10 ms·

Am I summarizing this article right? * The US premium paid is 150% of R&D costs, therefore cutting it will only cut spending on the costs that aren't R&D * M&

Am I summarizing this article right? * The US premium paid is 150% of R&D costs, therefore cutting it will only cut spending on the costs that aren't R&D * M&A did not drop in the first year of the program, which covered 10 drugs, therefore the program will have no effect once phased in * We think AI might develop new drugs for us someday, so it's safe to throw away the existing system today Not very solid reasons to go after the golden goose!

twoodfin 2y ago
You forgot putting “price controls” in scare quotes while describing the program matter-of-factly as “negotiation”. If you dive into the details of the law, it’s a “negotiation” only in the sense that drugmakers can choose to sell anything to Medicare or nothing at all if they don’t like the proposed price on any one drug. The penalties for “walking away” from that price are not limited to failing to make sales to Part D insurers. (Remember: Medicare doesn’t have its own formulary, that’s the Part D insurers’ role.) Also you don’t have to know much about the history of this law to know the non-partisan Congressional Budget Office thinks we’re going to fail to achieve a dozen or so blockbuster drugs over the next decade due to this “negotiation”: https://www.hks.harvard.edu/publications/biopharma-venture-capital-and-inflation-reduction-act https://www.hks.harvard.edu/publications/biopharma-venture-c...
- LorenPechtel 2y ago
  Note that the track record of government dictating what they'll pay for drugs is shortages. You drive prices as low as the drug companies can afford and the result is the drug companies don't make enough to pay for ensuring regular supplies even when things go wrong. One plant has a problem and a whole bunch of patients don't get what they need. The government has caused chronic supply problems this way before and I do not trust them not to do so again.
  - FireBeyond 2y ago
    The flip side, government paying X for Y doses of drugs, is a captive market where the drug companies will charge what they like because they know the government has little to no choice but to pay.
    - twoodfin 2y ago
      That’s not how Part D works. There is no standard Medicare formulary, and the federal government isn’t buying medications directly: Seniors pick a Part D plan from a private provider—typically a large insurer with plenty of their own negotiation power.

twoodfin 2y ago

You forgot putting “price controls” in scare quotes while describing the program matter-of-factly as “negotiation”. If you dive into the details of the law, it’s a “negotiation” only in the sense that drugmakers can choose to sell anything to Medicare or nothing at all if they don’t like the proposed price on any one drug. The penalties for “walking away” from that price are not limited to failing to make sales to Part D insurers. (Remember: Medicare doesn’t have its own formulary, that’s the Part D insurers’ role.) Also you don’t have to know much about the history of this law to know the non-partisan Congressional Budget Office thinks we’re going to fail to achieve a dozen or so blockbuster drugs over the next decade due to this “negotiation”: https://www.hks.harvard.edu/publications/biopharma-venture-capital-and-inflation-reduction-act https://www.hks.harvard.edu/publications/biopharma-venture-c...

LorenPechtel 2y ago
Note that the track record of government dictating what they'll pay for drugs is shortages. You drive prices as low as the drug companies can afford and the result is the drug companies don't make enough to pay for ensuring regular supplies even when things go wrong. One plant has a problem and a whole bunch of patients don't get what they need. The government has caused chronic supply problems this way before and I do not trust them not to do so again.
- FireBeyond 2y ago
  The flip side, government paying X for Y doses of drugs, is a captive market where the drug companies will charge what they like because they know the government has little to no choice but to pay.
  - twoodfin 2y ago
    That’s not how Part D works. There is no standard Medicare formulary, and the federal government isn’t buying medications directly: Seniors pick a Part D plan from a private provider—typically a large insurer with plenty of their own negotiation power.