Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why drug prices in America are so high (2016)

economist.com

Post reply on HN
Print view View original

141–150 of 204 posts

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

#141

Post by MrFantastic »

The reason is that private health insurance companies suffer from the Classic Agency Problem.

They want their costs to increase at a sustainable rate so that they can keep growing their Net Income.

Historically, private health insurance companies earn ~ 6% of their total revenue as profit. To justify an increase in their premiums they have to "miss" their payout ratio slightly every year.

Drugs that patients will take for life are a great way off locking in that increased cost in a "controlled" way.

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

#142

Post by kgwgk »

quest88 wrote: post #100
frgtpsswrdlame wrote: post #64

Earlier quoted context omitted.

What price control method would you advocate for?

Fixing the patent system so generics can come to market faster. I'm not sure how.

Shortening the period of exclusivity could result in higher prices and less drugs being developed. There is no magic bullet.

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

#143

Post by sharemywin »

ancap wrote: post #83
sharemywin wrote: post #42

Earlier quoted context omitted.

if a company has a monopoly there isn't by definition a functioning free market.

The question therefore is, why does the monopoly exist? You will find that, as _jal has commented, it is not because of some natural phenomenon springing out of a free market.

sure it's natural. why would anyone compete if they could carve up a market and make monopoly profits.

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

#144

Post by jtuente »

breatheoften wrote: post #140
mjevans wrote: post #135

Earlier quoted context omitted.

Or that there is less profit. I think we could have more accountable research if instead of being driven for profit it was driven as actual academic research with public domain benefit.

This. It's explicitly capitalistic to be against socializing risk and privatizing profits -- which the is game being played with the current setup of trying to fund drug creation via patent monopolies combined with per unit regulatory pricing games. Academia should be the primary means of drug discovery. Drug manufacturing and distribution _should_ be a commodity business. Anything otherwise and all research on the t…

> Academia should be the primary means of drug discovery.

But it isn't. Why?

I could put out a list of potential reasons, but I have no real knowledge of the complexity of drug discovery. I have some knowledge of the complexity of FDA approval, but nothing sufficient. My best guess - it's too expensive.

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

#145

Post by 8ytecoder »

quest88 wrote: post #100
frgtpsswrdlame wrote: post #64

Earlier quoted context omitted.

What price control method would you advocate for?

Fixing the patent system so generics can come to market faster. I'm not sure how.

On Evergreening: https://www.techdirt.com/articles/20130401/09233022536/india...

On forcing a license: http://www.nytimes.com/2012/03/13/business/global/india-over...

These may or may not work in a country like USA - due to its politics and "principles".

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

#146

Post by maxerickson »

entee wrote: post #137
joe_the_user wrote: post #86

Earlier quoted context omitted.

Of course there's no simple fix. US health reform has been attempted based on series of simple fixes with all the best-seeming ones already exhausted over the twenty or thirty years it's been tried. And the entities profiting (enormously) from US health care have become champions, geniuses at dodging all the simple fixes. Of course you can't force companies to sell for the same prices elsewhere unless you had no regu…

You're totally right, this is a hugely complex matter. However, it's not so simple to just relabel the drug, after all to a first approximation a drug is primarily an active ingredient and secondarily a delivery mechanism. You can patent one, the other or both together. There's definitely remixing, reformulation etc. for patent purposes, but it's not always that trivial to do. Re. regulatory capture, I don't know if…

Medicare drug plans do say no. There's even tools to find one that works best for a given patient.

https://q1medicare.com/PartD-SearchPDPMedicarePartDDrugFinde...

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

#147

Post by refurb »

breatheoften wrote: post #140
mjevans wrote: post #135

Earlier quoted context omitted.

Or that there is less profit. I think we could have more accountable research if instead of being driven for profit it was driven as actual academic research with public domain benefit.

This. It's explicitly capitalistic to be against socializing risk and privatizing profits -- which the is game being played with the current setup of trying to fund drug creation via patent monopolies combined with per unit regulatory pricing games. Academia should be the primary means of drug discovery. Drug manufacturing and distribution _should_ be a commodity business. Anything otherwise and all research on the t…

Academia should be the primary means of drug discovery. Drug manufacturing and distribution _should_ be a commodity business

You're missing a big step! The key role drug companies play today: drug development.

Discovery is the cheapest step in the process. Running clinical trials is where most of the money goes. I just can't picture academia funding tens of billions of dollars of drug development. Where would that money come from? Are they up for the risk?

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

#148

Post by refurb »

toomuchtodo wrote: post #41
harryh wrote: post #36

Earlier quoted context omitted.

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.

Has the US ever fought hard to institute a travel ban in order to prevent people of a certain religion from entering the country, despite judicial intervention. That's the thing about governments: they can do whatever they want. And your recourse is to deal with it or spend years fighting against it (or die in the streets fighting it, lest we forget that option). Disclaimer: I'm for breaking patents when necessary, a…

Laser sintering is a known technology. 3D printing drugs is a buzz word and a technology that doesn't even exist. As a chemist I can tell you it's a pipe dream. Chemistry just doesn't work that way.

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

#149

Post by chimeracoder »

breatheoften wrote: post #140
mjevans wrote: post #135

Earlier quoted context omitted.

Or that there is less profit. I think we could have more accountable research if instead of being driven for profit it was driven as actual academic research with public domain benefit.

This. It's explicitly capitalistic to be against socializing risk and privatizing profits -- which the is game being played with the current setup of trying to fund drug creation via patent monopolies combined with per unit regulatory pricing games. Academia should be the primary means of drug discovery. Drug manufacturing and distribution _should_ be a commodity business. Anything otherwise and all research on the t…

> Academia should be the primary means of drug discovery. Drug manufacturing and distribution _should_ be a commodity business

As mentioned below, the discovery is not the biggest driver of costs.

But you should also ask yourself: why is this not already the case? Currently, there's nothing stopping other countries from using taxpayer money to fund drug development locally. Except, by and large, they don't - as mentioned in the article, most of the drug development that happens worldwide is funded by the United States, even for companies that are headquartered in Europe.

The answer isn't that those countries aren't interested in consuming the benefits of that research, because they are more than willing to purchase those drugs that were developed in the US at lower prices. The answer is that they just choose not to fund the research, either because it's too expensive to conduct clinical trials with taxpayer money, or because it's more effective to have that funded by the market, especially when that market is US patients, rather than European taxpayers.

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

#150

Post by faragon »

In most European countries drug prices are negotiated at scale, because of public institution negotiating directly with pharmaceutical companies (most expensive drugs are the ones in international shortage, e.g. hepatitis C drugs, etc.). So what happens in the US is that pharmaceutical companies apply the "divide an conquer" rule, having a de facto monopoly.
Post reply on HN