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> The way they can afford to make it cheap for people who can't pay is by charging high prices for insured Americans This is a hugely underappreciated aspect o

> The way they can afford to make it cheap for people who can't pay is by charging high prices for insured Americans This is a hugely underappreciated aspect of why the cost of health care, including insurance premiums, is so high in the US. Well-meaning folks have called for decades for the US to transition to single-payer, citing the overall lower cost experienced in other countries as a primary motivator. Meanwhile, US companies remain the global leaders in the development of pharmaceuticals and medical equipment. That development is often subsidized by US taxpayers and the remainder is largely recovered from US patients because the single-payer systems in other countries often impose price controls that largely don't exist in the US. (This is not meant to argue against single-payer in the US. All things being equal, a single-payer system would likely solve many more problems than it would cause. I'm just pointing out what many before me already have about how Americans disproportionately subsidize the development of the healthcare the rest of the world benefits from).

LargeWu 1y ago
I think there's a case to be made for incentive programs for development of key drugs, akin to the way Operation Warp Speed operated for the COVID vaccines. Provide up-front cash for initial research and large guaranteed returns if a drug is approved; in exchange, the drugs become public domain. Or, just fund government research endeavors with no profit motive. If we can have a JPL for aerospace engineering, why not for pharmaceuticals?
- doctorpangloss 1y ago
  The status quo is bad, but do you have any evidence for drug development anywhere else in the world, that plays by the rules you’re describing? I mean China is really rich, runs lots of centralized R&D, and has an excellent research culture, why isn’t it developing cures for everything?
  - nxobject 1y ago
    After the latest round of research cuts to basic biomedical research and hostility towards foreign academics, why not give it 10 years? That's how long it'll take for the current cohort of graduates to find the institutions they'll stay in long-term.
  - cogman10 1y ago
    It's a little bit like the state of chip fabrication. The US has enjoyed a high concentration of R&D talent and funding which has somewhat starved out the desire of the rest of the world to do similar research. If you are China, for example, why spend the funds to R&D new drugs when you can pull the same research from NIH and FDA efforts of the US and produce those same drugs for cheap. And that isn't to say China is the only nation doing this. India is pretty famous for doing the same thing. The issue with these drugs is once the chemical structure is known and proven to work, it's (usually) relatively trivial to spin up manufacturing. China puts in R&D on products that are hard to manufacture even if the "how" is well known. They do that because China is a country built on international trade. That's why they are a world leader in battery tech.
  - scroogey 1y ago
    It takes time to develop institutions and foster the talent, but China is certainly advancing at a fast pace: https://archive.is/Csvbe https://archive.is/Csvbe
  - LargeWu 1y ago
    I guess my point of view is, truly game-changing pharmaceuticals should be shared with the world. And there's precedent for that. Jonas Salk did not patent the polio vaccine he discovered, and the world is a better place for it. Boner pills? Sure, go nuts on patenting those. But HIV prevention? No, it's immoral to patent this.
- deleted 1y ago
  [deleted]
jsbg 1y ago
> All things being equal, a single-payer system would likely solve many more problems than it would cause. That has not been the case at all in the countries that did go that route. The US system has serious issues but I would take it over Canada's any day.
- jsbg 1y ago
  [flagged]
  - vjvjvjvjghv 1y ago
    I don’t know about Canada but I would take Germany every day. In the US you have to be worried about taking an ambulance or visiting the ER may cost you thousands for nothing.
    - brookst 1y ago
      An acquaintance of mine died because they wouldn’t call an ambulance for fear of costs. This is a very real thing in the US.
    - jsbg 1y ago
      > In the US you have to be worried about taking an ambulance or visiting the ER may cost you thousands for nothing. No you don't. For one, if you are insured that is not a possibility. And 100% of the people I know who are not insured save more money than insurance would cost them given their incomes are higher and taxes lower than Germany. They choose to accept the risk because they are relatively young and healthy. All of them could cut down on luxuries and pay for insurance if they wanted to. I once took an ambulance to the wrong ER, not understanding that I had to go to one that took my insurance. When the hospital found out my insurance wasn't going to pay, they lowered the bill by 90% and it was completely manageable. Meanwhile in Canada I have family members that have to wait nerve-racking months for life-saving procedures or even imaging. In the US, I've had a few MRIs the same week the nurse practitioner ordered them for things that were absolutely not urgent.
cycomanic 1y ago
> Meanwhile, US companies remain the global leaders in the development of pharmaceuticals and medical equipment. That development is often subsidized by US taxpayers and the remainder is largely recovered from US patients because the single-payer systems in other countries often impose price controls that largely don't exist in the US. Citation needed. The US is neither dominating the list of big pharma (see e.g. Novartis, Roche, Astrazenica...), nor are the US exceptional in R&D spending per GDP (South Korea and Israel are the outliers). https://ourworldindata.org/grapher/research-spending-gdp?tab=line https://ourworldindata.org/grapher/research-spending-gdp?tab...
- the_d3f4ult 1y ago
  Neither of the things you mention detract from his point. Just because the companies are headquartered outside of the US doesn't mean that they aren't developing drugs with the intention of recouping their R&D costs (and then some) from the US market due to our uniquely broken healthcare system.
- deleted 1y ago
  [deleted]
heavyset_go 1y ago
> Meanwhile, US companies remain the global leaders in the development of pharmaceuticals and medical equipment. That development is often subsidized by US taxpayers and the remainder is largely recovered from US patients because the single-payer systems in other countries often impose price controls that largely don't exist in the US. From the first link in the OP you're replying to: > The United States Senate Committee on Finance launched an 18-month investigation of Gilead's Sovaldi pricing, and argued in its 2015 report that Gilead set prices high in disregard of the human cost and in order to set the stage for a higher eventual price for Sovaldi's successor, Harvoni. The committee's investigation, based in part on internal documents obtained from Gilead, revealed that the company had considered prices ranging from $50,000 to $115,000 per year, trying to strike a balance between revenue and predicted activist and public relations blowback, with little regard to research and development costs. The pricing was found to be intentionally divorced from R&D costs. They are charging as much as they can because they can, not because of R&D.
- maxerickson 1y ago
  $84,000 for a (likely) cure is a huge improvement over ~$300,000 for a liver transplant. This is partly how they established the pricing, they knew that insurers would go for the cost savings. It's fascinating that "fair" ends up being that the drug developer has to capture the correct amount of the value they are providing the patient, and the patient gets the rest.
  - fc417fc802 1y ago
    > It's fascinating that "fair" ends up being that the drug developer has to capture the correct amount of the value they are providing the patient, and the patient gets the rest. Keep in mind that the value is only "theirs" by force of IP law which at least officially exists for the benefit of society as a whole. Permitting a situation where people are priced out of a cure because the only available alternative is exorbitantly expensive doesn't seem moral or useful. If the concern is ensuring corporate investment into R&D then public policy could be adopted to subsidize R&D expenses either up front or after the fact.
vjvjvjvjghv 1y ago
The US taxpayer is mostly subsidizing stock buybacks.
CommenterPerson 1y ago
What are the development costs for Insulin, discovered 100 years ago? Americans overpay not to subsidize others but because Pharma Bros.
- selectodude 1y ago
  Newer insulins are pretty insane in how they work. Insulin icodec, for example, basically eliminated the need to set basal dosing because it's a once-weekly injection. Insulin is cheap. The newest, best, most convenient insulins are expensive.
  - phanimahesh 1y ago
    I've heard even the plain old insulin is significantly more expensive in US compared to Europe.
skissane 1y ago
> Meanwhile, US companies remain the global leaders in the development of pharmaceuticals and medical equipment No denying the US plays a huge role in the global pharmaceutical industry - but Europe does too - semaglutide (Ozempic/Rybelsus/Wegovy) was developed by Novo Nordisk, headquartered in Denmark. The popular ADHD drug lisdexamfetamine (Vyvanse/Elvanse) was developed by a US-based research team, but they ended up being acquired by a British pharmaceutical company (Shire), which in turn was acquired by a Japanese company (Takeda), who owned the patents (which expired last year or the year before, depending on country), and remain one of the major manufacturers of it. If you want a career in drug development, there are huge opportunities in the EU and Switzerland; by no means are you limited to the US. As usual, in the US you will almost certainly get paid more, but some people find the social setting of Europe more to their liking, and view that as a compensating advantage which makes up for lower pay.
- spjt 1y ago
  As a former pharmaceutical chemist, the job market in the US is kind of shit, which is why I write code for a living.
- jjani 1y ago
  > As usual, in the US you will almost certainly get paid more Switzerland is one of the few countries where getting paid more in the US for the same job would generally not be an "as usual" :) The large majority of equivalent jobs gets paid more in Switzerland, including office ones. The ones that don't are the outliers (which are of course greatly overrepresented here on HN). This is IME, so feel free to correct me if I'm wrong.
- 0xDEAFBEAD 1y ago
  Novo Nordisk charges about 10x as much for Ozempic in the US as it does in the EU: https://www.healthline.com/health-news/heres-how-much-more-ozempic-costs-in-the-u-s-compared-to-other-countries https://www.healthline.com/health-news/heres-how-much-more-o...
jonahhorowitz 1y ago
As long as they spend so much on marketing, it's hard to believe them when they say the only way they can recoup their R&D investments is to charge high prices. - *For many large pharmaceutical companies ("Big Pharma"), marketing costs often exceed R&D spending.* In analyses of the top 10 drugmakers by revenue in 2020, 7 companies spent more on sales and marketing than on research and development. For example, Johnson & Johnson spent $22 billion on marketing compared to $12 billion on R&D; Bayer spent $18 billion on marketing vs. $8 billion on R&D[1][2]. - The combined marketing spend for these top 10 companies exceeded R&D by $36 billion (about 37%) in 2020[1][2]. [1] https://www.ahip.org/news/articles/new-study-in-the-midst-of-covid-19-crisis-7-out-of-10-big-pharma-companies-spent-more-on-sales-and-marketing-than-r-d https://www.ahip.org/news/articles/new-study-in-the-midst-of... [2] https://www.csrxp.org/icymi-new-study-finds-big-pharma-spent-more-on-sales-and-marketing-than-rd-during-pandemic/ https://www.csrxp.org/icymi-new-study-finds-big-pharma-spent...
- markdown 1y ago
  Imagine how much cheaper healthcare could be if the US simply banned direct to consumer drug advertising. Surely that's something that would be easier to get bipartisan support for, somewhat avoiding the "socialism vs capitalism" chasm between the parties that prevents meaningful healthcare reform.
  - mullingitover 1y ago
    If this bill passes[1] that's exactly what could happen. It won't, because this regime is irredeemably corrupt and controls all four branches of government, but it could. [2] https://nadler.house.gov/news/documentsingle.aspx?DocumentID=397390 https://nadler.house.gov/news/documentsingle.aspx?DocumentID...

LargeWu 1y ago

I think there's a case to be made for incentive programs for development of key drugs, akin to the way Operation Warp Speed operated for the COVID vaccines. Provide up-front cash for initial research and large guaranteed returns if a drug is approved; in exchange, the drugs become public domain. Or, just fund government research endeavors with no profit motive. If we can have a JPL for aerospace engineering, why not for pharmaceuticals?

doctorpangloss 1y ago
The status quo is bad, but do you have any evidence for drug development anywhere else in the world, that plays by the rules you’re describing? I mean China is really rich, runs lots of centralized R&D, and has an excellent research culture, why isn’t it developing cures for everything?
- nxobject 1y ago
  After the latest round of research cuts to basic biomedical research and hostility towards foreign academics, why not give it 10 years? That's how long it'll take for the current cohort of graduates to find the institutions they'll stay in long-term.
- cogman10 1y ago
  It's a little bit like the state of chip fabrication. The US has enjoyed a high concentration of R&D talent and funding which has somewhat starved out the desire of the rest of the world to do similar research. If you are China, for example, why spend the funds to R&D new drugs when you can pull the same research from NIH and FDA efforts of the US and produce those same drugs for cheap. And that isn't to say China is the only nation doing this. India is pretty famous for doing the same thing. The issue with these drugs is once the chemical structure is known and proven to work, it's (usually) relatively trivial to spin up manufacturing. China puts in R&D on products that are hard to manufacture even if the "how" is well known. They do that because China is a country built on international trade. That's why they are a world leader in battery tech.
- scroogey 1y ago
  It takes time to develop institutions and foster the talent, but China is certainly advancing at a fast pace: https://archive.is/Csvbe https://archive.is/Csvbe
- LargeWu 1y ago
  I guess my point of view is, truly game-changing pharmaceuticals should be shared with the world. And there's precedent for that. Jonas Salk did not patent the polio vaccine he discovered, and the world is a better place for it. Boner pills? Sure, go nuts on patenting those. But HIV prevention? No, it's immoral to patent this.
deleted 1y ago
[deleted]

jsbg 1y ago

> All things being equal, a single-payer system would likely solve many more problems than it would cause. That has not been the case at all in the countries that did go that route. The US system has serious issues but I would take it over Canada's any day.

jsbg 1y ago
[flagged]
- vjvjvjvjghv 1y ago
  I don’t know about Canada but I would take Germany every day. In the US you have to be worried about taking an ambulance or visiting the ER may cost you thousands for nothing.
  - brookst 1y ago
    An acquaintance of mine died because they wouldn’t call an ambulance for fear of costs. This is a very real thing in the US.
  - jsbg 1y ago
    > In the US you have to be worried about taking an ambulance or visiting the ER may cost you thousands for nothing. No you don't. For one, if you are insured that is not a possibility. And 100% of the people I know who are not insured save more money than insurance would cost them given their incomes are higher and taxes lower than Germany. They choose to accept the risk because they are relatively young and healthy. All of them could cut down on luxuries and pay for insurance if they wanted to. I once took an ambulance to the wrong ER, not understanding that I had to go to one that took my insurance. When the hospital found out my insurance wasn't going to pay, they lowered the bill by 90% and it was completely manageable. Meanwhile in Canada I have family members that have to wait nerve-racking months for life-saving procedures or even imaging. In the US, I've had a few MRIs the same week the nurse practitioner ordered them for things that were absolutely not urgent.

cycomanic 1y ago

the_d3f4ult 1y ago
Neither of the things you mention detract from his point. Just because the companies are headquartered outside of the US doesn't mean that they aren't developing drugs with the intention of recouping their R&D costs (and then some) from the US market due to our uniquely broken healthcare system.
deleted 1y ago
[deleted]

heavyset_go 1y ago

> Meanwhile, US companies remain the global leaders in the development of pharmaceuticals and medical equipment. That development is often subsidized by US taxpayers and the remainder is largely recovered from US patients because the single-payer systems in other countries often impose price controls that largely don't exist in the US. From the first link in the OP you're replying to: > The United States Senate Committee on Finance launched an 18-month investigation of Gilead's Sovaldi pricing, and argued in its 2015 report that Gilead set prices high in disregard of the human cost and in order to set the stage for a higher eventual price for Sovaldi's successor, Harvoni. The committee's investigation, based in part on internal documents obtained from Gilead, revealed that the company had considered prices ranging from $50,000 to $115,000 per year, trying to strike a balance between revenue and predicted activist and public relations blowback, with little regard to research and development costs. The pricing was found to be intentionally divorced from R&D costs. They are charging as much as they can because they can, not because of R&D.

maxerickson 1y ago
$84,000 for a (likely) cure is a huge improvement over ~$300,000 for a liver transplant. This is partly how they established the pricing, they knew that insurers would go for the cost savings. It's fascinating that "fair" ends up being that the drug developer has to capture the correct amount of the value they are providing the patient, and the patient gets the rest.
- fc417fc802 1y ago
  > It's fascinating that "fair" ends up being that the drug developer has to capture the correct amount of the value they are providing the patient, and the patient gets the rest. Keep in mind that the value is only "theirs" by force of IP law which at least officially exists for the benefit of society as a whole. Permitting a situation where people are priced out of a cure because the only available alternative is exorbitantly expensive doesn't seem moral or useful. If the concern is ensuring corporate investment into R&D then public policy could be adopted to subsidize R&D expenses either up front or after the fact.

vjvjvjvjghv 1y ago

The US taxpayer is mostly subsidizing stock buybacks.

CommenterPerson 1y ago

What are the development costs for Insulin, discovered 100 years ago? Americans overpay not to subsidize others but because Pharma Bros.

selectodude 1y ago
Newer insulins are pretty insane in how they work. Insulin icodec, for example, basically eliminated the need to set basal dosing because it's a once-weekly injection. Insulin is cheap. The newest, best, most convenient insulins are expensive.
- phanimahesh 1y ago
  I've heard even the plain old insulin is significantly more expensive in US compared to Europe.

skissane 1y ago

> Meanwhile, US companies remain the global leaders in the development of pharmaceuticals and medical equipment No denying the US plays a huge role in the global pharmaceutical industry - but Europe does too - semaglutide (Ozempic/Rybelsus/Wegovy) was developed by Novo Nordisk, headquartered in Denmark. The popular ADHD drug lisdexamfetamine (Vyvanse/Elvanse) was developed by a US-based research team, but they ended up being acquired by a British pharmaceutical company (Shire), which in turn was acquired by a Japanese company (Takeda), who owned the patents (which expired last year or the year before, depending on country), and remain one of the major manufacturers of it. If you want a career in drug development, there are huge opportunities in the EU and Switzerland; by no means are you limited to the US. As usual, in the US you will almost certainly get paid more, but some people find the social setting of Europe more to their liking, and view that as a compensating advantage which makes up for lower pay.

spjt 1y ago
As a former pharmaceutical chemist, the job market in the US is kind of shit, which is why I write code for a living.
jjani 1y ago
> As usual, in the US you will almost certainly get paid more Switzerland is one of the few countries where getting paid more in the US for the same job would generally not be an "as usual" :) The large majority of equivalent jobs gets paid more in Switzerland, including office ones. The ones that don't are the outliers (which are of course greatly overrepresented here on HN). This is IME, so feel free to correct me if I'm wrong.
0xDEAFBEAD 1y ago
Novo Nordisk charges about 10x as much for Ozempic in the US as it does in the EU: https://www.healthline.com/health-news/heres-how-much-more-ozempic-costs-in-the-u-s-compared-to-other-countries https://www.healthline.com/health-news/heres-how-much-more-o...

jonahhorowitz 1y ago

As long as they spend so much on marketing, it's hard to believe them when they say the only way they can recoup their R&D investments is to charge high prices. - *For many large pharmaceutical companies ("Big Pharma"), marketing costs often exceed R&D spending.* In analyses of the top 10 drugmakers by revenue in 2020, 7 companies spent more on sales and marketing than on research and development. For example, Johnson & Johnson spent $22 billion on marketing compared to $12 billion on R&D; Bayer spent $18 billion on marketing vs. $8 billion on R&D[1][2]. - The combined marketing spend for these top 10 companies exceeded R&D by $36 billion (about 37%) in 2020[1][2]. [1] https://www.ahip.org/news/articles/new-study-in-the-midst-of-covid-19-crisis-7-out-of-10-big-pharma-companies-spent-more-on-sales-and-marketing-than-r-d https://www.ahip.org/news/articles/new-study-in-the-midst-of... [2] https://www.csrxp.org/icymi-new-study-finds-big-pharma-spent-more-on-sales-and-marketing-than-rd-during-pandemic/ https://www.csrxp.org/icymi-new-study-finds-big-pharma-spent...

markdown 1y ago
Imagine how much cheaper healthcare could be if the US simply banned direct to consumer drug advertising. Surely that's something that would be easier to get bipartisan support for, somewhat avoiding the "socialism vs capitalism" chasm between the parties that prevents meaningful healthcare reform.
- mullingitover 1y ago
  If this bill passes[1] that's exactly what could happen. It won't, because this regime is irredeemably corrupt and controls all four branches of government, but it could. [2] https://nadler.house.gov/news/documentsingle.aspx?DocumentID=397390 https://nadler.house.gov/news/documentsingle.aspx?DocumentID...