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The Hidden Monopolies That Raise Drug Prices

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Re: The Hidden Monopolies That Raise Drug Prices

#101

Post by kbenson »

chimeracoder wrote: post #93
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…

> Resists changing the price in the country that is imported into. If they don't, then people will just import drugs from the cheaper source, as long as it remains cheaper. Which amounts to the same thing. > With open export regulations on drugs, there is effectively no way to subsidize a drug for your own citizens without subsidizing it for others where it is lower than another country that allows importation as lon…

I think fundamentally what we have here is the collision of socialism and capitalism, and I'm not sure how to make those work at the margins where they meet. Government funding of research is socialism, but selling the developed drugs is capitalism, and selling them outside the funding country without an increase in price costs the funding country.

I'm not sure what the research on this topic says, but I suspect the solution is moving the demarcation of socialism and capitalism to a more acceptable point, as much as that makes sense. For example, instead of freely funding development, if the government got some ownership stake in the drugs developed with some of their funding, as profits as well, then any gain from their own citizens or the citizens of other countries would go towards teh budget, and thus the good of the citizens of the funding government.

I guess the real question is how do you mix capitalism and socialism in a way that eliminates, or at least reduces the friction caused where they push up against each other?

Re: The Hidden Monopolies That Raise Drug Prices

#102

Post by xadhominemx »

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…

Less than half of JNJ's revenues is pharmaceuticals, so not a great example to be honest.

Re: The Hidden Monopolies That Raise Drug Prices

#103

Post by xadhominemx »

baloneyman wrote: post #59
refurb wrote: post #42

Earlier quoted context omitted.

But that's their job! They are supposed to negotiate lower prices. They, in turn, can market their formulary to insurance companies by saying "If you use us, we can offer a lower cost pharmacy benefit." And if you're a smart insurance company, you do your due diligence and don't negotiate a contract where you have no transparency into the PBMs costs.

What "job" is that? There is no reason for these companies to exist. Incentivizing drug companies to raise prices in lockstep... to keep the middlemen happy? That is a very perverse incentive

>There is no reason for these companies to exist.

It is clear you don't know much about PBMs. Maybe try to rephrase your comment as a question.

Re: The Hidden Monopolies That Raise Drug Prices

#104

Post by [deleted] »

tclAmockingbird wrote: post #97
DarkKomunalec wrote: post #69

Earlier quoted context omitted.

> It's also keeping physicians up to date on the current science, applicability, and best practices of their products. I think it's a good thing for sales reps and MSLs to inform or remind physicians that there are alternatives to writing a script for Epipens, for example. There are many very cheap ways of keeping physicians up-to date, such as a conference presentation of the drug, followed by a Q&A session, with a…

> There are many very cheap ways of keeping physicians up-to date, such as a conference presentation of the drug, followed by a Q&A session, with a recording freely available online. 5 minutes of face time with a busy physician and supplying them with a useful article targeted to their specific needs can be far more effective. > Which are covered in the already mentioned 20% that goes to R&D (source pending). Are you…

[deleted]

Re: The Hidden Monopolies That Raise Drug Prices

#105

Post by chimeracoder »

kbenson wrote: post #101
chimeracoder wrote: post #93

Earlier quoted context omitted.

> Resists changing the price in the country that is imported into. If they don't, then people will just import drugs from the cheaper source, as long as it remains cheaper. Which amounts to the same thing. > With open export regulations on drugs, there is effectively no way to subsidize a drug for your own citizens without subsidizing it for others where it is lower than another country that allows importation as lon…

I think fundamentally what we have here is the collision of socialism and capitalism, and I'm not sure how to make those work at the margins where they meet. Government funding of research is socialism, but selling the developed drugs is capitalism, and selling them outside the funding country without an increase in price costs the funding country. I'm not sure what the research on this topic says, but I suspect the…

> I think fundamentally what we have here is the collision of socialism and capitalism, and I'm not sure how to make those work at the margins where they meet. Government funding of research is socialism, but selling the developed drugs is capitalism, and selling them outside the funding country without an increase in price costs the funding country.

I don't think you really want to call what happens in Europe and Canada "socialism" in this context, because it's quite literally "Europe and Canada receive the benefits while the US pays for it". That's a definition of socialism I've heard, but only ever in a pejorative context. And government funding of research is not "socialism". It can happen in a socialist society, or it can happen in a capitalist one, and it's not inherently inconsistent (or synonymous) with either philosophy).

I'm also not really thrilled with this framing of "socialism vs. capitalism", because Canada and most European countries do not officially claim to be socialist[0], and most of them aren't particularly socialist in practice. As a result, discussing the topic on those terms runs the very real risk of veering off into abstract philosophy without much grounding in the practical matter at hand, which is a very far way off from the original article.

[0] Of all Western, Central, or Scandanavian European countries, only one (Portugal) even claims to be socialist officially, and that claim is made rather nominally.

Re: The Hidden Monopolies That Raise Drug Prices

#106

Post by chimeracoder »

duwease wrote: post #99
chimeracoder wrote: post #91

Earlier quoted context omitted.

> The easiest way to fix this is to have cost controls like every other 1st-world country in the world on drugs Ignoring the incredibly loaded term "first world country", that's not true. Not all other "first-world" countries implement price controls on drugs. Secondly, as explained below, the only reason that works for them is that the single largest consumer of patent-protected drugs (the US) does not, and thereby…

Wait, so following suit would then lower prices in the US and pass on the costs to the rest of the world? ..Sold!

> Wait, so following suit would then lower prices in the US and pass on the costs to the rest of the world? ..Sold!

Yes, which is why basically any American should support drug reimporting[0]. But pharmaceutical companies lobbied heavily against it, so it was taken out of the ACA, and it's been defeated in Congress (albeit by a narrow margin) each time it's come up since then.

[0] Conversely, countries which import drugs from the US (which includes all developed nations) have a very vested interest in not letting pharmaceutical prices in the US drop.

Re: The Hidden Monopolies That Raise Drug Prices

#107

Post by refurb »

kgwgk wrote: post #71
refurb wrote: post #41

Earlier quoted context omitted.

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.

The price was too high. There are millions of untreated HCV patients out there that can't get treated because insurance companies won't pay for the drugs.

Re: The Hidden Monopolies That Raise Drug Prices

#108

Post by refurb »

chimeracoder wrote: post #49
refurb wrote: post #35

Earlier quoted context omitted.

The only reason that they can set these quotas in the first place is that US wholesalers can't (freely) export to Canada, and vice versa. If the ban on that had been lifted, AstraZeneca wouldn't be able to set quotas per-country in the first place. Manufacturer control over whole gets the buy drugs and what they can do with it after that is a cornerstone of drug distribution strategy. It also maintains drug pedigree…

> Manufacturer control over whole gets the buy drugs and what they can do with it after that is a cornerstone of drug distribution strategy. It also maintains drug pedigree and product integrity. I can't see it going away. Not really. Manufacturers already have essentially zero control over wholesale resale within the US. (They can track it, to assist in things like recalls, but they can't prevent it). And there are…

I worked in the industry and every branded manufacturer I worked with had clear restrictions on who wholesalers can sell to.

Re: The Hidden Monopolies That Raise Drug Prices

#109

Post by attaboyjon »

refurb wrote: post #42
attaboyjon wrote: post #26

Earlier quoted context omitted.

Actually the PBMs are a big villain here. They pocket the difference between the retail price of a drug and the discounts they negotiate with the drug makers. They choose the drugs on their formulary based on this spread. This one of the reasons why you will see prices for drugs like Insulin going up with each manufacturer raising price in lock-step. The drug makers are not competing to sell the consumer insulin, the…

But that's their job! They are supposed to negotiate lower prices. They, in turn, can market their formulary to insurance companies by saying "If you use us, we can offer a lower cost pharmacy benefit." And if you're a smart insurance company, you do your due diligence and don't negotiate a contract where you have no transparency into the PBMs costs.

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 billion acquisition of rival Medco Health Solutions (once the nation's largest PBM) created "a powerhouse in managing prescription drug benefits."

Re: The Hidden Monopolies That Raise Drug Prices

#110

Post by drugpusher »

tclAmockingbird wrote: post #60
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.

> > 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. It's also keeping physicians up to date on the current science, applicability, and best practices of their products. I think it's a good thing for sales reps and MSLs to inform or remind physicians that there are alternatives…

Hah. I've actually spent months of my life working with drug reps - including going with them on doctor's visits. They will get five minutes max to go through their spiel, and they are very focused on selling the specific uses or differences to get doctors to switch.

What is also amazing is that it is easy to get doctor level data on your drugs market share in their prescription patterns. So you can target very effectively. Then it's all discipline of frequency and hitting the right docs.

Why do you think so many drug reps are blonde girls? Because the doctors will make time to see 'em.

And what is doubly amazing is how effective this brute force sales technique is. I have graphs of visit frequency vs market share and it is DEADLY effective if you get it right. (Of course there are diminishing returns. Drug reps will game their visit stats by overvisiting friendly docs. So you can't​ give them credit for those visits.)

Source: I'm a healthcare sales management consultant

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