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Drugmakers hiked prices 1k% in price-fixing scheme, states allege

arstechnica.com

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Re: Drugmakers hiked prices 1k% in price-fixing scheme, states allege

#21

Post by tedmiston »

programmertote wrote: post #14
refurb wrote: post #5

Earlier quoted context omitted.

It’s important to note that this case is for generic drugs, not brand name drugs. The expensive drugs that make the news are generally the branded kind. Generic drugs are usually very cheap due to the level of competition. Interestingly, the US has some of the cheapest generic drug prices in the world due to the level of competition. I had read that for some generic companies, they make almost 100% of their profit by…

Can you please share where you read that "the US has some of the cheapest generic drug prices"? My mom, who lives in a southeast asian country, came to visit me in the US last month and I asked her to buy generic antibiotics; ear drops; artificial tear drops; generic antihistamines; and they all are much cheaper than what I would have paid here (and are equally effective in a way that I've been weathering fine in thi…

Do you have some example prices for comparison? Most of us have no idea what generic drugs cost outside of the US.

Re: Drugmakers hiked prices 1k% in price-fixing scheme, states allege

#22

Post by Bartweiss »

programmertote wrote: post #14
refurb wrote: post #5

Earlier quoted context omitted.

It’s important to note that this case is for generic drugs, not brand name drugs. The expensive drugs that make the news are generally the branded kind. Generic drugs are usually very cheap due to the level of competition. Interestingly, the US has some of the cheapest generic drug prices in the world due to the level of competition. I had read that for some generic companies, they make almost 100% of their profit by…

Can you please share where you read that "the US has some of the cheapest generic drug prices"? My mom, who lives in a southeast asian country, came to visit me in the US last month and I asked her to buy generic antibiotics; ear drops; artificial tear drops; generic antihistamines; and they all are much cheaper than what I would have paid here (and are equally effective in a way that I've been weathering fine in thi…

This is a complicated one: US generics are vastly more expensive than international generics, but at least part of that is because US manufacturers sell those drugs abroad at the cost of production, making up their remaining costs in the US. People in the industry have described it to me as a tactic of "we help people in need, please don't regulate us".

This isn't the whole story; east Asian manufacturers also produce cheaper products, for a bunch of reasons from lower costs to lower regulation to lower profits. And it's notably not the case for non-essential, non-basic medicines (e.g. most psychiatric meds), expensive new generics not used abroad, and certain other high-demand generics like insulin. Those are either expensive everywhere, or more expensive in the US than other wealthy countries and largely unused in poorer countries. (How all this relates to your story depends a lot on whether we're talking about Bangladesh or Taiwan.)

But as far as generic antibiotics or antihistamines, it's going to be hard to separate "US manufacturers overcharge" from "US manufacturers sell cheap abroad".

Re: Drugmakers hiked prices 1k% in price-fixing scheme, states allege

#23

Post by Bartweiss »

nerdponx wrote: post #2

Submission statement of sorts: the NYT article for this was submitted twice in the last two days but got no attention; the pharmaceutical industry seems to be a topic of interest here (including some non-mainstream views on characters like Martin Shkreli), so I'm interested to see HN's take on this.

I appreciate this submission; it's a story that challenges a number of my views, which I think are relatively common around HN.

Broadly, I've thought that high drug prices in the US stem from a mix of our bizarre insurance system (which rewards 'ambitious' pricing) and regulation. For name-brand drugs, that's largely patent protections, but even for generics it happens via process patents, high filing-fee barriers to enter markets, and regulatory delays to start production. (See e.g. here: https://slatestarcodex.com/2019/04/30/buspirone-shortage-in-...)

I still believe those things are issues. But this story has pushed me to revise how much I think those things matter relative to outright price manipulation. And if the answer is (as I suspect) that clumsy regulation raises costs some everywhere, but gouging raises costs massively for some drugs, then the question of how to fight both problems at once is exceedingly difficult. The only way to escape these sorts of tradeoffs is usually "make better regulations", and it's not clear how we make that happen.

Re: Drugmakers hiked prices 1k% in price-fixing scheme, states allege

#25

Post by sjb554 »

pnutjam wrote: post #3

There is a serious issue with price fixing in pharma. Whether it's generics colluding, fake patent extensions, or name brand producers paying off generic; it needs to stop. The current practice is to mark drugs up sky high and rebate the prices. Maybe someone can educate me, but it looks very similar to money laundering IMHO.

There is currently an anti-kickback statute in place that protects rebates. Big news is that this might change this year or next year, rebates are paid at point of sale to consumers. Insurance premiums would rise, so non-utilizers see an increase in cost, and very high utilizers see a reduction (rebates primarily on high cost brand drugs).

Re: Drugmakers hiked prices 1k% in price-fixing scheme, states allege

#26

Post by Bartweiss »

ptah wrote: post #17
bad-joke wrote: post #9

Earlier quoted context omitted.

It's surprising in light of the prevailing idea that markets enforce competition towards the lowest price. This idea forms the basis of the claim that market-driven healthcare benefits consumers by lowering costs.

it is a very elementary idea that applies to few real life markets. things are more complicated than what your learn in basic economics

> applies to few real life markets

It applies to almost all real-life markets. It's so standard that we don't even notice it happening, and focus on the exceptions. There is no level of economics you can reach where "competition drives down prices" stops being taken seriously; Nobel-winning left-wing economists like Stiglitz and Krugman accept that as true and relevant. So does Marx(!), who focuses on how lower costs are achieved at the expense of workers rather than capital holders.

Restaurants run at effectively zero margin. Lawn chairs and pencils and window blinds sell for essentially the cost of manufacturing and distribution. Even complex services like VOIP calling have moved from high profitable industries to "essentially free". Markets aren't inherently noble any more than they're inherently evil, but a major part of their value is that price-fixing hardly ever works.

Without appreciating that, we lose sight of just how strange healthcare (and college, and housing) are. When prices stay far above costs despite what presents itself as competition, there's something significant happening that deserves more attention.

Re: Drugmakers hiked prices 1k% in price-fixing scheme, states allege

#27

Post by ordu »

koolba wrote: post #15
bobblywobbles wrote: post #11

Earlier quoted context omitted.

Not sure if you are being serious or not. Inflating or price-fixing medicine that is ESSENTIAL to human life is not moral. It causes people to die because they can't afford it. To the common response of "they just need to save more" is not fair to ask. That's saying the generic you pay $30 is now $330.

> Inflating or price-fixing medicine that is ESSENTIAL to human life is not moral. It causes people to die because they can't afford it. "Inflating" the price of something beyond the cost of production is how you make a profit. Pharma companies are not charities and there's no reason to expect them to not try to make a profit. The morality of charging money for health services is subjective. Now "price-fixing" is a d…

> Pharma companies are not charities and there's no reason to expect them to not try to make a profit.

It is nothing wrong to make a profit. It is a right thing to make a profit. But to make a profit by amoral means is wrong.

> The morality of charging money for health services is subjective.

It doesn't mean that we shouldn't take it into a consideration. Law enforcement might have trouble to deal with a subjective assessments, but we are not the law.

At the same time, I think we can agree on the amorality of the discussed practices, so it is not so subjective as it may seem. Moreover I believe that pharma might agree with us, if it stops for a second to think about morality, not just about profits.

Re: Drugmakers hiked prices 1k% in price-fixing scheme, states allege

#28

Post by mcv »

mtgx wrote: post #4
pnutjam wrote: post #3

There is a serious issue with price fixing in pharma. Whether it's generics colluding, fake patent extensions, or name brand producers paying off generic; it needs to stop. The current practice is to mark drugs up sky high and rebate the prices. Maybe someone can educate me, but it looks very similar to money laundering IMHO.

It certainly helps that the U.S. government can't negotiate Medicare prices, too.

If there ever was a clear case for a law that should be revoked, it's that one. The whole point is that you can negotiate prices and make medical care cheaper for everyone. Banning that is the clearest evidence that the system is designed to increase corporate profits, not heal people.

Re: Drugmakers hiked prices 1k% in price-fixing scheme, states allege

#29

Post by thatfrenchguy »

Rooster61 wrote: post #20
fallingfrog wrote: post #10

The whole industry needs to be nationalized, full stop, and the current people in charge need to all be in jail.

Yes, put this in the hands of the same bureaucrats that allow this sort of thing to happen without penalty in the first place. That sounds like a fantastic idea.

It’s not like it doesn’t work in other countries (see France).

Re: Drugmakers hiked prices 1k% in price-fixing scheme, states allege

#30

Post by otikik »

Bartweiss wrote: post #23
nerdponx wrote: post #2

Submission statement of sorts: the NYT article for this was submitted twice in the last two days but got no attention; the pharmaceutical industry seems to be a topic of interest here (including some non-mainstream views on characters like Martin Shkreli), so I'm interested to see HN's take on this.

I appreciate this submission; it's a story that challenges a number of my views, which I think are relatively common around HN. Broadly, I've thought that high drug prices in the US stem from a mix of our bizarre insurance system (which rewards 'ambitious' pricing) and regulation. For name-brand drugs, that's largely patent protections, but even for generics it happens via process patents, high filing-fee barriers to…

I would say exemplary action would help.

Take 4 or 5 of these criminals, strip them of their fortunes, let the press take many pictures of them handcuffed and going to jail, where they will be for 10 years. Also, force the companies to price the drugs accordingly.

If we repeat this enough, I'm sure the problem will magically solve itself and suddenly the companies will be able to cope with clumsy regulation just fine.

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