
The Same Pill That Costs $1,000 in America Sells for $4 in India - ghosh
http://www.bloomberg.com/news/articles/2015-12-29/the-price-keeps-falling-for-a-superstar-gilead-drug-in-india
======
stickfigure
With prices like that, seems like insurance companies could arbitrage this by
paying their patients to live on a beautiful resort island somewhere near
India for the 3 month treatment course. You can afford to bring the patient to
the pills instead of the other way 'round.

~~~
vijayr
There is already "medical tourism" happening in India - there are companies
that organize everything, all one has to do is go there, get surgery (or
whatever treatment), then go sight seeing before returning to the US and the
cost of the entire trip would be less than what the procedure would cost here.
Only downside is, it is driving up costs for the locals.

~~~
kamaal
>>Only downside is, it is driving up costs for the locals.

As an India I can attest to this.

Also even by these standards(that appear to cheap to people in western
economies), health care is prohibitively expensive to most poor people in
India.

------
heavenlyhash
One of the biggest problems with the pharmaceutical/insurance hybrid system I
experience is the inability to express choice.

My family has an insurance plan in which we pay a set premium cost monthly,
and then for some set of health services our insurance promises covers (and
thus reduce for us) some of the costs. I think most Americans are in a similar
situation.

The insurance company is allowed to reject claims for some services. In
particular, they frequently reject claims for drugs for which there is a
cheaper "preferred" alternative.

To some extent, this seems reasonable and wise: if there's a cheaper,
completely substitutable version of the drug, then let's use it.

The trouble is, things aren't nearly so simple. My grandmother has a strong
preference for certain kinds of pain relief medication because some (let's
call it Drug A) will knock her out effectively all day, and others (let's call
it Drug B) let her function wonderfully and pain-free. However, Drug A is
"preferred" to Drug B. As a result, the insurance refuses to cover it.

Every single incentive structure in this system is unproductive:

* My grandmother is left expressing her preference by voting with her dollars, out of pocket -- punishing her for expressing a preference. Because the price gap between Drug A and Drug B is inflated by the effect of the insurance company, this disincentive is so vicious that many people would be unable sustain this at all. Many consumers are effectively _unable to express preference_ in the market because of the synthetically inflated price gap.

* The insurance company feels no pressure whatsoever to cover Drug B, even though the devastating side effects reported by my grandmother are extremely common. There's simply zero incentive for them to behave pro-consumer, _or even to bargain the price of Drug B down_.

* The drug manufactory feels reduced pressure to change the pricing of Drug B, because unless they drop it to _below_ the price of their current high-seller Drug A, the insurance company will powerfully influence the market away from Drug B, despite the fact that it is in almost all cases superior to Drug A and no more difficult to manufacture.

By completely failing to align incentives to match good outcomes, we've ended
up with a system that's pitted against its own progress. Hackers, can we
construct a better market?

~~~
abtinf
> Hackers, can we construct a better market?

No, you can't. Any solution you come up with will be illegal in some key
respect. You are dealing with one of the three most heavily regulated
industries in the United States.

You don't need hackers; you need an army lobbyists of lobbyists powerful
enough to overcome entrenched opposition from every corner of the healthcare
system.

~~~
toomuchtodo
Can we not lobby hard enough for universal healthcare? Which has been shown to
deliver healthcare at a much lower cost per capita?

Google, Facebook, and Apple are in front of how many people's faces per day?
Sounds like a huge lobbying force to me

------
fiatmoney
So why isn't someone smuggling bottles' worth back to the US until the price
equilibriates? That's a pretty nice profit margin even for the illegal drug
trade, and the US can't even reliably keep things like heroin from being
readily shipped on a retail basis.

~~~
wobbleblob
Is that really considered smuggling? If the whole 12 week treatment costs
$84000 in the US and apparently $336 in India according to the article, you
could take a nice vacation to India with your family, get your bottle of 84
pills there, and save $75k to $80k. A smart insurance company would cover it.

~~~
baddox
That's assuming the insurance company is fine paying whatever the vacation to
India costs.

~~~
wobbleblob
It's really their own $75k they're saving...

~~~
baddox
Not if they weren't going to pay that anyway.

------
logicuce
Pricing a medicine, like pricing any other product, will have its own
complexities.

* You need to fix a price which would cover the cost of your research that went in (and also for unsuccessful researches that you write off for other ailments) * You have idea about the scale of the ailment but little idea about market acceptance and reaction to your price. * After market has accepted a price, even if it exceeds your predicted consumption by many fold, you have little incentive to change the price especially if insurance is paying for it. * In a new market, because you have already recovered what went in to build the medicine, you can price it better.

In fact, insurance itself work very differently in US vs India. In India, in
most cases your insurance won't pay for your medicines and medical expenses
(diagnostics) if you don't end up hospitalized for at least a day. And that
can govern how medicines are priced here because price has a direct
implication on adoption.

~~~
jakobegger
You forgot one part:

* You have to finance your highly paid sales staff.

People always claim that pharma companies spend so much money on R&D, but when
I look at job ads in the news paper I don't see ads for research positions,
but lots of ads for sales positions (from pharma companies).

I'd love to see actual numbers, but I'm pretty sure that sales is at least as
costly as research (if not more so)

~~~
drewrv
Here's some actual numbers for marketing vs research:
[https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...](https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-
pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/)

------
calvinbhai
There is no market for healthcare and medicines in the US. Its just an
illusion.

US runs so much on the whims of the health insurance industry, that $1000 pill
justifies a rich/middle class family's $1000 a month insurance premium.

Would the families/individuals pay the same expensive premium every month, if
the pill was available for even $100 in US?

I pity the guy who jacked up the price of the pill in US, and got burned
online. All he was doing, was to take a bigger chunk from the stinking rich
health insurance companies, and providing the product in the US "Market".

I live in US and have spoken many Americans as to why they don't think of
going to India for medical reasons. I was expecting some kind of a
condescending / patronizing response about quality of service etc. Often, the
response is that they have a "sunk cost of expensive monthly premiums", which
gives them the illusion that getting treated in US costs lesser.

The blow of a $1000 pill is softened, to those who pay the expensive premiums.

As someone who moved from India to US, I can know market prices of individual
tablets /medicines in India, but its way too difficult to know the "market
rate" of medicines in US, unless you go by the rates shown by your health
insurance company.

------
melling
India is bigger than the US and Europe combined. I think we can even add in
the US again. They are a rapidly developing economy with a strong educational
system. Wouldn't we all benefit if the moved up from generics and created new
medicines? More drugs, more competition, etc

~~~
meagain20000
You mean if india started doing their own research? Well of course, we the
general population would benefit. Nobody is stopping them. Except maybe cost.

~~~
lloyd-christmas
Quality. The problem tends to come down to human trials. Very few countries
have a combination of the quality of medicine, the proper oversight, and a
large enough population to actually make the trials worthwhile. China/India
simply don't have the same quality control as that of US/Europe/Japan.

Beyond that, humans aren't all equal. Drug trials in the US make an effort to
represent the general US demographics within their studies (which is also
representative of Europe). Clinical trials of a 100% Indian population have
questionable relevance any other country, and will likely require the entire
study to be redone with a population-representative sample.

~~~
option_greek
Are there any drugs that work well with one populace but are harmful to
another ?

~~~
lloyd-christmas
Yep. I'd have to dig for examples, but many cancer drugs have different
efficacies on differing ethnic populations. My father researches genetic
markers vs. success rates in different treatments for the same types of
cancer. He sees it constantly (Dinner conversation; his big data vs my big
data). It's easy enough to assume they do given the different rates of
diseases among ethnic groups. From my viewpoint, I would be more shocked if
they did actually have the same efficacy.

------
known
India follows the "Sheep Herd" mentality. The whole country's economy is based
on people getting into "Profitable" domains mostly following the success of a
pioneer in the field. The most recent example of this ideology is the
"Business Process Outsourcing" industry. New BPO units are propping up here
and there at a dime a dozen leading to a quality deterioration in the final
deliverable. This process will continue till a saturation level is reached and
then they will wait till another "Killer" domain picks up momentum. Till then
India will be in a so called "Calm Period" where nothing great and major takes
place.

[http://qz.com/519777/why-india-needs-a-new-
constitution/](http://qz.com/519777/why-india-needs-a-new-constitution/)

------
narrator
I think making cheap drugs widely available is a way for China and India to
improve their soft power in a way that the west can't really match. However,
they first need to find a way to counteract the safety fear-mongering with
regards to drugs produced outside of western countries.

~~~
lloyd-christmas
To be fair, China produced toxic drywall. For my epilepsy, I'm happy paying
$1k for drugs produced in the US compared to $10 in China. Even countries like
Japan can barely manage human trials. My father is an oncology
physician/researcher/consultant. He goes there yearly to tell them to stop
chopping out every prostate that walks through their doors.

------
47
The cynic in me wonders if it is because people are able and willing to pay
higher prices in America.

~~~
JacobJans
It could be because the government is not allowed to negotiate drug prices.
(Medicare.) They pay whatever the drug companies ask.

Or, maybe because most individuals in the U.S. don't pay the full price. They
pay a 'co-pay.' Insurance companies pay the rest. But, they can only make
profit as a percentage of revenue. If they lower drug costs significantly,
they significantly lower their potential profits. Why would they do that? From
a shareholder's perspective, that's a very bad idea.

In the U.S. relatively few people really know how much a drug costs, so why
would price be taken into consideration?

~~~
replicatorblog
Your first statement isn't accurate. I used to work at a startup that dealt
with Medicare. They have a process where they put contracts out to bid. In my
companies case their allowable reimbursement declined by 90% in a single year.
They have plenty of power to put screws to suppliers and use their power
effectively.

~~~
JacobJans
> He has asked Congress to let Medicare officials negotiate prices with drug
> manufacturers — a practice explicitly forbidden by current law.

[http://www.nytimes.com/2015/04/28/us/obama-proposes-that-
med...](http://www.nytimes.com/2015/04/28/us/obama-proposes-that-medicare-be-
given-the-right-to-negotiate-the-cost-of-drugs.html?_r=1)

------
trentmb
> "From each according to his ability, to each according to his needs"

People that can pay more do, those that can't... don't?

------
skyhatch1
Pricing comparison charts for 8 drugs in 14 countries:
[http://www.bloomberg.com/graphics/2015-drug-
prices/](http://www.bloomberg.com/graphics/2015-drug-prices/)

US tops the list every time - even with discounts negotiated by insurers. The
flipside to these exorbitant costs is the accessibility they bring.

It's easy to ignore the fact that US pricing arrangements motivate
pharmaceutical companies to market more of these drugs. Keyword: market.

As sad as it feels to say this, a more socialist agenda wouldn't nurture as
much drug commercialization - development perhaps, but not marketable
products.

Australia's social healthcare, Medicare, is driving down the price of common
"molecules" to negligible amounts.

These days, you can really sense apathy on the pharmas' part. Stock outages
are frequent because there simply isn't a $ factor to make them care.

On top of being a geek, I'm a pharmacist business manager - knowing how drug
pricing economics works is part of my job.

~~~
calvinbhai
"Discount negotiated by insurers" is the mirage americans live in.

$10 pill is marked up to $100, charged to insurer. your health insurance with
a premium of $250 per month, negotiates the price and enables you to buy it
for $15, giving you a illusionary savings of "$85".

Same pill, is probably available in India, at a market rate of $5-$7.

People compare market rate of the pill in India $5 with the pre-negotiation
sticker price in US of $100.

Q to the Pharmacist Business Manager: Do you think prices of these drugs would
remain so high, if health insurance companies didn't exist and everyone paid
for medicines and services out of pocket?

------
37prime
This is similar with Bayer’s Nexavar (Sorafenib)and its India-market-only
counterpart.

India had to impose an export-restriction for these drugs.

------
Houshalter
Well of course, I don't know why people find this surprising. You are not
paying for the cost of manufacturing the single individual pill. You are
paying for the cost of researching it and testing it, as well as a thousand
other drugs that didn't make it to market.

If the US market didn't pay for these drugs, they wouldn't still be cheaper in
India. They likely wouldn't exist at all.

~~~
hrktb
> You are paying for the cost of researching it and testing it, as well as a
> thousand other drugs that didn't make it to market.

Trying to think of other straightforward instances where a tremendous cost is
spent on researching and testing, and directly affect human well being.

One example would be meat farming. As far as I know raising pigs or chicken
evolved a lot in our lifetimes, extensive research was done on how to produce
mor meat, there's oversight by a public agency and it is consumed by human so
there is a decent amount of safety check and oversight.

Yet meat is cheap.

The more research that went into it, the cheaper it got. Provided meat as a
product is more stable and less dangerous than drugs, I still think that it
doesn't explain why meat would become cheaper while drug price should stay
high and pharmatical firms should have extra protection to keep their prices
high.

We're not paying for research, we're paying for monopolies.

~~~
Houshalter
This comparison makes no sense. The vast majority of drugs are super cheap,
and we have more choices then ever before. Only ones developed in the last 20
years have patents.

The exact same is true in agriculture. You can patent a gene or a variety that
you bred. But the only way to sell it to farmers is if it gives them higher
yields than the previous stuff.

Agriculture did benefit a lot from research done by public universities. As
did medicine. I'm hugely in favor of increasing public research in both areas.
This is not not mutually exclusive with private research. It's not like there
are a finite number of things that can be researched or invented.

~~~
hrktb
> This comparison makes no sense. The vast majority of drugs are super cheap,
> and we have more choices then ever before. Only ones developed in the last
> 20 years have patents.

If as you say the majority of drugs are cheap, varied and didn't need patents,
I'd say it's as good sign as any that we don't need patents for drugs.

I also think we need more research, both public and private. I understand that
the current system relies on patent money to sustain itself, but I just don't
buy that it has to be this way, or that it wouldn't work otherwise.

For the record I am not comparing industries, just saying that different
models exists.

~~~
Houshalter
>If as you say the majority of drugs are cheap, varied and didn't need
patents, I'd say it's as good sign as any that we don't need patents for
drugs.

I think you are confused. Patents only last 15-20 years, not forever. The
majority of drugs were developed by companies looking to own the patents.
However they are now free to the public.

Without the patent system, they wouldn't exist at all.

------
hackaflocka
Indian person here, in case what I'm about to write is offensive to anyone:

The difference is that the Indian companies are simply stealing intellectual
property paid for by American taxpayers. These companies didn't spend years
and billions of dollars going through the FDA maze to develop the drugs. They
simply stepped in after all the hard work was done, to develop an alternative
process for a proven drug.

That's right, India has "process" patents, not "product" patents, for
pharmaceuticals. Look it up.

~~~
pavanred
The article mentions, Gilead licensed 11 companies in India to make generics.
I don't see how licensing to make generics make it stealing intellectual
property.

Besides I am curious how $1000 in USA compares to $4 (about ₹ 265) with the
per capita income in perspective, as a measure of affordability of the drug.

~~~
paul_milovanov
the purchasing power of $1000 vs ₹265 is not important; Gilead benefits,
because they now have >$0 from each pill whereas otherwise they would have $0.

Identical to software piracy in poor countries: if people are buying DVDs with
your software for $2, that's what the market will support. Nobody offers you a
choice between $500 and $2, it's between $2 and $0 :) So you'd be smart to go
and start selling it yourself for $2.

