4 ms·

I don't know figures, but I imagine Kaiser represents more than 35 million people (the approx population of Canada). Shouldn't they be able to negotiate the sa

by giarc 12y ago

I don't know figures, but I imagine Kaiser represents more than 35 million people (the approx population of Canada). Shouldn't they be able to negotiate the same price?

refurb 12y ago
Bingo! The largest US private insurer (United) cover 40M lives in the US. They pay higher prices than nearly all European countries (even the ones with smaller populations). Drugs aren't cheaper in places like the UK because the gov't negotiates lower prices. Drugs are cheaper because the gov't mandates lower prices. People shouldn't confuse the two.
- zaroth 12y ago
  So is the UK not concerned about mandating lower prices and squeezing the R&D funnel for new drugs... because Americans are making up the difference?
  - adwf 12y ago
    Drug companies spend more on marketing drugs to doctors and consumers than they do on R&D. In the UK, marketing drugs is illegal and therefore they don't need to go to that expense. All they have to do is convince an NHS board and then it's on the list of approved prescribed drugs.
    - maxerickson 12y ago
      Do you have a favorite citation for that factoid? Some similar claims I have looked at have used the "Selling, General, Administrative" off of an income statement as the marketing expense, but that category includes salaries and buildings and lots of other things, not just marketing expenses.
      - adwf 12y ago
        Just a quick googling: http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/11/b... http://www.bbc.co.uk/news/business-28212223 http://www.bbc.co.uk/news/business-28212223 Reading the BBC article reminded me of all the fines also. People are paying extra because drug companies push off-label uses on consumers and then get fined for it. It's not like the company really pays, they just up their prices a bit and push it onto the consumer. That sort of off-label usage doesn't happen in the UK so much, because doctors don't have any incentive to prescribe anything other than the NHS approved drug for a condition.
        maxerickson 12y ago
        So here's the financial segment of Johnson and Johnson's 2013 annual report: http://2013annualreport.jnj.com/sites/2013annualreport.jnj.com/files/2013_Johnson_Johnson_Annual_Report_Audited_Consolidated_Financial_Statements.pdf http://2013annualreport.jnj.com/sites/2013annualreport.jnj.c... (linked from here: http://2013annualreport.jnj.com/financials http://2013annualreport.jnj.com/financials ) In one place, it says this: Advertising Costs associated with advertising are expensed in the year incurred and are included in selling, marketing and administrative expenses. Advertising expenses worldwide, which comprised television, radio, print media and Internet advertising, were $2.5 billion, $2.3 billion and $2.6 billion in 2013, 2012 and 2011, respectively. That advertising number most likely does not include money they spend directly marketing to doctors and so on. So the Global Data report referenced by the BBC implies they are spending $15 billion directly marketing to doctors and other medical people/organizations. The next step would be to figure out what they are spending paying employees (with 120,000 of them, quite a lot), but I can't find good numbers on that.
        ptaipale 12y ago
        "Marketing drugs to doctors" is not exactly the same as "total sales and marketing budget". I don't even know if "cost of sales" includes the cost of regulatory approvals in various countries. Also note that there is not necessarily anything bad about off-label use of medicines. Medicines could be off-label simply for the reason that the regulator - out of pressure from the public health insurer, or more bluntly just the Department of Treasury in the country - does not approve using a medicine for some purpose, even though it is known to be efficient and without bad side effects. In fact, in some cases patients are complaining bitterly because they cannot get the medicine that their doctor knows would help them, because their regulators do not approve off-label use.
    - refurb 12y ago
      In the UK, marketing drugs is illegal Whoa there. Says who? The largest part of marketing drugs is paying sales reps to visit doctors. Are you saying that's banned in the UK? From what I've seen that's not true. If you're saying DTC (direct to consumer) marketing is banned, then I agree (for prescription drugs). DTC is not all there is to drug marketing. Also, you're fooling yourself if you think doctors have the time to research new drugs. That's why there are reps. They provide educational information, data from new trials, etc, etc.
      - adwf 12y ago
        Individual doctors do not make purchasing decisions. They don't have pharma reps turn up at GP clinics handing out free lunches in exchange for prescriptions. The NHS decides what drugs are allowed to be prescribed and doctors are limited to that list. It puts a huge crimp in any marketing.
        refurb 12y ago
        I'd have to disagree. Individual doctors don't make purchasing decisions, but they do make prescribing decisions which drive sales. They are the key stakeholder when it comes to pharmaceutical marketing. They may not be buying lunches in the UK, but sale reps are getting time with doctors and talking up their products.
        ptaipale 12y ago
        BTW, is there a law in UK (or US) about using generic products? Over here, a doctor prescribes something, but pharmacies have the responsibility to offer cheapest product, typically a generic replacement when available, unless the doctor justifies a specific brand with specific medical reasons (which are rather hard to come by).

by giarc 12y ago

I don't know figures, but I imagine Kaiser represents more than 35 million people (the approx population of Canada). Shouldn't they be able to negotiate the same price?

refurb 12y ago

Bingo! The largest US private insurer (United) cover 40M lives in the US. They pay higher prices than nearly all European countries (even the ones with smaller populations). Drugs aren't cheaper in places like the UK because the gov't negotiates lower prices. Drugs are cheaper because the gov't mandates lower prices. People shouldn't confuse the two.

zaroth 12y ago
So is the UK not concerned about mandating lower prices and squeezing the R&D funnel for new drugs... because Americans are making up the difference?
- adwf 12y ago
  Drug companies spend more on marketing drugs to doctors and consumers than they do on R&D. In the UK, marketing drugs is illegal and therefore they don't need to go to that expense. All they have to do is convince an NHS board and then it's on the list of approved prescribed drugs.
  - maxerickson 12y ago
    Do you have a favorite citation for that factoid? Some similar claims I have looked at have used the "Selling, General, Administrative" off of an income statement as the marketing expense, but that category includes salaries and buildings and lots of other things, not just marketing expenses.
    - adwf 12y ago
      Just a quick googling: http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/11/big-pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/ http://www.washingtonpost.com/blogs/wonkblog/wp/2015/02/11/b... http://www.bbc.co.uk/news/business-28212223 http://www.bbc.co.uk/news/business-28212223 Reading the BBC article reminded me of all the fines also. People are paying extra because drug companies push off-label uses on consumers and then get fined for it. It's not like the company really pays, they just up their prices a bit and push it onto the consumer. That sort of off-label usage doesn't happen in the UK so much, because doctors don't have any incentive to prescribe anything other than the NHS approved drug for a condition.
      - maxerickson 12y ago
        So here's the financial segment of Johnson and Johnson's 2013 annual report: http://2013annualreport.jnj.com/sites/2013annualreport.jnj.com/files/2013_Johnson_Johnson_Annual_Report_Audited_Consolidated_Financial_Statements.pdf http://2013annualreport.jnj.com/sites/2013annualreport.jnj.c... (linked from here: http://2013annualreport.jnj.com/financials http://2013annualreport.jnj.com/financials ) In one place, it says this: Advertising Costs associated with advertising are expensed in the year incurred and are included in selling, marketing and administrative expenses. Advertising expenses worldwide, which comprised television, radio, print media and Internet advertising, were $2.5 billion, $2.3 billion and $2.6 billion in 2013, 2012 and 2011, respectively. That advertising number most likely does not include money they spend directly marketing to doctors and so on. So the Global Data report referenced by the BBC implies they are spending $15 billion directly marketing to doctors and other medical people/organizations. The next step would be to figure out what they are spending paying employees (with 120,000 of them, quite a lot), but I can't find good numbers on that.
      - ptaipale 12y ago
        "Marketing drugs to doctors" is not exactly the same as "total sales and marketing budget". I don't even know if "cost of sales" includes the cost of regulatory approvals in various countries. Also note that there is not necessarily anything bad about off-label use of medicines. Medicines could be off-label simply for the reason that the regulator - out of pressure from the public health insurer, or more bluntly just the Department of Treasury in the country - does not approve using a medicine for some purpose, even though it is known to be efficient and without bad side effects. In fact, in some cases patients are complaining bitterly because they cannot get the medicine that their doctor knows would help them, because their regulators do not approve off-label use.
  - refurb 12y ago
    In the UK, marketing drugs is illegal Whoa there. Says who? The largest part of marketing drugs is paying sales reps to visit doctors. Are you saying that's banned in the UK? From what I've seen that's not true. If you're saying DTC (direct to consumer) marketing is banned, then I agree (for prescription drugs). DTC is not all there is to drug marketing. Also, you're fooling yourself if you think doctors have the time to research new drugs. That's why there are reps. They provide educational information, data from new trials, etc, etc.
    - adwf 12y ago
      Individual doctors do not make purchasing decisions. They don't have pharma reps turn up at GP clinics handing out free lunches in exchange for prescriptions. The NHS decides what drugs are allowed to be prescribed and doctors are limited to that list. It puts a huge crimp in any marketing.
      - refurb 12y ago
        I'd have to disagree. Individual doctors don't make purchasing decisions, but they do make prescribing decisions which drive sales. They are the key stakeholder when it comes to pharmaceutical marketing. They may not be buying lunches in the UK, but sale reps are getting time with doctors and talking up their products.
        ptaipale 12y ago
        BTW, is there a law in UK (or US) about using generic products? Over here, a doctor prescribes something, but pharmacies have the responsibility to offer cheapest product, typically a generic replacement when available, unless the doctor justifies a specific brand with specific medical reasons (which are rather hard to come by).