Note that I had to trim the lengthy title: I think this issue is an interesting and an important one to discuss, and that the discussion doesn’t benefit from the political framing. I certainly did editorialize however and would appreciate a better short title if one is offered.
The current title answers a question, it should instead raise a question. [Currently: Developing slightly fewer medicines is OK if it means lower prices]
Suggestion: Congress debates if developing slightly fewer medicines is OK if it means lower prices
That's assuming the alternative thing actually benefits from the money. You mention education, but we've already seen that education spending has a threshold past which spending more money no longer improves outcomes (it just inflates prices), and we're already above that level of education spending.
And even if we weren't, it doesn't follow that moving resources from one place to the other is the right choice. When you have two things that both produce benefits exceeding their costs, you're better off to do both of them.
> It doesn't follow that moving resources from one place to the other is the right choice. When you have two things that both produce benefits exceeding their costs, you're better off to do both of them.
Yes, in an imaginary world we can invest in all the good things at the same time.
In the real world you have a limited amount of resources, so you can't do everything at the same time without borrowing money. But guess what, borrowing money is moving resources from one place to an other.
The world in which you can invest in both drug research and education is not imaginary. We in actual fact already do both of those things at the same time.
Well this is, in essence, the concern of the "ObamaCare Death Panel"!
Only instead of determining by a board of doctors whether you are entitled to care, a bureaucratic measure to determine whether a company should investigate cures to what ails you. Better for society, worse for you as an individual.
With an insurer, you at least have a backstop of changing insurers.
If the government makes this decision, your backstop becomes "move to a new polity."
This is the core of the argument, that the government should not have this power. Say what you will of the sad state of the US health situation, there are potential solutions not involving this level of "We choose who can have what."
I'm not one with exotic health problems, the kind that involve going to a hospital for a week for a batter of tests and analysis, but I know people for whom this is the case. I suppose those people are the ones this is writing off.
Well you have assumed wrong. It was a reference to giving the government, likely unelected bureaucracies, power to decide who receives what healthcare.
In as much as it is a clever bit of propaganda for the corporatist idea that only private industry should be able to arbitrarily decide who does and does not receive life-preserving care, you're right.
In principle, there is no difference between this outcome and what HMOs like Kaiser do to this very day.
There is one difference, which is that it creates systemic risk.
If there are a hundred HMOs and there is a treatment which cures a disease which ten of them choose not to cover, it still exists and you can pay for it out of pocket or do whatever it takes to switch to a different insurance company etc.
If everyone is on the same federal plan and the government chooses not to cover something, the provider isn't going to get enough business to continue operating and then they're gone and that treatment option is eliminated for everyone.
> If there are a hundred HMOs and there is a treatment which cures a disease which ten of them choose not to cover, it still exists and you can pay for it out of pocket or do whatever it takes to switch to a different insurance company etc.
This is purely an on-paper difference. In practice, most Americans (where this conversation is relevant) don't actually have the ability to choose between an open market of health care providers. If they have access to it at all, its within the framework of what their workplace has negotiated for them, which may or may not be good. Certainly there is no individual recourse other than to choose between existing plans (which may all be from one provider).
So in that context, its actually exactly the same "systemic risk" problem only without the scrutiny of a general public. Plans are not public, and it is not unheard of for people with health issues to be quietly terminated to get them off plans. Pre-existing condition coverage is all over the map, with only the wealthiest citizens and workers having access to fair treatment. Even for someone like me, I struggle to get good health care when I run my own business because I am a cancer survivor.
So I think this concern you have is valid but the American system actually exacerbates it rather than protects against it. Both my partner and I face the auditing
of unaccountable corporate "death panels" every time we go to the doctor.
So maybe you can tell me how if I suffer from this condition while being within the top percentile of earners in the US, the market approach has done anything to fix it. I have a history of successful Startup participation (and I've exited my own in a profitable fashion), but as I get older the health care situation is so bad, I'm forced out of participating in startups because their health coverage is so bad. Is this outcome better than what other public options have got?
Well, that depends on specifically which drugs you subtract out of the set.
Some new drugs are not that critical to have. Others might be. Given that we don't / can't know which drugs will be developed in the future, it's kind of impossible to answer with certainty.
The problem is we don't really know. Drugs that are almost out will probably still come out. However we are most likely to lose ones that are in the here are 100 things we could try at high cost - we know from experience than 1 in 1000 of these ideas is useful. If the cost recovery is high enough you try all 100 ideas to see if they lead anywhere, and then find another list of 100... If cost recovery isn't high enough you don't try any, and we don't really know what we lost because we don't know which of the ideas before actually will turn out to work.
That is a straw man socialits try to make. Conservatives do not have a common voice. That socialism doesn't work is but one (there are some complex arguments for why it cannot that you are ignoring - though to be fair they are too complex to put into a short post)
Conservatives often point out that we don't have a free market to start with. We have a strictly regulated market (designed by socialists) that cannot help but increase costs because nobody who cares about costs gets a seat at the table. Wanting to get rid of the regulations and allow an actual market is a small point a few conservatives makes.
Keep in mind, we're not all born with the same socio-economic advantages. The idea that you're more capable because you're successful is merely confirmation bias.
Furthermore, your comment necessarily implies that anyone not as "capable", whatever that means, is therefore deserving of poverty and hardship. That's a moral stance I cannot support.
We as society vote with our money as to what we value.
We make value judgements all of the time.
You probably walk by the homeless and druggies all of the time. You don't volunteer your time or money because you're making an unconscious decision that I am better than that, that is not worth spending my time or money on.
And that value judgement is important - it shows yourself what you don't want to become, what you do and don't want to spend your time on, the trajectory of your life.
While I believe there is a range of capabilities, there is plenty of research showing that for most people the limit is practice (ie 10,000 hours), not something fundamental in the person. There are very few places where science has found something that makes on person objectivity better at a task once trained.
There are those who are clearly less able. Downs syndrome, blind, are a few of the obvious limits that mean someone is unable accomplish anything. However these are a minority and can be ignored in this discussion (though we will have to circle back to figure out what to do about them).
Or to put it a different way: I believe in equality of opportunity NOT outcome. You get the results of what you work for. Yes there is some luck, but luck is the difference between rich and upper middle class, not poor and middle class.
So your thesis is simply "Poor people are lazy. If they worked harder they wouldn't be poor"?
You're right that the difference between the middle class and the poor isn't luck. The difference between the poor and the middle class is poverty. Poverty isn't just about being poor. It's about being poor BECAUSE you're poor. It's generally cyclical, it can span generations, and is very difficult to break out of.
People don't get ahead when they can't afford to eat.
People don't get ahead when they can't afford to go to a school in a better neighborhood.
People don't get ahead when they get sick and can't afford health care.
I believe you have a fundamental misunderstanding about why people are poor, and remain poor. The idea that poor people have 'equality of opportunity' in any practical way is not based in reality.
In the US, as well as most of Europe (this list is not complete): there are essentially zero poor. What well call poor are really lower middle class. Even the bad schools are good enough to break out of - it might not get one generation from poverty to rich, but it can get to middle class.
I wouldn't pin remaining in lower middle class (which we consider poor) on just lazy though. Some are, but I've also met poor people who are not lazy, they just don't see how their hard work isn't in the right areas to get out. There is a lack of examples, and parents often don't teach their the basics of how to get ahead (in part because they don't know). The opportunity to get out of those bad neighborhoods exists for anybody. (Note that systematic racism in previous generations is mostly gone, but the after effects are still with us)
The poor elsewhere do lack opportunities and so cannot break out. I will grant that.
The term socialists use is “equitable”. As Marx said, “From each according to his ability, to each according to his need.” Equality, not equity, is “To each the same opportunity.”, which describes liberalism. Neither of these are directly tied to innovation, and people have been fusing them in political economy for more than a century. If you do want to talk about innovation read Schumpeter for gods sake. Educate yourself.
You’re literally defending being selfish. Adam Smith the moral philosopher never would have used this argument.
Edit: damn, US timezone HN really hates supporting the less capable.
Capitalism at its core is to sacrifice everyone's humanity to maximise a few people's profits.
It means prioritising treatments that manage conditions over ones that cure or prevent them.
It means prioritising drugs to fix the problems of rich old men (e.g. erectile dysfunction and male pattern baldness) over those to fix the problems of poor people (e.g. malaria).
It means monopolising and overcharging for treatments that thousands of people need in order to stay alive, knowing that they have little choice but to carry on paying.
Socialism is equally as capable of innovation as capitalism, potentially more so, as capitalism is inherently wasteful.
> It means prioritising drugs to fix the problems of rich old men (e.g. erectile dysfunction and male pattern baldness) over those to fix the problems of poor people (e.g. malaria).
Are you from the 19th century? Malaria has a very straightforwards cure, that in Capitalist america you can actually purchase without a prescription at the supermarket (tonic water contains quinine.) Stop with the grandstanding.
Also the medications you call out as excessive have several beneficial properties. Viagra for example can prevent miscarriage in certain women, and finasteride (male pattern baldness) also treats the male inability to urinate due to an enlarged prostate, which is actually a medical problem, believe it or not.
You don't need to restrict the number of drugs, just how they are awarded patents. Big Pharma has learned bow to exploit the system, by making drugs slightly different or using the same drug to claim that it now also treats another issue, and this is basically how they're getting +20 year extensions in perpetuity, almost.
Patents should be awarded much more sporadically, and/or their time period should be reduced, while generics should be more encouraged.
Then the pricing issue will fix itself.
Also it might be a good idea to drastically cut the patent time for drugs where >50% or so of the research was done with government grants. I don't see why such drugs should get more than a 5-year patent.
But the current system is not okay for people who need medications that exist and are cheap to manufacture (eg insulin) but can’t afford rates being charged
There is no patent protection on regular insulin, so it's some kind of ordinary monopoly problem, it appears.
I suspect a better set of regulations around generics would solve the problem with ordinary market forces. Probably there are quite a few policies that protect the existing drug companies that don't make any sense for generics.
IIRC the issue with insulin is that while "regular" insulin is not under patent, there are better insulin products on the market that are, and those are what everybody prefers.
Then, because most people do actually have insurance, the insurance pays for the more expensive version and so that's the only one anybody makes. The market for "regular" insulin is limited to people without insurance, which isn't a big enough market to justify all the regulatory work needed to manufacture it.
What's really needed there is to make it easier for generics manufacturers to get regulatory approval.
"What's really needed there is to make it easier for generics manufacturers to get regulatory approval."
That seems like a sensible solution to the extent the quality/safety itself is not compromised. For instance maybe there is difficulty importing from other countries, but there should be no problem importing regular insulin from Germany, for instance.
That’s a pretty privileged view point. On the other hand I have a family member whose genetic makeup makes it so that they cannot use ~90% of the medications available for their condition. As a result every new medication in that area is of extreme interest to them and their doctors because it might be something they can use.
Given the choice between higher prices or not having treatment at all, I suspect those whose medications would be culled would gladly choose higher prices.
And your point of view is also privileged by that standard. For people who can't afford the drugs for their conditions, reducing the price is "of extreme interest to them".
I'm not saying that your position is wrong--medical innovation is really important. I'm saying you're being reductionist. There are really hard questions here, and accusing others of privilege does nothing to make this discussion more productive.
Sure, being able to afford medications is also a privileged position. But too often I see these sorts of dismissals of “just a few less new medications a year” without an acknowledgement of the real human costs that will be paid. Further I posit that the problem of “some people cannot afford some medications” should and does have a solution other than “all people will lose access to otherwise viable medications”
That works for your 1 in a million (10 million? 100 million?) family member, but how about the 85 million who need insulin? Talking about "privilege" seems silly here as you're just prioritizing one person's needs over another's in the opposite direction.
Why wouldn’t it lead to a reduction in price? Removing artificial barriers to competition lowers prices, that’s like the whole idea behind supply/demand in economics.
The bill is about about "negotiating prices", i.e. price controls. But if you legislate lower prices by fiat and the result is fewer drugs, that's less competition -- which can raise prices.
If there are two drugs available for a condition then not covering one because it's too expensive is more viable. Take one of those companies out of the market and what does that do to your leverage when you're "negotiating" with the other one?
US drug prices are not because of R&D. This title presents a false dichotomy
Drug companies have enough capital at this point that they don't need old drugs to fund new drugs. They can charge a high price for new drugs to recoup their development costs, & then charge closer to the cost of production once that development has been covered
Also surprised by the lack of mention of reformulating existing drugs to extend their patents. The poster child of this practice is insulin, where Americans pay absurdly higher amounts for something where generics are abundant.
To be fair, reformulation isn't exactly cheap (though compared to a new drug it is), and often they are better than the generic. Generic insulin still exists, but the reformulations are better - or so the diabetics I've heard from have said.
> Also surprised by the lack of mention of reformulating existing drugs to extend their patents.
Reformulation does not extend patents, it creates a new patent on the new substance. The substance in the existing patent can be manufactured as a generic after the existing patent expires.
The wrinkle is that the new and existing substances are not equivalent, and thus cannot be substituted for one another. Thus, if a doctor prescribes the new one, that is what needs to be dispensed.
Can't a patient ask a doctor to prescribe a generic, when it exists? It seems like that would be an easy fix: a law that requires doctors to give you the alternative name for a generic, and make the sponsored version an optional upgrade.
I'm European and the whole concept of a doctor prescribing a "brand" sounds alien to me.
> Can't a patient ask a doctor to prescribe a generic, when it exists.
Yes, but it requires the patient (or their pharmacist) to request such.
> It seems like that would be an easy fix: a law that requires doctors to give you the alternative name for a generic, and make the sponsored version an optional upgrade.
> I'm European and the whole concept of a doctor prescribing a "brand" sounds alien to me.
The issue is that the two drugs are not equivalent, and is not about prescribing a "brand". Occasionally, a doctor insists on the brand for some reason (seems to be most common with Synthroid for some reason), but generally the prescription is treated as a prescription for the compound, even if the doctor uses a brand name.
The trouble with reformulation patents is that there is no generic for the reformulated compound. It is sufficiently different from the previous that it cannot be substituted by the pharmacist (otherwise it wouldn't have been patentable). In that case, the "brand" is the only thing available.
> They can charge a high price for new drugs to recoup their development costs, & then charge closer to the cost of production once that development has been covered
You have just described the patent system. They get a period of patent protection to charge high prices, then anyone can make the drug and competition lowers prices.
There are some places where this falls down, i.e. there are some generic drugs that have high prices due to a lack of competition, but that's not the common case. Have a look at the price of Ibuprofen to see how unpatented generics ought to work.
What really causes the failures is the amount of bureaucratic overhead which deters other companies from entering the generics market. When the market for a drug isn't very large, the return from selling a generic is less than the regulatory cost required to enter the market, so nobody does. Lower the compliance costs and that doesn't happen as much.
Healthcare and medicine is a commodity service, similar to airway transportation and food supply, and the more abundance is there on all levels of it, the lower the prices get across time. Artificial caps on the cost of medicine creates unhealthy bureaucratic incentives like this one instance within NHS in the UK https://eu.usatoday.com/story/opinion/2019/06/15/trump-criti...
Medicine is still a commodity even if another entity collectively bargains for it (ie NHS). Why doesn't the parent just by the medicine directly? Surely the NHS doesn't prevent that from happening. Oh, right, it is too expensive to purchase for most people without collectively bargaining. But I guess even that kind of bureaucracy isn't tolerable to an absolutist.
The entity may and should collectively bargain 90% discount, as long as the parents of those who need the unavailable medicine right now can withdraw from contributing their taxes to NHS and use the freed funds for direct purchases of the otherwise unavailable drug. I’m not sure it’s possible at the moment.
I get that sounds "fair" but when you consider the family can suffer from any number of ailments that is rather cruel to say "your son requires special medicine, to afford that you must withdraw from public health care and you are on your own if you break your arm or back"
That’s why I mentioned that abundance of options on all levels of the service of “providing healthcare” is crucially important for reducing costs over time. I can imagine different plans for different people of different healthcare needs (young and old, employed and unemployed etc), covered by more than one healthcare provider, in the same manner it is currently done in airway transportation.
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[ 23.9 ms ] story [ 1446 ms ] threadSuggestion: Congress debates if developing slightly fewer medicines is OK if it means lower prices
The suggestion was sadly too long by 6. I’ve gone with “Congress asks if developing slightly fewer medicines is OK if it lowers prices”.
And even if we weren't, it doesn't follow that moving resources from one place to the other is the right choice. When you have two things that both produce benefits exceeding their costs, you're better off to do both of them.
Yes, in an imaginary world we can invest in all the good things at the same time.
In the real world you have a limited amount of resources, so you can't do everything at the same time without borrowing money. But guess what, borrowing money is moving resources from one place to an other.
Only instead of determining by a board of doctors whether you are entitled to care, a bureaucratic measure to determine whether a company should investigate cures to what ails you. Better for society, worse for you as an individual.
If the government makes this decision, your backstop becomes "move to a new polity."
This is the core of the argument, that the government should not have this power. Say what you will of the sad state of the US health situation, there are potential solutions not involving this level of "We choose who can have what."
I'm not one with exotic health problems, the kind that involve going to a hospital for a week for a batter of tests and analysis, but I know people for whom this is the case. I suppose those people are the ones this is writing off.
In principle, there is no difference between this outcome and what HMOs like Kaiser do to this very day.
If there are a hundred HMOs and there is a treatment which cures a disease which ten of them choose not to cover, it still exists and you can pay for it out of pocket or do whatever it takes to switch to a different insurance company etc.
If everyone is on the same federal plan and the government chooses not to cover something, the provider isn't going to get enough business to continue operating and then they're gone and that treatment option is eliminated for everyone.
This is purely an on-paper difference. In practice, most Americans (where this conversation is relevant) don't actually have the ability to choose between an open market of health care providers. If they have access to it at all, its within the framework of what their workplace has negotiated for them, which may or may not be good. Certainly there is no individual recourse other than to choose between existing plans (which may all be from one provider).
So in that context, its actually exactly the same "systemic risk" problem only without the scrutiny of a general public. Plans are not public, and it is not unheard of for people with health issues to be quietly terminated to get them off plans. Pre-existing condition coverage is all over the map, with only the wealthiest citizens and workers having access to fair treatment. Even for someone like me, I struggle to get good health care when I run my own business because I am a cancer survivor.
So I think this concern you have is valid but the American system actually exacerbates it rather than protects against it. Both my partner and I face the auditing of unaccountable corporate "death panels" every time we go to the doctor.
So maybe you can tell me how if I suffer from this condition while being within the top percentile of earners in the US, the market approach has done anything to fix it. I have a history of successful Startup participation (and I've exited my own in a profitable fashion), but as I get older the health care situation is so bad, I'm forced out of participating in startups because their health coverage is so bad. Is this outcome better than what other public options have got?
Some new drugs are not that critical to have. Others might be. Given that we don't / can't know which drugs will be developed in the future, it's kind of impossible to answer with certainty.
But we’re obviously not all born equal in capability. Nor do we remain so.
It steals people’s ability to improve their own life.
So resentment settles in by those now required to hold up the less capable.
That almost never convince anyone that those are bad ideas, but it does a lot to make socialism looks good again!
Conservatives often point out that we don't have a free market to start with. We have a strictly regulated market (designed by socialists) that cannot help but increase costs because nobody who cares about costs gets a seat at the table. Wanting to get rid of the regulations and allow an actual market is a small point a few conservatives makes.
The delusion is to not see that going more "socialist" is both hugely popular and supported by the evidence from other countries.
Going more capitalist is unpopular and supported by Ayn Rand fictions.
Keep in mind, we're not all born with the same socio-economic advantages. The idea that you're more capable because you're successful is merely confirmation bias.
Furthermore, your comment necessarily implies that anyone not as "capable", whatever that means, is therefore deserving of poverty and hardship. That's a moral stance I cannot support.
We make value judgements all of the time.
You probably walk by the homeless and druggies all of the time. You don't volunteer your time or money because you're making an unconscious decision that I am better than that, that is not worth spending my time or money on.
And that value judgement is important - it shows yourself what you don't want to become, what you do and don't want to spend your time on, the trajectory of your life.
There are those who are clearly less able. Downs syndrome, blind, are a few of the obvious limits that mean someone is unable accomplish anything. However these are a minority and can be ignored in this discussion (though we will have to circle back to figure out what to do about them).
Or to put it a different way: I believe in equality of opportunity NOT outcome. You get the results of what you work for. Yes there is some luck, but luck is the difference between rich and upper middle class, not poor and middle class.
You're right that the difference between the middle class and the poor isn't luck. The difference between the poor and the middle class is poverty. Poverty isn't just about being poor. It's about being poor BECAUSE you're poor. It's generally cyclical, it can span generations, and is very difficult to break out of.
People don't get ahead when they can't afford to eat. People don't get ahead when they can't afford to go to a school in a better neighborhood. People don't get ahead when they get sick and can't afford health care.
I believe you have a fundamental misunderstanding about why people are poor, and remain poor. The idea that poor people have 'equality of opportunity' in any practical way is not based in reality.
I wouldn't pin remaining in lower middle class (which we consider poor) on just lazy though. Some are, but I've also met poor people who are not lazy, they just don't see how their hard work isn't in the right areas to get out. There is a lack of examples, and parents often don't teach their the basics of how to get ahead (in part because they don't know). The opportunity to get out of those bad neighborhoods exists for anybody. (Note that systematic racism in previous generations is mostly gone, but the after effects are still with us)
The poor elsewhere do lack opportunities and so cannot break out. I will grant that.
You’re literally defending being selfish. Adam Smith the moral philosopher never would have used this argument.
Edit: damn, US timezone HN really hates supporting the less capable.
https://news.ycombinator.com/newsguidelines.html
I want to hold all of them up as much as I can. I don't need to fear for my own life either, because they do the same in turn.
I will never understand your stance on healthcare. (I'm in Germany. Comments like yours make me appreciate our system again and again.)
It means prioritising treatments that manage conditions over ones that cure or prevent them.
It means prioritising drugs to fix the problems of rich old men (e.g. erectile dysfunction and male pattern baldness) over those to fix the problems of poor people (e.g. malaria).
It means monopolising and overcharging for treatments that thousands of people need in order to stay alive, knowing that they have little choice but to carry on paying.
Socialism is equally as capable of innovation as capitalism, potentially more so, as capitalism is inherently wasteful.
Are you from the 19th century? Malaria has a very straightforwards cure, that in Capitalist america you can actually purchase without a prescription at the supermarket (tonic water contains quinine.) Stop with the grandstanding.
Also the medications you call out as excessive have several beneficial properties. Viagra for example can prevent miscarriage in certain women, and finasteride (male pattern baldness) also treats the male inability to urinate due to an enlarged prostate, which is actually a medical problem, believe it or not.
https://news.ycombinator.com/newsguidelines.html
Patents should be awarded much more sporadically, and/or their time period should be reduced, while generics should be more encouraged.
Then the pricing issue will fix itself.
Also it might be a good idea to drastically cut the patent time for drugs where >50% or so of the research was done with government grants. I don't see why such drugs should get more than a 5-year patent.
I suspect a better set of regulations around generics would solve the problem with ordinary market forces. Probably there are quite a few policies that protect the existing drug companies that don't make any sense for generics.
Then, because most people do actually have insurance, the insurance pays for the more expensive version and so that's the only one anybody makes. The market for "regular" insulin is limited to people without insurance, which isn't a big enough market to justify all the regulatory work needed to manufacture it.
What's really needed there is to make it easier for generics manufacturers to get regulatory approval.
That seems like a sensible solution to the extent the quality/safety itself is not compromised. For instance maybe there is difficulty importing from other countries, but there should be no problem importing regular insulin from Germany, for instance.
Given the choice between higher prices or not having treatment at all, I suspect those whose medications would be culled would gladly choose higher prices.
I'm not saying that your position is wrong--medical innovation is really important. I'm saying you're being reductionist. There are really hard questions here, and accusing others of privilege does nothing to make this discussion more productive.
If there are two drugs available for a condition then not covering one because it's too expensive is more viable. Take one of those companies out of the market and what does that do to your leverage when you're "negotiating" with the other one?
US drug prices are not because of R&D. This title presents a false dichotomy
Drug companies have enough capital at this point that they don't need old drugs to fund new drugs. They can charge a high price for new drugs to recoup their development costs, & then charge closer to the cost of production once that development has been covered
Reformulation does not extend patents, it creates a new patent on the new substance. The substance in the existing patent can be manufactured as a generic after the existing patent expires.
The wrinkle is that the new and existing substances are not equivalent, and thus cannot be substituted for one another. Thus, if a doctor prescribes the new one, that is what needs to be dispensed.
I'm European and the whole concept of a doctor prescribing a "brand" sounds alien to me.
Yes, but it requires the patient (or their pharmacist) to request such.
> It seems like that would be an easy fix: a law that requires doctors to give you the alternative name for a generic, and make the sponsored version an optional upgrade.
> I'm European and the whole concept of a doctor prescribing a "brand" sounds alien to me.
The issue is that the two drugs are not equivalent, and is not about prescribing a "brand". Occasionally, a doctor insists on the brand for some reason (seems to be most common with Synthroid for some reason), but generally the prescription is treated as a prescription for the compound, even if the doctor uses a brand name.
The trouble with reformulation patents is that there is no generic for the reformulated compound. It is sufficiently different from the previous that it cannot be substituted by the pharmacist (otherwise it wouldn't have been patentable). In that case, the "brand" is the only thing available.
You have just described the patent system. They get a period of patent protection to charge high prices, then anyone can make the drug and competition lowers prices.
There are some places where this falls down, i.e. there are some generic drugs that have high prices due to a lack of competition, but that's not the common case. Have a look at the price of Ibuprofen to see how unpatented generics ought to work.
What really causes the failures is the amount of bureaucratic overhead which deters other companies from entering the generics market. When the market for a drug isn't very large, the return from selling a generic is less than the regulatory cost required to enter the market, so nobody does. Lower the compliance costs and that doesn't happen as much.