The Same Pill That Costs $1,000 in America Sells for $4 in India

The pills in question are self-administering oral pills, so you don't even need to stick around for 3 months. Just fly in and fly out. The FDA allows self-importation of personal use prescription medicine, as long as it's within a 3 months supply. What a wonderful coincidence.

Better yet, you don't even need to fly there. The FDA, along with their UK, Australia, and NZ counterparts[0], allow you to import the drugs by mail, as long as you have a valid prescription and it's within a 3 months supply.

[0] http://fixhepc.com/getting-treated/how-to-do-it/worldwide-im...

There is already "medical tourism" happening in India - there are companies that organize everything, all one has to do is go there, get surgery (or whatever treatment), then go sight seeing before returning to the US and the cost of the entire trip would be less than what the procedure would cost here. Only downside is, it is driving up costs for the locals.

Medical tourism is a thing https://en.m.wikipedia.org/wiki/Medical_tourism

As someone living in the US, I'm looking forward to seeing if Cuba turns out to be a destination for something like this.

I've heard some companies have begun looking at medical tourism as an option for some (locally expensive) treatments. Of course a few people are unhappy about this proposition, from medical practitioners to some patients...

Why not a beautiful resort in India?

> Hackers, can we construct a better market?

No, you can't. Any solution you come up with will be illegal in some key respect. You are dealing with one of the three most heavily regulated industries in the United States.

You don't need hackers; you need an army lobbyists of lobbyists powerful enough to overcome entrenched opposition from every corner of the healthcare system.

I did some customer development on these treatment issues.

One interesting anecdote was from a gentleman whose family was predisposed to a given disease which had a treatment pathway consisting of drugs A, then B, then C. Patients were not allowed to progress to B unless A had failed and were not allowed to progress to C unless C had failed.

Prior family members had been treated on this treatment pathway and had found that only drug C 'worked properly' (define that how you will). Therefore this group created their own protocol they shared amongst the family for how to act and what to say to doctors to rapidly progress from drug A to B and finally to C.

Establish a government monopoly for purchasing drugs. A painkiller costs maximum X or the government won't subsidise it. A drug to heal a disease costs maximum Y. People will spend everything they have to save their lives, even when it's to the detriment to the rest of society - There's a limited set of medicine available, and it's funnelling society's resources into the pharmaceutical industry because everyone's trying to compete for the best drug. Eventually people will work their whole lives to save up just so their parents can live 2 more years when they're 75, and that's not really good for society. Living out years isn't the end goal, enjoying what time we have is. An appropriate government institution will ensure that happens, while providing sufficient drug supply (but not as much as if everyone spent their life savings on drugs and nothing much else).

That's how it works in many countries outside the U.S.

For example, https://en.wikipedia.org/wiki/Pharmac

Is that really considered smuggling? If the whole 12 week treatment costs $84000 in the US and apparently $336 in India according to the article, you could take a nice vacation to India with your family, get your bottle of 84 pills there, and save $75k to $80k. A smart insurance company would cover it.

The primary distribution channels, pharmacies, want nothing to do with grey market suppliers. There's also not a lot of direct price sensitivity. People with 3rd party insurance have relatively inexpensive copays. The poor have access to Medicaid. In neither case are you paying full-freight out of pocket.

So you've got no mass distribution channels and a user base that is shielded from the true cost. People do try, drug co's all have "anti-diversion" strategies, but it's pretty well contained.

Because this isn't the type of drug that one would buy off of craigslist? It's the insurance companies who are in war with big pharma.

You forgot one part:

* You have to finance your highly paid sales staff.

People always claim that pharma companies spend so much money on R&D, but when I look at job ads in the news paper I don't see ads for research positions, but lots of ads for sales positions (from pharma companies).

I'd love to see actual numbers, but I'm pretty sure that sales is at least as costly as research (if not more so)

You mean if india started doing their own research? Well of course, we the general population would benefit. Nobody is stopping them. Except maybe cost.

To be fair, China produced toxic drywall. For my epilepsy, I'm happy paying $1k for drugs produced in the US compared to $10 in China. Even countries like Japan can barely manage human trials. My father is an oncology physician/researcher/consultant. He goes there yearly to tell them to stop chopping out every prostate that walks through their doors.

West can match, only if it gets out of the clutches of the health insurance industry.

Doctors hate health insurance companies Patients hate health insurance companies

only ones to love health insurance companies, are their share holders.

It could be because the government is not allowed to negotiate drug prices. (Medicare.) They pay whatever the drug companies ask.

Or, maybe because most individuals in the U.S. don't pay the full price. They pay a 'co-pay.' Insurance companies pay the rest. But, they can only make profit as a percentage of revenue. If they lower drug costs significantly, they significantly lower their potential profits. Why would they do that? From a shareholder's perspective, that's a very bad idea.

In the U.S. relatively few people really know how much a drug costs, so why would price be taken into consideration?

In America, we have insurance companies to pay the drug cabal on our behalf.

That's not cynical, that's exactly the reason. It's basic economics. If it cost thousands of dollars then virtually nobody in India would be able to afford it, whereas insurance companies in the US are willing to pay tens of thousands and don't try to negotiate prices. Medicare is even forbidden from negotiating prices. Rich countries with single-payer healthcare systems will lie somewhere in between. e.g. in the UK, there's an agency (NICE) that negotiates prices for drugs, and decides if they are worth the cost. They'll sometimes agree to pay massive prices if the drug is extremely effective and there are no substitutes, but if it's only a marginal improvement over an existing drug, or even if all it does is extend life by a month or two then they'll just refuse to allow it to be prescribed. Of course as you'd imagine, the prices quoted then have a habit of dropping. This is separate to the normal regulatory approval of drugs.

No cynicism is required. All market prices are determined by demand, which is defined as the desire and ability to obtain a good at a given price. It is tautological to say that higher prices indicate a greater willingness and ability to pay.

"Discount negotiated by insurers" is the mirage americans live in.

$10 pill is marked up to $100, charged to insurer. your health insurance with a premium of $250 per month, negotiates the price and enables you to buy it for $15, giving you a illusionary savings of "$85".

Same pill, is probably available in India, at a market rate of $5-$7.

People compare market rate of the pill in India $5 with the pre-negotiation sticker price in US of $100.

Q to the Pharmacist Business Manager: Do you think prices of these drugs would remain so high, if health insurance companies didn't exist and everyone paid for medicines and services out of pocket?

> You are paying for the cost of researching it and testing it, as well as a thousand other drugs that didn't make it to market.

Trying to think of other straightforward instances where a tremendous cost is spent on researching and testing, and directly affect human well being.

One example would be meat farming. As far as I know raising pigs or chicken evolved a lot in our lifetimes, extensive research was done on how to produce mor meat, there's oversight by a public agency and it is consumed by human so there is a decent amount of safety check and oversight.

Yet meat is cheap.

The more research that went into it, the cheaper it got. Provided meat as a product is more stable and less dangerous than drugs, I still think that it doesn't explain why meat would become cheaper while drug price should stay high and pharmatical firms should have extra protection to keep their prices high.

We're not paying for research, we're paying for monopolies.

This argument is pure propeganda from the pharmaceutical companies.

The modern world of lifesaving pharmaceuticals exists despite the American market's attempts to subvert it, not due to its largesse

> You are paying for the cost of researching it and testing it

More accurately, you are paying higher because pharma can hire congressmen and senators

> If the US market didn't pay for these drugs, they wouldn't still be cheaper in India. They likely wouldn't exist at all.

Doubt that much, its quite a strong claim and requires strong evidence. My beef is that we have never even come close to testing this hypothesis

One of the oft repeated justification for the absurd levels of IP protection and patent extensions that pharma enjoys is the huge cost of trials. But if huge development costs are the reason for these protections to exist, guess what, these costs will continue to remain huge. Its just self perpetuating.

Patents are primarily a preemptive measure against a hypothetical scenario. The hypothesis is that unless market pressures are cordoned off, innovation will stop. It is a believable hypothesis but not a quantitative one, and this exactly where we need a quantitative one. How many years exactly does one need to subvert the market so that a satisfactory level of innovation is maintained ? Nobody knows an authoritative answer.

In these scenario what we need is a feedback system, and pretty much the only scalable and fair apparatus that we have for such feedback on economic affairs is the market.

So rather than subverting the market, market should be explicitly and actively involved to work out this trade-off. How exactly this is to be done needs to be worked out.

There could be a futures market on patents on drugs undergoing testing: competitors can promise to buy the patent to the (drug,usecase) pair at a particular price (even if its a dud) and if the owner decides not to sell the owner pay a particular compensation. Such measures will spread the risk. There should be mechanisms for a company to raise money for testing in lieu of rights over the product.

The initial period of validity of a patent should be short, like 3~6 years, following which the patent is on the market. Entities can bid to bring the patent to public domain. The owner(s) bids to retain it. Whoever wins gets the balance. Of course the "bring it to public domain" bidders will bid less because profitability is less when its in the public domain, but market decides who gets to own it. If the owner(s) think they can still extract lots of profit from the drug, bid high. We should stop handing out blank checks without a feedback loop, that is just bad design.

[p.s. fun to watch the votes go up and down :)]

This is somewhat similar to developing new semiconductor processes or CPU architectures. It costs a ton in R&D but once taped out, the individual cost is relatively small.

However, as in semis, the developer manufacturer will also look at what the market will bear. And things are complicated in pharma by copy-cats and gov'ts who understandably look the other way when a manufacturer undercuts the original manufacturer/license holder... So they, the orig drugmakers, kind of make up this shortfall in economies where the market will bear higher prices, so, in essence, developed countries subsidize the pharma costs of developing economies. And perhaps that's not so bad, given the comparative resources.

Alternatively India has a lot of smart people and they can develop drugs if US companies don't. How much are US companies subsidized by both money and Indian scientists, and how would one determine this? Frankly I'm not sure where to go to find out the exact facts. I think you are right, but I'm not so sure anymore.

Bullshit... marketing budgets outstrip research, development and manufacturing all by very large margins... in most big pharma companies it's over 80-90% of the budget.

Except the pharma companies:

Spend resources on cancer "treatments" that give two more months of survival compared to placebo (with insane side effects though), have marketing budgets twice bigger than their R&D, try to push statins into baby milk (I hope this is sarcastic, for now) and totally abandoned antibiotics.

We also have patent extensions and other nasty tricks.

While the current model is somewhat effective, I think that direct NIH grants to develop drugs with the IP left in the public domain is a better approach. Also that way we can funnel more money into the pockets of the scientists.

And yet American pharmaceutical companies make every more billions in profit every year, while Indian pharmaceutical companies do not.

I think it's easy to see where that price difference is going.

Pharma companies massively exaggerate the cost of developing new drugs. http://www.economist.com/news/business/21679203-high-cost-rd...

Why the disparity though? Why not have it cost $500 in both places? And why aren't there arbitrageurs taking advantage of this?

That is incorrect. India changed to product patents about 10 years ago. If you read the article,you would have realized that Gilead licensed the drug for generic production in India and it was not someone "stealing" the IP.

The article mentions, Gilead licensed 11 companies in India to make generics. I don't see how licensing to make generics make it stealing intellectual property.

Besides I am curious how $1000 in USA compares to $4 (about ₹ 265) with the per capita income in perspective, as a measure of affordability of the drug.

Intellectual property (incl. patents, etc) is a tool that countries use to stimulate innovation.

More practically, there's no market in India for this pill at $1000 and there is at $4. The original manufacturer's most reasonable course of action would be to step in and start competing at $4 per pill, with a slight benefit of the "brand". Then they would have $4 per pill whereas now they have $0.

And, you know, the company & investors planned to recoup the costs and profit based on projected revenues in US/EU markets. If their strategy was, we'll develop this drug, start selling it in India for 1K a pop, ...., profit!, they'd have problems far more serious than this one.

And speaking of fairness, you can hardly argue that using "stolen" knowledge is unethical if, e.g. with cheap antiretrovirals you save tens of millions of people. "Stolen"? who gives a fuck -- the drug developer & investors made a profit in the US, the model works, they'll develop new drugs again. Way more useful than the vast majority of foreign aid.

(And that's not to mention the benefits of economic activity and growth of human capital that wouldn't happen if instead the government was just buying the drugs from outside instead of having domestic companies figure out how to make them).

So, don't get your panties in a bunch :)) Things are going to be fine.