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Lawrence Lessig had a blog post about this before he ran for president: drug prices are lower in places like Africa because they’re higher in the US. The rich U

Lawrence Lessig had a blog post about this before he ran for president: drug prices are lower in places like Africa because they’re higher in the US. The rich US consumers (or insurance companies) subsidize the poorer African purchases. For that matter, they also subsidize Medicaid purchases. Economists view this as a good and obvious way to get medication to more people.

maxlybbert 2y ago
I think this is what I remember reading (or perhaps a first draft that turned into this): https://www.wired.com/2004/02/stop-making-pills-political-prisoners/ https://www.wired.com/2004/02/stop-making-pills-political-pr... . It was written before those drugs actually were made available to poorer countries for low cost for humanitarian reasons.
tombert 2y ago
That's fair enough, but that kind of feels like poor and middle class Americans are the sacrificial lambs for healthcare for the rest of the world. There are certain income brackets that make too much money to qualify for medicare, but still don't really make enough to pay for healthcare out of pocket and don't have jobs that provide it, so they can't milk the insurance companies for endless amounts of money to cover their treatment. This leads to situations where people know that they can't afford the healthcare, so they don't see a doctor until situations are dire, go to an emergency room (where they cannot be denied treatment), ending up with an even higher bill that then needs to be accounted for in the rest of the hospital pricing, and therefore insurance. I'm glad that we're able to subsidize drug prices to make it so Africans can get cheaper healthcare, and I am fine with charging the insurance companies lots of money and taking money from richer people in the process (since the high costs have to be rolled into the premium rates), but it's a little frustrating that it has to come at the direct expense of poorer Americans in the process.
- blkhawk 2y ago
  you don't have to be glad about that because its clearly not why prices are lower in africa. Looking in from the outside this whole reasoning seems to me like some kind of propaganda thats meant to me easily swallowed by americans. It seems like a deflection that sells the disparity by leveraging american exceptionalism (US medicine is the best) to be swallowed resulting in variying thoughts depending on the disposition of the recipient ranging between "i am glad we are helping those poor people" to "WAAAA why should I pay for them". But neither of it is really true. The truth as it looks from the outside is that the american people are simply taken for a ride by pretty much all the parts of the healthcare sector.
  - tombert 2y ago
    Sure, and a counter to my claim is that we have a fully socialized system for the military (funded entirely by taxes), and that certainly hasn't stopped weapons from being developed here at all, and it hasn't stopped us from giving these weapons to other countries as a form of diplomacy. The military industrial complex of course has its own share of many problems, but clearly having the price be reasonable for the average Americans is not one of them.
blkhawk 2y ago
not having read the blog post I can at least say that it doesn't pass the smell test for me. The fact alone that the price disparity is not "africa" and "the rest of the world" but rather "the rest of the world" and the "USA" makes that very unlikely as a direct conclusion. Many countries that are comparitively rich should see similar high prices. This is not the case. Also when looking at the develpment costs of some of the most expensive drugs the high prices are simply not justified. Especially in cases where the main costs for a manufacturer is marketing because development was fully or partially financed from public money. I mean aside from insulin the epipen price hikes are also well known about. As manufacturing technics improve and whatever cost overheads are payed off the prices should go down for all drugs. This is not the case at all somehow.
- sanderjd 2y ago
  Other rich countries have price controls. If the US had the same price controls, all else equal, the economics of pharmaceutical research would fall apart. Whether that would be bad or good is certainly up for debate, but my personal view is that it would be bad. But it wouldn't be necessary to leave all else equal, if we introduced the same kind of price controls. The idea I think seems interesting is to do more research funding via large public prizes, rather than primarily grants and profits. Unfortunately it sounds pretty untenable, politically, to me, to set these prizes high enough to encourage a similar amount of research as the profit motive does. It's hard for me to envision a like $3B prize for "create a really good weight loss drug" having been politically feasible, for instance.
  - blkhawk 2y ago
    What price controls other countries have allow for profits that are more than healthy. And I don't think that the economics of pharmaceutical research are all that closely coupled to the prices of drugs in the US. The apparent profit margin of the US parma industry is just too high for that - I have seen 70% cited compared to ~20% in other countries. [Source:https://healthpolicy.usc.edu/research/flow-of-money-through-the-pharmaceutical-distribution-system/ https://healthpolicy.usc.edu/research/flow-of-money-through-...] Lets just think about your 3B weighloss thing leaving out complications like its a spherical cow in a vaccum - there are enough overweight people in the world that if you can sell enough of it to each of them at a 10USD profit in total you easily make that back. Imagine what a 20usd per cured overweight person profit would do. isn't doubling your money enough? And considering that new potentially overweight people are born every day it would be a perpetual (spherical) cash cow.
throwup238 2y ago
That doesn’t really play out in a capitalistic system of incentives. Pharma companies charge as much as the market will bear and the market in Africa just can’t bear very much, so pricing them out will leave profit on the table. Drugs that are too expensive like chemotherapy usually aren’t offered except as humanitarian donations or supplied to upper class patients. The tech industry does it all the time too, pricing games and SaaS subscriptions based on the currency, so that i.e. people in Russia or India pay a cheaper rate. Not because their consumers are being subsidized but because they would get zero profit from them otherwise.

maxlybbert 2y ago

I think this is what I remember reading (or perhaps a first draft that turned into this): https://www.wired.com/2004/02/stop-making-pills-political-prisoners/ https://www.wired.com/2004/02/stop-making-pills-political-pr... . It was written before those drugs actually were made available to poorer countries for low cost for humanitarian reasons.

tombert 2y ago

That's fair enough, but that kind of feels like poor and middle class Americans are the sacrificial lambs for healthcare for the rest of the world. There are certain income brackets that make too much money to qualify for medicare, but still don't really make enough to pay for healthcare out of pocket and don't have jobs that provide it, so they can't milk the insurance companies for endless amounts of money to cover their treatment. This leads to situations where people know that they can't afford the healthcare, so they don't see a doctor until situations are dire, go to an emergency room (where they cannot be denied treatment), ending up with an even higher bill that then needs to be accounted for in the rest of the hospital pricing, and therefore insurance. I'm glad that we're able to subsidize drug prices to make it so Africans can get cheaper healthcare, and I am fine with charging the insurance companies lots of money and taking money from richer people in the process (since the high costs have to be rolled into the premium rates), but it's a little frustrating that it has to come at the direct expense of poorer Americans in the process.

blkhawk 2y ago
you don't have to be glad about that because its clearly not why prices are lower in africa. Looking in from the outside this whole reasoning seems to me like some kind of propaganda thats meant to me easily swallowed by americans. It seems like a deflection that sells the disparity by leveraging american exceptionalism (US medicine is the best) to be swallowed resulting in variying thoughts depending on the disposition of the recipient ranging between "i am glad we are helping those poor people" to "WAAAA why should I pay for them". But neither of it is really true. The truth as it looks from the outside is that the american people are simply taken for a ride by pretty much all the parts of the healthcare sector.
- tombert 2y ago
  Sure, and a counter to my claim is that we have a fully socialized system for the military (funded entirely by taxes), and that certainly hasn't stopped weapons from being developed here at all, and it hasn't stopped us from giving these weapons to other countries as a form of diplomacy. The military industrial complex of course has its own share of many problems, but clearly having the price be reasonable for the average Americans is not one of them.

blkhawk 2y ago

not having read the blog post I can at least say that it doesn't pass the smell test for me. The fact alone that the price disparity is not "africa" and "the rest of the world" but rather "the rest of the world" and the "USA" makes that very unlikely as a direct conclusion. Many countries that are comparitively rich should see similar high prices. This is not the case. Also when looking at the develpment costs of some of the most expensive drugs the high prices are simply not justified. Especially in cases where the main costs for a manufacturer is marketing because development was fully or partially financed from public money. I mean aside from insulin the epipen price hikes are also well known about. As manufacturing technics improve and whatever cost overheads are payed off the prices should go down for all drugs. This is not the case at all somehow.

sanderjd 2y ago
Other rich countries have price controls. If the US had the same price controls, all else equal, the economics of pharmaceutical research would fall apart. Whether that would be bad or good is certainly up for debate, but my personal view is that it would be bad. But it wouldn't be necessary to leave all else equal, if we introduced the same kind of price controls. The idea I think seems interesting is to do more research funding via large public prizes, rather than primarily grants and profits. Unfortunately it sounds pretty untenable, politically, to me, to set these prizes high enough to encourage a similar amount of research as the profit motive does. It's hard for me to envision a like $3B prize for "create a really good weight loss drug" having been politically feasible, for instance.
- blkhawk 2y ago
  What price controls other countries have allow for profits that are more than healthy. And I don't think that the economics of pharmaceutical research are all that closely coupled to the prices of drugs in the US. The apparent profit margin of the US parma industry is just too high for that - I have seen 70% cited compared to ~20% in other countries. [Source:https://healthpolicy.usc.edu/research/flow-of-money-through-the-pharmaceutical-distribution-system/ https://healthpolicy.usc.edu/research/flow-of-money-through-...] Lets just think about your 3B weighloss thing leaving out complications like its a spherical cow in a vaccum - there are enough overweight people in the world that if you can sell enough of it to each of them at a 10USD profit in total you easily make that back. Imagine what a 20usd per cured overweight person profit would do. isn't doubling your money enough? And considering that new potentially overweight people are born every day it would be a perpetual (spherical) cash cow.

throwup238 2y ago

That doesn’t really play out in a capitalistic system of incentives. Pharma companies charge as much as the market will bear and the market in Africa just can’t bear very much, so pricing them out will leave profit on the table. Drugs that are too expensive like chemotherapy usually aren’t offered except as humanitarian donations or supplied to upper class patients. The tech industry does it all the time too, pricing games and SaaS subscriptions based on the currency, so that i.e. people in Russia or India pay a cheaper rate. Not because their consumers are being subsidized but because they would get zero profit from them otherwise.