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The Hidden Monopolies That Raise Drug Prices

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Re: The Hidden Monopolies That Raise Drug Prices

#141

Post by metaphorm »

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…

> Which is all to say, it's a fascinating space. It's very ripe for innovation.

is that a euphemistic way of saying its a train-wreck, where society is hobbled by rent-seeking behavior by monopolist cartels that have used a combination of anti-competitive business strategy and regulatory capture to extract massive amounts of wealth from their captive audience of sick people?

Re: The Hidden Monopolies That Raise Drug Prices

#142

Post by jellicle »

refurb wrote: post #38
jcfrei wrote: post #30

Earlier quoted context omitted.

In your comment you suggest that most of the profits of pharma companies go into R&D but that's not the case. There's a lot of rent seeking behavior by these companies due to poor legislation. This kind of behavior (incentives/"conferences" for physicians, lobbying, etc.) shows up under sales in their annual reports and it's clear they spend a lot more on it than on R&D: https://www.washingtonpost.com/news/wonk/wp/20…

What a poorly written article. It looks like just lumped all the business expenses under "sales and marketing". I think it's absurd to assume that all of that spending is completely discretionary. Contrary to what people think, you need to do a certain level of sales support in the pharmaceutical market. The drugs don't sell themselves.

We don't want them to be "sold". We want them to be prescribed as needed by medical professionals.

Re: The Hidden Monopolies That Raise Drug Prices

#143

Post by Retric »

refurb wrote: post #135
Retric wrote: post #112

Earlier quoted context omitted.

There are only ~50 new drugs a year, and many of those are highly specialized. So, it's really not hard to keep up with new drugs. The hard part is actually staying fresh on all the existing knowledge that you don't use regularly and some changes to best practices.

You realize that new data comes out on drugs constantly? Even drugs launched 10 years ago. Just take a look at all the medical journals. It's not a one-and-done thing with learning about drugs.

Yes, but again it's not about "keeping up on the latest pharmaceuticals" that's small chunk of time. The changing landscape of existing drugs that have been out for 2+ years is much larger than the number of 'new' drugs.

Look into AIDS medications for example and pills are often a mix of 2+ existing drugs that work well together. And again, GP's rarely have to worry about the new Cancer drugs etc.

Re: The Hidden Monopolies That Raise Drug Prices

#144

Post by dikdik »

rayiner wrote: post #31
torpfactory wrote: post #20

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…

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…

WHAAAAAAT?!

You don't hang around scientists much, do you? The people researching and making these drugs do not make a very good living. Not caring about your salary is seen as a mark of a good scientist, I've heard it from many, many people I work under. Most scientists make absolutely crap, even the ones in the pharma sector.

The majority of the pharma profits go straight to the business people that make all sorts of weird deals, jack up prices after cornering the market, get certain chemicals/processes banned so they can re-patent the same drug under a new mechanism, etc.

>Why spend years getting a PhD in biochemistry when you can go make $400k/year with just a BS at Google?

Because they like the work and find it interesting, go ask literally any scientist today. Reducing the profitability of pharma companies will hardly move the salaries for scientists because they are not at all tied to profits.

Re: The Hidden Monopolies That Raise Drug Prices

#145

Post by vkou »

brandonmenc wrote: post #70
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.

> That's advertising. Anecdotally, a friend of mine was doing post-doctoral work researching and developing cancer drugs. He now works on a pharmaceutical sales team as a scientific liaison. "Advertising" a drug involves a lot more than running TV commercials - it also includes former scientists making the current research digestible for doctors who don't have the time or specialized knowledge to do that in between s…

> The notion that every practicing doctor has enough free time - or is even smart enough - to keep up on the latest pharmaceuticals, is ridiculous.

How do doctors in other countries with functional medical systems deal with this problem? Health outcomes across the developed world are very similar.

Re: The Hidden Monopolies That Raise Drug Prices

#146

Post by dikdik »

refurb wrote: post #134
dikdik wrote: post #132

Earlier quoted context omitted.

>The notion that every practicing doctor has enough free time - or is even smart enough - to keep up on the latest pharmaceuticals, is ridiculous. That's part of the doctor's job, if they can't keep up with new medical/pharma literature then they need to find a different job. Further, most doctors know taking a ton of info from a pharma rep is just asking to be misinformed. A lot of pharma sales reps have no science…

That's part of the doctor's job, if they can't keep up with new medical/pharma literature then they need to find a different job. Do you know any doctors? Have you talked to them about how they spend their days? Most want to maximize the time they spend with patients. Any way they can keep up to date on the latest technology is helpful.

Yes, I know a TON of doctors and used to work very closely with about 50 of them.

Well the solution to your problem is not to inundate them with misleading or false information from someone whose entire base of scientific knowledge comes from employer-led seminars. The solution would be to train more doctors, so they have more time with patients AND can be more effective physicians.

Re: The Hidden Monopolies That Raise Drug Prices

#147

Post by [deleted] »

DarkKomunalec wrote: post #53
refurb wrote: post #44

Earlier quoted context omitted.

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.

[deleted]

Re: The Hidden Monopolies That Raise Drug Prices

#148

Post by bryondowd »

kbenson wrote: post #90
chimeracoder wrote: post #46

Earlier quoted context omitted.

> But that's the whole problem. Canada presumably doesn't want to subsidize U.S. citizens. Well, right now the US is effectively subsidizing Canadians, because the US is funding the majority of the pharmaceutical research that produces the drugs they consume. Half of the entire world's funding for pharmaceutical research comes from the US. A large chunk of that is funded by earnings on pharmaceutical sales[0][1]. > I…

> I don't understand what you mean by "resist". Resists changing the price in the country that is imported into. Let's consider this hypothetical scenario. A popular drug is sold for $100 in the U.S., but the Canadian government subsidizes it to the degree that Canadians pay $50 for it (and Canada has negotiated a price of $80). The drug can by and is imported into the U.S. and sold for $60. There is no incentive for…

Couldn't Canada in this case change the way they handle the subsidy, such that they only subsidize drugs consumed by Canadian citizens, or some such? In other words, you can not export a subsidized drug without refunding the subsidy first. That way, imports would be at the negotiated cost plus markup, rather than the subsidized negotiated price.

Re: The Hidden Monopolies That Raise Drug Prices

#149

Post by rayiner »

DarkKomunalec wrote: post #36
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…

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…

Let's take the middle two from each row: Pfizer and AstraZeneca. In 2013, Pfizer spent 13% of revenue on R&D, while AstraZeneca spent 17%. Google spent 12.9%, Intel spent 20.1%, and Microsoft spent 13.5%. Apple typically spends only 3-4% of revenues on R&D, but it's an outlier in the tech industry.

Re: The Hidden Monopolies That Raise Drug Prices

#150

Post by refurb »

dikdik wrote: post #146
refurb wrote: post #134

Earlier quoted context omitted.

That's part of the doctor's job, if they can't keep up with new medical/pharma literature then they need to find a different job. Do you know any doctors? Have you talked to them about how they spend their days? Most want to maximize the time they spend with patients. Any way they can keep up to date on the latest technology is helpful.

Yes, I know a TON of doctors and used to work very closely with about 50 of them. Well the solution to your problem is not to inundate them with misleading or false information from someone whose entire base of scientific knowledge comes from employer-led seminars. The solution would be to train more doctors, so they have more time with patients AND can be more effective physicians.

from someone whose entire base of scientific knowledge comes from employer-led seminars

You forgot to add that the scientific information is limited to the FDA approved label.

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