The price differences between domestic and international medicines can be truly outrageous. I just got back from a work trip to a hospital in Sierra Leone, where the anthelmintic medicine Albendazole costs the equivalent of $1 USD at a private pharmacy (or even less if you don't care about packaging). The same treatment in the US (a single dose) cost me $430 USD (before insurance). This medicine is out of patent; the R&D costs have been recovered. There's no reason for it to cost as much as is does in the US, apart from greed. It's more of a niche drug in the US than it is in sub-Saharan Africa, but it is shelf stable unlike say the antibodies of an immunotherapy, or the rabies vaccine, so it's not perishable. I trust the purity of the US version more than the version sold internationally, but that is probably an irrational fear. Even with added costs of laboratory purity testing and import tariffs, those in the US would still be better off if we could import drugs from overseas.
Some medicines are expensive for a reason: they're new and need to have R&D (and FDA) costs recovered (this is why we have patents), they have niche use and are produced in small quantities (cancer immunotherapies), they're perishable (biologicals), or all three. Many others are expensive because we have no regulatory protections against price gouging. Epi-Pens are another example. A 1mL vial of epinephrine costs ~$5, and the syringe to inject it costs pennies. Auto-injectors add some value, but not the $700 Mylan charges. They're fundamentally a pre-filled syringe a spring, and an injection molded case.
I wonder what the system would look like if we granted longer pharmaceutical patents (say, 30 years), with the change that upon expiration of the patents medicines would be produced by the government and sold at cost (or provided for free).
> There's no reason for it to cost as much as is does in the US, apart from greed.
The reason is people don't "pay" for it. Insurance does, and so nobody cares.
Edit: Well, the insurance companies should care, but if it's something that's rarely prescribed, it might be easier to just pay the claim instead of devoting people to negotiating a lower price.
In normal countries they have price controls. That approach works extremely well, in fact so well that price controls on pharmaceuticals in America are politically unworkable.
I don't know the parent's goals in trotting that out, but in general, I love how often this line is used as a defense of the "free market" in drugs.
Aside from the military[1], in what other categories of product do those waving that banner support mandatory payments to private entities supporting their preferred agenda[2]?
Never mind that the military is the best comparison to drugs in terms of regulation - the only products less "free-market" in the US than drugs are military weapons. In a way, there's a funny symmetry there.
[1] A huge amount of that money goes directly to private firms, just like pharma payments.
[2] Well, I guess one can opt out of medical care.
Patents distort what would happen in the absence of patents, but so does every other kind of property right. Markets in the absence of patents exhibit free rider effects, which are themselves undermine market efficiency.
I'm not defending a free market in drugs. I actually don't believe such a thing can exist. I'm simply observing the price board does what almost all price boards do: maximizing short-term political gains. It's a response to parent pretending a complex discussion has one true answer.
In Europe price controls have been in place since the War, if not earlier, and the pharma industry in Germany, France, Belgium, Switzerland and the UK did extremely well until the 1980s.
Pfizer opened their Sandwich site in 1954 and when they closed it in 2011 it wasn't because of the NHS.
Pharma takes from publicly funded research (globally) and then turns around and milks the public while lining their own pockets. I work tangentially in the pharma world, and much of the complicated biochemistry, assays, fermentation protocols etc have been figured out at universities. The value that Pharma companies' R&D brings in, is primarily in jacking up the downstream product yield so they can make money, and sometimes, lower costs.
Having worked in the industry, this is widly inaccurate. First off, a majority of drug discovered (~80%) are discovered by private companies.[1]
Of the 252 drugs approved from '97 to '05...
58% from pharmaceutical companies, 18% from biotech companies, 16% from universities, transferred to biotech
8% from universities, transferred to pharma
Second of all, discovering a drug gets you about 1/4 of the way to an approved, marketed drug. Typically the breakdown between research and development costs are 1/3 and 2/3. No academic institutions do the development part, where most of the cost is.
Since you didn't bother to read the article, let me summarize it for you:
118 of the drugs during this period were considered to have scientific novelty (46%), and of those:
44% were from pharmaceutical companies.
25% were from biotech companies, and
31% were from universities (transferred to either biotech or pharma)
Of the 118 scientifically novel drugs (new MOA, etc), 69% were NOT from academia. That is, academia has zero to do with the discovery all the way up to the approval of the drug.
>That is, academia has zero to do with the discovery all the way up to the approval of the drug.
Please don't insult our intelligence.The context for this discussion is about greedy companies using existing research for free and contributing nothing back. The linked article doesn't show which scientific research contributed to the product development. Universities are not all primarily engaged in drug discovery.
The article show where the drug was discovered. And as I mentioned, almost 80% were discovered by a private company.
Now, if you'd like to claim that that discovery was based on science paid for by the gov't, I won't disagree, but continuing that line of thought we could claim that drug companies are greedy because they are taking advantage of organic chemists who did work 200 years ago.
The problem is that they have no incentive to actually cure.
And near not incentive to provide cheap medication- which the patent system incentives you too, by running out after x Years. (Unless you are a frozzen Princess aka Disney)
Lots of diseases are only researched at universitys.
They have however a incentive, to sell anything expensive, to a audience desperate (that alone is a free market killer).
And they do.
I just try to understand how one can defend a held-hostage situation with free market rethoric.
That has nothing to do with what I'm saying. OF COURSE the Pharmas spend money on product development. They can't expect that for free too!! They already benefit a lot from publicly funded R&D, and contribute very little back in terms of pure science R&D. I work in vaccine automation and lemme tell you, the secret sauce to getting high yield ain't leaving the company.. ever.
>No academic institutions do the development part, where most of the cost is.
Because they got for free all of the decades of scientific research.
Because they got for free all of the decades of scientific research.
Yes, the scientific research that cost maybe 1% of the total cost of bringing the drug to market. Makes sense that the company should share some of the wealth.
Incorrect. They contribute _zero_ to our understanding of science. Its easier to build a bridge after someone else has already figured out what does and doesn't work. I don't blame them completely for using public domain information since there is no point reinventing the wheel. But after they've built their company on the backs of taxpayers who funded the research, we'd be fine if they just said thank-you and went on their way, instead of turning back and gouging everyone.
They contribute _zero_ to our understanding of science.
I definitely disagree here. There has been plenty of basic science discovered at private companies. I do agree they are hesitant to share it, but that's doesn't mean it doesn't happen. A great example of the Upjohn dihydroxylation reaction. Discovered at Upjohn Pharmaceuticals, freely disseminated through journal publications and now a key technology in organic synthesis.
I'm not sure they "should", at least from a financial standpoint. The ACA basically put a cap on insurance company profits, as a percentage. It's not phrased quite that way, but it's the upshot (look up "medical loss ratio"). This is the worst provision I know of in the ACA, because it sounds like a nice idea, but if you think it through, it actually disincentivizes insurance companies from doing what they can to lower costs.
It basically says that the maximum amount that insurance companies can keep is 20% of premiums (assuming no administrative cost or other overhead). Say the average cost per person is $4000 / year, so the average premium is $5000 / year; they're able to make a $1000 profit, or 20% of the premium. Now suppose the insurance company negotiates costs down to $3000 per year. Well, the maximum premium they can charge now is $3750, so they lose 25% of their profit. On the other hand, if they sit by and let costs skyrocket to $6000, they can raise premiums to $7500, and make $1500 in profit.
Now, of course insurance companies also compete on their premiums, so in theory, they still have some incentive to negotiate lower costs. But it seems like that must be seriously mitigated by the profit cap.
I'm not an expert on this by any means, so if someone who is wants to set me straight, I'd love to hear it. But I'm just very confused as to why this provision was thought to be a good idea.
I'd need to go digging through old talking points, but this always seemed obvious to me as a provision added for the sheer political calculus/motivation that it sounds good to people. It's just an easy sell—we're going to cap the percentage of profits focuses the attention away from the real cost side effects, and the ability to increase profits by not reducing costs exactly as you described.
A lot of those costs are taken indirectly via suppressed wages as many people get insurance via employment. It seems to me that a great deal of effort goes into hiding the costs of services and products from those who are paying them in this market.
Insurance companies don't care, period. If they somehow lose money one year, they raise the premiums next year. They don't even need to lose money. If their payments go up, they show that to their regulators, who allow them to charge us higher prices. And since the regulators allow them to have a certain profit margin, actually the insurance companies have the economic incentive to pay more.
What truly upsets me is that not a single politician really knows or wants to see how to fix healthcare!
Right now its like pulling a rope - we keep Obamacare at cost of billions of dollars, or we lose it at cost of millions lives affected, eventually.
Meanwhile big pharma thrives and examples like yours prove how corrupted US system is!
I'm still waiting for one single politician (not its not Trump) to actually start fixing healthcare from the bottom up! Fix the cost of drugs, therapies, etc, and all of sudden we need 1/10,000th of the initial costs.
Lots of people are working on this, but there are also lots of moving parts. It sounds like you know how large the health industry is, do you have any idea how hard it is to change a multi-trillion dollar market?
okay I guess in this case since its such a big issue, let's leave it like it is and add another 10 trillion in debt because we need to pay 400x what other countries pay for the same drug.
You'd expect just that to happen. The domestic market for human-rated albendazole is so small that it will sustain just one manufacturer, it's effectively a monopoly, and the monopolist can set prices to whatever he wants. We know what to do in such a situation (turn the monopolist into a regulated utility), but the current political climate won't permit this action.
This sort of rhetoric might work, but it doesn't in the face of Indian manufacturers who can easily be certified who will produce it for $1 and ship it to you the next day for $1 more. It's simply regulatory capture and a way of printing free money for people who already have money so they can rob the masses who don't. It's a scam, and it's stupid that we fall for it. The rich do get richer, and not for any other reason then they have money to affect regulatory capture. Generics should be nearly free. There is no reason for anyone to be making such large sized gains on generics.
This is why we don't want to import drugs from India:
Thakur knew the drugs weren’t good. They had high impurities, degraded easily, and would be useless at best in hot, humid conditions. They would be taken by the world’s poorest patients in sub-Saharan Africa, who had almost no medical infrastructure and no recourse for complaints. The injustice made him livid.
Ranbaxy executives didn’t care, says Kathy Spreen, and made little effort to conceal it. In a conference call with a dozen company executives, one brushed aside her fears about the quality of the AIDS medicine Ranbaxy was supplying for Africa. “Who cares?” he said, according to Spreen. “It’s just blacks dying.”[1]
Everyone loves to hate on the FDA until there's a compounding pharmacy that really messes up. A couple of years ago there was one that distributed some medication for injection that had a fungal contaminant, and there were several dozens of fatalities. You'd ask yourself what would happen without adult supervision.
And yet somehow the US imports mind-boggling quantities of other things we put in our bodies at safety standards that appear to generate no controversy whatsoever.
There are 74 US FDA-approved manufacturing facilities in India, more than in any other country outside the U.S. (This I believe has increased further over the last year)
Ranbaxy has been banned by the FDA for one thing or another for a long time now. Please use FDA approved Indian manufacturers. There are several dozens of them.
> Sounds like textbook comparative advantage, and in any sane market, imports would be about as controversial as paint drying.
This isn't comparative advantage, especially since we're often times talking about reimporting drugs (both brand-name and generics) that were manufactured in the US, but sold abroad for cheaper prices. The article doesn't make that very clear, and I wish it did, because it's an important distinction.
But your point is spot on - from a free market standpoint, this is a no-brainer. There is literally no reason to prevent US patients from buying drugs that were manufactured in the US from Canadian or European wholesalers. Except, of course, that this is a massive source of profit for pharmaceutical companies.
> This medicine is out of patent; the R&D costs have been recovered. There's no reason for it to cost as much as is does in the US, apart from greed.
So apparently this medicine is used for treating parasitic worm infections, which I imagine is a vanishingly small market in the United States. That means that the costs of tooling up to produce the drug (and producing it to the standards of safety and purity demanded of any medicine produced in the U.S.) must be amortized over a tiny population of customers.
To make a comparison: a commercial Common Lisp IDE runs nearly $1,000 for a hobbyist edition, while you can get professional versions Clion or Jetbrains for $100-400. But there's no patent or other protections limiting competition in the development tools industry. It's simply the economics of making a product that caters to a tiny niche of potential customers.
> So apparently this medicine is used for treating parasitic worm infections, which I imagine is a vanishingly small market in the United States.
It's incredibly common in veterinary medicine in the US.
Veterinary pharmaceuticals are oftentimes (though not always) manufactured in the same plants. Sometimes the inactive ingredients are not safe for human consumption, so that doesn't mean that you can always just take veterinary drugs safely, but sometimes (particularly in the case of antibiotics), they are literally manufactured on the same lines, and are simply packaged and distributed differently.
Given the massive difference in price between albendazole for humans and albendazole for animals, I'm willing to bet that this is another attempt at market segmentation (which we already know is rampant in the US pharmaceutical industry - that's how they make their global profits!), rather than a real necessity of the scale.
Texas has tried pretty much every piece of trope certain political parties like to trot out to "fix" medical care, including tort reform. It hasn't done a damn thing.
What percent of, say, Merck's annual budget goes towards paying out due to court cases they have lost where tort reform might make a difference? (I mean, ignore any lawsuits surrounding business practices, or from a competitor) Or pick any other pharma giant.
I tried to google it myself but didn't find anything clear on the matter.
What nonsense. It's out of patent. There's no cost anymore except production and distribution. It's not a matter of recovering costs anymore, it's an oligopoly fixing the prices.
Then perhaps we should look at the benfits of having such rigorous purity standards, if it makes drug prices 10000% higher than in other markets that have wider use.
It'd be really interesting to see their actual costs for whatever run size is justified by the US market (and some ancillary information like how much they throw away to keep the supply fresh and so on).
Since my wife works in pre-fills and other things I can tell you for a fact that you still have to go through FDA approval. If you change something slightly, you go through approval. There are often clinical trials if the change is not incremental, sometimes even if it is. Change the packaging? FDA review. Change the color of the label? FDA approval. Change suppliers? FDA review.
So yes, the syringe and container themselves don't cost that much on a per unit basis (no clue but it's not nothing.) The regulatory costs are astronomical and have to be paid for over time. The general inanity of this stuff is mind boggling. The amount of paperwork insane.
Mylan has a patent on some minor improvement to Epipens. So it isn't just the FDA, they pushed generics off the market.
Mylan flat out admitted that costs aren't any more than $150 per pen when they launched a generic version of their own branded product. Everything above that is clearly them working to get as much price differentiation as possible.
So why not sell Epipens without those minor, patented improvements for $20? Surely if there's profit to be made another provider would come in and destroy the $700 marginally better Epipen market.
I don't know why there weren't more competitors. Apparently part of it is that it is difficult to get right. Adrenaclick generics have been on the market much of that time for $150 or less.
One thing though, they would be epinephrine auto injectors, not Epipens, that's one of the things the patent did, it made it so that a prescription for Epipen could only be filled with Mylan's product.
If you happen to be in NYC (USA), stop by any major Chinese grocery store in Flushing, Queens. You'll find albendazole and other anthelmintics for about $10/pack.
> The wholesale cost in the developing world is between 0.01 and 0.06 USD per dose. In the United States, however, it is very expensive as of 2015 at about 201 USD per dose.
Several states have passed tort reform laws, including Texas. It hasn't made any difference.
The big pharma players spend more on marketing than R&D. The smaller players like Mylan specifically try to find niche drugs so they can buy the rights and jack the prices. It's pure rent-extraction and a drain on our healthcare system and economy.
>This medicine is out of patent; the R&D costs have been recovered.
Do you think the financial analysis involved with a new drug stops at "costs recovered"? Why should it?
I find it completely bizarre that, instead of getting behind the fact that the US is essentially subsidizing drugs for the 3rd world, people think rich first worlders should be paying sub-Saharan rates.
This is a pretty standard play inside the beltway. Many, many advocacy non-profits, some you have heard of, are really vehicles for increasing the ROI on corporate lobbying dollars. A humorous example: http://www.motherjones.com/mojo/2012/03/fight-save-paper-dol...
In India most of the Doctors go on a vacation to foreign countries at least twice a year, these are sponsored trips by non profit orgs of big pharmaceutical brands. There is also a massive lobby working in india to block generic drugs ; the present government thankfully did not yield to their lobby , the price of Stunt is now reduced by 80% , thats how much the price was marked up !
This is such an oblique position for legitimately grassroots activism to take. I mean, it's not like people are dropping dead en masse in Canada, out of all places, from taking supposedly sketchy, industrially-produced medication. Meanwhile, importing copycat generics from India is fine [1] (taken from an article with an obvious slant against Walmart, one major importer of such medications).
On the regulatory front, the difference is that India lets the US FDA work there and inspect plants that export to the US [2], while Canada doesn't, and although the US and Canada have been slowly easing into formally trusting the other's regulatory frameworks [3] by working up from food safety [4], they are not quite there on the medical front. How much of this is legitimately grounded in science, logistics, diplomacy, and protectionism are up for debate.
This is good investigative journalism. It certainly raises some additional questions that would have been difficult for an average person to learn on their own -- including questions about this nonprofit, about whether both parties' past attempts to allow Canadian drug imports have been comparable or different, about whether an organic movement concerned about drug safety exists at all, about the author's motivations for writing this piece; all good questions worthy of more research and conversation.
Unfortunately, insurance is the reason we have this health care issue in the US. There is no one to fight these special interest lobbys in the health care world. The hospitals don't care and a good number of patients don't care because of insurance. From what I see , people without insurance are treated as losers and their voice is not heard. Without insurance hospitals and doctors would fight the drug manufacturers on the patients' behalf.
If you have a point to make on Hacker News, the guidelines ask that you make it civilly. We ban accounts that continue to violate the guidelines like this.
What I do not understand is what you're suggesting to actually improve things, and end up losing myself in apparent contradictions - assuming you're doing more than just venting.
You're worried about WW3 - in no small part due to the American nuclear arsenal I'm sure, yet downplay American fears of other nuclear arsenals. In one breath you suggest the average American citizen so powerless in the grips of their political system as to be a rounding error, and in the next you suggest they perhaps take up that most powerful and deadly of exercises in political power: the ability to wage war, civil war, as a supposed means of stopping war, world war. If Americans are driven to such madness as to turn on their countrymen, what possesses you to think they'll stop there? We can't even elect a president without deciding they're a Muslim or a Russian (if only at heart), but a civil war will stay nice and contained? That we won't bomb the other side's (supposed) allies? Or actual allies? Perhaps with nukes? Do you think world war 1 or 2 could've been avoided if only there'd been a little more internal strife over on that side of the pond? Did any of the other wars to end all wars ever work?
We do face a number of existential threats. Perhaps global warming will kill us. Perhaps a big space rock. Perhaps another supervolcano. Perhaps world war 3. Perhaps even started by the U.S., yes. If we are ended by war, I imagine like all wars before it, it will be fueled by some very angry, afraid people, fed up with their circumstances, looking to demonize their enemies, those they've been sent to kill - people who have lost all faith in political systems or negotiation (regardless of whether it manipulates them or not.) I worry that I may have just described you - do you understand, then, why I'm drawn to dicker?
Most of these are not new problems, and it's not all bad. Mankind's first prophesy was, perhaps, our eventual doomsday - and yet we're still here for now. Technology brings people from across the planet together, spreading knowledge and awareness, bringing new light to old abuses and power structures, not to mention empowering the common citizen. We're closer than ever to ending the specters of famine and plagues. Globalization binds us together in mutual interdependence, with war being both more ludicrously expensive and more absolutely terrible for business than ever before. We are at perhaps a new renaissance of space exploration, and may yet spot the next rock before it hits, and redirect it, and leave our nest.
Doomsday or not, we are mortal. Let us do what we can with our remaining time to improve the world and live well, not pour fuel on the flames and live in fear.
Let us fight the good fight, if that's what's needed, rather than engage in self fulfilling prophecies. Let us work to delay the inevitable, if it truly is inevitable. But I'll ask you to ponder: is calling for civil war fighting the good fight? Even in hyperbole?
People looking to save money aren't buying branded drugs, they're buying generics. Which are still far too expensive in the US, compared to other OECD markets.
The US, with a few exceptions, actually has lower priced generic drugs than other countries, including the EU.[1]
Interestingly, the study also shows that the U.S. has one of the highest levels of generic drug use relative to total prescription volume, and that generic prices are lower in the U.S. than in all the countries except Canada, where the difference is 6%.
The manufacturer is the same, but manufacturers rarely sell directly to consumers. They sell to pharmacies, and medications at Canadian pharmacies are (surprise) generally priced based on whatever price controls and negotiated rates apply to Canadians. When those rates are 1/10th of the USA cost for the same drug from the same factory the same lot number, either someone's getting the drugs at less than cost or someone else is getting screwed on price.
Or put differently, "Why does the USA fund so much of basic drug research and drug company profits daddy?" "Regulatory capture and bought politicians, son."
There was a story on NPR awhile back about how, if I remember correctly, the U.S. government gives money away to drug companies to help fund drug research in exchange for a license to manufacture the resulting drug in case there's some kind of shortage or the drug is too expensive for anyone to buy it. This right has never been exercised, but there are some who think that they should start doing so to bring drug costs down.
If you allow imports of drugs that are already approved by the FDA, then the objections are mostly about economic incentives (i.e. high prices reward the companies that made the drug, etc..)
If you allow imports on drugs that are approved in other countries but not by the FDA (iirc this was advocated by Ted Cruz in his debate against Bernie Sanders on health care a few months back), then the objection is that it basically neutralizes the ability of the FDA to block dangerous drugs and makes it easier to push drugs to market that aren't ready by promoting the drug in whichever country has the loosest standards or is most corrupt.
Some medicines are expensive for a reason: they're new and need to have R&D (and FDA) costs recovered (this is why we have patents), they have niche use and are produced in small quantities (cancer immunotherapies), they're perishable (biologicals), or all three. Many others are expensive because we have no regulatory protections against price gouging. Epi-Pens are another example. A 1mL vial of epinephrine costs ~$5, and the syringe to inject it costs pennies. Auto-injectors add some value, but not the $700 Mylan charges. They're fundamentally a pre-filled syringe a spring, and an injection molded case.
I wonder what the system would look like if we granted longer pharmaceutical patents (say, 30 years), with the change that upon expiration of the patents medicines would be produced by the government and sold at cost (or provided for free).