> Something is systemically wrong in the US when we are cutting off people’s access to meds, like GLP-1s, which have profound health benefits.
Are we cutting off people's access to meds or do they just not want to pay what they cost?
Are we cutting off people's access to meds or do they just not want to pay what they cost?
Pharma is ultra R&D heavy so yes, medications are deeply profitable on a per-pill cost to manufacture basis. However, drug companies by and large are not extremely profitable. This is because to produce a single drug (which is high-margin from point of production), they have to sink billions of dollars into literally thousands of other drug candidates to figure out which ones are viable.
This is all "real, legitimate cost," as is reflected in their rather abysmal overall profitability.
As for the disparity between US and foreign markets, it's a basic tenet of commercialization to sell to every buyer at the highest price they'll accept, so long as that price is above your price to produce. All sorts of companies engage in "price discrimination" to achieve this. For example, cereal manufacturers will sell their own brand at $4/box, and sell the exact same product in a store brand box for $3.25/box. A lot of products in your local retail stores do this.
Overall, no one is really hurt by this per se. Every consumer is making a transaction they're willing to make, and the company is making the most money it can in aggregate, which actually gives it room to push the price at every price point lower than it would be able to if it could only sell to a single segment.
This is actually extremely important in the drug context due to the aforementioned abysmal profitability.
Let's take Trump's attempt to force a Most Favored Nation (MFN) clause onto drug manufacturers which guarantees US consumers pay the same price as the lowest price internationally. The intended effect is for US prices to come down to the level paid elsewhere.
But here's Pfizer CEO: "When [we] do the math, shall we reduce the US price to France’s level or stop supplying France? We [will] stop supplying France. So they will stay without new medicines. The system will force us not to be able to accept the lower prices.”
Not only does this obviously not result in lower US prices, but it very possibly results in higher US prices (since now there is less net revenue from lower priced consumers) and, more troubling in the pharma case, there is now even less net revenue coming in to justify new drug development.
It's hard to overstate how asinine this entire endeavor is. US consumers certainly pay too-high prices for drugs, but this intervention does very little to actually address that problem. The much more proximal issue is the incredible degree of intermediation in the US market between payers, providers, PBMs, GPOs, and more.
Maybe in Pfizer’s portfolio this is true. However, I just watched the Amazon Pharmacy pricing for GLP-1s drop substantially immediately following this. I think you may be being too black and white on claiming this categorically does not work.
Businesses will adapt pricing models, obviously this hurts Pfizer in some way, but Lilly and Novo found the new system was worth negotiating into. Like most things - when people say “always” or “never” - it’s reducing the spectrum of possibilities
It has nearly nothing to do with government action. These will be the most profitable medications ever invented once the dust settles and it’s a game of price optimization right now.
Not only are there multiple current-generation GLP-1s on the market (Novo's and Lilly's), but there are at least 2 or 3 more generations approaching the market.
Here's the thing: yes, you may "very possibly" be right, but that means you may also "very possibly" be wrong. The truth is, we don't know, and we can't really trust the CEO of any business to openly admit that they could tolerate a policy disadvantageous to them. So how would you suggest testing the case where you're wrong?
There is no world in which lower overall revenues does not reduce R&D spend.
There is no world in which lower R&D spend does not reduce the number and quality of new drugs.
This doesn't require trusting anyone about anything other than trusting that pharma companies are generally profit-seeking and therefore an MFN clause imposed by USG will create less optimal pricing (for the pharma companies' own incentives) than currently exists.
The exact price changes that happen in different localities that net out to "less revenue → less R&D → fewer drugs" is hard to predict, but the fact that it will be lower and it nets out to "less revenue → less R&D → fewer drugs" is absolutely predictable.
Please suggest an alternative outcome, if you can think of one.
This person is a less than neutral source in an industry that's already infamous for lying through its teeth to grind out every red cent from its customers. I would lend precisely zero credence to what he says when he's trying to justify why his poor billion dollar company wouldn't be able to lighten up on its wholesale fleecing of American customers.
You don't need to trust anything except that left to their own devices, those greedy pharma companies will price as efficiently as possible in order to maximize revenues. Despite this revenue maximization, the industry as a whole is nearly uninvestable.
Any deviation from the optimal pricing will reduce their overall revenues, which will obviously make the industry even less investable.
In an R&D heavy sector means they will no longer make new products, i.e. no new breakthrough medications that you or I or our parents or children may need.
Sure, I doubt Pfizer et al will just outright stop selling medications to France. Far more likely they will both reduce US prices and raise EU+ prices, but this still ultimately results in fewer drugs for fewer people today, and definitely much slower innovation toward new drugs by virtue of having less cash on hand and much worse expected ROI.
You do not need "trust" whatsoever, this is just basic logic.
If you want to understand how Americans should actually reduce drug prices, you can start to get an idea here: https://news.ycombinator.com/item?id=46933520
This is my point – quoting the man on what he says will happen is pointless because he's just using scary hypotheticals to make the best case to keep the cash hose turned on. He's not some altruistic saint bestowing new formulations upon the world if only he had more money, he's a slimeball pharma CEO trying to balance that R&D with reaping maximum profits.
Would lowering prices for Americans mean the world has less R&D bankrolled by American consumers? Probably. But the current situation is untenable.
The thrust of the comment above is that you do not need to trust him.
Back at you bub. My original comment was addressing why a quote from the guy who would be most affected by drug prices changing is hog wash, and you skillfully dodged my whole point to talk about R&D, investments and revenue. I didn't write my comment to dive into those things, I wrote it to point out that Pfizer's CEO would say anything if it means his company will get more money.
Fine! Why is that relevant to me?
Just because you're starting from the prior of "pharma CEOs are liars" doesn't mean everyone else is. Some people find it quite helpful to hear from the most powerful and most informed people on issues they want to learn about, even if you have to discount them due to conflicted interests (spoiler alert: nearly everyone who's well-informed on an issue will have some type of conflict to be discounted).
Evidently you are fine writing the words of Pfizer's CEO down to zero value, which is fine!
That's why I provided an alternative path by which applying your own critical thinking skills would get you to the same conclusion.
"Applying basic logic gets me to a similar conclusion as Pfizer's CEO, but Pfizer's CEO is a liar and conflicted and can't be trusted, therefore... [ ??? ]"
Edit in response to your edit: Don't act as if I introduced revenue/investment/R&D/etc after you raised the issue about Bourla's quote. That was the entire basis of the conversation from the start. Profoundly low-quality contribution to just chime in with "pharma CEO is conflicted." Yeah, everyone is aware of that. That's why there's an entire comment around the quote.
> That's why I provided an alternative path by which applying your own critical thinking skills would get you to the same conclusion.
To be clear, the only thing I've taken issue with here is his own words and how you've quoted him. I don't believe I've said anything regarding your overall position on drug prices and pharma profits, so it's weird that you're attacking me like I've specifically taken a position against it.
Understood. Have a good day!
Have a good day!
You can derive the same conclusion yourself! As stated over and over, much to your chagrin and denial, because “pharma bad.”
Fix the demand side and the supply side will adjust.
Americans pick their employer. Their employer picks their health plan. Their health plan picks which drugs are covered and which doctors and pharmacies they can use.
With the "innovation" of vertical integration between insurers, healthcare providers, and PBMs, there is effectively zero incentive for health insurers to manage costs, because those costs show up as revenue for their own subsidiaries. This is actually hugely advantageous for insurers because they are required by law to spend a certain percentage (~80%) of their members' premiums on healthcare goods and services, not profit or business development.
Well... if you own the pharmacies, the PBMs, the GPOs, and especially the healthcare providers... you can arbitrarily siphon money at any % rate you want while increasing the gross dollar intake by simply raising prices at your subsidiary companies!
All of this is well documented. Here are a few places to start:
https://www.statnews.com/unitedhealth-group-investigation-he...
https://www.wsj.com/health/healthcare/unitedhealth-medicare-...