Why drug prices in America are so high (2016) • Hacker News Board

Re: Why drug prices in America are so high (2016)

#11

Post by grabcocque » Mon, Mar 27, 2017, 4:01 PM UTC

Apfel wrote: post #6

ThomPete wrote: post #2

"The simple answer is because they can. European governments control prices in various ways—Britain has the strictest system, refusing to pay for medicines that fail to meet a threshold of cost-effectiveness. But in America companies set whatever official price they like."

If anyone's interested, England's system of health technology assessment (HTA) for the NHS is extremely transparent and world-leading. It's one of the things that we Brits should be extremely proud of (although pharma-sponsored sob story campaigns in tabloid newspapers may suggest otherwise). All new technologies are investigated in terms of incremental quality of life gain (vs current treatment norms) and changes in…

The interesting thing about NIHCE and its short existence is that it's a startling reminder that the idea that health policy should be evidence-based is still a new one.

NIHCE's greatest contribution has been that, in insisting on being evidence-based as de-politicised any and all questions about what treatments should be available.

I think this week's US shenanigans have showed that de-politicising healthcare is a very laudable goal.

Re: Why drug prices in America are so high (2016)

#12

Post by senior_james » Mon, Mar 27, 2017, 4:02 PM UTC

Drug prices are high because of government regulation. It can take up to a billion dollars and decades to get FDA approval and drug companies only have a limited time to recoup their investment before their patent expires. So they are forced to charge high prices.

This also reduces competition and creates a monopoly in the market. If regulations were reduced, it would bring in more competition and force the prices down.

Re: Why drug prices in America are so high (2016)

#13

Post by cowsandmilk » Mon, Mar 27, 2017, 4:03 PM UTC

whafro wrote: post #9

vowelless wrote: post #3

> And it is illegal for Medicare to negotiate with drug companies Why is this the case ? Also, this is from September 2016.

It was politics from a couple decades ago. Medicare historically didn't cover prescription drugs, until Part D was enacted during the Clinton administration. A tactic to get Republicans to support the measure was to pledge that Medicare wouldn't interfere in the drug market by developing its own formulary – Medicare Part D plan providers would compete for members and negotiate with pharmaceutical companies themselves…

> until Part D was enacted during the Clinton administration.

???? Medicare Part D came into being in 2003, well into Bush's administration. The whole rest of your post is based around the notion that it was proposed by Clinton, when it was Bush....

Re: Why drug prices in America are so high (2016)

#14

Post by dustingetz » Mon, Mar 27, 2017, 4:06 PM UTC

ThomPete wrote: post #2

"The simple answer is because they can. European governments control prices in various ways—Britain has the strictest system, refusing to pay for medicines that fail to meet a threshold of cost-effectiveness. But in America companies set whatever official price they like."

That quote seems to me to be missing a really important bit, which is that there doesn't seem to be a functioning free market which is a necessary condition to determine the price. (This comment is not aimed at you, it is aimed at the article for supplying such a broken explanation)

Re: Why drug prices in America are so high (2016)

#15

Post by chimeracoder » Mon, Mar 27, 2017, 4:06 PM UTC

Apfel wrote: post #6

ThomPete wrote: post #2

"The simple answer is because they can. European governments control prices in various ways—Britain has the strictest system, refusing to pay for medicines that fail to meet a threshold of cost-effectiveness. But in America companies set whatever official price they like."

If anyone's interested, England's system of health technology assessment (HTA) for the NHS is extremely transparent and world-leading. It's one of the things that we Brits should be extremely proud of (although pharma-sponsored sob story campaigns in tabloid newspapers may suggest otherwise). All new technologies are investigated in terms of incremental quality of life gain (vs current treatment norms) and changes in…

> It's one of the things that we Brits should be extremely proud of (although pharma-sponsored sob story campaigns in tabloid newspapers may suggest otherwise). They consider everything in a wider context of opportunity cost of adopting a new treatment and budget constraints.

For context, this is literally what risk-bearing entities in the US already do (both insurers and at-risk providers).

I could get behind the statement that risk-bearing entities should be performing methodical cost-benefit analysis of care coverage, but the fact remains that, at the end of the day, that means that someone is making the decision to deny certain people coverage because it's not cost-effective. Whether you have clinicians and analysts at an insurance insurance company performing that role or the government clinical panel of clinicians and analysts performing that role, it still results in some people having their care approved and some having their treatments denied[0].

It's weird to then dismiss the negative side of the tradeoffs as "pharma-sponsored sob story campaigns" in the UK, when those same stories are accepted as evidence of the systemic problems within the US.

[0] And to pre-empt the common misguided criticism that "it's better because it's not a for-profit company making the decision", that assumes that government agencies don't have a profit motive just because they that's not recorded on their balance sheet (they do), and it also forgets the counterintuitive fact that the explicit profit incentive in the US actually incentivizes the company to permit claims on more expensive treatments if the patient requests them.

Re: Why drug prices in America are so high (2016)

#16

Post by maxerickson » Mon, Mar 27, 2017, 4:08 PM UTC

cowsandmilk wrote: post #13

whafro wrote: post #9

Earlier quoted context omitted.

It was politics from a couple decades ago. Medicare historically didn't cover prescription drugs, until Part D was enacted during the Clinton administration. A tactic to get Republicans to support the measure was to pledge that Medicare wouldn't interfere in the drug market by developing its own formulary – Medicare Part D plan providers would compete for members and negotiate with pharmaceutical companies themselves…

> until Part D was enacted during the Clinton administration. ???? Medicare Part D came into being in 2003, well into Bush's administration. The whole rest of your post is based around the notion that it was proposed by Clinton, when it was Bush....

The support in the House of Representatives was also mostly Republican:

http://clerk.house.gov/evs/2003/roll332.xml

Re: Why drug prices in America are so high (2016)

#17

Post by spikels » Mon, Mar 27, 2017, 4:11 PM UTC

whafro wrote: post #9

vowelless wrote: post #3

> And it is illegal for Medicare to negotiate with drug companies Why is this the case ? Also, this is from September 2016.

It was politics from a couple decades ago. Medicare historically didn't cover prescription drugs, until Part D was enacted during the Clinton administration. A tactic to get Republicans to support the measure was to pledge that Medicare wouldn't interfere in the drug market by developing its own formulary – Medicare Part D plan providers would compete for members and negotiate with pharmaceutical companies themselves…

This history of Part D is so polically distorted it is almost exactly backwards.

https://mobile.nytimes.com/2003/03/05/us/bush-medicare-propo...

Re: Why drug prices in America are so high (2016)

#18

Post by chimeracoder » Mon, Mar 27, 2017, 4:11 PM UTC

dv_dt wrote: post #7

vowelless wrote: post #3

> And it is illegal for Medicare to negotiate with drug companies Why is this the case ? Also, this is from September 2016.

It was part of the Medicare part D program - and likely put in via lobbying of Drug companies to politicians: https://en.wikipedia.org/wiki/Medicare_Part_D#Criticisms https://en.wikipedia.org/wiki/Medicare_Prescription_Drug,_Im...

> It was part of the Medicare part D program - and likely put in via lobbying of Drug companies to politicians:

The prices are still negotiated. They're negotiated by the plans that provide Medicare Part D, rather than determined unilaterally by Medicare itself (which is what happens for Medicare A and B reimbursement rates).

Re: Why drug prices in America are so high (2016)

#19

Post by refurb » Mon, Mar 27, 2017, 4:12 PM UTC

Apfel wrote: post #6

ThomPete wrote: post #2

"The simple answer is because they can. European governments control prices in various ways—Britain has the strictest system, refusing to pay for medicines that fail to meet a threshold of cost-effectiveness. But in America companies set whatever official price they like."

If anyone's interested, England's system of health technology assessment (HTA) for the NHS is extremely transparent and world-leading. It's one of the things that we Brits should be extremely proud of (although pharma-sponsored sob story campaigns in tabloid newspapers may suggest otherwise). All new technologies are investigated in terms of incremental quality of life gain (vs current treatment norms) and changes in…

I would argue HTA is not without it's problems. That's why the UK has a cancer drug fund. NICE has said "no" to those drugs, yet the public still clammers for them. So a separate funding mechanism was created to pay for them.[1]

[1]https://www.england.nhs.uk/cancer/cdf/

Re: Why drug prices in America are so high (2016)

#20

Post by doktrin » Mon, Mar 27, 2017, 4:13 PM UTC

> These high prices support innovation, they argue—not just for America, but for the world.

I suspect this is in fact somewhat true, but how is it a coherent argument in favor of higher prices? The American people / American elderly (obviously) don't have some unspoken moral obligation to subsidize pharmaceutical R&D for the whole world.

Governments around the world are able to negotiate affordable rates for their citizens, yet in the US we have to listen to these completely insane justifications?

IMO if the US government (who presumably agree with the drug companies on this) feels this strongly about subsidizing research they could always expand federal research grants and/or NIH funding. Yet I suspect that's a non starter for political reasons.