My friend’s daughter needs an eczema crème and was told the price was $1000 per tube and wasn’t covered under insurance.
The price in Canada is around $100. Yes, Big Pharma gouges Americans.
The price in Canada is around $100. Yes, Big Pharma gouges Americans.
You can choose to not repair your car. You cannot choose to not repair your body except in extreme cases.
Demand will always be infinite. We don't have the technology to saturate the healthcare market any time soon.
Meanwhile, plenty of Americans still insist that they "Don't want to pay for freeloaders" as the current system means hospitals overcharge them to subsidize people with no insurance who come into the emergency room (a much much much more expensive healthcare onramp) and require care.
But Americans will fix that shortly. Once hospitals are allowed to just let uninsured people die, you can rest assured that your money will not be used to subsidize poor people. Instead, every excess dime you spend will go right into the profit column of some executive's spreadsheet!
Which is what TFA points out as well:
"The bulk of the rents is captured instead by providers of health-care services such as hospitals and the system’s true money-makers: insurers, pharmacy-benefit managers and other middlemen taking advantage of its opacity. They have higher costs of capital than drugmakers, but they also clear our 10% hurdle much more comfortably (chart 3)"
50 years ago, there were many more pharma companies, many more insurance companies, and many more hospitals under individual ownership. First the pharma companies consolidated, which give them monopoly pricing power over insurers. So then the insurance companies consolidated to they could negotiate on equal footing, but then they had monopoly pricing power over the hospitals. So then hospitals consolidated so they could negotiate. And now after decades of this, we're right back we're started, except for consumers, who can't consolidate and hence get fucked.
The two solutions here are either breaking up all the monopolies at the same time-- pharma, insurance, and hospitals-- so that everyone has market competition again, or letting health care consumers consolidate so they have pricing leverage-- i.e., forming a single-payer health-care system where the government negotiates deals on behalf of a 330+-million payer pool.
It does not make sense to either blame or spare one single sector: the pharmas, insurers and hospitals are all guilty, though in a sense all of their hands were forced by their counterparties. It's a coordination problem of exactly the kind government is supposed to solve, hence why government-run health care eventually seems like the only option.
Consumer consolidation is called voting. Its too bad most consumers have voted in politicians who don't represent their best interests
This is happening to a huge number of industries in the US, not just healthcare.
- Healthcare is almost 20% of the economy
- Demand for Healthcare is largely inelastic
Health insurers are limited by law as to profit margins. So how to make more money? Raise prices, or signal to providers that you'll pay higher. Because if your incoming premiums have to rise, then that percentage that can be captured as profit rises.
But wait... what if you (an insurer) build/buy a middle-man to route prescription money through? That isn't covered by those profit margin constraints. So you can just up the prices of prescriptions and siphon profits that way.
Even better, you can do entirely sketchy BS (looking at you, Aetna, but also others): "Sure, you can get your scripts filled at your local pharmacy... but only for <=30 day supplies. We'll reject any script authorization for a supply of 31+ days, like those extremely convenient 90 day refills... unless you use the mail-order pharmacy that is wholly owned by us", thus making people choose between convenience and pricing.
I suppose it is possible that the buyers of these plans agree to link the payments to the cost of the care provided, but I doubt it.
The flip side of what you say is this - employers are not actuaries in the world of healthcare. So, while an employer can say "hey, whatever else we're doing, we want to give every employee a massage a week, covered 100%, no copay" and the TPA will facilitate the pricing of that, for the general spectrum of care, they will say "We want basically this level of care" and really just choose a plan already provided by the insurer, because all the actuarial effort has been done and the employer has less risk of getting slammed with a multi-million bill because of unexpected incidences.
On the Pharma and Devices side, there should be hard FDA requirements for dual sourcing (completely separate ownership structures) and 50% domestic production (for security) as a requirement to even offer medications/devices requiring a prescription in the US.
It could still allow for private competition for better servicing and support without federalizing everything.
Proof:
- I can get plenty of drugs cheaper if I don’t use my insurance - I can get hospital services cheaper if I don’t use my insurance. There have been times where my copay after meeting the deductible and the insurance coverage is higher than my entire out of pocket cost if I don’t use my insurance.
If you do have that view please show me some evidence that the US prices cross fund other countries rather than just pad shareholders' profits and CEO pay. No, not partisan papers (plenty of US right wing think-tank papers which confuse corporate income with actual R&D) but actual data on research subsidies per capita or a similar comparable unit.
If you are getting cheap healthcare because these people are basically subsidizing it for you, and they’re not even getting anything, then you’re the leech.
These people laughing at Americans having to go bankrupt to afford $1000 medicine that they only have to pay $10 for in their country: fuck em. How I wish we could distribute the costs evenly…
How much profit is enough?
Let's hope they never discover that they could just not sell it in Canada at all and make even more money.
Sure, companies are gouging the US worse - but they still make a tidy profit in the Canadian market.
Most common drugs are out of patent anyway, so there should be no barrier to low cost production anywhere.
Moreover the EU and China give huge funding to basic and specific research, which forms the basis of many drugs. For instance the RNA research that gave us COVID vaccines was completely European from start to finish, only production then involved American companies due to scale benefits and market access.
On the contrary where the evidence is obvious is that the US pharma companies have amazing profits (such as the few Europeans that sell at scale in the US).
My personal, unscientific, take is that the entire narrative that the US prices fund global low prices is completely unfounded and just an attempt by big pharma to get the US government on their side to break fair pricing mechanisms in other countries.
The US admin negotiated them down to $20 a dose IIRC. Billions of dollars to just do scale manufacturing of a drug someone else slaved over, invented, stood behind for a decade while nobody else cared, and quickly utilized to deal with a novel virus that seemed to evade normal vaccine strategies.
$20 ain't nothing, but in our terrible system, it's almost a bargain.
And the shareholders of the Pharma company involved were fucking incensed that they didn't get more money.
They are ghouls.
But no, lets keep insisting that the US government couldn't negotiate prices for drugs to save Americans a significant chunk of change despite the fact we have a recent and obvious example of them doing a good job of it. Let's keep insisting that Democrats are in bed with Pharma and profit off our costs even though it was republicans who banned import of cheap drugs from Canada and republicans who refuse to allow Medicaid to negotiate meaningfully.
Pharma companies are public. You can see how much they spend on R&D. The claim is false.