51–60 of 199 posts
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We need food to survive, and market forces work fine. In fact, I would say that the U.S. supermarket is a model of market efficiency.
When I can buy drugs from the Pharamacy for $1.69 a pound I'll be happy to see it driven by market forces. The market simply isn't doing a good enough job getting medications to consumers at a reasonable price.
I'm going to make the statement that perscription drugs aren't like other products and shouldn't be viewed as such. People literally need them to survive. This whole system of having something you need to survive being subject to market forces like some other widget is ridculous. Price fixing is absolutely a reasonable tactic to employ when the market for prescription drugs in the US is as completely useless at deliv…
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Proportionately to their revenue, pharma doesn't spend that much on R&D: https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p... And that's just compared to advertising - throw in other overhead, and separate R&D into genuinely new drugs vs. generics and flavoured aspirin, and the numbers are even worse. Of course it's hard to get such comprehensive financial data, but that's just one of the advantages of pri…
Drug companies spend the most on R&D out of any industry. The average is almost 20% of revenue. That means if you buy a drug for $1000, $200 of that goes back into R&D. And no, the sales and marketing in that article is not advertising alone. It's mostly sales people who go and visit medical professionals to talk about their products.
That's advertising.
You mentioned 20% of their revenue is R&D - do you have a source, ideally listing what the other 80% goes to? That's a lot of unaccounted revenue, especially given how many drugs were shown to be dirt cheap to manufacture.
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The system is always subject to market forces. The government can budge the market around, but it's like pushing on one part of a balloon--it'll just have an effect somewhere else. When you set prices, you drive investment and talent out of the industry. Why spend years getting a PhD in biochemistry when you can go make $400k/year with just a BS at Google? It's precisely because people need drugs to survive that it's…
Almost all other developed economies use this approach and it works for them. Many Of these very companies are based on those very countries. We need a reasonable price for these medications. The market isn't delivering them. The scandal here isn't the pay these companies researchers receive. I'm happy to have them paid more for their work. To me the scandal is how much profit is being taken while many people go with…
The problem is that most people only want to pay for the ones that work.
Thankfully there are companies that manage that market risk taking on our behalf and take a fee for the service.
By far, these are the most corrupt organizations in the medical/drug industry. At least the phrama companies actually make something at the end of the day and do research, and employ more than just business people. I am forced by whatever insurance plan I have, to deal with these companies directly because they have whats called a "carve out" -- an exclusive agreement with the major insurance carriers that requires I deal with them directly. I literally have no choice or alternative from which to get my medication.
The reason is clear: my medication costs between $60,000 - $150,000 per month. I'm not kidding, either. It's been this way forever, despite the patents expiring on the medication. Its so lucrative and it makes me ill that so many people are benefiting and using me as some kind of financial conduit due to my medical condition. A significant amount of the money goes to one of these companies. They literally have a markup on the medication on a per-unit basis. So they tack on 20% or 30% to each unit of my medication (think pills, but its actually IU potency units -- its an IV medication I give to myself).
I'm fortunate that, because of these extreme costs, these companies have actually worked out in my favor: they have a dedicated rep assigned to me, and continually renegotiate their position with the insurance carriers to maximize their profit (I'm a high-profit user and thus very important to them).
These companies have no interest in getting costs down, and actually fight for the opposite. A few years ago they bullied the drug companies into offering a co-pay assistance program so they can literally take my insurance for all its worth. Their goal is to max out whatever benefits I have, and at that point usually the patient can be a blocker because they don't have the money for the maximum yearly deductible. However, they basically worked with/forced the drug companies into creating a co-pay program, then raised up the prices for the first order of the year. What happens is the first order I place is always more expensive, and then it gets discounted by some amount (usually my yearly co-pay). I don't have to pay this money however, it comes directly from the manufacture's co-pay assistance program.
So I guess its a triumph in the fact I don't really have to pay much -- if anything for my medication, but that's only because its extreme high price. I'm sure its not like this for other people on the middle and lower ends of the system.
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When I can buy drugs from the Pharamacy for $1.69 a pound I'll be happy to see it driven by market forces. The market simply isn't doing a good enough job getting medications to consumers at a reasonable price.
Look at OTC medication costs, every store makes their own generic and they are very cheap.
I deal with Express Scripts and CVS Caremark. I have Hemophilia, a bleeding disorder condition I've been born with. By far, these are the most corrupt organizations in the medical/drug industry. At least the phrama companies actually make something at the end of the day and do research, and employ more than just business people. I am forced by whatever insurance plan I have, to deal with these companies directly beca…
Someone here can probably find the private cost of the meds if you didn't mind listing them.
The article does a good job of starting to explain the forces, but it's actually even more complicated. A number of the PBMs are cross invested in pharmacies and insurance companies, and the incentives of 2-3 large pharmacies that control the majority of the market (and how they get paid) is very different than how small pharmacies get paid. Additionally the way the generic market works vs the branded (patented) meds…
> what works so well in Canada and most of Western Europe is right now R&D into pharmaceuticals is largely financed by the opportunity size available in the US market. If you were to just adopt the centralized model tomorrow R&D would grind to a stop This is really hard to explain to people.
It's not that it's hard to explain, it's that it causes people to want to switch from the US system even more, because as soon as you understand it you realize that US patients and taxpayers are being unfairly forced to subsidize more than their share of drug R&D for Canada and Europe.
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Actually the PBMs are a big villain here. They pocket the difference between the retail price of a drug and the discounts they negotiate with the drug makers. They choose the drugs on their formulary based on this spread. This one of the reasons why you will see prices for drugs like Insulin going up with each manufacturer raising price in lock-step. The drug makers are not competing to sell the consumer insulin, the…
But that's their job! They are supposed to negotiate lower prices. They, in turn, can market their formulary to insurance companies by saying "If you use us, we can offer a lower cost pharmacy benefit." And if you're a smart insurance company, you do your due diligence and don't negotiate a contract where you have no transparency into the PBMs costs.
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Drug companies spend the most on R&D out of any industry. The average is almost 20% of revenue. That means if you buy a drug for $1000, $200 of that goes back into R&D. And no, the sales and marketing in that article is not advertising alone. It's mostly sales people who go and visit medical professionals to talk about their products.
> And no, the sales and marketing in that article is not advertising alone. It's mostly sales people who go and visit medical professionals to talk about their products. That's advertising. You mentioned 20% of their revenue is R&D - do you have a source, ideally listing what the other 80% goes to? That's a lot of unaccounted revenue, especially given how many drugs were shown to be dirt cheap to manufacture.
> That's advertising.
It's also keeping physicians up to date on the current science, applicability, and best practices of their products. I think it's a good thing for sales reps and MSLs to inform or remind physicians that there are alternatives to writing a script for Epipens, for example.
> You mentioned 20% of their revenue is R&D - do you have a source, ideally listing what the other 80% goes to? That's a lot of unaccounted revenue, especially given how many drugs were shown to be dirt cheap to manufacture.
Many drugs are cheap to make, but that neglects the astronomical development and regulatory costs.