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The Hidden Monopolies That Raise Drug Prices

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Re: The Hidden Monopolies That Raise Drug Prices

#181

Post by WalterBright »

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…

Your link says that $19.9 is marked as "selling, marketing, and administrative expenses".

It looks like a dumpster category for all kinds of expenses, not just "marketing".

Re: The Hidden Monopolies That Raise Drug Prices

#182

Post by WalterBright »

spangry wrote: post #111
xadhominemx wrote: post #102

Earlier quoted context omitted.

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

Actually it's a pretty good example. In Australia, medicines and medical devices (i.e. 81% of J&J revenue) are regulated by the same body (the TGA) using the same approach, craftily reasoning that sick people need both. I realise you might see thing differently (i.e. better) in the USA, but I guess that's just part of what makes you exceptional!

"Johnson & Johnson's brands include numerous household names of medications and first aid supplies. Among its well-known consumer products are the Band-Aid Brand line of bandages, Tylenol medications, Johnson's baby products, Neutrogena skin and beauty products, Clean & Clear facial wash and Acuvue contact lenses."

  -- https://en.wikipedia.org/wiki/Johnson_%26_Johnson

Re: The Hidden Monopolies That Raise Drug Prices

#183

Post by gech »

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.

>Any way

Bribes?

Re: The Hidden Monopolies That Raise Drug Prices

#184

Post by mattieuga »

kellanem wrote: post #61
bradleyjg wrote: post #45

Earlier quoted context omitted.

> If you're interested in roughly what the wholesale price is plus a very small markup What about the rebates mentioned in the article several times? I know in the car industry one trick is to go on and on about "dealer invoice" and how great a deal you are getting while ignoring that rebates make that number fairly meaningless.

Two things going on with the rebates. 1. I think the article is a little one sided in their explanation of the rebate system, though it certainly more opaque than it should be. (some of which is just healthtech is stuck in the dark ages) 2. The rebates really only apply to the branded meds, which are approximately 20% of the market.

I think that's very dismissive of the importance rebates play. The PBMs' defensibility comes almost entirely from their ability to use their scale to drive up branded/specialty medication costs up by demanding larger and larger rebates from pharma. In terms of revenue, branded and specialty meds already make up more than 75% of the market today. They are the real problem here, not generics.

Re: The Hidden Monopolies That Raise Drug Prices

#185

Post by jjmorrison »

svskeptic wrote: post #76
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…

"roughly what the wholesale price is plus a very small markup" .. is not my experience. I just had a pharmacist friend show this to me. Blink charged the customer $10 for generic Lipitor (atorvastatin) 20mg, 30 pills. And reimbursed the pharmacy $4.90. Hence keeping > 50% of what the customer paid. As per the pharmacist, he would be happy to fill the prescription in cash for $7.50, lowering the price for consumer and…

Just to provide more info - for a given pharmacy, Atorvastatin 20mg is $.0629 per pill, so $1.887 at cost. For most pharmacies the real cost is going the pharmacist filling the rx. An insurance company would probably reimburse Also claiming: Avg. retail: $132.52 You save: 96%

Is the complete OPPOSITE of transparency. $132.52 might be a realistic price for branded Lipitor, but that's not at all what is being sold here.

Re: The Hidden Monopolies That Raise Drug Prices

#186

Post by jjmorrison »

e40 wrote: post #83
iamleppert wrote: post #55

I deal with Express Scripts and CVS Caremark. I have Hemophilia, a bleeding disorder condition I've been born with. By far, these are the most corrupt organizations in the medical/drug industry. At least the phrama companies actually make something at the end of the day and do research, and employ more than just business people. I am forced by whatever insurance plan I have, to deal with these companies directly beca…

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…

The new FDA head is actually very anti PBM, so he might be a force for good here.

http://www.drugchannels.net/2017/03/scott-gottliebs-radical-...

Re: The Hidden Monopolies That Raise Drug Prices

#187

Post by spangry »

jessriedel wrote: post #154
spangry wrote: post #77

Earlier quoted context omitted.

"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?

Yes I do dispute that notion. Actually I dispute the entire idiot notion that the US is somehow subsidising the rest of the worlds' healthcare.

In actual fact, pharmaceutical / medical device companies will simply charge whatever the market will bear, and it just so happens the US market will bear almost any price. If some market won't bear a profit making price, pharma companies simply won't sell into it.

It makes utterly no sense to sell at a loss and then cross subsidise using the massive rents extracted from US markets, yet that is exactly what most people here seem to think is happening. Although maybe Trump really has managed to 'make America great again'. Speaking of great...

The US spends 17.1% of of its GDP on healthcare. The 5 countries that are richer than the USA (GDP per capita) pay an average of 7.77%. Excluding Qatar, it's 9.03%. The top 10 richest countries (excluding the USA) spend an average of 8.03% of their GDP on healthcare, and I'm pretty sure at least a few of these have universal public health insurance.

You're paying more than DOUBLE compared to the 9 other richest countries in the world. You're simply getting gouged. If you can't even admit that maybe there's a problem here, and instead want to persist with all these insane American exceptionalist fantasies, it's unlikely anything is going to change in American healthcare.

Data from here: http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS?end=2014&...

And here: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi... (using IMF GDP figures)

Re: The Hidden Monopolies That Raise Drug Prices

#188

Post by kgwgk »

refurb wrote: post #178
kgwgk wrote: post #163

Earlier quoted context omitted.

Not completely true (the restrictions have been eased a bit) but how does this fact support your claim? ("If they had priced lower, they probably would have seen even greater profits.") Profits were higher when prices were higher.

Yes, access has gotten better, somewhat driven by discounts, but also driven by lawsuits against Medicaid. Where I'm coming from is that there are 3.5M people in the US with HCV. Let's say 10% are in California (350,000). Many of them are on Medicaid. Medicaid estimates it will be spend $1B on these drugs in 2017[1]. Based on that article, it comes out to 14,300 patients. A small fraction of those with HCV. I would i…

I see is no reason to think the increase in numbers treated would have been so large that payers would have spent more dollars than they did, so its not clear that Gilead's revenue (let alone profit) would have been higher.

Re: The Hidden Monopolies That Raise Drug Prices

#189

Post by spangry »

WalterBright wrote: post #182
spangry wrote: post #111

Earlier quoted context omitted.

Actually it's a pretty good example. In Australia, medicines and medical devices (i.e. 81% of J&J revenue) are regulated by the same body (the TGA) using the same approach, craftily reasoning that sick people need both. I realise you might see thing differently (i.e. better) in the USA, but I guess that's just part of what makes you exceptional!

"Johnson & Johnson's brands include numerous household names of medications and first aid supplies. Among its well-known consumer products are the Band-Aid Brand line of bandages, Tylenol medications, Johnson's baby products, Neutrogena skin and beauty products, Clean & Clear facial wash and Acuvue contact lenses." -- https://en.wikipedia.org/wiki/Johnson_%26_Johnson

Literally every single one of those products listed fall under their 'Consumer Segment' (see pages 7 & 8 of financial statements in original post). The entire consumer segment accounts for 18.5 per cent of their total revenue.

The remaining 81.5 per cent of their revenue comes from the sale of pharmaceuticals and medical devices.

Re: The Hidden Monopolies That Raise Drug Prices

#190

Post by WalterBright »

spangry wrote: post #189
WalterBright wrote: post #182

Earlier quoted context omitted.

"Johnson & Johnson's brands include numerous household names of medications and first aid supplies. Among its well-known consumer products are the Band-Aid Brand line of bandages, Tylenol medications, Johnson's baby products, Neutrogena skin and beauty products, Clean & Clear facial wash and Acuvue contact lenses." -- https://en.wikipedia.org/wiki/Johnson_%26_Johnson

Literally every single one of those products listed fall under their 'Consumer Segment' (see pages 7 & 8 of financial statements in original post). The entire consumer segment accounts for 18.5 per cent of their total revenue. The remaining 81.5 per cent of their revenue comes from the sale of pharmaceuticals and medical devices.

The original post was listing the "consolidated" figures. Marketing of consumer products was not broken out separately from the consolidated figures.

The information in the pdf does not support the narrative of the original article, because of the use of consolidated figures.

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