How Big Pharma reaps profits while hurting everyday Americans (2019) | Hacker News Reader

How Big Pharma reaps profits while hurting everyday Americans (2019)

americanprogress.org

106 pointshammock65 comments

Pharma strikes me as one of the industries that would benefit heavily from a few congressionally chartered nonprofits being booted up. Same employee comp (with cash substitutes for stock), same general structure, same incentives, but with a mandate to recycle profits back into new drug development rather than paying out to shareholders through buybacks, dividends, etc, all audited by a dedicated regulatory body to ensure that comp and waste don't go into excess. Perhaps with a requirement that some percentage of reinvestment is towards cures rather than treatments.

You see similar models with co-ops and credit unions.

The hope would be that the industry doesn't actually profit off of human suffering but still maintains incentive to continue development.

A good start would be if the medical industry in the US were run like normal businesses with transparent and consistent pricing. Right now nobody can predict how much something cost because insurances, hospitals, drug companies and a lot of middlemen play all kinds of games. I think we should mandate that all prices are open so people know what's actually going on. Hospitals should also charge the same price for the same procedure to everybody independently of insurance or day of the week or whatever factor makes a procedure cost $5000 sometimes and $50000 another time.

All the excuses like "we need to charge more to insured people because of uninsured people" or "we need to charge 10x as much in the US for drugs than in other countries because of R&D" should be viewed as self serving BS until all the numbers are transparent. If there is an imbalance we should do direct subsidies based on the actual numbers instead of the current mess.

Health care is not regular business in the sense that you don't have to buy a product if it's too expensive and where it's easy to compare competing products. How would I know which hospital is better than another?

Absolutely! The truth is that nobody really knows what medications actually cost. They are often sold in bundles similar to cable tv channels.

For those who are running into coverage / affordability problems for drugs in the US… contact the manufacturer. They often have payment assistance programs or discounts to reduce out of pocket costs. They may be able to help you get costs covered by your insurer.

You should not ever be paying the full “list price” out of pocket. Pharma companies want market share and they would rather sell to you at a discount than lose you as a customer.

Not only that, but insurance companies get to negotiate special rates, but as an individual you have zero opportunity to do so, zero leverage. That is, to your point, the price of the service is 100% flexible. The ambiguity and confusion benefits those who are best positioned to benefit from it, that's not the individual.

It's a system optimized to be self-serving. It's the Healthcare Industrial Complex, that doesn't actually care much about health. Profits over people.

>>A good start would be if the medical industry in the US were run like normal businesses with transparent and consistent pricing.

People keep saying this, but I don't see how that helps in the slightest if you have had an accident and need help now.

Or for non-urgent care - something is wrong, you don't know what, you go to two doctors, one recommends a set of tests for $5000, the other a different set for $10,000, how does price transparency help you here in any way shape or form?

Edit: to be clear, this isn't meant to be a comment against price transparency. My point is that I don't think that's what the issue is. When I go to an NHS doctor here in UK I have absolutely 0 idea how much any of the tests or procedures cost, and yet the system isn't putting people in poverty(it has a lot of other problems, but bankrupting people isn't one of them).

It would provide some incentive to equalize across hospitals and rein in any sort of egregious outliers. Right now no one has any idea what is an outlier.

There was already list pricing published and some hospitals charge wildly different prices for the same tests, never mind with different insurers.

It wouldn’t solve everything but the base of knowledge we have is effectively zero, so something would be better than nothing.

Consumers in the US are also perfectly capable of shopping around for non-urgent care. They already do this for elective dentistry, for example.

Absolutely true for urgent care, but most care isn't urgent. If you need a new hip or cataract surgery, that's very much plannable and if you could save a few thousand by going to a different hospital, definitely something to consider.

Like a kind of Service, for Health, covering the whole Nation... a National Health Service, perhaps! Sorry, brit here, couldn't resist. It's really interesting seeing (in my unscientific view) America slowly realising it needs to reform profit-driven health, while England's government slowly privatises its existing "free at poinnt of use" service and makes it harder for poorer people to access good health care.

https://en.wikipedia.org/wiki/Public_health_insurance_option for those missing the connection.

NHS comes across to me as government funded healthcare rather than a gov-kickstarted not-for-profit insurance option. Am I missing a nuance? Not familiar with NHS so I could have a wildly wrong impression of what it is.

Healthcare and medication are different things and as long as we continue to conflate the 2 everyone will be talking past each other.

For a market that's so large, there are very few players involved. More than likely several illegal monopolies have formed. We already have laws that are meant to address this issue. We should probably just enforce those.

Pharmaceuticals is a pretty capital intensive industry. Who's providing the capital? The government? Moreover, who's providing oversight? Congress? Given how dysfunctional the government is right now, and the tendency of government programs to turn into jobs/pork barrel programs (eg. F35), I'm skeptical that it's going to work out better.

> Pharmaceuticals is a pretty capital intensive industry.

The larger part of that is sales and marketing. They spend more on sales and marketing than research and development in USA. All that is wasted, publishing lots of manipulative ads and marketing material to get as many as possible to buy the most expensive medicines isn't a good use of our resources.

https://www.ahip.org/news/articles/new-study-in-the-midst-of...

1. The study in question is from ahip, which is a trade association of health insurance providers. They have an incentive to push the blame of high healthcare costs on other companies, so claims by them should be taken with a grain of salt.

2. The above link doesn't actually actually provide the study, or mention the methodology. However searching around[1] it looks like similar claims in the past have issues, mainly due to how expenses are categorized in financial statements. Specifically, advertising/marketing spend is often lumped together with general and administrative spend, which overstates that figure.

[1] https://skeptics.stackexchange.com/questions/16472/do-typica...

Moreover, what happens to all the work in progress when the government "shuts down"? People in publicly funded science have lost work in previous incidents where they were locked out of their buildings and unable to tend to long running experiments. America needs to work on its uptime.

As usual, the biggest factor is ignored:

        Risk

Who takes the risk of exploring a drug candidate that literally no one can predict will succeed or fail?

Let's imagine the Secretary of Drug Development testifying before Congress on why so many of his drugs didn't work. His best strategy is to only pursue safe bets.

you're not aware that government and universities provide half the funding of basic research in the united states?

I'm in agreement here, I think the poster has an idea of the issue with profits, but typically anything the government can do, we can do infinitely better private.

I.e. you want the government to run industry. That never works well.

> all audited by a dedicated regulatory body to ensure that comp and waste don't go into excess

Since when has that ever worked for government run operations?

> The hope would be that the industry doesn't actually profit off of human suffering

I.e. industry works to alleviate suffering by providing the things that suffering people want. Their motivation is to make a profit.

The profit tends to be far less than the waste from the inefficiency of government industry.

BTW, the drug industry would serve us a lot better if they weren't strangled by FDA regulations and a screwed up patent system.

See "Regulation of Pharmaceutical Innovation" by Sam Peltzman:

https://www.amazon.com/Regulation-Pharmaceutical-Innovation-...

Yeah - Europe is basically hell if you have health problems and in the US you get great, affordable and immediate treatment...

Having lived and had health issues in both, I can 100% guarantee that health care in Western Europe is much better than in the US for the average citizen. This is a fact.

I live in Europe. Just not in the nice, posh Western side that benefitted from all those cheap but well trained doctors and nurses who emigrated after their country got accepted in the EU.

Here in the East we thank God for private health care since the socialized state-run one IS basically hell as it kills people routinely.

There was a thread about Chernobyl a while back on reddit, and many survivors were commented on it (a fascinating thread). One remarked that while root canals were free, you had to pay for the anesthetic. One also had to pay bribes to the hospital staff to get things done.

> had to pay bribes to the hospital staff to get things done

This is still common. Patients are routinely ignored (and if elderly often abused) unless throwing bribes around. Countless cases of deceased friends and relatives in the media.

Absolutely no one in the Eastern block would dream to recommend state-run healthcare. It’s a deeply corrupted mafia organization.

The US system is well over 50% run by the government. Obamacare drove my insurance provider out of the state, and I'm stuck with the only one left. Thanks, Obama!

Before 1960 or so, the US health care business was free market and reasonably inexpensive. All government attempts to reduce health care costs cost cost increases.

> A vial of NovoLog, one type of insulin, costs15 anywhere from $14 to $300 in the United States but only $48 in Singapore, $14 in India, $6 in Austria, and $0 in Italy.

I think a reasonable solution without having to dictate details is to require pharmaceutical companies give the US most favored nation status - that is they must provide the US the same price as the country where it is sold for the cheapest. Perhaps you exclude developing nations from that calculation.

I'd bet even buying at the 2nd most expensive OECD nations price would make a huge dent and seems more than reasonable for all the tax breaks and other incentives pharmacal companies receive.

I think that it only "costs" $0 in Italy because the actual cost is paid by some subsidy or insurance system.

Also, insulin is a prescription medicine, so even in the absence of such confounding factors its price is not entirely market-driven; we have a nebulous understanding what the equilibrium price would be on a free market.

> we have a nebulous understanding what the equilibrium price would be on a free market.

I can’t imagine a free market existing in the US without PS5-style-resellers immediately buying out the entire supply and jacking up the price for drugs people need to live. Not like that’s significantly different than what we have now, it’d just be a worse version.

“Big Pharma” is a symptom of a much larger issue in the USA. The root cause here is privatization of health care.

I hate dealing with the health insurance middlemen, and I supposedly have premium coverage. For some treatments my (in network) doctors prescribes, my insurance company will drag their ass through the approval and payout process.

It’s slightly invisible to me, and the doctors office staff usually takes care of the appeals process to get themselves paid. Occasionally I get a doctors office that gives up after 1 appeal and tries to forward me the bill for the rest. End up having to appeal myself and get it approved.

These vampires take their cut from my paycheck (in addition to the portion covered by my workplace). And they have the fucking nerve to deny treatments.

Let’s not forget about the mess with “pharmacy benefit managers” and their associated fees (“DIR” fees) on pharmacies. Large chains typically tank these costs through volume, but end up squeezing out the mom & pop pharmacies.

The hate on big Pharma is crazy to me. They're actually a pretty small part of the healthcare bill: 8.9%. Even if drugs were free your health insurance bill would be pretty much the same. https://www.ama-assn.org/about/research/trends-health-care-s...

Depends who you are. For people with certain lifelong conditions, the drug component would make up almost 100% of their healthcare costs.

Same with the hearing aid and many other heath care industries.

From 2019. Maybe an update now that Biden's been in office a while would be appropriate?

The legislative branch of government passes laws, not the executive.

Why would Biden being in office change anything unless he signed an executive order specifically about this?

> unless he signed an executive order specifically about this?

.. and we all know he would never sign an order that he knew was unconstitutional /s

If a president intends to start crossing out parts of the constitution like a todo list of line items as you're asserting, it makes a lot more sense to come out and actually say that in the executive orders to avoid any uncertainty or ambiguity.

It also completely ignores how the last several presidents signed executive orders later ruled by the courts to be partially unconstitutional.

The most charitable interpretation is: through a wildly convoluted method involving underwater jumping-jacks and singing Sinatra lyrics during a half moon on even calendar days, the president's EO are going to stealthily erode the constitution and the checks and balances will somehow fail even though it's counterfactual to reality.

Its kind of amazing how a basic medication like Wellbutrin XL is like $1.18/dose while in the US, you're looking at $83/dose ($2483/30 at Walgreens). Same damn pill, free market capitalism my ass.

https://www.goodrx.com/wellbutrin-xl says $29 at Walgreens and most other pharmacists - some much cheaper.

I pay like 15$ for 30 - I don’t know what you are talking about

1) Generic or brand (sounds like generic) 2) This is for Wellbutrin XL 300 (30 day script) 3) that's with insurance? Sounds likeyou're insured

The only "innovation" of capitalism is intermediation, otherwise called "rent-seeking". One of the big lies Big Pharma tells you is that R&D is expensive but the actual R&D is done primarily by government funding and research at colleges. Big Pharma spends WAAY more on marketing.

The only real R&D Big Pharma does is patent extension. Patents have a life so companies will make minor changes to the molecule or the delivery mechanism to reset that patent protection period.

What makes Big Pharma particularly evil is it's one of those industries that profits from inelastic demand (ie people will die without some product) and buying the government to build a moat and make themselves a monopoly. The prices US consumers pay for pharmaceuticals is absolutely criminal.

This is capitalism working as intended: taking a captive market (eg diabetics that cannot live without insulin) and extracting wealth from them to the hands of a very few.

>One of the big lies Big Pharma tells you is that R&D is expensive but the actual R&D is done primarily by government funding and research at colleges

Not an expert, but my understanding is that the kind of basic science R&D done by the government and academia is the simplest and easiest type of research to do by far. As it was explained to me- anyone can invent new compounds, the really really really hard low-percentage stuff is trialing that those new compounds are A) medically effective in people, and B) actually safe for people and don't have strong side effects.

Also, I believe that if academia actually does invent something novel & useful, they license it out to pharma companies for a % of the profits. Big universities are not shy at all about licensing their IP

Pretty close. Without getting into what is “cheaper and easier”, the work you need to do to publish is a bit different from the amount of work you need to do to: identify targets, set up screening assays, screen hundreds of thousands of compounds, find/optimize a hit, set up secondary assays, optimize the lead compound, do all kinds of physchem/tox/safety studies, select an indication, test in animal models if good ones exist, try and find a suitable dose range, and put all that into a package to support a phase 1 trial. This is part what I’ve seen on the biology side of things, and it only scratches the surface of what the chemistry (small-batch synthesis and the scale-up), pharmacology, and associated people contribute.

Lots of people can synthesize and test a compound in vitro. Doing the above is another challenge because it needs to work reliably in humans.

And yes, from my understanding, universities are getting better at patenting and licensing their IP. Some even do some basic drug discovery IIRC.

Oh good, then the government and academia can stop spending $70b a year in basic R&D research. Since it's "simple and easy" then pharma can pay for it. Big brain move here.

This is entirely correct.

> Not an expert, but my understanding is that the kind of basic science R&D done by the government and academia is the simplest and easiest type of research to do by far.

Yeah it is easy to come up with stuff that works in a lab. For example, just see the HN submissions for new battery technology.

Don't know about the US, but in other countries a phase 1 trial might very well get done by academia, sometimes even phase 2.

> The only "innovation" of capitalism is intermediation, otherwise called "rent-seeking". One of the big lies Big Pharma tells you is that R&D is expensive but the actual R&D is done primarily by government funding and research at colleges. Big Pharma spends WAAY more on marketing.

Yet when shit hit the fan with a global pandemic, it was US Pharma companies that were both able to develop and produce and distribute at scale effective vaccines in a very short amount of time.

This actually makes my point. mRNA vaccines were researched in academic institutions for decades. The Covid 19 vaccines just took those vaccines and ran them through clinical trials.

This isn't hard to verify. Just this week researchers were awarded the Nobel Prize for Medicine for their work on mRNA vaccines. Did they work for Pfizer? Johnson and Johnson? Some other company? Or was it an academic institution?

Gotta love the word “just” in that first paragraph.

The majority of the research money behind most (if not all) drugs, is spent well after academia’s contribution. Clinical trials are very costly, they usually fail, and yet they’re quite important!

> The majority of the research money behind most (if not all) drugs, is spent well after academia’s contribution

[citation needed]

Just look at the timeline for Covid 19 [1] and how late in the piece you get before a company like Moderna gets involved. What huge investment was made by Big Pharma here?

Even this was funded by Operation Warp Speed, another $10 billion in Federal money.

[1]: https://covid19.nih.gov/nih-strategic-response-covid-19/deca...

Well, for one, if Moderna et al didn’t actually provide much value above the public research, why didn’t the Chinese quickly create their own highly effective mRNA vaccines?

Building the platform to turn research into practical drugs is hard, not to mention expensive and hardly guaranteed to succeed.

“The Covid 19 vaccines just took those vaccines and ran them through clinical trials.”

“Just” that, and figuring out manufacturing and distribution at massive scale. Combined that’s billions.

> This is capitalism working as intended: taking a captive market (eg diabetics that cannot live without insulin) and extracting wealth from them to the hands of a very few.

People can't live without food, either, but every historical attempt at government agriculture has resulted in famine. With swinish capitalists engaging in food production, we're all the fattest people in history.

As for the "very few", anyone can buy stock in Big Pharma and get their fair share of the wealth.

> ... but every historical attempt at government agriculture has resulted in famine

So famine has been eliminated then? A quick Google search shows that ~9 million people die of hunger every year. There's no communism to blame that on, much as people like to talk about, say, famine in the USSR, but 9M deaths per year from intentionally withholding food under the auspices of capitalism doesn't get a second thought? Why is that?

> As for the "very few", anyone can buy stock ...

Things like 401ks have convinced people that they are participants. But owning 20 shares in Amazon doesn't make you a capital owner. Something like the wealth of the 8 richest people on Earth is about the same as the bottom 4 billion.

But sure, tell me some more about stock market participation.

> A quick Google search shows that ~9 million people die of hunger every year

Show a cite, please.

> under the auspices of capitalism

Show us which country(s).

> owning 20 shares in Amazon doesn't make you a capital owner

Sure it does. You'll get a share in the profits.

It was amazing to see skepticism and criticism of big pharma become forbid during COVID with many citizens happily shaming, ostracizing, and censoring others.

And then to see it suddenly be allowed again.

Extremely fascinating.

This article is from 2019 and second, I don't think anyone questions the validity of the results of Big Pharma, just the price, transparency and lack of willingness to allow the US Federal government to collectively price bargain.

People absolutely question the results of big pharma. Americans nowadays are less healthier and have lower life expectancies than their parents' generation, and while some of that may be due to lifestyle choices, some is due to pharma pushing drugs that are a net negative, like the unnecessary opioids that caused an addiction epidemic.

The opioid epidemic isn’t making a dent in the lower life expectancy. Lower life expectancy is almost entirely due to heart diseases, diabetes, and cancer, and those are being driven primarily by bad diets, poor sleep, and sedentary lifestyles. Ironically, FAANG and many tech companies are probably more to blame in this respect than Pharma.

>The opioid epidemic isn’t making a dent in the lower life expectancy

That's absolutely false. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6034969/ for instance found that in British Columbia from 2014 to 2016, life expectancy declined 0.38 years of which 0.12 years of the decline was due to "mainly opioid-involved" overdoses, i.e. opioids were responsible for around a third of the reduction in life expectancy.

So much better.

It's from a time when Democrats were casting doubt on the "Trump Vaccine" to advance their political agenda, only to do an about face once Biden was President.

https://www.youtube.com/watch?v=ZmZnmbGPzR0

I was shocked how quickly "COVID went away" in German news and the public discourse when the war in Ukraine started.

Suddenly it was ok for very old people to die. But lookdows lasted only 2 weeks anyway, so it was not an issue.

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