7 ms·

People with no money in the US go on Medicaid, and Medicaid is legally obligated to pay for any medically necessarily FDA-approved drug. Much of the article ab

by ef4 12y ago

People with no money in the US go on Medicaid, and Medicaid is legally obligated to pay for any medically necessarily FDA-approved drug. Much of the article above is essentially about state Medicaid programs freaking out for exactly this reason.

waps 12y ago
This is probably one of the rules that makes it so easy for pharma companies to make medicine so expensive. Most European welfare states refuse certain treatments based on costs. This can, obviously, really suck because there are (sometimes) no private options, or they're unrealistic. And of course, every few years an expensive option is made available for a year or so because some politician's daughter happens to have it. This has been a criticism of Europe. Drugs get developed because Americans will pay for them, then when the cost is mostly recouped (ie. a decade later), it finally becomes available in Europe. This is freeloading, but you can't really blame them.
- DanBC 12y ago
  > Drugs get developed because Americans will pay for them, then when the cost is mostly recouped (ie. a decade later), it finally becomes available in Europe. Does anyone have any reputable cites for this please?
  - hellrich 12y ago
    Sounds implausible, given the number of European pharma companies...
    - briandh 12y ago
      That doesn't follow at all; foreign drug companies sell plenty of drugs to Americans. The test of that assertion is to look at when drugs have been introduced to different markets, compared to R&D costs and the price the manufacturer got for them.
- rbehrends 12y ago
  This is an inaccurate generalization. The NHS does that to some extent, but (for example) neither France nor Germany do it. In fact, access to anticancer drugs in France is pretty exemplary [1, 2]. Countries that ensure universal access to approved drugs generally keep costs down by the negotiation power of a government-backed monopsony combined with the threat of compulsory licensing should demands be excessive (rarely exercised, but the fate of BRCA1/BRCA2 tests in France is an example). [1] https://www.youtube.com/watch?v=_yF69KVbUaQ&t=4m11s https://www.youtube.com/watch?v=_yF69KVbUaQ&t=4m11s [2] http://blogs.reuters.com/anya-schiffrin/2014/02/12/the-french-way-of-cancer-treatment/ http://blogs.reuters.com/anya-schiffrin/2014/02/12/the-frenc...
  - Brakenshire 12y ago
    In France that seems to have been the case until recently, but not any longer: > New drug regulations in France: what are the impacts on market access? "Cost-effectiveness studies will now be part of the market access requirements for all drugs in order to satisfy the selection criteria for medico-economic assessment." ... "Conclusion: In light of these changes, it clearly appears that the access to the French drug market will be increasingly driven by data pertaining to comparative-effectiveness and cost-effectiveness, and an increased role of postmarketing studies in the years to come." http://www.jmahp.net/index.php/jmahp/article/download/20891/29560 http://www.jmahp.net/index.php/jmahp/article/download/20891/... > Countries that ensure universal access to approved drugs generally keep costs down by the negotiation power of a government-backed monopsony combined with the threat of compulsory licensing should demands be excessive Putting compulsory licensing aside, which does not happen in many countries, I don't think this contradicts the poster above - a government agency makes a judgement about the cost-effectiveness of a particular drug, and they either decide to buy or not to buy depending on whether the price is above or below that limit.
    - rbehrends 12y ago
      > In France that seems to have been the case until recently, but not any longer As your source notes, that does not affect "irreplaceable and expensive drugs". Cost-effectiveness concerns are typically about cases such as reimbursement for a generic vs. an equally-effective non-generic medicine. > Putting compulsory licensing aside, which does not happen in many countries, I don't think this contradicts the poster above - a government agency makes a judgement about the cost-effectiveness of a particular drug, and they either decide to buy or not to buy depending on whether the price is above or below that limit. Regarding compulsory licensing: contrary to what some people think, Europe isn't actually all that socialist; compulsory licensing exists as an ultima ratio in cases where the greed of a pharmaceutic corporation would endanger access to an important new drug or procedure (which was exactly the case in the BRCA case). It's a Sword of Damocles, not a weapon that's being wielded routinely. Whether the option actually exists is irrelevant: with a government-backed negotiator, it can always be legislated into practice (again, which is what happened in the BRCA case after a firestorm of criticism). Regarding government agencies making a cost-effectiveness judgement about the purchase of a drug, that's again an inaccurate generalization. First of all, recall that private insurance companies make such decisions all the time (see the article I referenced above), with the difference that they are interested only in their own bottom line, and that the health of their customers only enters into that calculation insofar as it affects profit or regulations force them to (the latter of which is the exact same situation as government backed-negotiation, except for the lack of the bargaining power of a monopsony). Second, a minority of drugs are actually monopolies; price a drug for which there is competition out of the market, and you simply put money in your competitor's pocket. Likewise, drug companies don't just want to sell one single drug. Ask for too much for their one new irreplaceable drug, and they may see the income from their other ones go down (there is, after all, only so much money to be had in total). Third, this is not necessarily how it happens. For example, it may not be a government agency (as in Germany, for example), and the agency may not have the power to make a decision whether to buy or not to buy a drug, but only whether the drug is effective (including relative effectiveness compared to other drugs), especially for life-saving drugs.
- arethuza 12y ago
  "certain treatments based on costs" I think here in the UK it's slightly more accurate to say that the NHS limits treatments on a balance of costs and expected benefits.
  - makomk 12y ago
    "Balance of costs and expected benefits" is definitely more accurate. For example, if the claims for this drug are accurate, I'd be surprised if it didn't make the cut because it has some pretty clear long-term benefits. The treatments you hear about the NHS not funding are generally ones which are both expensive and not terribly effective.
    - andygates 12y ago
      Indeed: The typical examples are cancer drugs for a specific cancer, which give a few extra months of good-quality life. The cost/benefit on these is not clear-cut.
- Brakenshire 12y ago
  > And of course, every few years an expensive option is made available for a year or so because some politician's daughter happens to have it. Has this ever actually happened? This reads like a caricature. The decisions about cost-effectiveness in Britain are made by the National Institute for Clinical Excellence, which has a very strong reputation for rigor and independence.
bradleyjg 12y ago
> People with no money in the US go on Medicaid Alas not necessarily. PPACA (aka Obamacare) was supposed to ensure exactly that, but the Supreme Court struck down those provisions. So in 24 states Medicaid does not necessarily cover poor, non-senior, non-disabled adults without dependent minor children. That's leaving aside the entire category of aliens which even in the other 26 states have only spotty coverage.
cpwright 12y ago
This struck me as the largest problem here. They can charge $84,000; and medicare/medicaid will pay nearly that because they have no choice. If they could refuse based on cost, then Gilead would have more incentive to lower the cost. There is very little true price discovery going on when the largest payer for healthcare services has absolutely no choice to purchase the product at a given price. All they have to do is get a new treatment approved (i.e. show that it works and is safe), and then the government has no choice but to buy it. I don't see anything wrong with Gilead charging $84,000 for curing a disease. I just see something wrong with the stats not being able to take it or leave it.
- obvious_throw 12y ago
  An easy fix here is for the patient to be evaluated for fault. If you got Hep C via botched transfusion, you're covered; if, however, you are a degenerate who chose to scrounge up used heroin needles from alleyways, then you're not. This is, of course, for reasons nobody can adequately respond to with reason instead of feelings, unpopular. But it's certainly 1. fair and 2. a large cost savings, given the sheer number of Hep C patients who brought it on themselves.
  - brixon 12y ago
    It's not a cost savings in the long run. 1. They will spread it to more people. 2. The disease causes more issues that will end up costing more than this drug. This will not be an issue when the masses that have Hep-C now are cured. This is mostly a short term financing problem. Would you rather solve the issue for $1X now or pay $3-5X over time to deal with it. I would rather cure the masses now and lower the long term medical costs.
  - king_jester 12y ago
    To punish addicts by denying them health care is extremely cruel and unfair. There is no basis for denying care because of your irrational hatred.
    - obvious_throw 12y ago
gordjw 12y ago
Ah, thank you. I was under the impression that Medicaid was just another form of insurance, which would need to be paid for like normal insurance. That sounds similar to Medicare (Australia), although I haven't had to use Medicare to pay for medications. That certainly does make it seem like they're attempting to price gouge the government, because "they can afford to pay".

by ef4 12y ago

waps 12y ago

This is probably one of the rules that makes it so easy for pharma companies to make medicine so expensive. Most European welfare states refuse certain treatments based on costs. This can, obviously, really suck because there are (sometimes) no private options, or they're unrealistic. And of course, every few years an expensive option is made available for a year or so because some politician's daughter happens to have it. This has been a criticism of Europe. Drugs get developed because Americans will pay for them, then when the cost is mostly recouped (ie. a decade later), it finally becomes available in Europe. This is freeloading, but you can't really blame them.

DanBC 12y ago
> Drugs get developed because Americans will pay for them, then when the cost is mostly recouped (ie. a decade later), it finally becomes available in Europe. Does anyone have any reputable cites for this please?
- hellrich 12y ago
  Sounds implausible, given the number of European pharma companies...
  - briandh 12y ago
    That doesn't follow at all; foreign drug companies sell plenty of drugs to Americans. The test of that assertion is to look at when drugs have been introduced to different markets, compared to R&D costs and the price the manufacturer got for them.
rbehrends 12y ago
This is an inaccurate generalization. The NHS does that to some extent, but (for example) neither France nor Germany do it. In fact, access to anticancer drugs in France is pretty exemplary [1, 2]. Countries that ensure universal access to approved drugs generally keep costs down by the negotiation power of a government-backed monopsony combined with the threat of compulsory licensing should demands be excessive (rarely exercised, but the fate of BRCA1/BRCA2 tests in France is an example). [1] https://www.youtube.com/watch?v=_yF69KVbUaQ&t=4m11s https://www.youtube.com/watch?v=_yF69KVbUaQ&t=4m11s [2] http://blogs.reuters.com/anya-schiffrin/2014/02/12/the-french-way-of-cancer-treatment/ http://blogs.reuters.com/anya-schiffrin/2014/02/12/the-frenc...
- Brakenshire 12y ago
  In France that seems to have been the case until recently, but not any longer: > New drug regulations in France: what are the impacts on market access? "Cost-effectiveness studies will now be part of the market access requirements for all drugs in order to satisfy the selection criteria for medico-economic assessment." ... "Conclusion: In light of these changes, it clearly appears that the access to the French drug market will be increasingly driven by data pertaining to comparative-effectiveness and cost-effectiveness, and an increased role of postmarketing studies in the years to come." http://www.jmahp.net/index.php/jmahp/article/download/20891/29560 http://www.jmahp.net/index.php/jmahp/article/download/20891/... > Countries that ensure universal access to approved drugs generally keep costs down by the negotiation power of a government-backed monopsony combined with the threat of compulsory licensing should demands be excessive Putting compulsory licensing aside, which does not happen in many countries, I don't think this contradicts the poster above - a government agency makes a judgement about the cost-effectiveness of a particular drug, and they either decide to buy or not to buy depending on whether the price is above or below that limit.
  - rbehrends 12y ago
    > In France that seems to have been the case until recently, but not any longer As your source notes, that does not affect "irreplaceable and expensive drugs". Cost-effectiveness concerns are typically about cases such as reimbursement for a generic vs. an equally-effective non-generic medicine. > Putting compulsory licensing aside, which does not happen in many countries, I don't think this contradicts the poster above - a government agency makes a judgement about the cost-effectiveness of a particular drug, and they either decide to buy or not to buy depending on whether the price is above or below that limit. Regarding compulsory licensing: contrary to what some people think, Europe isn't actually all that socialist; compulsory licensing exists as an ultima ratio in cases where the greed of a pharmaceutic corporation would endanger access to an important new drug or procedure (which was exactly the case in the BRCA case). It's a Sword of Damocles, not a weapon that's being wielded routinely. Whether the option actually exists is irrelevant: with a government-backed negotiator, it can always be legislated into practice (again, which is what happened in the BRCA case after a firestorm of criticism). Regarding government agencies making a cost-effectiveness judgement about the purchase of a drug, that's again an inaccurate generalization. First of all, recall that private insurance companies make such decisions all the time (see the article I referenced above), with the difference that they are interested only in their own bottom line, and that the health of their customers only enters into that calculation insofar as it affects profit or regulations force them to (the latter of which is the exact same situation as government backed-negotiation, except for the lack of the bargaining power of a monopsony). Second, a minority of drugs are actually monopolies; price a drug for which there is competition out of the market, and you simply put money in your competitor's pocket. Likewise, drug companies don't just want to sell one single drug. Ask for too much for their one new irreplaceable drug, and they may see the income from their other ones go down (there is, after all, only so much money to be had in total). Third, this is not necessarily how it happens. For example, it may not be a government agency (as in Germany, for example), and the agency may not have the power to make a decision whether to buy or not to buy a drug, but only whether the drug is effective (including relative effectiveness compared to other drugs), especially for life-saving drugs.
arethuza 12y ago
"certain treatments based on costs" I think here in the UK it's slightly more accurate to say that the NHS limits treatments on a balance of costs and expected benefits.
- makomk 12y ago
  "Balance of costs and expected benefits" is definitely more accurate. For example, if the claims for this drug are accurate, I'd be surprised if it didn't make the cut because it has some pretty clear long-term benefits. The treatments you hear about the NHS not funding are generally ones which are both expensive and not terribly effective.
  - andygates 12y ago
    Indeed: The typical examples are cancer drugs for a specific cancer, which give a few extra months of good-quality life. The cost/benefit on these is not clear-cut.
Brakenshire 12y ago
> And of course, every few years an expensive option is made available for a year or so because some politician's daughter happens to have it. Has this ever actually happened? This reads like a caricature. The decisions about cost-effectiveness in Britain are made by the National Institute for Clinical Excellence, which has a very strong reputation for rigor and independence.

bradleyjg 12y ago

> People with no money in the US go on Medicaid Alas not necessarily. PPACA (aka Obamacare) was supposed to ensure exactly that, but the Supreme Court struck down those provisions. So in 24 states Medicaid does not necessarily cover poor, non-senior, non-disabled adults without dependent minor children. That's leaving aside the entire category of aliens which even in the other 26 states have only spotty coverage.

cpwright 12y ago

This struck me as the largest problem here. They can charge $84,000; and medicare/medicaid will pay nearly that because they have no choice. If they could refuse based on cost, then Gilead would have more incentive to lower the cost. There is very little true price discovery going on when the largest payer for healthcare services has absolutely no choice to purchase the product at a given price. All they have to do is get a new treatment approved (i.e. show that it works and is safe), and then the government has no choice but to buy it. I don't see anything wrong with Gilead charging $84,000 for curing a disease. I just see something wrong with the stats not being able to take it or leave it.

obvious_throw 12y ago
An easy fix here is for the patient to be evaluated for fault. If you got Hep C via botched transfusion, you're covered; if, however, you are a degenerate who chose to scrounge up used heroin needles from alleyways, then you're not. This is, of course, for reasons nobody can adequately respond to with reason instead of feelings, unpopular. But it's certainly 1. fair and 2. a large cost savings, given the sheer number of Hep C patients who brought it on themselves.
- brixon 12y ago
  It's not a cost savings in the long run. 1. They will spread it to more people. 2. The disease causes more issues that will end up costing more than this drug. This will not be an issue when the masses that have Hep-C now are cured. This is mostly a short term financing problem. Would you rather solve the issue for $1X now or pay $3-5X over time to deal with it. I would rather cure the masses now and lower the long term medical costs.
- king_jester 12y ago
  To punish addicts by denying them health care is extremely cruel and unfair. There is no basis for denying care because of your irrational hatred.
  - obvious_throw 12y ago

gordjw 12y ago

Ah, thank you. I was under the impression that Medicaid was just another form of insurance, which would need to be paid for like normal insurance. That sounds similar to Medicare (Australia), although I haven't had to use Medicare to pay for medications. That certainly does make it seem like they're attempting to price gouge the government, because "they can afford to pay".