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Why drug prices in America are so high (2016)

economist.com

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

#21

Post by refurb »

chimeracoder wrote: post #8
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."

> "The simple answer is because they can. The easiest way to fix the fact that 'they can' would be to permit re-importating drugs that were manufactured within the US. Shortly before Obama left office, there was a bill that would have fixed that, but nine Democrats joined the Republicans in voting it down: https://www.senate.gov/legislative/LIS/roll_call_lists/roll_...

Please explain how that would work.

If I'm Pfizer, why on earth would I dramatically increase my sales of drugs to Canada knowing they're just going to be reimported into the US?

The answer is, I wouldn't. I would put a quota on Canadian sales. Sell them enough drugs for Canadians. This was actually done about a decade ago when reimportation was more popular.

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

#23

Post by ancap »

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."

For a publication named "The Economist" that's quite the intellectually lazy answer. They say nothing of the existing conditions which make it possible for a company to arbitrarily set drug prices (after all, few other businesses in the economy enjoy such a privilege). Furthermore, the answer is not even satisfying to those who may have a rudimentary grasp on economics. After all, if the reason is "because they can" why not raise the price of their drugs to $1 million per dose? This argumentum ad absurdum demonstrates that even with the lack of medicinal alternatives, there are certain economic factors which prevent astronomically high prices.

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

#24

Post by refurb »

maxerickson wrote: post #10
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.

This has background: http://kff.org/medicare/issue-brief/searching-for-savings-in... A summary is that when the coverage was established, the law was written so that Health and Human Services is prevented from participating in price discussions, it's left to the private companies that underwrite the policies. You can bet that if Medicare did establish a formulary, we'd be talking about the problems with that instead.

This is the most accurate answer. Medicare doesn't negotiation on drug prices. The private insurers who manage the Part D plans do the negotiations and yes, they get significant price concessions (sometimes higher than for commercial patients).

When these private plans negotiation lower prices, they can in turn cover more patients for fewer dollars. That's why Part D has actually come in well under projected costs.

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

#25

Post by RcouF1uZ4gsC »

This has a very simple fix, and is a fix that would appeal to Donald Trump:

Require that pharmaceutical companies do not charge Americans any more for their drugs than what they charge any developed country.

This lets other countries do the dirty work of negotiating prices while reaping the benefits for the US. In addition, it goes along with his whole America is getting screwed narrative - ie that other companies are taking advantage of the fact that American markets pay for the drug developments, and other countries reap benefits of cheap drugs and that he would put America back on equal footing.

EDIT: Thanks for the great comments. To ease with the concern about hurting the very poor countries, we could substitute "developed country" with "OECD country" (http://www.oecd.org/about/membersandpartners/list-oecd-membe... which are relatively rich countries).

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

#26

Post by toomuchtodo »

refurb wrote: post #21
chimeracoder wrote: post #8

Earlier quoted context omitted.

> "The simple answer is because they can. The easiest way to fix the fact that 'they can' would be to permit re-importating drugs that were manufactured within the US. Shortly before Obama left office, there was a bill that would have fixed that, but nine Democrats joined the Republicans in voting it down: https://www.senate.gov/legislative/LIS/roll_call_lists/roll_...

Please explain how that would work. If I'm Pfizer, why on earth would I dramatically increase my sales of drugs to Canada knowing they're just going to be reimported into the US? The answer is, I wouldn't. I would put a quota on Canadian sales. Sell them enough drugs for Canadians. This was actually done about a decade ago when reimportation was more popular.

That's how you get your patent broken.

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

#27

Post by sharemywin »

chimeracoder wrote: post #15
Apfel wrote: post #6

Earlier quoted context omitted.

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 st…

-> that assumes that government agencies don't have a profit motive just because they that's not recorded on their balance sheet (they do)

As long as you say so. Every must agree.

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

#28

Post by Apfel »

grabcocque wrote: post #11
Apfel wrote: post #6

Earlier quoted context omitted.

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 v…

Just for the record, although the acronym does technically spell out NIHCE since they changed the name, they've stuck with the "NICE" branding.

It allows for all sorts of pun titles for academic papers like the following:

[i] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1734179/pdf/v03...

[ii] http://www.nature.com/bdj/journal/v215/n5/full/sj.bdj.2013.8...

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

#29

Post by harryh »

chimeracoder wrote: post #8
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."

> "The simple answer is because they can. The easiest way to fix the fact that 'they can' would be to permit re-importating drugs that were manufactured within the US. Shortly before Obama left office, there was a bill that would have fixed that, but nine Democrats joined the Republicans in voting it down: https://www.senate.gov/legislative/LIS/roll_call_lists/roll_...

This is a silly hack.

The US has plenty of market power to reduce prices for drugs sold in the US. There are reasons to be in favor of wielding that market power and there are reasons to be against it. But there is no rational reason to pretend to not wield it but then re-import a bunch of drugs from Canada. That's just a waste of shipping costs.

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

#30

Post by sharemywin »

chimeracoder wrote: post #15
Apfel wrote: post #6

Earlier quoted context omitted.

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 st…

At the end of the day if you don't have the money to pay for a treatment yourself then someone else is making a cost to benefit analysis.
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