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Comment by rtkwe | Hacker News Reader

Prices are low in Canada because they have the negotiating power of the entire country behind their single payer system driving prices down. To do the same in the US would require taking on the very powerful (because they have huge piles of cash from drug prices being so high) pharma lobby and getting it past the rabidly pro business Republican party. The only real way to do it would be a) move to a more centralized insurance system to negotiate prices (did you know Medicare the largest insurance in the US can't legally negotiate the prices it will pay for drugs?) or b) have legal limits on the prices of drugs set by fiat.

I'm dubious this is going anywhere, it seems like a ploy to get some talking points for the election in 2020.

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Strictly speaking, this is not true. The Patented Medicine Prices Review Board does set prices based on comparable prices in other countries, but the actual purchasing happens by a wide variety of public and private payers. Most working Canadians have private insurance that covers pharmaceuticals, and each province maintains its own separate drug insurance scheme for low-income citizens.

In response, pharmaceutical companies inflate prices of new medications, then negotiate confidential deals that make it difficult to get a realistic comparison for the purpose of setting prices. Because we don't actually have a single payer for pharmaceuticals (there is no national pharmacare program), this program fails at price discovery, since the review board does not go about the actual purchasing of said drugs.

The net result is that Canada has the 3rd-highest per capita drug spend in the world (Switzerland is #2).

> pharmaceutical companies inflate prices of new medications, then negotiate confidential deals that make it difficult to get a realistic comparison for the purpose of setting prices.

In reality, this occurs because the “new” product is junk and no better than the cheaper generic it’s replacing. With these government-sanctioned rebates, the manufacturers save themselves the embarrassment of trying to explain why nobody’s insurance will pay for it (it’s expensive junk).

Maybe for some products that are merely isomers of existing off-patent medications, but biologics are pretty amazing - Hep C is basically curable now, for example.

A drug like that pretty much names its own price. Even Canada's system has exemptions from its usual pricing controls for drugs like that.

> Prices are low in Canada because they have the negotiating power of the entire country behind their single payer system driving prices down.

This is not correct for a variety of reasons, first and foremost that the Canadian healthcare system (systems, really, each province administers its own) do not cover drugs in most cases. There are public programs for low income earners, otherwise it's out of pocket or covered by private insurance.

The real answer is simply that there are legal caps on pricing for most patented medicines, as a condition of being patented.

United Health Care, one of the largest private insurers in the US covers more lives than the Canadian Government and has every incentive to negotiate low prices.

This simple answer is satisfying to many who otherwise prefer single-payer plans, but doesn't really hold up to scrutiny

Health insurers in most states are subject to a minimum loss ratio that says they must payout 85% of the premiums they take in. Insurers operating near this cap actually have an incentive to pay out more money in order to raise the cap on their profits.

Then competing insurers can steal their insureds away with lower premiums. The caveat is that we must abolish employer sponsored healthcare, dump everyone on healthcare.gov, and provide a sufficient pool of healthy lives to make providing insurance viable.

I don't think that can explain it, because IIRC that rule has only been around since Obamacare, but the US/world price disparity for prescription drugs has existed much longer than that.

Well, if UHC decides to negotiate hard and fails, then people will leave UHC and move to another insurer which is willing to pay those insane prices.

If country X (with single payer plans) does the same thing, the only choice the pharmaceutical company has is to not be covered by insurance, which mean they won't sell their drug. Also the state can just pass laws to make the pharmaceutical company life's miserable. UHC can't do that.

> This simple answer is satisfying to many who otherwise prefer single-payer plans, but doesn't really hold up to scrutiny

I mean, it fails the even more basic scrutiny that Canada simply does not have a single payer for pharmaceuticals, or even a handful of single payer provinces. It's much like the US in structure (out of pocket or private insurance), simply with price controls.

I'm sure they are able to negotiate but the question is whether the savings get passed to the customers or payments keep going up?

> Prices are low in Canada because they have the negotiating power of the entire country behind their single payer system driving prices down.

A clarification: Canada does not have a single payer system. Rather it has multiple single payer systems.

Canada is a federation, in that while it has one national government, it also has ten provincial governments (and three territories).

Health care is the responsibility of the provinces, and so there is not "national" health care system (like in France or UK's NHS).

And drugs aren’t automatically covered by that single-payer system (except in hospitals).

Some groups are a federal responsibility for health care: (aboriginals, military, federal police, federal prisoners and veterans)

This can be solved overnight if voters wanted it, however majority seem to think that somehow the system is OK,so why bother? Pharmaceutical companies absolutely should be able to make money,and tons of it,if the drugs are good,but then one needs to ask himself: what's more important,human health,or the company,which will make 1 billion instead of, let's say 2 or 3? Also people temd to forget thst there a lot of large pharmaceutical companies outside US with no footprint in its market,yet they are pulling billions selling drugs to all those so called poor countries.

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