
Transatlantic divide: how U.S. pays three times more for drugs - brianclements
http://www.reuters.com/article/2015/10/12/us-pharmaceuticals-usa-comparison-idUSKCN0S61KU20151012
======
bediger4000
This is what "Globalization" looks like: use laws and captured regulatory
agencies to segment the world into markets by ability to pay. Charge more
where you can. At the same time, use cheap communications to hire the lowest-
cost labor to develop and create the product.

Humbug. This kind of information puts a huge damper on the arguments about
"Intellectual Property" and "piracy" and stuff, at least to me. Why not
segment the labor market, too, and enforce that. High priced pharmaceuticals?
They have to be developed and made by high-priced labor, thank you very much.

~~~
icebraining
_This is what "Globalization" looks like: use laws and captured regulatory
agencies to segment the world into markets by ability to pay. Charge more
where you can._

No, charge _less_ where you can. Why would you assume the companies would
choose a low price if forced to have only one globally? Do you think they'd
rather lose the tremendous margins when selling to richer countries, just so
that they could get some more sales in poorer ones?

The laws that keep prices high are the ones that prevent competition, not the
ones that enable price segmentation.

~~~
bediger4000
_Why would you assume the companies would choose a low price if forced to have
only one globally?_

Why would I assume that workers would choose a low wage if force to have only
one globally?

I can assure you that the "worker" part is true, because I've had to train my
Indian successors at least once. This is indeed a fine example of
"Globalization", where large corporations rig the laws so that markets can be
artificially segmented, and prices kept high in North America and to some
extent Europe, with lower prices elsewhere. It's Globalization for the 1%.

------
madaxe_again
Not to worry, they'll cost the same everywhere in a few years, when tpp and
ttip are ratified and enforced - everyone's prices will go up to match the
US's.

~~~
chad_oliver
I live in New Zealand, which has a centralised purchasing agency for
pharmaceuticals (called Pharmac). The TPP doesn't require New Zealand to
disband Pharmac. It can still negotiate reduced prices on behalf of the Kiwi
public. The only change is that there is a more rigorous feedback and appeal
process, which seems perfectly reasonable to me.

~~~
x5n1
Most of that money is wasted on marketing, like over 50%. As a part of the TPP
or future agreements there should be a requirement to stop all drug marketing
expenditure and instead reinvest that into research.

Also I wonder if arguments like similar drugs cost 55x as much so this should
too would fly.

------
mipapage
> "Manufacturers say decent returns are needed to reward high-risk research
> and prices reflect the economic value provided by medicines."

Contrast this market or model with mining, where small junior companies raise
investment capital from people who want to take the risk of the junior
actually finding a profitable deposit to mine.

It seems this is more what markets were made for; people who want to take the
risk and get the reward foot the bill for that risk. Removing that cost from
the cost of the product makes the product more accessible, and the financing
comes from those who want to finance.

------
marcoperaza
I posted this in a previous thread:

By centralizing all procurement of a drug for an entire country through a
single contract, of course countries are able to negotiate better prices than
what Americans pay in a more free market. This is especially true given the
structure of the pharma business, with massive up-front costs and almost-zero
marginal costs. You could do the same with countless products. But this is
it's own kind of abuse. Instead of being paid the market price, pharma
companies are paid the lowest-price they could absolutely tolerate. They also
have to worry about the political fallout of walking away from a deal when the
government tries to blame them for the lack of a deal.

There's definitely ways in which drug pricing can become abusive and needs to
be regulated, especially because government intervention via patents is
partially responsible for enabling these abuses. But let's not throw out the
baby with the bath water. A free market for drugs makes sure that companies
can recoup their investments and make a reasonable profit. If pharma companies
don't feel that they can do that, they won't invest in new drugs. Also, I
don't want to live in a place where the availability of a treatment is
determined by some government committee that determines what the value of a
month of my life is.

A final thought, sticker prices for drugs are thrown around as evidence that
drugs are overpriced, but 1) no one ever pays the sticker price, it's almost
always negotiated way down and 2) these drugs provide immense value.
Antiretroviral drugs, for example, turn HIV from an imminent death sentence
into a very manageable disease like diabetes. Thousands of dollars a month is
pretty reasonable when you consider that. Insurance makes sure that
individuals can afford it.

~~~
yason
_Instead of being paid the market price, pharma companies are paid the lowest-
price they could absolutely tolerate._

Isn't that the market price, then? Market price is the price at which trading
happens——above and below that are prices which at least one of the parties
doesn't tolerate. And obviously volume discounts bring down the price in
comparison to selling in smaller batches, this generally applies everywhere.

I don't think any single company would sell at a lower price than what they
can afford to ask. Note that part of the price can certainly be in goodwill,
better public relations, or to win a bigger market share instead of cash. But
that still is a net win for the seller, or they wouldn't be selling.

~~~
marcoperaza
No, it's not what the market price would be in a system with a plurality of
buyers. The demand side of the equation is heavily skewed when a single entity
has the authority to make purchasing decisions for effectively the entire
population. And since marginal costs are so low, the company is in a position
where even a price that doesn't recoup their total unit costs is better than
no sale at all to a population of tens of millions.

~~~
yason
The fact that trade does take place proves that a market exists. Obviously
it's a different market, selling to larger establishments or even countries
versus selling to small retailers. Similarly goods markets and prices are
slightly different in big cities versus remote country villages. But a market
is a market, and when a trade closes that's the market price. If the
merchandise and the price paid for it didn't benefit both the company and the
buyer, there would be no trade.

~~~
marcoperaza
Any system with buyers and sellers is a "market", that's a meaningless
standard. If all of the insurance companies in the US decided to merge and use
their leverage to lower drug prices, it would be an illegal cartel. The
resulting price would be the "market price" but not the price that would exist
in a free market, which in most definitions includes prohibitions on such
cartels. Governments can get away with it because they write the rules and
there's no higher authority to stop them.

------
mrlyc
The price difference can be a lot more than three times. For example, the
cheapest U.S. price of Ventolin is $36.99. It costs us $4.45 in Australia.

------
brianclements
I was asked to repost this as part of the new HN reposting experiments.
Original located here[1], thought it was a good original comment and wanted to
carry it over.

[1][https://news.ycombinator.com/item?id=10375093](https://news.ycombinator.com/item?id=10375093)

~~~
dang
Ok, we merged the threads.

~~~
brianclements
Meta: I didn't know if that was an option technically on your end, but my two
cents is that should be default behavior for this repost experiment.

~~~
dang
Usually the earlier post doesn't have any comments, since we only invite
reposts when a story hasn't had significant attention yet.

------
forrestthewoods
The rest of the world is so damn proud of their cheap universal health care.
Little do they realize how much of it is subsidized by Americans. You're
welcome world. You're welcome.

~~~
pcrh
It is a common misconception that the US subsidizes others. Expenditures by US
companies account for no more than 50% of pharmaceutical research among the
top ten drug companies [0], so the rest of the world contributes as much as
does the US. I don't think any other US spending could be considered a subsidy
to others.

[0] [http://www.fool.com/investing/general/2013/09/23/the-
pharmac...](http://www.fool.com/investing/general/2013/09/23/the-
pharmaceutical-industrys-10-biggest-rd-budgets.aspx)

~~~
nostromo
How does that refute his point?

Take Roche -- based in Switzerland. Their largest market by revenue is... the
US. Their US revenues are 63% higher than all of their European sales
combined.

[http://webcache.googleusercontent.com/search?q=cache:uNS_cQR...](http://webcache.googleusercontent.com/search?q=cache:uNS_cQR0BtkJ:www.roche.com/med-
cor-2014-10-16-e.rtf+&cd=3&hl=en&ct=clnk&gl=us&client=safari)

~~~
forrestthewoods
Ding ding ding, winner!!

~~~
antr
You might want to explain the USA's addiction to prescription drugs, and how
your conclusion is hence, well, misguided
[https://www.gov.uk/government/uploads/system/uploads/attachm...](https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/216249/dh_117977.pdf)

~~~
forrestthewoods
Yes. The USA is addicted to prescription drugs. That addiction puts
significant money in the pocket of pharmaceutical companies. Those companies
may or may not be American. Either way their pockets are lined with American
dollars.

