Big Pharma is using faux generics to keep drug prices high, critics say
arstechnica.com
arstechnica.com
This is outrageous. Nothing new, I know, but every time I read about this I'm outraged. I trully think there should be a law on maximum margins at least for life saving drugs, or some kind of regulations preventing this phenomenon.
What incentive is there to produce new drugs when they are making plenty of money gouging people on price with the old drugs?
They also have a patent on Descovy, but Descovy is not on the market for PrEP.
Right now, a month's supply of Truvada costs $1800. Six months ago, it cost $1400.
Truvada has a considerable amount of damaging side-effects that prevent many people from taking the medication, and cause harm to those who do take it. Truvada is hard on the kidneys, so much so that patients have their kidney screened every 3 months while taking the drug. Truvada is also hard on people's bones. Brittleness and fractures can happen. The medication can and has damaged people's bodies.
Descovy isn't without side-effects, but the drug doesn't harm the kidneys and bones as much as Truvada.
However, the patent for Truvada doesn't expire until 2020. Gilead has been dragging its feet for years when it comes to introducing Descovy for PrEP. A lawsuit alleges that Gilead is purposely timing their introduction of Descovy for PrEP to line up with Truvada's patent expiration[1].
[1] https://www.marketwatch.com/press-release/mass-tort-alleges-...
Along the same lines, why invent a cure, when you could instead invent a lifelong treatment?
- Completely destroy competitor's lifelong treatments
- Can be sold at a higher price
- Will help you make best use of your 20 year patent
- If particularly effective, will get you priority on drug testing, grants,... and good publicity.
Why would drug companies develop those cures? Because they can market them at quite high prices and still save insurers money (and it is an improvement over the long term treatments that exist, and so on).
Here’s two reasons:
1. Because consumers will likely prefer a cure to a lifelong treatment
2. Because your lifelong treatment is going to be out of patent before you can collect on a lifetime of purchases.
The existence of the vaccine industry demonstrates there is a market for a cure. As do immunotherapies. Where cures are possible, they are commercialized.
It wouldn't surprise me one tiny bit, given the US' track record with letting corporations do whatever the hell they want to, to people.
I'm not saying it's true, but you can't simply dismiss a theory about the corporate world screwing over the American people with a simple "no way that's too ridiculous to ever happen", any more. Especially if it's directly in line with what the free market would demand, as well as it not happening being contingent on a corporation being "nice" from the good of its "heart".
Please tell me instead that it's false because there is regulation in place, or there is some strong market force making them take the other route.
Because your implied argument would be "that is inhumane and corporations wouldn't do that"--now THAT is embarrassing.
Off the top of my head: Planned obsolescence is a thing. Whole companies of people in India calling your house trying to trick you into buying computer-virus protection is a thing. Entire nations conspiring to steal industry secrets from other countries is a thing. Operation Mockingbird was/is a thing. General corruption is a thing and people working together when they have common goals is a thing.
So what's your point in saying that something sounds like a "conspiracy theory" when there are clearly many, many people conspiring to do wrong all the time?
And the existence of the vaccine industry does not prove that cures are always commercialized when possible.
For once, the health industry works on planning its own obsolescence (as it should, generally), and a major conspiracy theory pops up countering the trend...
Another domain you didn't mention: imagine the crisis in the food and distribution industry if everyone started having a healthy diet overnight... While those sectors may not have started the obesity epidemics deliberately, they now rely on its expansion for growth.
https://fortune.com/2019/02/05/pfizer-pneumonia-vaccine-trea...
To not be glib: first, Prevnar is an outlier (https://www.fiercepharma.com/special-report/5-prevnar-13) and lack of profitability in basic vaccines is a public health problem in terms of investment in R&D and producer concentration https://magazine.jhsph.edu/2002/fall/vaccines.html (dated link but still accurate). They aren't like normal pharma in terms of their margins and R&D profile. You develops something for macular degeneration and it's a one off that can be depreciated. Influenza and some others require international monitoring, forecasting, sample collection and new work every season. It's closer to biologics or genetic therapies in terms of cost of revenue, but priced nowhere near that because of the economies of scale and, frankly, social responsibility of the producers.
And the global vaccine market is work $32B right now, so there is obviously a lot of profit being made.[1]
[1]https://www.prnewswire.com/news-releases/vaccine-market-size...
You're mixing market cap with annual sales. Twitter's revenue was $2.61B last year.
You are confused about terminology. Vaccines don’t cure. They are preventative.
That is not true. For one, the FDA has little influence on the degree of difficulty in building and approving new hospitals. You'll note too that one of the problems is that existing medical facilities are disappearing from poorer and rural areas.
For another, the "shortage of residencies and medical school intake restrictions" is due to the Balanced Budget Act of 1997, which "capped the number of residency slots the federal government would fund ... The shortfall-what is not covered by the Federal government-is paid for by the hospitals where residents train. While it is possible to increase the number of residents they train, to do so, hospitals must fund the entire cost of those training positions." - https://thehill.com/blogs/congress-blog/healthcare/266610-sh... . The FDA has nothing to do with that.
What? No. These are well-known structural problems that are mentioned often. I mentioned one related to funding residency programs.
Another which has come up is the lack of public pricing information. Eg, "how much does it cost to give birth at your hospital if there are no complications?" - https://www.vox.com/2016/5/5/11591592/birth-cost-hospital-bi... . (I believe this information is now required to be public.)
A third is how Medicare is prohibited from negotiating for better drug prices.
The exact details of your comments are important because if you don't know the source of the problems - which in part are due to the same federal government that you pin your hopes on - then you are at a high risk of being manipulated by the same mistaken views that have perpetuated this broken system.
Take your final statement, "takes too long, too regulated".
That is a common talking point pushed by those who want to sell "drugs" that haven't been proven to actually work, and by those who are philosophically opposed to government regulations.
Quite simply, the US isn't the only country developing new drugs. Other countries have their own, different regulations, and if it were a simple matter of the US being "over regulated" then we see companies elsewhere doing significantly better.
Or, look at all the people who, desperate for treatment, go to another country with weaker regulations to seek an experimental treatment which not only doesn't work, but drains them of money, and sometimes makes things worse.
There is nothing wrong with the fact that the government keeps drugs that are not proven to work out of people hands, but somebody to bear the cost of doing the tests, if not them, then who? Life sciences have an incredibly high failure rate. Imagine the number of times your code fails to compile properly when you push to CI. Imagine the number of tries it takes for you to get it build successfully and deployed. A single cycle or iteration in computing is measured from anywhere nanoseconds to hours. Machine learning perhaps takes slightly longer. Take your number of tries for code compilation and assume that it takes the same number of tries to get a drug approved. In life sciences a single cycle or iteration is a matter of months and years or in the worst case, decades. Lyme disease continues to plague us thanks to the fact that a readily available vaccine was shut down for political reasons. We have more than enough life science grads to easily triple, quadruple or even increase the number of researchers in the field by an entire magnitude. There is absolutely no shortage of biology majors. You can hairsplit and yak shave the things that I attribute to being the root cause but massive "production level" double blind-type trials aren't the sort of thing that your average researcher can exactly afford. It's easy to be dismissive when your entire day job involves sitting on an Aeron chair in front of a massive monitor and value is generated when you push new code to the cloud. Your git push won't magically bring a molecule into production if the powers that be takes their own sweet time with accreditation and certification and expects you to pay for it (and no in pharmacy, there are no magical AWS grants or credit bonus to help lower the cost your double blind human trials when you send your buddy a referral link)
The EU has its own rules which are different than the US ones.
Some of the European pharma companies which develop drug cures are Merck, Boehringer-Ingelheim, Bayer, Roche, Novartis, Sanofi, and GlaxoSmithKline. These are as advanced as their US counterparts.
Because of the ease of moving money between countries, that "money sloshing around" also funds research efforts in Europe, and India, and Japan, and elsewhere. If they could be proven to be successful there, under different rules, then there is easily the funding to make it also work in the US.
And, we know that happens. One of the more unethical attempts was Theil's funding of a herpes vaccine https://www.vox.com/science-and-health/2017/1/31/14364090/pe... and reference in several HN posts including https://news.ycombinator.com/item?id=15115263 .
While on a completely different spectrum, Cuba has several vaccines on the international market - despite US power.
https://en.m.wikipedia.org/wiki/Tuskegee_syphilis_experiment
The relative spend on R & D vs Marketing
The fact that the taxpayers already funding a lot of the research (university grants mostly, I believe)
The fact that lifestyle drugs are much more likely to be developed.
It would seem hardly any new antibiotics are being developed (I'm not saying none) despite the so-called superbug crisis
I'm just not sure the current system works for most people.
I see this argument a lot, but most people don't realise the amount of research, work and vast amounts of money that goes into turning an academic finding into an effective drug on the market. Identifying a cellular pathway involved in a disease, or even going as far as presenting a hit compound that targets that pathway in a paper is such a small step towards a useful drug. There are hundreds of things that are yet to be considered and any one of them could result in the entire project being scrapped, and that is of course assuming the work published by academia can actually be replicated.
And margins have to be high - what other investor would risk hundreds of millions on a 1:10 bet unless high margins.
Preemptively, I’ll take on the other talking point: “Me too” drugs are actually important. All meds come with side effects, either from the active ingredients or the inactive ingredients. Having options allows patients to choose something that works for them. Multiple treatments also means competition and lower costs.
So maintaining the current system without patents seems difficult. But an option would of course be to shift the system - public investment for research and promising trials and then the result is free to use (or protected only for a short period).
I'm sure it's still expensive, though, and many companies like you said go bankrupt.
Let universities and government institutions invent them.
Why does everything need to be run by corporations these days?
People doing groundbreaking work are motivated to do the work for whatever reason, and it's seldom money. There are more important things to them, whether it's simply doing Good, or status, or it fascinates them, or whatever. The guy who invented insulin sold the patent for a dollar.
New drugs and therapies are often developed outside these big companies anyway, and they just buy them, run them through the certification, and then sell them at incredible markup. The money's not in development, it's in the business side of things.
We've (some of us, at least) so bought into the argument that the world needs to be this way that we totally ignore these things actually get done.
That's covered by the patent system. The barriers to selling an existing, out-of-patent drug (remember that mention upthread of an "authorized generic"?) are covered by the FDA; they're totally unrelated.
This argument is so worn out it has become a cargo cult parroted response.
Now, if we got rid of trademarks, which gives a company the monopoly on the trade name, then it would of course be much easier for generics to start selling EpiPen-labeled injectors.
If you want an Advil, I think you should be able to buy Advil. If you want 200mg ibuprofen, you can also shop for that, but if you happen to know that you prefer the outer pill smoothness and taste of genuine Advil, you are harmed by having the generic ibuprofen (without that same outer coating) be able to be advertised as "Advil" (rather than merely as "the same active ingredient as Advil").
Since "The first modern epinephrine autoinjector, the EpiPen, was invented in the mid-1970s at Survival Technology in Bethesda, Maryland by Sheldon Kaplan[10][11] and was first approved for marketing by the FDA in 1987", at least those patents have expired.
And this article is, after all, talking about generics - authorized generics, certainly, but still generics.
However, you are right - the "Epipen" is a trademark for an epinephrine autoinjector. As such, it can be applied to many things, eg, "Sudafed" packages might not contain pseudoephedrine as they once all did.
This is exactly the opposite of what you want. Investment goes where the margins are. That’s why huge amounts of money gets invested in stuff like Facebook. Making it relatively unprofitable to create lifesaving drugs just ensures that investment won’t flow into that area.
Apple makes about the same profits as the total US pharma industry, and that amounts to a tiny fraction of US healthcare spending. Too much profit is not the problem.
Different bodies also respond very differently to all the different kinds of insulin available. There is room for further improvement as the typical lantus/lispro regimen isn’t perfect for everyone.
Insulin is hard to manufacture. The older versions are now generic, but the new, patented ones have measurable advantages. Because most people have insurance coverage, there is a limited market for the older, generic insulin.
If only parma had some kind of inherent motivating factor.
I'm just asking for recognition that although most people would pay an amount that would bankrupt them for a single dose of a lifesaving drug, doesn't mean that you should routinely charge that much.
Profit margins work when it's consumer goods. For example:
Scenario #1: Sell 10 TVs at $1,000 each. Profit=$10,000.
Scenario #2: Sell 20 TVs at $100 each. Profit=$2,000.
I don't care how many people have TVs, so I'm happy for you to choose scenario #1. However, if instead of TVs, it was a lifesaving drug, Scenario #1 is a huge tragedy, where 10 people die in the process.
Repeat, there must be a happy medium between pure charity and price gouging.
In your example where TVs are a lifesaving drug, you could argue that we should find a happy medium where TV manufacturers are only making 3-4k in profit. In the short term this would increase the accessibility of TVs, saving lives. In the long term this would cripple future investment in better TVs, reducing lives saved in the future.
Investment is distributed in response to expectation of future returns. If you want more lifesaving drugs you should incentivize their creation, not penalize the field relative to less important pursuits.
Some people will pursue medical research (or invest in it) for its own sake out of an admirable desire to help others. Many more will work for whoever will pay the most, or invest in whatever business has the most potential for profit. You don't have to admire those people, but it's not rational to actively push them away from fields where their work could benefit others.
Why don’t we fine the company, class action a settlement, and place a few execs behind bars instead.
The system being proposed in the US as part of the M4A bill is how almost every other developed nation except the US handles essential drug prices. The government negotiates the price with the drug companies and they come to an arranged price at which they are sold.
Here in Australia we don't have the same problems you have with run-away drug prices, specifically because our government both covers part of the cost of drugs when purchasing them (as part of Medicare) and negotiates the prices down.
Tired of the false dichotomy of wild-west anything-goes or heavy government control. We could have a functioning market and also punish bad actors, if it was considered a possibility.
Because here in Europe, multiple countries are fine with it.
And according to the WHO, most European countries set drug prices [1]
[0] https://solidarites-sante.gouv.fr/ministere/acteurs/instance... translated with DeepL
[1] https://www.who.int/medicines/technical_briefing/tbs/TBS2016... slide 23
[1] https://www.rijksoverheid.nl/onderwerpen/geneesmiddelen/beta...
Soviet Russia was communist/socialist.
Soviet Russia killed millions of people
Therefore, all men are Socrates—er, I mean, setting maximum prices for some goods kills millions of people.
Do you see the false syllogism here?
It's an argument I see made all the time, and it doesn't hold a drop of water.
And I am not Russian.
I have no idea what your country is, as you didn't mention it; however, I have heard over and over again the argument that Stalin killed millions of people, therefore anything that moves even the slightest bit toward socialism is Evil.
The fact remains that claiming that setting maximum prices for some lifesaving drugs will lead to the situation you saw in your country has no logical basis. At best, it's a slippery slope fallacy.
No one is talking about people Stalin killed and you're right it has no logic. The thing that got these people to die was market manipulation, which is why I posted it in a discussion about market manipulation.
Not everyone has to be immediately thinking about Stalin when making an argument about socialism leading to deaths. There are plenty of options. See Venezuela for instance.
But any doctor can prescribe it and the "full" price is around € 80 for the single pack or 140 for the two pack, so it is around 1/4th if the US $600 cited in the article.
BTW here a "normal" adrenaline 0.5 mg vial is around 1 or maybe 2 €, so all the prize must be in the auto-injection mechanism and not in the actual drug.
There's no incentive for anyone to push back on price. There's plenty of money to be made doctors make the same either way. People don't notice because they just want the best healthcare available regardless of cost. Pharmacy make more money with gouging. Drug companies do. Insurance companies make more with higher prices. Companies just pay what they have to show it as a benefit.
Who in the entire system looks out for costs?
I get it is not profitable to make doses that are only used temporarily when people quit your product, but this is definitely harmful to the consumer.
I was stuck with one and I tried everything to find a lower dose. I had tried quitting cold turkey 3 separate times and I ended up a sobbing mess each time. Given that was just not working, I tried different pharmacies, I talked to them about liquid suspension ($200+ not covered) and more. I was fed up. Eventually, against the advice of my doctors, I just started cutting my pills into 1/4s and taking a 1/4 less every 2-4 weeks until I was off it. Doing it this way was utterly painless and I was able to continue working throughout. After that I didn't need it anymore. But this is a terrible practice, and won't work with all drugs -- especially delayed ones.
This is why I think so many people are on these types of drugs. They are amazing short term and can help people work through some really difficult issues to get to a better place mentally -- but not everyone needs them long term. However when faced with the withdrawal symptoms, many people start to think they can't survive without it.
Im not claiming some conspiracy, but the current strategy isn't the best for patients, that's for sure.
In fact, using anti-depressants is more likely to make you relapse after you are off of them, rather than if you got over the depression without drugs: https://www.karger.com/Article/Abstract/110056
There is definitely an interest from these companies to have people be on these drugs pretty much indefinitely. They have a host of side effects which the companies will also benefit from treating (obesity, sexual dysfunction, liver damage, etc...).
It's pretty clear from what's coming out of the opioid trials that these companies conspire on a regular basis to do what's right for their bottom line, not what's right for people...
Compounding pharmacies are able to remix manufactured dosages into what you desire. I know folks who, with the assistance of their doctor, crafted finely tuned taper schedules.
You bring the drugs, they remix to your prescription.
Yes, cutting pills works for some formats (tablets). Liquid suspension can somewhat be done yourself if you have suitable input medication and buy a mortar and pestle. It's of course harder with capsules or extended-release formats, but rarely are those the _only_ format a drug is available in.
pharmacists are trained, allowed and encouraged to prepare different doses of drugs when needed for the specific needs of their individual patients. Not sure why you expect pharma companies to take on their role here.
I don't expect pharma companies to take any role, as I understand their position. I was hoping that I had made that clear. I simply believe it as a current short fall of the system.
I don't attribute any blame, it's just something that could possibly be improved. Honestly, the change would likely have to be more on an insurance / governmental level. It shouldn't be an ordeal to get a lower dose -- it should be just as easy and cost-effective as the original medication.
The economically rational consumer is best off getting drugs through insurance, but in doing so, builds a system that makes any alternative less affordable.
https://mises.org/library/how-third-party-payers-drive-medic...
It isn't just patents either, the FDA will grant exclusivity periods for other reasons, and so on, but it then doesn't have much power to examine pricing. It's because our Congress is stupid (I mean, that's the terse summary of it).
Most of the egregious examples of raising prices happens in specific markets - ones where there are significant barriers to competition even in the absence of patent protection. These markets also tend to be on the smaller side - big enough to make a good profit, but not so big that it attracts a ton of competitors.
There are examples of drug prices coming down because of competition. Hepatitis C drugs are a great example. Launched at almost $90K, they now hover around $40K because there are multiple companies competing on price (the drugs are all very effective).
The other thing driving prices down are the insurance companies. Amgen dropped the price of their cholesterol drug Repatha by 60% because insurance companies said "yeah, we're not going to pay for that at that price".[1]
[1]https://www.biopharmadive.com/news/amgen-cuts-us-repatha-pri...
That price is less than $500 in India. Generics in the US are estimated to cost the consumer $200[1].
If the drug cost $500 in the US, it would have been a net loss investment in the first place.
The people in the middle of this getting shafted are uninsured who are forced to pay imaginary list prices and don’t get any rebates. Now the producers are trying to just sell generics at the post-rebate level, but the media field by lobbyist are calling them out like it’s a bad thing. Because it threatens the con game of the PBM/Insurance/Pharmacy cabal (yes they often end up all owned by the same corporation), while they are pointing fingers at the producers who just want market access and fair competition.
But, free market just doesn't work for health care. In a life or death situation people would pay anything.
So the difficult thing is they are incentivized to increase revenue to increase profits, and cutting costs won't result in more profit.
[1] - https://www.verywellhealth.com/health-insurance-companies-un...
Uh, so does the DOJ: https://www.justice.gov/usao-ma/pr/mylan-agrees-pay-465-mill...
1. Brands charge a premium of 10x-20x compared to generics.
2. Brands are offering non-brand versions at about 50% of branded price.
3. Brands pay 50% kickbacks to middle men (so cut = revenue neutral).
4. Offering the cheaper version kills real generic competition.
How can 4 be true when brands haven't done anything to their net margin and the generics are still a factor cheaper than the non-branded "brand" version?It just sounds like a bit of trickery to shut the politicians up more than something designed to hurt their competitors.
Or is the “negotiated” price of the brand name basically equal to the list price of the first-party generic?
I am missing some piece to arrive at “this is not taking money out of the system”.
I can see how the pharma company perhaps could make out the same in the end... but is the consumer actually paying less?
One very interesting thing is that my insurance company has not tried to switch my kids’ Humalog for the equivalent sold as “Lispro” which was very curious to me, implying it doesn’t save them any money. I’m long past the out-of-pocket maximum anyway, so I pay $0 at this point in any case.
Regarding you anecdote. One potential reason is that the ACA limits the profit margin of insurance to 20% percent of medical spending. This incentivises them to maximize healthcare costs. Switching to Lispro would hurt their bottom line instead of increase it.
https://www.healthinsurance.org/obamacare/billions-in-aca-re...
Eventually when everyone can order their medication online with next day shipping the Pharmaceutical Mafia in the USA will need to compete. Otherwise, I don't believe the Government regardless of party will change things since there are billions involved in lobbying.
https://www.fda.gov/drugs/drug-safety-and-availability/fda-u...
Many citations available, eg https://www.ncbi.nlm.nih.gov/m/pubmed/23115341/?i=2&from=/26...
Isn't this basically measuring placebo effect?