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No, it's because our government negotiates on behalf of all Canadians. And we are a very big healthcare market (even with a small population) since we all parti

No, it's because our government negotiates on behalf of all Canadians. And we are a very big healthcare market (even with a small population) since we all participate in the health care system – since it's public.

dboreham 4y ago
Is that meaningfully different from price controls? US government also represents a huge proportion of the demand but is banned through corruption from exercising similar price pressure.
- harimau777 4y ago
  Doesn't that go both ways? Eli Lilly is a huge organization negotiating in favor of higher prices, so it makes sense that a huge organization (i.e. the government or insurance companies) would be needed to negotiate against them. Even if there is a power imbalance between Eli Lilly and the Canadian Government, there would also be a power imbalance if it was instead Eli Lilly vs. individual consumers.
  - bart_spoon 4y ago
    Eli Lilly actually doesn’t negotiate for higher prices. I’ve had somewhat more insight than the average person into how the dynamics of the insulin pricing work, and it’s a total abomination, largely born out of a lack of a universal public insurance option in the US. Despite the skyrocketing costs of insulin over the decades, Eli Lilly’s profits per unit are mostly in line with inflation. This is because in the US system, there is a pervasive system of rebates that exists between pharmaceutical companies and insurers. Insurers often may only pay 10% of what the sticker price is for insulin. But the way these rebates get negotiated through third party firms known as PBMs create a system that incentivizes insulin that is marked up an incredible amount and then discounted to X, than simply pricing it at X in the first place. But this obviously screws over anyone without access to the rebate, i.e. those without insurance. And this system largely exists because the privatized nature of insurance in the US. If there was some kind of universal medicare in the US, undermines those incentives and the market would normalize immediately.
    - wwtrv 4y ago
      > If there was some kind of universal medicare in the US You don't even need that. Just more/better regulation would suffice. You have countries with fully privatized healthcare systems like Switzerland or partially privatized ones like Germany or Netherlands which have no such problems.
      - djbebs 4y ago
        The problem is the regulation that mandates people have insurance or be punished for it...
        wwtrv 4y ago
        > The problem is the regulation that mandates people have insurance or be punished Which is the cornerstone of any universal healthcare system? It only works in other countries if the healthy subsidize the costs of those less fortunate. Also Switzerland had compulsory fully private insurance. To be fair they do suffer from similar issues as the US. Healthcare prices are very inflated compared to the surrounding countries, accessibility to some services (e.g. dental) is poor for low income individuals etc. Of course it helps that Switzerland is a quite homogenous, has low inequality and subsidize access for low income individuals. However inherently the system is not that different from the one in US (I mean Switzerland is closer to US than either is to Britain).
tomohawk 4y ago
The negotiation goes like this: "Here's what we'll pay you for that. If you don't like it, we'll ignore your patents and intellectual property and manufacture it ourselves." The companies would rather prevent Canada from funding competition, so they just jack up prices in the US to compensate. If the US passed a law requiring sales of drugs in the US to match the lowest sale price in any other country, one of 2 things would happen. The likely thing is that innovation would come to a standstill. Money goes to where it can make the most money. No money in drugs? No new drugs. Or, the companies would get a lot more hard nosed about sales in countries with price controls, and there would be trade wars between the US and those countries. And then you would see higher prices in Canada.
- orra 4y ago
  > If you don't like it, we'll ignore your patents and intellectual property and manufacture it ourselves Citation? > so they just jack up prices in the US to compensate. Pharmaceutical companies charge as much as they can anywhere, including in the US. They wouldn't entertain reducing prices in the US even if the Canadian market were different.
  - tomohawk 4y ago
    Any time there are price controls, there is scarcity. That is, unless the price controls are subsidized in some way like in the situation we're talking about. I like the innovative drugs that are being made, so I'm not in favor of price controls. If you think drugs are too expensive, then do something about it. Create some useful drugs and sell them for a cheaper price.
    - wwtrv 4y ago
      > Any time there are price controls, there is scarcity That's not true. It would be the case for (close to) perfectly competitive markets with lower margins, like petrol, basic foodstuffs to some extent etc. It does not apply to markets controlled by oligopolies/monopolies. Especially pharmaceuticals where margins are extremely high and producers of some drugs would still be able to make a profit if they cut (list) prices by a magnitude or two. Only argument against is that it might decrease available funding for developing new drugs, which might be a legitimate concern. But in no way would reasonable prices controls result in a scarcity of almost all currently available drugs.
refurb 4y ago
Canada has a population of 35M. United healthcare, the largest US insurer cover over 40M people.

dboreham 4y ago

Is that meaningfully different from price controls? US government also represents a huge proportion of the demand but is banned through corruption from exercising similar price pressure.

harimau777 4y ago
Doesn't that go both ways? Eli Lilly is a huge organization negotiating in favor of higher prices, so it makes sense that a huge organization (i.e. the government or insurance companies) would be needed to negotiate against them. Even if there is a power imbalance between Eli Lilly and the Canadian Government, there would also be a power imbalance if it was instead Eli Lilly vs. individual consumers.
- bart_spoon 4y ago
  Eli Lilly actually doesn’t negotiate for higher prices. I’ve had somewhat more insight than the average person into how the dynamics of the insulin pricing work, and it’s a total abomination, largely born out of a lack of a universal public insurance option in the US. Despite the skyrocketing costs of insulin over the decades, Eli Lilly’s profits per unit are mostly in line with inflation. This is because in the US system, there is a pervasive system of rebates that exists between pharmaceutical companies and insurers. Insurers often may only pay 10% of what the sticker price is for insulin. But the way these rebates get negotiated through third party firms known as PBMs create a system that incentivizes insulin that is marked up an incredible amount and then discounted to X, than simply pricing it at X in the first place. But this obviously screws over anyone without access to the rebate, i.e. those without insurance. And this system largely exists because the privatized nature of insurance in the US. If there was some kind of universal medicare in the US, undermines those incentives and the market would normalize immediately.
  - wwtrv 4y ago
    > If there was some kind of universal medicare in the US You don't even need that. Just more/better regulation would suffice. You have countries with fully privatized healthcare systems like Switzerland or partially privatized ones like Germany or Netherlands which have no such problems.
    - djbebs 4y ago
      The problem is the regulation that mandates people have insurance or be punished for it...
      - wwtrv 4y ago
        > The problem is the regulation that mandates people have insurance or be punished Which is the cornerstone of any universal healthcare system? It only works in other countries if the healthy subsidize the costs of those less fortunate. Also Switzerland had compulsory fully private insurance. To be fair they do suffer from similar issues as the US. Healthcare prices are very inflated compared to the surrounding countries, accessibility to some services (e.g. dental) is poor for low income individuals etc. Of course it helps that Switzerland is a quite homogenous, has low inequality and subsidize access for low income individuals. However inherently the system is not that different from the one in US (I mean Switzerland is closer to US than either is to Britain).

tomohawk 4y ago

The negotiation goes like this: "Here's what we'll pay you for that. If you don't like it, we'll ignore your patents and intellectual property and manufacture it ourselves." The companies would rather prevent Canada from funding competition, so they just jack up prices in the US to compensate. If the US passed a law requiring sales of drugs in the US to match the lowest sale price in any other country, one of 2 things would happen. The likely thing is that innovation would come to a standstill. Money goes to where it can make the most money. No money in drugs? No new drugs. Or, the companies would get a lot more hard nosed about sales in countries with price controls, and there would be trade wars between the US and those countries. And then you would see higher prices in Canada.

orra 4y ago
> If you don't like it, we'll ignore your patents and intellectual property and manufacture it ourselves Citation? > so they just jack up prices in the US to compensate. Pharmaceutical companies charge as much as they can anywhere, including in the US. They wouldn't entertain reducing prices in the US even if the Canadian market were different.
- tomohawk 4y ago
  Any time there are price controls, there is scarcity. That is, unless the price controls are subsidized in some way like in the situation we're talking about. I like the innovative drugs that are being made, so I'm not in favor of price controls. If you think drugs are too expensive, then do something about it. Create some useful drugs and sell them for a cheaper price.
  - wwtrv 4y ago
    > Any time there are price controls, there is scarcity That's not true. It would be the case for (close to) perfectly competitive markets with lower margins, like petrol, basic foodstuffs to some extent etc. It does not apply to markets controlled by oligopolies/monopolies. Especially pharmaceuticals where margins are extremely high and producers of some drugs would still be able to make a profit if they cut (list) prices by a magnitude or two. Only argument against is that it might decrease available funding for developing new drugs, which might be a legitimate concern. But in no way would reasonable prices controls result in a scarcity of almost all currently available drugs.

refurb 4y ago

Canada has a population of 35M. United healthcare, the largest US insurer cover over 40M people.