The Hidden Monopolies That Raise Drug Prices • Hacker News Board

Re: The Hidden Monopolies That Raise Drug Prices

#151

Post by jellicle » Thu, Mar 30, 2017, 8:06 PM UTC

joshuaheard wrote: post #24

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…

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.

A great deal of agricultural regulation and subsidy goes into ensuring the food supply is consistent and in excess of demand. Also, food is almost entirely substitutable - you don't NEED any particular food item. (And for items where there aren't good substitutes, like milk for babies, we have extra subsidies to ensure supply.) Also, no one has a government-granted monopoly on "bread" or "fish". Therefore, the market for food doesn't degenerate under the conditions that prevail currently.

If you needed to eat a whole wheat bagel (only) in the next 24 hours or you would die, and whole wheat bagels were under a government-granted monopoly, the bagel manufacturer could charge you any amount they'd like, couldn't they?

Re: The Hidden Monopolies That Raise Drug Prices

#152

Post by Tactic » Thu, Mar 30, 2017, 8:08 PM UTC

refurb wrote: post #2

It's interesting how the villains of drug pricing have gone from the drug companies to the PBMs. At any rate, I don't agree that PBMs cause drug costs to increase. PBMs are simply purchasing groups for insurance companies. They take advantage of bulk purchasing and offer that service to insurers. They also handle the all the complexities in setting a formulary which includes evaluating new drugs, negotiating with dru…

There is hardly a single villain in the existing system. Everyone is making a profit that is ultimately at the expense of the citizens.

And even despots do some good. It doesn't mean they are any less a villain.

Re: The Hidden Monopolies That Raise Drug Prices

#153

Post by attaboyjon » Thu, Mar 30, 2017, 8:32 PM UTC

refurb wrote: post #125

attaboyjon wrote: post #109

Earlier quoted context omitted.

Well yeah that's the problem. They dont pass the discount on to me. I pay full retail price, and they keep the discount. This is why Express Scripts is a $100 BILLION company. And that's for managing Formularies you say? Express Scripts Holding Company is the largest pharmacy benefit management (PBM) organization in the United States,[20] with 2013 revenues of $104.62 billion.[21] In 2012 Express Scripts' $29.1 billi…

Well yeah that's the problem. They dont pass the discount on to me. I pay full retail price, and they keep the discount. This is why Express Scripts is a $100 BILLION company. And that's for managing Formularies you say? The discounts are passed through via lower insurance premiums. You don't really see that since your employer pays the premiums. And yes, ESI is a $100B per year company with $3.4B in net income.[1] A…

Well no. I pay for it all out of pocket. My deductible is high enough that I pay for all that medication. It's about $6000/year. My insurance premiums are $1400 per month by the way. So no, there's no magical cost saving being passed back to me.

Re: The Hidden Monopolies That Raise Drug Prices

#154

Post by jessriedel » Thu, Mar 30, 2017, 8:39 PM UTC

spangry wrote: post #77

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 woul…

With all the sarcasm, it's hard to tell how broad of a point you're trying to make. Do dispute the fact that Australia free-rides to a non-trivial extent on US medical R&D?

Re: The Hidden Monopolies That Raise Drug Prices

#155

Post by ch4s3 » Thu, Mar 30, 2017, 8:43 PM UTC

AnthonyMouse wrote: post #58

ch4s3 wrote: post #37

Earlier quoted context omitted.

> 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.

> 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.

To quote your sibling comment:

>Probably because saying something is "financed" by demand is counter-intuitive.

Since Healthcare is in economic terms a superior good, people spend a larger share of income on it as their income rises. And because the US is such a large, wealthy market, demand is sufficient to to pay down R&D costs that other markets could no bear. It's still a shitty deal, but it makes perfect sense that it turned out this way. That's just hard to articulate to people who are not familiar with the industry or economics.

Re: The Hidden Monopolies That Raise Drug Prices

#156

Post by jessriedel » Thu, Mar 30, 2017, 8:46 PM UTC

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…

> patients pay for most drugs out of pocket, and their generic prices are actually not much lower than they are in the US[0]

But rayiner's entire point is about incentivizing R&D by allowing the collection of monopoly rents on patented drugs; he's not talking about generics. How the market for generics is structure has essentially no impact on R&D. And as you say, since Canada's generics are nearly as expensive as in the US, or are more expensive (see below), re-importing generics does not usefully push down prices.

http://news.nationalpost.com/news/canada/this-is-why-canada-...

Re: The Hidden Monopolies That Raise Drug Prices

#157

Post by ch4s3 » Thu, Mar 30, 2017, 8:50 PM UTC

TheAdamAndChe wrote: post #122

e40 wrote: post #83

Earlier quoted context omitted.

So I read this and I'm horrified. And I know that no one in the coming years will make this or anything like it a priority in Congress. They give no shits about us. The media spends all day talking about tweets and Russian influence in our election and on our newly minted government officials. Yeah, the latter is important, but health care is really, really important. It's the reason our new POTUS was elected, accord…

Remember, Donald Trump was elected because people want change. Most people are aware at this point that the system is rigged, and are looking to change it. It's unclear currently whether populism or socialism will win in the long run, but don't lose hope yet.

Socialism and populism are not necessarily mutually exclusive. Quite often socialism takes the form of populist socialism (think Bernie Sanders or Chavez).

Also, I think anyone who voted Trump to generate populist change, are likely getting a raw deal. The administration is loaded with Billionaires and business leaders, the opposite of populism. And, they've already set about enacting changes that negatively affect average people, like rolling back privacy protections, and pushing for health reforms that would cause 20 million people to lose insurance coverage, while according to the CBO raising costs.

Re: The Hidden Monopolies That Raise Drug Prices

#158

Post by chimeracoder » Thu, Mar 30, 2017, 8:56 PM UTC

jessriedel wrote: post #156

chimeracoder wrote: post #19

Earlier quoted context omitted.

> 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…

> patients pay for most drugs out of pocket, and their generic prices are actually not much lower than they are in the US[0] But rayiner's entire point is about incentivizing R&D by allowing the collection of monopoly rents on patented drugs; he's not talking about generics. How the market for generics is structure has essentially no impact on R&D. And as you say, since Canada's generics are nearly as expensive as in…

> But rayiner's entire point is about incentivizing R&D by allowing the collection of monopoly rents on patented drugs.

I'm pointing to the generics as an illustration of Canada's pharmaceutical prices not being as controlled as people often think. (In fact, in Canada they're not controlled directly at all - they're simply pegged by law to other countries which set their own prices).

I actually agree with rayiner's point about incentivizing R&D by allowing (temporary) collection of monopoly rents on patented drugs. I'm just saying that they should be collecting those monopoly rents from all countries that consume the drugs. Right now, they basically collect them only in the US, and allowing reimporting from other countries which respect US patent laws would ensure that all countries are contributing towards that in proportion to the amount that they actually consume the results of the R&D.

Re: The Hidden Monopolies That Raise Drug Prices

#159

Post by TheAdamAndChe » Thu, Mar 30, 2017, 9:08 PM UTC

ch4s3 wrote: post #157

TheAdamAndChe wrote: post #122

Earlier quoted context omitted.

Remember, Donald Trump was elected because people want change. Most people are aware at this point that the system is rigged, and are looking to change it. It's unclear currently whether populism or socialism will win in the long run, but don't lose hope yet.

Socialism and populism are not necessarily mutually exclusive. Quite often socialism takes the form of populist socialism (think Bernie Sanders or Chavez). Also, I think anyone who voted Trump to generate populist change, are likely getting a raw deal. The administration is loaded with Billionaires and business leaders, the opposite of populism. And, they've already set about enacting changes that negatively affect a…

Thank you, I wasn't aware of that. I thought they were completely different. How would Trump's direction be described, then? Nationalism?

Also, I agree that electing Trump was a raw deal. But between the two presidential candidates, Trump was the Change candidate and Clinton was the Status Quo candidate. From what I understand, a lot of studies show that Sanders would have won the election if he wasn't suppressed on the Democratic side. Most people don't feel like the country is going in the right direction, and they want change.

Re: The Hidden Monopolies That Raise Drug Prices

#160

Post by kbenson » Thu, Mar 30, 2017, 9:18 PM UTC

bryondowd wrote: post #148

kbenson wrote: post #90

Earlier quoted context omitted.

> 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.

You could make it a capped tax write off, and that may prevent a large single actor from exporting, but it won't stop many individual people from reselling to a local exporter for some quick case. In other words, it adds a small per-limit cost to the exporter to deal with individual people and aggregate, but doesn't address exporting overall very well.