Why Chemotherapy That Costs $70,000 in the U.S. Costs $2,500 in India

> the patentability of modifications to existing drugs under Indian law

A key point here is that the original drug itself was patented, and has expired. The issue that the Indian court had with Gleevec patent application is that it only rearranged the molecule in a new crystal pattern, ie Polymorphism. The Indian court consider polymorphism to be a well known technique when working with drugs, and just applying polymorphism to a old drug and record what it did do not fulfill the requirement for patentable.

This is basically the paradox of US healthcare innovation. Canada can tell its pharmaceutical companies, "yeah, that cool drug you just invented, we're not gonna pay you what you want for that." And what option does the pharmaceutical company have? Convince healthcare providers to charge retail prices to their patients as an out-of-pocket expense, or... reduce prices accordingly.

Because healthcare payments are not functionally a government-controlled monopoly (ie. socialized healthcare) in the US, this doesn't happen. So Novartis can sell Gleevec for $75,000 in the US, because a healthcare provider will agree to pay and just bill it to private insurance companies, and those private insurance company will agree to pay and just increase their premiums on the customers, who probably won't notice because, assuming they have employer-provided health insurance, their employer won't take anything more out of their paycheck, but then say increased operational costs means nobody can get a raise.

So US healthcare leads the way in innovation because device and pharmaceutical manufacturers can make a lot more money than in countries with socialized healthcare. So these companies make most of their profits in the US, and then they'll grumble and accept lower prices in every other country, because at that point it's just icing to them. After the profits made in the US, getting $2,500 from Indians for Gleevac is better than getting $0.

The US is effectively subsidizing advanced healthcare for every other country in the world. This is pretty crappy, obviously, but this is a complex problem to solve. Because if you move to a cost-controlling system, then you will stifle legitimate innovation. Why jump through all our FDA clinical trial hurdles if there's no promise of a big payout at the end? Why invest in R&D without the protections of patent law to prevent your drugs from being trivially replicated?

I'm not trying to say, "oh, those poor profits of the drug companies." I recognize this may not be a sympathetic argument. But it's likely to be tough to control costs and yet maintain R&D and innovation. Right now, every other country essentially gets the US to pay the bill for the innovation and they reap the benefits at a lower cost, but with US healthcare already consuming 1/6 of our economy, this isn't sustainable.

US firms are investing less in R&D relatively to their rank http://en.wikipedia.org/wiki/Pharmaceutical_industry#Market_... than their French/UK (publicly-funded healthcare) counterparts. The US are not "subsidizing it for poor countries" more than other rich countries.

The truth in the case you're making is not specific to healthcare and is that "research (private and public) of rich countries that can afford it" benefits poorer countries. So what, let's stop advancing science? We're all better off this way!

Actually, the problem in the US is in the lack of the balance between the producers and customers of medicine. In Canada, as you point out, there is a state monopoly on the purchasing side, but there is a similar monopoly on the selling side, in the form of medical patents. In India, there isn't a monopoly on either side.

In the US, you have no monopoly on the healthcare side, but the drug companies have a monopoly on the drugs they produce. I'm not saying neither that you should drop the patents nor that you should introduce social healthcare -- but you should restore the balance in some way.

Personally, I'm for dropping or drastically reducing the patents on new drugs. I know that the argument against it is that it will discourage the research, but I don't believe it -- actually, it would enable further research on already existing drugs, improving them, and finding new uses and applications (think Viagra). But that's my personal opinion, and I'm not even a US citizen; you should find the right solution for yourselves.

> In the US, you have no monopoly on the healthcare side, but the drug companies have a monopoly on the drugs they produce.

In a way there is a monopoly on the healthcare side in the US, but it only impacts a certain segment of the population. Medicare is able to negotiate significant discounts on the cost of healthcare compared to private insurers precisely because for so many people it is the de facto provider.

There was a really interesting Planet Money podcast a month or so ago about healthcare costs in the US which covered why the difference between private insurers and Medicare is so great: http://www.npr.org/blogs/money/2013/02/26/172996963/episode-...