
The Danger of Managing Drug Prices - gedrap
http://www.bloombergview.com/articles/2015-09-11/the-danger-of-managing-drug-prices
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success_hawk
I tend to always want the free market to find the balance as well, however
medical care price markets for everything are not a free market. Between
patent regulations allowing for extension and monopoly combine, liability on
producers, pressure from investors for profit and returns, with those
prescribing and taking the drugs having no connection to the price and value
the forces that drive pricing are a maelstrom. I have worked in pharma
research both internal to the companies and as an external independent data
reviewer. I am also aware of a both subtle and overt collusion to fix data and
pricing. While I think government does nothing well this is area is a dark
cave that could use some light.

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fredkbloggs
While I agree with you and the author, I don't see either of you proposing any
solutions, and I don't really have one either. About the closest I can get to
is to abolish or at least very radically reform the third-party payer system.
But since it's fashionable these days to push for a single-payer system (which
is even farther in the wrong direction), that seems at least as politically
impossible as anything else that might be proposed. There are a number of
modest improvements to e.g. the approval process that would lower risks and
costs, but not enough to make any real difference, and even those are
politically daunting.

Ultimately, the only way to get new research is to be willing to pay for it.
And the only way to get low prices is to be willing to walk away. It might be
helpful for people to take a big-picture approach here, and I suspect that if
they did, many would decide that maybe having all these expensive drugs and
even more expensive medical plans isn't really worth it. You can probably get
a lot more enjoyment out of a 60-year life than a 70-year life if every year
comes with an extra 10 grand to spend, especially if your last five years
would have been spent suffering side effects in a hospital bed. I suppose I'm
questioning the author's assertion that (rational) people are willing to pay
any price for drugs.

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beagle3
> push for a single-payer system (which is even farther in the wrong
> direction),

Why do you think it's in the wrong direction?

Many countries have socialized medicine, some of which have single payer, and
I've never met a person who experienced a single payer system who didn't think
it was the right way to go.

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hugh4
>Many countries have socialized medicine, some of which have single payer, and
I've never met a person who experienced a single payer system who didn't think
it was the right way to go.

Really? You haven't met many people.

However, I'm pleased to meet you, because I've lived in the US and Australia
and I think that the US system is vastly superior (assuming you have decent
insurance).

My objection to the Australian system is both practical (the standard of care
is lower because hospitals are just government departments, they don't have a
profit motive, it suits them to give you less care rather than more) and
philosophical ("single-payer" health care just functions as yet another
government-enforced transfer of wealth from the rich who earn it to the poor
who vote for it).

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beagle3
> I've lived in the US and Australia and I think that the US system is vastly
> superior (assuming you have decent insurance).

Go ask your australian friends who lived in the US what they think. I've lived
in the US and Israel, and spent considerable time in the UK (the latter two
single payer systems), and I had great insurance living in the US.

The "standard of care" is a vague measure that could mean anything at all.
Yes, being hospitalized in the US is more like a hotel room, one person per
room.

But the doctors are considerably less experienced (structurally so), which
means you get the wrong care for things that aren't common (from experience).
The "out-of-pocket" on my great insurance in the US is significantly higher
than my premium-to-make-include-hotel-room-stays in the other places. And I
generally have much shorter waits for both routine visits and specialty
doctors outside the US.

The US costs a lot more. In return, you get care that is lesser but is
shinier. Every statistic of care effectiveness that I've seen ranks the US
quite low -- mostly comparing life expectancy but also quality-of-life post
treatment.

What's this "standard of care" you speak of?

Note, I'm unfamiliar with the australian system - it might be worse than the
US on every front. But the Japanese, Swiss, British, most EU, and Israeli
systems are not lesser and much, much cheaper, in my opinion and limited
experience.

p.s. re "great insurance" \- it's great until you _really_ need it, but then
it fails to be great way too often. Leading cause of bankruptcy in the US is
medical expenses[0] - more than 50% of medical bankruptcies are by people who
have insurance. How great is that?

[0] [http://www.cnbc.com/id/100840148](http://www.cnbc.com/id/100840148)

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alistairSH
All this is good and fine, except darn near every other nation already fixes
drug prices in one way or another, forcing the US to bear the costs of drug
R&D.

Couple that with market forces in the US that prevent a text-book
"fair"/"functioning" free market, and we (American consumers) get stuck with
prices that are not just mind-bogglingly high, but also much higher than
consumers in other 1st world nations pay.

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DanBC
Do you have a reliable source for your claim that the US bears the cost for
R&D?

(And this question is aimed only at alistairSH)

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melling
Why only for alistairSH? We're a hive with collective intelligence that just
wants the truth. :-)

Search for the words "Much of the development cost of a new drug is paid by
the US market"

[http://www.forbes.com/sites/timworstall/2012/03/15/drug-
deal...](http://www.forbes.com/sites/timworstall/2012/03/15/drug-dealing-free-
markets-and-price-fixing-just-dont-work-together/)

~~~
ZeroGravitas
Freelance libertarian bloggers aren't generally considered a good source.

A quote from your man:

"I'm one of those classical liberal types with the libertarian mindset that
sees the carbon-cutters as, in general, authoritarian, super-statist, quasi-
socialist conspirators intent on bossing people around and interfering with
their lives and liberties. Having confessed, I'm now going to prove that it's
true, that it's not just my belief but a true reflection of the world"

~~~
Frondo
What? You mean we _shouldn 't_ start with belief, and set out to prove it?

What are the libertarians supposed to do now?

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hapless
Any time someone dares to suggest that U.S. pharmaceutical pricing is out of
control, pundits (often paid pundits) work themselves into a froth about new
drug development.

I'm tired of subsidizing drug development for the rest of the world. Let's
manufacture and sell drugs in the United States at a rate that maximizes
social welfare. Industry profits and R&D costs can rest on someone else's
back.

If no new pharmaceutical was ever funded by private research money ever again,
but we could control pharmaceutical costs, that would be just fine with me.

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danbruc
Have an international agreement that every country pays an amount based on the
GDP into a fund and distribute that money based on prior research success.
Make the results available to everyone at no costs and let them produce and
sell drugs at self cost prices. No profits for investors, no patents, more or
less fair research cost distributions, drugs as cheap as they can get. A
global solution for a global problem.

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arkem
How do you determine what the correct level of funding is for the project?

We can solve problems beyond pharmaceuticals with a command economy style
approach if we can come up with a good methodology for resource allocation.

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danbruc
Use current global spendings as a baseline and adjust from time to time. If
you have more money available than researchers to pay you can decrease
spendings, if you desire faster progress throw more money at it. Besides the
added complexity of a global scale undertaking I see no reasons that it is
fundamentally harder to do then say planning the budget for road construction
and maintenance or other national infrastructure spendings.

EDIT: In the case of drugs we also have a somewhat exceptional situation, we
have a pretty good idea of what the demand is and what the benefits of
satisfying a specific demand will be.

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brohoolio
Makena or Compounded 17P?

$30,000 vs $800

That's what we get to decide for our next pregnancy. Someone bought a drug,
reformulated it a bit and replaced a generic.

Do we use the generic that's regarded as safe and effective? Do we use the new
drug?

I don't want to hold another stillborn child. How can I make an informed
decision? There aren't great stats for me to make an easy choice and the
marketing makes makena seem like it's a much better choice.

~~~
refurb
Compounded drugs are generally regarded as safe with a few exceptions. There
was a compounding pharmacy in MA that gave hundreds of patient fungal
meningitis due to unsterile conditions.

I would first see if your insurance will pay for Makena. The company that
makes it has reduced the price substantially due to public lashback.

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zem
surely the optimal end goal would be publicly funded drug research labs, with
budget allocations comparable to what the pharmaceutical firms spend.
surprising that the article never even touched upon that.

