Hacker News Reader

Comment by remy_luisant | Hacker News Reader

Stupid question from an idiot from communist Canada: Can't you just import the bloody pills from somewhere that isn't the USA?

View on HN

Nope. It's actually against the law. There are some in congress that have been fighting for years to allow US citizens to personally import from Canada. There used to even some be surreptitious "tourism" along the border for day trips to Canada get prescriptions filled, but they put a stop to that shortly after the ACA passed.

I think the FDA will fight to your death for your right to safe medicine.

I'm baffled by the snark. Could someone please attempt to reconcile the following positions for me:

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!

FDA is given power to do a necessary job: keep us from eating poison instead of medicine, or whatever. But the same power is abused to prevent competition by "suggestion" of the industry that provides these medicines.

It's hardly a complicated situation.

Exactly: it is a very simple situation - we collectively as the society decided that we do not want garbage peddled as medicine. FDA established how we determine "not garbage". Full stop.

Edit: yes, based on our current position Export from US->Other Country->Import to US for medicine violates "Not Garbage" state. It is no different than importing USB chargers that sell in China for $1.02. We do not want the vast majority of the population engaging in this though those who know how to are allowed to do it themselves.

I think you are jumping to a conclusion without having enough supporting evidence.

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.

It contradicts basic economics. If you raise prices 8000x and I will go into competition with you and raise prices 7999x i.e. do what MCI did to ATT and Vizio did to Samsung.

In the examples you gave, they were huge markets and they were ripe for disruption. As the article laid out, most of the drugs which have experienced this huge hike are ones with very limited markets. It’s not worth it for a pharmaceutical company to jump into a new drug with almost no market for it.

Medications blow electronics market out the water.

That’s such a vague statement you could either be wildly wrong or mostly right. If you’re talking average profit margin, yes medications generally have higher, but electronics are fairly good margins generally too. If you’re talking market cap / overall market size, you definitely aren’t correct. Even the biggest pharmaceutical company pales in comparison to the electronics top three.

Not if there is collusion or cartel pricing. There are also regulatory means of limiting competition. The basic economics notion works in a market that is mostly free. I suspect that most things related to the American health care system do not qualify as a free market.

There's no cartel pricing in medicine. If there was there would be a competing cartel as it is the case everywhere.

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.

Your view of economics does not match reality.

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

https://en.m.wikipedia.org/wiki/Cartel

My view of cartels matches non-academic reality. Here's one:

OPEC

here's a non-member ( which is basically a cartel by itself) fucking it for them:

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

You wrote:

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.

name other cartels and i will provide their competitors

You don't get competition on day one, and one week of 8000x prices is worth more than 10 years of 1x prices. However, you can and will drop prices when competition shows up, so you see 8000x profits when competitors see a competitive market.

neither AT&T nor Samsung were able to do it against MCI or Vizio. But, sure, lets pretend it is different this time.

AT&T did not have a total monopoly and the ability to charge 8000x prices. Remember the drug company is already ahead even if they never sell this drug again. That's not true of less extreme price increases.

During the days where MCI had a pronounced savings over AT&T (aka mid to late 90s), it was only 5-6x difference [0]. Based on that, I agree, totally different ball game with pharmaceuticals (like 3 orders of magnitude difference).

[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.

Presumably, other first world nations also regulate drugs. Are the drugs as expensive in those nations? If not, why not?

They have different rules than we do. Adjusting rules is fairly easy: change the bloody FDA. Agency lives at the pleasure of administration. We had (D)s in control of all three branches of government. Now we have (R)s in control of all three branches of government. The reason why this is not changing is because a compelling case is made that the current rules for !Garbage are better than the proposed alternatives.

The reconciliation is that some countries have what appears to be perfectly adequate regulations to address #1, but much smaller effect of #2, suggesting that some aspect of the US regulatory environment is suboptimal.

I enjoy having the option of buying drugs that are covered by strict regulatory controls. I understand that there is a cost associated with this.

If I choose to forgo that cost and roll the dice that I am getting arsenic as medicine that should be my prerogative.

And it is - you can import those drugs just fine. It simply means you have to jump through some hoops.

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.

1. The vast majority of the cost of FDA regulation is in ensuring the effectiveness of medicines, yet whenever someone defends the purpose of the FDA they cite examples of medicine safety.

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 have one very interesting and totally unregulated market that is quite similar. The market is cosmetics and beauty products. As long as products make no medical claims it is total buyer beware. I seriously doubt anyone in the United States wants that to be applied to medicine and medical instruments.

In line with the enduring trend of public discourse, all nuance is cast aside.

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.

Safety might be a good reason to prohibit imports from a place like Tanzania, but it makes no sense as a reason to prohibit imports from Canada. Canada has some equivalent to the FDA which is about as good as ours, so there should be no safety problem when it comes to importing their medicine.

We do not have reciprocity agreement with Canada regarding drug approvals.

Anything approved in both countries ought to be OK, no?

You are describing this:

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.

I’m saying that even if we don’t have reciprocity, if the drug is separately approved in both countries, it should be legal to buy in Canada and take to the US.

No, because our system of approvals does not treat re-import the same as direct import.

By “should,” I’m saying it ought to be structured this way, not that it actually is at this time.

Sure, we should just redefine it.

What?

We should define that if a drug is OK to buy in Canada it can be imported to the US.

Both of these things can be true?

Only if you can define lines.

People do but there’s an entire industry devoted to lobbying against competition.

The issue is that there is no real competition for drug pricing in Canada due to the fact that the Canadian government imposes price controls. You are, of course, free to argue that this is a better way of doing things. But it's not "competition."

So there's no way for a company to compete on how to hit that price threshold while still turning a profit?

Clearly Canadian system is flawed and unable to viably finance modern drug development.

https://www.thestar.com/news/canada/2014/11/25/the_strange_t...

With a few exceptions its not legal to bring foreign drugs or re-import drugs (made here and sent overseas and brought back) into the USA.

Reply on news.ycombinator.com