What should be done about the outrageous increases in prescription drug prices?

Page 2 - Seeking answers? Join the AnandTech community: where nearly half-a-million members share solutions and discuss the latest tech.

mrjminer

Platinum Member
Dec 2, 2005
2,739
16
76
And here's a real kicker:
http://www.businessweek.com/article...ug-delays-push-novartiss-diovan-prices-higher


Basically US patent law allows for a single company to win monopoly to manufacture the generic drug for the first six months. And here is the biggest outrage. If that company can't or won't manufacture it safely, everyone else is blocked, by US law, from manufacturing it, even if they could do so safely, and it effectively remains a monopoly for the original patent holder, indefinitely. This is a rigged system to fleece Americans.

Didn't know that. Seems pretty screwed up. I could understand permitting an exclusivity arrangement with a single company to mitigate the loss of profit the "real drug" company would have after the drug can go generic, but I think it is pretty lame that they can avoid producing the drug during the exclusivity period they are granted. I think they should have a mandatory quota to be met, or something similar.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,879
4,265
126
Entirely? You are saying it was the insurance companies that determined to pay 3 times as much for same drugs?

Of course. They set the amount paid for ingredient costs, the fees reimbursed, what the copays are. How did you think this worked ?
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,879
4,265
126
The US is one of the last areas that Pharma's can recoup their big R&D spend and hopefully turn a profit so they can invest in the next treatment.

Killing patent protection (which is short already when one considers the time the drug actually goes to market) and or regulating prices will mean less companies spend on R&D for new treatments period.

All of the mergers are just big bloated pharmas with nothing left in their pipelines trying to do whatever they can to consolidate resources in the hopes that one of their smaller research teams stumble upon something with potential or biding time until they can acquire a company working towards a new breakthrough.

Of course and naturally few are able to look for unconventional solutions and politicians are too stupid/power hungry to entertain alternatives. In fact they'll work to kill them.
 

senseamp

Lifer
Feb 5, 2006
35,785
6,187
126
Of course. They set the amount paid for ingredient costs, the fees reimbursed, what the copays are. How did you think this worked ?

So you believe that it's insurance companies who are tripling the drug prices, because they like to pay more?
 

senseamp

Lifer
Feb 5, 2006
35,785
6,187
126
The US is one of the last areas that Pharma's can recoup their big R&D spend and hopefully turn a profit so they can invest in the next treatment.

Killing patent protection (which is short already when one considers the time the drug actually goes to market) and or regulating prices will mean less companies spend on R&D for new treatments period.

All of the mergers are just big bloated pharmas with nothing left in their pipelines trying to do whatever they can to consolidate resources in the hopes that one of their smaller research teams stumble upon something with potential or biding time until they can acquire a company working towards a new breakthrough.

Even accepting the questionable R&D argument, why should American businesses be the only ones who pay for recouping pharma R&D that their competitors in other countries take advantage of? Because we are stupid enough to volunteer for it, while other countries protect their businesses and consumers and limit drug prices? We are telling companies like Ford, you will pay a lot more for drug prices so that your competitors like VW in Germany or Toyota in Japan can buy drugs for their employees for less and have a lower cost than you.
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,879
4,265
126
So you believe that it's insurance companies who are tripling the drug prices, because they like to pay more?

I suggest you read over all I've said in this thread. I'll pay you $10 if you can find where I said insurance companies are forcing drug manufacturers to raise the costs of medications sold to pharmacies. You pay me if you cant. You won't take that bet. I was curious to see if people knew how this really works. I'd have to say no.
 

senseamp

Lifer
Feb 5, 2006
35,785
6,187
126
I suggest you read over all I've said in this thread. I'll pay you $10 if you can find where I said insurance companies are forcing drug manufacturers to raise the costs of medications sold to pharmacies. You pay me if you cant. You won't take that bet. I was curious to see if people knew how this really works. I'd have to say no.

The DRX drug cost survey examined average wholesale price, a benchmark based on wholesaler list prices that doesn’t include discounts negotiated by health plans. It’s roughly equivalent to what a person might pay at a pharmacy if he didn’t have insurance, says Jim Yocum, DRX’s executive vice president. Big health plans often negotiate prices that are 15 percent to 20 percent less than the wholesale price, he says.
If the wholesale price of a drug triples, the insurance company price also approximately triples. You claimed that this price is entirely determined by the insurance companies, when in fact it's determined by the drug maker and insurer only negotiates a discount off the drug maker's price.
I would take your $10, but I don't want to share my paypal info, so you can keep it.
 
Nov 30, 2006
15,456
389
121
http://www.businessweek.com/articles/2014-05-08/why-prescription-drug-prices-keep-rising-higher

comp_drugschart20_630.jpg




Drug prices are not just increasing they are multiplying in a matter of years. It seems ridiculous that products like EpiPen which have been around forever are tripling in prices.
Should the Republican ban on Medicare negotiating lower prices on prescription drugs for seniors be lifted? Should US stop approving pharmaceutical industry mergers that give drug companies excessive pricing power and reduce competition? Should we allow the importation of prescription drugs from Canada and other countries?
I think all of the above.
Obama made a backroom deal with Big Pharma in 2009.

http://www.huffingtonpost.com/2009/08/13/internal-memo-confirms-bi_n_258285.html
 

senseamp

Lifer
Feb 5, 2006
35,785
6,187
126

White House agreed to:
1. Oppose importation
2. Oppose rebates in Medicare Part D
3. Oppose repeal of non-interference
4. Oppose opening Medicare Part B

That's why I laugh when people say Obama is a liberal.
Sounds like an opening for GOP to differentiate themselves from Obama and to vote to:
1. Allow importation
2. Allow rebates in Medicare Part D
3. Support repeal of non-interference
4. Support opening Medicare Part B
 

Hayabusa Rider

Admin Emeritus & Elite Member
Jan 26, 2000
50,879
4,265
126
If the wholesale price of a drug triples, the insurance company price also approximately triples. You claimed that this price is entirely determined by the insurance companies, when in fact it's determined by the drug maker and insurer only negotiates a discount off the drug maker's price.
I would take your $10, but I don't want to share my paypal info, so you can keep it.

You aren't entitled to anything. Insurance agrees to pay on certain terms but that does not mean they must. They decide and it has happened that drugs have gone up in costs for pharmacies but reimbursements were capped regardless, resulting in a real loss. You will also find that I said that insurance cannot control the price companies charge pharmacies, but the policies for reimbursement remain entirely up to the insurance company. In fact it's a violation of anti trust law for pharmacies to negotiate with insurance. They can accept or reject terms, but cannot engage in talks about them. Take it or leave it. Now insurance, including government plans reluctantly agrees (and that is important) to pay for increased acquisition costs, but not always. They have the ultimate say.

This is a nontrivial point. Many believe there is a free market provider economy and there isn't. Dumb politicians, yours included, have attacked providers who are legally powerless, by cutting reimbursements, which aren't all that much on average while ignoring the real causes which are largely that of acquisition. They made bad guys out of those with no negotiating power (that would be themselves) while ignoring what their buddies in industry were doing. Note that this has been consistently true for decades regardless of party in power. They are all responsible.
 

senseamp

Lifer
Feb 5, 2006
35,785
6,187
126
You aren't entitled to anything. Insurance agrees to pay on certain terms but that does not mean they must. They decide and it has happened that drugs have gone up in costs for pharmacies but reimbursements were capped regardless, resulting in a real loss. You will also find that I said that insurance cannot control the price companies charge pharmacies, but the policies for reimbursement remain entirely up to the insurance company. In fact it's a violation of anti trust law for pharmacies to negotiate with insurance. They can accept or reject terms, but cannot engage in talks about them. Take it or leave it. Now insurance, including government plans reluctantly agrees (and that is important) to pay for increased acquisition costs, but not always. They have the ultimate say.

This is a nontrivial point. Many believe there is a free market provider economy and there isn't. Dumb politicians, yours included, have attacked providers who are legally powerless, by cutting reimbursements, which aren't all that much on average while ignoring the real causes which are largely that of acquisition. They made bad guys out of those with no negotiating power (that would be themselves) while ignoring what their buddies in industry were doing. Note that this has been consistently true for decades regardless of party in power. They are all responsible.

That's why this thread is about drug companies overcharging, not pharmacies.
 
Nov 25, 2013
32,083
11,718
136
The US is one of the last areas that Pharma's can recoup their big R&D spend and hopefully turn a profit so they can invest in the next treatment.

Killing patent protection (which is short already when one considers the time the drug actually goes to market) and or regulating prices will mean less companies spend on R&D for new treatments period.

All of the mergers are just big bloated pharmas with nothing left in their pipelines trying to do whatever they can to consolidate resources in the hopes that one of their smaller research teams stumble upon something with potential or biding time until they can acquire a company working towards a new breakthrough.

Or they could stop spending roughly twice as much on marketing as they do on research.
 

bozack

Diamond Member
Jan 14, 2000
7,913
12
81
Even accepting the questionable R&D argument, why should American businesses be the only ones who pay for recouping pharma R&D that their competitors in other countries take advantage of? Because we are stupid enough to volunteer for it, while other countries protect their businesses and consumers and limit drug prices? We are telling companies like Ford, you will pay a lot more for drug prices so that your competitors like VW in Germany or Toyota in Japan can buy drugs for their employees for less and have a lower cost than you.

Do you know how much these companies expend chasing a viable CD, the countless resources eg dollars put to the task...the time involved, and then when it finally gets to market the exceptionally limited window they have to not only recoup their costs but also turn a profit, and they have to hope that all the while they are the only ones with a drug on the horizon....its as much a gamble as it is science and these companies have to pay big time to play.

As for the US vs other countries I guess one could make your argument, or possibly look at it as one of the last free market systems available that companies can leverage to turn a profit. Sure other countries get to take advantage of a system that is tipped against our favor, but again these companies have to generate revenue and the limited time they have to make money means they have to charge what they can when they can.

Sure we can regulate Drug costs, or mandate that no drugs be patent protected and everything is immediately generic, and you will see most if not all discovery scale back and be left to government run agencies or universities..

agree

IMO Px drug adds should be banned from TV/Print

With generics the big names have to do whatever they can to turn a profit, while Generics are great for consumers, the reality is they don't expend nearly as much as the big names do on R&D, they simply make a copy of the original formulas...plus with the rules changing around marketing to Doctors they felt they had to do something to make people aware of their products.

Do I wish they would spend more money on R&D, sure, but I understand why they do what they do.
 

senseamp

Lifer
Feb 5, 2006
35,785
6,187
126
Do you know how much these companies expend chasing a viable CD, the countless resources eg dollars put to the task...the time involved, and then when it finally gets to market the exceptionally limited window they have to not only recoup their costs but also turn a profit, and they have to hope that all the while they are the only ones with a drug on the horizon....its as much a gamble as it is science and these companies have to pay big time to play.

As for the US vs other countries I guess one could make your argument, or possibly look at it as one of the last free market systems available that companies can leverage to turn a profit. Sure other countries get to take advantage of a system that is tipped against our favor, but again these companies have to generate revenue and the limited time they have to make money means they have to charge what they can when they can.

Sure we can regulate Drug costs, or mandate that no drugs be patent protected and everything is immediately generic, and you will see most if not all discovery scale back and be left to government run agencies or universities..



With generics the big names have to do whatever they can to turn a profit, while Generics are great for consumers, the reality is they don't expend nearly as much as the big names do on R&D, they simply make a copy of the original formulas...plus with the rules changing around marketing to Doctors they felt they had to do something to make people aware of their products.

Do I wish they would spend more money on R&D, sure, but I understand why they do what they do.

These companies were perfectly happy selling the same drugs for one third the price in the US market for many years after they were invented. They are still happy to sell them for even less in other countries. So it's not the case that the old price was insufficient to recoup their R&D investment. It's that they WANT more money, and because of consolidation and patent monopoly they CAN get that money. That's all there is to it. These companies spend about 16% of revenue on R&D.
R&D%20expenditure%20trends_1.jpg
 

Zorba

Lifer
Oct 22, 1999
14,452
9,837
136
With generics the big names have to do whatever they can to turn a profit, while Generics are great for consumers, the reality is they don't expend nearly as much as the big names do on R&D, they simply make a copy of the original formulas...plus with the rules changing around marketing to Doctors they felt they had to do something to make people aware of their products.

Welcome to every industry that uses patents. They get 17 years for exclusivity, then they have to compete. If they can't recoup their R&D costs in 17 years, the drugs probably weren't actually needed.

Not to mention how many stupid patents are given, like how companies were able to get new patents on inhalers only because they changed the propellent. They didn't event a new propellent, just made the same switch the hair spray companies made. Hair spray didn't change in cost at all when they went from CFCs to butane, but when inhalers made the same change the price went up like 15x.
 

JEDIYoda

Lifer
Jul 13, 2005
33,981
3,318
126
nothing should be done about the prices of prescription drugs!! Get a better job so you can afford your meds!!
 

senseamp

Lifer
Feb 5, 2006
35,785
6,187
126
Move to India.

Eli Lilly makes drug in Indiana for 25 cents, sends to India where you can get it for 50 cents.

Meanwhile they charge Americans $5 for the same pill.

Obvious solution is to move to India.

Lots of people import from overseas either online or in person by going to Canada or Mexico. If I was ever uninsured and it was a choice between forgoing treatment, getting ripped off for being an American, or importing, it would be a no-brainer decision. Unless it's a controlled substance, legal risk is slim to none.
But this is more a sign of a systemic problem we need to fix than a solution in itself.