Best line in the very short article “Health care is a right for all, not a privilege and that is why I am so proud that we created an insulin price cap that successfully puts patients above profit,” according to Gov. JB Pritzker.
There will be sacrificial lambs though. People will die because they can't drive out of state to get insulin. It might take a long time to force them to sell it at this cost, and they might win a lawsuit saying it's unenforceable, all while people die because of this legislation. Trust me, I don't like the companies doing this, but only passing the law setting a price ceiling without a secondary law requiring any company who was selling at the time the law was put in place to continue to sell is short sighted. Way too many situations where this ends up killing people.
Just responding to the "Why shouldn't governments" argument, but the obvious counter-response to that is that (at least in its current iteration) the government is pretty bad on slapping its own hand. We see this at the heart of the criminal justice system, and we see its ill effects. That is slowly starting to change, and I think for the better, but it's still pretty bad.
In competitive space, what do we do when the government fails to check itself against anti-competitive behavior?
> The US is a global outlier on money spent on the drug, representing only 15 percent of the global insulin market and generating almost half of the pharmaceutical industry’s insulin revenue. According to a recent study in JAMA Internal Medicine, in the 1990s Medicaid paid between $2.36 and $4.43 per unit of insulin; by 2014, those prices more than tripled, depending on the formulation.
> It doesn't cost anywhere near $100 to produce a month's supply
Is the $100 indexed to inflation?
Separately, this is a supply-side problem. Why can’t I start a business that manufactures insulin while selling it at a reduced—but profitable—margin? Those barriers to entry are a fundamental issue.
> In 2009, the list price for a 10-milliliter vial of Humalog, a fast-acting insulin made by Eli Lilly, was about $93. Today it costs closer to $275. Similarly, Novo Nordisk's fast-acting insulin Novolog cost almost $93 for a 10-milliliter vial in 2009. Today, it costs about $290. - https://www.businessinsider.com/insulin-price-increased-last...
If you've got any evidence that the inflation rate between 2009 and 2019 was 300%, I'd love to see it.
I seem to recall from an Economist podcast a few years ago (and a brief glance at wikipedia confirm) that humalog was a human biologic, instead of the more common insulin extracted from pig pancreas. The option to take animal or human insulin is likely welcome to folks with adverse reactions or maybe a religious prohibition.
As you can imagine, we don't just extract humalog from human pancreases. They instead modify plants to generate the exact molecule humans would. This is somewhat common these days, but it does take some effort and innovation to cultivate, versus the naturally occurring substances previously used.
I don't know if human insulin is any more effective (wikipedia citations suggest no but...), but the impression I got from the podcast was not really, and that the drug was considered a net loss for its developers.
> Since January 2006, all insulins distributed in the U.S. and some other countries are synthetic "human" insulins or their analogues.
If we truly cared about affordability, why ban additional supply? Even if not everyone can use it, forcing people who need the human insulin to compete with those who could choose seems likely to drive up prices.
tl;dr: Humalog was an alternative to an already existing treatment, and by 2009 it already was enjoying 3 years of import protections from the treatment it intended to replace.
> (g) On January 1 of each year, the limit on the amount that an insured is required to pay for a 30-day supply of a covered prescription insulin drug shall increase by a percentage equal to the percentage change from the preceding year in the medical care component of the Consumer Price Index of the Bureau of Labor Statistics of the United States Department of Labor.
> Why Americans ration a drug discovered in the 1920s.
The current top-shelf insulins were not discovered in the 1920s and are considerably better than the ones that were. The older insulins (going back to R, L, N sold in the 80s) are fairly inexpensive; on the order of $25 per bottle (and I believe can be bought over the counter). The newer insulins sell for on the order of $275 per bottle.
The numbers I see say it should cost about $300 for a years supply for me (given my current usage) if everything was optimal (non-greedy, short supply chain). Then assume it goes through 3 hands to get to me (original manufacturer, distributor, plan manager; I'm ignoring the pharmacy since I assume they're at least partially altruistic) and add 50% each time for a total of 1012.50 (300 * 1.5. * 1.5 * 1.5). So even then, it's still less than 100 per month expected cost. Though that's for only the short acting insulin, not the 24hour.
What it would really cost without insurance right now is thousands per month. They're making bank on it.
You misunderstand. I'm not saying "If the manufacturers decide it costs $110". I mean, if it costs $110. You can't force someone to create things at $110 and sell them at $100... or at least, you can't for very long.
Others are observing that the current prices are not currently anywhere near $100. That's completely unrelated to what I'm explaining.
I'd also point out that is a temporary fact, not a permanent fact. If, let's say, in two months the Coronavirus has mutated into a mark 2.0 and is sweeping through Illinois [1], getting insulin may become much more expensive due to all the measures needed to prevent spread of infection. If it becomes more than $100 worth of expensive, it's going to be difficult to distribute. There can be supply disruptions due to source contamination, whoknows what else. Even if today this seems like a generous cap, an inflexible cap can still be a problem tomorrow.
Of course, the last few years being what they are in online discourse, a large number of you will be inclined to read this as a defense of high prices, rather than what it actually is, which is an observation that price fixing has certain effects and that we don't know the future very reliably. Screwing around with insulin prices just because you can is evil and should be the grounds of a presumptive collusion, oligarchy, or monopoly investigation. But that doesn't mean that fixing the price is a good idea, or going to fix it. Personally I'd suggest getting a few state attorney's together and digging into why the price is so high, with an eye towards criminal charges or anti-trust action, would be much more effective. You might even find that "feels better" than mere price caps. Remove the incentives for people thinking they can get away with this sort of thing scott-free, rather than trying to treat the symptoms far down the pipeline from the root cause.
(Downvoters are invited to consider my replacement suggestion of criminal charges or significant antitrust action before deciding that I'm "defending" anything. This is a silly papering over of the problems by people who ought to have the power to do a lot more.)
The topic is price fixing; the discussion is about the efficaciousness of price fixing.
Why cap when they ought to have the power to look at the root problems? Why fix this one particular thing in a dangerous and probably-ultimately-ineffective way when they ought to be able to address the whole issue of price-gouging medicines more systematically?
(Other than the possibility of this being a band-aid while they do that, but I wouldn't trust a politician's word on that even if they were promising it.)
Except they can't. You have to get FDA approval and jump through regulatory capture hoops. Even for drugs already approved on on the market. See Martin Skrelli's case of a generic medication easily made in science class. Sure it was cheap and easy to make but only his company had the FDA approval to sell it and the cost for a competitor to get approval was significantly higher than any potential profit.
People will die, that's the system we have. The only question is do we relent and give in to what amounts to terrorist demands?
I'm not arguing that they cost $100 to produce, but even in this article they cost more than the stated "<$5 to make". And this doesn't include any recoup of research cost. I'm not arguing for higher insulin cost, even though it seems like I am. I have to buy the stuff and take it or die. On the other hand, a consistent supply and further research into better fast acting and long acting insulins also matter to me, as they make a HUGE difference in the quality of life. It's a double edge sword, unfortunately. Until such time as profit motive is replaced (and I would be ecstatic if it were), those of us with type I diabetes have to thread that needle very carefully =\",
In most of the world people can get a month's supply of insulin for less than $100/ month. It's not more expensive to manufacture here, there is just more profit-taking.
You're making a hypothetical argument when you don't need to. Since we're specifically talking about insulin, and not placing an arbitrary cap on any drug, there's no need.
We know what it costs to manufacture insulin, and it's literally a few bucks per vial [1]. You're framing this as if it represents the larger debate between fixing medical costs and the free market, but it's not that at all, and no one is going to lose their insulin.
Look at what other countries pay for insulin and you’ll see why this argument holds no water. What’s going on in the US is captive market price gouging, plain and simple.
If the law simply prevents prices higher than $100 in Illinois then manufacturers and distributors might stop selling in the state or only take orders from the state if they have surplus. Either of which might hit availability in the state, especially if the industry tries to make an example out of this.
I guess it also depends on the profit margin at that price and how it compares with the "market price".
Edit: Care to explain the downvotes? I'm just putting forward what could happen in the real word, not voicing my opinion of what is right.
The downvotes are because the opinion you have is not popular, not because it is wrong. You may be right, you may be wrong, that is less important these days.
Let's say that you write a bill "you can't sell insulin for over $100". If insulin sellers refuse to sell for less than $100, there's no insulin available.
However, the bill might also say that insurance companies must keep the out-of-pocket costs under $100 or that the state will make up any amount over $100.
In reality, it seems unlikely to harm insulin availability since most jurisdictions have cheap insulin and the cost in the US seems to be significantly higher.
Theoretically, price caps can be set low enough that no one will produce and sell an item. If you capped the price of computers at $100, no one would be making and selling computers and you wouldn't be able to find a computer without going to the black market. Countries like Venezuela have tried price caps on goods and what has happened is that those goods can't be found. Retailers won't sell items for less than they can get them from a supplier and suppliers won't sell for that price, possibly due to the cost of inputs, production, shipping, etc.
In this case, there's evidence that prices have been inflated unfairly with insulin and therefore this just hurts suppliers' margin without really changing availability. However, there is the potential that suppliers won't work with the price restriction. Let's say that you're CVS and you're buying an insulin drug from BigPharmCo at $150. Illinois has a new law such that you can't sell insulin for more than $100 so you tell BigPharmCo that you need supplies at $60 so that you can sell it for $100 and pay for stores, employees, etc. BigPharmCo decides that they'd rather not sell it to you at $60 because they'd rather write off Illinois sales all together rather than reduce their price to $60. Illinois is only about 4% of the US population. If you lower your price to $60, you're losing 60% of your revenue. If you write off Illinois, you're only losing 4% of your revenue.
Now, you might argue that they'd only have to give CVS a discount on supplies for Illinois, but that would be hard to enforce. It seems legal to ship medical stuff across states. Would it be legal to prevent someone from entering into interstate commerce they've always been accustomed to? I have no idea. Maybe suppliers would only supply a certain amount they deemed necessary for the Illinois population to CVS at the discounted price. However, then why wouldn't CVS just stop selling in Illinois and sell the discounted insulin for a higher price in other states?
Even if one can prevent cross-state shipment of insulin, suppliers might deem it worth their while to make an example out of Illinois. If they don't make an example out of Illinois, other states will likely follow. They might get some bad press, but at some point the state would need to act to protect the welfare of its people and repeal the restriction.
I'm not saying that any of these things are good or righteous. It's just harder to force people to do what you want than many people think. Given that forms of insulin are generic, maybe the answer is that we need more generic manufacturers to make it competitive.
Again, I don't think shortages are likely to happen. GoodRx shows generic Humalog available for under $70, but many others are much more expensive. I don't know enough about insulin prices to really know what will happen. However, in many instances, price caps haven't been really effective at helping people.
> Theoretically, price caps can be set low enough that no one will produce and sell an item.
But studies show that the US currently pays as much as 7x what the UK does for insulin[0]. How can insulin be so cheap in some places but so expensive in others to the point that manufacturers stop making it?
The actual bill[1] says (more or less) that insurance policies that include prescription drug coverage must cover insulin with a maximum of $100 out-of-pocket expense to the insured for a 30-day supply (page 12 lines 12-18). That $100 limit is indexed to the medical component of the Consumer Price Index (page 13 lines 1-6). It doesn't directly affect the amount suppliers receive, and the state isn't offering to reimburse anyone for the difference. If you don't have insurance which covers prescription drugs then the limit does not apply.
This will most likely lead to higher insurance premiums for policies which cover prescription drugs. Certainly the insurers and suppliers aren't going to be the ones paying for it.
Do we have any idea how much higher the premiums are likely to be?
Google says there are 1.5-3 million insulin users in the USA - lets call it 1% of the population. Let's say that their drugs cost $300 / month, but they pay $100. The extra $200 will be shared between 100 people's premiums, so $2 extra per month.
The media is citing 1.3 million in Illinois alone with diabetes requiring insulin (out of about 12M population; over 10%) and at least some cases where the cost is over $1000 per month. Assuming it averages out to $300 per month as you said, however, that's still $20/mo. extra per person assuming the difference is distributed uniformly across all insured individuals, and that all individuals in the state are insured.
So the next step is to nationalize the facility that manufactures it, the testing of it, the distribution of it. All taxpayers will pay for it. And the ubiquitous govt will have to compensate the drug companies for the taking of their intellectual property. Welcome to Venezuela.
Insulin is a generic. No one is required to be compensated.
Pharma had their chance to be reasonable. That time has passed.
Not to say that we shouldn’t appropriate intellectual property when necessary (eminent domain or not respecting a patent, as has happened in India and Canada), it’s just not necessary in this case. That doesn’t make us Venezuela, that makes us pragmatic.
There are different generations of insulin; the old ones are cheap, the latest ones are not. I would like to see every inventor give the patents away for free, it would be great in a way, I just don't know who will invent anything new because these days the marginal cost of improving products is astronomical. For example, building a log cabin 200 years ago was tiny, both in cost of raw materials and work. Now the cost of a house is huge, not only because different materials are used, more complex manufacturing processes are needed, but who wants to live in a log cabin? Same comparison with insulin, there is cheap insulin and expensive insulin, people want the expensive one to be cheap. Not always possible.
Generic Insulin is already cheap, around $100. It is the newer more effective versions that pharma companies have come up with recently that are more expensive.
One can't argue that the pharma companies are bringing no value, and then demand their specific product because the generic isn't good enough.
One can argue they’re attempting to capture more value than the social contract intended, and that contract will be updated through legislative action.
We reserve the right as a society to update the social contract at any time.
Google for your local, state, and federal law. Your continued presence in the jurisdiction indicates your acceptance of the implicit contract defined by these laws.
If it doesn’t vibe with your beliefs (which is fair!), there are other jurisdictions available for consideration, a visa and plane ticket away.
The laws are not the contract. I already moved where I did because I liked the laws. But the damned things keep changing because of this social contract. If the laws were the social contract, your parent comment wouldn't make sense either. Not liking the laws is one thing. Justifying new ones because of this pretend contract is another.
That's one of my complaints about democracy. Something doesn't have to be real for people to vote like it's real. There's no contract that says anybody owes anyone anything else at a specific price.
You're aware that (AFAIK) every single other OECD state uses implicit (monopsony) or explicit price controls as a key part of controlling healthcare costs and maintaining access to healthcare, right? In fact it's maybe the one factor that pretty much every non-US healthcare system shares. Even friggin' Singapore, the usual "look, the market can work!" example for healthcare, does it.
I hate the constant misuse of the word "right". How would a country guarantee this right? What if every doctor in the US quit tomorrow? What if I decided to live on the top of a mountain where there is no population? How does the government guarantee my right to healthcare? Rights are around restrictions. I have the right NOT to be killed. I have a right NOT to be silenced. When something requires someone else doing something and giving it to me - that can't be a right.
Who's going to stop you from having your right not to be killed infringed upon? That requires just as much affirmative action from a society's justice system. Any of our rights only matter as much as society's agreement to help you defend them, and in this case the government of Illinois has agreed to defend this one.
People not killing each other costs nothing. Cost is only incurred when the right to life is infringed. People providing healthcare to one another always has costs. If this "right" is infringed and no healthcare is provided then no cost is incurred.
Whether or not healthcare is a right is a lot less important than whether or not it is affordable.
Negative rights seem to be those more amenable to guarantees since they ask little. The guarantee of positive rights assumes a bunch of prerequisites from what I understand (some of which like healthcare are predicated on a ton of upfront infrastructure and training and availability and so forth).
https://en.wikipedia.org/wiki/Negative_and_positive_rights
"Positive right" is just political marketing for privileges. Universality is implicit in the notion of rights, e.g. treatment that every human has a valid claim not to be subjected to and which must be observed in order to have a civil, liberal society. The enumeration of specific protections may have to change with technology, but the underlying principles do not short of radical psychological/physiological alteration as a species. If we abandon that concept then rights have no meaning, they're just a list of popular demands which can shift arbitrarily, and including privileges does just that.
It's obvious why people are in favor of them of course, but we have to be honest about what it is we're asking for and why instead so we can make a rational analysis of it, instead of torturing the intellectual and moral foundations of our culture to make something outside of it fit. And it's foolish not to be suspicious that politicians' incentives have basically everything to do with making promises that get votes, and basically nothing to do with actually making the system work long-term.
There are no natural rights - i.e. the ocean won't push you to shore because you're drowning and have the right to life.
Rights are defined as part of the social contract we create in living close proximity to each other. If the collective people define what their rights are through democratic representation, then it's up to those who have the monopoly on violence to enforce it.
Ignoring the right versus privilege debate, It's just humane to provide resonably priced access to a drug that was invented many decades ago the price of which was artificially kept high by abuse of the patent system. The R&D cost of which is certainly fully amortized by now.
That's what we don't have in the US. You can certain make the case that we should, but that's a separate argument. Now we have a situation where we have a flat out price control, and it's going to have unintended consequences written all over it.
All these arguments for "look at Europe" doesn't fly in health economics. There are not subtle differences in the US legally, infrastructurally, and culturally.
Along similar lines, I read a study nearly twenty years ago and I wish I could find it for these very recurring government vs market debates. The study evaluated prices between single payer countries and found that it wasn’t the collective bargaining that reduced prices in those countries. They observed that there was no correlation between the size of the single payer and pricing. Rather, it was that the pharma adjusted price to minimize counterfeiting and black markets. In countries where black markets and counterfeiting risks were high, the price was lower. Ironically the decision to lower gave some single payers added incentive to participate in arbitrage. One country would be so low the country itself decided they could arbitrage their Higher priced neighbors by selling off their excess through undisclosed side deals. You see a variant of this example playing out between Canada and US. The article talked about individual black markets and state backed black markets that would emerge as a result of these single payer deals... which were supposed to be confidential but of course the black markets allowed pricing information to leak causing everyone to demand lower prices... everywhere except the US which essentially subsidized all of these below market deals that give the appearance that collective bargaining is superior.
Edit: another thought comes to mind - has anyone compared the size of health insurers in the US and compared their purchasing power to government run single payers? I’d hazard a guess that United Health for example probably dwarfs entire single payers of some governments.
> pharma adjusted price to minimize counterfeiting and black markets
I'd totally believe it. It occurs across all markets, with all actors. Market prices isn't simply supply and demand. It's many things like black markets.
Another example is public bonds in the US. Why are their yields under what it should be from the interest rates? It's because the earnings are tax free. The market has already adjusted for that.
> Edit: another thought comes to mind - has anyone compared the size of health insurers in the US and compared their purchasing power to government run single payers? I’d hazard a guess that United Health for example probably dwarfs entire single payers of some governments.
Medicare alone covers more patients than NHS England does. (Very few countries in Europe actually have single-payer healthcare; the four UK countries are the exception, not the rule).
> You get a Medicare provider, with an insurance company that you work with.
Well, no, the majority of Medicare patients still receive their inpatient and outpatient benefits through Medicare. A (growing) minority receive their Medicare benefits through a private insurer.
> All these arguments for "look at Europe" doesn't fly in health economics. There are not subtle differences in the US legally, infrastructurally, and culturally.
Not to mention: European countries wouldn't be able to negotiate those prices if the US market didn't exist. Pharmaceutical companies - many of whom are based in Europe - know that they'll make most of their revenue from the US, which is not only the single largest market by number of patients[0], but also a disproportionately lucrative market, because the expected per-patient revenue is also higher.
If the Netherlands (a country whose population is lower than the state of New York alone) decides to "negotiate" a few extra Euro off the price of a particular drug, AstraZeneca doesn't care, because they know they'll more than make it up in the US market.
If the US passed a "most favored nation" law with respect to drug pricing, or allowed pharmaceutical imports from Europe/Canada (as has been proposed in the past), we'd see drug prices in the US drop dramatically, but drug prices in Europe would also increase.
[0] China and India are in a totally different category, because of their respective patent laws (whereas the US and Europe have harmonized patent treatment)
Further, in general, the drug release schedules are US -> Europe -> Asia. This is primarily for two reasons - the FDA approval process is the most rigorous in the world. It would not be outrageous to classify European drug approval process as "rubberstamping" if the drug has already received FDA approval. Essentially, the US pays the R&D of the drug costs for the rest of the world.
The second reason is that without price controls, the US price is the closest thing to a market price for that drug. Sorry, but ultimately the prices of the drug comes down to how much a life is, or more accurately, how it affects the quality of life. When price negotiations between pharma and European governments start, both sides use that data. It would be very interesting if the US went single payer to see how it would affect the European drug prices (my guess it goes up).
Side note: Asia has always been third due to underdeveloped markets and legal systems. Further Japan has in the past (I think they just got rid of it in the last 5 years) a law where drugs need to be tested on Japanese citizens before approval.
Real case: Romania. We put a price control in place, thousands of drugs are no longer available. My brother works for a distributor (they import and distribute, so they don't have any control) and told me the government report on 1200 drugs that disappeared from pharmacies in the past 3-4 years are the important ones, in total there are over 5000 they can no longer import because the controlled price is lower than the bulk price they can buy for.
Price controls are usually really bad. But medicine is a different case for many reasons I don’t want to get into now. Lots of countries do control prices of medical care without restricting supply.
The obvious counter to that and (feel free to interject if I'm wrong) is that it's because other countries have instituted price controls on pharmaceuticals that companies have to make up their profits on the US market.
My worry here is that the price control seems to act as a disincentive for selling in the price controlled market. So long as there are 49 other states where margins are greater, it seems like those orders will be fulfilled first.
Yes. Literally every other healthcare system in a state with an advanced economy. (I'd love to see a counter-example, I've gone looking and failed to find one)
[EDIT] to the downvoters: no, seriously, please post an example of, say, an OECD member state other than the US that doesn't use either explicit or implicit (single primary buyer setting prices, that is, monopsony) price controls as a major part of their healthcare policy. I assume you know of at least one, and I'd really like to know if I'm wrong about this.
This one is actually kind of complicated. Healthcare costs are weird.
In general marginal costs to make drugs you already know how to make are usually low, so you can and do see a lot of free riders on the expensive part (R&D). It would be surprising if Illinois can't just join them.
That said, ideally if you're trying to contain costs by fiat you want these to be negotiated by governments and healthcare providers.
I'm really past the whole "pharma need to charge high prices to fund research" line of argument. Aside from being factually untrue (research funding is dwarfed by marketing for example[0]), it is also arguing for a continued unhealthy relationship with pharmaceutical care.
A large amount of research is currently publicly funded. Either via public academic research or directly. When that research bears fruit it is often given away almost at-cost (or below cost when you take into account the larger research landscape) to pharma companies who then privately profit off of it.
Pharma companies are profiting off of your tax dollars and then turning around and profiting off of you too. Sure, the benefit exists, but this whole model is broken as all heck.
We should just scarp for-profit pharma development as an industry, increase public funding of research, and drug production factories should be a modest profit venture (e.g. 20% of the wholesale cost). Looking more like the generics industry today, where they produce, they don't develop.
Why do we need a private business to develop drugs at a 40%-1000%+[1] margin when the taxpayer could do it at nearly 0% margin? We've chosen to make it this way, other countries haven't, and we see plenty of drugs developed via public institutions around the world.
You need to look at return on capital. Right now the return on capital in pharma is below the cost of capital and it's trending towards zero. The inevitable result is significantly lower funding for research. https://endpts.com/pharmas-broken-business-model-an-industry...
This suggests that something is very wrong with the market. The costs of development and production (even ignoring failures) are way below revenue, which means that return on capital should be very positive. Somehow most of the money is going into overhead. One might debate whether the overhead constitutes corruption, but it should be able to be reduced.
"Markets" are poorly designed for health care/research investment in general. Just like roads, education, general science research, etc... It just doesn't play well with being largely run with a profit motive.
That's not to say there's on place for the private sector there, but there is massive friction between a profit motive in drug research and you know, building a more healthy society. See the "new Adderalls" like Vyvanse that offer no benefits over Adderall, but Adderall's patent is up so it can be made by generics and isn't as profitable anymore.
Competition is what drives down costs in a market. If costs are going out of control, perhaps there is something in the current system that is preventing competition? Lack of price transparency?
Lack of price transparency is an issue. There's waaay too many misdirections and misaligned incentives between the price a consumer pays for a drug and the manufacturer's pricing.
But again, market-based solutions are just not appropriate for essential health care. You would pay ANYTHING to not die - there's no price elasticity of demand.
Every other developed country has figured out that this is simply immoral.
Competition drives down profits, not necessarily costs. If you passed a law that funds pharma startups to produce drugs, you would reduce profits and increase costs (through taxes).
Cost goes down with increased productivity. Competition sometimes brings that, sometimes it doesn't.
As long as we have effective monopolies on new drugs, (either through patents or trade secrets) the market cannot function to drive down prices. I don't know why people like to pretend that it can. Life saving drugs are as close to perfectly price inelastic as you can get assuming no competition.
Except the market has succeeded fantastically. In my lifetime alone, AIDS and HepC went from death sentences to chronic conditions. Many forms of leukemia went from fatal to highly treatable.
Meanwhile, what has the government done? The trip from DC to New York on Amtrak is slower today than it was in 1960. In 1980, DC’s Metro had self driving trains. They had to shut that down in 2009 due to lack of maintenance and the unions. Spending on public education, adjusted for inflation, per student since 1960. But achievement hasn’t budged one inch. If the drug industry has failed, what words are in the English language for what the government has done?
there is a distribution of talent in the government as there is in a private enterprise. the talent is distributed as much across functions as within them. where government "chooses" to be excellent, it is. such pockets of excellence are nurtured by funding, top cover and insulation from the inefficient and less competent parts of government. if policymakers wanted to create an enclave of excellence in public pharma, it could. if.
Of course you can find examples of where the private sector outperforms government. And I can provide counter examples. I just moved to a much smaller city (in the same region) with gigabit municipal internet. For the same price that I was paying comcast for 50 mbps internet, I now have 20 times the speed with no data caps.
The market works great until it doesn't. The interstate system, and the military are 2 prime examples where the market is never going to provide a solution. Affordable medical care for everyone is another.
I’m not just giving examples. Education and infrastructure are two of the big pillars of why we have government in the first place, and US government bodies have failed miserably on both fronts despite enormous funding.
As to municipal internet—its great until it’s not. Maryland has municipal cable systems that were built a couple of decades ago, and they have struggled to keep up with the DOCSIS upgrade treadmill. Additionally, what problems exist with broadband in the US are largely government created. Comcast has no data caps almost everywhere in Maryland, because it’s in competition with Verizon. The only place that’s not true is Baltimore—where the city legally prevented Verizon from coming in and competing with Comcast. Verizon wanted to wire up Baltimore—the city wouldn’t allow it to do so.
Speaking more generally, DC Metro was snazzy at first too, but was unable to maintain the system long term. It’s interesting you focus on the price point: is $50 sustainable? Charging too little is actually a big problem. A subway ticket in London can cost 2-3x as much as one in New York, despite the two systems being very similar in age and size. Unsurprisingly, the London subway is doing fine and the New York subway is falling apart.
> I’m not just giving examples. Education and infrastructure are two of the big pillars of why we have government in the first place, and US government bodies have failed miserably on both fronts despite enormous funding.
I would posit that the only thing that is a bigger failure than the public school system, is the private school system.
It's numbers look good, but that's largely because private schools are more expensive, and also opt out of educating problem students.
How was that market motivated? Did private companies take a leading role in AZT or Sovaldi research (I’m talking about the origins of Sovaldi not the efficacy studies and packaging)
> Except the market has succeeded fantastically. In my lifetime alone, AIDS and HepC went from death sentences to chronic conditions. Many forms of leukemia went from fatal to highly treatable.
> The trip from DC to New York on Amtrak is slower today than it was in 1960.
serious question - does a profitable private passenger railroad company that actually owns/maintains tracks, stations, etc exist without subsidies anywhere at all in the world? And Amtrak itself is nominally public-private and was formed in reaction to purely private railroads collapsing..
> In 1980, DC’s Metro had self driving trains. They had to shut that down in 2009 due to lack of maintenance and the unions.
even if the trains were self driving, for the 10y or so I lived there before this, there was still a conductor, so not sure if this is really a good argument..
> serious question - does a profitable private passenger railroad company that actually owns/maintains tracks, stations, etc exist without subsidies anywhere at all in the world?
Hong Kong, Japan. But my point is narrower than that. I’m not saying governments in general cannot run decent train service. I’m saying Americans cannot. We’re culturally defective in that respect.
> even if the trains were self driving, for the 10y or so I lived there before this, there was still a conductor, so not sure if this is really a good argument..
They had a conductor for safety. But the self driving trains made the ride very smooth and allowed tighter headways. Even after 10 years, Metro conductors cannot properly stop at stations. To avoid overshooting the platform, they stop way short, and then jerkily inch into position. When I was growing up, headways on the orange line were 6 minutes and the WMATA trip planner was accurate. Today, it’s 8 minutes, because they can’t sustain the 6 minute headways. And they had to revise the trip planner a few years ago to increase the predicted travel time between stations. If you look at Metro advertising from the 1980s, station to station trip times today are 30-50% longer.
I'll just note that there is a false dichotomy here, because it is impossible to separate government funding and policy from most pharma and biomedical developments. They continue to do much of the heavy lifting, and there is no model really for doing it at all privately.
When it costs billions to develop a new drug due to onerous testing regulations, that's what happens.
Ultimately returns in every industry tend towards zero. If we made it cheaper to develop new drugs it would extend the lifespan of the industry somewhat but not indefinitely. At some point diminishing returns take over and investment must go down.
How much is spent on marketing in comparison? Only in the US and New Zealand can you market drugs directly to the public. I sense an opportunity to destroy an unnecessary cost.
If you believe the market is choosing to waste money on ineffective marketing, sure. Do you have any particular reason to think that? Why would you expect return on capital to go up without marketing?
You only need one participant in the market to start advertising and seeing profits, and then everyone else has to follow suit. Collectively the money may still be wasted because no one's relative market position changes very much.
As much as the erection drug ads annoy me, this argument may prove too much... It may be that humans would be happier and the economy more efficient if all marketing were outlawed?
The marketing may be effective and still unnecessary. For example, consider a simified world model where drug A and drug B are identical, and are the two widely known solutions to a given condition. In a world where no marketing is done, people with the condition will randomly buy A or B, with roughly a 50% chance of either outcome, assuming they cost the same amount. In a world where A spends half their revenue on marketing, people start buying A more than B. If B responds by also spending $50 on marketing, we go back to the world where each is purchased roughly equally, but now the marketing budget has to come out of the pocket of either the company owners or drug purchasers.
If you pass a law banning drug marketing, you may be able to get the same health outcomes with less overhead. Of course, this ignores all the hypothetical cases where marketing helps, like increasing awareness of a beneficial treatment that was not previously well known.
Insulin is a great example of abuse of the patent system. The original patents for all of the major modern insulin formulations expired years ago, but the manufactures filed new patents years and even decades after the products had already been on the market to extend patent protection from 20 years to 30+.
That just raises more questions. Are these "newer formulations" a meaningful improvement over everything else (in particular those for which patents have expired) created during the past 97 years, as opposed to ploys to maintain IP? The tactic involved here is using regulatory capture, near monopoly control of supply and IP law to limit what is available for prescription use to expensive products.
Mostly, yes. The newer insulins (well they've been around for 20 years) have molecules which are engineered be faster acting so that they reduce peaks in blood sugar after meals; or longer lasting, so they can provide a more predictable background coverage.
The testing regulations are not onerous. They are necessary to ensure that new medications are both safe and effective.
I often see vague complaints about the regulations, but no one seems to have specific suggestions about how to lower drug development costs while still protecting patients.
Specific suggestion: get rid of efficacy requirement, keep safety requirement. Let doctors decide what works, as they currently do for off-label uses just fine.
For many medicines, you really can't separate efficacy from safety. As an extreme case, take for example cancer drugs. They typically have high side effects and every year, a certain proportion of the people taking them, die from the side effects. That is an acceptable risk because there is evidence that they are efficacious in treating cancer. If they are not efficacious, that is a completely unacceptable risk.
Less extreme are antibiotics which can also have bad side effects, but are useful drugs because they actually kill bacteria. If they did not, the side effects would be unacceptable.
Should a doctor be making that decision, or should the government?
Or should the government make that decision for on-label uses and doctors make that decision for off-label uses? That's the status quo. Whatever argument you have for one half of that is an argument against the other half.
Are you suggesting when a new drug hits the market doctors should just try it out on a few patients to see if actually does what it says it does? If only there was some way this sort of trial and error could be performed before a drug was widely available, in a controlled environment...
I'm familiar with the off-label discussion, but what number of these off-label uses were discovered by treating coinciding conditions in patients? How many were last ditch attempts when other treatment options either don't exist or failed?
I'm not suggesting that current regulation by the FDA isn't flawed, or that it doesn't need an overhaul, but I think it's clear that there should be some proof that efficacy studies were done before a drug becomes widely available, especially when the potential damage done by a failed treatment is so high. The current opioid crisis has completely eroded any faith that the pharmaceutical industry is capable or willing to regulate itself.
Tons of drugs have been approved, only to be later pulled off the shelves. So despite the massive cost, delays, etc. the process has failed at least 35 (!) times:
Actually they are effective, and have been made even more effective after the recent drug recalls. If the regulations were looser then there would have been even more recalls. Therefore your argument is illogical.
That page says it's about drugs withdrawn for safety concerns. That's different from the typical complaint, which is efficacy trials that are overly expensive.
Given that closer research is finding that a lot of popular drugs and treatments actually do more harm than good, I don't think it's so easy to characterize the current testing regulations as onerous.
The current regime in the USA didn't happen for nothing. It's well-known now that pharma companies had long been exploiting the file drawer effect and p-hacking to inflate the apparent safety and efficacy of their drugs in their FDA filings. The decision a couple decades ago to cut that off did dramatically reduce the rate at which drugs win approval, and that's a very good thing.
> Thus, he concluded, “(the) penalties imposed by the marketplace on sellers of ineffective drugs prior to 1962 seem to have been enough of a deterrent to have left little room for improvement by a regulatory agency”
Amount of homeotherapy currently on the shelves bring "penalties imposed by the marketplace on sellers of ineffective drugs" into a sharp contrast... People will take pure water if you tell them it works.
EDIT:
But I suppose a complex measure of: removing efficacy requirements AND banning advertising to both consumers and doctors AND mandating pre-regisration of trials might lead to more drugs on the market with companies using efficacy trials to compete with each other and doctors selecting best drugs based on cost/benefit/harm analysis.
I'm sure there are loopholes that would be promptly exploited in this scheme given enough incentive though.
> People will take pure water if you tell them it works.
To be fair, if you tell them it works, people will take pure water and show noticable improvments over non-treatment. Personally I just take the placebo effect directly though.
This analysis you link leaves plenty of room for either or both stories to be correct.
Perhaps the marketing and R&D departments compete internally for budget. They certainly do at every other company I've worked at.
And drug marketing is peculiar. One would expect demand to be largely inelastic, so it's odd to see marketing spend on par with that of soft drinks in the industry. Nor can we safely assume that whatever portion of demand is driven by marketing is beneficial from a public health perspective, given that overtreatment is known to be a serious problem in the USA, and that a significant motivator for overtreatment is patient pressure on health care providers.
The problem is convincing Americans. There is a significant population of people who would never vote for this because it would benefit those who don't work and pay taxes. They are so stubborn about this that they are willing even to let pharma prices exceed their own grasp.
One of the reasons I don't vote for it is because the current system benefits billions of people that don't pay any US taxes. Most of the rest of the world greatly benefits from positive externalities from US medical R&D.
Billions of people elsewhere in the world plus Americans in 20+ years when patents expire if far greater than ~40 million people in the US in the present
Comments like this always make me sad. Not just because I disagree with them (I do!) or that I think they are claiming certainty about facts in dispute (I think they are ! [1, 2] ) but because they make no mention of trade-offs. We can vehemently disagree about these things, get our information from different sources, and advocate for different policies, but hopefully we can all agree that there _would_ be tradeoffs? What might be the downsides to the proposed approach ? Do we think this would result in reduced innovation? In fewer potential cures?
whenever anyone casts doubt on the idea that healthcare (or pharma) could be cheaper (and implicitly that the tradeoffs would be worth it) my simple response is: then please tell me how does every other western nation accomplish it? overall healthcare goals are met and for less money (in aggregate and individually) all around the world. in which way is america exceptional except insofar as exactly that here business tries to extract as much as value as physically possible. invariably someone will say something like "wait times" but it never pans out (just yesterday i was looking for data on this and it's simply inconclusive).
100% agree. If we didn't have data about any of these other Western country's healthcare systems, then arguments like "maybe that's just how much it costs" or "there are tradeoffs between market driven and government driven" are plausible. However, that is simply not the case. The money goes >somewhere<, to >someone<, and with wealth inequality being quite high in the US, I imagine you can identify where a large amount of that money is going. Extremely rich pharma Bros are a great example of how the market has failed in the pharma industry.
If you are rich, get cancer and can pick any country to get treatment in, which country do you go to? Obviously it would depend on the specific cancer, but I think the US would be the best bet in aggregate.
Well, it depends on what citizenship you have. The point is that if it's expensive in the US now then perhaps in the future it will be cheaper and available elsewhere.
> in which way is america exceptional except insofar as exactly that here business tries to extract as much as value as physically possible
Apparently, it's exceptionality comes from high levels of obesity, homicide, car accidents and drug abuse, of which only the last one has any link to businessy nature of healthcare.
I for one am not casting any doubt on the idea that health care in the US could be much cheaper without any cost to research. I'm casting doubt on the proposals I've seen because the root cause (in my opinion) is not being addressed. When I have to buy the insurance my boss selects for me it is impossible for me to improve the system. (in theory I can buy elsewhere, but I lose the large subsidy my boss provides)
Every other western nation can accomplish it because the US is paying for, and performing the vast majority of drug discovery research (publicly and privately funded). US citizens are subsidizing the healthcare of all of those other countries.
Considering you brought in feelings into the equation, I want to express the reason I'm sad. I'm sad that antibiotics are not profitable enough to be researched and we're slowly but steadily heading into antibiotic-resistance hell as we're losing the arms race with bacteria thanks to capitalist healthcare.
Sorry that’s not what I meant... it was a joke of course but I was saying if you suggest any course of treatment to a doctor you’re going to get a hairy eyeball in response. I wasn’t saying anything at all about the places where ads are allowed.
don't forget ED drugs! america: take all the dick pills you want through a shady phone app (sponsored by VCs) but don't expect to have have your life threatening illnesses treated affordably!
edit: i'm getting downvoted. in case you weren't aware the subways in NY are plastered with HIMS and Roman health ads.
That's why we (the Dutch) have pharmacies that take the prescription of the doctor and then determine, based on your current medicine and medical history, alter your new prescription to fit your need (and he will confer with the GP if needed)
In the US, we have something similar (but evil) that people don't know or refuse to acknowledge.
A Doctor writes a script, and then a pharmacist (not on their own, but at the direction of an insurance company) suggests a change typically to benefit the insurer (for example changing a name brand to a generic or changing 30 days to 90 days so the patient doesn't get seen by the doctor again for 90 days for additional testing/monitoring). In the US the pharmacy/pharmacist can not change the script so they send the recommendation to the doctor for approval (and get paid a bonus from the insurer for sending the request), if the doctor approves the pharmacy gets a 2nd bonus, if the doctor does not make the change, there is a very good chance the insurer will drop the doctor from their network for not doing what the insurer asks to lower their costs through the pharmacy proxy.
In most states, the law explicitly requires the pharmacist to fill a prescription with a generic (if available) unless the doctor specifically writes "dispense as written". Not allows - requires.
The purpose of these laws is to protect patients - in the overwhelming majority of cases, the generic and brand name drugs are equivalent for patients, so patients save money by purchasing the generic medication even if the physician prescribed the drug using its more well-known name (the brand name).
Its not the patients that lobbies for these laws...it is the insurers, and its to lower their costs.
Its also why the insurers pay the pharmacists a bonus for these changes, if it was about costs to the patient, the bonuses (money back) would go to the patient.
> Its not the patients that lobbies for these laws...it is the insurers, and its to lower their costs.
I mean, no, patients don't lobby for them because patients don't really lobby en masse for healthcare policy in general, but patients definitely are the ones who benefit from them.
There are some cases where the relationship between insurers and patients is adversarial. This is not one of them.
>There are some cases where the relationship between insurers and patients is adversarial.
Well imagine your doctor gives you a Rx, you go to fill and the insurer tells the pharmacist to ask doctor to change it. If the doctor disagrees (for whatever reason) the insurer may drop your doctor from their network, then you will be stuck going to a doctor who does whatever the insurer asks.
If you feel there is no conflict there or that isn't adversarial that is fine...in my experience both patients who lose their doctor and the doctors themselves disagree.
That's not something similar, and has nothing whatsoever to do with what you replied to.
And there's nothing wrong with switching from brand name to generic, and most patients don't need to see their doctor every 30 days, and if they do, they can still make an appointment.
The length of the drug prescription does not control the appointment - and anyway you can just call and they'll extend the prescription on the phone.
>And there's nothing wrong with switching from brand name to generic, and most patients don't need to see their doctor every 30 days, and if they do, they can still make an appointment.
For patients with chronic conditions if the doctor determines the patient should be seen to evaluate their condition in 30 days before a new script is written, insurers having pharmacists effect a change to 90, is a direct interference with the doctor's practice of medicine. The doctor should make the determination, because they have the relationship with the patient, they know if they are at risk or likely to adhere to the therapies better than an insurer making broad brush strokes based on the cost to insurers. You also skip over the part where doctors get dropped from the insurers network when they don't accept the insurers "recommendations."
>The length of the drug prescription does not control the appointment - and anyway you can just call and they'll extend the prescription on the phone.
Sure, but that is not how it works in practice, the patients won't set up another appointment until they need another script, which is cheaper for the insurer and worse for the patient outcomes. Nevermind the Doctor being in the best position to determine which patients should be seen every 30 or 90 days, the shorter duration and 30 day appointments lead to higher percentages of drug adherence...which is a major issue in the US leading to about 1 million hospitalizations per year.
>It doesn't, it has nothing whatsoever to do with that
Yes, the patient could pick up the phone and schedule another appointment, or the doctor could call to try to schedule another appointment in the meantime. You are missing the point...in practice those appointments don't get rescheduled.
The Doctors and insurers know this, which is why the Doctor tries to do 30 day scripts for at risk patients so they can be closely monitored, and its why the insurer attempts to change 30 day therapies to 90 day because they know the patient won't schedule an appointment in the meantime and that saves the insurer money.
Anyway its clear you see nothing wrong with an insurer interfering with a doctor's practice of medicine...or the other part you keep glossing over that is the insurer dropping doctors from their networks (i.e. patients losing their doctor) when the doctors don't follow the insurers requests for changes to therapies.
>Such a patient isn't going to correctly take their medication either, 30 days or not.
Exactly that is why the doctor specifically writes a 30 day so they come back in and can check their numbers.
>Insurance companies do a lot of bad stuff, but you seem to have invented a whole new class of things that they just don't do.
When you hear the term consolidation of the healthcare market this is what they are talking about. There are numerous lawsuits right now by doctors against insurers for dropping them, illegally, from their networks and sending their patients to new providers/practices that are owned by the insurers. You can find any number of those lawsuits, if you cared, but here is an article on the practice of insurers buying providers (to control all aspects of their costs), you have insurance A, odds are you are only able to go to a doctor practice/hospital owned by the insurer.
You are wrong, and it is clear you have never even heard of Medication Therapy Management (MTM) or OutcomesMTM. Walk into any big pharmacy (walmart, cvs, walgreens) and ask the pharmacist about OutcomesMTM and MTM generally. Or use this link to a OutcomesMTM report and learn about it http://www.outcomesmtm.com/wp-content/uploads/2018/02/2016MT...
>"Today, more than half of U.S. pharmacies are active
in OutcomesMTM programs, earning revenue for their clinical services while helping healthcare payors reach their goals."
>Each year, OutcomesMTM recognizes pharmacies and pharmacy chain organizations with exceptional performance in delivering MTM services. Top MTM Center and Top Chain awards are based on the organization’s overall effectiveness in delivering CMRs and resolving drug therapy problems through TIPs
> For patients with chronic conditions if the doctor determines the patient should be seen to evaluate their condition in 30 days before a new script is written
I'm reasonably cynical about lots of things, but I would be absolutely shocked if a pharmacist can give you 90days of pills when handed a 30day (no refills) prescription.
The don't unilaterally change the Rx and hand it to you...they fax the Dr. a request for change to the therapy (and earn a bonus from the insurer for sending the request for change). If the Doctor authorizes the change, the pharmacy gets a 2nd bonus payment from the insurer.
If the Doctor(s) refuse to make the requested change that data is tracked and eventually the insurer will drop the doctors from their network.
Sure, but neither is the guy who asks for a new drug based on the 30 second ad he just saw.
If I go to my doctor and say "hey, for my condition XYZ I hear there's a new drug ABC, would that offer any benefits over what I'm on now?" that's one thing, but if I go in and say "hey give me that ABC" they'll correctly roll their eyes at me.
That's what I meant - you can use that first phrase and the doc's very likely to say "No." with no explanation. Even if your current drugs aren't working well.
I get it, they're nearly always overworked and tired, and most of their clients are idiots.
But people should be free to try something new without all this gatekeeping that keeps getting worse.
At the same time, place the responsibility on the user if they request something out of the ordinary, of course.
I know a couple of doctors overseas and while there isn’t direct to consumer advertising for Rx drugs, the doctors get invited by the pharmas to conferences in the Greek islands or the Adriatic, sometimes they are invited to “talk”. They can bring their spouses too... in addition I think they get kickbacks for Rxs -but I’m not sure.
On the other hand, I hate the general attitude of "don't question your doctor or do your own medical research; the doctor knows what's best"
Doctors are mortals too and can only have so much time to draw on info they crammed X years ago. Patients can quickly become more expert than GPs with regards to their own diseases, especially if they have months to research it.
Anecdotal example - my sister had a wierd skin condition in high school. My mom researched skin images and symptoms for hours and hours and concluded it was shingles. My Mom then brought her in and discussed her findings with the GP who scoffed and said she was far too young for it to be shingles. He then admonished my mom for doing her own research. Long story short and one embarrassed GP later, it was shingles.
> Patients can quickly become more expert than GPs with regards to their own diseases, especially if they have months to research it.
Waking into a 15 minute appointment with months worth of research seems like a bad way to approach collaboration with healthcare professionals. Or do people still have personal relationships with doctors outside the appointment window?
It seems like GPs have become dispensers of medicine rather than care.
It isn't always possible to answer every question in 15 minutes, but I think it's helpful when people have questions to come prepared with those questions. It's literally our job to provide health advice; the "realities" of dealing with high volume can't/shouldn't change that.
So I have a friend with Hashimoto's. Before finally being diagnosed, she had a long history of being misdiagnosed, blown off, and having her symptoms dismissed as nothing. After being diagnosed, she connected with a number of other Hashimoto's patients and sufferers of chronic illness in general and found out that pretty much everyone she's talked to has the same stories. Constant invalidation, ignoring of symptoms, doctors just plain not listening, until they finally find someone who actually knows their stuff.
Concierge medicine in some areas allow hour long appointments which makes the exchange of complex health concerns effective. I really wish the model would scale up, but primary care doctors are currently slaves to an administration.
But medical advertising doesn’t inform the patient. Often it misleads. It has no value. Having medical information in public would be good so people can learn themselves but advertising provides no value.
FDA has done research into it and it clearly provides some value.
Other highlights of the surveys include:
Most physicians agreed that because their patient saw a DTC ad, he or she asked thoughtful questions during the visit. About the same percentage of physicians thought the ad made their patients more aware of possible treatments.
Many physicians thought that DTC ads made their patients more involved in their health care.
I would imagine you’d need to draw a correlation between advertisements and quality of care and successful treatment rate; awareness and involvement aren’t positive or negative per se.
Secondly, I see too many damn branded pens in my doctor’s office to be under the illusion that the marketing is only directed at the patients. I can’t count the number of times I’ve been prescribed medication just to have it swapped out at the pharmacy for a generic variety. Doctors are just as susceptible to advertising than the rest of us, except exclusively at harm to the patient.
The demonstrated “value” being provided seems to be mostly in the form of cash in the pockets of providers and pharmaceuticals, not in material benefit to the patients.
So, the reason they've got branded pens is that the drug reps are allowed to give them pens, so they do. Trivial low value gift. Historically the doctor wouldn't remember HealthyHeart brand beta blockers because of the 40 cent pen but because they paid for his two week safari. Most of the world banned that, but not so very long ago. My nurse friend didn't spend a penny of her own money on big birthday events when she was younger, drug reps paid for everything. (In the NHS system some nurses have full prescribing powers I presume some US nurses likewise but even if not it's the same for doctors)
Drug reps in the US quit giving away pens and coffee mugs in the US in 2008, in accord with PhRMA rules (that's the drug manufacturers' association/lobby). They got to say it was improved ethics, but it was also a mutual disarmament agreement of sorts. "We'll stop giving out sticky pads if you will."
Secondly, I see too many damn branded pens in my doctor’s office to be under the illusion that the marketing is only directed at the patients.
I can assure you that drug reps didn't bring in catered lunch to my ex-wife's GP office for the benefit of better informing patients about their choices. We got divorced 30 years ago, but I'd bet money I've still got a sticky note pad lying around the house somewhere with a pharma company's name on it.
There's plenty of drug marketing going on that will never come under the gaze of a patient.
If the true goal is to educate the patient, I'm 100% certain there are more effective and ethical ways to accomplish that goal other than for-profit advertising (which by definition cannot be unbiased).
They can be sued for making false claims. There's no value in doing so, especially in a high profile medication.
Why would you spend a couple billion dollars on research/marketing, years of research, to bring something to market only to shoot yourself in the foot by making false claims?
>Doctors are mortals too and can only have so much time to draw on info they crammed X years ago.
First, doctors are expected and generally pursue continuing education. As much as the "golfing at an exotic locale during a medical conference" is a meme, many of those conference also educate doctors on new therapies.
Second, let's not pretend that the drug conpany reps don't get as damn close to bribery as possible to get their medications in front of doctors and in hospitals
I'm a trans woman. It's widely acknowledged in the trans community that most of us have to teach our doctors what meds to prescribe, what starting doses are common, and how to interpret lab results to determine how to titrate the dosage. Most of us have read the Encdocrine Society's clinical guidelines for HRT cover to cover, because we have to be the experts. And half the time, it turns into a fight. At one point, I had to print out relevant sections from the Endocrine Society's guidelines and use a highlighter on key parts just to demonstrate that my dose needs to be upped, to a level that's still regarded as safe, because my levels were way too low. I was so happy when I switched to a better doctor a couple of years later.
And a lot of us end up ordering our meds from gray-market online pharmacies anyway and paying for our own blood tests (usually via Private MD Labs).
If you can, I'd encourage you to find the care providers you need.
One friend moved to become a patient of the #2 Lyme disease specialist.
Another moved to become enrolled in a clinical trial. He was proclaimed terminal and went doctor shopping. (Still alive today.)
I've stayed anchored in my house for decades because I won't risk leaving my care providers (SCCA, FHCRC). I've had terrible experiences with noob doctors. As in life threatening.
I now better understand how doctors think. Recurring rounds of 20 questions time boxed to 15 minutes. Hopefully they've seen your condition before. If not, oops, too bad, out of time, take two aspirin and call me in the morning. Next!
>Patients can quickly become more expert than GPs with regards to their own diseases, especially if they have months to research it.
A couple of years ago my GI specialist put me on a medicine that had just been approved that was designed for my type of gut issues. We spent a lot of time talking about what we hoped to see, and he spent a lot of time listening to what my experience actually was. This has continued ever since, and he always spends a lot of time listening, because I am one of his few patients that takes that medicine. This patient / doctor feedback loop is incredibly important!
I have a lot of serious long term health issues and quickly found out you have to be the champion for your own health and research everything. But that doesn't mean just asking for the latest drug in the market. Its about asking the right questions. Unless you have a common well understood health issues, you will quickly reach a roadblock.
Is it really such an odd question? Putting advertising outside, it seems to me that it would be a common occurrence that someone dealing with problem X has probably spoken to other people with the same issue, and what the group knows works well would be spread around. In my case, I'm asthmatic, and I know very well what works best for me, simply because I've had decades of experience figuring it out. When I've gone to see a new doctor, I've been specific in my medicine requests, and it has been received well enough.
When television cigarette advertising was banned (in the US) profits and stock prices went up! [1] Since all the cigarette companies were in an even playing field, they saved a lot of money by not having to advertise.
I think it may be a win-win if the U.S. prohibited television medical advertising.
That's interesting. Does the budget count these free samples at retail price? If most of that is in turn advertising, then a lot of the money never existed?
I don't disagree but by far the largest amount of marketing is spent targeting doctors not patients. Every few years they get caught sending them on junkets, paying them kickbacks disguised as fake speaking gigs, hiring cheerleaders or strippers as "sales associates", etc
It seems like there is a perception by these companies that there is a discoverability problem. If they are truly making a useful and safe drug, there should be a market for it. Instead of marketing, shouldn’t there be a way to make all products and services more discoverable? By doctors in this case and generically in the larger sense.
Incidentally, I have had two occasions where I wanted to search for a product by its physical dimensions. One was for furniture and one was for a refrigerator. I haven’t seen a search engine that lets me start by searching by physical dimensions: length, width, height. On these occasions, I had a specific physical space that I needed to put something into.
FWIW, a medicine I have been taking since 2003 is still not available in all other countries except the US and Canada (and it's only recently become available in Canada). It's still the only effective treatment for my condition.
There's typically a couple of reasons for that, and awareness is not really one of them.
Just like the FDA reviews drugs for safety and efficacy, and just like your insurer reviews drugs for price, national health boards review drugs for safety, efficacy, and price.
Sometimes, the boards want to wait and see if the drug is actually effective in clinical use.
Sometimes the boards want to wait and see if the drug is actually safe in clinical use.
Sometimes, that equation does not swing in the drug's favour. If a drug is $10,000/year, compared to a $500/year, but provides someone taking it for 10 years, on average, with a month's extra life, it would be foolish to spend $100,000 on the better drug - if for that money, you can buy more than a month of life for other people, with another drug, or with surgeries, or better screenings, etc, etc.
Likewise, if a drug improves quality of life for someone, how do weigh that against saving someone's life? There's a limited medical budget, and there's some ethical calculus that you plug the numbers in, and determine which of those options is a better use of scarce resources. But in order to do that, you actually need to get the numbers. Clinical trials, in themselves, don't give all of those answers.
The FDA differs from the FAA, in that the world does not consider it the sole gatekeeper of medical efficacy, safety, and cost.
What will not solve this problem, is the drug manufacturer spending half a billion dollars on taking doctors, medical directors, and politicians on all-expense paid junkets to the Carribean. You're not going to get better awareness from this, you're going to get more corruption, and more expensive drugs. (The $500/year alternative can't compete with the $100,000/year alternative in this sense - as the manufacturer of the latter can trivially out-bribe the former.)
This drug is very effective and very safe with few side effects if not abused.
This drug costs more than $10,000 per year because it is an orphan drug. There's little to no money spent on marketing for this drug. None that I've ever seen and I'm the target market for it. The net margins for the pharmaceutical company that manufacturers the drug is now around 20-25%, but their net margin was very very deep in the red for the first ~6 years that I took the drug. Not sure if they have yet recouped the investment from the 7+ years that they were in the red.
> it would be foolish to spend $100,000 on the better drug - if for that money, you can buy more than a month of life for other people, with another drug, or with surgeries, or better screenings, etc, etc.
It's not foolish if you're the one whose life is bettered by the medicine in question. How my healthcare dollars are spent is my decision, not the government's decision. This is where the arguments for single payer healthcare break down because you're arguing to take away my choices that I've earned by being useful to society. You're not the one paying the price for putting the decision in the hands of a bureaucrat. I and people like me are paying that price.
>
This drug costs more than $10,000 per year because it is an orphan drug. There's little to no money spent on marketing for this drug. None that I've ever seen and I'm the target market for it. The net margins for the pharmaceutical company that manufacturers the drug is now around 20-25%, but their net margin was very very deep in the red for the first ~6 years that I took the drug. Not sure if they have yet recouped the investment from the 7+ years that they were in the red.
If it's an orphan drug, treating a rare condition, the economics of it are by nature difficult, because of the high fixed costs, and the low maximum revenues.
Since international medicine does not follow the same model as international aviation, it's not surprising that the high fixed costs (In time, research, and money) of adopting a new medicine + low, variable returns (Most countries are much smaller, or much poorer than the US), it's not surprising that the world isn't jumping on this head-over-heels.
Do you need this drug to live? If not, is it a marginal or significant quality of life improvement? If one of the latter, its possible that the cost/benefit analysis for it isn't great, and its manufacturer hasn't even bothered to go through the approval processes for other countries.
> It's not foolish if you're the one whose life is bettered by the medicine in question. How my healthcare dollars are spent is my decision, not the government's decision.
I'd like to decide how my military, policing, and grade school education dollars get spent, too, but there turn out to be exceptionally good reasons for why they should be spent collectively.
> You're not the one paying the price for putting the decision in the hands of a bureaucrat. I and people like me are paying that price.
Everyone will at some point need healthcare, so yes, I do pay the price, and I'd like a system that does its best to get good results for money spent.
And if your insurance is paying for this drug, keep in mind that some unelected insurance-company bureaucrat has done a cost-benefit analysis on it, and decided that they were going to pay it. They could have gone the other way with it, and decided that it was not covered by insurance. As someone who buys into health insurance, but does not consume much healthcare, I can use your same argument to argue that my hard-earned insurance money should be spent on me, not you.
Of potential relevance: The U.S. Supreme Court ruled on the constitutionality of a statute restricting the advertising of the prices of prescription drugs in Virginia State Pharmacy Board v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976). (https://www.law.cornell.edu/supremecourt/text/425/748). The Court ruled that statute at issue was unconstitutional under the First Amendment.
But I like cartoons telling me about amazing drugs I desperately need in my life while someone soothingly mentions oily rectal leakage [1], compulsive gambling [2], and suicide [3] as potential side effects!
Ironically, insulin is a great example of why your premise is false:
Insulin replacement was developed a century ago, being first discovered by a government entity (U of Toronto). Private companies commercialized the treatments in the 1940s and 1950s, developing long acting forms that could be administered in a single injection per day. Since then, pharmaceutical companies have made continuous improvements with fewer side effects: https://www.hopkinsmedicine.org/news/media/releases/why_peop...
Note that nobody is proposing to give people the versions of the drugs developed by public entities, or even the long out-of-patent earlier versions of the drugs. That’s strong evidence of the fact that the improvements developed by private companies were really important.
Moreover, the only thing stopping companies from making cheap generic insulin is the government itself:
> Patents on the first synthetic insulin expired in 2014, but these newer forms are harder to copy, so the unpatented versions will go through a lengthy Food and Drug Administration approval process and cost more to make. When these insulins come on the market, they may cost just 20 to 40 percent less than the patented versions, Riggs and Greene write.
Instead of “scrapping” the industry, wouldn’t it make more sense to, as a first step, get rid of regulatory roadblocks that prevent competitors from producing out of patent drugs?
Moreover, as to your claim that “other countries” do things differently—your only example is India, which does essentially no pharmaceutical R&D. Western European countries also rely on for-profit pharmaceutical development. Pharmaceutical spending as a percentage of GDP is about 2% in the US and Japan, 1.8% in Canada, and 1.5-1.6% in Germany or France: https://data.oecd.org/healthres/pharmaceutical-spending.htm. European countries negotiate hard on drugs like insulin, but for the most part they pay a lot too.
As to your broader point of “why do we need private businesses to do this?” It’s a mistake to mix up the products being made with the process by which the products are developed. Just because people need drugs more than search engines doesn’t mean that the government is more qualified to develop drugs than search engines. It’s two completely different things. Drug development is high tech work. If the government could do it well, while squeezing out the profit margins, there would be no reason for the government not to run Google or Netflix.
After all, why do we need a “private business” like Apple to develop iPhones with 50% margins “when the tax payer could do it at nearly 0% margin?”
>Instead of “scrapping” the industry, wouldn’t it make more sense to, as a first step, get rid of regulatory roadblocks that prevent competitors from producing out of patent drugs?
What's your solution for drugs that aren't out of patent?
> What's your solution for drugs that aren't out of patent?
Wait for them to get out of patent? The average remaining patent term for newly approved drugs is 10-12 years. So drugs approved in 2008 will mostly be coming out of patent this year.
All this stuff you here about “evergreening” is entirely the result of gaming the FDA approval practices. Patent law is categorical: once you make a thing publicly available, that thing is prior art not just for the patent you file to cover it, but every invention embodied in the thing. So once the first set of patents expires on the thing, that thing itself is in the public domain. You can’t bring that specific thing out of the public domain by making incremental improvements, etc.
> All this stuff you here about “evergreening” is entirely the result of gaming the FDA approval practices
Evergreening has absolutely nothing to do with the FDA and everything to do with the USPTO and the specific chemical makeup of insulin, which has unique characteristics that make it very easy to engage in effective "evergreening". This also allows drug companies to manipulate pricing lists in deceptive ways that fool both doctors and distributors into placing higher cost (but chemically identical) products onto "preferred" prescription lists of insurance companies. There are also current court cases where there are accusations of fraud and illegal kickbacks around those practices.
> Evergreening has absolutely nothing to do with the FDA and everything to do with the USPTO and the specific chemical makeup of insulin, which has unique characteristics that make it very easy to engage in effective "evergreening"
The best answer comes from the paper you cited earlier:
> "New biologic drugs are orders of magnitude larger than small-molecule drugs, and it’s often impossible to know on an atom-by-atom basis whether one large-molecule drug is the same as another. Subsequent versions of off-patent biotech drugs are therefore called biosimilar rather than generic. Differences in the tissue systems that produce them can lead to differences in protein folding and glycosylation, which could theoretically result in efficacy or safety differences. But the FDA, the EMA, and the generic drug industry hope these issues can be addressed by new regulatory sciences of biosimilarity."
> "Although regulatory pathways for biosimilar insulin are being finalized in the United States and Europe, economists warn that the introduction of biosimilars may not lead to price reductions equivalent to those seen with typical generic medicines. Even an abbreviated approval process for biosimilars will require substantially more original data than the typical abbreviated new drug application required for small-molecule generics and will necessitate immunogenicity and other safety studies in humans."
Sorry, I realize those excerpts in my earlier comment don't really convey what I intended. The paper does talk about about how the various improvements over the years were changes in just a few (or even just one) amino acids in the molecule. It's a large molecule, nearly 6000 daltons (for reference, the limit for what we call small molecules is around 1500 da), so there's been a lot of opportunity for tinkering.
No, his solution is to dial competition back up by reducing regulatory barriers to new entrants, competition being the thing that tends to actually produce durable price decreases in markets, and is, for instance, the reason virtually everyone in the country has a phone in their pocket that only rich people had just 12 years ago.
You can't coherently and simultaneously believe that markets are inefficiently pricing insulin too high and that the government should be imputing gigantic costs on firms that want to introduce new, unencumbered insulin products. The two thoughts aren't compatible.
This is the classical "tricke down economy" type of solution. Give companies, who are additionally acting unethically, a guaranteed and direct profit increase and _hope_ that it solves itself in the long-term.
Surely it depends on the barriers and how much of a cut those actually are in practice.
Furthermore, private corps aren't the only way drugs can be invented.
No, trickle-down refers very specifically to tax breaks tailored narrowly to the wealthy, in hopes that they will in turn distribute their wealth via increased employment of capital and, ultimately, labor. Since its origins in Gilded Age populist political writing and depression era popular media, it has never meant anything else, and it has nothing to do with the subject at hand.
> Give companies, who are additionally acting unethically, a guaranteed and direct profit increase...
No, lowering barriers to competition doesn't give anyone guaranteed profit. It reliably does the opposite, depriving incumbent companies of their monopolies.
> Furthermore, private corps aren't the only way drugs can be invented.
Nobody -- literally nobody -- would dispute that. The question is whether the government is able to do the various parts of drug development as efficiently as the private sector. This is not a simple analysis, but I think the answer is more often than not, No.
Sigh, this is such a typical HN response, "I read everything literally and need to explain what it _actually_ means". I wrote _type_, as in similar. I know the origin.
> This is not a simple analysis, but I think the answer is more often than not, No.
Why not? Profit-driven drug companies will obviously focus on things that make money, e.g. superficial/vanity related things, not what's necessarily aligned with public interests.
Because in most markets, one of the more straightforward ways to make money is to deliver products more efficiently, split the reduced cost basis with the customer, and outcompete incumbents.
You're not doing your argument any favors with this "typical HN response" stuff. Have a discussion with people on the thread or don't; it is fine for you to simply disagree and walk away.
And in many markets it's not. Well-run state companies, that exists, and have existed for a long long time, efficiency is not a problem and they can focus their efforts and money on what's important, not profits and marketing.
Don't tone police me please. I find it rude to assume ignorance and go on explaining. Did you miss the whole mansplaining wave?
Sure. However, given the rudeness in the replies I feel that I restrained myself decently with a few slips.
"You can't coherently and simultaneously believe"
"You might as well call it "fascist" or "colonialist". It's jibberish."
"it is fine for you to simply disagree and walk away"
"Right, so it was a bullshit distraction that can safely be ignored."
"You're still not understanding."
"Now read this slowly and carefully"
"You are completely misunderstanding the argument."
"I think you're trying to construct a straw man"
"which discussion you opened with a snarky, dismissive one-liner."
"[if] you're able to use google for five minutes. At this point, though, I'm confident that you're interested only in polemics, rather than actually learning anything about the issue."
Ah I see. So as long as we append the word "type", we're free to throw phrases into completely non-sensical contexts? How convenient.
Kidding aside, your use of the phrase here indicates a fundamental misunderstanding. This isn't "similar" to trickle-down. This has nothing to do with it whatsoever. You might as well call it "fascist" or "colonialist". It's jibberish.
Try this: You can find the Hopkins paper that Rayiner cited at https://sci-hub.tw/10.1056/nejmms1411398. It's a consice description of the causes of the ongoing dearth of generic biologic (non-small-molecule) medicines.
Read that. It's only five pages. Then tell me how the various possible ways to limit the monopoly position of incumbent insulin makers -- patent reform, lowered regulatory barriers for new competitors, whatever -- would constitute a "trickle down type" giveaway to said incumbents. Tell me how that makes any sense at all.
> Profit-driven drug companies will obviously focus on things that make money, e.g. superficial/vanity related things, not what's necessarily aligned with public interests.
Just for fun, give me some examples of drugs that are merely "superficial/vanity related". I think you're trying to construct a straw man.
It's certainly true that the free-market does not guarantee alignment with the public interest. It's also true that over-regulation is one of things that causes such misalignments.
In this case, a strong regulatory framework around biosimilars may be unavoidable due to their extreme complexity (again, read the paper). But if there are regulatory hurdles that can safely be removed, and thus allow generic drug makers to enter the market with cheaper alternatives, how exactly would that be unfair or unjust for anybody?
The template of trickle down economics I'm referring to is the method where the already wealthy/profiting and so on, is given immediate benefits under the premise of vague and long-term benefits for the many. This method of upwards redistribution has been applied repeatedly time and time again, and tax cuts in the style of trickle down economics are just one instance of it.
> Just for fun, give me some examples of drugs that are merely "superficial/vanity related". I think you're trying to construct a straw man.
Once again, it was one example, I was mainly thinking about hair loss or other male things caused by men, historically and still, earning more.
My main point was that the profit motive causes this kind of skew:
"Scientific publications brought the evidence that there was a lack of news drugs for diseases that cause high mortality and morbidity among people living in poor areas. One showed that only 1.1% of new drugs were approved specifically for neglected diseases over a period of 25 years (1975 to 1999) despite the fact that these diseases represented 11.4% of the global burden"
> It's certainly true that the free-market does not guarantee alignment with the public interest. It's also true that over-regulation is one of things that causes such misalignments.
I would argue that "free-markets" is the exact reason for anti-competitive regulations, among others, in the form of regulatory capture, which is inherent with capitalism.
Regardless of how you want to redefine the phrase trickle down, your use of it here betrays a fundamental misunderstanding of the subject. If it's possible to reduce the regulatory burden of the approval process for biosimilar insulin so as to allow generic makers to compete more easily, this will REDUCE the monopoly power of the large incumbent drug companies. I don't know if you're being deliberately obtuse, but I can't say this any more clearly.
> Once again, it was one example, I was mainly thinking about hair loss or other male things caused by men, historically and still, earning more.
Right, so it was a bullshit distraction that can safely be ignored.
> My main point was that the profit motive causes this kind of skew...
Which has exactly nothing to do with insulin, or the larger problem of building a manufacturing base for complex biosimilar medicines that's big, efficient, and safe enough to not bankrupt us. Regulations are necessary and powerful tools that, if wielded clumsily, can easily kill that manufacturing base. Making sure those regulations are suited to the task is not "trickle down" in any way whatsoever.
> The approval process isn't the problem. Government granted monopolies are.
You're still not understanding. Overly burdensome approval processes are part of what creates government granted monopolies. In other words, those two things go together.
For example, if you're familiar with the approval pipeline for generics in the U.S., you'll remember that the main component of an ANDA filing is proving equivalence. Regulations require the evaluation to be based not just on the chemical description of the brand name medicine, but on actual physical samples. A separate regulation subjects any medicine with serious side effects to the REMS program, which restricts its distribution to narrow channels of the drug maker's choosing. Furthermore, the regulation allows companies to voluntarily subject a drug to REMS-type treatment even in the absence of serious side effects.
The result of these twisted regulations is that a large incumbent drug maker can easily deprive smaller generic makers from getting the samples they need to pursue approval.
This is just one example. REMS and other regulations allow incumbent drug makers other ways to block prospective generic makers. These abuses are common, and according to one study cited by the FTC, if we removed or reformed some these regulations, it would save Americans billions of dollars a year. [1]
Now read this slowly and carefully: these government regulations help to preserve big pharma monopolies. Read the citation below. Read the paper cited earlier. Read anything.
If you have any evidence of your own to support your positions -- studies, papers, anything -- I'd be interested to hear it. Otherwise I'm done with this.
You couldn't make this up. The very group that ordered the report you are referring to, The Association for Accessible Medicines (AAM), is also appealing the introduction of a law in California that makes pay-for-delay deals with drug companies illegal. Do you understand why I'm calling it naive now? They clearly don't have the public interests in mind at all, just raking in profits, even if it's through mob-like protection fees with incumbents.
"The Association for Accessible Medicines (AAM), which represents generic drugmakers, is appealing a December 31 decision by a federal judge that allows California’s new law barring pay-for-delay arrangements between brand-name and generic pharma firms to go forward."
"AAM had argued that the law violated the federal government’s right to regulate interstate commerce and the scope of US patents"
Lets say the current price for insulin is $200. I see this margin, and say "I can produce insulin for cheaper, and I'm happy with selling it for $50". The government is placing restrictions on new competitors, so I can't just come in and sell insulin for $50. There is a restriction on competition, which causes artificial prices
The presumption is that it's actually the regulations that prevents the competition, which haven't at all been made clear. How about patents for example? How about the cheap prices of Europe?
The presumption is that the regulations add a major cost hurdle to delivering unencumbered insulin products at lower prices, because that is in fact what they do.
I think you're trying to construct a straw man. Nobody on this thread is suggesting that pharma be deregulated. Rather, Rayiner pointed to a specific regulatory problem that may be contributing to the price of insulin. Whether or not drug companies operate at a loss in Europe is immaterial to that point.
I'm not sure what straw man that would be? I haven't suggested that either. What I'm implying is that Europe have regulations too, and that the price difference is not in proportion to the difference in regulatory strictness.
You have presented no evidence to support that argument, which has appeared late in your discussion, out of the blue, which discussion you opened with a snarky, dismissive one-liner.
I should be the one providing evidence that the following example is disproportionate with regards to regulatory differences between US and Europe?
"West, 30, has had type 1 diabetes since she was three years old. Back in Seattle, where she used to live, she typically paid $70 per month for insulin and another $130 for pump supplies. That was a relative steal in the U.S., made possible by her excellent health insurance, which she got through her employer. But still, it was a financial strain.
In Germany, she pays about €10, roughly $11. Every three months."
The extraordinary claim is that that vast price disparity is in proportion, so the burden of evidence rests on you.
It's a good summary of the costs of one type of overly burdensom regulation in the U.S. drug market, and was cited by the FTC in congressional testimony. There are other problems to be sure, but the anti-competitive effect of our over-wrought regulatory framework is widely recognized to be a problem by both liberal and conservative policy makers.
There's plenty more material out there you're able to use google for five minutes. At this point, though, I'm confident that you're interested only in polemics, rather than actually learning anything about the issue.
"Humira’s price has defied gravity — and been ensconced as a frequent rhetorical target on Capitol Hill — through AbbVie’s aggressive use of patents and deals with generic manufacturers to forestall competition."
"Humira was approved by the FDA in 2002 and its core patents expired in 2016, according to the Biosimilars Council, a division of the Association for Accessible Medicines, which represents generic manufacturers. But AbbVie won dozens of additional patents — what critics call a “patent thicket” — that extended the exclusive market for the drug to as late as 2034, the council said."
I'm not saying that there isn't high costs involved in the approval process, what I'm saying is that it is disproportionate to the price difference. What actually makes a difference is government regulations on another level, mainly price controls, like in Europe.
Just to make it clear, I'm very much in favour of generics, but the focus should be patents and price control, not small fish like REMS (from your link "consumers pay an extra $1.8 billion in out-of-pocket costs.", which furthermore is a number the authors have every interest to inflate) or removing burdensome, but appropriate, approval regulations, possibly threatening public safety.
> Based on our analysis of prices in regulated markets, the United States paid on average more than 50% that other developed markets.
Of course, that figure is before discounts:
> Hence, while US pharmaceutical reference prices are typically higher than most counterparts, it does not mean that the US also ultimately pays higher prices than other countries – a fine but important distinction.
But even taking the 50% figure at face value, that suggests we could cut our drug spending to German levels (from $1,200 per person per year to $800). That’s not the kind of huge delta you see when it comes to things like inpatient services (surgeries that cost 5-10x as much). It’s also not that much compared to the $5,000-6,000 more we spend on healthcare overall per person compared to Germany.
In addition to reducing regulatory barriers that prevent generic producers, why is no one suggesting altering the pharmaceutical intellectual property system?
Twenty years to hold monopoly production rights is an obscene amount of time.
Yes, reducing that twenty to say five will reduce capital investments in drug research, but it will also alter the structure of those investments.
Investing in improvements at the margin might make sense when you can collect 20 years of royalties, but if you can only collect 5 then it'll more often make sense to fund cures and use that 5 year monopoly to cure as many people as you can before the drug goes generic.
The typical window with today's regulatory framework is 7-12 years. Your proposal certainly changes that some, but it's not nearly as dramatic as your original framing of "reduce it from 20 to 5 years."
Lowering drug patent duration would explode prices upwards. Its much easier to recover 1B investment over 20 years than 5.
And this conspiracy that pharma is intentionally not funding cures to make more money is ridiculous. That would imply they know how to cure things, but just don't want to...
Explode prices for this first 5 years, maybe it would. But then, the improvement would have to be enough over the most recent generic that the consumer would actually pay the increase.
As to not investing in cures, I'm not saying they don't at all, but they allocate resources towards the best return on capital. And I'd ask you to apply your own reasoning, that "Its much easier to recover 1B investment over 20 years than 5" to which gives an easier return on capital.
Of course, implicit in that is that it's less risky to fund research in incremental improvements than on outright cures- but I'm open to being taught differently on that.
> Drug development is high tech work. If the government could do it well, while squeezing out the profit margins, there would be no reason for the government not to run Google or Netflix.
I agree we don't need a state-run version of Google or Netflix, but how does their being "high-tech" in any way preclude that? NASA seems like a great counter-example.
Capital intensive R&D—getting highly skilled workers into a run and having them work in making things that don’t exist and may not necessarily be possible—is a specific type of work. That type of work is similar both in pharma and Silicon Valley. If the government could do that efficiently, there would be no reason not to have a public version of a Google.
Focusing on whether we “need” a state-run version of Google misses the point. It’s not the nature of the product that matters. If the government could run Google as efficiently, and we could squeeze out the profit margin in the process, why shouldn’t the government run Google? We have Google as a private company not because we believe certain products and services should be “given” to the private sector, but because we believe certain types of work are more efficiently handled by the private sector.
NASA is not a good counterexample. NASA (and DARPA) are managerial organizations. The Apollo lander was designed and built by Rockwell and the Saturn V rocket was designed and built by Boeing.
It's quite telling what you excluded in your rendition of history.
The original research for the synthesis of insulin was actually done in Europe by a private citizen (not a government entity). That research was followed up on by a surgeon with a private practice in Canada, and only after a time was it taken to the U of Toronto. The work leading to a manufacturable insulin process was done in collaboration with another private citizen (not affiliated with the U of Toronto). The trio only decided to patent the discovery upon literal threat by Eli Lilly to steal it for sale. They then sold it to the U of Toronto for a single dollar because of a strong belief that it would have been ethically bankrupt to profit from the manufacture and distribution of such an important drug. Funny you left that out!
But anyway, to your main point, it's interesting you neglect to mention that the main manufacturers of "generic" insulin (there's actually no such thing, but that's a topic for a different time) are the same companies who manufacture the name brands. They do this for pure price discrimination reasons; the new "generics" you reference (Admelog/Insulin Aspart) are exact chemical duplicates of their higher priced cousins. They prevent other companies from creating their own "generics" through a process called "evergreening" where they change patents in small, insignificant ways while still maintaining the patent on the core product. They then force other manufacturers into pricing and distributorship deals in order to license these patents to prevent cannibalization of their own products. Most of these deals include strict price controls. Have you ever wondered why those regulatory controls are so strict? Maybe it's because of regulatory capture as a part of this complex system to artificially inflate drug prices. That would require more than a skin deep analysis relying on middle school free market ideology though.
This isn't even getting into the "manufacturer rebate" programs most drug companies have for, again, pure price discrimination and marketing reasons. Or the fact that for the same exact chemical formula insulin costs have increased over 10x in the past 20 years. This also doesn't address the fact that we're seeing 20% year over year increases in insulin prices while drug manufacturers post profit increases almost in lock step. Feel free to read their quarterly earnings reports, they state in plain black and white that they purposefully price insulin in accordance with how expensive it is to treat diabetes _without_ the drug. To quote John Lechleiter, the CEO of Eli Lilly, “Yes, they [referring to insulin] can be expensive, but disease is a lot more expensive”. I believe that's called "extortion", I wonder if getting rid of regulatory roadblocks can solve that problem.
There's also no such thing as insulin "side effects"... lower quality/old synthesis method insulin just doesn't work as efficiently which means you have to use more of it or can't use it in modern insulin pumps. Most insulin manufactured today is biologically identical to the insulin manufactured 10 years ago. Most of the quality of life improvements occurred long before the recent price surges.
But then again your post compares iPhones and Netflix with a drug that over a million Americans have to take in order to survive, so I doubt any of this will reach through your armor of specious and unserious speculation.
>They prevent other companies from creating their own "generics" through a process called "evergreening" where they change patents in small, insignificant ways while still maintaining the patent on the core product.
To be really clear:
1) A company receives patent X in 2000, which expires in 2020.
2) In 2018, that company gets a new patent Y that is really patent X but with "small, insignificant" changes.
Are you saying that after step 2, that original patent for X is now extended or will that still go generic in 2020?
You are saying that step (2) has no effect on patent X from step (1), and thus patent X still enters public domain in 2020, correct?
Note- I understood this to be your position from your other comments. I asked the clarifying question to understand `pdeuchler`'s idea of the `evergreening` process.
Pharma companies are profiting off of your tax dollars
No. Pharma companies are paying taxes collectively which are then used to fund basic research they can all benefit from.
Another way to do it would be to form a consortium like SEMATECH [1].
If the government didn't tax and regulate companies and people so highly they would have more left over to join voluntary associations and do the same thing.
Wow, you believe companies actually pay taxes? Ok, a bit hyperbolic, but really. A half a century of deregulation and tax breaks isn't making this _worse_ for companies.
Yes, companies pay taxes. Company owners also pay taxes on dividends, capital gains or distributions. Most taxes are paid by minority of relatively well off people.
My point is that SEMATECH shows you can have a voluntary consortium where different parties fund an organization and then collectively benefit from it.
Government does that, but on a more general level and it's not based on voluntary interaction (you must pay taxes, otherwise if you resist arrest you will be murdered).
I'm responding to people who complain how companies are ripping the public off, when in reality it's the government that takes almost half of GDP in developed nations.
If the government took less in taxes, then companies would have more left over to fund a voluntary consortium which would do similar things that NIH and NSF do.
My mother has diabetes and pays quite a bit for her insulin in California. I however am not sure government enforced price caps are the way to go. Today, people neglect to factor in the law of unintended consequences, and instead stand on a pedestal of moral superiority argument. What happens if price caps do reduce research. It’s no coincidence that the US has the best pharma companies and develops some of the most effective drugs in the world.
If the US only competes with and does not clearly and utterly surpass Europe (while serving the American people much less effectively), then how can your argument stand?
Agree price caps are not the solution. Don't agree about US big pharma. Novartis is a Swiss multinational, Roche also Swiss, Bayer is a German multinational, Glaxo Smith Kline is a British multinational... Big pharma is a global, or at least Euro-American effort.
This whole cost plus percentage model doesn’t work — it encourages people to drive up costs to increase profit.
I see no reason that pharma manufacturing can’t be done just regular contract manufacturing. The Zika vaccine is a prime example. The US developed the ZIPV vaccine at public expense, and then, for some mind boggling reason, they offered an exclusive license to Sanofi. Imagine if Apple outsourced iPhone manufacturing by giving Foxconn and exclusive license! The US could have solicited bids to manufacture the vaccine and accepted more than one, thus resulting in multiple sources without any IP exclusivity.
What, never seen corruption at work? Somebody at Sanofi, or connected to them, was connected elsewhere, and hey, there's your license :) (No, no cash payment.... but my kid really wanted to get into Harvard, maybe a limited endowment/scholarship? You know somebody, right?)
This is why I have low expectations of government solutions to high healthcare costs. How about a radical experiment in price transparency like we have with every other commodity? Rather than the US healthcare system becoming more like the UK's NHS, the opposite is happening[1]. The crony capitalists are winning and they are hoping we give their government buddies more control over our lives.
[1]Episode 105 of a podcast called the Accad and Koka Report.
But it isn't. It is licensed to an exclusive drug manufacturer who has a de facto monopoly on the new drug. If it were protected with drug patents then those patents licensed for free to all generic manufacturers, that would be a massive improvement.
That's because the drug manufacturer has to spend a billion dollars performing clinical trials which might still fail. Even with some research already performed, this is still a huge risk. Not to mention the fact that the research still needs to be turned into something producible and consistently deliverable to the patient.
No one is arguing that drug companies don't have work, and a lot of it, to do developing a promising drug (that is generally what comes out of university research) into a marketable one. Nor is anyone saying that that process is cheap.
However, the amount of money that goes into finding those promising drugs (collectively, including all the failures in those stages) is much greater than the work that drug companies do in testing and developing them (collectively, including failures).
Right or wrong, most of that research is government funded, and then the (monetary) rewards of all that spending generally flow entirely to the drug companies (often with some reward going to the University who hosted the research). So the drug companies wind up with Hughe effective subsidies, and little of the down-side of early drug development or basic research.
Do you have historical data? Because in the BBC article, it mentions patents, and how drug companies have a limited number of time to make up profits. The article states drug companies have 10 years to make it up, but I think that's even shorter in the US. I was taught in my health econ class that it's 5 years in the US simply because of the FDA approval process.
R&D money spent is cyclical, and GlobalData's report may just be a down cycle where pharma is just trying to recoup past R&D costs. There's also a large number of drugs that are not approved from past years. Pharma has to recoup those costs, too.
From purely a health econ standpoint, that recovery window offered by the patent system is the main reason we are where we are today.
It would be interesting if there was a way to inform people about effective options that are not profitable enough to receive much attention in our current system.
I'm fine with purely public research funding, but if we need extra incentives for "last mile" applied research, drug bounties are wholely better for the public and pharmaceutical industry alike.
Disclaimer: I work in big pharma as a biologist and nobody asks me anything about pricing or broad strategy
I don't hate the idea of bounties, but someone has to decide what bounties to offer, and the current system for deciding that is whether money can be made in that area. It's not perfect, but at least broadly it means that there is an incentive for treatments for conditions that affect a lot of people and ones with a high cost of disease without treatment.
The thing I could see easily being missed by bounties (or maybe worse, being subject to being lobbied by pharma companies with a drug in the chamber) is drugs that start for one indication, but pivot or expand to another, and drugs that are second or third in class. There is undoubtedly some value to a second in class drug that is more efficacious and safer, and line extensions are also helpful for expanding the use of a drug in market.
Good answers. I would say research grants and bounties are both subject to regularity capture. Bounties are high stakes and thus more worth being corrupted, but also fewer and hopefully more in the public eye and so exposed to more scrutiny.
But, as I led with, I'd be fine with just purely public research leading to generic drugs. Drug bounties are just the "post-capitalist" fallback plan if the old school state-bureaucratic approach isn't work.
Wait, so government funding supports the drug through the whole discovery and FDA validation process then just hands it off to the pharma companies? That seems broken
No, that's exceedingly rare. That kind of thing that only happens for super rare diseases, maybe like the ebola vaccine that was quickly developed over the past few years, where the economics are very upside down for companies to do the development.
What is way more common is that scientists from around the world, mostly funded by public money produce research that might implicate a particular pathway or target for a particular disease. Scientists in companies see those publications and try to verify the result, then make a drug for it. The process of making the drug, testing tens of thousands of compounds, making sure efficacy and safety margin are maximized, running clinical trials, and producing the drug with good yields is almost always done by companies.
The government can do stuff like funding studies on new uses for off-patent drugs, fund various parts of that development, and reduce regulatory burden to tilt the economics for companies to make drugs for a disease, but that mostly happens to do stuff that wouldn't happen in the normal system in which companies have to make money making drugs.
Disclaimer: I work in pharma, but in biology, not anywhere near the budget-making
The numbers don’t support their argument that r&d expenses drive the prices, so they’ve shifted to saying that prices reflect the drugs “value”. Even on this, the numbers don’t really agree.
But to jump on to your main point — people don’t realize just how much their tax dollars have already paid for the development of these drugs.
Having a healthy competitive market to take these things the last mile is good — but these companies are incredibly deceptive when it comes to how much they’ve benefited from public investment.
Food is far more important for human survival than medicine. Somehow we're able to allow a free market with for profit food producers and distributors. Lots of research is done to make better/heartier foods. Prices are quite reasonable for food with stable inflation. Almost no one thinks it'd be a good idea to nationalize food research, production and distribution. The solution seems clear to me: take a look at the relatively less important drug industry and change the regulations such that it operates more like the incredibly important food industry.
The market for food is not at all like the market for medicine. The main difference is that food is far more fungible than drugs are. If a patient is suffering an illness, there may be only one drug that will help, whereas if one needs calories, or vegetables, there are many more options.
Having said that, there is a reasonable argument to be made that the FDA and the patent situation stifles innovation and that most definitely should be looked at.
Off patent drugs are fungible in the sense that if Tylenol starts charging too much I can buy acetaminophen from anyone. Drug patents only last about 10 years. Fix evergreening at the patent office and your concerns are taken care of. Fixing evergreening is a much smaller action than cannibalizing an entire industry, which should be a last resort.
Makes sense to me. If evergreening is fixed, then theoretically in ten years time every drug on the market right now could be available as a generic at generic prices.
I think there's a lot of other great options on the table too. For example, we could form an international alliance with countries like Canada, Germany, UK, Japan... If a drug is legal/approved in one of those countries not only is it approved here automatically but we can also buy drugs from those countries.
We could further lower the barrier to entry for patients to get drugs by forcing the least dangerous varieties to be over the counter. For example, there's little reason an Albuterol inhaler requires a prescription. It's basically impossible to OD on and is not addictive.
Even if these specific ideas aren't the right solutions, I think we've been forced into a false dichotomy of basically the status quo or nationalization. I think we can be much more creative.
This is a very disingenuous comparison. For any given food, there are a large number of both perfect and imperfect substitutes, which is very much not the cases for patented medicines. It is also much easier for individuals to grow their own food than it is to manufacture their own pharmaceuticals. But beyond that, food is one of the most regulated markets in modern society. Farm subsidies, food assistance programs like SNAP, strategic food reserves, and any number of other programs function as "soft" price controls. I don't think that "changing pharmaceutical regulations to match the food industry" means what you think it does.
Drug patents only last about 10 years. So fixing the evergreening system at the patent office solves your concern about perfect and imperfect substitutes.
Take a look some time at the large list of drugs Walmart pharmacy offers for just a few bucks a month. Our model should be to get more drugs in such a state that a Walmart can offer them for such a low price.
>research funding is dwarfed by marketing for example
In an industry with high fixed costs, marketing may in fact reduce the cost per consumer. Using software as an example, you can't just take the marketing costs per customer and subtract that from the price. If 1,000,000 in marketing brings in 3,000,000 in extra revenue, that marketing didn't cost customers anything. It could even allow the software company to charge less per copy.
There are some real differences between software and medicine. And I'm not sure increasing users of a drug is a good thing in many cases. But I doubt prilosec commercials are increasing the price I pay.
My doctor prescribes my medication, not my software. Why would anything more than a journal article with technical information released for the benefit of the medical community be needed?
The US is one of like 2 countries that even allow TV commercials for drugs, yet all those other countries (and their Not for Profit or universal healthcare systems) work better than the US.
If I'm told to ask my doctor if [DRUG] is right for me, shouldn't they already be aware of the option and if beneficial brought it up vs staying quiet and endangering my health? The marketing budget is way out of line.
> My doctor prescribes my medication, not my software. Why would anything more than a journal article with technical information released for the benefit of the medical community be needed?
Because it requires time and effort to educate providers on state-of-the-art medications and the marketing that goes to them is often educational.
I understand the frustration around the healthcare situation in the US, but the argument that marketing is bad, or that profits are bad, or that the private market cant service are frankly trying to reinvent the economic wheel.
I work in medical research and mostly agree with this, but there are two major problems I see preventing this from becoming a reality:
1) Academic medical research is simply not well tooled, right now, to do the later stages of drug development. What pharma does well and academia does not, is basically optimization of candidates. They do it through high-throughput screens and medicinal chemistry. Those things are very expensive and not publishable, so...academics don't do them. And everyone with the expertise works in pharma.
2) Clinical trials are freaking expensive. My institute has developed several drug candidates and the same process necessarily applies every time. The public-funded researcher basically HAS to either sell the patent to pharma or start a company and raise the many millions required to do a trial. The amount of money required is way out of range of current grant funding. If they want to see their drug get to patients, and of course they do, there is literally no other way right now except partnering with pharma.
When I get a chance to talk to politicians about how to fix this, I always make the same pitch. Step #1 should be to give a huge wad of money to the FDA. Say $1B/yr. Then you tell the FDA: every year, pick the 50 most promising drug candidates. Publicly fund the clinical trials, and the public will own the patent. Give some cash to the inventor and the institute to incentivize them to do this scheme and not sell to pharma.
Politicians, both left and right, look at me like I'm from Mars when I propose this. Those on the left think high drug costs are all about greed and not our broken system, and those on the right have unwavering faith that "free" markets will always solve everything.
And with insulin specifically, there is another problem: diabetics won't take the generic insulin that has been off-patent for years now. They must have the fancy and more convenient version. Mark my words, the fact that Americans must always have the absolute best thing, cost be damned, will become a major issue if we ever get single-payer.
> Politicians, both left and right, look at me like I'm from Mars when I propose this. Those on the left think high drug costs are all about greed and not our broken system, and those on the right have unwavering faith that "free" markets will always solve everything.
Do you think they actually believe any of this nonsense? I would have assumed the rehearsed political phrasing is just the public veneer over something to the effect of "and if I endorse this, X lobby group(s) will steer Y amount of PAC funding to my primary opponent and eat me alive".
There is a fair amount of that. But I think the bigger problem is dogmatic ideology.
Many of those on the right are just ideologically opposed to government spending on anything (that isn't the military). It is often a win to get them to provisionally admit that, maybe, possibly, ANY government spending on research is useful. So "give more money to the FDA" is where they stop listening.
On the left, there is often a dogmatic refusal to even try to understand how markets and incentives work. They tend to inhabit a fantasy world where all humans are, or should be, pure altruists. If you think it is just pharma that responds to monetary incentives, you'd be dead wrong. Publicly-funded institutions LOVE this system as well because the typical endpoint is that when one of their researchers develops a candidate, the patent is sold to pharma...BUT the institute retains a right to, say, 5% of profits.
Why not just allow drug imports from Canada and India? It is because we -- meaning the American consumer and taxpayer -- are subsidizing drug development for the entire world. The current system in the USA, bad as it is for American consumers, develops the majority of new drugs for the whole world. I have no doubt that if you allow foreign drug imports without other reform in the system, you actually will see less drug development.
I have no issue with this, although having to open up competition to companies regulated by external regulatory bodies does kind of highlight how regulatory capture has destroyed the ability of the free market to solve this issue internally.
aren't there some diabetics that need the newer types of insulin? is it really true that all diabetics could take the generic, classical insulin without any problems, and suffer no health consequences?
I mean I doubt they pay hundreds of dollars just to sport the Mylan brand like like a Gucci purse..
To my knowledge -- keeping in mind this is not my area -- there are modest benefits for newer types of insulin. You have to dose less often. The variance in swings of blood glucose is lower -- newer types tend to be more "extended release". Some types can be inhaled instead of being injected, which is obviously preferable.
But in my understanding, in general, there are no major health risks from using plain insulin, and it is mostly about convenience. I do not know if that is true for all diabetics.
EDIT: kkreamer above says there are differences in long-term complication risks between insulin types. From my very brief literature review just now, that looks to be true. I guess I have become jaded because of the number of diabetics I have recently heard complaining that they are in danger of IMMINENT DEATH because they cannot afford their insulin. Long-term complication risks are important but it is not the same thing.
This is how pharma keeps the whole scheme going. They invent a drug that is marginally better in some way, refreshing the patent. Then, if the consumer cannot afford the product that is even 5% better, the consumer feels as if they might as well have been sent to a death panel.
This depends on what you mean by "plain insulin". If you are referring to NPH and R, there's a massive world of difference going to, say, Novolog and Lantus. If you're comparing something like Lantus versus Tresiba, sure, it's more "extended release" Or yes, Afrezza is inhalable. But when people complain about the cost of insulin, they're referring to the cost, and especially the huge cost increases, of insulins like Lantus and Novolog (that have been out for a couple decades now), not the cost of new insulins like Afrezza or Tresiba.
To clarify, the IMMINENT DEATH possibility is also true, in the case of diabetic ketoacidosis, which is caused from lack of insulin. Yes, if it came to it, you could use Walmart's NPH/R to avoid DKA, but then you put yourself at a higher risk of severe hypoglycemia (extreme low blood sugar) due to the way those insulins work, which can also result in imminent death.
My comment previously was referring to the best case, where you only lose some toes or a foot in a decade or two.
> When I get a chance to talk to politicians about how to fix this, I always make the same pitch. Step #1 should be to give a huge wad of money to the FDA. Say $1B/yr. Then you tell the FDA: every year, pick the 50 most promising drug candidates. Publicly fund the clinical trials, and the public will own the patent. Give some cash to the inventor and the institute to incentivize them to do this scheme and not sell to pharma.
This would be abused like any other slush fund. Plus there’s a natural adverse selection bias as all the “really good” patents will go the private route.
The real answer to all of this is to pass a law that drug prices in the USA have to be less than anywhere else on earth. Let that kick off a race to the bottom amongst the world’s countries. Let them eat the cost of constant marketing in the first world.
Some will argue that’s not fair to the millions in less affluent nations. I say who cares? A governments’s foremost job is to protect its own citizens.
The current pharma pricing system milks the American consumer so as to subsidize the rest of the planet. It’s long past time to end that.
That's a Fully Generic Argument against any pool of government money for any purpose. The law could be written in such a way that the money is allocated for this specific purpose.
> Plus there’s a natural adverse selection bias as all the “really good” patents will go the private route.
A valid critique. The long-term goal, of course, would be to expand the program and phase out pharma entirely. An intermediate step would be to increasingly offer grants to academics with the stipulation "if you take this grant money, you must go the public route". In much the same way that now, any research published with NIH funds must be open-access within 1 (2? I forget) years.
> The current pharma pricing system milks the American consumer so as to subsidize the rest of the planet.
Yes, but...
> The real answer to all of this is to pass a law that drug prices in the USA have to be less than anywhere else on earth.
And you don't think this would negatively impact the rate of drug development? I do. Price controls are also a very drastic step in terms of American law. They tend to have...undesirable side-effects.
If I were pondering general solutions in the area of what you are talking about, I'd prefer laws drastically limiting the amount and type of marketing pharma can do. And ideally supplement that with FDA-provided, more objective material for consumers and MDs about the actual, objective benefits and risks of various drugs.
> And you don't think this would negatively impact the rate of drug development? I do. Price controls are also a very drastic step in terms of American law. They tend to have...undesirable side-effects.
I do think that will happen. Quite frankly I don’t care.
Access to today’s existing treatments at affordable prices would do much more for the masses then any new research will provide in their lifetimes. In short: its worth it
Longer term I think the prices will stabilize (higher for the world, lower for the USA) and research costs will align as well. Until that happens the common man would still be better off.
> If I were pondering general solutions in the area of what you are talking about, I'd prefer laws drastically limiting the amount and type of marketing pharma can do. And ideally supplement that with FDA-provided, more objective material for consumers and MDs about the actual, objective benefits and risks of various drugs.
I’m for eliminating all medical advertisement but still feel the lowest worldwide pricing is needed. Nobody advertises insulin but the average diabetic in the USA pays 5-6x more than in other countries.
Not going to respond on the rest of your comment, but on insulin, I want to rebut the idea that generics are the same as "fancy and more convenient" versions. They are completely different drugs with different (and far worse) clinical outcomes.
You might as well say "infected people won't have amputations like we've been doing forever. They must always have the fancy and more convenient antibiotics instead."
The fact is, because of intrinsic differences in the types of insulin, a regimen of NPH and/or R can not help but have a significant increase in diabetic complications (including amputations, as in my statement above) than a basal/bolus regimen of Lantus/Levemir and Novolog/Humalog -- all of which have been available for something like 20 years and all of which have seen predatory price increases.
You are right, and I altered a comment below to reflect this. I was trying to make a more general point and phrased it poorly.
The general point is: the reason drug costs are high because of two things working together:
1) Pharma continually refreshes patents by making modest, but real, improvements to things that are generically available.
2) Patients will not accept any level of increased health risk, no matter how much the cost increases in exchange for decreased risk.
The result of these two things is that even though we have generics available for almost every major disease, they are rarely used, and we are always using the patented versions which are orders of magnitude more expensive. And then we have people wondering why health care is so expensive.
It would be absolutely bizarre if it were any other area of the economy. Imagine if every person insisted on owning a sports car because they go 20% faster. But because we (the public in general) continue on insisting that no price can be placed on marginal increases human life or health -- despite the huge logical contradictions that result from this -- we cannot have rational discussions about how to actually keep health care affordable.
I totally agree with you regarding drug prices overall, but insulin is different in this respect. A vial of Humalog cost $35 in 2001. The exact same size vial of the exact same insulin -- no refreshed patent, no reformulations, no improvements, no change whatsoever -- cost $270 in 2017. If the price would have only followed inflation, it would have been $48.50 in 2017.
Insulins are biologic medicines, so once patents expire you might get biosimilar drugs which also require FDA approval, not generics as with other drugs. Admelog is the biosimilar for Humalog, approved by the FDA in early 2018.
As I understand it, Sanofi (Admelog's manufacturer) sets the price to be only slightly below that of Humalog.
Eli Lilly, Novo Nordisk, and Sanofi manufacture substantially all of the insulin, and they more or less follow each other price-wise. There's not the competition you would expect that would drive down prices.
EDIT: they compete by offering varying discounts to particular insurance companies to only cover their insulin at the exclusion of the other company's insulins. This often leads to a letter to patients near the end of the year telling them that the insurance company has decided that their treatment plan has now changed, decisions of their doctor be damned. (Yes, you can appeal and what-not, but it's still fundamentally the insurance company's decision, not your doctor.) This, of course, also screws anyone without insurance who is expected to pay list price.
Gracias for the information. I had to look up biologic medicine to understand what the difference is with other drugs like say acetaminophen. This article from forbes laid it out [1].
TLDR:
1) Biologic / large molecule drugs (insulin) are much harder to produce than small molecule drugs like acetaminophen.
2) The FDA thus requires a lengthly, costly approval process to make generic large-molecule drugs. And since often these drugs are not atom-by-atom the same like small
molecule drugs, they are referred to as "bio-similar"
3) Additionally- though least clear from the article, while the patent on a large molecule drug does expire after 20 years in the same way as small-molecule drugs, it appears that the larger-molecule gives a wider area to patents that can be applied to it. The article hints at, but does not make explicit, a mechanism for "evergreening" as I tried to clarify elsewhere in these comments.
Anyways, thought I'd write it up the TLDR because this background info would have been useful to know prior to engaging in this comment section.
>And with insulin specifically, there is another problem: diabetics won't take the generic insulin that has been off-patent for years now.
A huge reason I found is your doctor won't ever recommend it. Most diabetics may very well just be blissfully ignorant (I was until recently) that it's even an option, save for Wal-Mart very heavily marketing their "Reli-On" branded insulin produced by Novo Nordisk.
I wonder if PCPs (not endocrinologists) are even aware it exists. I've had many PCPs in the past few years, from one of the best health care centers in the US, never recommend it as an option, and seemed to forget it even existed. I guess when you recommend Eli Lilly's biologic-developed analogs for decades and decades, you damn near forget about the old school insulin out of habit.
I recently switched, WITHOUT a doctor's approval (none would recommend it). I have to be more careful, but my costs of using purely generic everything plummeted to below 1997-era insured levels Increasingly insurance co-pays have gotten far more expensive for the biologics, and increasingly plans don't even cover the biologic-process analogs anymore (where my costs would be $560/mo for just the insulins that aren't covered by my current plan, or $130/mo if I paid another +$230/mo for a better single-person insurance plan -- only a $170/mo net reduction).
My uninsured "no prescription required" OTC costs for all my diabetic supplies (two insulins, sharps container, lancets, test strips) are $69/mo, and $18/mo (prescription required) for generic syringes now. It required taking everything in my own hands and telling every PCP I had to #$%& their hat.
> Step #1 should be to give a huge wad of money to the FDA. Say $1B/yr. Then you tell the FDA: every year, pick the 50 most promising drug candidates. Publicly fund the clinical trials, and the public will own the patent. Give some cash to the inventor and the institute to incentivize them to do this scheme and not sell to pharma.
I think the FDA is whats making drugs prohibitively expensive. First by disallowing the importation of drugs, second by putting a very conservative standard on the commercialization of drugs.
You are right about something, the policy is unappealing for either side. The right doesn't want to give more money to the FDA, and the left doesn't care about giving a gov institution pocket money, they want to outright outlaw profits as a whole.
The standard we have for drugs now was paid for in lives.
Elixir Sulfonamide, Profusion of Barbiturate use in the 50's, Thalidomide (which the US missed because of our more stringent rules), Phen-Fen - I can go on.
Say $1B/yr. Then you tell the FDA: every year, pick the 50 most promising drug candidates. Publicly fund the clinical trials, and the public will own the patent.
What do you think the FDA knows about running clinical trials? They are obviously experts when it comes to regulatory aspects, but what about trial recruitment, monitoring, supply chain, etc? And what about the educational side? Doctors need someone to talk to, to explain the data, to answer a multitude of questions.
It would take FAR more than $1B per year to have the FDA so all that. The Pharma industry spends $70B plus on R&D each year and they already have all the infrastructure.
And don’t for one second believe that getting a drug to market is as simple as funding clinical trials. There is a ton of upkeep once approved - phase 4 trials, manufacturing tweaks, educating physicians and customers.
2019 FDA budget was $5.7B. I’d guess you’d need closer to 20x to replicate the work the pharma industry is doing, just on the R&D side, let alone everything else.
I seem to recall that the reason marketing costs seem high relative to R&D is that large firms typically acquire much smaller firms, small firms which invested a ton of money developing a drug but without the means of distributing it.
When a company like Pfizer acquires said company, none of the R&D spending of the smaller company gets absorbed into Pfizer's balance sheet.
In 2006, the pharma entire industry spend 12 billion in marketing, but 58.8 billion on r&d. Simply looking at individual large companies' doesn't do this justice.
Ultimately non profits or the government should produce insulin and other medicines to sell at cost. This sort of law will hopefully be a step in that direction.
Generic is already around $100, this is targeting non-generic, newer more effective insulin. If you force drug companies to sell their new inventions is the generic price, there will be no more new inventions.
I don't know why new outlets make the actual factual information for these things so difficult to find. Can't they include the bill number or link to the bill itself? The actual bill text is here [1] and the record leading up to its passage is here [2].
It may very well be quite true that the price of insulin is too high but price controls really are not that great. If the price now is to high, $100 probably still is too high. Also, in the more general case (not for insulin, obviously) pharma does need to recover its research costs and who is going to say what is a good price and what not. You know, capitalism actually kind of works and price controls just don't.
There actually is a capitalist solution to the problem of high medicine prices. That is for pharma companies to have to post a price of their patents. And when somebody is willing to pay that price they do get the patent for exactly that price. After that you tax the value of the patents at a somewhat high percentage. This way, if the price of the medicine is to high relative to the posted value the state or perhaps the insurance companies could just buy the patent. On the other hand if the price of the patent is too high relative to the price of the medicine there is no real problem. In the case where both are too high but it is not the case that one is higher than the other the state should just funnel the money that comes in through the tax back to whoever needs to buy the medicine at a the high price.
except it doesn't in this case. Manufacturers keep the price artificially high by continually patenting more and more esoteric parts of the manufacturing of this drug. They then cross license the patents to each other, preventing any third party from joining the marketplace.
Insulin is NOT rocket science, and it's necessary for some people to live. It's almost as simple to make as beer. It is unreasonable that people don't have access to such a simple life saving drug.
Fuck the pharma companies. Fuck the patent system for keeping it this way. Congratulate the legislature who is tackling this problem.
You know, dropping f bombs is not a very mature way to engage in discussion.
I agree, though, that it should also become harder to get patents. If a useful invention depends on more than one or, at most, two patents the patents mainly serve as friction to innovation. A corrollary of this is that software patents should not exist. Perhaps there could also be a process where it is asserted that a medicine can only depend on one patent. Whenever it depends on more than one it should be adjudicated which of them is the innovative one and the other ones should not apply. This will solve the cross licensing problem that you notice.
What needs to happen is, again and again with health care issues, transparency.
Manufacturers should be required to declare and with audits prove how much they're spending to manufacture everything. Then everyone can see the price they're being charged and figure in their head what sort of markup they are being charged.
Then we can start to push back on the companies need to recoup primarily marketing costs and dividends and bonus programs and all the other padding that they have built up over decades of never being held accountable.
Should anyone buying that insulin have to divulge how much money they make a year and what other things they spend their money on, so that the manufacturer can figure out how much to charge?
Nope. I don't think patient details are required for determining an equitable markup per drug. It's the companies that are relying on the relative invisibility of their pricing decisions that have all the power in the current dynamic.
A reasonable percentage can be arbitrated once the process is in public view.
Exactly what does the accountability process look like? Angry newspaper articles? We've got plenty of those. Boycotting their products? You realise we're talking about insulin, right?
Actually, I think in practice my solution is much simpler than yours. For yours to work it is a precondition that these audits are of good quality. Perhaps they will be and perhaps not but at the very least we can note that the pharma companies have large incentives to game them. Also, the question becomes how much of a markup is reasonable. Clearly, for more innovative research more markup would be acceptable than for less innovative research if both of these would lead to working medicine. Innovativeness would need to be quantified for each and every medicine separately. This does not sound like an easy task.
I really am surprised that I am getting more downvotes than upvotes here. I think people are too emotional about this. I also note that a post dropping f-bombs is not getting downvoted which it really should be. It is not very mature.
If state-controlled healthcare wasn't a racket the cost wouldn't need to be capped.
> “Health care is a right for all, not a privilege and that is why I am so proud that we created an insulin price cap that successfully puts patients above profit,”
Healthcare isn't a right. If it was a natural right it wouldn't be necessary to force people to pay for it.
One day inflation will strike and insulin will no longer be available at that price. Will he be proud then?
Unfortunately, this does not act as a price control. This just mandates that insurance companies cap the out-of-pocket expense; it does nothing to affect the retail or wholesale price of insulin except insofar as insurance companies can push back on drug manufacturers.
Net effect of this is yet to be seen, since it doesn't go into effect until 2021, but one possibility is that insurance companies will only cover variants of insulin that are cheaper than the allowed maximum, or the value that they calculate allows maximum extraction of value. Or, alternatively, the price of insurance will rise to spread the cost among all covered people.
The fundamental problem is that insulin should be a commodity, but it is not. Baseline human insulin is actually available fairly cheaply; ~$25 for a month's supply. But pharmaceutical companies have developed and sell a variety of faster-acting and longer-release insulin analogs of increasing price; and although many of them have technically fallen out of patent protection, generic makers have been slow on the uptake and manufacturers have done various tricks (relabeling, etc.) to ensure that they can maintain their effective monopoly.
There's something deeper that is wrong here that is preventing the market from working as it should be working; that is, generic makers making fast-acting insulin cheaply and driving the price down to the marginal price of production.
You're right. This is terrible. Here's an excerpt from the bill:
> Provides that insurers that provide coverage for prescription insulin drugs must limit the total amount an insured is required to pay for a covered prescription insulin drug to $100
This will create way more problems than it solves. It continues to hide the true cost from the consumer. This doesn't affect the pharmaceutical companies or insurance companies at all. What it will due is just make the insurance companies charge everyone a little more. The corporations are not affected whatsoever.
Wouldn't it be much more meaningful for the Sate of Illinois to say they will buy a State-managed insulin supply, for which they will guarantee access by State residents at $x/Month?
Easy to make something unallowed on paper. Much harder, and more meaningful, with Skin in the Game, to actually go out and do what they may think their rules will accomplish.
The politicians solution: create another law.
The economists solution: create more competition, probably by getting rid of some laws. I guess JB Pritzker knows more about politics than about economics.
Economics is strongly against price controls. It's very much against the core mechanics of micro-economics. If you put a price control, you limit supply.
The media doesn't seem to be reporting the actual name or number of the bill, so I thought I'd save someone else the trouble of hunting down the full text:
Patents are the problem, not the market. Patents are government protectionism. They are a government imposed monopoly — a government imposed cap on supply.
In a free society and a free market, anyone with the knowledge and means to produce insulins would be free to do that.
The high prices are a direct result of the government preventing competition through patent law. Without patents, the price would tend to fall as companies compete on price, more efficient manufacturing, distribution, etc.
Just like the neighborhood drug pusher, big pharma companies give away free samples. Turns out that in the case of opiates, your neighborhood drug dealer and big pharma coincide.
Great job. Now you'll have to figure out what to do when those making insulin decide to take those resources and allocate them to producing something far more profitable.
Wow, Pritzker is on a roll. Legalizing pot, reviving horse racing, now defending diabetics. Why can't my state have a good governor? Do we need to send a bunch of former governors to prison first? I'm willing to do that! Heck, I think most people would be fine with Greitens in prison...
Do you want our drastically under funded state pension system too? Illinois wants revenue anyway it can it, selling pot, gambling, whatever. What's wrong with Missouri?
You can't really blame an underfunded pension system on somebody who has been governor for a year. Illinois pensions are like many municipal pensions: they were unreasonable the day they were negotiated, and have only grown less reasonable over the many decades since.
There are lots of things wrong with Missouri. Our justice system is brutal to poor people and basically corrupt. Still, our cities are quite violent relative to other cities in USA. The "Department of Natural Resources" has rules to protect the environment, but very few of them are ever enforced against those who are willing to ignore them. (The one time I followed this trail all the way down the rabbit hole, the "Chief of Compliance and Enforcement" claimed that the courts always overrule him when he does choose to do his job, so this issue could be related to the first.) Important infrastructure is allowed to deteriorate while vanity projects get top priority. As a state, we'll vote for Trump again later this year, even though it's clear at this point that his previous anti-war rhetoric was nothing but lies. And so on...
everyone tearing their hair out over this: the effect of the law is just that insurance overall will be somewhat more expensive in Illinois. There won't be any effect on research or innovation or anything else. Everyone will have to chip in a bit to make sure people with diabetes don't go without insulin. I don't see this is as a big disaster. Illinois has much bigger problems than this.
If people foregoing insulin because of out of pocket cost is a problem in Illinois, fixing it could have positive effects, including positive fiscal effects. So net cost is probably quite small.
I think this is a naive approach. We could price cap anything. Homes in San Francisco for example. The result will be rationing and shortages. It won't solve the fundamental problem. They key to bringing prices down is to remove barriers of entry. We need to flood the market with more insulin, or with my SF housing example flood the market with many more houses.
This isn't that sort of price cap, as far as I can see. It's a law for insurance companies saying that if you want to insure people in this state, you must cover the cost of insulin from your general insurance pool, not from the individuals who need it (except for the first $100 / month).
> “Health care is a right for all, not a privilege“
In that case, charging people even $100 a month is unconscionable. It needs to be free, just like food, housing, entertainment, and all the other inalienable rights.
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[ 3.6 ms ] story [ 256 ms ] threadI would love to see them attempt to justify denying life saving medication in only one part of the country because money.
Might just be the straw that would finally break their backs, and it's been too long coming.
Why shouldn't governments own private industry if it still competes through the market?
In competitive space, what do we do when the government fails to check itself against anti-competitive behavior?
Nobody has an obligation to manufacture insulin.
I'm not saying the costs are $110. I don't know. I'm just explaining why this can result in lost insulin.
https://www.vox.com/2019/4/3/18293950/why-is-insulin-so-expe...
> The US is a global outlier on money spent on the drug, representing only 15 percent of the global insulin market and generating almost half of the pharmaceutical industry’s insulin revenue. According to a recent study in JAMA Internal Medicine, in the 1990s Medicaid paid between $2.36 and $4.43 per unit of insulin; by 2014, those prices more than tripled, depending on the formulation.
Is the $100 indexed to inflation?
Separately, this is a supply-side problem. Why can’t I start a business that manufactures insulin while selling it at a reduced—but profitable—margin? Those barriers to entry are a fundamental issue.
> In 2009, the list price for a 10-milliliter vial of Humalog, a fast-acting insulin made by Eli Lilly, was about $93. Today it costs closer to $275. Similarly, Novo Nordisk's fast-acting insulin Novolog cost almost $93 for a 10-milliliter vial in 2009. Today, it costs about $290. - https://www.businessinsider.com/insulin-price-increased-last...
If you've got any evidence that the inflation rate between 2009 and 2019 was 300%, I'd love to see it.
As you can imagine, we don't just extract humalog from human pancreases. They instead modify plants to generate the exact molecule humans would. This is somewhat common these days, but it does take some effort and innovation to cultivate, versus the naturally occurring substances previously used.
I don't know if human insulin is any more effective (wikipedia citations suggest no but...), but the impression I got from the podcast was not really, and that the drug was considered a net loss for its developers.
What I did learn today is that in 2006, we restricted the supply of products competing with Humalog (https://en.wikipedia.org/wiki/Insulin_(medication)#Principle...):
> Since January 2006, all insulins distributed in the U.S. and some other countries are synthetic "human" insulins or their analogues.
If we truly cared about affordability, why ban additional supply? Even if not everyone can use it, forcing people who need the human insulin to compete with those who could choose seems likely to drive up prices.
tl;dr: Humalog was an alternative to an already existing treatment, and by 2009 it already was enjoying 3 years of import protections from the treatment it intended to replace.
Yes.
The current top-shelf insulins were not discovered in the 1920s and are considerably better than the ones that were. The older insulins (going back to R, L, N sold in the 80s) are fairly inexpensive; on the order of $25 per bottle (and I believe can be bought over the counter). The newer insulins sell for on the order of $275 per bottle.
The numbers I see say it should cost about $300 for a years supply for me (given my current usage) if everything was optimal (non-greedy, short supply chain). Then assume it goes through 3 hands to get to me (original manufacturer, distributor, plan manager; I'm ignoring the pharmacy since I assume they're at least partially altruistic) and add 50% each time for a total of 1012.50 (300 * 1.5. * 1.5 * 1.5). So even then, it's still less than 100 per month expected cost. Though that's for only the short acting insulin, not the 24hour.
What it would really cost without insurance right now is thousands per month. They're making bank on it.
Others are observing that the current prices are not currently anywhere near $100. That's completely unrelated to what I'm explaining.
I'd also point out that is a temporary fact, not a permanent fact. If, let's say, in two months the Coronavirus has mutated into a mark 2.0 and is sweeping through Illinois [1], getting insulin may become much more expensive due to all the measures needed to prevent spread of infection. If it becomes more than $100 worth of expensive, it's going to be difficult to distribute. There can be supply disruptions due to source contamination, whoknows what else. Even if today this seems like a generous cap, an inflexible cap can still be a problem tomorrow.
Of course, the last few years being what they are in online discourse, a large number of you will be inclined to read this as a defense of high prices, rather than what it actually is, which is an observation that price fixing has certain effects and that we don't know the future very reliably. Screwing around with insulin prices just because you can is evil and should be the grounds of a presumptive collusion, oligarchy, or monopoly investigation. But that doesn't mean that fixing the price is a good idea, or going to fix it. Personally I'd suggest getting a few state attorney's together and digging into why the price is so high, with an eye towards criminal charges or anti-trust action, would be much more effective. You might even find that "feels better" than mere price caps. Remove the incentives for people thinking they can get away with this sort of thing scott-free, rather than trying to treat the symptoms far down the pipeline from the root cause.
(Downvoters are invited to consider my replacement suggestion of criminal charges or significant antitrust action before deciding that I'm "defending" anything. This is a silly papering over of the problems by people who ought to have the power to do a lot more.)
[1]: A totally absurd, impossible scenario, of course. https://chicago.cbslocal.com/2020/01/24/first-case-of-corona...
Hell, via state of emergency declaration the state can use tax money to buy the insulin.
Then this is a https://en.wiktionary.org/wiki/if_my_aunt_had_balls,_she%27d... scenario.
If IL were capping below cost, that'd be a problem. They're not, though.
Why cap when they ought to have the power to look at the root problems? Why fix this one particular thing in a dangerous and probably-ultimately-ineffective way when they ought to be able to address the whole issue of price-gouging medicines more systematically?
(Other than the possibility of this being a band-aid while they do that, but I wouldn't trust a politician's word on that even if they were promising it.)
No it's not. This is specifically about price fixing as it relates to insulin.
People will die, that's the system we have. The only question is do we relent and give in to what amounts to terrorist demands?
That's well below the $1,200 a year cap.
If you can find any variant that even approaches $100, please link a source.
We know what it costs to manufacture insulin, and it's literally a few bucks per vial [1]. You're framing this as if it represents the larger debate between fixing medical costs and the free market, but it's not that at all, and no one is going to lose their insulin.
[1]: https://www.businessinsider.com/insulin-prices-could-be-much...
I guess it also depends on the profit margin at that price and how it compares with the "market price".
Edit: Care to explain the downvotes? I'm just putting forward what could happen in the real word, not voicing my opinion of what is right.
Maybe we would all be better off in the long term if they did. Probably wouldn't work out great for them, however.
I would love to see those marketing execs strung out in the court of public opinion for denying life saving medication because "omg our margins!"
That might just be enough to start lighting the fires that need to burn.
However, the bill might also say that insurance companies must keep the out-of-pocket costs under $100 or that the state will make up any amount over $100.
In reality, it seems unlikely to harm insulin availability since most jurisdictions have cheap insulin and the cost in the US seems to be significantly higher.
Theoretically, price caps can be set low enough that no one will produce and sell an item. If you capped the price of computers at $100, no one would be making and selling computers and you wouldn't be able to find a computer without going to the black market. Countries like Venezuela have tried price caps on goods and what has happened is that those goods can't be found. Retailers won't sell items for less than they can get them from a supplier and suppliers won't sell for that price, possibly due to the cost of inputs, production, shipping, etc.
In this case, there's evidence that prices have been inflated unfairly with insulin and therefore this just hurts suppliers' margin without really changing availability. However, there is the potential that suppliers won't work with the price restriction. Let's say that you're CVS and you're buying an insulin drug from BigPharmCo at $150. Illinois has a new law such that you can't sell insulin for more than $100 so you tell BigPharmCo that you need supplies at $60 so that you can sell it for $100 and pay for stores, employees, etc. BigPharmCo decides that they'd rather not sell it to you at $60 because they'd rather write off Illinois sales all together rather than reduce their price to $60. Illinois is only about 4% of the US population. If you lower your price to $60, you're losing 60% of your revenue. If you write off Illinois, you're only losing 4% of your revenue.
Now, you might argue that they'd only have to give CVS a discount on supplies for Illinois, but that would be hard to enforce. It seems legal to ship medical stuff across states. Would it be legal to prevent someone from entering into interstate commerce they've always been accustomed to? I have no idea. Maybe suppliers would only supply a certain amount they deemed necessary for the Illinois population to CVS at the discounted price. However, then why wouldn't CVS just stop selling in Illinois and sell the discounted insulin for a higher price in other states?
Even if one can prevent cross-state shipment of insulin, suppliers might deem it worth their while to make an example out of Illinois. If they don't make an example out of Illinois, other states will likely follow. They might get some bad press, but at some point the state would need to act to protect the welfare of its people and repeal the restriction.
I'm not saying that any of these things are good or righteous. It's just harder to force people to do what you want than many people think. Given that forms of insulin are generic, maybe the answer is that we need more generic manufacturers to make it competitive.
Again, I don't think shortages are likely to happen. GoodRx shows generic Humalog available for under $70, but many others are much more expensive. I don't know enough about insulin prices to really know what will happen. However, in many instances, price caps haven't been really effective at helping people.
But studies show that the US currently pays as much as 7x what the UK does for insulin[0]. How can insulin be so cheap in some places but so expensive in others to the point that manufacturers stop making it?
0: https://insulinnation.com/treatment/u-s-pays-much-uk-insulin...
so it comes out of the higher taxes.
Diabetics are exempt from all out-of-pocket prescription charges though, so that part is subsidized.
This will most likely lead to higher insurance premiums for policies which cover prescription drugs. Certainly the insurers and suppliers aren't going to be the ones paying for it.
[1] http://www.ilga.gov/legislation/fulltext.asp?SessionId=108&D...
Google says there are 1.5-3 million insulin users in the USA - lets call it 1% of the population. Let's say that their drugs cost $300 / month, but they pay $100. The extra $200 will be shared between 100 people's premiums, so $2 extra per month.
People don’t pay for insulin in any of them and yet, society functions just fine.
Pharma had their chance to be reasonable. That time has passed.
Not to say that we shouldn’t appropriate intellectual property when necessary (eminent domain or not respecting a patent, as has happened in India and Canada), it’s just not necessary in this case. That doesn’t make us Venezuela, that makes us pragmatic.
One can't argue that the pharma companies are bringing no value, and then demand their specific product because the generic isn't good enough.
https://www.snopes.com/fact-check/insulin-walmart-vial/
We reserve the right as a society to update the social contract at any time.
If it doesn’t vibe with your beliefs (which is fair!), there are other jurisdictions available for consideration, a visa and plane ticket away.
You call it “pretend”, but the results you take issue with appear to be very real.
Via its taxpayers of course.
Whether or not healthcare is a right is a lot less important than whether or not it is affordable.
It's obvious why people are in favor of them of course, but we have to be honest about what it is we're asking for and why instead so we can make a rational analysis of it, instead of torturing the intellectual and moral foundations of our culture to make something outside of it fit. And it's foolish not to be suspicious that politicians' incentives have basically everything to do with making promises that get votes, and basically nothing to do with actually making the system work long-term.
Rights are defined as part of the social contract we create in living close proximity to each other. If the collective people define what their rights are through democratic representation, then it's up to those who have the monopoly on violence to enforce it.
The "Stand in the school house door" is one historical example of this in play: https://en.wikipedia.org/wiki/Stand_in_the_Schoolhouse_Door
https://en.wikipedia.org/wiki/General_Maximum
That's what we don't have in the US. You can certain make the case that we should, but that's a separate argument. Now we have a situation where we have a flat out price control, and it's going to have unintended consequences written all over it.
All these arguments for "look at Europe" doesn't fly in health economics. There are not subtle differences in the US legally, infrastructurally, and culturally.
Edit: another thought comes to mind - has anyone compared the size of health insurers in the US and compared their purchasing power to government run single payers? I’d hazard a guess that United Health for example probably dwarfs entire single payers of some governments.
I'd totally believe it. It occurs across all markets, with all actors. Market prices isn't simply supply and demand. It's many things like black markets.
Another example is public bonds in the US. Why are their yields under what it should be from the interest rates? It's because the earnings are tax free. The market has already adjusted for that.
Medicare alone covers more patients than NHS England does. (Very few countries in Europe actually have single-payer healthcare; the four UK countries are the exception, not the rule).
You get a Medicare provider, with an insurance company that you work with.
Yeah there's lots of layers of bureaucracy.
Correct
> You get a Medicare provider, with an insurance company that you work with.
Well, no, the majority of Medicare patients still receive their inpatient and outpatient benefits through Medicare. A (growing) minority receive their Medicare benefits through a private insurer.
Not to mention: European countries wouldn't be able to negotiate those prices if the US market didn't exist. Pharmaceutical companies - many of whom are based in Europe - know that they'll make most of their revenue from the US, which is not only the single largest market by number of patients[0], but also a disproportionately lucrative market, because the expected per-patient revenue is also higher.
If the Netherlands (a country whose population is lower than the state of New York alone) decides to "negotiate" a few extra Euro off the price of a particular drug, AstraZeneca doesn't care, because they know they'll more than make it up in the US market.
If the US passed a "most favored nation" law with respect to drug pricing, or allowed pharmaceutical imports from Europe/Canada (as has been proposed in the past), we'd see drug prices in the US drop dramatically, but drug prices in Europe would also increase.
[0] China and India are in a totally different category, because of their respective patent laws (whereas the US and Europe have harmonized patent treatment)
Further, in general, the drug release schedules are US -> Europe -> Asia. This is primarily for two reasons - the FDA approval process is the most rigorous in the world. It would not be outrageous to classify European drug approval process as "rubberstamping" if the drug has already received FDA approval. Essentially, the US pays the R&D of the drug costs for the rest of the world.
The second reason is that without price controls, the US price is the closest thing to a market price for that drug. Sorry, but ultimately the prices of the drug comes down to how much a life is, or more accurately, how it affects the quality of life. When price negotiations between pharma and European governments start, both sides use that data. It would be very interesting if the US went single payer to see how it would affect the European drug prices (my guess it goes up).
Side note: Asia has always been third due to underdeveloped markets and legal systems. Further Japan has in the past (I think they just got rid of it in the last 5 years) a law where drugs need to be tested on Japanese citizens before approval.
My worry here is that the price control seems to act as a disincentive for selling in the price controlled market. So long as there are 49 other states where margins are greater, it seems like those orders will be fulfilled first.
[EDIT] to the downvoters: no, seriously, please post an example of, say, an OECD member state other than the US that doesn't use either explicit or implicit (single primary buyer setting prices, that is, monopsony) price controls as a major part of their healthcare policy. I assume you know of at least one, and I'd really like to know if I'm wrong about this.
In general marginal costs to make drugs you already know how to make are usually low, so you can and do see a lot of free riders on the expensive part (R&D). It would be surprising if Illinois can't just join them.
That said, ideally if you're trying to contain costs by fiat you want these to be negotiated by governments and healthcare providers.
A large amount of research is currently publicly funded. Either via public academic research or directly. When that research bears fruit it is often given away almost at-cost (or below cost when you take into account the larger research landscape) to pharma companies who then privately profit off of it.
Pharma companies are profiting off of your tax dollars and then turning around and profiting off of you too. Sure, the benefit exists, but this whole model is broken as all heck.
We should just scarp for-profit pharma development as an industry, increase public funding of research, and drug production factories should be a modest profit venture (e.g. 20% of the wholesale cost). Looking more like the generics industry today, where they produce, they don't develop.
Why do we need a private business to develop drugs at a 40%-1000%+[1] margin when the taxpayer could do it at nearly 0% margin? We've chosen to make it this way, other countries haven't, and we see plenty of drugs developed via public institutions around the world.
[0] https://www.bbc.com/news/business-28212223
[1] https://economictimes.indiatimes.com/industry/healthcare/bio...
You need to look at return on capital. Right now the return on capital in pharma is below the cost of capital and it's trending towards zero. The inevitable result is significantly lower funding for research. https://endpts.com/pharmas-broken-business-model-an-industry...
Perhaps the market is not designed for this sort of endeavor (drug research). Let government stand in where the market has failed.
That's not to say there's on place for the private sector there, but there is massive friction between a profit motive in drug research and you know, building a more healthy society. See the "new Adderalls" like Vyvanse that offer no benefits over Adderall, but Adderall's patent is up so it can be made by generics and isn't as profitable anymore.
But again, market-based solutions are just not appropriate for essential health care. You would pay ANYTHING to not die - there's no price elasticity of demand.
Every other developed country has figured out that this is simply immoral.
Cost goes down with increased productivity. Competition sometimes brings that, sometimes it doesn't.
Economics can be complex!
Meanwhile, what has the government done? The trip from DC to New York on Amtrak is slower today than it was in 1960. In 1980, DC’s Metro had self driving trains. They had to shut that down in 2009 due to lack of maintenance and the unions. Spending on public education, adjusted for inflation, per student since 1960. But achievement hasn’t budged one inch. If the drug industry has failed, what words are in the English language for what the government has done?
The market works great until it doesn't. The interstate system, and the military are 2 prime examples where the market is never going to provide a solution. Affordable medical care for everyone is another.
As to municipal internet—its great until it’s not. Maryland has municipal cable systems that were built a couple of decades ago, and they have struggled to keep up with the DOCSIS upgrade treadmill. Additionally, what problems exist with broadband in the US are largely government created. Comcast has no data caps almost everywhere in Maryland, because it’s in competition with Verizon. The only place that’s not true is Baltimore—where the city legally prevented Verizon from coming in and competing with Comcast. Verizon wanted to wire up Baltimore—the city wouldn’t allow it to do so.
Speaking more generally, DC Metro was snazzy at first too, but was unable to maintain the system long term. It’s interesting you focus on the price point: is $50 sustainable? Charging too little is actually a big problem. A subway ticket in London can cost 2-3x as much as one in New York, despite the two systems being very similar in age and size. Unsurprisingly, the London subway is doing fine and the New York subway is falling apart.
I would posit that the only thing that is a bigger failure than the public school system, is the private school system.
It's numbers look good, but that's largely because private schools are more expensive, and also opt out of educating problem students.
Meanwhile, what has the government done?
Exactly that: "NIH funded the majority of support for HIV/AIDS, infectious disease and oncology research." https://www.thebalance.com/who-funds-biomedical-research-266...
serious question - does a profitable private passenger railroad company that actually owns/maintains tracks, stations, etc exist without subsidies anywhere at all in the world? And Amtrak itself is nominally public-private and was formed in reaction to purely private railroads collapsing..
> In 1980, DC’s Metro had self driving trains. They had to shut that down in 2009 due to lack of maintenance and the unions.
even if the trains were self driving, for the 10y or so I lived there before this, there was still a conductor, so not sure if this is really a good argument..
Hong Kong, Japan. But my point is narrower than that. I’m not saying governments in general cannot run decent train service. I’m saying Americans cannot. We’re culturally defective in that respect.
> even if the trains were self driving, for the 10y or so I lived there before this, there was still a conductor, so not sure if this is really a good argument..
They had a conductor for safety. But the self driving trains made the ride very smooth and allowed tighter headways. Even after 10 years, Metro conductors cannot properly stop at stations. To avoid overshooting the platform, they stop way short, and then jerkily inch into position. When I was growing up, headways on the orange line were 6 minutes and the WMATA trip planner was accurate. Today, it’s 8 minutes, because they can’t sustain the 6 minute headways. And they had to revise the trip planner a few years ago to increase the predicted travel time between stations. If you look at Metro advertising from the 1980s, station to station trip times today are 30-50% longer.
Ultimately returns in every industry tend towards zero. If we made it cheaper to develop new drugs it would extend the lifespan of the industry somewhat but not indefinitely. At some point diminishing returns take over and investment must go down.
If nobody is marketing, that definitely might increase return on capital.
If you pass a law banning drug marketing, you may be able to get the same health outcomes with less overhead. Of course, this ignores all the hypothetical cases where marketing helps, like increasing awareness of a beneficial treatment that was not previously well known.
This does not explain the increase in cost of insulin, which was invented in 1923.
It's newer formulations that are expensive, and those are still protected by patents.
> In the United Kingdom 1,000 iu costs the NHS £7.48, while in the United States this amount is about $134.00.
I often see vague complaints about the regulations, but no one seems to have specific suggestions about how to lower drug development costs while still protecting patients.
Specific suggestion: get rid of efficacy requirement, keep safety requirement. Let doctors decide what works, as they currently do for off-label uses just fine.
Less extreme are antibiotics which can also have bad side effects, but are useful drugs because they actually kill bacteria. If they did not, the side effects would be unacceptable.
Or should the government make that decision for on-label uses and doctors make that decision for off-label uses? That's the status quo. Whatever argument you have for one half of that is an argument against the other half.
This is exactly how doctors determine what works, with or without the government. See the off-label discussion in the link above.
I'm not suggesting that current regulation by the FDA isn't flawed, or that it doesn't need an overhaul, but I think it's clear that there should be some proof that efficacy studies were done before a drug becomes widely available, especially when the potential damage done by a failed treatment is so high. The current opioid crisis has completely eroded any faith that the pharmaceutical industry is capable or willing to regulate itself.
Tons of drugs have been approved, only to be later pulled off the shelves. So despite the massive cost, delays, etc. the process has failed at least 35 (!) times:
https://prescriptiondrugs.procon.org/fda-approved-prescripti...
The current regime in the USA didn't happen for nothing. It's well-known now that pharma companies had long been exploiting the file drawer effect and p-hacking to inflate the apparent safety and efficacy of their drugs in their FDA filings. The decision a couple decades ago to cut that off did dramatically reduce the rate at which drugs win approval, and that's a very good thing.
This provides what to me is compelling evidence that the efficacy requirement by the FDA is wasteful.
Amount of homeotherapy currently on the shelves bring "penalties imposed by the marketplace on sellers of ineffective drugs" into a sharp contrast... People will take pure water if you tell them it works.
EDIT: But I suppose a complex measure of: removing efficacy requirements AND banning advertising to both consumers and doctors AND mandating pre-regisration of trials might lead to more drugs on the market with companies using efficacy trials to compete with each other and doctors selecting best drugs based on cost/benefit/harm analysis.
I'm sure there are loopholes that would be promptly exploited in this scheme given enough incentive though.
To be fair, if you tell them it works, people will take pure water and show noticable improvments over non-treatment. Personally I just take the placebo effect directly though.
https://www.linkedin.com/in/kelvinstott/
Perhaps the marketing and R&D departments compete internally for budget. They certainly do at every other company I've worked at.
And drug marketing is peculiar. One would expect demand to be largely inelastic, so it's odd to see marketing spend on par with that of soft drinks in the industry. Nor can we safely assume that whatever portion of demand is driven by marketing is beneficial from a public health perspective, given that overtreatment is known to be a serious problem in the USA, and that a significant motivator for overtreatment is patient pressure on health care providers.
Billions of people elsewhere in the world plus Americans in 20+ years when patents expire if far greater than ~40 million people in the US in the present
[1] https://blogs.sciencemag.org/pipeline/archives/2019/05/28/wh... [2] https://blogs.sciencemag.org/pipeline/archives/2014/11/11/ma...
https://hbr.org/2017/04/how-pharma-companies-game-the-system...
https://www.cdc.gov/cancer/dcpc/research/articles/concord-2....
Apparently, it's exceptionality comes from high levels of obesity, homicide, car accidents and drug abuse, of which only the last one has any link to businessy nature of healthcare.
https://randomcriticalanalysis.com/2019/11/07/a-tale-of-two-...
i really believe pharma advertising should be banned
If I asked my GP for a specific medication they'd look at me like an alien.
Direct-to-doctor marketing is legal almost everywhere else, and it's by far what pharmaceutical companies spend more money on.
edit: i'm getting downvoted. in case you weren't aware the subways in NY are plastered with HIMS and Roman health ads.
https://www.vice.com/en_us/article/ne5ndb/erectile-dysfuncti...
He shouldn't. They're not all knowing super genius specialists who keep up with all the drugs and research.
A Doctor writes a script, and then a pharmacist (not on their own, but at the direction of an insurance company) suggests a change typically to benefit the insurer (for example changing a name brand to a generic or changing 30 days to 90 days so the patient doesn't get seen by the doctor again for 90 days for additional testing/monitoring). In the US the pharmacy/pharmacist can not change the script so they send the recommendation to the doctor for approval (and get paid a bonus from the insurer for sending the request), if the doctor approves the pharmacy gets a 2nd bonus, if the doctor does not make the change, there is a very good chance the insurer will drop the doctor from their network for not doing what the insurer asks to lower their costs through the pharmacy proxy.
In most states, the law explicitly requires the pharmacist to fill a prescription with a generic (if available) unless the doctor specifically writes "dispense as written". Not allows - requires.
The purpose of these laws is to protect patients - in the overwhelming majority of cases, the generic and brand name drugs are equivalent for patients, so patients save money by purchasing the generic medication even if the physician prescribed the drug using its more well-known name (the brand name).
Its not the patients that lobbies for these laws...it is the insurers, and its to lower their costs.
Its also why the insurers pay the pharmacists a bonus for these changes, if it was about costs to the patient, the bonuses (money back) would go to the patient.
I mean, no, patients don't lobby for them because patients don't really lobby en masse for healthcare policy in general, but patients definitely are the ones who benefit from them.
There are some cases where the relationship between insurers and patients is adversarial. This is not one of them.
Well imagine your doctor gives you a Rx, you go to fill and the insurer tells the pharmacist to ask doctor to change it. If the doctor disagrees (for whatever reason) the insurer may drop your doctor from their network, then you will be stuck going to a doctor who does whatever the insurer asks.
If you feel there is no conflict there or that isn't adversarial that is fine...in my experience both patients who lose their doctor and the doctors themselves disagree.
See Medicare for All.
And there's nothing wrong with switching from brand name to generic, and most patients don't need to see their doctor every 30 days, and if they do, they can still make an appointment.
The length of the drug prescription does not control the appointment - and anyway you can just call and they'll extend the prescription on the phone.
For patients with chronic conditions if the doctor determines the patient should be seen to evaluate their condition in 30 days before a new script is written, insurers having pharmacists effect a change to 90, is a direct interference with the doctor's practice of medicine. The doctor should make the determination, because they have the relationship with the patient, they know if they are at risk or likely to adhere to the therapies better than an insurer making broad brush strokes based on the cost to insurers. You also skip over the part where doctors get dropped from the insurers network when they don't accept the insurers "recommendations."
>The length of the drug prescription does not control the appointment - and anyway you can just call and they'll extend the prescription on the phone.
Sure, but that is not how it works in practice, the patients won't set up another appointment until they need another script, which is cheaper for the insurer and worse for the patient outcomes. Nevermind the Doctor being in the best position to determine which patients should be seen every 30 or 90 days, the shorter duration and 30 day appointments lead to higher percentages of drug adherence...which is a major issue in the US leading to about 1 million hospitalizations per year.
I don't understand why you think the length of a prescription controls the appointments. It doesn't, it has nothing whatsoever to do with that.
Yes, the patient could pick up the phone and schedule another appointment, or the doctor could call to try to schedule another appointment in the meantime. You are missing the point...in practice those appointments don't get rescheduled.
The Doctors and insurers know this, which is why the Doctor tries to do 30 day scripts for at risk patients so they can be closely monitored, and its why the insurer attempts to change 30 day therapies to 90 day because they know the patient won't schedule an appointment in the meantime and that saves the insurer money.
Anyway its clear you see nothing wrong with an insurer interfering with a doctor's practice of medicine...or the other part you keep glossing over that is the insurer dropping doctors from their networks (i.e. patients losing their doctor) when the doctors don't follow the insurers requests for changes to therapies.
Such a patient isn't going to correctly take their medication either, 30 days or not.
> the other part you keep glossing over that is the insurer dropping doctors from their networks
Yah, because that's not actually true.
Insurance companies do a lot of bad stuff, but you seem to have invented a whole new class of things that they just don't do.
There is no bonus for 30 day to 90 conversion. There is only a lower co-pay for the member.
Exactly that is why the doctor specifically writes a 30 day so they come back in and can check their numbers.
>Insurance companies do a lot of bad stuff, but you seem to have invented a whole new class of things that they just don't do.
When you hear the term consolidation of the healthcare market this is what they are talking about. There are numerous lawsuits right now by doctors against insurers for dropping them, illegally, from their networks and sending their patients to new providers/practices that are owned by the insurers. You can find any number of those lawsuits, if you cared, but here is an article on the practice of insurers buying providers (to control all aspects of their costs), you have insurance A, odds are you are only able to go to a doctor practice/hospital owned by the insurer.
https://www.modernhealthcare.com/article/20180602/NEWS/18060...
>There is no bonus for 30 day to 90 conversion
You are wrong, and it is clear you have never even heard of Medication Therapy Management (MTM) or OutcomesMTM. Walk into any big pharmacy (walmart, cvs, walgreens) and ask the pharmacist about OutcomesMTM and MTM generally. Or use this link to a OutcomesMTM report and learn about it http://www.outcomesmtm.com/wp-content/uploads/2018/02/2016MT...
>"Today, more than half of U.S. pharmacies are active in OutcomesMTM programs, earning revenue for their clinical services while helping healthcare payors reach their goals."
>Each year, OutcomesMTM recognizes pharmacies and pharmacy chain organizations with exceptional performance in delivering MTM services. Top MTM Center and Top Chain awards are based on the organization’s overall effectiveness in delivering CMRs and resolving drug therapy problems through TIPs
I'm reasonably cynical about lots of things, but I would be absolutely shocked if a pharmacist can give you 90days of pills when handed a 30day (no refills) prescription.
If the Doctor(s) refuse to make the requested change that data is tracked and eventually the insurer will drop the doctors from their network.
If I go to my doctor and say "hey, for my condition XYZ I hear there's a new drug ABC, would that offer any benefits over what I'm on now?" that's one thing, but if I go in and say "hey give me that ABC" they'll correctly roll their eyes at me.
I get it, they're nearly always overworked and tired, and most of their clients are idiots.
But people should be free to try something new without all this gatekeeping that keeps getting worse.
At the same time, place the responsibility on the user if they request something out of the ordinary, of course.
Those ads are a small portion of pharma marketing budgets for prescription products. The vast majority goes to direct-to-doctor marketing.
Given that experience, I'd not be surprised if pharma spend a ton of money on direct-to-doctor marketing.
Not sure which one is better or worse.
Doctors are mortals too and can only have so much time to draw on info they crammed X years ago. Patients can quickly become more expert than GPs with regards to their own diseases, especially if they have months to research it.
Anecdotal example - my sister had a wierd skin condition in high school. My mom researched skin images and symptoms for hours and hours and concluded it was shingles. My Mom then brought her in and discussed her findings with the GP who scoffed and said she was far too young for it to be shingles. He then admonished my mom for doing her own research. Long story short and one embarrassed GP later, it was shingles.
Waking into a 15 minute appointment with months worth of research seems like a bad way to approach collaboration with healthcare professionals. Or do people still have personal relationships with doctors outside the appointment window?
It seems like GPs have become dispensers of medicine rather than care.
However, many people will at least do several hours of research before going into the doctor
So I have a friend with Hashimoto's. Before finally being diagnosed, she had a long history of being misdiagnosed, blown off, and having her symptoms dismissed as nothing. After being diagnosed, she connected with a number of other Hashimoto's patients and sufferers of chronic illness in general and found out that pretty much everyone she's talked to has the same stories. Constant invalidation, ignoring of symptoms, doctors just plain not listening, until they finally find someone who actually knows their stuff.
Other highlights of the surveys include:
Most physicians agreed that because their patient saw a DTC ad, he or she asked thoughtful questions during the visit. About the same percentage of physicians thought the ad made their patients more aware of possible treatments.
Many physicians thought that DTC ads made their patients more involved in their health care.
https://www.fda.gov/drugs/drug-information-consumers/impact-...
Secondly, I see too many damn branded pens in my doctor’s office to be under the illusion that the marketing is only directed at the patients. I can’t count the number of times I’ve been prescribed medication just to have it swapped out at the pharmacy for a generic variety. Doctors are just as susceptible to advertising than the rest of us, except exclusively at harm to the patient.
The demonstrated “value” being provided seems to be mostly in the form of cash in the pockets of providers and pharmaceuticals, not in material benefit to the patients.
I can assure you that drug reps didn't bring in catered lunch to my ex-wife's GP office for the benefit of better informing patients about their choices. We got divorced 30 years ago, but I'd bet money I've still got a sticky note pad lying around the house somewhere with a pharma company's name on it.
There's plenty of drug marketing going on that will never come under the gaze of a patient.
They can be sued for making false claims. There's no value in doing so, especially in a high profile medication.
Why would you spend a couple billion dollars on research/marketing, years of research, to bring something to market only to shoot yourself in the foot by making false claims?
First, doctors are expected and generally pursue continuing education. As much as the "golfing at an exotic locale during a medical conference" is a meme, many of those conference also educate doctors on new therapies.
Second, let's not pretend that the drug conpany reps don't get as damn close to bribery as possible to get their medications in front of doctors and in hospitals
And a lot of us end up ordering our meds from gray-market online pharmacies anyway and paying for our own blood tests (usually via Private MD Labs).
One friend moved to become a patient of the #2 Lyme disease specialist.
Another moved to become enrolled in a clinical trial. He was proclaimed terminal and went doctor shopping. (Still alive today.)
I've stayed anchored in my house for decades because I won't risk leaving my care providers (SCCA, FHCRC). I've had terrible experiences with noob doctors. As in life threatening.
I now better understand how doctors think. Recurring rounds of 20 questions time boxed to 15 minutes. Hopefully they've seen your condition before. If not, oops, too bad, out of time, take two aspirin and call me in the morning. Next!
YMMV.
FWIW, it took a few years but I finally found a doctor I'm happy with. But I'm also lucky enough to live in a major US city.
A couple of years ago my GI specialist put me on a medicine that had just been approved that was designed for my type of gut issues. We spent a lot of time talking about what we hoped to see, and he spent a lot of time listening to what my experience actually was. This has continued ever since, and he always spends a lot of time listening, because I am one of his few patients that takes that medicine. This patient / doctor feedback loop is incredibly important!
Pharma TV and billboard ads are the last place I'd seek such information though.
I think it may be a win-win if the U.S. prohibited television medical advertising.
[1] https://economicdynamics.org/meetpapers/2011/paper_868.pdf
[1]https://truthinitiative.org/research-resources/tobacco-indus...
The TV ads you see for drugs add up to $6 billion, which is a small fraction compared to industry R&D.
Incidentally, I have had two occasions where I wanted to search for a product by its physical dimensions. One was for furniture and one was for a refrigerator. I haven’t seen a search engine that lets me start by searching by physical dimensions: length, width, height. On these occasions, I had a specific physical space that I needed to put something into.
The rest of the world manages to 'discover' that these drugs exist on the market just fine, yet pharma advertising is banned in most of it.
Just like the FDA reviews drugs for safety and efficacy, and just like your insurer reviews drugs for price, national health boards review drugs for safety, efficacy, and price.
Sometimes, the boards want to wait and see if the drug is actually effective in clinical use.
Sometimes the boards want to wait and see if the drug is actually safe in clinical use.
Sometimes, that equation does not swing in the drug's favour. If a drug is $10,000/year, compared to a $500/year, but provides someone taking it for 10 years, on average, with a month's extra life, it would be foolish to spend $100,000 on the better drug - if for that money, you can buy more than a month of life for other people, with another drug, or with surgeries, or better screenings, etc, etc.
Likewise, if a drug improves quality of life for someone, how do weigh that against saving someone's life? There's a limited medical budget, and there's some ethical calculus that you plug the numbers in, and determine which of those options is a better use of scarce resources. But in order to do that, you actually need to get the numbers. Clinical trials, in themselves, don't give all of those answers.
The FDA differs from the FAA, in that the world does not consider it the sole gatekeeper of medical efficacy, safety, and cost.
What will not solve this problem, is the drug manufacturer spending half a billion dollars on taking doctors, medical directors, and politicians on all-expense paid junkets to the Carribean. You're not going to get better awareness from this, you're going to get more corruption, and more expensive drugs. (The $500/year alternative can't compete with the $100,000/year alternative in this sense - as the manufacturer of the latter can trivially out-bribe the former.)
This drug costs more than $10,000 per year because it is an orphan drug. There's little to no money spent on marketing for this drug. None that I've ever seen and I'm the target market for it. The net margins for the pharmaceutical company that manufacturers the drug is now around 20-25%, but their net margin was very very deep in the red for the first ~6 years that I took the drug. Not sure if they have yet recouped the investment from the 7+ years that they were in the red.
> it would be foolish to spend $100,000 on the better drug - if for that money, you can buy more than a month of life for other people, with another drug, or with surgeries, or better screenings, etc, etc.
It's not foolish if you're the one whose life is bettered by the medicine in question. How my healthcare dollars are spent is my decision, not the government's decision. This is where the arguments for single payer healthcare break down because you're arguing to take away my choices that I've earned by being useful to society. You're not the one paying the price for putting the decision in the hands of a bureaucrat. I and people like me are paying that price.
If it's an orphan drug, treating a rare condition, the economics of it are by nature difficult, because of the high fixed costs, and the low maximum revenues.
Since international medicine does not follow the same model as international aviation, it's not surprising that the high fixed costs (In time, research, and money) of adopting a new medicine + low, variable returns (Most countries are much smaller, or much poorer than the US), it's not surprising that the world isn't jumping on this head-over-heels.
Do you need this drug to live? If not, is it a marginal or significant quality of life improvement? If one of the latter, its possible that the cost/benefit analysis for it isn't great, and its manufacturer hasn't even bothered to go through the approval processes for other countries.
> It's not foolish if you're the one whose life is bettered by the medicine in question. How my healthcare dollars are spent is my decision, not the government's decision.
I'd like to decide how my military, policing, and grade school education dollars get spent, too, but there turn out to be exceptionally good reasons for why they should be spent collectively.
> You're not the one paying the price for putting the decision in the hands of a bureaucrat. I and people like me are paying that price.
Everyone will at some point need healthcare, so yes, I do pay the price, and I'd like a system that does its best to get good results for money spent.
And if your insurance is paying for this drug, keep in mind that some unelected insurance-company bureaucrat has done a cost-benefit analysis on it, and decided that they were going to pay it. They could have gone the other way with it, and decided that it was not covered by insurance. As someone who buys into health insurance, but does not consume much healthcare, I can use your same argument to argue that my hard-earned insurance money should be spent on me, not you.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3278148/
[1] https://www.drugs.com/sfx/orlistat-side-effects.html
[2] https://time.com/4317182/abilify-aristada-aripiprazole-sex-g...
[3] https://www.health.com/condition/depression/medications-depr...
Insulin replacement was developed a century ago, being first discovered by a government entity (U of Toronto). Private companies commercialized the treatments in the 1940s and 1950s, developing long acting forms that could be administered in a single injection per day. Since then, pharmaceutical companies have made continuous improvements with fewer side effects: https://www.hopkinsmedicine.org/news/media/releases/why_peop...
Note that nobody is proposing to give people the versions of the drugs developed by public entities, or even the long out-of-patent earlier versions of the drugs. That’s strong evidence of the fact that the improvements developed by private companies were really important.
Moreover, the only thing stopping companies from making cheap generic insulin is the government itself:
> Patents on the first synthetic insulin expired in 2014, but these newer forms are harder to copy, so the unpatented versions will go through a lengthy Food and Drug Administration approval process and cost more to make. When these insulins come on the market, they may cost just 20 to 40 percent less than the patented versions, Riggs and Greene write.
Instead of “scrapping” the industry, wouldn’t it make more sense to, as a first step, get rid of regulatory roadblocks that prevent competitors from producing out of patent drugs?
Moreover, as to your claim that “other countries” do things differently—your only example is India, which does essentially no pharmaceutical R&D. Western European countries also rely on for-profit pharmaceutical development. Pharmaceutical spending as a percentage of GDP is about 2% in the US and Japan, 1.8% in Canada, and 1.5-1.6% in Germany or France: https://data.oecd.org/healthres/pharmaceutical-spending.htm. European countries negotiate hard on drugs like insulin, but for the most part they pay a lot too.
As to your broader point of “why do we need private businesses to do this?” It’s a mistake to mix up the products being made with the process by which the products are developed. Just because people need drugs more than search engines doesn’t mean that the government is more qualified to develop drugs than search engines. It’s two completely different things. Drug development is high tech work. If the government could do it well, while squeezing out the profit margins, there would be no reason for the government not to run Google or Netflix.
After all, why do we need a “private business” like Apple to develop iPhones with 50% margins “when the tax payer could do it at nearly 0% margin?”
What's your solution for drugs that aren't out of patent?
Wait for them to get out of patent? The average remaining patent term for newly approved drugs is 10-12 years. So drugs approved in 2008 will mostly be coming out of patent this year.
All this stuff you here about “evergreening” is entirely the result of gaming the FDA approval practices. Patent law is categorical: once you make a thing publicly available, that thing is prior art not just for the patent you file to cover it, but every invention embodied in the thing. So once the first set of patents expires on the thing, that thing itself is in the public domain. You can’t bring that specific thing out of the public domain by making incremental improvements, etc.
Evergreening has absolutely nothing to do with the FDA and everything to do with the USPTO and the specific chemical makeup of insulin, which has unique characteristics that make it very easy to engage in effective "evergreening". This also allows drug companies to manipulate pricing lists in deceptive ways that fool both doctors and distributors into placing higher cost (but chemically identical) products onto "preferred" prescription lists of insurance companies. There are also current court cases where there are accusations of fraud and illegal kickbacks around those practices.
I’m very curious what you think these are.
> "New biologic drugs are orders of magnitude larger than small-molecule drugs, and it’s often impossible to know on an atom-by-atom basis whether one large-molecule drug is the same as another. Subsequent versions of off-patent biotech drugs are therefore called biosimilar rather than generic. Differences in the tissue systems that produce them can lead to differences in protein folding and glycosylation, which could theoretically result in efficacy or safety differences. But the FDA, the EMA, and the generic drug industry hope these issues can be addressed by new regulatory sciences of biosimilarity."
> "Although regulatory pathways for biosimilar insulin are being finalized in the United States and Europe, economists warn that the introduction of biosimilars may not lead to price reductions equivalent to those seen with typical generic medicines. Even an abbreviated approval process for biosimilars will require substantially more original data than the typical abbreviated new drug application required for small-molecule generics and will necessitate immunogenicity and other safety studies in humans."
FWIW, the full paper is available at https://sci-hub.tw/10.1056/nejmms1411398
You can't coherently and simultaneously believe that markets are inefficiently pricing insulin too high and that the government should be imputing gigantic costs on firms that want to introduce new, unencumbered insulin products. The two thoughts aren't compatible.
Surely it depends on the barriers and how much of a cut those actually are in practice.
Furthermore, private corps aren't the only way drugs can be invented.
> Give companies, who are additionally acting unethically, a guaranteed and direct profit increase...
No, lowering barriers to competition doesn't give anyone guaranteed profit. It reliably does the opposite, depriving incumbent companies of their monopolies.
> Furthermore, private corps aren't the only way drugs can be invented.
Nobody -- literally nobody -- would dispute that. The question is whether the government is able to do the various parts of drug development as efficiently as the private sector. This is not a simple analysis, but I think the answer is more often than not, No.
> This is not a simple analysis, but I think the answer is more often than not, No.
Why not? Profit-driven drug companies will obviously focus on things that make money, e.g. superficial/vanity related things, not what's necessarily aligned with public interests.
You're not doing your argument any favors with this "typical HN response" stuff. Have a discussion with people on the thread or don't; it is fine for you to simply disagree and walk away.
Don't tone police me please. I find it rude to assume ignorance and go on explaining. Did you miss the whole mansplaining wave?
https://news.ycombinator.com/newsguidelines.html
"You can't coherently and simultaneously believe"
"You might as well call it "fascist" or "colonialist". It's jibberish."
"it is fine for you to simply disagree and walk away"
"Right, so it was a bullshit distraction that can safely be ignored."
"You're still not understanding."
"Now read this slowly and carefully"
"You are completely misunderstanding the argument."
"I think you're trying to construct a straw man"
"which discussion you opened with a snarky, dismissive one-liner."
"[if] you're able to use google for five minutes. At this point, though, I'm confident that you're interested only in polemics, rather than actually learning anything about the issue."
Kidding aside, your use of the phrase here indicates a fundamental misunderstanding. This isn't "similar" to trickle-down. This has nothing to do with it whatsoever. You might as well call it "fascist" or "colonialist". It's jibberish.
Try this: You can find the Hopkins paper that Rayiner cited at https://sci-hub.tw/10.1056/nejmms1411398. It's a consice description of the causes of the ongoing dearth of generic biologic (non-small-molecule) medicines.
Read that. It's only five pages. Then tell me how the various possible ways to limit the monopoly position of incumbent insulin makers -- patent reform, lowered regulatory barriers for new competitors, whatever -- would constitute a "trickle down type" giveaway to said incumbents. Tell me how that makes any sense at all.
> Profit-driven drug companies will obviously focus on things that make money, e.g. superficial/vanity related things, not what's necessarily aligned with public interests.
Just for fun, give me some examples of drugs that are merely "superficial/vanity related". I think you're trying to construct a straw man.
It's certainly true that the free-market does not guarantee alignment with the public interest. It's also true that over-regulation is one of things that causes such misalignments.
In this case, a strong regulatory framework around biosimilars may be unavoidable due to their extreme complexity (again, read the paper). But if there are regulatory hurdles that can safely be removed, and thus allow generic drug makers to enter the market with cheaper alternatives, how exactly would that be unfair or unjust for anybody?
> Just for fun, give me some examples of drugs that are merely "superficial/vanity related". I think you're trying to construct a straw man.
Once again, it was one example, I was mainly thinking about hair loss or other male things caused by men, historically and still, earning more.
My main point was that the profit motive causes this kind of skew:
"Scientific publications brought the evidence that there was a lack of news drugs for diseases that cause high mortality and morbidity among people living in poor areas. One showed that only 1.1% of new drugs were approved specifically for neglected diseases over a period of 25 years (1975 to 1999) despite the fact that these diseases represented 11.4% of the global burden"
> It's certainly true that the free-market does not guarantee alignment with the public interest. It's also true that over-regulation is one of things that causes such misalignments.
I would argue that "free-markets" is the exact reason for anti-competitive regulations, among others, in the form of regulatory capture, which is inherent with capitalism.
> Once again, it was one example, I was mainly thinking about hair loss or other male things caused by men, historically and still, earning more.
Right, so it was a bullshit distraction that can safely be ignored.
> My main point was that the profit motive causes this kind of skew...
Which has exactly nothing to do with insulin, or the larger problem of building a manufacturing base for complex biosimilar medicines that's big, efficient, and safe enough to not bankrupt us. Regulations are necessary and powerful tools that, if wielded clumsily, can easily kill that manufacturing base. Making sure those regulations are suited to the task is not "trickle down" in any way whatsoever.
Care to explain how it doesn't fit the template I described?
> this will REDUCE the monopoly power of the large incumbent drug companies
This is at best naive. The approval process isn't the problem. Government granted monopolies are.
> Which has exactly nothing to do with insulin
Uhm, yes, and that was in response to the free-market nonsense, not insulin.
You're still not understanding. Overly burdensome approval processes are part of what creates government granted monopolies. In other words, those two things go together.
For example, if you're familiar with the approval pipeline for generics in the U.S., you'll remember that the main component of an ANDA filing is proving equivalence. Regulations require the evaluation to be based not just on the chemical description of the brand name medicine, but on actual physical samples. A separate regulation subjects any medicine with serious side effects to the REMS program, which restricts its distribution to narrow channels of the drug maker's choosing. Furthermore, the regulation allows companies to voluntarily subject a drug to REMS-type treatment even in the absence of serious side effects.
The result of these twisted regulations is that a large incumbent drug maker can easily deprive smaller generic makers from getting the samples they need to pursue approval.
This is just one example. REMS and other regulations allow incumbent drug makers other ways to block prospective generic makers. These abuses are common, and according to one study cited by the FTC, if we removed or reformed some these regulations, it would save Americans billions of dollars a year. [1]
Now read this slowly and carefully: these government regulations help to preserve big pharma monopolies. Read the citation below. Read the paper cited earlier. Read anything.
If you have any evidence of your own to support your positions -- studies, papers, anything -- I'd be interested to hear it. Otherwise I'm done with this.
1 - https://accessiblemeds.org/sites/default/files/2018-09/REMS_...
"The Association for Accessible Medicines (AAM), which represents generic drugmakers, is appealing a December 31 decision by a federal judge that allows California’s new law barring pay-for-delay arrangements between brand-name and generic pharma firms to go forward."
"AAM had argued that the law violated the federal government’s right to regulate interstate commerce and the scope of US patents"
https://www.centerforbiosimilars.com/news/lobbying-group-app...
Lets say the current price for insulin is $200. I see this margin, and say "I can produce insulin for cheaper, and I'm happy with selling it for $50". The government is placing restrictions on new competitors, so I can't just come in and sell insulin for $50. There is a restriction on competition, which causes artificial prices
"West, 30, has had type 1 diabetes since she was three years old. Back in Seattle, where she used to live, she typically paid $70 per month for insulin and another $130 for pump supplies. That was a relative steal in the U.S., made possible by her excellent health insurance, which she got through her employer. But still, it was a financial strain.
In Germany, she pays about €10, roughly $11. Every three months."
The extraordinary claim is that that vast price disparity is in proportion, so the burden of evidence rests on you.
https://accessiblemeds.org/sites/default/files/2018-09/REMS_...
It's a good summary of the costs of one type of overly burdensom regulation in the U.S. drug market, and was cited by the FTC in congressional testimony. There are other problems to be sure, but the anti-competitive effect of our over-wrought regulatory framework is widely recognized to be a problem by both liberal and conservative policy makers.
There's plenty more material out there you're able to use google for five minutes. At this point, though, I'm confident that you're interested only in polemics, rather than actually learning anything about the issue.
https://www.washingtonpost.com/business/economy/why-humiras-...
"Humira’s price has defied gravity — and been ensconced as a frequent rhetorical target on Capitol Hill — through AbbVie’s aggressive use of patents and deals with generic manufacturers to forestall competition."
"Humira was approved by the FDA in 2002 and its core patents expired in 2016, according to the Biosimilars Council, a division of the Association for Accessible Medicines, which represents generic manufacturers. But AbbVie won dozens of additional patents — what critics call a “patent thicket” — that extended the exclusive market for the drug to as late as 2034, the council said."
I'm not saying that there isn't high costs involved in the approval process, what I'm saying is that it is disproportionate to the price difference. What actually makes a difference is government regulations on another level, mainly price controls, like in Europe.
Just to make it clear, I'm very much in favour of generics, but the focus should be patents and price control, not small fish like REMS (from your link "consumers pay an extra $1.8 billion in out-of-pocket costs.", which furthermore is a number the authors have every interest to inflate) or removing burdensome, but appropriate, approval regulations, possibly threatening public safety.
> Based on our analysis of prices in regulated markets, the United States paid on average more than 50% that other developed markets.
Of course, that figure is before discounts:
> Hence, while US pharmaceutical reference prices are typically higher than most counterparts, it does not mean that the US also ultimately pays higher prices than other countries – a fine but important distinction.
But even taking the 50% figure at face value, that suggests we could cut our drug spending to German levels (from $1,200 per person per year to $800). That’s not the kind of huge delta you see when it comes to things like inpatient services (surgeries that cost 5-10x as much). It’s also not that much compared to the $5,000-6,000 more we spend on healthcare overall per person compared to Germany.
Twenty years to hold monopoly production rights is an obscene amount of time.
Yes, reducing that twenty to say five will reduce capital investments in drug research, but it will also alter the structure of those investments.
Investing in improvements at the margin might make sense when you can collect 20 years of royalties, but if you can only collect 5 then it'll more often make sense to fund cures and use that 5 year monopoly to cure as many people as you can before the drug goes generic.
And this conspiracy that pharma is intentionally not funding cures to make more money is ridiculous. That would imply they know how to cure things, but just don't want to...
As to not investing in cures, I'm not saying they don't at all, but they allocate resources towards the best return on capital. And I'd ask you to apply your own reasoning, that "Its much easier to recover 1B investment over 20 years than 5" to which gives an easier return on capital.
Of course, implicit in that is that it's less risky to fund research in incremental improvements than on outright cures- but I'm open to being taught differently on that.
EDIT: fixing jumbled words
I agree we don't need a state-run version of Google or Netflix, but how does their being "high-tech" in any way preclude that? NASA seems like a great counter-example.
Focusing on whether we “need” a state-run version of Google misses the point. It’s not the nature of the product that matters. If the government could run Google as efficiently, and we could squeeze out the profit margin in the process, why shouldn’t the government run Google? We have Google as a private company not because we believe certain products and services should be “given” to the private sector, but because we believe certain types of work are more efficiently handled by the private sector.
NASA is not a good counterexample. NASA (and DARPA) are managerial organizations. The Apollo lander was designed and built by Rockwell and the Saturn V rocket was designed and built by Boeing.
The original research for the synthesis of insulin was actually done in Europe by a private citizen (not a government entity). That research was followed up on by a surgeon with a private practice in Canada, and only after a time was it taken to the U of Toronto. The work leading to a manufacturable insulin process was done in collaboration with another private citizen (not affiliated with the U of Toronto). The trio only decided to patent the discovery upon literal threat by Eli Lilly to steal it for sale. They then sold it to the U of Toronto for a single dollar because of a strong belief that it would have been ethically bankrupt to profit from the manufacture and distribution of such an important drug. Funny you left that out!
But anyway, to your main point, it's interesting you neglect to mention that the main manufacturers of "generic" insulin (there's actually no such thing, but that's a topic for a different time) are the same companies who manufacture the name brands. They do this for pure price discrimination reasons; the new "generics" you reference (Admelog/Insulin Aspart) are exact chemical duplicates of their higher priced cousins. They prevent other companies from creating their own "generics" through a process called "evergreening" where they change patents in small, insignificant ways while still maintaining the patent on the core product. They then force other manufacturers into pricing and distributorship deals in order to license these patents to prevent cannibalization of their own products. Most of these deals include strict price controls. Have you ever wondered why those regulatory controls are so strict? Maybe it's because of regulatory capture as a part of this complex system to artificially inflate drug prices. That would require more than a skin deep analysis relying on middle school free market ideology though.
This isn't even getting into the "manufacturer rebate" programs most drug companies have for, again, pure price discrimination and marketing reasons. Or the fact that for the same exact chemical formula insulin costs have increased over 10x in the past 20 years. This also doesn't address the fact that we're seeing 20% year over year increases in insulin prices while drug manufacturers post profit increases almost in lock step. Feel free to read their quarterly earnings reports, they state in plain black and white that they purposefully price insulin in accordance with how expensive it is to treat diabetes _without_ the drug. To quote John Lechleiter, the CEO of Eli Lilly, “Yes, they [referring to insulin] can be expensive, but disease is a lot more expensive”. I believe that's called "extortion", I wonder if getting rid of regulatory roadblocks can solve that problem.
There's also no such thing as insulin "side effects"... lower quality/old synthesis method insulin just doesn't work as efficiently which means you have to use more of it or can't use it in modern insulin pumps. Most insulin manufactured today is biologically identical to the insulin manufactured 10 years ago. Most of the quality of life improvements occurred long before the recent price surges.
But then again your post compares iPhones and Netflix with a drug that over a million Americans have to take in order to survive, so I doubt any of this will reach through your armor of specious and unserious speculation.
To be really clear:
1) A company receives patent X in 2000, which expires in 2020.
2) In 2018, that company gets a new patent Y that is really patent X but with "small, insignificant" changes.
Are you saying that after step 2, that original patent for X is now extended or will that still go generic in 2020?
Note- I understood this to be your position from your other comments. I asked the clarifying question to understand `pdeuchler`'s idea of the `evergreening` process.
Another way to do it would be to form a consortium like SEMATECH [1].
If the government didn't tax and regulate companies and people so highly they would have more left over to join voluntary associations and do the same thing.
[1] https://en.wikipedia.org/wiki/SEMATECH
My point is that SEMATECH shows you can have a voluntary consortium where different parties fund an organization and then collectively benefit from it.
Government does that, but on a more general level and it's not based on voluntary interaction (you must pay taxes, otherwise if you resist arrest you will be murdered).
I'm responding to people who complain how companies are ripping the public off, when in reality it's the government that takes almost half of GDP in developed nations.
If the government took less in taxes, then companies would have more left over to fund a voluntary consortium which would do similar things that NIH and NSF do.
otherwise known as the lets-keep-the-status-quo-because-i-can-afford-it argument.
>It’s no coincidence that the US has the best pharma companies and develops some of the most effective drugs in the world
lol best pharma companies according to share values or according to how many people they help?
I see no reason that pharma manufacturing can’t be done just regular contract manufacturing. The Zika vaccine is a prime example. The US developed the ZIPV vaccine at public expense, and then, for some mind boggling reason, they offered an exclusive license to Sanofi. Imagine if Apple outsourced iPhone manufacturing by giving Foxconn and exclusive license! The US could have solicited bids to manufacture the vaccine and accepted more than one, thus resulting in multiple sources without any IP exclusivity.
What, never seen corruption at work? Somebody at Sanofi, or connected to them, was connected elsewhere, and hey, there's your license :) (No, no cash payment.... but my kid really wanted to get into Harvard, maybe a limited endowment/scholarship? You know somebody, right?)
We humans are predictable.
[1]Episode 105 of a podcast called the Accad and Koka Report.
Publicly funded research should be given away, royalty-free, to the public. Universities aren't in the business of...business.
However, the amount of money that goes into finding those promising drugs (collectively, including all the failures in those stages) is much greater than the work that drug companies do in testing and developing them (collectively, including failures).
Right or wrong, most of that research is government funded, and then the (monetary) rewards of all that spending generally flow entirely to the drug companies (often with some reward going to the University who hosted the research). So the drug companies wind up with Hughe effective subsidies, and little of the down-side of early drug development or basic research.
R&D money spent is cyclical, and GlobalData's report may just be a down cycle where pharma is just trying to recoup past R&D costs. There's also a large number of drugs that are not approved from past years. Pharma has to recoup those costs, too.
From purely a health econ standpoint, that recovery window offered by the patent system is the main reason we are where we are today.
I don't hate the idea of bounties, but someone has to decide what bounties to offer, and the current system for deciding that is whether money can be made in that area. It's not perfect, but at least broadly it means that there is an incentive for treatments for conditions that affect a lot of people and ones with a high cost of disease without treatment.
The thing I could see easily being missed by bounties (or maybe worse, being subject to being lobbied by pharma companies with a drug in the chamber) is drugs that start for one indication, but pivot or expand to another, and drugs that are second or third in class. There is undoubtedly some value to a second in class drug that is more efficacious and safer, and line extensions are also helpful for expanding the use of a drug in market.
But, as I led with, I'd be fine with just purely public research leading to generic drugs. Drug bounties are just the "post-capitalist" fallback plan if the old school state-bureaucratic approach isn't work.
https://www.intelligencesquaredus.org/debates/blame-big-phar...
Good arguments from both sides.
> Pharma companies are profiting off of your tax dollars and then turning around and profiting off of you too.
> the taxpayer could do it at nearly 0% margin?
Adds lots of nuance to blanket/false statements.
What is way more common is that scientists from around the world, mostly funded by public money produce research that might implicate a particular pathway or target for a particular disease. Scientists in companies see those publications and try to verify the result, then make a drug for it. The process of making the drug, testing tens of thousands of compounds, making sure efficacy and safety margin are maximized, running clinical trials, and producing the drug with good yields is almost always done by companies.
The government can do stuff like funding studies on new uses for off-patent drugs, fund various parts of that development, and reduce regulatory burden to tilt the economics for companies to make drugs for a disease, but that mostly happens to do stuff that wouldn't happen in the normal system in which companies have to make money making drugs.
Disclaimer: I work in pharma, but in biology, not anywhere near the budget-making
But to jump on to your main point — people don’t realize just how much their tax dollars have already paid for the development of these drugs.
Having a healthy competitive market to take these things the last mile is good — but these companies are incredibly deceptive when it comes to how much they’ve benefited from public investment.
Having said that, there is a reasonable argument to be made that the FDA and the patent situation stifles innovation and that most definitely should be looked at.
We could further lower the barrier to entry for patients to get drugs by forcing the least dangerous varieties to be over the counter. For example, there's little reason an Albuterol inhaler requires a prescription. It's basically impossible to OD on and is not addictive.
Even if these specific ideas aren't the right solutions, I think we've been forced into a false dichotomy of basically the status quo or nationalization. I think we can be much more creative.
[0] https://news.ycombinator.com/item?id=22184942
Take a look some time at the large list of drugs Walmart pharmacy offers for just a few bucks a month. Our model should be to get more drugs in such a state that a Walmart can offer them for such a low price.
In an industry with high fixed costs, marketing may in fact reduce the cost per consumer. Using software as an example, you can't just take the marketing costs per customer and subtract that from the price. If 1,000,000 in marketing brings in 3,000,000 in extra revenue, that marketing didn't cost customers anything. It could even allow the software company to charge less per copy.
There are some real differences between software and medicine. And I'm not sure increasing users of a drug is a good thing in many cases. But I doubt prilosec commercials are increasing the price I pay.
I do not believe this is generally true.
In any case, it clearly doesn't apply to insulin provision for diabetes patients - a captive market.
The US is one of like 2 countries that even allow TV commercials for drugs, yet all those other countries (and their Not for Profit or universal healthcare systems) work better than the US.
If I'm told to ask my doctor if [DRUG] is right for me, shouldn't they already be aware of the option and if beneficial brought it up vs staying quiet and endangering my health? The marketing budget is way out of line.
Because it requires time and effort to educate providers on state-of-the-art medications and the marketing that goes to them is often educational.
I understand the frustration around the healthcare situation in the US, but the argument that marketing is bad, or that profits are bad, or that the private market cant service are frankly trying to reinvent the economic wheel.
other countries haven't
Ummm... you do realize that most big pharma companies are European, right? Bayer is German, GSK is British, etc...
1) Academic medical research is simply not well tooled, right now, to do the later stages of drug development. What pharma does well and academia does not, is basically optimization of candidates. They do it through high-throughput screens and medicinal chemistry. Those things are very expensive and not publishable, so...academics don't do them. And everyone with the expertise works in pharma.
2) Clinical trials are freaking expensive. My institute has developed several drug candidates and the same process necessarily applies every time. The public-funded researcher basically HAS to either sell the patent to pharma or start a company and raise the many millions required to do a trial. The amount of money required is way out of range of current grant funding. If they want to see their drug get to patients, and of course they do, there is literally no other way right now except partnering with pharma.
When I get a chance to talk to politicians about how to fix this, I always make the same pitch. Step #1 should be to give a huge wad of money to the FDA. Say $1B/yr. Then you tell the FDA: every year, pick the 50 most promising drug candidates. Publicly fund the clinical trials, and the public will own the patent. Give some cash to the inventor and the institute to incentivize them to do this scheme and not sell to pharma.
Politicians, both left and right, look at me like I'm from Mars when I propose this. Those on the left think high drug costs are all about greed and not our broken system, and those on the right have unwavering faith that "free" markets will always solve everything.
And with insulin specifically, there is another problem: diabetics won't take the generic insulin that has been off-patent for years now. They must have the fancy and more convenient version. Mark my words, the fact that Americans must always have the absolute best thing, cost be damned, will become a major issue if we ever get single-payer.
Do you think they actually believe any of this nonsense? I would have assumed the rehearsed political phrasing is just the public veneer over something to the effect of "and if I endorse this, X lobby group(s) will steer Y amount of PAC funding to my primary opponent and eat me alive".
Many of those on the right are just ideologically opposed to government spending on anything (that isn't the military). It is often a win to get them to provisionally admit that, maybe, possibly, ANY government spending on research is useful. So "give more money to the FDA" is where they stop listening.
On the left, there is often a dogmatic refusal to even try to understand how markets and incentives work. They tend to inhabit a fantasy world where all humans are, or should be, pure altruists. If you think it is just pharma that responds to monetary incentives, you'd be dead wrong. Publicly-funded institutions LOVE this system as well because the typical endpoint is that when one of their researchers develops a candidate, the patent is sold to pharma...BUT the institute retains a right to, say, 5% of profits.
Why not just allow drug imports from Canada and India? It is because we -- meaning the American consumer and taxpayer -- are subsidizing drug development for the entire world. The current system in the USA, bad as it is for American consumers, develops the majority of new drugs for the whole world. I have no doubt that if you allow foreign drug imports without other reform in the system, you actually will see less drug development.
True competition is almost always a good thing.
I mean I doubt they pay hundreds of dollars just to sport the Mylan brand like like a Gucci purse..
But in my understanding, in general, there are no major health risks from using plain insulin, and it is mostly about convenience. I do not know if that is true for all diabetics.
EDIT: kkreamer above says there are differences in long-term complication risks between insulin types. From my very brief literature review just now, that looks to be true. I guess I have become jaded because of the number of diabetics I have recently heard complaining that they are in danger of IMMINENT DEATH because they cannot afford their insulin. Long-term complication risks are important but it is not the same thing.
This is how pharma keeps the whole scheme going. They invent a drug that is marginally better in some way, refreshing the patent. Then, if the consumer cannot afford the product that is even 5% better, the consumer feels as if they might as well have been sent to a death panel.
My comment previously was referring to the best case, where you only lose some toes or a foot in a decade or two.
That's not even a lot of money, in the U.S. context.
This would be abused like any other slush fund. Plus there’s a natural adverse selection bias as all the “really good” patents will go the private route.
The real answer to all of this is to pass a law that drug prices in the USA have to be less than anywhere else on earth. Let that kick off a race to the bottom amongst the world’s countries. Let them eat the cost of constant marketing in the first world.
Some will argue that’s not fair to the millions in less affluent nations. I say who cares? A governments’s foremost job is to protect its own citizens.
The current pharma pricing system milks the American consumer so as to subsidize the rest of the planet. It’s long past time to end that.
That's a Fully Generic Argument against any pool of government money for any purpose. The law could be written in such a way that the money is allocated for this specific purpose.
> Plus there’s a natural adverse selection bias as all the “really good” patents will go the private route.
A valid critique. The long-term goal, of course, would be to expand the program and phase out pharma entirely. An intermediate step would be to increasingly offer grants to academics with the stipulation "if you take this grant money, you must go the public route". In much the same way that now, any research published with NIH funds must be open-access within 1 (2? I forget) years.
> The current pharma pricing system milks the American consumer so as to subsidize the rest of the planet.
Yes, but...
> The real answer to all of this is to pass a law that drug prices in the USA have to be less than anywhere else on earth.
And you don't think this would negatively impact the rate of drug development? I do. Price controls are also a very drastic step in terms of American law. They tend to have...undesirable side-effects.
If I were pondering general solutions in the area of what you are talking about, I'd prefer laws drastically limiting the amount and type of marketing pharma can do. And ideally supplement that with FDA-provided, more objective material for consumers and MDs about the actual, objective benefits and risks of various drugs.
I do think that will happen. Quite frankly I don’t care.
Access to today’s existing treatments at affordable prices would do much more for the masses then any new research will provide in their lifetimes. In short: its worth it
Longer term I think the prices will stabilize (higher for the world, lower for the USA) and research costs will align as well. Until that happens the common man would still be better off.
> If I were pondering general solutions in the area of what you are talking about, I'd prefer laws drastically limiting the amount and type of marketing pharma can do. And ideally supplement that with FDA-provided, more objective material for consumers and MDs about the actual, objective benefits and risks of various drugs.
I’m for eliminating all medical advertisement but still feel the lowest worldwide pricing is needed. Nobody advertises insulin but the average diabetic in the USA pays 5-6x more than in other countries.
You might as well say "infected people won't have amputations like we've been doing forever. They must always have the fancy and more convenient antibiotics instead."
The fact is, because of intrinsic differences in the types of insulin, a regimen of NPH and/or R can not help but have a significant increase in diabetic complications (including amputations, as in my statement above) than a basal/bolus regimen of Lantus/Levemir and Novolog/Humalog -- all of which have been available for something like 20 years and all of which have seen predatory price increases.
The general point is: the reason drug costs are high because of two things working together:
1) Pharma continually refreshes patents by making modest, but real, improvements to things that are generically available.
2) Patients will not accept any level of increased health risk, no matter how much the cost increases in exchange for decreased risk.
The result of these two things is that even though we have generics available for almost every major disease, they are rarely used, and we are always using the patented versions which are orders of magnitude more expensive. And then we have people wondering why health care is so expensive.
It would be absolutely bizarre if it were any other area of the economy. Imagine if every person insisted on owning a sports car because they go 20% faster. But because we (the public in general) continue on insisting that no price can be placed on marginal increases human life or health -- despite the huge logical contradictions that result from this -- we cannot have rational discussions about how to actually keep health care affordable.
If you're right, do you know why no generic producers of the drug were able to enter the market by 2017?
[1] https://www.pbs.org/newshour/health/insulin-market-shakeup-p...
Insulins are biologic medicines, so once patents expire you might get biosimilar drugs which also require FDA approval, not generics as with other drugs. Admelog is the biosimilar for Humalog, approved by the FDA in early 2018.
As I understand it, Sanofi (Admelog's manufacturer) sets the price to be only slightly below that of Humalog.
Eli Lilly, Novo Nordisk, and Sanofi manufacture substantially all of the insulin, and they more or less follow each other price-wise. There's not the competition you would expect that would drive down prices.
EDIT: they compete by offering varying discounts to particular insurance companies to only cover their insulin at the exclusion of the other company's insulins. This often leads to a letter to patients near the end of the year telling them that the insurance company has decided that their treatment plan has now changed, decisions of their doctor be damned. (Yes, you can appeal and what-not, but it's still fundamentally the insurance company's decision, not your doctor.) This, of course, also screws anyone without insurance who is expected to pay list price.
TLDR:
1) Biologic / large molecule drugs (insulin) are much harder to produce than small molecule drugs like acetaminophen.
2) The FDA thus requires a lengthly, costly approval process to make generic large-molecule drugs. And since often these drugs are not atom-by-atom the same like small molecule drugs, they are referred to as "bio-similar"
3) Additionally- though least clear from the article, while the patent on a large molecule drug does expire after 20 years in the same way as small-molecule drugs, it appears that the larger-molecule gives a wider area to patents that can be applied to it. The article hints at, but does not make explicit, a mechanism for "evergreening" as I tried to clarify elsewhere in these comments.
Anyways, thought I'd write it up the TLDR because this background info would have been useful to know prior to engaging in this comment section.
Gracias again
[1] https://www.forbes.com/sites/theapothecary/2019/03/08/biolog...
A huge reason I found is your doctor won't ever recommend it. Most diabetics may very well just be blissfully ignorant (I was until recently) that it's even an option, save for Wal-Mart very heavily marketing their "Reli-On" branded insulin produced by Novo Nordisk.
I wonder if PCPs (not endocrinologists) are even aware it exists. I've had many PCPs in the past few years, from one of the best health care centers in the US, never recommend it as an option, and seemed to forget it even existed. I guess when you recommend Eli Lilly's biologic-developed analogs for decades and decades, you damn near forget about the old school insulin out of habit.
I recently switched, WITHOUT a doctor's approval (none would recommend it). I have to be more careful, but my costs of using purely generic everything plummeted to below 1997-era insured levels Increasingly insurance co-pays have gotten far more expensive for the biologics, and increasingly plans don't even cover the biologic-process analogs anymore (where my costs would be $560/mo for just the insulins that aren't covered by my current plan, or $130/mo if I paid another +$230/mo for a better single-person insurance plan -- only a $170/mo net reduction).
My uninsured "no prescription required" OTC costs for all my diabetic supplies (two insulins, sharps container, lancets, test strips) are $69/mo, and $18/mo (prescription required) for generic syringes now. It required taking everything in my own hands and telling every PCP I had to #$%& their hat.
I think the FDA is whats making drugs prohibitively expensive. First by disallowing the importation of drugs, second by putting a very conservative standard on the commercialization of drugs.
You are right about something, the policy is unappealing for either side. The right doesn't want to give more money to the FDA, and the left doesn't care about giving a gov institution pocket money, they want to outright outlaw profits as a whole.
Call yourself Elon because you are on Mars :)
Elixir Sulfonamide, Profusion of Barbiturate use in the 50's, Thalidomide (which the US missed because of our more stringent rules), Phen-Fen - I can go on.
What do you think the FDA knows about running clinical trials? They are obviously experts when it comes to regulatory aspects, but what about trial recruitment, monitoring, supply chain, etc? And what about the educational side? Doctors need someone to talk to, to explain the data, to answer a multitude of questions.
It would take FAR more than $1B per year to have the FDA so all that. The Pharma industry spends $70B plus on R&D each year and they already have all the infrastructure.
And don’t for one second believe that getting a drug to market is as simple as funding clinical trials. There is a ton of upkeep once approved - phase 4 trials, manufacturing tweaks, educating physicians and customers.
2019 FDA budget was $5.7B. I’d guess you’d need closer to 20x to replicate the work the pharma industry is doing, just on the R&D side, let alone everything else.
Why not apply this principle to everything else? Food, software, etc.
When a company like Pfizer acquires said company, none of the R&D spending of the smaller company gets absorbed into Pfizer's balance sheet.
In 2006, the pharma entire industry spend 12 billion in marketing, but 58.8 billion on r&d. Simply looking at individual large companies' doesn't do this justice.
http://phrma-docs.phrma.org/sites/default/files/pdf/marketin...
[1] http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name...
[2] http://www.ilga.gov/legislation/BillStatus.asp?DocNum=667&GA...
There actually is a capitalist solution to the problem of high medicine prices. That is for pharma companies to have to post a price of their patents. And when somebody is willing to pay that price they do get the patent for exactly that price. After that you tax the value of the patents at a somewhat high percentage. This way, if the price of the medicine is to high relative to the posted value the state or perhaps the insurance companies could just buy the patent. On the other hand if the price of the patent is too high relative to the price of the medicine there is no real problem. In the case where both are too high but it is not the case that one is higher than the other the state should just funnel the money that comes in through the tax back to whoever needs to buy the medicine at a the high price.
Insulin is NOT rocket science, and it's necessary for some people to live. It's almost as simple to make as beer. It is unreasonable that people don't have access to such a simple life saving drug.
Fuck the pharma companies. Fuck the patent system for keeping it this way. Congratulate the legislature who is tackling this problem.
I agree, though, that it should also become harder to get patents. If a useful invention depends on more than one or, at most, two patents the patents mainly serve as friction to innovation. A corrollary of this is that software patents should not exist. Perhaps there could also be a process where it is asserted that a medicine can only depend on one patent. Whenever it depends on more than one it should be adjudicated which of them is the innovative one and the other ones should not apply. This will solve the cross licensing problem that you notice.
What needs to happen is, again and again with health care issues, transparency.
Manufacturers should be required to declare and with audits prove how much they're spending to manufacture everything. Then everyone can see the price they're being charged and figure in their head what sort of markup they are being charged.
Then we can start to push back on the companies need to recoup primarily marketing costs and dividends and bonus programs and all the other padding that they have built up over decades of never being held accountable.
A reasonable percentage can be arbitrated once the process is in public view.
I really am surprised that I am getting more downvotes than upvotes here. I think people are too emotional about this. I also note that a post dropping f-bombs is not getting downvoted which it really should be. It is not very mature.
> “Health care is a right for all, not a privilege and that is why I am so proud that we created an insulin price cap that successfully puts patients above profit,”
Healthcare isn't a right. If it was a natural right it wouldn't be necessary to force people to pay for it.
One day inflation will strike and insulin will no longer be available at that price. Will he be proud then?
Net effect of this is yet to be seen, since it doesn't go into effect until 2021, but one possibility is that insurance companies will only cover variants of insulin that are cheaper than the allowed maximum, or the value that they calculate allows maximum extraction of value. Or, alternatively, the price of insurance will rise to spread the cost among all covered people.
The fundamental problem is that insulin should be a commodity, but it is not. Baseline human insulin is actually available fairly cheaply; ~$25 for a month's supply. But pharmaceutical companies have developed and sell a variety of faster-acting and longer-release insulin analogs of increasing price; and although many of them have technically fallen out of patent protection, generic makers have been slow on the uptake and manufacturers have done various tricks (relabeling, etc.) to ensure that they can maintain their effective monopoly.
There's something deeper that is wrong here that is preventing the market from working as it should be working; that is, generic makers making fast-acting insulin cheaply and driving the price down to the marginal price of production.
> Provides that insurers that provide coverage for prescription insulin drugs must limit the total amount an insured is required to pay for a covered prescription insulin drug to $100
This will create way more problems than it solves. It continues to hide the true cost from the consumer. This doesn't affect the pharmaceutical companies or insurance companies at all. What it will due is just make the insurance companies charge everyone a little more. The corporations are not affected whatsoever.
Easy to make something unallowed on paper. Much harder, and more meaningful, with Skin in the Game, to actually go out and do what they may think their rules will accomplish.
Or just set price controls (in the case of insulin)
Can they? The insurance companies are mandated to buy it now
SB0667 - Illinois 101st General Assembly
PRICING-PRESCRIPTION INSULIN
http://www.ilga.gov/legislation/billstatus.asp?DocNum=0667&G...
- Protect people without insurance. Usually they're the most vulnerable.
- Don't just force someone to pay for the Insulin. These companies making them don't need to become richer. Take it from them forcefully.
In a free society and a free market, anyone with the knowledge and means to produce insulins would be free to do that.
The high prices are a direct result of the government preventing competition through patent law. Without patents, the price would tend to fall as companies compete on price, more efficient manufacturing, distribution, etc.
Prepare for insulin shortages IL. Government intervention / price fixing has NEVER worked.
There are lots of things wrong with Missouri. Our justice system is brutal to poor people and basically corrupt. Still, our cities are quite violent relative to other cities in USA. The "Department of Natural Resources" has rules to protect the environment, but very few of them are ever enforced against those who are willing to ignore them. (The one time I followed this trail all the way down the rabbit hole, the "Chief of Compliance and Enforcement" claimed that the courts always overrule him when he does choose to do his job, so this issue could be related to the first.) Important infrastructure is allowed to deteriorate while vanity projects get top priority. As a state, we'll vote for Trump again later this year, even though it's clear at this point that his previous anti-war rhetoric was nothing but lies. And so on...
If people foregoing insulin because of out of pocket cost is a problem in Illinois, fixing it could have positive effects, including positive fiscal effects. So net cost is probably quite small.
Would be nice if there were actual price controls at the federal level.
Price ceilings don't work, I don't quite understand how people are elected when they don't understand high school level government/economics.
> “Health care is a right for all, not a privilege“
Insurance has to be free too!
Or just set price controls
In that case, charging people even $100 a month is unconscionable. It needs to be free, just like food, housing, entertainment, and all the other inalienable rights.