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The Hidden Monopolies That Raise Drug Prices

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Re: The Hidden Monopolies That Raise Drug Prices

#71

Post by kgwgk »

refurb wrote: post #41
clueless123 wrote: post #10

Earlier quoted context omitted.

If your drug is so good, you should let the market decide what the fair price. The problem is that drug companies and wholesalers don't let that happen by lobbying against open markets and government paid healthcare.

If your drug is so good, you should let the market decide what the fair price. Contrary to what people think, drug companies can't just charge whatever they want. Take a look at the HCV drugs. They priced too high and their sales are eroding very quickly. If they had priced lower, they probably would have seen even greater profits.

How so? There are only so many patients to treat. Sales are eroding mostly because competition has brought prices down and improved drugs allow for shorter treatments.

Re: The Hidden Monopolies That Raise Drug Prices

#72

Post by koolba »

rayiner wrote: post #11
chimeracoder wrote: post #3

> Americans pay the highest health-care prices in the world, including the highest for drugs, medical devices, and other health-care services and products. Our fragmented system produces many opportunities for excessive charges. But one lesser-known reason for those high prices is the stranglehold that a few giant intermediaries have secured over distribution. The antitrust laws are supposed to provide protection aga…

We "disallow trade" for lots of legitimate reasons. One such reason is when government intervention in another country drives prices below market levels ( e.g. we put high tariffs on Chinese steel to counter heavy Chinese government subsidization of that industry). That's exactly what happens in Canada. Because the healthcare system is publicly funded, the government has enormous market power that it can use to drive…

That's a pretty shitty way of saying that somebody has to pay and it has to be us (the USA).

Shafting the American consumer because the rest of the world can't or won't pay the "true" cost (including research / marketing / profits) isn't a solution.

Re: The Hidden Monopolies That Raise Drug Prices

#73

Post by bradleyjg »

kellanem wrote: post #61
bradleyjg wrote: post #45

Earlier quoted context omitted.

> If you're interested in roughly what the wholesale price is plus a very small markup What about the rebates mentioned in the article several times? I know in the car industry one trick is to go on and on about "dealer invoice" and how great a deal you are getting while ignoring that rebates make that number fairly meaningless.

Two things going on with the rebates. 1. I think the article is a little one sided in their explanation of the rebate system, though it certainly more opaque than it should be. (some of which is just healthtech is stuck in the dark ages) 2. The rebates really only apply to the branded meds, which are approximately 20% of the market.

With all due respect, saying the article is a little one sided doesn't tell me much. Can you outline what the other side of the story is?

Re: The Hidden Monopolies That Raise Drug Prices

#74

Post by DarkKomunalec »

xadhominemx wrote: post #63
DarkKomunalec wrote: post #53

Earlier quoted context omitted.

> 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.

you're speaking very authoritatively for someone who apparently does not know the difference between sales, marketing, and advertising and also does not know how to pull basic financial information of publicly-traded companies

What a great opportunity for you to pull this so easily available and understandable information, and destroy my entire argument by showing how efficiently pharma allocates revenue to important drug research, and how little is wasted on marketing, sales, generics, and other stuff!

Re: The Hidden Monopolies That Raise Drug Prices

#75

Post by [deleted] »

refurb wrote: post #44
DarkKomunalec wrote: post #36

Earlier quoted context omitted.

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.

[deleted]

Re: The Hidden Monopolies That Raise Drug Prices

#76

Post by svskeptic »

kellanem wrote: post #27

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…

"roughly what the wholesale price is plus a very small markup" .. is not my experience. I just had a pharmacist friend show this to me.

Blink charged the customer $10 for generic Lipitor (atorvastatin) 20mg, 30 pills. And reimbursed the pharmacy $4.90. Hence keeping > 50% of what the customer paid. As per the pharmacist, he would be happy to fill the prescription in cash for $7.50, lowering the price for consumer and making him more margin.

These are real numbers. Blink is in fact contributing to increasing the price for consumers, while being yet another middleman in the process.

Re: The Hidden Monopolies That Raise Drug Prices

#77

Post by spangry »

kellanem wrote: post #27

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…

"Finally one of the challenges with moving to a centrally managed pricing solution like 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, at least for some period of time until we found new ways to finance it."

That would be bad. Based on 5 minutes of googling and 10 minutes of reading, the largest US pharma company is Johnson & Johnson. Their latest earnings report has the following for the 12 months in 2016 (not all expenses are listed here):

- Sales (i.e. revenue): $71.8bn

- Marketing expense: $19.9bn

- R&D expense: $9.1bn

- After tax, after expenses profit: $16.5bn

So, on behalf of my fellow Australians, I'd just like to thank J&J for selling into my country at a substantial loss (and, in doing so, bravely running the risk of breaching their fiduciary duties to their shareholders).

I'd also like to express my gratitude to consumers in the United State, who are apparently so generous that they are willing to subsidise my country's single-purchaser medical system. It's a shame you can't have one as well, but at least you have the world's gratitude for your sacrifice. USA #1!

EDIT: Link - http://files.shareholder.com/downloads/JNJ/4178180194x0x9249...

Re: The Hidden Monopolies That Raise Drug Prices

#78

Post by gleb »

chimeracoder wrote: post #19
rayiner wrote: post #11

Earlier quoted context omitted.

We "disallow trade" for lots of legitimate reasons. One such reason is when government intervention in another country drives prices below market levels ( e.g. we put high tariffs on Chinese steel to counter heavy Chinese government subsidization of that industry). That's exactly what happens in Canada. Because the healthcare system is publicly funded, the government has enormous market power that it can use to drive…

> we put high tariffs on Chinese steel to counter heavy Chinese government subsidization of that industry That's not a good comparison, because we're talking about reimportation - ie, drugs that are produced in the US and exported to another country before being reimported. In general, nobody's interested in reimporting steel produced in the US and exported to China. > Because the healthcare system is publicly funded…

That is so interesting. I had no idea Canada didn't cover drugs.

Re: The Hidden Monopolies That Raise Drug Prices

#79

Post by [deleted] »

kellanem wrote: post #27

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…

[deleted]

Re: The Hidden Monopolies That Raise Drug Prices

#80

Post by Broken_Hippo »

replicatorblog wrote: post #54
torpfactory wrote: post #47

Earlier quoted context omitted.

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…

How much are you willing to pay the nine teams of scientists whose experimentation fails to yield any useful medications for every one that works? 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.

"How much are you willing to pay the nine teams of scientists whose experimentation fails to yield any useful medications for every one that works?"

The same yearly salary that the folks on the "success" team make. I don't see why success is the issue here. I'd just make sure the failure is public information so that others can learn from it. After all, the things that don't work aren't valueless and the drug may be effective for something else.

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