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Why America pays so much more for drugs (1 Viewer)

cstu

cstu

Footballguy
The costs of innovation and negotiation


Miller got a round of applause for suggesting that the rest of the world take up some of the burden that the U.S. currently shoulders for high drug prices. But it raises the question: If prices in other countries were to come more in line with those in the U.S., what would happen? Would prices here drop, or would everyone simply pay more?

Reilly agreed that other countries should pay more for drugs: "Unfortunately, we're the only country in the world that still values some of the innovation that is coming to market," she said.

Certner had a different take:

"I would say we're the only country in the world that doesn't use the marketing power the rest of the world does" to bring prices down, he said.

The elephant on the sidelines is the U.S. government itself, which would have significant negotiating power -- if it were allowed to negotiate, which it's not. This part of the issue is one of the wonkiest subjects to have percolated into the 2016 presidential race, with Hillary  Clinton and Bernie Sanders both promising to combat high drug prices by allowing Medicare to negotiate. Among  Republicans, using the government's bargaining power against the drug industry is a non-starter -- with the notable exception of Donald Trump, who perhaps can't resist the chance to use the government's  power to wheel and deal on a truly grandiose scale. Trump has claimed that allowing Medicare to negotiate could save $300 billion, but that is almost certainly a huge overestimate since, in 2015, the total Medicare prescription drug spending for its part D benefit was projected to be $85 billion.

Miller, who is very familiar with the business of negotiating drug prices, said that the ability to negotiate itself would have only a limited impact -- unless Medicare could also exclude some medications from its formulary of covered drugs, something that it doesn't currently do. Playing hardball by refusing to cover other pricy hepatitis C drugs was how Miller's company was able to negotiate a discount on the drugs that allowed Express Scripts to save $1 billion in 2015. Negotiating without being able to say "no" to any particular drug is a weak bargaining position -- and possibly not a solution that any of the players on the stage would readily embrace.
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I'm always amused at this notion that "innovation" will disappear if the government made the drug companies fall in line.

 
I would be content paying the average rate of top three major countries. If the pharma companies don't like that then they need to increase the rate for other countries.

For example, that would be around $28k for the cancer drug we currently pay $80k for.

 
Somebody has to pay for those profits after all the R&D is taken out.  it's their right and is not negotiable.

Hopefully, we can just do away with the prescriptions and the need for doctors and they can just start selling directly to the consumer.  

 
Can one of the unemployed millenials write an open letter to big pharma to see about lowering these prices?

TIA.

 
The Commish said:
I'm always amused at this notion that "innovation" will disappear if the government made the drug companies fall in line.
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Why?  R&D investment decisions pretty clearly hinge on expected ROI.  The reason why patents exist, for example, is to drive up prices and boost the ROI for new drugs so as to create additional incentive to spend on R&D.  

 
I thought it was to pay for their great ad campaigns. I love the one where the pink irritated bowel is walking around town, or the fungus toenail is playing tennis, or the gy who can't take a dump is walking around looking longingly people who have regular poop schedules. Can't get enough of these.

 
IvanKaramazov said:
The Commish said:
I'm always amused at this notion that "innovation" will disappear if the government made the drug companies fall in line.
Click to expand...
Why?  R&D investment decisions pretty clearly hinge on expected ROI.  The reason why patents exist, for example, is to drive up prices and boost the ROI for new drugs so as to create additional incentive to spend on R&D.  
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Primarily because a good portion of our research results come from government research funds like the NIH.  If we have a sound researching body and if we can even bolster that body by siphoning funds to them, the research will continue.  It's not going to disappear.

 
urbanhack said:
Somebody has to pay for those profits after all the R&D is taken out.  it's their right and is not negotiable.

Hopefully, we can just do away with the prescriptions and the need for doctors and they can just start selling directly to the consumer.  
Click to expand...
I realize certain drugs are a necessity in life or for some folks. But for most it would be better if we would just do the work on the front end and then not need all these drugs. My wife and I are in our early 40s and we see folks our age and older with prescription pills for any and everything. They all have side effects and especially if taken daily over the long term. 

The drug dealers are pushing every night on the TV when you watch any of the major networks between about news time and up thru prime time nightly. "Friends, do you suffer from...do you have a hard time getting up in the morning, falling to bed at night, just breathing, not going MOP on your neighbor...well friend do I have the cure for you." 

Meanwhile we are still locking poor folks up for dealing herb in different parts of the country. 

 
Another reason we pay so much is that we take so much.  We account for ~5% of the Earth's population....and take ~75% of the pharmaceuticals in it.

 
NutterButter said:
Is that true?  OMG.   Why is that the case?  
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I've heard different numbers as to just how much we here in the US take, I'm sure it's at least half.  And yes, we account for about 5% of the world's population.  I did a quick google search, but didn't see anything official, just a reference to a recent documentary film that claimed 50%.  The most I've heard it the 75% figure.  We're way over prescribed medications here.  Oh, we also take 80% of the world's painkiller drugs (Oxy on codeine are the biggies).  Ah, the "legal" drug trade.

 
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urbanhack said:
Because big pharma is profit-based and it's covered by insurance.
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And the Doc's prescribing it get a piece of the action when they do so.  They make money, the drug company makes money, insurance pays for it (meaning we all end up paying for it with higher premiums), and maybe you got prescribed something you never needed in the first place - and may not use all of it anyway.

 
Other crazy stats:

- More than half of Americans take two prescription medications, and 20 percent of Americans are on at least five prescription medications.

 
Ministry of Pain said:
I finally got my dealer down to 250/oz for the medicinal so actually it seems like drugs are costing less than ever. 
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This is why I fear legalization - gov't just going to #### it all up.   Great supply chain I have now, and no hassles (as a white guy in the burbs mind you, but hey, that's what I am)

 
TheAristocrat said:
If you find the right guy in Colorado, you won't pay much over $180/oz.  
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I should add that since legislation passed in those other states, where I am has been like Baskin Robbins where it used to just be Choc/Van. The CO legalization especially has pushed things everywhere to a higher place. 

 
The country could negotiate much better, but you know, then the gov't would mess it up and we'd have death panels and lines for an x-ray. "No thanks" says America.

 
The General said:
I thought it was to pay for their great ad campaigns. I love the one where the pink irritated bowel is walking around town, or the fungus toenail is playing tennis, or the gy who can't take a dump is walking around looking longingly people who have regular poop schedules. Can't get enough of these.
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Don't take digitoxicam if you're allergic to digitoxicam.​
 
What a line of BS. Drug companies have managed to post profits in the BILLIONS while being "saddled" with these research costs.

Saving lives through medicine should be a non-profit endeavor in all aspects. Are police and fire companies for profit endeavors?

But we're stupid enough to allow these turds to charge 10, 100, sometimes 500 times their costs to produce. Uninsured and under-insured folks wind up in the ICU all the time for DKA or other very preventable problems because they couldn't afford to pay for meds that are cheap to produce but monopolized for decades by the drug companies. (Insulin is still under patents, and is dirt cheap to actually produce, but they've managed to maintain patents because of minor changes to manufacturing procedure that have produced barely measurable and ultimately unimportant improvements in the product) By the way...look up the average cost of a 3 day hospital stay with one day in the ICU, and compare it to the cost of INsulin. Even at the prices charged by the drug companies...it's downright asinine that we would allow ANYONE to go without regardless of the reason it happens.

There are better ways to do this.

 
matttyl said:
Another reason we pay so much is that we take so much.  We account for ~5% of the Earth's population....and take ~75% of the pharmaceuticals in it.
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Well...to be fair....

Fully half of the worlds population has virtually no access whatsoever to fully modernized health care, and tens of millions more have somewhat limited care.

Your point stands that we are way over-medicated, but it isn't even remotely as ugly as those numbers suggest.

 
matttyl said:
And the Doc's prescribing it get a piece of the action when they do so.  They make money, the drug company makes money, insurance pays for it (meaning we all end up paying for it with higher premiums), and maybe you got prescribed something you never needed in the first place - and may not use all of it anyway.
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Why don't they fight it, Matt? Could it be because higher premiums = high profits for health insurance companies?

 
cstu said:
Why don't they fight it, Matt? Could it be because higher premiums = high profits for health insurance companies?
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Yep. How dumb is it to put a for profit intermediary between the consumer and the for profit health system? The end consumer as no clue what the "product" costs before he buys it. Worse, most of the time the "consumer" has no choice but to purchase said "product" or suffer physically. And to top it all off, insurance is usually set up through an employer with limited choices, and the policy pre-selects the medical providers you can use or face higher co-pays.

Insurance is little better than a ponzi-scheme. The overwhelming majority of health care providers are simply trying to care for the patients in front of them, and know little or nothing about the back room economics that result in their actual salaries.

It's a %#&&@ joke, and we put up with it because somehow we've been convinced that anything that looks like Capitalism = GOOD and RIGHT, but anything that remotely looks like socialism = BAD and WRONG.

 
IvanKaramazov said:
Why?  R&D investment decisions pretty clearly hinge on expected ROI.  The reason why patents exist, for example, is to drive up prices and boost the ROI for new drugs so as to create additional incentive to spend on R&D.  
Click to expand...
The system goes kind of haywire sometimes, though, producing prescription fish oil capsules (without any great innovation) for $300 a month.

http://slatestarcodex.com/2014/06/15/fish-now-by-prescription/

It's not just patented drugs that are way too expensive. It's (some) generics as well.

http://slatestarcodex.com/2015/09/24/the-problems-with-generic-medications-go-deeper-than-one-company/

 
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renesauz said:
What a line of BS. Drug companies have managed to post profits in the BILLIONS while being "saddled" with these research costs.
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They spend more in marketing than they do in research (if you account for the kickbacks they are giving to doctors as "marketing").

 
cstu said:
Why don't they fight it, Matt? Could it be because higher premiums = high profits for health insurance companies?
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Higher premiums can also mean less people buying your product or service.  Supply and demand and all that.  If insurance company A can negotiate their wholesale cost of an Rx to be less than company B's cost - they can price their product lower and get more of the market share.

And no, higher premiums do not mean higher profits.  Premiums in the individual market are higher now than they have ever been, and carries are losing money (you've seen the articles I've posted in the ACA thread).  Prior to the ACA individual policies cost much less on average, and carriers were making money.

 
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Koya said:
This is why I fear legalization - gov't just going to #### it all up.   Great supply chain I have now, and no hassles (as a white guy in the burbs mind you, but hey, that's what I am)
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Legalization won't deter the home growers much. If it were legal I would have a new hobby guaranteed. 

 
The General said:
I thought it was to pay for their great ad campaigns. I love the one where the pink irritated bowel is walking around town, or the fungus toenail is playing tennis, or the guy who can't take a dump is walking around looking longingly people who have regular poop schedules. Can't get enough of these.
Click to expand...
You forgot the woman at the bowling alley. It's her turn to bowl and her worried bladder is dragging her away to the bathroom to pee.

 
matttyl said:
They spend more in marketing than they do in research (if you account for the kickbacks they are giving to doctors as "marketing").
Click to expand...
Which raises another question....why do we allow drug companies to directly advertise prescription drugs to patients instead of allowing doctors to choose the best drug for their patients?

 
Brony said:
The country could negotiate much better, but you know, then the gov't would mess it up and we'd have death panels and lines for an x-ray. "No thanks" says America.
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As an ICU nurse...I'm all for "death panels". The suffering and waste at end of life is staggering.

 
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IvanKaramazov said:
Why?  R&D investment decisions pretty clearly hinge on expected ROI.  The reason why patents exist, for example, is to drive up prices and boost the ROI for new drugs so as to create additional incentive to spend on R&D.  
Click to expand...
They spend many times on marketing what they do R&D. 

 
renesauz said:
As an ICU nurse...I'm all for "death panels". The suffering and waste at end of life is staggering.
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Agree with this 1,000%.  You bring up death panels in a conversation with most people and they want to jam a fork in your eyeball.  I did this once in a group of about 8-10 people and thought they were going to nail me to a cross.  Just in terms of healthcare dollars, end of life measures are very high, and thats just the economic factor, not to mention the suffering as well.  It's just stupid.

 
Johnnymac said:
Agree with this 1,000%.  You bring up death panels in a conversation with most people and they want to jam a fork in your eyeball.  I did this once in a group of about 8-10 people and thought they were going to nail me to a cross.  Just in terms of healthcare dollars, end of life measures are very high, and thats just the economic factor, not to mention the suffering as well.  It's just stupid.
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Yep. The most frustrating part to me is that there is no logical way that distraught family members with barely a HS education should be expected to make decisions based on information they have no way to process and understand. Worse, many remember some stupid news story about some person somewhere waking up from a 20 year coma. All too often I hear, "God will save him/her", referring to their 85 year old grandma who's had a massive cardiac event with obvious hypoxic brain injury. I just wanna beat them over the head and yell at them: "If God's gonna do a miracle, he doesn't need our help with the ventilator and 3 pressors". Inevitably, that pt. codes again 3 or 4 days later and passes anyway. Or worse, they survive but are a functional vegetable in a nursing home, dying of SEPSIS 3 months later.

It's sad.

 
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