Why a Pill That's 4 Cents in Tanzania Costs Up to $400 in the U.S
npr.org
npr.org
Americans should feel good about high drug prices: that's your aid to the Third World right there. Not the most efficient technique but still better than not doing it at all.
It's unclear to me why another drug manufacturer doesn't come in and undercut the price. This is what happens in most other industries. My gut suspects the arduous FDA approval process, but I have no real evidence for this hypothesis.
Also, it's difficult to acquire approval needed from the FDA to demonstrate the new drug is safe and equivalent to the already approved because the original producer won't cooperate and provide relevant samples to their competition so they can demonstrate equivalence.
This is a commonly cited reason but I don't buy it. They're selling these things for 4 cents in tanzania so we're talking about something that is practically free to make. There are lots of things that cheap where we see competition in the US: paperclips, reams of paper, chewing gum, whatever.
Why is there competition for these things but not cheap drugs?
Is there a chemist in the house? :)
Look for the explanation by Derek Lowe in the linked article. Key points:
> The FDA grants market exclusivity to companies that are willing to take ‘grandfathered’ compounds into compliance with their current regulatory framework.” Once a company does that, it gains an effective monopoly through the "generic bioequivalence" rules.
Setting up the production line isn't the issue, because the pharmaceutical company will outsource the actual manufacturing of the drugs anyway.
Situations like these should count as evidence that something isn't quite as it should be.
From the sound of things these diseases were until very recently isolated to poorer countries. Even today, with the increased number of cases, there might not be enough money to be made based on a few sick North Americans to justify tooling up to make a new drug. (Some of that is about FDA regulatory approval, but not much since it's not a new drug. They'd be manufacturing something that has already been tested and approved.)
Ideally the drug company making this thing would just stop being boneheads about pricing. Having this in the news will probably help.
The article also says albendazole, the drug in question, can be purchased in the UK for $2. Why can I not start a pharma company that A) imports albendazole (and other rare disease drugs) from the UK and other 1st world country at a reasonable markup or B) orders albendazole, and other rare disease drugs, from the same manufacturer that makes it for the UK, and other 1st world countries, at a reasonable markup?
I'm genuinely curious about the regulatory landscape of that question.
1. https://www.unitedpharmacies-uk.md/Zentel-Albendazole-400mg-...
If you add burdensome regulatory costs to some competitors (domestic pills) but not others (foreign pills), the others will win all business. That is an unfair playing field. So part of the deal with regulating drugs in America is that you can't import drugs from other countries.
I think I'd probably allow importation of the exact drug, by the exact manufacturer. Or just set a price control saying you cannot sell a drug for more than 120% of the average price in the EU + Japan + Canada + Australia + NZ etc.
Well, right. It's pretty impossible to justify not allowing importation of the drug for any safety-related reasons if it is literally the same product from the same manufacturer.
I think this is silly. We don't expect that companies "stop being boneheads" (by which I assume you mean act more ethically) when it comes to the pricing of televisions, or food, or household goods, or practically anything else. Why should we expect it for these pills? That expectation will be doomed to failure in many instances.
A more ideal scenario would be to examine the underlying reasons that allow the company to charge so much for something that apparently costs so little to make. If we can understand that problem we should be able to implement fixes that lead to proper pricing without the expectation that profit seeking corporations will magically decide to forgo profit just to be nice.
Sure we do. Companies react to non-market concerns like ethics, civics, reputation, government and public pressure at the expense of short-term profit all the time, in addition to reacting to market competition.
Even if you accept the notion that the corporation (if it were a person) should be considered a sociopath, it is not at all obvious that market factors or regulation will be as effective in any given case at moving a company's leadership to behave ethically as, say, negative PR that will keep the CEO from getting laid. (not that you'd want to base an economic system on that...)
> A more ideal scenario would be to examine the underlying reasons that allow the company to charge so much for something that apparently costs so little to make.
That is not the important question at all. (do you really want to argue that charging a lot for something that "costs so little to make" is inherently a bad thing?) The important question in this case is why the same company can sell the same thing in two different markets with a 10,000x price difference.
And if the FDA recognized that Europeans aren't particularly dying off from poor quality medicine and maybe we should allow import of EMA accepted drugs then maybe economies of scale would be less of a problem.
The largest expenses are marketing and sales. Doctors won't prescribe drugs they don't know exist, so "educating" doctors about the benefits of a drug is a paramount. Contracts have to be negotiated with all insurance companies, and that's expensive too.
How profitable the business of generics actually is, we don't know for sure. The pharmaceutical industry is notoriously vague about how much profit they make, and the numbers they report are questionable. For instance they'll call market research into which drug to buy next "R&D".
He points out that a large % of this R&D cost is actually marketing.
A lot of R&D is also spent on taking existing drugs and subtly changing them so that a non-generic one can be launched.
So it's not as cut and dried as it seems.
The same tired old and wrong argument. The article clearly states that the patent expired decades ago. So why not read the article and see that this old excuse is WRONG ?
What do you stand to gain by putting out these lies? What will it take for idiots like you to stop doing so??
[Note to "dang" or any other mod: yes, I called this person an idiot. I was trying to be restrained. I am tired of people making excuses for the greed of pharma companies. They always use "recoup R&D costs" as an excuse for price gouging, and killing people.]
(most money is spent marketing the drug, not developing it)
(marketing includes bribing doctors and healthcare systems to prescribe it)
But again mostly you need to get your drugs in the day.
Similarly, if you really wanted to subsidize pharmaceuticals for the rest of the world (and I'm not convinced you actually do) then again, hiding the cost in the pills, is a silly way to do it.
If on the other hand, you wanted to charge as much as you could get away with, and could pay off politicians in order to be allowed to take advantage of sick customers to line your own pockets then putting that in the cost would make perfect sense.
oh, you can: https://www.youtube.com/watch?v=FoU_9G1Ae_I
I'm surprised you don't remember the reason because it was in the news 24/7. It's because insurance costs 10X for sick people (because they also draw 10X in insurance), those sick people could not afford their insurance, and the ACA gave those uninsured sick people deeply subsidized insurance, raising the average cost to insurance companies of each insured person
sol_remmy seems to be making the case that lots of sick people didn't have coverage before ACA (Which would be a massive plus point for it if true) and that the number of new sick people buying insurance outweighed the number of new young, healthy people entering the pool, driving costs up.
There seems to be a lot of conflicting info on this, but at least Brookings made the case that the expected effect of ACA did actually happen, lots more people started paying for insurance and the average cost paid by individuals therefore went down (even while the average coverage they could recieve went up).
So we seem to be talking about the same thing, just with radically different facts about the same situation.
Is that before or after the sticker price that hospitals give insurance companies?
I'm not sure anyone can get accurate prices, so I'm immediately distrustful of your 10x number.
There is a very real and obvious reason. Thanks to the ("Affordable" Care Act, aka Obamacare), insurance companies have a captive audience of citizens (but interestingly, not illegal aliens) who MUST purchase their insurance product under threat of fine/imprisonment. There is no incentive to lower prices in this arrangement, and the insurance companies are immune from the pressures of a true competitive marketplace. The insurance marketplace is the equivalent of a prison commissary.
Surely there's simpler explanations for this that fit the facts better?
1. We need regulation of drugs/medicine/etc because we do not want some snake oil peddlers peddling arsenic as medicine?
2. Regulations prevent us from getting shit cheap! Baaaaa!
It's hardly a complicated situation.
Regulation on drugs didn’t suddenly get 8,000x more expensive for drug companies in the last few years.
An alternative theory, which I can’t prove any more than you can prove yours, is that due to some pharmaceutical companies realizing they were leaving serious money on the table, they tried hiking prices. Once they realized there would be little repercussions, all jumped in and we have a new industry norm.
The reality is that companies that make generics are simply too small to be able to compete with Pfizer, Merc, Glaxo etc and for all big talk our scientists in R&D and FDA are bought and sold like trading cards and their opinions change with the opinions of their owners, which is, for example, why FDA accepts garbage studies from Pfizer and does not from itty bitty company that competes with it.
A survey of hundreds of published economic studies and legal decisions of antitrust authorities found that the median price increase achieved by cartels in the last 200 years is about 23%.[1] Private international cartels (those with participants from two or more nations) had an average price increase of 28%, whereas domestic cartels averaged 18%. Less than 10% of all cartels in the sample failed to raise market prices.
Cartels do exist and do not always have a competing cartel. Especially if the cost to entry is too great for a competing cartel to get started. There is also the fact that competition doesn’t just instantly occur. There is a lag in the market and during the lag cartel pricing occurs.
It’s not some immutable law of the universe that completion always springs up in economics. This isn’t always the case and it isn’t always the case that a cartel, oligopoly, or monopoly will instantly lose its pricing power simply because a new player arrives. Sometimes the new player gets absorbed, or becomes part of the cartel.
Quote above from
OPEC
here's a non-member ( which is basically a cartel by itself) fucking it for them:
US
Here's another cartel:
Siemens and Mitsubishi Heavy Industries
Here's a competitor: Hyundai Heavy Industries
When real world meets economic studies, economic studies get clobbered
If there was there would be a competing cartel as it is the case everywhere.
Providing two examples of where there are competing cartels is not an argument that this phenomenon occurs everywhere (emphasis originally yours). Your logic is off.
[0] Source: I worked for MCI during that era. When we were selling flat rate 10¢/min, most of the folks we talked to were paying 40-60¢/min with AT&T for intra and inter-lata calls. Folks thought the price was so low that there was some hidden charge or it was some kind of scam. Of course AT&T (pre-SBC acquisition) responded and dropped their prices, but they took a long time to do it.
If I choose to forgo that cost and roll the dice that I am getting arsenic as medicine that should be my prerogative.
What we do not want as a society is that the guy on a corner stall that sells $4.00 USB chargers that may or may not explode sell a million pills to little old ladies which may or may not do what they are supposed to. This is the current societal contract.
[Edit:] Now I personally think we should live in the more Darwinian society and in my view we should allow dude on a corner sell pills just like he can sell chargers and should some benefit manager buy the pills from the corner dude from Nigeria without vetting the corner dude from Nigeria and his suppliers and therefore killing and maiming a few thousand old ladies, we should throw the book at the benefits manager and not the corner dude from Nigeria (who should be thrown a book based on fraud and not manslaughter) but that's just me.
2. The FDA keeps arsenic out of our medicines and that's totally related to fulfilling arbitrary and expensive effectiveness regulations! Ineffective and dangerous medicines like fen-phen getting through just proves we need more regulations! Baaa!
We self-evidently need regulation of medicines and medical devices, at least until we hit some glorious future utopia of flawless consumer knowledge. Otherwise, people will come along, and they will sell products and devices that will harm people, and they will do it by lying about them and covering up their problems.
On the other hand, it's possible that the relatively slow pace of regulation and medical testing could cause problems bringing potentially beneficial treatments to market. This might represent an excess focus on safety at the expense of the benefits in access to new and innovative treatments.
Naturally the argument should be something along the lines of "I think we should reform medical testing to enhance the availability of innovative treatments" versus "I think that the loosening of medical regulation will result in an increase in the harmful outcomes of dangerous and untested treatments". Both ideas that are totally reasonable to think might be the case, and for which you can imagine undertaking some kind of evidence-based process to establish if reform is needed, and if so what form it might take.
But of course, snark is much easier.
Canada->US, approved US->Canada, approved
i.e. Canadian companies are successfully selling to the united states medicine that is manufactured in Canada and is regulated by the US. US companies successfully selling products to Canada that are manufactured in the US and regulated in Canada.
If we had a reciprocity then we would have:
US->Canda->US auto-approved Canada->US->Canada auto-approved
i.e. if a product is sold to Canada then it can be re-imported into the US.
https://www.thestar.com/news/canada/2014/11/25/the_strange_t...
It seems to be because their payments are benchmarked to what private insurers pay and the private insurers don't fight price hikes on drugs with (for them) small total costs.
One fix might be to use a benchmark that is less dependent on whether private insurance bothers to negotiate. Another would be to allow HHS (working with FDA) to arrange for import of certain drugs.
What would happen if a challenger appeared? A new company gets some funding to try to make a small number of high profit drugs, competing with Impax? Impax can drop their price on those drugs lower than the challenger until the challenger is out of money.
Any incumbent has already paid the initial capital costs, while challengers haven't. Challengers can't win unless they've got big enough pockets to equal the incumbent, or new techniques that let them undercut even the lowest price the incumbent can do. But in a field like this, where the lowest price is apparently in the pennies, I can't really see how you can undercut enough.
I don't really see any simple solution to this problem.
How can a newcomer get into this market and undercut a competitor who can essentially drop prices as low as they want without losing their profitability?
As a solution though, I think we need reciprocity between drug regulatory agencies and open up drug sales between countries that have reciprocity. For example, if a drug is approved for sale in Canada it should be purchasable by people in the US and visa versa. It would allow competition between regulatory agencies (which should in theory make them more efficient because they have to compete) and lower the cost of bringing a drug to market because you no longer need to get approval in as many countries. Which in theory should lower consumer costs.
Combine that with transparent pricing so that everyone knows what the costs are before they need to make a purchasing decision and we might be part way to a solution.
The difference is two orders of magnitude.
> Why are prices so different in the U.S.?
> "In other countries, there are price control methods. The government steps in to ensure drug prices do not increase by a certain amount," Alpern says. "There are no price control mechanisms in the U.S."
> Between 2011 and 2016, mebendazole's price jumped more than 8,000 percent, from $4.50 to $369.
So it was indeed $4.5 in the U.S. - until the company decided to get greedy.
In other words, the article explains why the price growth was not capped. It does not explain why it grew in the first place.
In general I wish the drug company had taken time to contribute to this article and show their side of the story.
From what I can tell, there are no patents. That means the only thing making this expensive is the lack of competition. The company bought the marketing rights and took over manufacturing.
I would imagine after a second supplier enters the market prices will crash.
Let's not pretend this is some bizarre problem that needs more money to solve. Congress only has to erase one law.