Just wanted to say thanks for writing this piece, Doc. I've shared it with a few friends - also insulin dependent - and it's really, really heartening to have an MD weigh in on this unjust morass, when so many are content to just stay the fuck out of it. Bravo, and thanks again.
You fail to consider foreign markets. Many countries have price controls which make it impossible for the drug maker to make any money there. Instead of refusing to supply the drug, they make up the loss where there are no price controls. We are subsidizing foreign consumers.
Foreign markets do complicate things; but pharma wouldn’t sign those contracts if they weren’t making enough $ doing their thing. If US consumers paid true market rates, Pharma would negotiate differently with Europe etc. if they needed to to maintain their profit margins. I think it takes naïveté to think US prices would drop if Europe loosened their price caps.
I believe you're very wrong about Pharma signing those contracts abroad. They sign them knowing full well that they will make up lost profits abroad here in the US. I learned this a few decades ago in a conversation with someone in Treasury of a major Pharma company when I asked that very question about why they sign unprofitable contracts in Europe. If more Americans understood the connection between those 'low prices' abroad and our high prices here there would be a very unpleasant confrontation with many authorities abroad. The ability to charge higher prices here is why even many European and Asian Pharma companies have their R&D facilities based in US which generates certain legal benefits because patents are originated here. The solution is not to force prices down in US alone, but I suspect it will be necessary to take a more holistic approach with US laws that dictate that Pharma may not charge more in US than abroad combined with patent protections and protections for the companies from retaliation by foreign regulatory authorities. The Treasury person told me that if the company does not go along with the lower prices those foreign authorities threaten to seize the patent and allow the drugs production by other generic companies. In order to rationalize global prices companies in US need the backing of US government to prevent this.
Where the research in conducted does not affect in patent protection.
Companies want to be close to the top Academic centers (Massachusetts, California, Washington, North Carolina, Texas etc.), to headhunt the top students straight out of academia, and to collaborate with the top labs.
The lobbying chart, like a lot of online article chart is incomprehensible. He says $390,000,000 but the chart doesn't total anything close. I have medicare and don't pay anything, and could afford more but there is no mechanism to shift costs by income levels. All discoveries we have, the ones who saved our lives come from Pharma. We have built our civilizations with oil and gas yet are constantly in their business saying they make "obscene" profits. No one attacks Apple, Microsoft, etc. for making the same kind of profits. It's as if oil and Pharma companies owe us something because they fill such base needs. They don't owe us anything. We owe them for the lives we had. This is a lifetime of listening to Dems scaring seniors and others about "big Pharma," and "Big Oil," and blaming them for our problems. These are self inflicted. The Oil and Pharma companies need to plan long term to operate. The government should make sane patent laws and make these people friends not demons.
With that all said, we should be able to get our prices down. But our leverage would be better if we honored these companies for the good they do, then work with them to bring down prices.
Don't believe your lying eyes! Biden has told god and everyone that he has signed legislation that dramatically cut the cost of drugs! Maybe he was just referring to the rock bottom prices for fentanyl?
What exactly are all the policy "wins" that morally depraved, treasonous democrats are always prattling on about?!
The government caused the problem and letting them negotiate prices makes it even more expensive for those not on government aid. US Pharma isn't allowed to pass on R&D costs to foreign markets, so the US consumer has to bear a disproportionate burden.
Dr. Hollander, free markets also produce better private institutions to ensure the efficacy and safety of products and services. Have you heard of Underwriters Laboratory, Consumer Reports, Angie's List and other free market companies rating businesses or putting their stamp of approval on products. In a free market they'd exist because there's a demand for them. Instead, we have the government doing it. It's not Big Pharma ripping off customers, it's the government restricting competition that allows Big Pharma to charge higher prices. Service at Walmart is better than at the DMV or IRS.
Politicians are selling interference with free markets, so they can pick winners and losers. If they weren't selling such favors and instead defending free markets, we'd have better medical care at lower prices.
Thank you for reminding us all how well the rating companies did with their 'regulation' of the financial markets, and how short our collective memories are.
I'm glad you mentioned that. Yeah, the SEC totally failed to investigate, even after being informed about it by Michael Burrey of Scion Capital Management (as described in the film, "The Big Short"). Further the financial ratings agencies (Moody's, Standard & Poor's, and Fitch) are essentially a government created cartel, so they are not free market rating agencies. Here's a description of how it happened (from the ThinkProgress website):
"But the real game changer was the SEC’s creation of the NRSRO, or Nationally Recognized Statistical Rating Organization in 1975. That formalized the definition of an officially sanctioned ratings agency. The SEC designated these firms through so-called “no action” letters where they would not prosecute anyone who relied on their ratings. Their original use was for setting broker-dealer capital levels.
Others started to piggyback on this official designation. Numerous laws and designations referenced the NRSROs, and in a parallel fashion, the private sector adopted them in guidelines, financial contracts, loan agreements and swaps, and those sorts of things."
No one was fired AFAIK for a loss of $500 billion from the treasury. And one unlucky guy was prosecuted. The NYT has an article titled "Why Only One Top Banker Went to Jail for the Financial Crisis" and another "A Clue to the Scarcity of Financial Prosecutions" for the 2008 crisis.
You are absolutely, the government failed to protect us, yet again, via institutions they allegedly created for that purpose. It's because they didn't defend free markets, in preference to government rigged markets. Rigged so that people who couldn't afford houses could get loans and would vote for Clinton is just one many examples of government rigging the housing market.
Absolutely most companies would behave truthfully and honestly, because being found out otherwise harms the financial return to the owners and employees. Have you never heard of regulatory capture? There's a Wikipedia article on it. Just look at how Fauci, the CDC, the FDA, and Big Pharma all operated during the Covid crisis that our government and Fauci funded to produce. They told us a bunch of lies, and search the internet for "CDC reputation" and you'll see articles such as "CDC chief tries to rebuild her agency's reputation — and morale", "Scathing CDC Report: Agency Is Slow, Elite, Confusing", or "CDC And FDA Trusted By Only Half Of Americans : NPR".
Regulatory capture isn't so easy when a consumer rating company can go out of business, while government rating agencies don't go out of business if they fail to do their job. They'll ask for more of our tax money instead.
And FWIW, not every private firm or person is entirely moral, but they get weeded out sooner or later, while government employees seldom get fired. Free markets aren't perfect, but it's the best alternative.
You are shockingly uninformed about the back end of pharma distribution and pricing. Taking your example of Pradaxa generics - they have only just been commercialized in the last few months so competitive pricing hasn't shaken out yet. The price point you refer to may be a "list" price - but that is not what the companies are selling them to wholesale for. I can absolutely assure you that the prices being sold to wholesale are at least 70% off AWP - but none of that is being passed on to insurance or cash patients. I'm in the business and dealing with this currently - generic launched at huge discount from list - wholesale selling to pharmacies at WAC and pharmacies will lose money on every rx if they fill it. This has nothing to do with pharma pricing and everything to do with the middlemen pbm's and wholesalers. The biggest problem is CVS and the lack of government oversight into continued intertwining acquisitions.
I prefer “somewhat ignorant” to “shockingly uninformed”, please! It’s true, I steered clear of PBMs as that would have doubled the research & word count for this post which was too much as it was… but I have to question your insinuation that the middlemen are the main drivers of excessive prices. Low hanging fruit, probably; but primary driver? From this: https://www.commonwealthfund.org/publications/issue-briefs/2022/jul/impact-pharmaceutical-wholesalers-drug-spending there is a great pie chart I cannot paste here, but wholesalers retained about 4% ($18B) of overall revenue (vs nearly 70% manufacturers).
I totally agree PBMs etc need to be addressed as there is so much grift in the system (and pharmacy distribution basically functions as an oligopoly, too) and not as much political inertia to tackle. But I think reforming patent abuse is a bigger issue.
Regarding comment below. Pharma SAYS they must have high prices to innovate. But lets be honest, a lot of "innovation" is some new (expensive patented) drug that may not be better than an older drug. They know how to manipulate clinical trials to give the new drug every possible chance it needs to squeeze past the finish line in the trial. The trials focus on efficacy and accurate risk/benefit analysis is not done, especially since the risk is often long term side effects, which are not studied. Amazingly many drugs still don't succeed in spite of the trials being designed with a thumb on the scale.
Another example, which has nothing to do with innovation and research. I live half the year in France. I have on going lyme and fatigue issues. So every few years my French doctor prescribes an extensive blood panel with thyroid panel , vitamin D, ferritin, and about 6 other metrics. It costs about $60. Recently, feeling very tired while in USA, I got a very similar blood work done. It cost over $500! What the hell? This has nothing to do with USA innovation. ITs simply that somehow these companies have worked it out with insurance that they are allowed to charge that much so they do!
Dr Hollander is correct that a single payer system with aggressive negotiation could bring our prices down to European levels. There would still be a lot of crappy drugs that don't do much, but at least they would be cheaper.
I live in Florida, but I'm guessing it's the same everywhere. There are two types of doctors: Those that treat you like a number, and those that treat you like a human being. If I were to guess, I'd say the former group outnumbers the latter group by a ten-to-one margin. And one of the most distressing parts about being treated like a number is that it seems to go hand-in-hand with giving you drugs for whatever condition you have, without even making a scintilla of an effort to find another way to help you.
I agree that we need to change our intellectual property regime, but I don't think that we need a bigger role for government in regulation. In fact, I happen to be personally familiar with one instance where the government regulator is directly responsible for giving the pharmaceutical companies an opportunity to exploit patent law for the purpose of predatory pricing.
I lived in China for four years, and I found that while living in China, I would have periodic problems with wheezing from a relatively uncomplicated case of asthma. I had lived in Los Angeles for over a decade before moving to Beijing and had gone years at a time without using a rescue inhaler. In Beijing, the pollution was so bad, much worse than American cities in the seventies, that in especially bad times of the year, I'd need a rescue inhaler several times a day. Fortunately, albuterol inhalers were available over-the-counter for the equivalent of three dollars. When I returned to America, I moved a few times before settling in Texas where the allergens cause me some seasonal difficulties with my asthma, and as a result, I need an inhaler several times a week during some parts of the season. I finally exhausted my supply of inhalers from China near the beginning of the epidemic and had to get a prescription online for a new albuterol inhaler. When I went to fill the prescription, which as I recall from before living in China might run around fifteen dollars because of the difference in purchasing power parity, I was told that the inhaler now costs seventy dollars.
Albuterol is an old medication, so I started looking into the problem. A simple Google search told the story. Apparently, when the government decided to ban CFCs, despite international agreement to permit excluding CFCs used as propellants in small delivery systems for medicines, devices like inhalers, a bureaucrat outlawed them at the urging of the pharmaceutical companies. Apparently, the pharmaceutical companies knew that the patent system would allow them to protect the old medication when qualified by the FDA to be used in a package with a new propellant, and the government move pushed the cost of a simple, commonplace asthma drug to ridiculous levels. That's your government at work. Some nimrod in D.C. decides with the stroke of a pen and completely at the bureaucrat's discretion to outlaw the generic market in a certain class of drugs. Would changes to patent law really be enough to curb this kind of stupidity when the industry has the ear and favor of the bureaucrats? The bureaucrats could end this misery around asthma drugs right now if they were so inclined, so I hope that you can understand why I don't place much confidence in the bureaucrats. They refuse to fix what's already in their power to fix.
Regulatory capture will reliably work to ensure that regulations benefit the big players in any industry and allow them to engage in some kind of rent-seeking behavior like gaming the patent system or swamping the makers of generics with unreasonable paperwork burdens effectively driving them from the market or making their products noncompetitive.
I totally agree that regulatory capture is a huge part of this aspect of the medical-industrial complex (and many more aspects, too). I don't pretend patent law reform in some sensible manner is likely to happen, but that it needs to happen. The whole system is infested by actors incentivized to keep the system irrational and unwieldy. It needs to be blown up and redesigned. I like to think the first step in the reform process is outrage, but that's usually the only step, I grant you.
The persistence of high drug prices in the US springs from what one might call the original sin of drug development: the US subsidizes the rest of the world in the search for new and improved drugs. There are a lot of historical reasons for this situation, but it has never made sense and doesn't make sense today, which is why the industry is so bad at defending it. It's indefensible. But it's the only system we've got. Reduce US prices to where they are for national health systems in the rest of the developed world and you can kiss new drugs for all but the most common illnesses goodbye.
How about prohibiting consumer advertising? Those costs get passed along just as lobbying does. The pharmaceutical cost trend and the medical cost trend increased precipitously when consumer advertising took off in the 90s. How about, you want a pill go the expletive doctor. Just saying.
Hey Doc, only way to get the world’s best scientists to work on miracle cures is to pay them. The rest can find meaningless employment in academia and government.
I have type 1 diabetes, diagnosed ten years ago. One doctor told me was that he, who'd had type 1 diabetes himself for 40-some years, had been hearing "a cure is 5 years away!!" for most of his life and that I should not pay such statements any mind, and instead just focus on management.
With an extremely expensive criminally gouged pharmaceutical product called insulin.
Over the next four years of my life (2012-16) the already shamelessly high price of my medicine . . . doubled.
The world's best scientists do what they are paid very highly to do by their criminal corporate employers. Everybody's got a boss, mate.
Best wishes (sincerely) with managing your health. My point is that world class talent demands world class compensation and that is one primary factor in Big Pharma costs. Plus remember that the vast majority of the research never materializes into revenue.
Sincerely appreciated. My question about "world class talent": is David Ricks, CEO of Eli Lilly (one of the companies of the two toned staircase insulin price graph, above), "talented" to the tune of $15M per year? Or those Merck executives who make $4M+ per year, three of whom make $10-15M per year, mentioned above? Seems the only "talent" there is grift.
My husband is a dyed-in-the-wool libertarian. He's actually in the woods hunting deer right now. I sincerely love libertarianism and consider myself a proponent . . . outside of this healthcare morass that my life depends on, but I do my best to avoid completely: usually by buying insulin outside of this country, whenever possible. :)
Compare those salaries to NBA players and consider who contributes more to society; eg Lebron James $1 billion net worth has more than all the Pharma CEO’s combined. Hope your hub gets one btw.
*My* libertarian friend was disgusted that I even mentioned CEO salaries, making the fair point that directing revenue streams of that magnitude and complexity they probably deserve (and hide) far bigger salaries. Fair point. But when you look at what they pay their scientists, it’s crap compared to Google or Morgan Stanley. I don’t have much love for Big Pharma because they are rightfully driven to find profitable products rather than meaningful products. They rarely hit “game-changing” meds partly because they rarely look for them. You could make the case federal funding is the only way to ensure looking for the latter.
Haha. At least Lebron's talent can serve as entertainment while drinking a cold one. No one alive today, and certainly not CEO David Ricks, is using their talent to keep me alive. Their talent is in charging me into the ground (figuratively and, quite possibly literally). Credit for keeping me alive goes to Frederick Banting in 1921, who sold the patent on insulin for $1 and said "insulin does not belong to me, it belongs to the world."
Could be - except that many new technologies start in academia, before being spun off as a start-up or licensed by (pharma) companies. Commercial companies really get interested in 'miracle cures' once someone else has completed a proof-of-concept.
Academia is like baseball minor leagues; if your over 28 years old there it’s game over. Government employment is like age old homes for terminally incompetent.
I just had an interesting conversation with my cousin, who does cancer research in an academic center. I left the convo feeling like the academic centers are critical to the "game-changer" type research we all want done, that requires a lot of moderately expensive and very time-consuming throwing pasta at the fridge and seeing what sticks, and Pharma counts on them to do it, and then is integral to providing the big $$$ for running the Phase 2-3 trials and bringing drugs to market. It's a symbiosis that makes me nervous, but it's what we have.
Dear Doc, you talk w ur cuz in academia and come away thinking academia is critical to research. Maybe a lil conflict and bias. Your a good guy and I do respect you. Please be wary of gov and academia. Both are tax payer funded money pits.
Just wanted to say thanks for writing this piece, Doc. I've shared it with a few friends - also insulin dependent - and it's really, really heartening to have an MD weigh in on this unjust morass, when so many are content to just stay the fuck out of it. Bravo, and thanks again.
You fail to consider foreign markets. Many countries have price controls which make it impossible for the drug maker to make any money there. Instead of refusing to supply the drug, they make up the loss where there are no price controls. We are subsidizing foreign consumers.
Foreign markets do complicate things; but pharma wouldn’t sign those contracts if they weren’t making enough $ doing their thing. If US consumers paid true market rates, Pharma would negotiate differently with Europe etc. if they needed to to maintain their profit margins. I think it takes naïveté to think US prices would drop if Europe loosened their price caps.
I believe you're very wrong about Pharma signing those contracts abroad. They sign them knowing full well that they will make up lost profits abroad here in the US. I learned this a few decades ago in a conversation with someone in Treasury of a major Pharma company when I asked that very question about why they sign unprofitable contracts in Europe. If more Americans understood the connection between those 'low prices' abroad and our high prices here there would be a very unpleasant confrontation with many authorities abroad. The ability to charge higher prices here is why even many European and Asian Pharma companies have their R&D facilities based in US which generates certain legal benefits because patents are originated here. The solution is not to force prices down in US alone, but I suspect it will be necessary to take a more holistic approach with US laws that dictate that Pharma may not charge more in US than abroad combined with patent protections and protections for the companies from retaliation by foreign regulatory authorities. The Treasury person told me that if the company does not go along with the lower prices those foreign authorities threaten to seize the patent and allow the drugs production by other generic companies. In order to rationalize global prices companies in US need the backing of US government to prevent this.
Where the research in conducted does not affect in patent protection.
Companies want to be close to the top Academic centers (Massachusetts, California, Washington, North Carolina, Texas etc.), to headhunt the top students straight out of academia, and to collaborate with the top labs.
The lobbying chart, like a lot of online article chart is incomprehensible. He says $390,000,000 but the chart doesn't total anything close. I have medicare and don't pay anything, and could afford more but there is no mechanism to shift costs by income levels. All discoveries we have, the ones who saved our lives come from Pharma. We have built our civilizations with oil and gas yet are constantly in their business saying they make "obscene" profits. No one attacks Apple, Microsoft, etc. for making the same kind of profits. It's as if oil and Pharma companies owe us something because they fill such base needs. They don't owe us anything. We owe them for the lives we had. This is a lifetime of listening to Dems scaring seniors and others about "big Pharma," and "Big Oil," and blaming them for our problems. These are self inflicted. The Oil and Pharma companies need to plan long term to operate. The government should make sane patent laws and make these people friends not demons.
With that all said, we should be able to get our prices down. But our leverage would be better if we honored these companies for the good they do, then work with them to bring down prices.
Don't believe your lying eyes! Biden has told god and everyone that he has signed legislation that dramatically cut the cost of drugs! Maybe he was just referring to the rock bottom prices for fentanyl?
What exactly are all the policy "wins" that morally depraved, treasonous democrats are always prattling on about?!
VOTE OUT ALL DEMOCRATS!!!!!!!!!!!!!!
The government caused the problem and letting them negotiate prices makes it even more expensive for those not on government aid. US Pharma isn't allowed to pass on R&D costs to foreign markets, so the US consumer has to bear a disproportionate burden.
Dr. Hollander, free markets also produce better private institutions to ensure the efficacy and safety of products and services. Have you heard of Underwriters Laboratory, Consumer Reports, Angie's List and other free market companies rating businesses or putting their stamp of approval on products. In a free market they'd exist because there's a demand for them. Instead, we have the government doing it. It's not Big Pharma ripping off customers, it's the government restricting competition that allows Big Pharma to charge higher prices. Service at Walmart is better than at the DMV or IRS.
Politicians are selling interference with free markets, so they can pick winners and losers. If they weren't selling such favors and instead defending free markets, we'd have better medical care at lower prices.
Thank you for reminding us all how well the rating companies did with their 'regulation' of the financial markets, and how short our collective memories are.
I'm glad you mentioned that. Yeah, the SEC totally failed to investigate, even after being informed about it by Michael Burrey of Scion Capital Management (as described in the film, "The Big Short"). Further the financial ratings agencies (Moody's, Standard & Poor's, and Fitch) are essentially a government created cartel, so they are not free market rating agencies. Here's a description of how it happened (from the ThinkProgress website):
"But the real game changer was the SEC’s creation of the NRSRO, or Nationally Recognized Statistical Rating Organization in 1975. That formalized the definition of an officially sanctioned ratings agency. The SEC designated these firms through so-called “no action” letters where they would not prosecute anyone who relied on their ratings. Their original use was for setting broker-dealer capital levels.
Others started to piggyback on this official designation. Numerous laws and designations referenced the NRSROs, and in a parallel fashion, the private sector adopted them in guidelines, financial contracts, loan agreements and swaps, and those sorts of things."
No one was fired AFAIK for a loss of $500 billion from the treasury. And one unlucky guy was prosecuted. The NYT has an article titled "Why Only One Top Banker Went to Jail for the Financial Crisis" and another "A Clue to the Scarcity of Financial Prosecutions" for the 2008 crisis.
You are absolutely, the government failed to protect us, yet again, via institutions they allegedly created for that purpose. It's because they didn't defend free markets, in preference to government rigged markets. Rigged so that people who couldn't afford houses could get loans and would vote for Clinton is just one many examples of government rigging the housing market.
You believe that those companies would behave different, if their were only market incentives?
You'll understand if I'm not as optimistic as you are...
Absolutely most companies would behave truthfully and honestly, because being found out otherwise harms the financial return to the owners and employees. Have you never heard of regulatory capture? There's a Wikipedia article on it. Just look at how Fauci, the CDC, the FDA, and Big Pharma all operated during the Covid crisis that our government and Fauci funded to produce. They told us a bunch of lies, and search the internet for "CDC reputation" and you'll see articles such as "CDC chief tries to rebuild her agency's reputation — and morale", "Scathing CDC Report: Agency Is Slow, Elite, Confusing", or "CDC And FDA Trusted By Only Half Of Americans : NPR".
Regulatory capture isn't so easy when a consumer rating company can go out of business, while government rating agencies don't go out of business if they fail to do their job. They'll ask for more of our tax money instead.
And FWIW, not every private firm or person is entirely moral, but they get weeded out sooner or later, while government employees seldom get fired. Free markets aren't perfect, but it's the best alternative.
You can take away their power..... stop buying their shit.
I have type 1 diabetes and need insulin. Can't stop buying it. I buy in Mexico instead, whenever possible.
You are shockingly uninformed about the back end of pharma distribution and pricing. Taking your example of Pradaxa generics - they have only just been commercialized in the last few months so competitive pricing hasn't shaken out yet. The price point you refer to may be a "list" price - but that is not what the companies are selling them to wholesale for. I can absolutely assure you that the prices being sold to wholesale are at least 70% off AWP - but none of that is being passed on to insurance or cash patients. I'm in the business and dealing with this currently - generic launched at huge discount from list - wholesale selling to pharmacies at WAC and pharmacies will lose money on every rx if they fill it. This has nothing to do with pharma pricing and everything to do with the middlemen pbm's and wholesalers. The biggest problem is CVS and the lack of government oversight into continued intertwining acquisitions.
I prefer “somewhat ignorant” to “shockingly uninformed”, please! It’s true, I steered clear of PBMs as that would have doubled the research & word count for this post which was too much as it was… but I have to question your insinuation that the middlemen are the main drivers of excessive prices. Low hanging fruit, probably; but primary driver? From this: https://www.commonwealthfund.org/publications/issue-briefs/2022/jul/impact-pharmaceutical-wholesalers-drug-spending there is a great pie chart I cannot paste here, but wholesalers retained about 4% ($18B) of overall revenue (vs nearly 70% manufacturers).
I totally agree PBMs etc need to be addressed as there is so much grift in the system (and pharmacy distribution basically functions as an oligopoly, too) and not as much political inertia to tackle. But I think reforming patent abuse is a bigger issue.
Regarding comment below. Pharma SAYS they must have high prices to innovate. But lets be honest, a lot of "innovation" is some new (expensive patented) drug that may not be better than an older drug. They know how to manipulate clinical trials to give the new drug every possible chance it needs to squeeze past the finish line in the trial. The trials focus on efficacy and accurate risk/benefit analysis is not done, especially since the risk is often long term side effects, which are not studied. Amazingly many drugs still don't succeed in spite of the trials being designed with a thumb on the scale.
Another example, which has nothing to do with innovation and research. I live half the year in France. I have on going lyme and fatigue issues. So every few years my French doctor prescribes an extensive blood panel with thyroid panel , vitamin D, ferritin, and about 6 other metrics. It costs about $60. Recently, feeling very tired while in USA, I got a very similar blood work done. It cost over $500! What the hell? This has nothing to do with USA innovation. ITs simply that somehow these companies have worked it out with insurance that they are allowed to charge that much so they do!
Dr Hollander is correct that a single payer system with aggressive negotiation could bring our prices down to European levels. There would still be a lot of crappy drugs that don't do much, but at least they would be cheaper.
"But those coordinated price hikes are symptomatic of a system untethered to the forces of competition."
No, it's symptomatic of large corporations choosing to collude rather than compete.
I live in Florida, but I'm guessing it's the same everywhere. There are two types of doctors: Those that treat you like a number, and those that treat you like a human being. If I were to guess, I'd say the former group outnumbers the latter group by a ten-to-one margin. And one of the most distressing parts about being treated like a number is that it seems to go hand-in-hand with giving you drugs for whatever condition you have, without even making a scintilla of an effort to find another way to help you.
I agree that we need to change our intellectual property regime, but I don't think that we need a bigger role for government in regulation. In fact, I happen to be personally familiar with one instance where the government regulator is directly responsible for giving the pharmaceutical companies an opportunity to exploit patent law for the purpose of predatory pricing.
I lived in China for four years, and I found that while living in China, I would have periodic problems with wheezing from a relatively uncomplicated case of asthma. I had lived in Los Angeles for over a decade before moving to Beijing and had gone years at a time without using a rescue inhaler. In Beijing, the pollution was so bad, much worse than American cities in the seventies, that in especially bad times of the year, I'd need a rescue inhaler several times a day. Fortunately, albuterol inhalers were available over-the-counter for the equivalent of three dollars. When I returned to America, I moved a few times before settling in Texas where the allergens cause me some seasonal difficulties with my asthma, and as a result, I need an inhaler several times a week during some parts of the season. I finally exhausted my supply of inhalers from China near the beginning of the epidemic and had to get a prescription online for a new albuterol inhaler. When I went to fill the prescription, which as I recall from before living in China might run around fifteen dollars because of the difference in purchasing power parity, I was told that the inhaler now costs seventy dollars.
Albuterol is an old medication, so I started looking into the problem. A simple Google search told the story. Apparently, when the government decided to ban CFCs, despite international agreement to permit excluding CFCs used as propellants in small delivery systems for medicines, devices like inhalers, a bureaucrat outlawed them at the urging of the pharmaceutical companies. Apparently, the pharmaceutical companies knew that the patent system would allow them to protect the old medication when qualified by the FDA to be used in a package with a new propellant, and the government move pushed the cost of a simple, commonplace asthma drug to ridiculous levels. That's your government at work. Some nimrod in D.C. decides with the stroke of a pen and completely at the bureaucrat's discretion to outlaw the generic market in a certain class of drugs. Would changes to patent law really be enough to curb this kind of stupidity when the industry has the ear and favor of the bureaucrats? The bureaucrats could end this misery around asthma drugs right now if they were so inclined, so I hope that you can understand why I don't place much confidence in the bureaucrats. They refuse to fix what's already in their power to fix.
Regulatory capture will reliably work to ensure that regulations benefit the big players in any industry and allow them to engage in some kind of rent-seeking behavior like gaming the patent system or swamping the makers of generics with unreasonable paperwork burdens effectively driving them from the market or making their products noncompetitive.
https://www.nytimes.com/2013/10/13/us/the-soaring-cost-of-a-simple-breath.html
I totally agree that regulatory capture is a huge part of this aspect of the medical-industrial complex (and many more aspects, too). I don't pretend patent law reform in some sensible manner is likely to happen, but that it needs to happen. The whole system is infested by actors incentivized to keep the system irrational and unwieldy. It needs to be blown up and redesigned. I like to think the first step in the reform process is outrage, but that's usually the only step, I grant you.
The persistence of high drug prices in the US springs from what one might call the original sin of drug development: the US subsidizes the rest of the world in the search for new and improved drugs. There are a lot of historical reasons for this situation, but it has never made sense and doesn't make sense today, which is why the industry is so bad at defending it. It's indefensible. But it's the only system we've got. Reduce US prices to where they are for national health systems in the rest of the developed world and you can kiss new drugs for all but the most common illnesses goodbye.
You can get some of the meds in the EU but remember your income tax is 70%.
How about prohibiting consumer advertising? Those costs get passed along just as lobbying does. The pharmaceutical cost trend and the medical cost trend increased precipitously when consumer advertising took off in the 90s. How about, you want a pill go the expletive doctor. Just saying.
Hey Doc, only way to get the world’s best scientists to work on miracle cures is to pay them. The rest can find meaningless employment in academia and government.
I have type 1 diabetes, diagnosed ten years ago. One doctor told me was that he, who'd had type 1 diabetes himself for 40-some years, had been hearing "a cure is 5 years away!!" for most of his life and that I should not pay such statements any mind, and instead just focus on management.
With an extremely expensive criminally gouged pharmaceutical product called insulin.
Over the next four years of my life (2012-16) the already shamelessly high price of my medicine . . . doubled.
The world's best scientists do what they are paid very highly to do by their criminal corporate employers. Everybody's got a boss, mate.
Best wishes (sincerely) with managing your health. My point is that world class talent demands world class compensation and that is one primary factor in Big Pharma costs. Plus remember that the vast majority of the research never materializes into revenue.
Sincerely appreciated. My question about "world class talent": is David Ricks, CEO of Eli Lilly (one of the companies of the two toned staircase insulin price graph, above), "talented" to the tune of $15M per year? Or those Merck executives who make $4M+ per year, three of whom make $10-15M per year, mentioned above? Seems the only "talent" there is grift.
My husband is a dyed-in-the-wool libertarian. He's actually in the woods hunting deer right now. I sincerely love libertarianism and consider myself a proponent . . . outside of this healthcare morass that my life depends on, but I do my best to avoid completely: usually by buying insulin outside of this country, whenever possible. :)
Compare those salaries to NBA players and consider who contributes more to society; eg Lebron James $1 billion net worth has more than all the Pharma CEO’s combined. Hope your hub gets one btw.
*My* libertarian friend was disgusted that I even mentioned CEO salaries, making the fair point that directing revenue streams of that magnitude and complexity they probably deserve (and hide) far bigger salaries. Fair point. But when you look at what they pay their scientists, it’s crap compared to Google or Morgan Stanley. I don’t have much love for Big Pharma because they are rightfully driven to find profitable products rather than meaningful products. They rarely hit “game-changing” meds partly because they rarely look for them. You could make the case federal funding is the only way to ensure looking for the latter.
Doc, lol that I will make the point for federal funding! :D
Haha. At least Lebron's talent can serve as entertainment while drinking a cold one. No one alive today, and certainly not CEO David Ricks, is using their talent to keep me alive. Their talent is in charging me into the ground (figuratively and, quite possibly literally). Credit for keeping me alive goes to Frederick Banting in 1921, who sold the patent on insulin for $1 and said "insulin does not belong to me, it belongs to the world."
You're cool :)) I do, too!
Could be - except that many new technologies start in academia, before being spun off as a start-up or licensed by (pharma) companies. Commercial companies really get interested in 'miracle cures' once someone else has completed a proof-of-concept.
Academia is like baseball minor leagues; if your over 28 years old there it’s game over. Government employment is like age old homes for terminally incompetent.
You can say what ever you want, - but without academia, we would not have many of the new therapeutics developed over the last decade...
Yea right. Lol.
I just had an interesting conversation with my cousin, who does cancer research in an academic center. I left the convo feeling like the academic centers are critical to the "game-changer" type research we all want done, that requires a lot of moderately expensive and very time-consuming throwing pasta at the fridge and seeing what sticks, and Pharma counts on them to do it, and then is integral to providing the big $$$ for running the Phase 2-3 trials and bringing drugs to market. It's a symbiosis that makes me nervous, but it's what we have.
Do we know how many new drugs would still have been developed without academia and/or government funding/research?
Dear Doc, you talk w ur cuz in academia and come away thinking academia is critical to research. Maybe a lil conflict and bias. Your a good guy and I do respect you. Please be wary of gov and academia. Both are tax payer funded money pits.