
Pharma companies continue to raise drug prices at rates well above inflation - pera
https://arstechnica.com/science/2019/10/new-drug-pricing-data-shows-stunning-hikes-one-whopping-667-increase/
======
InvisibleCities
I truly do not understand the purpose of a free market for pharmaceuticals.
The demand for these drugs is almost completely inelastic, as it is driven by
the statistical incidence of the underlying medical conditions. This makes
central planning remarkably easy compared to typical consumer goods. The
government already sponsors the vast majority of exploratory, pre-clinical,
and early-phase clinical research; all it would take to expand that program to
include later-phase clinical trials would be increased funding. A nationalized
pharmaceutical industry that provides drugs at cost seems like it would be a
tremendous boon to our society, only requiring the "sacrifice" of the opulent
lifestyles of the executives and investors profiting off the extortionate
practices of our current system.

~~~
nostromo
I truly do not understand the purpose of a free market for food. The demand
for food is almost completely inelastic, as it is driven by the biological
need for sustenance. This makes central planning remarkably easy compared to
typical consumer goods.

A nationalized food industry that provides food at cost seems like it would be
a tremendous boon to our society. It's time we give Washington full control of
our nation's food market.

~~~
harshreality
Your sarcasm aside, there _isn 't_ a free market for food. There's tons of
intervention.

There's intervention on the supply side, with direct financial subsidies for
particular products. There are indirect subsidies like those Snake River dams,
which allow farmers in Idaho to cheaply float their crops down to the coast,
and which are helping to destroy the salmon population. There are government
advice programs like the USDA old "food pyramid" which is pretty much wrong,
but shifted demand for foods for decades.

And, of course, there's intervention on the demand side, with food stamps.
Essentially, socialized food but only for people who nominally can't afford
it.

~~~
asdff
Sounds like the government is already shouldering most of the cost, might as
well go full monte.

------
i_am_nomad
I’ve worked in pharma for much of my career, but will never go back. At one
point I was working for a company that continues to milk profits off of a drug
that was developed in the 1950s - the company doubled the price over the span
of a few years in the late 2000s, for no reason besides the P in P&L. And that
company is generally considered one of the “good guys” in the industry,
spending proportionally more on R&D than almost anyone else.

You could argue that the outrageous profits made off a 70 year old drug are
funding that research, but (a) that’s just not the case, and (b) why should
one group of patients and their insurers have to shell out for another? Isn’t
that what financing is for?

~~~
Excel_Wizard
What's the company's overall margin?

Everything objective you stated sounds like it could describe either a good
company or a bad company, all conditional upon whether the margins are huge or
fair.

Any pharma company that spends on R&D will have to rake in profits from
somewhere to subsidize R&D efforts. R&D is extremely risky (most drug R&D
projects fail) and has a very long time period before payback if it succeeds.

~~~
dv_dt
Maybe. There are studies which point out some interesting large scale trends.
One that private pharma R&D is getting less efficient, creating fewer and
fewer drugs per billion dollars. Another is that many current high profit
drugs had their early fundamental breakthrough research as government funded
R&D, and that todays gov't funding of drug R&D is at a relative low because
private industry is theoretically taking care of it all now. Another
observation is that private R&D often focuses far more on the development than
the research, developing new drug "packaging and delivery", in part to gain IP
extensions, instead of fundamentally new drugs.

~~~
entee
It's important to understand why the efficiency is going down, and it's not
because the companies themselves suck more every year. It's because of two
main drivers:

1.) The easy targets are mostly gone. All the biology we understand very well
either has drugs already, or for some key reason can't be addressed with the
drug discovery system we have today (see KRAS, though there are glimmers of
home there). This means we have to go after harder diseases that aren't as
well understood or have complex etiology. Necessarily that's less efficient.

2.) When you drug something, it eventually becomes incredibly cheap to use
that drug, and it becomes the benchmark. (AKA the "better than the Beatles
problem") As a pharma company you're competing against the former, better
(because you were going after easier biology) versions of yourself all the
time. This is also true in software, good software often becomes somewhat
commoditized. However, in software we've had exponentially increasing compute
capacity for some time, which means the next product can be exponentially
better than the previous one simply because new things become actually
possible to do when they weren't before. This by and large isn't and can't be
true in pharma.

~~~
dv_dt
I do think some aspect of this is true, but I think how research is directed
is systemically off today. You may want to read this overview report (it has
footnotes for all the research it cites). But there are quotes in there like:

"While critical medical needs remain unmet, a majority of new medicines
developed have no added therapeutic value."

[https://www.ucl.ac.uk/bartlett/public-
purpose/sites/public-p...](https://www.ucl.ac.uk/bartlett/public-
purpose/sites/public-
purpose/files/peoples_prescription_report_final_online.pdf)

~~~
mattkrause
That's a frustrating article.

Figure 1 shows that recent neuro/psychatric drugs don't have dramatic effects.
That's true--but it's not for want of trying. People have been bashing their
heads against the brain for _decades_ , but it turns out to be a really hard
problem. Biogen lost $18B of market cap on its aducanumab trials early this
year. Eli Lilly, AstraZeneca, Roche, Pfizer, Merck, and Johnson & Johnson have
all also had big Alzheimer's trials go sideways. I'm not sure that throwing
_more_ money at the same amyloid hypothesis will help. Maybe share
buybacks—which get taxed and thereby fund the NIH--might not be the worst
idea.

The paper also complains about expensive drugs and me-too drugs. The initial
HepC drugs were _crazy_ expensive (nearly six figures), but produced quick
cures in virtually all of the patients. This was still a massive win over
slow, ineffective treatments that still ended with liver cirrhosis/
cancer/transplants for half of the patients. The subsequent "me- too" drugs,
which mostly target the same pathway, don't work appreciably better (hard to
demonstrate improvement vs a 95%+ cure rate) but have driven the price down by
tens of thousands of dollars.

------
jngreenlee
I'm sure a lot of folks will pile in here about evil, etc. But I do appreciate
the fact that some market incentives (profits) exist to encourage greedy
companies to come out with new drugs. I fear lower innovation in its absence.

THAT SAID...obviously a big problem (like software) with the way we handle
intellectual property. Just like IBM/x86, there's no philosophical reason why
one shouldn't be able to derive a generic and produce it. That's the real
issue. We issue "king's crown" (gov't) monopolies on these products. The ONLY
advantage I am okay with is first mover advantage. Similar corollary to toll
road and broadband concessions...stop protecting these giants and allow REAL
PvP competition!

~~~
thaumaturgy
> _But I do appreciate the fact that some market incentives (profits) exist to
> encourage greedy companies to come out with new drugs. I fear lower
> innovation in its absence._

I think of this as a "prayer to innovation", in the cargo-cultism sense. Like
tax relief for the wealthy, the prayer goes that "if we can just give these
people more money, they'll improve our lives".

Multiple studies have found links between drug pricing and the development of
new drugs, but it doesn't work in the obvious way. Large pharmaceutical
companies often rely on purchasing smaller startups who do the actual research
into developing new drugs [1] but don't have the expertise in bringing the new
drug to market and making it successful. The larger pharma companies need
financial capacity for this, but since the patents have expired on a lot of
other successful drugs before the companies recovered the profits they wanted,
they're relying on captive markets for the monopolies they still have in niche
pharmaceuticals [2].

These companies are profit-motivated. They aren't working for the public
interest. They have no particular desire to "innovate"; their business model
instead relies on identifying innovators, buying them, and then selling the
product of their research at high prices for as long as possible.

Price controls for pharmaceuticals would ultimately reduce the funding
available for the R&D startups, which would limit the creation of new drugs.
But it's not clear that allowing big pharma companies to continue charging
extortionate rates for life-saving medicines is a good solution to this, nor
is it a guarantee for future innovation.

It seems like single-payer insurance and more federal funding for
pharmaceutical R&D would be a far better solution than defending predatory
drug pricing.

[1]: [https://www.forbes.com/sites/stanfleming/2019/06/20/the-
rela...](https://www.forbes.com/sites/stanfleming/2019/06/20/the-relationship-
between-drug-prices-and-innovation/)

[2]:
[https://www.healthaffairs.org/do/10.1377/hblog20190228.63655...](https://www.healthaffairs.org/do/10.1377/hblog20190228.636555/full/)

~~~
rayiner
> They have no particular desire to "innovate"; their business model instead
> relies on identifying innovators, buying them, and then selling the product
> of their research at high prices for as long as possible.

Isn't that to a great degree how Silicon Valley works too? Google didn't
develop Android, for example. It acquired Android, Inc. and then plugged it
into the Google ecosystem. Such acquisitions are a fundamental pillar of R&D.
They enable startups to do what they do best, and allow big companies to take
over when it is time to try and bring a product to market.

~~~
thaumaturgy
Sure, but Google and Pfizer (to pick an example at random) aren't exactly
equivalent. Few people will die if Google suddenly decides to jack up their
pricing on one or more of their services.

The incentives and market pressures are likewise different. Despite the valid
criticisms of Google's anticompetitve practices, they have a far less captive
market than any large pharmaceutical company does. If Google behaves _too_
badly, they'll become vulnerable; meanwhile, a pharmaceutical company can
increase drug pricing for vulnerable people as much as they care to, as long
as the company has a patent-protected monopoly on the drug, and people will
either find a way to pay it, or they will die.

This business model deserves far more scrutiny than any Silicon Valley darling
simply because people's lives and well-being are at stake.

~~~
tptacek
To ratchet Rayiner's argument forward to its next step: if the difference
between Google and Pfizer is that Pfizer's work is more important, why would
it make sense to de-incentivize it by capping its profits? Shouldn't we want
drug development to be an attractive industry for entrants?

~~~
thaumaturgy
Well, how is this unlike deregulating any other market that has an acute
impact on people's lives? Why, for instance, are unregulated ICOs bad, but
unregulated pharmaceutical profits not?

Keeping the pharmaceutical R&D market healthy does not necessarily depend on
continued predatory pharmaceutical pricing. Let's take a closer look at one
example, adalimumab (Humira). Adalimumab was developed initially by a research
partnership between Cambridge Antibody Technology Group -- which was publicly
funded -- and BASF Pharma, which at the time was a biotech section of a
massive German chemical corporation. BASF commissioned Cambridge Antibody
Technology to create a tumor necrosis factor-neutralizing agent using some new
phage technology [1]. They succeeded, the long and expensive trial process was
started, and eventually that section of BASF got picked up by Abbott
Laboratories [2], which eventually became AbbVie, which now owns and markets
Humira.

This brings us to the present day: Abbott paid $6.9 billion for Humira and all
of BASF Pharma's other assets. Using the typical market value logic that's
popular on HN, let's assume that this is approximately all of the costs
associated with developing Humira and getting it to market.

AbbVie made approximately $16 billion off of Humira in 2016 alone. [3]
AbbVie's pricing for Humira is massively asymmetrical depending on which
country it's being sold in, and as the linked article suggests, appears to be
"priced in the United States primarily on the basis of what the market will
bear."

The most common defense of predatory pharmaceutical pricing in the United
States by far is that we can't regulate these prices because it will hurt
pharmaceutical development. So, my question to you, or rayiner, or anybody
else exploring that position, is: at which point in that process did predatory
United States pharmaceutical pricing help develop Humira?

Was it in the public funding of a UK research group? Or was it in the funds of
a massive German chemical company? Or is it that doctors in the US wouldn't
know to prescribe the drug without the massive marketing campaign AbbVie has
waged, especially in the US, to urge patients to "ask your doctor about
Humira"? Or, perhaps, is it in the development of patent "thickets" that
AbbVie uses to protect its biggest revenue stream, or in the corrupt kickbacks
it was paying out to drive sales? [4]

This is the part where this argument loses me. Whenever I look at the details,
I don't see any evidence that pricing in the US has anywhere near a 1:1
correlation with drug development. The NY Times article for instance links to
a Journal of the American Medical Association study which found:

"Per capita prescription drug spending in the United States exceeds that in
all other countries, largely driven by brand-name drug prices that have been
increasing in recent years at rates far beyond the consumer price index. ...
Although prices are often justified by the high cost of drug development,
there is no evidence of an association between research and development costs
and prices; rather, prescription drugs are priced in the United States
primarily on the basis of what the market will bear."

To answer your question directly: in this case study, I see no evidence that a
_reasonable_ amount of regulation on pharmaceutical pricing in the United
States would have had any discouraging effect whatsoever on the development of
this drug; it would however have made a _huge_ difference to the health and
well-being of many, many people.

[1]:
[https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2958567/](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2958567/)

[2]:
[https://www.wsj.com/articles/SB976832374667325423](https://www.wsj.com/articles/SB976832374667325423)

[3]: [https://www.nytimes.com/2018/01/06/business/humira-drug-
pric...](https://www.nytimes.com/2018/01/06/business/humira-drug-prices.html)

[4]: [https://www.huffpost.com/entry/opinion-humira-costs-
patents_...](https://www.huffpost.com/entry/opinion-humira-costs-
patents_n_5bd0c893e4b0a8f17ef3961f)

~~~
wiggles_md
> To answer your question directly: in this case study, I see no evidence that
> a reasonable amount of regulation on pharmaceutical pricing in the United
> States would have had any discouraging effect whatsoever on the development
> of this drug

With the benefit of hindsight? I suspect you are correct. But pharma
portfolios operate on the lognormal success model of VCs. Without the
blockbusters, you can’t fund “development” of the failures that could lead to
another blockbuster. (Of course, much if large pharma R&D is by way of
strategic partnership and acquisition.)

As to your pricing of the Humira acquisition: I personally would have included
some consideration to the existing market exclusivity of the drug. The
transaction price is unlikely to be just the “replacement cost”.

~~~
thaumaturgy
> _But pharma portfolios operate on the lognormal success model of VCs.
> Without the blockbusters, you can’t fund “development” of the failures that
> could lead to another blockbuster._

That was the point of my whole Humira example though: high pharmaceutical
prices did not fund its development.

This assertion that drugs have to be expensive or they can't be developed
keeps getting repeated, but there's little evidence to support it and even
less evidence that they need to be _this_ expensive. This argument is further
troubled by little details like drugs being 600% more expensive in the US than
in other countries, indicative of more of a "how much money can we extract
from vulnerable people" strategy than a "how much will it cost to develop the
next great drug" strategy.

For extra credit, take a look at AbbVie's notable products
([https://www.drugwatch.com/manufacturers/abbvie/#abbvie-
produ...](https://www.drugwatch.com/manufacturers/abbvie/#abbvie-products))
and see if you can identify any that they developed, or that they funded the
development of.

To put this into perhaps more familiar terms, AbbVie's behavior is far closer
to Intellectual Ventures than to Y Combinator, and yet people here keep
defending it.

~~~
wiggles_md
Fine. Where did BASF get their money from? How much, in your esteemed opinion,
should it cost to develop a therapeutic Ab from a drugable target? How should
my industry pay for pipeline failures?

------
Zelphyr
I've said it before that the pharmaceuticals, hospitals, and insurance
companies are signing their own death warrants. They keep (in my opinion)
colluding to charge outrageous prices for life-saving things and at some point
we're all going to get fed up with it enough to elect someone that will shoe
in legislation that turns them all into state-owned or, at the very least,
highly regulated. I personally don't feel like that's what we really want but
damn these companies are just being abusive now.

~~~
mlevental
didn't we already elect someone like that (Obama vis-a-vis ACA)? and yet the
monied interests have undone most of the work.

~~~
dlp211
No? What part of the ACA was intended to upend the pharma industry? The ACA
was specifically designed to work within the system as it existed in 2008/9.

~~~
Zelphyr
If I recall, originally it was supposed to be more drastic in its changes in
an attempt to introduce more efficiencies into the system. But then they
realized that they could create a lot of jobs in healthcare (remember, we were
smack in the middle of the recession) so they opted to do that instead. That’s
not any kind of commentary as to whether their decision was good or bad but it
does appear to have resulted in making the system less efficient in many ways.

------
entee
There's a huge issue with pricing today. It used to be that drug companies
were ethical about the "your money or your life" nature of medicine. Merck
once even gave a drug away for free because it was the right thing to do [1].

Nowadays it's about charging what the market can bear. The trouble is that
drugs have gotten way more expensive to develop for a variety of mostly
scientific reasons. This means a "prize" mentality has developed where each
drug is like a lottery ticket, and you best get the most out of that ticket if
it wins. There's also a sense across the industry that price controls are
going to come, so ramp the prices up now so when the controls arrive they
won't gut the industry.

Also sometimes drugs have to cost as much as they do because they're just very
hard to make (see gene therapy), but at this point the pharmaceutical industry
has squandered all the public trust they had with recent rapacious practices
(see insulin, opioids).

Fundamentally there are good reasons drugs cost a fair amount of money, but
it's not necessarily clear that costing _this_ much money is justifiable. I
believe drug companies can do good while doing well, but that it takes a
leadership interested in more than boosting the margins as high as possible.
We need a code of ethics for drug and med device companies, maybe something
along the lines of the hippocratic oath.

[1] [https://www.nytimes.com/1987/10/22/world/merck-offers-
free-d...](https://www.nytimes.com/1987/10/22/world/merck-offers-free-
distribution-of-new-river-blindness-drug.html)

------
corndoge
Everyone wanted to crucify Shkreli for the toxo drug price hike. Where is the
outrage for the mentioned 667% hike on generic Prozac? Or did people just
target Shkreli because they didn't like his views on other things?

~~~
FireBeyond
Well, Shkreli was an easy target:

1) he repeatedly took us for saps. "People are angry at me because I'm raising
the price of this drug when most of them will still pay the same $20 copay".
Except we're paying for the full cost of the drug. The fact that the cost is
"invisible" because it comes out of our insurance pool was the issue, and he
genuinely acted victimized because people could see past that.

2) On at least one occasion, he/his company opposed FDA approval of a new
drug. Not on the basis that there was risk/danger/issues of efficacy, indeed,
the new drug was less risky and more efficient. It just didn't belong to his
company. i.e. if you thought re-patenting drugs was bad, this guy was
literally doing the things the worst "Big Pharma conspiracy theorists" were
saying - opposing the introduction of new, better drugs for no reason other
than "threat to corporate profit".

------
rdlecler1
One of the problems is cost of development. We invested in an incredible
company called Brightseed that looks at each of the tens of millions of small
molecules in our food supply and uses AI to predict how those interact with
metabolic networks associated with health. Because everything they discover is
implicitly regarded as safe (GRAS) there’s the potential to develop products
much more rapidly and cheaply. While we may not find something that optimizes
on efficacy there’s the potential to get very close.

------
dekhn
I worked at Genentech when it was purchased by Roche. We frequently had Roche
execs visit to understand "what it was you crazy californians are doing that
makes Genentech our most profitable investment."

One exec said the right way to think about Swiss pharma like Roche is that
they aren't in the pharma business, they are wealthy families who invest in
pharma because it's a consistently profitable sector.

If you look, all the pharmas in CH are basically co-owned by each other.

~~~
chance_state
>If you look, all the pharmas in CH are basically co-owned by each other.

Sorry if I'm missing this, but what is CH?

~~~
dekhn
Confederation Helvetique.

------
xhruso00
I like Slovakian approach. Price of drugs can't be higher than average of 5
cheapest EU countries where the drug is being sold. However we face re-
exporting and sometimes unavailability. Also we have a new law where
distributor will lose licence if the drug is un-available (recent update).
[https://www.ncbi.nlm.nih.gov/pubmed/29073987](https://www.ncbi.nlm.nih.gov/pubmed/29073987)

------
tathougies
So the 'whopping' 667% increase is not on Prozac as a whole, but actually only
on a liquid version of the drug. Prozac is a generic medication, so there is
competition here.

For example, according to GoodRX, 30 capsules of fluoxetine are $4 at walmart:
[https://www.goodrx.com/fluoxetine](https://www.goodrx.com/fluoxetine)

~~~
hristov
Yes, and in the second arm of the scam, the drug companies will send out their
army of salespeople to convince doctors and hospitals to prescribe the more
expensive version. Because of small differences between the drugs (maybe the
liquid version is easier on the stomach) they will decide that the solid
generic is not equivalent to the liquid.

Then the patients will all buy the expensive version, as ordered by their
doctors, and charge it to their insurers. The insurers will look at the cost
going up and will raise insurance rates.

If you have been paying attention to what has been happening to insurance
rates for the past several years you can easily see the result.

~~~
tathougies
I mean, the obvious answer there is to educate doctors on what is actually
scientifically proven. If doctors (who ought to be one of the most
scientifically minded professionals engaged with on a regular basis) are
susceptible to salespeople selling them false science, then we should probably
not allow them to be doctors anymore. The lack of critical thinking in that
profession then ought to alarm us, and ought to be the first thing that's
fixed.

On the other hand, if it is actually a superior product, then I don't see what
the issue is in it costing more. Doctors would know about the cheaper version
and prescribe it if the patient wanted it? Of course, given that insurance for
everyday needs screws up the pricing dynamics, I do think the alienation of
pricing from the consumer, thus reducing demand for the lower priced versions,
is a valid criticism.

~~~
hristov
It is not that much about education. Currently there exists a complex system
of various incentives to convince doctors to prescribe more pills and to
prescribe certain types of pills.

The pharma companies have installed their people in hospital management and
various medical boards all over the place, and they are constantly pushing for
more drugs and more expensive drugs.

The pharma companies can make it worthwhile for a hospital group to prescribe
more drugs. The hospital group management can in turn incentivize their
doctors to do it. It is even in the insurance companies benefit, because there
really isn't a competitive market for medical insurance. Insurance companies
actually welcome higher costs, because they raise their rates accordingly,
which actually make their profit dollars go up.

It is only us ordinary users of medical services that are paying the bill.

The underlying problem is that there isn't any mechanism for a cost benefit
analysis in the doctor patient relationship. The modern medical insurance
system was set up to assure the customer that he would get the best medical
care he needs without worrying about cost. It is a perfect system for gouging
and everyone has started gouging.

------
drugsupplychain
This is incorrect and a giant red herring. Pharma is not "raising prices" in
the implied sense, and pharma is not the cause of drug prices being high in
the US.

Pharma is increasing the "gross price" of a drug in order to increase the
rebate going to the PBM (Pharmacy Benefit Manager) so that they maintain their
position on the formulary (to be "covered by insurance"). The "net price" of
drugs (what pharma makes) is overall growing at the pace of inflation, not
above. There's obviously exception cases, and plenty of small biotech firms
launch questionable products with high prices that then get covered. But this
is a result of this rebate system that prioritizes covering drugs with large
rebates (since PBMs monetize rebates), not the most cost effective drug.

------
refurb
I’ll start by stating the companies who are taking these egregious price
increases are only shooting themselves in the foot. They’ll end up in front of
a Senate committee before long.

That said, profit attracts investment. The rare diseases are a great example.
Who wants to spend $50M creating a drug for a disease with so few people you’d
only lose money?

Genzyme started the trend of charging a lot, with the caveat than any insurer
might have a handful of patients. The cost per member might be $0.10.

Insurers said ok and investment flood the rare disease space. We’re talking
hundreds of billions. Now some people with a rare disease have treatment.

------
tracker1
Need to do the following:

    
    
        * Eliminate extension patents.
        * Add dual sourcing requirements for drugs
        * Add fiduciary responsibility to insurance co reqs
        * Govt backed non-profit insurance corp
          replacing Medicare, Medicaid, VA Ret medical
          covering federal employees
        * Single-account billing
        * Published rates, rates between payees cannot be more 
          than 20% variance in a single calendar year.
    

Extension patents on medications are generally not great and minimal actual
value, in fact, the entire Patent system largely deserves to be broken apart
entirely.

Dual sourcing requirements would ensure licensing arrangements and at least
_some_ level of competition for drug companies.

Making insurance companies have a fiduciary responsibility in negotiating on
client behalf would also help undo the effects of the profit caps from
Obamacare without further checks in place.

Gov't non-profit covering those currently covered by federal programs and
employees would add a baseline of competition without a profit incentive.

Not seeing a dozen different bills from one visit would help. Localized state
billing agencies would help too, but not a fan of this, better than federal
level here.

Eliminating the massive difference between insurance and private pay rates is
another important step.

Combined would see massive pushback, but all are really needed to bring
effective change to the medical care system as a whole, while not
significantly effecting federal funding. I've given the above list time and
time again, but nobody really seems to listen.

------
vmurthy
From the article: "The median price increase overall was 25.8%. Generic drugs,
specifically, had higher increases, with a median rise of 37.6%"

Given that the US inflation levels are single digits, this obviously looks
egregious but I'd be a lot more satisfied with the article if it gave data
on/considered the following:

\- Typically inflation takes into account _goods_. What about the R&D costs
which are driven by both goods, people's salaries and other factors? Were they
well above inflation?

\- It might be that conditions were favourable for a big increase and the
costs will stay flat for a few more years (I won't bet on this!)

\- Finally, any company which prices its goods and services just above
inflation is bound to be held in low esteem by its shareholders. After all, if
investors wanted returns just above inflation, they'd be buying bonds! The
risks associated with equity should be well compensated by the company and
this might have prompted the companies to take this course of action.

------
loorke
I believe that as always problems like this one may be solved only through
erasing privatized monopolies from the market. The civilized way to achieve
this is to raise number of competitors on the market. And there's a plenty of
available options. E.g. cut subsidies and raise taxes for big pharmaceutical
companies, make additional subsidies and cheap loans to small ones, give
students extra grants for pharmacology courses at universities (in order to
increase number of specialists), abolish or at least change patent laws for
drugs, support public pharmaceutical researches funding by government and
involved companies with results available to everyone. I guess in modern world
one of the primary economic responsibilities of government is providing an
environment in which not only large business may start to do high-tech.

------
drak0n1c
For those who have pricey prescriptions, look into pharmacy coupon databases
like GoodRX. Some drugs are 95% cheaper with these private coupons (pharmacies
do not advertise them), and sometimes cheaper than buying them through your
insurance.

------
vertis
I'm in Bangkok at the moment and there are billboard/bus shelter
advertisements from the USPTO encouraging people to 'Only buy from licensed
pharmacies'.

I'm not sure exactly what they're targeting. The pharmacies that will sell
without a prescription, or the IRL spammers trying to sell viagra by the side
of the road.

Regardless, it seems strange for the US patent office to meddle in local food
and drug administration.

I shared a pic on twitter:
[https://twitter.com/vertis/status/1183986568857440256?s=20](https://twitter.com/vertis/status/1183986568857440256?s=20)

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elthor89
Correct me if I am wrong, but the report is talking about wholesale prices.

I would be more interested in the price after the expected discount that the
pharmaceutical companies give.

If the price increase is still high then it is newsworthy.

~~~
nabdab
This is hitting the nail right on the head. People are blaming “greedy Pharma
companies” but at the same time companies are taking lower and lower net
prices while the rebates that the purchasers are taking home are absolutely
absurd rebates.

I get it, some people don’t feel phama companies should still be able to
profit on a drug invented 50years ago. But I just can’t take any discussion
about that serious when we are also in an environment where the purchasers
take literally twice the profits on all drug sales without having invested a
penny in research or having spent a penny in production distribution or
marketing.

They eat up all that money all by abusing their position of “representing the
buyers”, but at the same time since their rebates are percentage cuts they are
just pushing pharma companies to increase prices over and over again.

The American model is rotten and someone has to stop the madness.

~~~
hristov
Nobody is required to give out rebates to pharmacy benefit managers and the
like. That is a problem the pharma companies created by themselves. The
pharmas can drop their list prices and stop rebates tomorrow if they really
wanted.

~~~
jVinc
If you where a pharmacy benefits manager, and you where sitting across two
different potential drug makers and one says "I'll let you have it at 30$!"
and the others says "I'll let you have it at 120$ with a 50% rebate!" which
one do you think you'd take?

The forces at play in the pharma/PBM negotiation leads to price increases
instead of price competition because the PBM effectively sits on both sides of
the table. They want high rebates and they don't care about list-prices as
long as they can take back a bit cut of them. This is why you see rebates
reaching levels close to 70%. Imagine if you sent a guy to negotiate a car
purchase for you, and that guy was looking at taking 70% of the net you pay
through rebates from the car dealership. Do you honestly think he would be
looking for the cheapest deal?

------
Symmetry
Well, with the GDUFA each genetic manufacturer has to pay the same large
inspection fee regardless of how much a drug they produce and they have to pay
it far ahead of the time they start selling the drug. This has driven a
dramatic consolidation that's resulted in things like the recent bospirone
shortage in addition to the recent sudden spike in generic prices.

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rossdavidh
They are raising prices because, uh, wait...what was supposed to stop them
from raising prices, again? Oh, that's right. "Nothing".

There's nothing broken here, because there's nothing present to discourage
them from raising prices in the first place. No market mechanism, and also no
regulatory mechanism. They raise prices because...they can.

~~~
interlinkedcell
That's right. The system is working as intended. As guaranteed by lobbyists
and big donors having undue influence on public policy.

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mensetmanusman
The rest of the world has figured this out, people in the US are just willing
to pay more (as in, not protesting en masse to lower costs).

Also, drug spending is proportional to the % of elderly, which is growing
faster than inflation as a %.

------
TazeTSchnitzel
[https://www.youtube.com/watch?v=ylLTMYt24lA](https://www.youtube.com/watch?v=ylLTMYt24lA)

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jdkee
Normative: Healthcare should not be subject to the strictures of profit making
entities. See insulin prices in the United States vs. elsewhere.

------
ddingus
Of course they are! They have a captive, increasingly needy market.

Go big I say.

That will force better policy. Hate that idea, but little else has worked.

------
jayalpha
What is inflation? Seriously.

------
1000units
Shkreli Did Nothing Wrong

------
techntoke
But the President says they are the lowest they've ever been.

~~~
derision
They have been declining if you look at the prescription drug CPI[1], which is
more closely related to what people are actually paying, rather than this
article which references a document that only lists increases of wholesale
prices. I'd like to see a comparison of increases and decreases. If 3 drugs
increased an average of 300%, but 10 drugs decreased an average of 300%, for
example.

[https://data.bls.gov/timeseries/CUSR0000SEMF01?output_view=p...](https://data.bls.gov/timeseries/CUSR0000SEMF01?output_view=pct_3mths)

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hilbert42
We've now long reached the point where we can give the market a free
hand/carte blanche in pharma matters. Now it's time for Government to act and
to do so urgently.

If ethics ever played a role in pharma—which I doubt [remember
thalidomide]—then it certainly does not do so now. As health and lives of its
citizens are at stake then it's the responsibility of Government to rectify
this situation.

After all, the first responsibility of government is to protect the security
and well-being of its citizens. If it fails to do so here then it's abrogating
its responsibility.

~~~
decoyworker
I agree. The free-market did not work, time for regulations.

~~~
hilbert42
Dead on!

