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Comment by LorenPechtel | Hacker News Reader

I still think the approach I proposed years ago would be a big help: Turn the usual arguments on their head, prohibit all negotiation. Drug companies would be required to sell to all customers at the same price. This would end all cost-shifting, it's fair for all and forces the drug companies to actually compete on the end price.

This would end this sort of preferred drug shifting, it would end the game of state Medicaid often mandating the name brand rather than the generic because most of the money is federal and the state receives a big enough rebate that it's cheaper for them. Applied internationally (we don't have direct authority over foreign drug companies but we could make it a condition of importing them to the US that they follow our pricing rules) and the big subsidy to the UHC countries goes away.

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> Drug companies would be required to sell to all customers at the same price. This would end all cost-shifting, it's fair for all and forces the drug companies to actually compete on the end price.

Then you only sell the drugs that do profit, and stop making the ones that cost money. You cant make people do what they don't want to do, pharma is no exception.

The source of this problem is patent law, importation restrictions, etc. In short, competition.

> Then you only sell the drugs that do profit, and stop making the ones that cost money.

This is the situation we're in now. Just different people shoulder differing amounts of the cost. Equal pricing won't change the fundamental economics of drug research.

> This is the situation we're in now.

Cost-shifting is a valuable effect in the pharma industry, because high profit-margin technology might subsidize low-profit high cost drugs.

Price differentiation is usually net positive effect, but being inequitable people have a reaction against it and more so in health related services. If you could only sell 1 type of seat in an airplane, for example, you would have lots less flying than today, by reducing the amount of rich people flying business/first because of loss of quality, and by reducing the median/average person because of increased cost.

So yes, from an economic standpoint, equal pricing has an effect on the research and development of a product. This should be obvious in this community, for example, look at Google. Almost everything loses money but search. Equitable pricing would make search cheaper, and all the other services paid.

You make people do what they don't want to do by passing laws. It is all on our cowardly, selfish, incompetent lawmakers.

I agree 100%. The approach I like is what I call "lowest negotiated price". How it would work is that buyers (i.e. insurance companies) could still negotiate for a lower cost, but whatever that cost ends up being is the cost _everyone_ pays. This allows buyers to continue to try to get a better price if they can, while likely making sure the price that is agreed upon is fair to all.

That sounds like an interesting solution.

It makes me ponder a "highest negotiated salary for $position" approach to combat income inequality

We have most of that in a union. You can literally trace the decline of middle class income to the decline of union membership - i.e.:

https://www.russellsage.org/sites/default/files/Stone_Arthur...

There is evidence that this would actually increase prices across the board. How do we know? Such a system already exists.

The price that Medicaid plans pay is either 23% less than the average price paid or the “best price” (if lower).

When this was instituted, drug companies actually pulled back on their discounts to non-Medicaid accounts, so as to not trigger the “best price”.

Right now there's likely to be 100 different prices for almost any medicine or procedure - it depends on who's paying. I think one of the frustrating aspects is that if you are uninsured, you are likely to pay the HIGHEST rate - even though you are likely to be the least able to afford it.

I agree that on non-generic drugs that the price would likely remain high - however if everyone paid the same rate (low or high) then it would at least discourage some of the type of pricing we see now where a procedure is provided below cost to a specific group of users to make sure those members (i.e. customers of specific insurance companies) are able to be kept "in network", while charging much, much higher rates to others to make up the difference.

Another part of this is the rise of 'rebates' for PBM's and insurance companies, that does not change the price paid for the drug.

Except Medicaid is contaminated by rebates from the drug companies to the states. That's one of the things that needs to be banned.

Perhaps they should just prohibit price and coverage changes mid-year. It's fine if prices change from year to year, but what's not fine is if the drugs that are covered are suddenly not covered after you enroll in a medical plan for that year. Prices should be locked in for the following year by summer of the previous year and in the fall of the previous year when people start shopping for insurance plans, insurers should be able to provide a list of medications that they will guarantee to be covered.

A better approach might be to prohibit insurance coverage for insulin altogether.

Part of the reason healthcare is expensive is that the entity paying for the product is not the customer of the product. When the customer pays, the customer becomes price-sensitive and markets work the way they're supposed to: Prices go down. Since insulin is inherently cheap, making everybody pay for it out of pocket would be both humanely reasonable and it would stabilize prices.

You realize this could potentially increase prices right?

Every pricing decision undergoes a cost-benefit analysis. If I know that offering a small account a lower price means everyone gets that price, I’d be willing to lose all business to the smaller account because in the end I get more money.

A much better proposal would be no net pricing. The price that everyone pays is public knowledge.

As I said, it would end cost shifting. That would mean those paying the least would now pay more, but I'm not saying to preclude insurance or the like (I'm talking about the price the drug company sells it at, not who pays or the like), I don't see that it's going to be a problem.

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