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Comment by ikeboy | Hacker News Reader

The question is how we can fix this systematically without making bigger problems. Should a government agency set prices? What if the company stops making the drug, then? The price is high because no other companies are willing to make it for lower, after all. Note that the drug in question is not under patent.

I don't think you'd advocate for literally forcing the company to make it and sell it for a specific price.

There's also the concerns I went over here: https://news.ycombinator.com/item?id=10248817

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>What if the company stops making the drug, then? The price is high because no other companies are willing to make it for lower, after all.

Nope, don't force the company to make it. Force the company to give the formulation to another company that will. This article states the reason it is able to be priced so high, at least for a time, is that other companies will have to reverse engineer it and get a line running. Take out the time of getting the product formulated right and the original holder has to think about the ramifications of any shenanigans they will attempt to pull.

The composition is public, and needs to be disclosed when patented. In order to get FDA approval for a generic drug, you need to show that it performs as well as the actual drug (not really, but that's a different issue [0]). In order to do that, you need to have samples of the actual drug.

[0] http://fortune.com/2013/01/10/are-generics-really-the-same-a...

Government setting prices works for the NHS in the UK. If a drug is too expensive it just doesn't get authorised as a treatment and we go with something else. The collective bargaining power of the nationalised system effectively forces the pharmaceutical companies to the table everytime. They'd rather sell for some profit than no profit.

It's only because the pharma companies can deal with consumers in the US on an individual basis that you guys get screwed over so much on your pricing.

It's only because the pharma companies can deal with consumers in the US on an individual basis that you guys get screwed over so much on your pricing.

That's not true at all. The biggest private insurance companies in the US are what? 30-40M lives? That's bigger than Canada. They routinely negotiate for lower drug prices.

If the proposal is "set up a single payer system in the US", this may be relevant.

Do you know where I could find out whether the NHS is covering Daraprim at the new prices?

I'm confused. The article is about a drug that was sold at price X (13.5) that is now offered at price Y (750).

Now, in my world every rational person has to see that this is insane. There's no way that the previous price was even remotely possible (even with a loss) that requires the new price.

I don't see any data that supports your 'no one would be willing to make it for less' argument. The only reasons that doesn't seem to happen are either technical (the monopoly on the drugs manufacturing process) or legal (can't do that or you have to pay for .. creating cheaper drugs). Can you back your unlikely scenario? Looking at the article in question, is 750 the 'right' price and no one's willing to create the drug for less? Were they losing about 700 a pop before they increased the price?

What. The. Hell?

I don't see any data that supports your 'no one would be willing to make it for less' argument.

There are currently no other companies that are willing to make and sell the drug.

* The only reasons that doesn't seem to happen are either technical (the monopoly on the drugs manufacturing process) or legal (can't do that or you have to pay for .. creating cheaper drugs).*

The patent is expired, and saying "monopoly" is describing an outcome, not an input. Yes, it's a monopoly, because no other company is willing to go into that market right now.

Looking at the article in question, is 750 the 'right' price and no one's willing to create the drug for less?

I would deny that any price is "right". If you want to refer to "right", define it and give a way to calculate what price can be right.

As I said in the other comment, there's no good system to determine who should capture the value from a product that costs less to make than it's worth to purchasers, other than a free market.

Let's take this apart. I'm not an expert, not on drug creation nor on .. 'free market' theories.

1) I'm not convinced that no one is interested to create the drug. Numerous people in this very discussion list issues to create a 'replacement' drug, even if the patent is expired. If they are correct (see disclaimer above) that might be a reason why others haven't tried it - or why they haven't succeeded yet.

2) 'Right' price is ambiguous, I agree. In my world, drug prices are ethic problems and have no connection to the so-called free market. No, a working, helping, proven drug cannot cost hundreds of $currency. We can discuss about the need to offset the R&D costs and I'm fine with drugs that costs my health insurance a ~largish~ sum, as long as the end user can get instant and easy access to the drug.

Your comments about putting a price on a person's life and your opinions on drug prices - as far as I can follow! - are impossible to understand from this person's pov. The lack of empathy and the trust in random business/market theoretical stuff to find a reasonable solution for the access to drugs that might very well save lives - that just doesn't compute, doesn't make sense in my world.

I don't believe in free markets. I certainly don't believe in free markets when we're talking about the basic needs of each and every human (for the sake of the argument let's limit this to nutrition and health for now). Health care should be free. Drugs should be affordable. Changing the price of a drug that was obviously doing okay (it was on the 'free market', right?) and multiplying the price by 65, because .. why not? .. is immoral and should be illegal. There's no 'value' to 'capture'. We're talking about a product that the company obviously produced with some sort of margin for ~13.5~ and that benefits the population at large - or at least the subset of the population that requires the drug. There is _no_ reason to increase the price, especially by that ridiculous value, other than inhuman greed. But maybe (see disclaimer) that's what a 'free market' is about - I wouldn't know.

Numerous people in this very discussion list issues to create a 'replacement' drug, even if the patent is expired. If they are correct (see disclaimer above) that might be a reason why others haven't tried it - or why they haven't succeeded yet.

Replace interested with "no one is interested and able". The reasons don't matter (insofar as they cannot be changed), the fact is that no one else is making them.

The lack of empathy and the trust in random business/market theoretical stuff to find a reasonable solution for the access to drugs that might very well save lives - that just doesn't compute, doesn't make sense in my world.

This doesn't come from a lack of empathy. I am (or try to emulate) a utilitarianist. To my mind, the question to ask is "which system will produce better outcomes overall"?

As I've said elsewhere in this thread, this particular example has them covering the cost of the drug for anyone who can't afford it; so the value of a life is irrelevant. The question is "is it better for a health insurance company or the drug manufacturer to have the money?" This doesn't seem obvious.

On the other hand, any claims of "fairness" fail to compute. If doing X improves the world, who cares if it makes things less fair?

Health care should be free.

The world should be perfect. I agree. Now, do you have any way of bringing the world to perfection? Saying "Health care should be free" while ignoring the fact that currently, health care needs to be rationed, does nobody any good.

Who pays for health care, if it's free? Who becomes a doctor, a researcher, if the prices are driven down by politicians with similar arguments to yours?

There's no 'value' to 'capture'.

That sounds to me like saying that every drug company should be selling at cost or close to cost. The problem with that is that there's then much less incentive for investors to fund pharmaceutical startups, which leads to less new drugs being developed, and so on.

You can't ignore economics when building your utopia.

> Should a government agency set prices?

Yes.

> What if the company stops making the drug, then?

A non-profit government sponsored entity manufactures the drug at cost.

Why not skip step 1, then? Let the company sell it for however much it wants, and the non profit competes them out of business?

Supply chain stability. Availability is sometimes more important than cost, and if you have a government non-profit producing the drug, you're not wasting any money on the profit that a private company is extracting.

Drugs should be priced based on their cost to produce and whatever R&D needs to be amortized, not by how much value you can extract.

I still don't understand. Why do you need to set prices for private companies if you're competing with them yourself?

Because the free market doesn't work when there's inelastic demand, or when supply chain disruptions cost people their life.

If you think the government making the drug is a viable solution, there's no need to set prices. If you think the government making the drug is not a viable solution, then you shouldn't set prices for fear of the drug being cancelled.

Could you point out the flaw here?

The government (FDA in this case) doesn't make the medication. They just get someone else to make it. They tell company X "You F'ed Up. Give us all your documentation and we will take it to company Y to make."

I'm trying to remember the name of the company that this happened to. It was like 8 years ago and I think I remember them being a cardiac arrest medical. Anyhow, the company CEO flat out refused the FDA regulators demands that they get their manufacturing process up to standards. The FDA went to another manufacturer (I believe Johnson and Johnson) and asked if they would make the medication and they accepted. The FDA then shut down the prior company.

When lives are impacted, the FDA doesn't mess around. They put CEOs in prison for the crappy decisions they make.

There's a big difference between

"not having a manufacturing process up to standards" and "raising the price insurance companies have to pay".

The only way to properly do this would then be to have the government become the only R&D and pharma company.

Doable. But I think you put too much faith in the government. The government is a natural monopoly itself. If they're doing a shitty job you don't get any other options.

> Doable. But I think you put too much faith in the government. The government is a natural monopoly itself. If they're doing a shitty job you don't get any other options.

Disagree. A government can be held accountable. Some asshole ex-hedge fund manager attempting to corner the market on a drug can't be.

> A government can be held accountable.

Accountability is not really the main measure we care about (though it's related to it). It's efficiency. We only really care about accountability because its supposed to increase efficiency. People are supposed to get punished when things are running poorly.

The problem is, no one really gets punished when large government organizations are running inefficiently. The business does not go out of business. There is no competition. There is no real incentive to innovate and beat your competitors.

I think we need to reevaluate pharma law. But I don't think replacing the current monopoly with a government one will do much good of anything.

I've long held the belief that whenever there is a supposed failing of private enterprise- it's almost always actually a failing of government. I've yet to be proved wrong. Government makes the barriers of entry too high in the drug market. It's way too easy to have a monopoly because the government basically grants you one.

I am willing to trade some efficiency/cost effectiveness for price and availability stability.

In the longer term you'll get the worst of all worlds. Why not get the best of the short term and long term?

Fix pharma competition.

First I will say that I'm not an expert in these questions, so my thoughts might be off, but that's probably the reason we are discussing it.

The closest to perfect solution in my mind would include all the details to make the medicine in the patent itself (I'm not sure how detailed patents has to be today). This would make it easy for other companies to create a competition once the patent expires and essentially would create a free market.

In the scenarios when it happens that there is only a single player in the market for one or another reason, things get a little trickier. I guess one of the solutions could be a commitment by government to buy/prescribe certain amount of medicine. The price of a unit should be predetermined in such cases to avoid exploitation.

Overall the actual knowledge of how to make a medicine and having a market for it, should make such situation pretty rare when only a single player is left in the market.

Should all trade secrets be outlawed, then? Or only in medicine?

I believe that if you want the protection of patent, you should disclose everything and it not suppose to be a secret. If you want to keep it as a secret, don't patent it. Isn't that is the reason behind the patent system? Inspire people to create things by providing certainty that no one will be allowed to reproduce their creations until patent expires. The only reasonable thing after that is to make the patented technology (including all the bits and pieces) a public knowledge.

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