4 ms·

If it took two decades from the creation of part D and a worldwide pandemic/financial disaster just to allow for price negotiation, I see that more as evidence

If it took two decades from the creation of part D and a worldwide pandemic/financial disaster just to allow for price negotiation, I see that more as evidence of power rather than weakness. Good that it finally changed though. Democrats also put price caps on insulin which seems nice for diabetics.

refurb 3y ago
Well the kicker is that Medicare never paid the list price anyways. There are a ton of mandatory discounts the government gets. With Part B, Medicare pays average selling price, which is the average price private insurers pays. Then add on top 340B discounts which many hospitals get, which knocks another 23.1% off plus penalties for price increases above inflation (Google "340B penny pricing", many hospitals only pay $0.01 per unit of drug). With Part D, the government doesn't pay for drug anyways. Private insurers do the negotiating on behalf of he government. Then look can look up VA pricing (24% off at a minimum). Medicaid gets "best price" which is the lowest price the drug sells for anywhere. So the government has "negotiated" (by fiat) plenty of discounts. But saying "Medicare doesn't negotiate drug prices" makes plenty of political hay, and while technically true, doesn't really explain the prices the government gets.
- silverquiet 3y ago
  > Medicaid gets "best price" which is the lowest price the drug sells for anywhere. I'm guessing you mean anywhere in the US. Apparently Florida is currently pushing to import drugs from Canada. https://www.reuters.com/business/healthcare-pharmaceuticals/us-fda-allow-florida-import-cheaper-drugs-canada-2024-01-05/ https://www.reuters.com/business/healthcare-pharmaceuticals/...
  - refurb 3y ago
    Yes anywhere in the US. Private insurers often get discounts of 50%+, which then Medicaid gets. And sure Florida can try to import Canadian drugs. They tried that 20 years ago. The companies capped sales to Canada at no more than 10% of last years sales. Canada then put export restrictions in place to put prevent shortages. The US government has talked about price referencing Europe. Which would actually be great. Companies would be forced to increase European prices and lower US prices.
    - silverquiet 3y ago
      I often find myself saying the US should do things like they do in Europe, but I'm told it's impossible for one reason or another (American Exceptionalism in some form or other no doubt), so that does have an appeal to me at least. I wonder though, given that these companies are generally (all?) for-profit entities, what stops them from raising prices in Europe now? It's always seemed a bit grim mixing market economics with human morbidity and mortality, but I would think the upshot is that you can really squeeze people for lots of money when their life is on the line.
      - nradov 3y ago
        Most European countries impose some form of price fixing on pharmaceuticals. The details vary by country but this is often done based on an economic value calculation, such as the number of quality-adjusted life years (QALYs) that the drug would add for a typical patient. It's not impossible to do this in the USA, at least in the sense that it wouldn't violate the Constitution. But if would somewhat slow down the pace of new drugs. The US pharmaceutical industry launches far more new drugs every year than all of Europe, largely due to the outsize profit potential in the US domestic market. With price fixing we would lose out on some percentage of those new drugs.
        silverquiet 3y ago
        I have approximately zero interest in new drugs, but better drugs would be great. Is that the case? My impression is that the latest two blockbuster drugs that I’m aware of - mRNA vaccines and GLP1 agonists, had substantial European development, such that Novo-Nordisk is substantially impacting the GDP of Norway today.
        justinclift 3y ago
        > Norway Denmark, not Norway. Novo Nordisk's market capitalization exceeded the GDP of Denmark's domestic economy in 2023, and it is the highest valued pharmaceutical company in Europe. https://en.wikipedia.org/wiki/Novo_Nordisk https://en.wikipedia.org/wiki/Novo_Nordisk

refurb 3y ago

Well the kicker is that Medicare never paid the list price anyways. There are a ton of mandatory discounts the government gets. With Part B, Medicare pays average selling price, which is the average price private insurers pays. Then add on top 340B discounts which many hospitals get, which knocks another 23.1% off plus penalties for price increases above inflation (Google "340B penny pricing", many hospitals only pay $0.01 per unit of drug). With Part D, the government doesn't pay for drug anyways. Private insurers do the negotiating on behalf of he government. Then look can look up VA pricing (24% off at a minimum). Medicaid gets "best price" which is the lowest price the drug sells for anywhere. So the government has "negotiated" (by fiat) plenty of discounts. But saying "Medicare doesn't negotiate drug prices" makes plenty of political hay, and while technically true, doesn't really explain the prices the government gets.

silverquiet 3y ago
> Medicaid gets "best price" which is the lowest price the drug sells for anywhere. I'm guessing you mean anywhere in the US. Apparently Florida is currently pushing to import drugs from Canada. https://www.reuters.com/business/healthcare-pharmaceuticals/us-fda-allow-florida-import-cheaper-drugs-canada-2024-01-05/ https://www.reuters.com/business/healthcare-pharmaceuticals/...
- refurb 3y ago
  Yes anywhere in the US. Private insurers often get discounts of 50%+, which then Medicaid gets. And sure Florida can try to import Canadian drugs. They tried that 20 years ago. The companies capped sales to Canada at no more than 10% of last years sales. Canada then put export restrictions in place to put prevent shortages. The US government has talked about price referencing Europe. Which would actually be great. Companies would be forced to increase European prices and lower US prices.
  - silverquiet 3y ago
    I often find myself saying the US should do things like they do in Europe, but I'm told it's impossible for one reason or another (American Exceptionalism in some form or other no doubt), so that does have an appeal to me at least. I wonder though, given that these companies are generally (all?) for-profit entities, what stops them from raising prices in Europe now? It's always seemed a bit grim mixing market economics with human morbidity and mortality, but I would think the upshot is that you can really squeeze people for lots of money when their life is on the line.
    - nradov 3y ago
      Most European countries impose some form of price fixing on pharmaceuticals. The details vary by country but this is often done based on an economic value calculation, such as the number of quality-adjusted life years (QALYs) that the drug would add for a typical patient. It's not impossible to do this in the USA, at least in the sense that it wouldn't violate the Constitution. But if would somewhat slow down the pace of new drugs. The US pharmaceutical industry launches far more new drugs every year than all of Europe, largely due to the outsize profit potential in the US domestic market. With price fixing we would lose out on some percentage of those new drugs.
      - silverquiet 3y ago
        I have approximately zero interest in new drugs, but better drugs would be great. Is that the case? My impression is that the latest two blockbuster drugs that I’m aware of - mRNA vaccines and GLP1 agonists, had substantial European development, such that Novo-Nordisk is substantially impacting the GDP of Norway today.
        justinclift 3y ago
        > Norway Denmark, not Norway. Novo Nordisk's market capitalization exceeded the GDP of Denmark's domestic economy in 2023, and it is the highest valued pharmaceutical company in Europe. https://en.wikipedia.org/wiki/Novo_Nordisk https://en.wikipedia.org/wiki/Novo_Nordisk