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Comment by refurb | Hacker News Reader

It’s important to note that this case is for generic drugs, not brand name drugs. The expensive drugs that make the news are generally the branded kind. Generic drugs are usually very cheap due to the level of competition.

Interestingly, the US has some of the cheapest generic drug prices in the world due to the level of competition. I had read that for some generic companies, they make almost 100% of their profit by wining patent cases. Once competition ramps up, their margin is razor thin.

So based on that, I guess it’s not that surprising companies would collide in order to improve margins.

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Can you please share where you read that "the US has some of the cheapest generic drug prices"?

My mom, who lives in a southeast asian country, came to visit me in the US last month and I asked her to buy generic antibiotics; ear drops; artificial tear drops; generic antihistamines; and they all are much cheaper than what I would have paid here (and are equally effective in a way that I've been weathering fine in this allergy season with these drugs). My significant other, who is from the same country as I, is a medical resident in the US and she still orders meds from her parents.

Do you have some example prices for comparison? Most of us have no idea what generic drugs cost outside of the US.

This is a complicated one: US generics are vastly more expensive than international generics, but at least part of that is because US manufacturers sell those drugs abroad at the cost of production, making up their remaining costs in the US. People in the industry have described it to me as a tactic of "we help people in need, please don't regulate us".

This isn't the whole story; east Asian manufacturers also produce cheaper products, for a bunch of reasons from lower costs to lower regulation to lower profits. And it's notably not the case for non-essential, non-basic medicines (e.g. most psychiatric meds), expensive new generics not used abroad, and certain other high-demand generics like insulin. Those are either expensive everywhere, or more expensive in the US than other wealthy countries and largely unused in poorer countries. (How all this relates to your story depends a lot on whether we're talking about Bangladesh or Taiwan.)

But as far as generic antibiotics or antihistamines, it's going to be hard to separate "US manufacturers overcharge" from "US manufacturers sell cheap abroad".

> US manufacturers sell those drugs abroad at the cost of production

Not everyone agrees with that statement.

First of all, purchasing negotiations are all secret. US manufactures could very well be saying one thing, and doing another.

Donald Trump said something along those lines some time ago, calling EU "Freeloaders". There is a Wall Street Journal article echoing his comments.

Here's an answer from EU's Health Commissioner Vytenis Andriukaitis:

https://sciencebusiness.net/news/drug-prices-row-eu-health-c...

tl;dr: according to him, Trump was just lying.

I should have been clearer about "abroad"; I didn't mean Europe. Trump is referencing the claim that Americans pay for drug development and Europe gets cheap products from it, which is dubious at best. And I don't think US-developed medicines are being sold at-cost there, even if they are cheaper.

What I'm talking about is medicines that are donated, sold with differential pricing, or assigned 'voluntary licenses' to increase medical access in underdeveloped countries. Voluntary license medicines are required to be produced with substantially different appearances from their developed-nation analogues, specifically so that they won't be exported back to undercut those products.

All of those programs are fundamentally good things which save lives, but they lead to some pretty strange outcomes and in turn strange reporting. It can be vastly cheaper to obtain a medicine in an underdeveloped country with supply shortages than in the first world, and that sometimes also prompts articles saying that such-and-such a medicine "only costs 10 cents in other countries!" As far as I know, this is mostly an issue in the US; most other high-differential-price countries have socialized healthcare or other functional solutions like Singapore's, but the US has a lot of extremely poor people who end up paying much higher prices than equally impoverished people abroad.

https://apps.who.int/medicinedocs/documents/s17815en/s17815e...

I should clarify that with "cheaper generic drug prices compared to other western countries".

By comparison, the United States has historically had low generic drug prices and high rates of generic drug use (84% in 2013), but has in recent years experienced sharp price increases for some off‐patent products.[1]

[1]https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5594322/

It's surprising in light of the prevailing idea that markets enforce competition towards the lowest price. This idea forms the basis of the claim that market-driven healthcare benefits consumers by lowering costs.

it is a very elementary idea that applies to few real life markets. things are more complicated than what your learn in basic economics

> applies to few real life markets

It applies to almost all real-life markets. It's so standard that we don't even notice it happening, and focus on the exceptions. There is no level of economics you can reach where "competition drives down prices" stops being taken seriously; Nobel-winning left-wing economists like Stiglitz and Krugman accept that as true and relevant. So does Marx(!), who focuses on how lower costs are achieved at the expense of workers rather than capital holders.

Restaurants run at effectively zero margin. Lawn chairs and pencils and window blinds sell for essentially the cost of manufacturing and distribution. Even complex services like VOIP calling have moved from high profitable industries to "essentially free". Markets aren't inherently noble any more than they're inherently evil, but a major part of their value is that price-fixing hardly ever works.

Without appreciating that, we lose sight of just how strange healthcare (and college, and housing) are. When prices stay far above costs despite what presents itself as competition, there's something significant happening that deserves more attention.

In almost all markets competition produces pressure towards consolidation and monopolization. You need strong regulation to keep things competitive

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