Given that what we currently have isn't a free-market approach at all I wonder why we couldn't just fund it directly, via taxes. The cost could be shared between countries AND the research could be directed. The companies could be pure R/D labs, leaving the manufacturing to others.
Also, if research is publicly funded, it would probably tend to focus on whatever the public is more aware of. Public awareness of diseases doesn't do correlate well to the severity of the problem. For instance:
http://dailycaller.com/2010/10/05/breast-cancer-receives-muc...
If the market wasn't given any incentives to perform research on its own, then I could see this problem becoming magnified.
My point is that research companies should focus on discovering how the human body works and reacts to different substances, not how to create the drug efficiently. Their output should be scientific knowledge (and we would pay them for that), not industrial processes. That can be left to manufacturing companies, operating in a mostly-free market (but with quality regulations) and all that.
> Also, if research is publicly funded, it would probably tend to focus on whatever the public is more aware of. Public awareness of diseases doesn't do correlate well to the severity of the problem.
True. But profitability isn't really the same as the severity or "ethical" importance either, and that's how things are today. Directly funding research is how things are done with particle physics for example.
Recognizing that, Bernie Sanders introduced a bill a couple years back, taxing insurers for patent-free drug development. To keep the government from picking research projects (which it tends to do very conservatively), it would fund prizes instead of funding research directly.
Um...exactly the opposite. Under the ACA "the minimum percentage of premium health plans must spend on health care is 85 percent for large groups and 80 percent for small groups and individual policyholders."
So, if an insurance company spends $65,000 on a drug, they get 65k/.85 or $76,470 in premiums, earning $11,470 in profit.
If the drug only cost $10,000 the profit would just be $1,764.
The more expensive drugs are, the more money health insurers make. Health insurers are harmed by cheap patent-free drugs.
That could be a problem for healthcare costs in general, in markets where competition among insurance companies is limited. I bet we end up changing that provision sooner or later.
Every single insurance company director I've ever talked to HATES the current pricing of drugs.