The Best Fix for American Drug Prices Is Already on the Books

In addition, public funding tends to more risk averse. Private industry generously rewards innovation. Public funding tends to reward not rocking the boat.

On average, group behavior can best be studied when assuming average humans have selfish, rational motivations. It's possible to create incentives in the public sector but you can imagine it would be much like academia -- a focus on pushing out high volumes of papers, getting grants, and theoretical/laboratory breakthroughs without any consideration of bringing them to market.

Most of the breakthroughs in medicine used by countries around the world were invented in the US and originally held by US companies -- the US has effectively subsidized and enabled foreign socialized healthcare systems by being a global exporter of medical technology. So the US adopting a state run medical system would likely have an interesting effect on the global medicine market, in a way much different than any other country (i.e. a massive reduction in global progress).

Most people advocating that seem to think the US system is a failed example of a 'free marketplace,' which is an embarrassingly incorrect belief but a product of significant misinformation littering both sides of the argument these days. The US healthcare system is in most ways further from a free market than that of any other country I know of. First of all, we have universal healthcare but only for the elderly (medicare) and the poor (medicaid), which creates an artificial demand imbalance that pumps the prices up for non-participants in those programs, which is even worse than a singular universal system. Then look at the ridiculously overpowered IP law in the US (especially in pharmaceuticals), the oppressive occupational licensing (harder to become a doctor here than anywhere else so naturally we have an artificial shortage of people qualified to do mostly very basic things), FDA-imposed pharmaceutical monopolies, inability to opt-in to experimental treatment (which also means malpractice insurance is always a significant expense), amongst others. This is not a free market, and even if we adopted universal healthcare tomorrow, it does not fix all the other problems listed.

Also, pharma researchers will accept massive pay cuts "for the science and the cause" as soon as Silicon Valley software engineers take massive pay cuts "to make the world a better place". I have many friends in biotech and they are as interested in maximizing their paycheck as software engineers, it would be naive to expect anything different.

You are right though, it does require some government intervention to incentivize long term gambles with huge up front costs. NASA and The Manhattan Project are no different. Spend lots of money now, knowing you wont reap benefits for years. Our current system of using temporary intellectual property ownership of the formula is broken.

http://www.commonwealthfund.org/publications/issue-briefs/20...

The reverse payments I see nothing wrong with. Imagine you're a drug company holding a patent. A generic company decides to try and invalidate it. You think there is a 50% chance they'll win. The generic company agrees.

You have two options: 1) spend a ton of lawyers and still possible lose, 2) go to the generic company and agree to let them produce the generic 5 years before patent expiration.

With the 2nd option, you're basically agreeing to split up the pie evenly rather than risking it all.

In every case where reverse payments are made, the drug goes generic earlier then if they went to court and got the patent upheld.

Eliminate reverse payments and what you're doing is making lawyers rich. In many cases the branded drug company would win and block generics for many more years than if a reverse payment was made.

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

It is very much like many other products. If you don't have food you will die of starvation, if you don't have shelter you will die of exposure, etc.

The real issue is drug patents. Nobody is complaining about the price of ibuprofen any more than they complain about the price of eggs. But the patent system is doing what it's supposed to here -- twenty years ago any patented drug didn't exist, and it nominally only exists now because the inventors judged it to be sufficiently profitable to conduct the research. If you make it less profitable, you'll get less research.

There is no drug research fairy. If you don't want the money to come from high insurance premiums that pay for high drug costs, it has to come from somewhere else. And just devising some other method (like taxes) of extracting the same money from the same general public isn't really going to change much.

This is the biggest flaw in how we think about many important issues. Market economics isn’t something you decide to apply or not based on public policy. Instead, its the framework of actions and consequences against which you must determine public policy. If your policy is to have private companies develop and commercialize medicines, then you need to ensure functioning markets from drugs. That means avoiding antitrust issues, but also avoiding free-rider problems that result for drugs being easy to copy.

You can, of course, do something else, such as having the government pay to commercialize drugs. What you can’t do is eat your cake and have it too, by deciding that you can somehow “opt out” of market dynamics for industries you deem to be of public importance. It’s like saying that “supersonic flight is important, so we ought not to look at it through our normal understanding of aerodynamics.”

The free market solution would be to send your patients to Egypt to get treated. Ecnonomy class flight + drugs = $2000 (maybe $3000 from Hawaii).

The biggest issue with American health care is if you have something acute that needs immediate treatment. Then you're f*ed. But for 95% of non-acute cases, travel to Latin America, travel to Europe, travel to North Africa, or Asia and get the drugs + plane ticket at out of pocket prices lower than your co-pay.

I know this is ecologically terrible in terms of CO2, but it's what I would be doing in that case.

the last numbers I saw, 2015, showed marketing budgets for medicine to be often times twice what was being spent on R&D in the US. currently, only four countries allow this time of marketing: New Zealand, Brazil, Hong Kong, and United States.

it sounds like the US isn't necessarily subsidizing drug R&D, and instead is subsidizing marketing.

Through reading up on the 'opioid epidemic' you realise that a lot of this 'innovation' is not that great. Slow release tablets? There is no big deal there. Furthermore a lot of this 'research' is backwards, i.e. create a molecule that can be patented, see how much of it kills rats and then try and find some medical benefit for this 'new molecule'. If it treats cancer then is that because it kind of prolonged someone's life by a week even if the others in the trial were essentially killed by the 'new molecule'?

This went on with AMGEN and Johnson + Johnson with the EPO drug that Lance Armstrong so enjoyed. They sold this drug into many, many 'off label' side markets - could the same molecule be good for stroke victims too? No trial data, but with profits to be made this sort of thing happens.

You can market a drug a dozen ways even if it is only paracetemol. Back pain? You can buy this tablet. Hangover? This one mixed with caffeine. Kids version? Brightly coloured with a lower dose per pill. Easy.

Then there are those drugs sold with the 'dating website' business model. The 'dating website' business model is to have a few success stories but have everyone else paying their subscription as long as possible. Statins are sold like this, the Big Pharma scam is to have people on these things for life.

The rest of the world - Canada included - care about healthcare more than money. In the UK healthcare is a service, not a business first and foremost. The NHS has to balance the books but not be putting profit before people. In the US it is backwards.

The rest of the world would do better without U.S. Big Pharma stifling innovation and sponging off their citizens.

But if that's the case, it just seems like really good evidence that squeezing drug companies and making aggressive demands drives down drug costs and encourages them to move R&D costs out of the country. Why wouldn't the US be all over that?

I dunno, I just always feel like I'm missing something when I see this. Other countries have better health care than us, but we can't use their tactics, even though they seem to be working really well, because... we're nice, and we don't want their drugs to cost more?

If we accept that having R&D based out of the US is a bad thing, then why are we fighting to keep it here? Shouldn't we increase regulation until all the pharmaceuticals move to Canada?

Also given a capitalistic marketplace you'd think US drug consumers would also band together to bulk purchase and drive down the rates. You'd be crazy to make a law to prevent that kind of thing.

Don't blame other countries for your own governments inability to bargain.

Pharma companies still have patents and exclusivity deals. They will price the drug at a point where it's profitable, and countries will buy those drugs if they work.

Mods: Can you update thread to point to the above link? Bloomberg bamboozled my post.

Anecdote. I take Humira for psoriatic arthritis. It works well for me. I have variously paid $0, $30, $180 for a 4 week supply. The insurance companies require that I use a specialty pharmacy to dispense this. Those companies appear to exist to put as many road blocks in the way of refills as possible. Long phone calls every month, shipping problems that cause a weeks delay, then all subsequent doses are delayed, then randomly need a pre-auth from my rheumatologist, before you know it insurance has managed to avoid paying for this medication for 3 months of the year

This doesn't pass my sniff test. The original article's point isn't that companies are marketing just so they can flush money down the toilet. Of course it's profitable. The article's point is that we as a society want them to spend more money on R&D; and our current strategy seems not to be working.

Companies would prefer to spend no money at all. If they could recoup their investment by spending no money on marketing, research, development, or production, they would. So a good company does the next best thing: they find the least costly, most efficient way to make money and prioritize that.

If companies are investing the majority of their resources into marketing, that at least suggests that they view marketing as the most efficient way to make money. Since we as a society would prefer that R&D be the most efficient way for them to make money, it may very well be reasonable to look for ways to decrease the cost of R&D and/or to increase the cost of marketing.

Shortening the exclusivity period of a patent might be an effective way to decrease the value of marketing, since marketing returns likely benefit from exclusivity.

Sometimes it's worth it! If you need to take a drug three times a day and the new version is only once, that can improve patient adherence and outcomes.

However, sometimes the added value is minuscule. In that case insurance companies should just say "we're not paying for it since the added cost is not worth it".

Problem solved.