Removal of Safe Harbor Protection for Rebates
federalregister.gov
federalregister.gov
Good read, and a good example of why regulation is just necessary.
It all depends on what the definition of the word "copay" is, doesn't it?
Having a single market everyone trades in does have efficiency advantages, but the main reason we have had organised markets in jurisdictions all over the world, for thousands of years, is because the people making the rules wanted transactions to be done out in the open to keep the people doing the transactions honest.
There is still a market price because the customer has an alternative. There is a second best drug. In the worst case (e.g. the only alternative is death), there is still a price because the drug company can't demand a billion dollars if the customer doesn't have a billion dollars.
The fact that we get into this position of no alternative but death is problematic, but it's also how the patent system is designed to work. If the drug didn't exist, you would die. If it does exist, you have the choice between death or bankruptcy. This is still not ideal, but it's better than the original situation, and eventually the drug patent expires.
There are a number of implementation failures with this, like public funding going to drug research that is subsequently patented, and a regulatory system that gives no one an incentive to do clinical trials for promising treatments they don't hold a patent on, and so on.
But the basic idea is not without merit. It costs a mint to do research and trials. If there isn't money in it then companies wouldn't do it. So if there is a patented drug which is the only thing that can save your life, would you rather have to file for bankruptcy paying for it, or have it not exist because we said they're not allowed to make enough money to get them to do the R&D to begin with? In some cases there isn't really a third option.
In principle you can have the government fund the research instead of depending on the market, and then not patent it so patients don't have to pay a lot. Which works fine when that finds the cure. But if it doesn't, do you still want the system that allows the market to find it as a backup, or not?
That's definitely a perspective, I guess.
There's a much stricter limit than that. I keep seeing people say that you can charge as much money for lifesaving medical care as the patient has, and it's nonsense. That hypothetical patient is choosing between whatever remains of their life and leaving an inheritance of $1 billion. I guarantee you that the world is chock full of people who would kill themselves for $1 billion. Life insurance policies exclude suicide for a reason, and they pay tens of thousands of times less than that.
That all seems fair and reasonable to me. The companies both benefit from and are constrained by regulation. They wouldn't exist without regulatory protection, so it's fair that it comes with a cost. In reality the question is what constitutes fair regulation, and that's something reasonable people can disagree on.
And then you don't get the expensive drugs.
Suppose there are 50,000 people with a fatal condition. Researching a cure and getting it approved would cost $5B. Therefore each person needs to pay at least $100,000, or there isn't enough money to fund the research. If you say they can only charge $10,000/patient, no cure.
Whatever price you set as the max they can charge, that's the value you're assigning to a human life.
With just a few minor word substitutions, what you just said could as easily be the speech a bank robber, trapped in the bank with a dozen hostages. If that $10,000 reflects the profit motive taken to an extreme rather than anything related to the cost of the drug, then it’s the company placing a number on human life. Specifically they’re saying, “It’s only worth our time if you pay us enough for us to 100x+ our margins.”
In order for that to happen, you would need something that affects a nontrivial number of people for which it's possible to inexpensively find a treatment and yet only one company and no government has bothered to do so.
Unless... you put “research” in there as a confounding factor to be cute?
Those are prices, not net margins. How much did the research cost, including the failed attempts before they found one that worked?
This is why "research" is a necessary qualifier. If you just find the occasional schmuck who got a good deal on a patent that was worth more than the seller anticipated, that isn't telling you much. The likes of Pfizer and Merck are public companies, you can go find their net margins from their financial statements. They're not 99%.
> There are many more, their credit pharma companies have accountants thst would make Hollywood blush, so it takes some digging past the claims of R&D (dwarfed by marketing budgets in many cases) being the cost driver, and not record profits.
The marketing budgets are a byproduct of insurance. Typically to make $100 in revenue you have to convince a customer to pay $100 for something that provides $110 in value to them. Throw in insurance and you make $1000 in revenue because the patient pays $100 for $110 in value while the insurance pays $900 more, which makes it much more valuable to advertise, so they advertise much more.
Insurance and patents are basically incompatible. The idea of patents is that you give someone a temporary monopoly and the market (i.e. the customer) decides how much the product is worth before they refuse to buy. The idea of insurance is that there is a low probability high cost event that the insurance pays whatever is necessary for if it comes to pass. But if the insurance pays whatever is necessary, and the seller has a monopoly, the seller can charge arbitrarily high prices. Or the price is limited by the patient's copay percentage, i.e. the insurance does nothing but raise the price by the exact amount the insurance covers, because the patient discounts the price by that amount when choosing whether to purchase.
People would pay a lot less in total, i.e. about the same amount for drugs and far less in premiums, if insurance companies would stop covering patented drugs whatsoever.
permit Indian generics into the USA
"India is the world’s largest exporter of generic drugs, making almost 40 percent of all new generics the FDA approved in 2018"(0)
(0) https://www.bloomberg.com/news/features/2019-01-31/culture-o...
This applies even if the drug is just the best one for what it does.
edit
Unless you mean that regulation in the form of patent protections.
This will however not solve anything only make it visible. Copay should be changed to work on net price after rebates, and some serius investigation of the middlemen needs to be instigated.
Some better, free-market oriented solutions would be to remove patent protection from drugs discovered from tax payer funded research, or auction the right to be the exclusive distributor.
It’s very sad that a large contingent of intelligent tech people, who have made small to large fortunes operating in one of the few unregulated industries in America (software), begging for yet more regulation in biotech and pharmaceuticals. The system is extremely distorted as it stands.
That would make government funded research a poison pill nobody would rely on. If you come up with the idea for an app, then someone else spends a bunch of money hiring coders to actually build, test, and commercialize it, does that give you the right to force release of the app as open source?