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> If the US allowed imports from Canada, it's likely the pharmaceutical industry would stop selling to Canada at the rates set by the PMPRB. Wait, it sounds li
by irrational 4y ago
> If the US allowed imports from Canada, it's likely the pharmaceutical industry would stop selling to Canada at the rates set by the PMPRB.
Wait, it sounds like you are saying that buy paying higher prices, the USA is subsidizing the rest of the worlds healthcare costs. Is that true?
- andruby 4y agoThey are generating the largest _profit_ in the US. I wouldn’t say they are subsidizing since afaik they are still selling with some profit in other countries.
- irrational 4y agoBut if the US made it so they couldn’t get high profits here anymore, wouldn’t they raise prices for everyone else?
- threatripper 4y agoIf they could raise the prices they would have already. If they didn't make a profit they wouldn't produce and sell the product. So the reality is, that they would just lose some of the profit but nothing else would change. As others pointed out, it would affect decisions for future research. Because you can't just rake in the money in the US you must be more wise with spending your research money.
- leaflets2 4y agoMaybe moving the research to lower living cost countries? > If they could raise the prices they would have already. Good point
- junofan 4y agoThat’s been done. Over half of trial sites are outside the US. https://www.fda.gov/media/91849/download https://www.fda.gov/media/91849/download
- NotACop182 4y agoThey have two choices. Sell for X profit or make no profit. You don’t turn away making millions if someone told you you couldn’t make a billion
- deleted 4y ago[deleted]
- junofan 4y agoDrugs must be developed before they may be sold. The two choices are develop/not develop. The drug developer may use a spreadsheet to calculate NPV. If negative, the drug is not developed.
- oblio 4y agoIn single payer systems, they can't. The government literally tells you "you sell it for this much". And guess what, "that much" already covers their costs plus profit, so they keep selling. It's just profitable for them to price gouge you, and you don't fight back, at all.
- otterley 4y agoSorry, but how exactly do you know how the finances work out for pharmaceutical development, manufacturing, and distribution around the world? You seem to know an awful lot about this.
- oblio 4y ago1. If you're defending large corporations, always assume that they're adversarial. They're machines made to defend themselves/attack opponents. When posting in their favor, be careful not to become a shill for them, accidentally. As a general rule, defending the "big guy" on their behalf is generally a losing strategy. They can defend themselves already, no need to stand up for them. 2. I have family working in the medical and pharma fields. 3. I doesn't even matter what and who I know, this tells you everything you need to know: https://www.macrotrends.net/stocks/charts/PFE/pfizer/gross-profit https://www.macrotrends.net/stocks/charts/PFE/pfizer/gross-p... The profit graphs for most of the Big Pharmas look similar. They're hugely profitable. For sure they could lose a chunk of that and do fine. It's just greed. A bit of greed shows ambition. A lot of greed corrodes everything. It's just pathological at some point (money is not points on a mobile game leaderboard!).
- otterley 4y agoKnowing the overall profit of the business doesn’t tell you exactly where the profits are coming from or how margins differ among different product lines and markets. I think we should refrain from claiming specific knowledge of a business’s finances and making confident conclusions unless we have more granular data or are actually employed by the businesses in question.
- oneoff786 4y agoIf drug X costs 1B to research and you can sell it for a gross margin of $1 in Europe and $100 in US and you expect the lifetime total gross income to be 10.1B it’s a good thing to invest in. If both countries are limited to a gross margin of $1 and you expect the lifetime gross income to be 0.2B this is now going to be a massive net loss. So you will not invest in it.
- newsclues 4y agoIf you make an addictive pay to win mobile app, and you make $1/user but have a single whale user who dumps $1000 a month into the game. If the whale suddenly stops paying, you can continue to profit from regular customers you just don’t make the obscene profit from before. Can corporations continue to survive with less profit? I think some individuals have to learn to live with less income, so I’m sure a big pharmaceutical company can figure it out, I’ve had to cut out most meat from my diet in lean times, I’m sure pharmaceutical executives can do something similar.
- oneoff786 4y agoNo, you’ve entirely missed the point. There is a large, up front research cost to drugs (and video games). If you have no whales, you might not expect the game to ever achieve enough gross revenue (revenue minus variable costs, sort of) to offset the research costs. Given you already have the drug, sure, it makes sense to keep selling it. But if you try to research more drugs and make more games with no whales, you will quickly go out of business. The video game analogy is apt. These kinds of video games are only possible because of whales. If whales could not exist due to regulations similar to drugs, they would not be developed / researched
- bushbaba 4y agoYes. The US makes up 42% of GLOBAL healthcare spend. Let alone R&D budget. We might see less medical innovation if the US adopted socialized medicine. https://www.mhaonline.com/blog/healthcare-debates-funding-medical-research https://www.mhaonline.com/blog/healthcare-debates-funding-me...
- oblio 4y agoThat's just BS, sorry. They could, you know, become more efficient with their spending. The medical industry in the US has such a huge overhead, it's scandalous. You're feeding millions of administrative leeches.
- irrational 4y agoWhen has a large corporation become more efficient with their spending to that degree? From the figures being thrown around, if their profits from the USA suddenly dropped by 90%, that isn’t just becoming more efficient, that is having to severely contract.
- oblio 4y agoYou do know that if profits go down, companies don't have to contract, right? Companies contract when they have losses... (or when their revenue goes down, but only if they predict it will keep going down, while in this case this would be a 1-time shock). I see a bunch of people defending these corporations, I have to ask: why? Why are you defending corporations with tens if not hundreds of thousands of employees and decades of years of profits in the mid-to-high tens of billions of dollars? Their abuses are well documented, is it Stockholm syndrome?
- riversflow 4y agoI’ll bite, I think the defense is mostly to the status quo of the industry. The fact of the matter is these corporations have developed and tested medicines that drastically improve my parents (and many many elderly/retirement age folks) quality of life, and some of these medicines are pretty new. The system is currently working pretty good by the metric of pharmaceutical advances.
- s1artibartfast 4y agoShort answer is yes and this is common knowledge. I have seen revenue projections for go/no go development decisions. US and EU revenue are primary considerations, and heavily weighted to the US. Some products are never expected to turn a profit in small countries even if the product has already been developed. Passing the regulatory barriers in these cases is done for humanitarian reasons.
- mft_ 4y agoUsing the word “subsidised” makes it sound like companies are deliberately selling for artificially low prices outside the US, because they can charge more within the US to make up the difference. That’s not usually the case. Pharma companies generally aim to make as much as they can, everywhere they sell. It’s just that they can make much more in the US than elsewhere. Of course, this is built into their business models, but I’d still argue the term subsidy doesn’t quite fit.
- irrational 4y agoBut, what would happen if the USA adopted the Canada model and the pharmacy companies started collecting a fraction of their former profits?
- mft_ 4y agoI'm not sure we can accurately predict what would happen, but a few thoughts: * Clearly, this would hugely disrupt the current pharma business model. * One obvious initial response would be to limit investment into research. However, this isn't a viable long-term solution, given research is the lifeblood of continuing success in the industry. It would therefore increase pressure for regulatory reform - essentially to reverse the trend of recent years, and make medicines easier/quicker (and therefore cheaper) to develop. * Other typical business-leader responses: cost-cutting, job losses, mergers, etc. * Pressure on developed countries outside the US to pay higher prices * Longer-term, it might disrupt the current model of drug research funding altogether. The industry is already at a point where development of many drugs is close to unprofitable, and that trend is worsening as regulators become ever-more conservative, and of course with each new successful drug, the next one becomes progressively more difficult to find. The change we're discussing might well mean that drug discovery and development is simply no longer an area where profit can be reliably made - and as such shareholders remove their investments, and pharma companies would merge/struggle/fold. Faced with this, governments and regulators would presumably need to work together to find ways to continue the funding of drug development - and make up a overall shortfall in research and development funding similar to the GDP of a decent-sized country. (To be clear, I'm not disagreeing at all that the US is effectively supporting the industry - just the term subsidy in the way it was used.)
- rat9988 4y agoNo. Pharmaceutical revenue in europe alone can cover all r&d spending.
- oneoff786 4y agoHow could you believe that to be true? Western Europe is just 20% or so of global pharma spending. You believe that rd can continue full steam ahead with 20% revenue, dropping the most profitable part?
- otterley 4y agoEuropean Redditors apparently know everything and are quite confident of their knowledge. I enjoy waking up every day to read their insights.
- tialaramex 4y ago> You believe that rd can continue full steam ahead with 20% revenue, dropping the most profitable part? You get what you measure. Americans decided they want to measure profit and so they think their pharmaceutical companies must be working well because of how profitable they are. Sure, the people are miserable, many can't afford medication they need, but there's so much profit that means it's success right? Nope. The owner's hilltop mansion and two yachts don't actually make sick children well, or prevent heart failure or anything like that, spending on R&D is not in fact linked to company profits, instead it's necessary for these companies to survive because innovation is their lifeblood. The profits are an excess.
- junofan 4y agoOne common measure of the health of the US pharmaceutical industry is approvals per year. Objectively the current system does well on that metric relative to past models; eg the USSR’s and Japan’s.
- tialaramex 4y agoThis metric optimises for more approvable products, which still isn't the thing you actually wanted. Sixteen slightly different approved products which do basically the same thing means sixteen approvals but you only solved one actual problem. Together with favourable treatment for "new" patentable medicines compared to just using the stuff that already worked the result is an American can find their doctor has prescribed them a $1000 per month "new" drug that is basically identical to the $10 per month drug similar patients are given Free At Point Of Use in many countries for a decade, except this one has a patent and so the manufacturer gets exclusivity and $990 profit. What we actually wanted wasn't richer executives, or more approval paperwork, it was healthier people, and the US scores very badly on that.
- krageon 4y ago> Is that true? No, because the US is not the center of the universe.
- cashsterling 4y agoI have worked in pharma drug development and manufacturing in the past (and am again as of a month ago) and I would say: "yes... it is moreorless true that the US is subsidizing the cost of pharmaceuticals in other markets." At one place I worked, our general manager literally said, in a meeting, that if too much Canadian product crossed over into the US market, the company would stop selling to Canada. US prices for our drugs were higher than every other country in world, often times by 3x or more. Almost every other country in the world, besides the US, negotiates price as part of the drug approval process. It is insane that the US continues with the status quo.