for everything. Price controls for medicine are proven to work, based on single payer European systems. They cost cheaper and provide better outcomes than the US system. Yet here we are.

mrfusion 5y ago
That’s a little different because we’re dealing with a monopoly which can raise prices above the market rate. But you are correct that in those cases it can work well. Same with other monopolies like utilities.
FredPret 5y ago
That’s different. The drugs are invented and produced all over the world and can be imported to Europe. So low European drug prices will harm overall pharma innovation a bit without killing the entire market. Housing, OTOH, is always local. Low rents will discourage development which will make the real, underlying problem worse.
nradov 5y ago
That is an example of what economists call the free rider problem. European countries get cheap drugs only because they are effectively being subsidized by Americans. https://www.investopedia.com/terms/f/free_rider_problem.asp https://www.investopedia.com/terms/f/free_rider_problem.asp Outcome differences are due more to public health and social factors like obesity. Expensive drugs or lack thereof have only a tiny impact at the population level.
- toomuchtodo 5y ago
  US pharma spends an outsized amount on sales and marketing, expenses that could be eliminated if public funding was spent directly on R&D. Europeans aren’t free riding; they’re paying a reasonable rate for these goods while Americans are shouldered with extraction of revenue for pharma profits and those inefficient (and arguably unnecessary) sales and marketing expenses. Only two countries in the world permit marketing directly to consumers to promote pharmaceuticals: the United States and New Zealand.
  - nradov 5y ago
    There is already a lot of public funding for basic biomedical research. Actual drug development is another thing entirely. If this were publicly funded then funding would be allocated based on political priorities rather than realistic scientific and economic assessments. That misallocation of resources would overwhelm any savings from reducing sales and marketing expenses. But in general the traditional drug development approach of finding small molecule drugs to treat specific diseases is running out of steam. Most of the low-hanging fruit has already been picked.
    - cestith 5y ago
      A ban on marketing prescription-only drugs directly to the public existed in the US until recent decades. The amount spent on marketing skyrocketed when that ban was removed.
      - nradov 5y ago
        Since there's no way to reinstate the marketing ban short of a Constitutional amendment (basically impossible) that point is moot.
        cestith 5y ago
        An outright ban would be very difficult now that the genie is out of the bottle. The FDA can regulate what goes in the ads, like requiring disclosure of the expected benefit, how prevalent some of those side effect them mention are, how common the condition it's meant for actually is, and of the list price of the medication. Many of these drugs are for rare conditions and the drugs, though approved, help a smaller percentage of patients than the ads portray and to a lesser extent.
    - rurp 5y ago
      It's not like profit motive is a great allocation method either though. There are massive perverse incentives to favor expensive ongoing treatments over cures or prevention.
  - 5y ago
JamesBarney 5y ago
The way price controls affect supply is people build less of the thing who's price your controlling. Since medicine is mostly a technological good, it lets the rest of the world freeride off America paying for much of medical R&D.

mrfusion 5y ago

That’s a little different because we’re dealing with a monopoly which can raise prices above the market rate. But you are correct that in those cases it can work well. Same with other monopolies like utilities.

FredPret 5y ago

That’s different. The drugs are invented and produced all over the world and can be imported to Europe. So low European drug prices will harm overall pharma innovation a bit without killing the entire market. Housing, OTOH, is always local. Low rents will discourage development which will make the real, underlying problem worse.

nradov 5y ago

That is an example of what economists call the free rider problem. European countries get cheap drugs only because they are effectively being subsidized by Americans. https://www.investopedia.com/terms/f/free_rider_problem.asp https://www.investopedia.com/terms/f/free_rider_problem.asp Outcome differences are due more to public health and social factors like obesity. Expensive drugs or lack thereof have only a tiny impact at the population level.

toomuchtodo 5y ago
US pharma spends an outsized amount on sales and marketing, expenses that could be eliminated if public funding was spent directly on R&D. Europeans aren’t free riding; they’re paying a reasonable rate for these goods while Americans are shouldered with extraction of revenue for pharma profits and those inefficient (and arguably unnecessary) sales and marketing expenses. Only two countries in the world permit marketing directly to consumers to promote pharmaceuticals: the United States and New Zealand.
- nradov 5y ago
  There is already a lot of public funding for basic biomedical research. Actual drug development is another thing entirely. If this were publicly funded then funding would be allocated based on political priorities rather than realistic scientific and economic assessments. That misallocation of resources would overwhelm any savings from reducing sales and marketing expenses. But in general the traditional drug development approach of finding small molecule drugs to treat specific diseases is running out of steam. Most of the low-hanging fruit has already been picked.
  - cestith 5y ago
    A ban on marketing prescription-only drugs directly to the public existed in the US until recent decades. The amount spent on marketing skyrocketed when that ban was removed.
    - nradov 5y ago
      Since there's no way to reinstate the marketing ban short of a Constitutional amendment (basically impossible) that point is moot.
      - cestith 5y ago
        An outright ban would be very difficult now that the genie is out of the bottle. The FDA can regulate what goes in the ads, like requiring disclosure of the expected benefit, how prevalent some of those side effect them mention are, how common the condition it's meant for actually is, and of the list price of the medication. Many of these drugs are for rare conditions and the drugs, though approved, help a smaller percentage of patients than the ads portray and to a lesser extent.
  - rurp 5y ago
    It's not like profit motive is a great allocation method either though. There are massive perverse incentives to favor expensive ongoing treatments over cures or prevention.
- 5y ago

JamesBarney 5y ago

The way price controls affect supply is people build less of the thing who's price your controlling. Since medicine is mostly a technological good, it lets the rest of the world freeride off America paying for much of medical R&D.