
Why a Pill That's 4 Cents in Tanzania Costs Up to $400 in the U.S - nitramm
https://www.npr.org/sections/goatsandsoda/2017/12/11/567753423/why-a-pill-thats-4-cents-in-tanzania-costs-up-to-400-in-the-u-s
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empath75
The answer is that our insurance and medical billing system is a complete
tirefire and needs to be burned to the ground and replaced with something
sane.

~~~
gaius
If the pill retailed for $0.04 in the US could the R&D be recouped?

Americans should feel good about high drug prices: that's your aid to the
Third World right there. Not the most efficient technique but still better
than not doing it at all.

~~~
harryh
While in general I agree with you that is not the case here. The drug's patent
expired decades ago. The issue is that there is only 1 US manufacturer giving
them pricing power.

It's unclear to me why another drug manufacturer doesn't come in and undercut
the price. This is what happens in most other industries. My gut suspects the
arduous FDA approval process, but I have no real evidence for this hypothesis.

~~~
justin66
> It's unclear to me why another drug manufacturer doesn't come in and
> undercut the price.

From the sound of things these diseases were until very recently isolated to
poorer countries. Even today, with the increased number of cases, there might
not be enough money to be made based on a few sick North Americans to justify
tooling up to make a new drug. (Some of that is about FDA regulatory approval,
but not much since it's not a new drug. They'd be manufacturing something that
has already been tested and approved.)

Ideally the drug company making this thing would just stop being boneheads
about pricing. Having this in the news will probably help.

~~~
jonwachob91
>>From the sound of things these diseases were until very recently isolated to
poorer countries. Even today, with the increased number of cases, there might
not be enough money to be made based on a few sick North Americans to justify
tooling up to make a new drug.

The article also says albendazole, the drug in question, can be purchased in
the UK for $2. Why can I not start a pharma company that A) imports
albendazole (and other rare disease drugs) from the UK and other 1st world
country at a reasonable markup or B) orders albendazole, and other rare
disease drugs, from the same manufacturer that makes it for the UK, and other
1st world countries, at a reasonable markup?

I'm genuinely curious about the regulatory landscape of that question.

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rhino369
I think our system is so fundamentally broken, you should be able to do that.
But if you could, it would be an end run around the FDA. Might as well shut
the FDA down in that case.

If you add burdensome regulatory costs to some competitors (domestic pills)
but not others (foreign pills), the others will win all business. That is an
unfair playing field. So part of the deal with regulating drugs in America is
that you can't import drugs from other countries.

I think I'd probably allow importation of the exact drug, by the exact
manufacturer. Or just set a price control saying you cannot sell a drug for
more than 120% of the average price in the EU + Japan + Canada + Australia +
NZ etc.

~~~
justin66
> I think I'd probably allow importation of the exact drug, by the exact
> manufacturer.

Well, right. It's pretty impossible to justify not allowing importation of the
drug for any safety-related reasons if it is literally the same product from
the same manufacturer.

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turc1656
What the article leaves out is that the real reason is that there are laws
that were specifically passed to make import of drugs nearly impossible and
illegal in most cases. The system is tightly controlled such that no price
arbitrage can be had. This shit wouldn't fly with any other product. If it
wasn't illegal, companies would be buying in bulk and importing to the US
since the US price is literally 10,000x higher. Price would converge quickly.
But Congress decided that should be outlawed. And to be clear, we're not
talking about off-brand or fake pills that are manufactured in violation of
the patent owners wishes. We're talking about the same pills manufactured by,
for example, GSK and shipped to different locations around the world. The
current system is simply global welfare that everyone in the US pays for.

~~~
ZeroGravitas
This seemed a great comment until the very last sentence. Are you really
claiming that Congress wanted to fund the advancement of medicine globally,
and they did so by banning imports of pharmaceuticals?

Surely there's simpler explanations for this that fit the facts better?

~~~
turc1656
No, that's not what I'm claiming. I'm claiming that pharmaceutical companies
wanted a way to increase profits. They concluded that if they raised prices
that would be bad PR because of the poorer nations that couldn't afford it and
they would be seen as villains. Yet, the US had the potential to pay more. So
they found a way to go right down the middle and lobbied congress hard to pass
those laws. Now they get to be the benevolent rich guys who get to prattle
about how many doses they donate globally and how cheap they can make the
pills in the lesser developed nations while simultaneously ripping off US
citizens to cover all that, and more.

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remy_luisant
Stupid question from an idiot from communist Canada: Can't you just import the
bloody pills from somewhere that isn't the USA?

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nasmorn
I think the FDA will fight to your death for your right to safe medicine.

~~~
notyourday
I'm baffled by the snark. Could someone please attempt to reconcile the
following positions for me:

1\. We need regulation of drugs/medicine/etc because we do not want some snake
oil peddlers peddling arsenic as medicine?

2\. Regulations prevent us from getting shit cheap! Baaaaa!

~~~
ztjio
FDA is given power to do a necessary job: keep us from eating poison instead
of medicine, or whatever. But the same power is abused to prevent competition
by "suggestion" of the industry that provides these medicines.

It's hardly a complicated situation.

~~~
notyourday
Exactly: it is a very simple situation - we collectively as the society
decided that we do not want garbage peddled as medicine. FDA established how
we determine "not garbage". Full stop.

~~~
notyourday
Edit: yes, based on our current position Export from US->Other Country->Import
to US for medicine violates "Not Garbage" state. It is no different than
importing USB chargers that sell in China for $1.02. We do not want the vast
majority of the population engaging in this though those who know how to are
allowed to do it themselves.

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chmaynard
From the article: "In the years following albendazole's price hike in 2011,
Medicaid spending on the drug went from under $100,000 in 2008 to more than
$7.5 million in 2013." To most Congressional Republicans, this is beautiful
music begause it means one of their constituents is getting rich by ripping
off taxpayers. (Indeed, it may be the only form of music they can appreciate.)

~~~
maxerickson
I would really like to see a detailed analysis of why Medicaid is paying these
higher prices.

It seems to be because their payments are benchmarked to what private insurers
pay and the private insurers don't fight price hikes on drugs with (for them)
small total costs.

One fix might be to use a benchmark that is less dependent on whether private
insurance bothers to negotiate. Another would be to allow HHS (working with
FDA) to arrange for import of certain drugs.

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mabbo
This is a great case where unregulated free markets absolutely fail to solve
the problem. Companies like Impax Laboratories are sole-suppliers, and the
cost to produce is the smallest cost, once initial capital costs are laid down
to build the factories to produce them.

What would happen if a challenger appeared? A new company gets some funding to
try to make a small number of high profit drugs, competing with Impax? Impax
can drop their price on those drugs lower than the challenger until the
challenger is out of money.

Any incumbent has already paid the initial capital costs, while challengers
haven't. Challengers can't win unless they've got big enough pockets to equal
the incumbent, or new techniques that let them undercut even the lowest price
the incumbent can do. But in a field like this, where the lowest price is
apparently in the pennies, I can't really see how you can undercut enough.

I don't really see any simple solution to this problem.

~~~
maxerickson
Drugs are heavily regulated in the US.

~~~
mabbo
But is that the problem here? I mean, yes, if the rules about importing went
away this problem would vanish over night, but let's ignore that for just a
moment and imagine this same problem exists on a world-wide scale (it very
well could!).

How can a newcomer get into this market and undercut a competitor who can
essentially drop prices as low as they want without losing their
profitability?

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maxehmookau
Because American healthcare is, from an outside perspective, utterly insane.

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throwaway2016a
No mention that the average wage in Tanzania is $45 to $50 a month? As a
proportion to wage it is actually more comparable than at first glance.

As a solution though, I think we need reciprocity between drug regulatory
agencies and open up drug sales between countries that have reciprocity. For
example, if a drug is approved for sale in Canada it should be purchasable by
people in the US and visa versa. It would allow competition between regulatory
agencies (which should in theory make them more efficient because they have to
compete) and lower the cost of bringing a drug to market because you no longer
need to get approval in as many countries. Which in theory should lower
consumer costs.

Combine that with transparent pricing so that everyone knows what the costs
are before they need to make a purchasing decision and we might be part way to
a solution.

~~~
cvsh
The median monthly household income in the U.S. is $4710.

The difference is two orders of magnitude.

~~~
throwaway2016a
Correct, if you were to go purely by the wages, the pill should cost $4 in the
US not $400. It is still high, I was just pointing out that there are market
differences. And to expand on that, the illness the drug in question is more
common in Tanzania (per the article) so I can only presume the drug company
can sell an order of magnitude more and might actually be making almost as
much profit in aggregate on that $0.04 as they do the $400 here.

~~~
mtgx
The article explains why it's so expensive:

> Why are prices so different in the U.S.?

> "In other countries, there are price control methods. The government steps
> in to ensure drug prices do not increase by a certain amount," Alpern says.
> "There are no price control mechanisms in the U.S."

> Between 2011 and 2016, mebendazole's price jumped more than 8,000 percent,
> from $4.50 to $369.

So it was indeed $4.5 in the U.S. - until the company decided to get greedy.

~~~
throwaway2016a
I'm not sure your conclusion follows from the article. The lack of controls
may contribute but the reasoning may have not been greed. There are many
market factors in play. It may very well be greed but I don't see much
evidence in this article either way.

In other words, the article explains why the price growth was not capped. It
does not explain why it grew in the first place.

In general I wish the drug company had taken time to contribute to this
article and show their side of the story.

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exabrial
>
> [https://www.drugpatentwatch.com/p/NDA/020666](https://www.drugpatentwatch.com/p/NDA/020666)

From what I can tell, there are no patents. That means the only thing making
this expensive is the lack of competition. The company bought the marketing
rights and took over manufacturing.

I would imagine after a second supplier enters the market prices will crash.

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1024core
What's to prevent someone from importing the $0.04 pill and selling it for,
say, $1?

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wafflesraccoon
It is against the law.

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stmfreak
If the USA would stop outlawing importation of same drugs for resale, these
price disparities would disappear overnight.

Let's not pretend this is some bizarre problem that needs more money to solve.
Congress only has to erase one law.

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jryan49
Supply and demand? Because we'll pay for it anyway?

~~~
reustle
* Medicare will pay for it

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pb000
While the article talks about big pharma, we can solve this specific parasite
issue by switching to another approach: Traditional Chinese medicine. At
$60/week per tea made of 8-12 ingredients one can completely expel parasites
from the body in a few weeks. Of course, big pharma never makes that known or
even knows about it themselves. People in rural areas of East Asia certainly
do.

