3 ms·

Australia solved this. It's called the PBS. Basically, an independent board of experts does a cost-benefit analysis on new drugs (note - they don't call it cos

by wisty 12y ago

Australia solved this. It's called the PBS. Basically, an independent board of experts does a cost-benefit analysis on new drugs (note - they don't call it cost-benefit, but whatever). If the drugs are "worth it", then the Australian government massively subsidises them. If they aren't "worth it", then people can still get them, but they cost more. Insurance companies rarely pay for them. Patients can pay for them, but they'll usually find an alternative. Pharma companies then set their prices to a reasonable level. Effectively, you have a monopoly buyer (the government) and a monopoly seller (the patent holder). This is, in theory, far superior to the situation where there's a monopoly seller and a huge number of buyers. Of course, the US is doing God's work, by overpaying for drugs. This effectively subsidises drug research, and allows all the more socialist countries to freeload.

lafar6502 12y ago
funny, how do you think it works in 'socialist' countries? Pharma companies together with the government are giving pills for free? No, there's a national health insurance - a monopoly that is supposed to make rational decisions (in theory), but somehow ends up stuffing big pharma with taxpayer money. Exactly like those damn capitalists in the US
- danielweber 12y ago
  You obviously set up a strawman by saying that the pills "aren't free." Most countries use their ability to violate patents as a threat to squeeze drug companies down to a price that exceeds their costs on a marginal unit, but less than their costs on an average unit. It makes sense for the companies to go along because something is better than nothing and they still have the US paying full fare. The US cannot get in on this, too, without destroying the drug industry, which depends on revenue from the American customer base. Other systems are possible, but one should demonstrate their effectiveness before destroying the old system. So, yeah, like the grandparent said, the US is "unfairly" subsidizing the rest of the world. It would be nice if other countries shared the load, but the US can't force them.
  - gradstudent 12y ago
    > The US cannot get in on this, too, without destroying the drug industry, which depends on revenue from the American customer base. The mining sector often makes similar arguments whenever proposals are made to increase resource taxes and it's always a bunch of hot air. Introducing a government buyer to negotiate down the price of essential drugs (such as this Hep-C cure) will not put Big Pharma out business. It may impact profits but they'll still make billions upon billions of dollars.
Brakenshire 12y ago
> Of course, the US is doing God's work, by overpaying for drugs. This effectively subsidises drug research, and allows all the more socialist countries to freeload. Another way of looking at it is that the government is paying what the drug is worth, and no more, alongside banning direct-to-consumer advertising, and heavily restricting marketing to doctors, and is therefore setting extremely direct incentives for drug companies. i.e. it is a market operating between experts with equal access to time and evidence. The money spent on marketing and advertising to consumers (who have little expertise) and doctors (who often don't have the time to make a serious judgment) not only massively increases costs, but also distorts the market.

by wisty 12y ago

lafar6502 12y ago

funny, how do you think it works in 'socialist' countries? Pharma companies together with the government are giving pills for free? No, there's a national health insurance - a monopoly that is supposed to make rational decisions (in theory), but somehow ends up stuffing big pharma with taxpayer money. Exactly like those damn capitalists in the US

danielweber 12y ago
You obviously set up a strawman by saying that the pills "aren't free." Most countries use their ability to violate patents as a threat to squeeze drug companies down to a price that exceeds their costs on a marginal unit, but less than their costs on an average unit. It makes sense for the companies to go along because something is better than nothing and they still have the US paying full fare. The US cannot get in on this, too, without destroying the drug industry, which depends on revenue from the American customer base. Other systems are possible, but one should demonstrate their effectiveness before destroying the old system. So, yeah, like the grandparent said, the US is "unfairly" subsidizing the rest of the world. It would be nice if other countries shared the load, but the US can't force them.
- gradstudent 12y ago
  > The US cannot get in on this, too, without destroying the drug industry, which depends on revenue from the American customer base. The mining sector often makes similar arguments whenever proposals are made to increase resource taxes and it's always a bunch of hot air. Introducing a government buyer to negotiate down the price of essential drugs (such as this Hep-C cure) will not put Big Pharma out business. It may impact profits but they'll still make billions upon billions of dollars.

Brakenshire 12y ago

> Of course, the US is doing God's work, by overpaying for drugs. This effectively subsidises drug research, and allows all the more socialist countries to freeload. Another way of looking at it is that the government is paying what the drug is worth, and no more, alongside banning direct-to-consumer advertising, and heavily restricting marketing to doctors, and is therefore setting extremely direct incentives for drug companies. i.e. it is a market operating between experts with equal access to time and evidence. The money spent on marketing and advertising to consumers (who have little expertise) and doctors (who often don't have the time to make a serious judgment) not only massively increases costs, but also distorts the market.