The Hidden Monopolies That Raise Drug Prices • Hacker News Board

Re: The Hidden Monopolies That Raise Drug Prices

#91

Post by chimeracoder » Thu, Mar 30, 2017, 4:49 PM UTC

e40 wrote: post #84

chimeracoder wrote: post #3

> Americans pay the highest health-care prices in the world, including the highest for drugs, medical devices, and other health-care services and products. Our fragmented system produces many opportunities for excessive charges. But one lesser-known reason for those high prices is the stranglehold that a few giant intermediaries have secured over distribution. The antitrust laws are supposed to provide protection aga…

As I and other have mentioned before, the easiest way to fix this would be to permit re-importing drugs that were manufactured within the US. The easiest way to fix this is to have cost controls like every other 1st-world country in the world on drugs and medical procedures. Unfortunately, this is treasonous to Republicans and Democrats are spineless. The current system will be upheld until people get fed up enough t…

> 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 ends up subsidizing medical research for the rest of the world. (Half of all medical research in the world is funded by the US, and even many European pharmaceutical companies fund their research from the US).

Re: The Hidden Monopolies That Raise Drug Prices

#92

Post by maxxxxx » Thu, Mar 30, 2017, 4:55 PM UTC

novalis78 wrote: post #62

maxxxxx wrote: post #39

This is just another example of how messed up the US medical "market" is. Almost everywhere you look there are hidden prices, hidden middlemen and so on. I am not aware of any other market where things are so opaque and convoluted. If the current administration was serious about markets they should mandate that all pricing becomes transparent so a real functioning market can actually develop.

Absolutely agree. Something long the lines of what pricepain.com had in mind. This "market" is so ripe for disruption like no other. Sadly, its guarded by a lot of lobbying power and artificial regulations. I think they get away with it "because health".

Americans are now so used to this insane system they can't even conceive that it actually doesn't have to be that way.

Re: The Hidden Monopolies That Raise Drug Prices

#93

Post by chimeracoder » Thu, Mar 30, 2017, 5:00 PM UTC

kbenson wrote: post #90

chimeracoder wrote: post #46

Earlier quoted context omitted.

> But that's the whole problem. Canada presumably doesn't want to subsidize U.S. citizens. Well, right now the US is effectively subsidizing Canadians, because the US is funding the majority of the pharmaceutical research that produces the drugs they consume. Half of the entire world's funding for pharmaceutical research comes from the US. A large chunk of that is funded by earnings on pharmaceutical sales[0][1]. > I…

> 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 long as the combined import fees and subsidized cost are not more than the cost in the importing country.

Correct. And on the flip side, there is no way for one country to force the other to subsidize its share of medical research, by purchasing the drugs at a price that doesn't cover R&D. Currently, that's what is happening. Pharmaceutical companies don't complain too much, though, because they can still make up the difference off of their largest customer: the US. If they couldn't, then things would be very different.

The US is the largest consumer of patent-protected drugs, by a huge margin. It also funds half of all medical research worldwide, the benefits of which are then available to all countries, even though most pay rates that wouldn't sustain that level of research. There's a reason that even most European pharmaceutical companies get the bulk of their research funding from the US.

Any solution which reduces drug prices in the US will inevitably result in either other countries that recognize US parents having to pay more, or total medical research funding dropping, which affects all countries worldwide. Realistically, it'll probably be some combination of both.

Re: The Hidden Monopolies That Raise Drug Prices

#94

Post by tclAmockingbird » Thu, Mar 30, 2017, 5:02 PM UTC

galdosdi wrote: post #65

tclAmockingbird wrote: post #60

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. 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…

FWIW the anecdotal experience of people I know in the health field in the US is that pharma sales reps know nothing about medicine, are hired for their sales / "relationship building" ability, and can't answer any question about the drug they are touting that can't be answered by looking at the brochure. Very disappointing. You can't expect to get unbiased, quality advice from someone with such a strong incentive. Th…

> FWIW the anecdotal experience of people I know in the health field in the US is that pharma sales reps know nothing about medicine, are hired for their sales / "relationship building" ability, and can't answer any question about the drug they are touting that can't be answered by looking at the brochure. Very disappointing.

MSLs have advanced degrees in medicine or biomedical research. It's preferred that the traditional sales reps now have bachelor's degrees in the sciences and it is expected that, within the narrow scope of their product's science, they be well-informed regardless of prior academic background. It's preferred because they are more effective reps.

> You can't expect to get unbiased, quality advice from someone with such a strong incentive. The right way for doctors to stay up to date is for doctors to stay up to date! They need to read a damn book or journal article once in a while and takes responsibility for their own professional development. If doctors aren't doing that, regulators need to suspend their licenses.

Continuing medical education is a requirement to maintain licensure. I don't think I get your point here.

Re: The Hidden Monopolies That Raise Drug Prices

#95

Post by dv_dt » Thu, Mar 30, 2017, 5:03 PM UTC

rayiner wrote: post #11

chimeracoder wrote: post #3

> Americans pay the highest health-care prices in the world, including the highest for drugs, medical devices, and other health-care services and products. Our fragmented system produces many opportunities for excessive charges. But one lesser-known reason for those high prices is the stranglehold that a few giant intermediaries have secured over distribution. The antitrust laws are supposed to provide protection aga…

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…

You talk as if the negotiated prices were permanent. The profit extraction flows like water - if most customers negotiate lower prices, then the one market that doesn't (the US), ends up carrying the bulk of the profits.

If the US closes down the allowed margin, the drug maker isn't just going to blink out of existence. I would expect a set of renegotiation between all it's existing customers to rebalance what is a reasonable profit to allow - which admittedly would likely be lower than what is extracted from the US market currently. But that is likely healthier for society in the long term as it would remove all the costs of inefficiency spent on this crazy drug pricing dance that occurs in the US.

Re: The Hidden Monopolies That Raise Drug Prices

#96

Post by AnonMePBM » Thu, Mar 30, 2017, 5:04 PM UTC

I can say this article rings very true. I am generally very impressed by the accuracy of the points raised. But make sure not to associate all PBMs with this practice. We too don't like it. I am pretty high up at a PBM (not one of the big three), and can say our model does not play the same games (crimes!). The point about MAC pricing is not exactly fair however. Some customers prefer to engage this way since it reflects revenue based solely on the usage of medications prescribed. It might sound odd, but this way we reduce (or near zero) other fees that we charge the customer. In general, we DONT recommend this model, but in some cases, it makes sense. I have to stay anon, since I don't speak officially for the company; all opinions are my own.

Re: The Hidden Monopolies That Raise Drug Prices

#97

Post by tclAmockingbird » Thu, Mar 30, 2017, 5:07 PM UTC

DarkKomunalec wrote: post #69

tclAmockingbird wrote: post #60

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. 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…

> 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 purposefully ignoring information you dislike?

The dev part was an honest error while I was editing, and I don't think the accusation is called for. Regulatory costs, and I think of quality also being in that group, is not an R&D cost and is substantial.

Re: The Hidden Monopolies That Raise Drug Prices

#98

Post by SilasX » Thu, Mar 30, 2017, 5:07 PM UTC

jcfrei wrote: post #87

rayiner wrote: post #64

Earlier quoted context omitted.

So that's an article on how pharma companies spend more on sales and marketing than research. But many companies we'd consider "innovative" spend about twice as much on SG&A (sales, general, and administrative) as on R&D. For 2014-2015, the ratio between R&D spending and SG&A spending is 0.59 at Pfizer, 0.75 at Google, 0.56 at AstraZeneca, 0.43 at Apple, and 0.58 at Microsoft.

I'm skeptical that pharma companies should require equally high levels of marketing spending as other industries. After all most expensive pharmaceutical products are bought through an expert (ie. your physician). There's not a huge discoverability problem to be solved for those companies - or at least there shouldn't be - after all there's a national drug directory run by the FDA. Furthermore the US is one of only t…

If doctors were hyperdiligent about researching treatment options rather than "meh, it's a job, we don't have anything for you, next!" then I would agree completely. But sometimes they have to be reminded of what is out there, which may have changed since they were in med school.

Re: The Hidden Monopolies That Raise Drug Prices

#99

Post by duwease » Thu, Mar 30, 2017, 5:09 PM UTC

chimeracoder wrote: post #91

e40 wrote: post #84

Earlier quoted context omitted.

As I and other have mentioned before, the easiest way to fix this would be to permit re-importing drugs that were manufactured within the US. The easiest way to fix this is to have cost controls like every other 1st-world country in the world on drugs and medical procedures. Unfortunately, this is treasonous to Republicans and Democrats are spineless. The current system will be upheld until people get fed up enough t…

> 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!

Re: The Hidden Monopolies That Raise Drug Prices

#100

Post by rayiner » Thu, Mar 30, 2017, 5:10 PM UTC

jcfrei wrote: post #87

rayiner wrote: post #64

Earlier quoted context omitted.

So that's an article on how pharma companies spend more on sales and marketing than research. But many companies we'd consider "innovative" spend about twice as much on SG&A (sales, general, and administrative) as on R&D. For 2014-2015, the ratio between R&D spending and SG&A spending is 0.59 at Pfizer, 0.75 at Google, 0.56 at AstraZeneca, 0.43 at Apple, and 0.58 at Microsoft.

I'm skeptical that pharma companies should require equally high levels of marketing spending as other industries. After all most expensive pharmaceutical products are bought through an expert (ie. your physician). There's not a huge discoverability problem to be solved for those companies - or at least there shouldn't be - after all there's a national drug directory run by the FDA. Furthermore the US is one of only t…

Is discovability a problem for Apple, Microsoft, or Google? And note that Microsoft and Google sell primarily to experts too (advertising and IT professionals).

As to advertising. As for as I know, what other nations ban is direct to consumer advertising, which is a minority of advertising spend. And as to DTC advertising, you can level the very legitimate criticism that it's directed to convincing people to ask for drugs they don't really need. But that's true of most advertising. Does anyone really need a new iPhone or to upgrade to Windows 10? Also, getting rid of DTC advertising wouldn't really address drug prices. It would just force manufacturers to recover their R&D + ROI from a smaller pool of buyers (the ones who really need the drug). On a cost per pill basis, whatever would be saved through lower DTC advertising expenditures clould be outweighed by the reduced sales.