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Why drug prices in America are so high (2016)
51–60 of 204 posts
Re: Why drug prices in America are so high (2016)
#52> 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 ci…
This. Do we need to subsidize Sweden and Germany? I have wondered for a while why we don't make a law saying the highest price you can sell a drug for in the US is no higher than the lowest negotiated price that drug is sold to in other rich countries. So if Canada negotiates a drug for $10 then that is the highest price you can sell it for here etc. That way they can set the prices however they want but collective b…
Something tells me this would be against some WTO rules. The US gov could simply negotiate a better deal just like Germany, Sweden or any other country does but...I guess the lobby plays a important role in the grand scheme of things so unless the US electorate puts pressure on the government you won't see a better deal.
Re: Why drug prices in America are so high (2016)
#53Earlier quoted context omitted.
That's how you get your patent broken.
Has the US ever disallowed a patent because the company holding it refused to sell a product to the government at the price the government wanted? It's hard to imagine SCOTUS allowing that sort of thing. The US gov't is subject to its own laws.
It's easy to imagine SCOTUS allowing such a thing, it's just hard to imagine the government doing it, or anything that restrains healthcare costs at the expense of healthcare companies.
Re: Why drug prices in America are so high (2016)
#54This 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 ar…
What about the edge cases? If I understood you correctly, the poorest developed countries dictate the pricing.
Depends on if it is profitable to sell them drugs in that world.
If it isn't profitable, those countries either mostly do without or violate trade agreements (ignoring patents and the like).
Re: Why drug prices in America are so high (2016)
#55Earlier quoted context omitted.
Why would that appeal to Donald Trump? It would hurt the profits of the drug industry in America which will cost jobs, pharma execs will tell him how bad this is for America and how harmful it is to drug R&D, etc etc. Donald Trump may have campaigned as a negotiator for the common man but he identifies with CEOs, anything that hurts them is not something that appeals to him.
The high price of medical care costs lives as well as jobs in other industries...
That didn't stop him from trying to repeal Obamacare. I personally think we should institute drug price controls for many reasons including that one but I'm not sure why we are thinking that Donald Trump is going to do it.
Re: Why drug prices in America are so high (2016)
#56"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)
This is very, very important.
The drug market is one of the farthest things we have from a free market in the US outside of military weapons. It is just massively dysfunctional due to a combination of special interest lobbying combined with stepwise path-dependency.
A huge part of the health care discussion in the US starts from assuming our current system is somehow natural. It isn't. It is an engineered thing, with the engineering performed by in a non-coordinated fashion with incompatible goals by non-experts, piecewise, over a long period of time.
Even though I doubt it (healthcare truly is different than most services/goods), a truly free market might even be superior to what we have, in terms of outcomes by patient count. Of course, that would lead to unsightly public corpses, a much different drug industry and a lot of unemployed clerical workers, among other things.
And the big, unanswered question remains: why the US is such a special snowflake that what works in various ways in every other first-world country cannot work here. (Aside from the obvious answer.)
Re: Why drug prices in America are so high (2016)
#57This 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 ar…
Why would that appeal to Donald Trump? It would hurt the profits of the drug industry in America which will cost jobs, pharma execs will tell him how bad this is for America and how harmful it is to drug R&D, etc etc. Donald Trump may have campaigned as a negotiator for the common man but he identifies with CEOs, anything that hurts them is not something that appeals to him.
This may not actually hurt the profits of the drug industry, because they would probably renegotiate their prices with the other countries. Right now, as long as the cost of what they charge to country is basically their marginal cost of production, they don't have much incentive to oppose the negotiation. Now, they can say that because they have to charge the same to the US, the other countries will have to pay more, or not get the drug. Thus, this has the potential to be revenue neutral for the drug companies while spreading out the cost more fairly
Re: Why drug prices in America are so high (2016)
#58This 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 ar…
There are a lot of problems with reference pricing. First off, if country A (300M people) references country B (30M people), then the drug company can simply chose not to launch the drug in country B if that reference price is too low.
Second, drug companies can modify their launch sequence (this already happens today) so that they launch in the referenced countries after the price is set in the country doing the referencing.
Third, this may actually push up the prices in other countries. This actually happened with Medicare Part B reimbursement back in the 1990s. Drug companies were offering big discounts to some private plans. Medicare said they wanted a piece of that, so they started calculating ASP (average selling price). Pretty quickly those other discounts disappeared and ASP got pushed way up and the gov't ended up with a fraction of the discounts they thought they'd get.
Re: Why drug prices in America are so high (2016)
#59This 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 ar…
This is not a great fix. Almost all companies (not just drug companies) routinely find ways to segment the market into different groups with different abilities to pay and then charge different prices for very similar products. That is the profit (or future research budget) maximizing strategy. The US is richer. It should be paying more. How much more is debatable.
The US is richer and should be paying more than say Kenya. However, you would be hard-pressed to explain why the US should be paying more than say Denmark or Sweden or Germany?
Re: Why drug prices in America are so high (2016)
#60> 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 ci…
I don't know if the R&D argument even works. Just how much are we overpaying for our drugs? It looks like American pharmaceutical R&D is about $60 billion/year, or roughly $200 per capita. Is that really all we're losing to these high prices?