Down here, medications are either "covered" or not covered. Many basic drugs are free, most require a copay of $5 per month/term. But after a certain number of repeats or total spending in a calendar year, the copay goes away. Drugs that aren't covered cost more, but at a fraction of the price that they sell for in the US at retail. Some very specialised and expensive drugs require a doctor to provide a medical case for prescribing them, but that's no different than with US insurance companies. If that's turned down, you can always pay retail but that doesn't happen very often.
Needless to say, drug companies don't like this system, which is why they tried to change it with a little-noticed (except here) provision in the TPP that would have severely restricted the NZ government's role in setting drug prices, and thus overruling the wishes of NZ citizens. That's the Big Pharma Dr Krugman is talking about: rapacious and psychopathically greedy. But US voters have a different view.
10
Let's remove the biggest problem to getting health care reform done in America. Force all our elected officials to live through what we live through whenever we need medical care. Don't allow them to ask their staff for assistance, don't give them special treatment when it comes to their claims, send them incomprehensible bills, let them get balance billed like we do, have them threatened by collection agencies if they don't pay immediately. And force them to sit in the doctor's office for hours for a 7 minute "visit".
Last, but not least, drop at least one medication they need from the formulary and kick at least on doctor they use off the plan. Then surprise them with the bill.
If they had to deal with what they are forcing us to deal with the whole system would be fixed in 6 months.
19
Blame Citizens United.
9
Meanwhile, the Sunshine Act requires that every time I attend an educational or marketing session sponsored by a pharmaceutical company, the $15 value of my sandwich is reported publicly for all to see.
How about a Sunshine Act for Congress so the public—who they are alleged to serve—can know just how much THEIR “sandwiches” cost?
15
Americans love prescriptions and pills to the point they ingest more than the rest of the world combined.
Americans love food to the point that they are the most obese population on the planet.
This combination is a set-up for our current pharmaceutical cost problem.
Turning the issue on its head, I ask why Americans cannot get themselves out of their love affair with medications. If you are not taking medications, you don't have any costs.
The typical middle-aged American is obese and taking medications for hypertension, high cholesterol, and type 2 diabetes. These 3 costly, chronic "diseases" requiring medications would likely disappear with a normal weight in most people. Tack on obstructive sleep apnea and cardiovascular disease, and the savings would be greater than $750 billion per year if all Americans were normal weight. We spend $1 trillion per year to remain fat.
Is it so hard for Americans to see the relationship between their gluttony and their medical bills?
6
Trump has sold us out once again... aren't his supporters getting tired of "winning" yet?
3
President Trump proposed little that would actually limit Big Pharma’s power to price-gouge patients. In fact, the stock prices of Pfizer, Merck, Gilead Sciences, and Amgen all spiked after his recent speech.
The U.S. cannot make prescription drugs safer and more affordable without addressing the root cause of the dysfunction: the outsized power of the profit-based pharmaceutical industry.
On May 17, a group of physician leaders in the U.S. and Canada will release a sweeping proposal for reform, which will also be published in the British Medical Journal. “Healing an ailing pharmaceutical system: Prescription for reform for the U.S. and Canada,” was drafted by a committee of 21 prominent experts. The proposal identifies critical areas for reform, along with both short and long-term solutions to improve the development, approval process, pricing, and marketing of prescription drugs.
Key principles of pharmaceutical reform:
•Access to medications should be determined by medical need, not financial means.
•Drugs must be affordable to society.
•Drug development should be geared toward real innovation that maximizes population health.
•The human right to health must take precedence over intellectual property rights (patents).
•The safety and effectiveness of medications must be independently and rigorously evaluated.
•Comprehensive and unbiased information on drugs should be available to prescribers and patients.
8
Your comment on Big Pharma, with its bought-and-sold lawmakers, and its victims (us), presents principles which should guide reform.
As long as we live in a dollar democracy laws will continue to be written and lawmakers' votes be purchased by Big Money.
When I was a child I was taught about bribery, and about how it was wrong and illegal. Things have changed.
But the 99.9% outnumber the 0.1%, so we just have to meet and greet and then get to work making bribery illegal once more.
3
Just as Republicans drove us to Obamacare they're now driving us towards a single-payer system. I don't know if it will happen after the next election or in 20 years, but it absolutely will happen. And the reason it will happen is because Republicans invent problems that don't exist so they can solve them (last year's "tax reform" for instance) and then ignore real problems, like healthcare. In 2016 Trump was elected because he hates things so many Americans hate. 65 million Americans literally shot themselves in the foot, if not the head, by voting for Trump.
6
And Trump had the gall last week to threaten the rest of the world with increasing their drug prices so that America would not be what it is: totally in thrall to the drug companies, and suffering the highest drug costs in the world. luckily, the rest of the world does not have to listen to Trump.
1
the drug industry, in fact the whole medical industry is one big government sanctioned monopoly. the debate about what to do to control prices is based on the premise that the health care market represents free market capitalism at its best. but that premise is completely false. there is nothing free about health care markets except the ability of health care providers to charge as much as they want for services and raise prices at double digit rates every year. if we are going to control prices and perhaps reduce them then we are going to have to recognize that if government is going to grant monopoly control to providers then the government is going to have to control prices and profit margins.
1
A few other issues:
1) Pharma claims it needs monopoly profits to pay for research, but it pays as much on marketing as on research. Just watch, for example, daytime CNN.
2) The basic research tends to be done by universities, not by pharmaceutical companies. That research is largely paid for by the federal government and, to a lesser extent, by foundations, that is private philanthropy.
3) The pharmaceutical companies are in the business of selling drugs, not curing diseases. The development incentives are wrong. The drug companies seek expensive pills to be taken every day, not one pill taken once.
Conclusion: The whole business structure of the drug industry needs to be taken down, replaced by a system in which research is done by collaboration among universities, foundations, and the federal government, and drug manufacturing is done under federal license.
5
Few drugs pride a cure. Serious diseases are managed,
1
It is maintained that Europe's drug prices are low because drug companies make up the difference by charging us high prices. Thus we are subsidizing them. I have always thought that no one sells something to lose money. If they lost money, it would make sense for them not to sell at all. Thus, they are still making money with lower prices. Everyone has his/her favorite example of overreach. Mine is: the drug for thyroid (levothyroxine) costs $30 copay. I don't know how much more insurance pays. In Europe, it costs only $6 with no insurance and for the same amount.
5
Patents and copyrights are supposed to balance the public good of innovation and the public evil of monopoly. There system should be evaluated periodically to determine that the system is still in balance as markets change. Since the patent monopoly is created by the government, the government can change it. The length of copyright has gotten to be ridiculous. Did we really need to extend copyright to 80 years after the death of the author to encourage authors?
1
One huge problem is that speculators can buy out, re-patent and jack up prices of formerly cheap and very important meds. Rescue inhalers used to be cheap, $6-7 range, doctors used to hand them out like Pez. Then the propellant was changed for environmental reasons, some greedy so and so figured out how to re-patent and now a poor single mother or aging low wage worker can be charged over $200. The Greedy exploiter gets his, the rest of us pay for the extra ER, visits and hospitalizations, not to mention the occasional death, which is why doctors USED to hand them out so freely.
6
The fact that a drug company would pay Trumps lawyer/fixer 1.2 million over a year tells you all you need to know about our political system and drug companies. Both are as corrupt as the day is long.
9
Mr Krugman walks down the same path the drug companies have laid for him and so many before him. Drug prices should pay companies for innovation. But new drugs are only a part of the problem It is generic drugs that have skyrocketed. A medicine that cost $0.06 per pill in April of 2010 went to 13 pills for $53 in October of the same year.. Today, two of those pills cost over $300. In Europe and South America the cost is around $0.10 a pill retail. Wholesale in Europe, one pill is $0.02 They can be brought into the U.S at the cost where the are made but have to be sold in this country at the $150 pr pill cost. This is just one of the examples of outrageous cost of generic drugs. It is not innovation that is supported by these increases. It is the profit for distributors that is supported. Mr Krugman also picks apart Trump's proposal but what is the alternative. There have been no plans to reduce drug cost by a president in decades if ever. Is their a plan in congress waiting to be signed to reduce cost? No!!! What Trump did is open the conversation. Others now have the opportunity to jump in if they have courage. But the drug companies and distributors have a lot of money to pass around to their friends so don't hold your breath.
2
Public financed elections and a 10 year moratorium on your ability to become a lobbyist or consultant after you leave office. It won't eliminate corruption, but it will reduce it.
6
Looks as if Novartis might have gotten their money's worth after all.
5
Sir,
as a physician, I would like to ad another difference to ECON 101.
If you are critical ill, you will have no free choice to buy a drug or not. You and your family will pay any price to survive.
4
Alex Azar was out in the liberal media yesterday slickly spinning the speech. He lies even more effectively than Trump and I wonder how many people who don't go for details realize how many of his statements are out-and-out lies. The only mind-numbing drug I can afford to deal with this administration is the OFF switch to my TV, radio, and internet access.
1
Thank-you Mr. Krugman for reminding us all what a rigged game this is. My wife and i have too much money to qualify for assistance under the Affordable Care Act. Last year, the cost of our heath care exceeded $20,000, not counting what we had to shell out for prescriptions, which was around $300 a month.
I didn't vote for Trump, but for a fleeting moment had some glimmer of hope that, when they failed to get the GOP plan for health care through Congress, at least they might fix some of the issues in the existing system.
Count me as yet another sucker to this decades-long con job that is Donald Trump.
My wife has asthma, for which she uses an inhaler. I suffer from severe chronic pain after suffering a catastrophic back injury in 1996, followed by an even more catastrophic botched back surgery a few months after. As a result, I've spent the prime of my life on disability. Twenty-one years to be exact.
Two months ago I, along with millions of other decent, law-abiding citizens, was told that, due to the opioid crisis, I would no longer be able to receive the medication I so desperately need.
I now live with two emotions, fear and rage, along with the fervent desire to see Trump and everyone in his extended family know what it's like to be in complete agony 24/7.
8
The battle over costs of Pharmaceuticals is a red herring - they will not make us a healthy nation- nor overcome the consequences of depending on fake & highly processed food. Buy organic, learn to cook a few things and get a little exercise however you can
3
Amen! We don't have a free market pharmaceutical industry. We have an oligopoly with U.S. Government enabling obscene profits, ultra-low corporate taxes, and the American electorate playing the patsy.
6
Simply, we need a socialized medical/dental health care system in the United States. The only argument against it is that a bunch of very wealthy pharmaceutical and insurance executives may lose their Golden Goose. The private, for-profit health insurance business is a legalized scam. The hospital system is another legalized scam. I see many "non-profit" hospital systems paying their top executives millions in yearly salary and bonuses, while patients go broke trying to pay for procedures. It is sickening.
4
A drug I need costs $240 at my local pharmacy. Fortunately I travel enough to have purchased it in several different countries. $35 in Germany, $25 in Italy. $16 in Thailand. Or how about this crazy anecdote. On my last trip to India I bought enough of them at $8 a pop to basically pay for my plane ticket. On the return, No one at US customs even mentioned it as a problem for this 71 year old guy.
3
However it’s achieved, prices need to come down—and sooner rather than later.
2
Your arguments are internally inconsistent. You say Pharma companies have monopoly power due to their patents and yet you say they mostly make drugs that are duplicative of existing drugs. If there are duplicative drugs on the market, by definition there’s no monopoly power. Further, patents do not by themselves create monopoly power. Patents only give the patentees the power to exclude others from selling the patented products. They do nothing to preclude others from making alternative and competing products that don’t infringe the patents. Your article shows a lack of understanding of how the patent system works.
"Health care is the tapeworm on the US economy", Warren Buffet
3
The excessive ads prodding consumers to 'ask their doctor' myst have a major impact on drug prices. If you have a doctor that was unaware of a treatment option until you asked about it, you need to find a competent doctor. The highest-priced, most-advertised drug is not always the best option.
Spiraling drug prices go hand in hand with excessive marketing expenses.
1
I'm not sure how to start a prescription coop, but I bet looking back into the 1930s and 1940s, it was done. What I do know is that eyedrops I get which have been sold for only a few dollars per bottle for years are suddenly $20 per bottle because of the new gel formula that allows them the company to claim it's a new patentable formulation, not generic any more.
2
An inequality thought: The Fed should pay/ credit low income people with a minimum basic income directly without offsetting tax or other income. Those with jobs would be paid more.
This both increases the resources available to the poor and - through inflation- reduces the resources of the very rich. Equitable redistribution would be achieved.
No?
How would that apply to people working in the underground economy and not reporting their earnings to the government?
Currently, those in the underground economy lie to welfare officials and create fraudulent income tax returns in order to get Earned Income Tax Credits for taxes never paid.
IMO, the federal welfare benefits should be rolled into block grants to the states and welfare beneficiaries should get what they need but be forced to bring their underground wages into compliance, along with their employers who are evading payroll taxes.
As it stands now, someone earning $2,000 per week off the books can assert they are earning $200 per week and the welfare examiner is not even permitted to ask them how they are covering their $3,000 per month rent. So the scofflaw gets an EITC, Medicaid, food stamps, an Obamaphone and LiHEAP payments while his next door neighbor earning $50,000 per year paying $36,000 in rent gets zip.
Econ 101, supply-and-demand stories beloved by free-market enthusiasts? That was before the so-called free-market enthusiasts discovered there's more benefit for themselves if they made the market less free. Apparently American exceptionalism is now about gaming the system to favor your side.
If making America great again means the great put their boot on the necks of the forgotten people, America is great already. I’d vote any day to make America good again.
3
Since you apparently live in NYC, I would find it highly desirable if you would get your city government to refrain from dumping millions of gallons of raw sewage into the waterways which is destroying the local fishing waters and closing local beaches because of high coliform counts. Also, pay for your own mass transit rather than demanding the federal taxpayer subsidize your subways. It is annoying when I pay $1 in federal fuel excise tax that Tennessee is allocated back by the federal formula only $0.80 so that NY can be allocated $1.20 for every dollar its residents contribute.
Obamacare rules made the pricing of drugs even more opaque than they were before Obamacare so that the drug companies, insurers and pharmacy benefit managers could increase their profitability, pass it along to consumers through escalation of premiums and pretend Obamacare wasn't increasing medical costs for everyone.
He managed to move drug prices even further from the free market than it already was by demanding that the bulk of the market be shifted to third party payers.
Statements on Obamacare notwithstanding, your complaints regarding the excise tax are exactly backward. In aggregate, NY is a federal donor state, generally receiving about 80 cents in federal spending per dollar of tax paid. Tennessee receives about $1.25 in federal money per tax dollar paid. There may be local variances, but that is splitting hairs. Stop sweating the small stuff, overall states like NY help keep your state solvent!
Largely missing in this discussion is the huge amount of taxpayer money that funds basic research through the NIH, NSF, DOD and other agencies. While the NIH is the premier research institution in the world, and deserves to be well supported, drug companies pay virtually nothing for the incredible discoveries that are the basis for their medicines. In my opinion pharmaceutical concerns should pay a reasonable tax on their profits that recognizes this relationship, and directly helps fund the science that has supported their development programs for decades.
1
It takes an incredible amount of money and effort to turn a laboratory discovery into an FDA approved medication. And the companies still have to do a tremendous amount of preclinical work even if the intial discovey came from a university lab. Not to mention that the vast majority of compounds fail in clinical trials.
1
Basic research does not commercialize their ideas. Research organizations, including those funded by the taxpayer, sell patents on new drugs to venture capital funded drug researchers who start out with a great idea and spend billions to conduct trials to bring the drug to market. For every thousand patented drugs, only a few make it through the toxicity tests, much less the effectiveness tests that indicate it performs better than something else already available in the market.
Overwhelmingly, the cost of bringing drugs to market is borne by speculators who lose more often than they win. By the time the drug makes it to market, it frequently has fewer than three years of patent life yet.
There was huge outrage when Hepatitis C drugs hit the market with a list price of $100,000 for a cure. Today, those drugs cost $13,000 to $25,000. A high price, but not so much when you consider the value of not contracting liver cancer.
Without a doubt, the drug companies engage in strategies like advertising Prolia, which costs a minimum of $2400 per year because its twice per year injections are more convenient than taking a generic drug once per week with an annual cost of $48.
How much of that was the result of Obama decreeing that drug insurance was an essential health benefit? People should get expensive lifesaving drugs like chemotherapy even if it means the costs get socialized to healthy consumers. People who want the convenience of $2400 over $48 shouldn't.
"The bottom line is that American exceptionalism has prevailed again: We're still the only major nation that lets the drug companies charge whatever they like."
More generally, we're the only major nation without a health care system that serves patients. Instead, we have a medical-industrial complex that serves the executives and shareholders of its corporations at the (excessive) expense of patients. (The medical-industrial complex even defines providing actual health care to patients as "medical loss.") And those corporations make substantial investments in politicians so they'll put the interests of Big Insurance, Big Pharma, Big HMO, and other rent-seekers ahead of their other constituents.
It's significant that every other developed nation has rejected a capitalist approach like ours. They have determined that health care is a right for their citizens. The conflict between that right and corporate obligation to shareholders is just too great. The solution is either to make health care a government responsibility, or to heavily regulate private health care. Either way, Big Pharma still sells drugs in all those countries. They apparently make enough profit for it to be worthwhile, even if the profit is not as spectacular as in the United States.
The United States never explicitly decided that health care is a privilege rather than a right. That's just a consequence of capitalist health care. That can change, but only if voters turn out consistently to demand it.
8
The United States decided that health care was a right under Reagan, when the law stipulated that hospitals that received any Medicaid or Medicare funding were obligated to treat anyone regardless of their ability to pay.
The law remains in place. However, under Obamacare, if you show up at a center of excellence in need of complicated care, they will stabilize you and transport you to a hospital that it in-network for your Medicaid or Obamacare policy. If you have a brain tumor like Ted Kennedy or John McCain, you will not be air lifted to a center of excellence in Arizona or North Carolina, you will go to the local hospital.
The amount of uncompensated care was reduced at the centers of excellence and all other profitable hospital systems, and yet they increased their charges by 33% while the CPI increased 10%. The big boys shifted poor high cost patients to lower priced alternatives, irrespective of the quality of care, which freed their facilities to attract a more prosperous clientele and then raise prices.
Obamacare was a gift to big medicine. It did not expand the availability of health care and did not reduce the cost of health care. It increased the bifurcation of the system between the haves and the have-nots, as designed, along with increasing costs.
There is nothing capitalist about Obamacare. It is pure crony socialism, with the elitists garnering a bigger share of the pie at the expense of the people.
It is disgusting.
Step One: when a drug is developed with money from a government grant, do not allow any resulting patents to be assigned to a drug company.
5
Who is going to conduct the drug trials, which consume 98% of the costs to bring a drug to market?
A recent study found that medical care, including drugs, is more than double the expense of any country in Europe because of one fact: Providers in the US charge more. Period. That's it. There is not more research, or more care, or better care. We just get charged more for similar care.
The best scene in Sicko, Michael Moore's film about the medical industry, was the shot of congress people filing into a hearing room with a bubble over their head showing how much money they received from the medical industry. All were in the hundreds of thousands of dollars. That is the answer to all the questions about why medicine costs more in the US.
11
In Great Britain, over 50% of the physicians employed by the NHS are junior physicians, roughly the equivalent of residents in the US. [They have a big problem with brain drain, as qualified physicians have a high rate of migration out of the UK after completing their relatively low cost education.]
Payment to the junior physicians is low relative to that paid to residents in the US. It s so low that 50% of emergency rooms are closed at night and on weekends because they cannot find enough residents with which to staff them. Not so good if you are in an accident and have to travel to the nearest ER or if you are in need of immediate attention in an ER but somehow don't make it through triage promptly because you don't seem as badly off as others.
But it is cost effective, because it is more efficient to operate half as many ERs.
American healthcare doesn't follow the rules of supply and demand because we have a middle man between the consumer and producer who is distorting market pricing.
Insurance companies have different wants and needs than do healthcare consumers. Medical Insurance companies only exist to take as much money out of the healthcare system for themselves as they can get away with, they offer nothing positive to our overall healthcare system.
5
Whether or not the insurers contribute to improved health depends on the circumstances.
Large employers who are self insured typically pay lower costs for higher value services. There are a couple of reasons. They tend to insure a healthier population. They tend to sign five year contract with insurance companies to manage the systems. There is no incentive on the part of the insurer to not pay, because their compensation is a combination of a per capita management fee and a percentage of bills processed. And if they skimp on preventative care in year one, it will come back to bite in year four.
In order to get the five year contract and to increase the probability of getting a renewal, they have historically offered supplemental services like a nurse line, a coordinator for people with complex and/or chronic conditions, and direction to centers of excellence. [It turns out that if you need an organ transplant, although the rates may be higher at a center of excellence, the hospital stay is shorter with fewer complications so it's cheaper, with the added bonus that the patient has a high likelihood of survival.]
If you buy a one year policy in the individual market, they are not motivated to recommend you get a mammogram every two years because you may go somewhere else next year so they can't amortize the cost over two years or recommend you get a colonoscopy at age 50, because you may seek lower premiums next year with another insurer.
Drug price inflation slowed after the implementation of Medicare part D in 2006. It did not start growing again until after the implementation of O'care, which reduced the donut hole and made it mandatory for some drugs to be provided. Notably, all contraceptives regardless of cost had to be provided free of co-pay, even when the cost was ten or twenty times that of the generic equivalent, with no evidence of improved effectiveness.
Seventy percent of American prescription drug consumption is of generics. The FDA, acting to support big pharma, has made it necessary for established drug manufacturers to spend $5-25 million plus three to five years to get permission to market generics plus what they would have to spend in capital. The FDA tightened regulations on small manufacturers to drive them out of business. The FDA colluded with manufacturers of drugs going off patent to allow them to bribe those applying for permission to market generics to maintain their patent exclusivity.
Add to that the big medicine group purchasing organizations that used their anti-trust exemption to bully generic drug manufacturers into low prices, and you have a situation where big medicine gets low prices, which hospitals do not pass on to consumers, varies parties in the system get rebates, which do not get passed off to the consumers, small suppliers go out of business and shortages are created.
Price controls on Medicare will result in increased drug prices for everyone else.
1
This article makes an important point that needs to be underscored. If a drug company has a patent, then the price of the drug needs to be regulated. Mr. Krugman is right on point here, and this needs to be put into legislation.
3
When a drug company is licensed to sell a drug, it is extraordinarily rare for the patent to have more than five years left on its life. If you want to guarantee that drug research comes to an end, decide that a bureaucrat is going to be permitted to set the price.
When the Hepatitis C drugs came into the market, there were many who were outraged that the list price for an eight week period that would cure the previously incurable disease was $100,000. What was not public was that most of the pharmacy benefit managers had negotiated 40% discounts and that the drug companies were using their charities to subsidize high copays. Medicaid was entitled to a discount off the lowest price paid commercially.
Today, those drugs are available to the uninsured for $13,000.
Seventy percent of American prescription drug consumption is generic drugs. Patent holders have been permitted, with an assist from the FDA and the court system, to bribe generic manufacturers to forego selling generics for drugs going off patent.
For drugs that are long off patent, like the famous EpiPen, the FDA requires $5-25 million and three to five years to approve a generic supplier, which gives their favored cronies and extra three to five years of exclusivity. So Mylan, whose CEO is the daughter of a Senator, gets extra bonuses for increasing the price for an old product from $100 when they bought the marketing rights in 2008 to $600 in 2015.
The FDA is a big part of the problem.
There are several basic issues here. Broadly speaking, Pharma is Congressionally protected from competition in what simply amounts to a cartel.
First, Congress has given pharma a ticket to forever get out of jail. Patent laws have created a moat to protect pharma over an extended period of years beyond those accorded other products. This protection is based on the notion that pharma does the heavy lifting of research and deserves recompense for its work.
Second, Pharma's largest expenditure is not in research but in advertising their products, many of which are developed in non-pharma labs (think universities)who are not allowed to market their discoveries. It's the law. It allows pharma to market these discoveries, many of which have been developed with assistance of Federal dollars.
Third, this, coupled with the idea of "dirty" drugs from abroad because FDA can't certify their makers flies in the face of the fact that many of pharma's drugs are made abroad beyond the reach of FDA.
The system does not allow for competition until generics are able to produce products once the patents expire. That's when prices fall.
4
You do not know what you are talking about. When the Hepatitis C drugs came onto the market at list prices of $100,000 per cure, they had a maximum of three years left on their 20 year patents. They at now selling for $13000 to the uninsured, with rebates dropping the price below that for insurers.
There was an exception made for orphan drugs, which have been gamed by the drug companies. Orphan drugs are those that have a potentially small market, and they do get a substantial increase to the period of exclusivity. They also get other benefits like accelerated approval of another commercial drug, which they can sell to another drug manufacturer who wants to jump to the head of the line.
How they game the system is that they get approval to sell the product to a tiny market, knowing that it will be highly desirable to a huge market, to which they sell it off label at a high price for the long period of exclusivity. It seems like that law should be modified to limit the period of exclusivity for an orphan drug that is selling large quantities at a protected monopoly price to an off label market.
The FDA also needs a kick in the pants to prevent it from slow walking the approval of generic drugs that favors their cronies.
Many drugs sold in the US are manufactured off shore, but they are regulated by the FDA.
You have put together bits and pieces of facts but your analysis is flawed.
There should be more press coverage of the corruption that defines the industry, including the often quoted figure of one billion dollars to bring a drug to market. Consider the case of Fumaderm, an old and inexpensive medication for psoriasis that cost only a few dollars a month in Europe. One component of that drug, dimethyl fumarate, was found to work for MS and was rebranded as Tecfidera and now costs over $60,000/yr. No drug development need. It's such a simple molecule that a high-school student could literally make it in the kitchen. This is but one example of which there are many. The pharmaceutical industry simply preys on people, especially those with chronic illness.
3
This article on Big Pharma is wrong for the same reason the discussions of Big Medicine and Healthcare are wrong, and for the same reason treatment for the 75% of healthcare that is chronic care is wrong and ineffective - they only look at symptoms while ignoring the fundamental problem.
Everyone talks about the cost of drugs and healthcare. They wrongly assume that healthcare and drugs work, and are worth paying for. That's wrong.
Before you reengineer a problem you first need to rethink it.
Drug-based healthcare is killing people - conservatively about 125,000 die every year from drug reactions. It's the 4th leading cause of death.
Our chronic-care healthcare is a failure. Not one person is cured in "managed care." Just "treated" and "put on" a drug.
The average person is on 10 pharmaceuticals!
Yet US healthcare has the worst outcomes of any industrialized nation - while also being the most expensive.
Big Medicine is a parasite on sick people, as are the well-paid conventional medicine Malpractice Doctors involved in this trillion-dollar scam.
Studies show that 90% of drugs do not work (google: Light, Safra, Harvard, pharmaceuticals). But all drugs (since they are synthetic and foreign bodies) are toxic - they all have side effects, including death.
(Note there are Always cheaper, non-toxic alternatives that work better, but they're not patentable).
Cost is merely a symptom. The underlying problem is that Big Medicine is a Trillion-dollar scam.
1
The US does not have the worst outcomes of health care in the industrialized world.
Our infant mortality rates compare favorably with all of the industrialized world. But they do not count low birth weight premature babies because they have no intention of caring for them. You can argue that it is not an economically sound decision for Americans to pay for ten million dollar babies when only one will survive. American values stipulate that you pay $10 million dollars because you cannot predict which of the ten will make it. The rest of the industrialized world sacrifices the one for $10 million. Different values. The bookkeeping difference also inflates their life expectancies, because loosing nine infants that aren't counted as live births makes a huge change in life expectancies.
The US has better survival rates for cancer than the UK or Canada, because delays in treatment of six months are standard in the UK and Canada and rare in the US. And the most expensive cancer treatments are not available in countries that practice price controls on drugs.
There is much that can be improved in healthcare delivery and cost in the US. But there is much to recommend it, including the advances available because Americans fund them. We need to figure out how to clean up the cronyism that our current third party payment system is designed to conceal for the benefit of big medicine. Americans and Saudi princes don't go to Canada for treatment unavailable at home.
"US ranked as worst healthcare system" amongst the top 11 industrial nations:
https://www.newscientist.com/article/2140698-us-ranked-worst-healthcare-...
And ranked #37 below Costa Rica by WHO:
http://thepatientfactor.com/canadian-health-care-information/world-healt...
Rather than have government limit the prices that can be charged, as Krugman suggests (the last thing we need is more government incompetence), open up the drug market to free choice and let the purchasers have the ability to purchase the drugs they need anywhere they want. What we have now is crony capitalism. What we need is a free market.
1
What we need in this country is a "poison pill" defense against our health care system. But this is one thing Trump supporters won't swallow.
Buy a drug that's been around for decades, sells for peanuts, and has no competition. Corner the market and jack the prices up to the breaking point for people who desperately need the drug. Then listen to the cash register sing. A business or a crime? Just ask our legislators! They will need jobs as lobyists down the road, so it must be a legitimate enterprise. Don't ask the consumers. They have no voice!
5
Here's how we wind up with a single supplier of an essential generic drug.
FDA increases the regulations on small manufacturers despite no evidence there is anything wrong with their procedures; the FDA prefers a few large manufacturers because it's easier to audit and to level big fines. The added costs imposed cause manufacturers to drop generic drugs that have small markets.
Big medicine hospital chains and their affiliates have a long time antitrust exemption that enables them to form group purchasing organizations that use their concentration of demand to impose low prices on their suppliers. The "savings" from the bulk purchasers are not passed on to customers, but retained within the big medicine opaque third party payer system. The monopsony purchasing power of the GPOs drives some more generic suppliers out of business with low prices.
It takes $5-25 million and 3-5 years to get approval from the FDA to sell a generic drug.
People like Martin Shkreli sees that an old generic drug that is essential is down to a single supplier and buys it. Then he raises the price 1000 times. Thanks to the policies of the FDA, he's got at least 3-5 years of exclusivity.
The FDA needs to efficiently approve generic suppliers and return a competitive market to generics and stop making non-scientific regulatory changes. Congress needs to pass a law removing the antitrust exemption for GPOs.
Incremental improvements to reduce generic drug costs, 70% of the US market.
As more wealth is funneled to the wealthy by free market capitalism, and its servant, the US Government, Pharma will continue to correctly calculate that optimizing shareholder value - its legal and foundational first responsibility - will involve developing medicines for the uber-wealthy. "Normal" Americans, and their medical illnesses, will generate less and less profit. Some physicians and other health-care professionals in the US are overpaid. The most obscenely overpaid are the CEOs and "managers" of insurance companies and health-care systems. Greed and are destroying healthcare in the US.
Single-payer might work, if the fear and distrust Americans have over each other can be overcome.
3
It's not illegal to be a monopoly, only to exploit your monopoly position. So, when a drug company does that, a la Martin Shkreli, why can't the PTO just revoke their monopoly grant? And, while they're at it, why can't the PTO revoke all those stupid patents, quite "obvious" in retrospect, that were granted just because the applicants spent more on lawyers than the PTO, with the Public unrepresented in those proceedings.
While Big Business pretends to believe in markets and competition, they hate both because they're bad for profits. They hide behind terms like "barriers to entry" and "sustainable competitive advantage" and buy protection from those willing to sell it, namely, Congress. Teddy Roosevelt created competition where previously there had been none and kicked off the American Century. We should do the same.
1
Martin Shkreli did not have a monopoly. The drug he raised the price on, Daraprim, was a over sixty-year old drug and wasn’t protected by patents.
The drug that Shkreli increased by 100 times was not a patented drug, it was decades out of patent.
It costs $5-25 million plus 3-5 years for the FDA to approve a generic competitor. Shkreli knew that he had 3-5 years of exclusivity during which he could print money.
If the FDA were not in bed with big medicine, it would take them $250,000 and six months to approve an established drug manufacturer to market generic drugs. Shkreli never would have raised the price from $13.50 to $700 with only a six month window of exclusivity.
No change is required in the law. The deep state needs to be whipped into shape.
High drug prices are a direct result of greed, pure and simple.
4
Ah, but the greed is on the part of government officials and their cronies, not a free market.
Drug companies use the dark state to suppress competition. Big hospital chains use their influence with the government to skim out 30% in rebates on supply chain opacity but don't pass savings on to consumers or third party payers. Insurers don't object to the increases in costs, because they are entitled to 20% for overhead and profit. Twenty percent of an inflated bill is an improvement in their profit.
Politicians like the Democrats, McCain and Colins aren't about to give up their campaign contributions to reduce opacity,
For the amount of taxes that are collected in the US, shouldn't you all have enough money to pay for a Single Payer system? I showed my Canadian payslip to some US friends and they are paying comparable taxes.
So what are you getting from your politicians?
1
You are forgetting about the HST that is hidden from you whenever you purchase goods and services. You don't even know how much you are paying in taxes, which is the way the government likes it.
Americans are also not willing to wait six months from diagnosis to treatment for cancer.
Last night on the NewsHour, I heard Trump's HHS Secretary and former drug company executive Alex Azar beaming and gushing without a hint of a blush that Trump's plan does exactly what he promised in his campaign, and allows Medicare to negotiate for drug prices and provides wonderful benefits for which we should all be grateful. Particularly distressing was his bland enthusiasm for the dubious plan to make sick people in other countries pay more for drugs as a strategy for lowering prices for American consumers. Disappointingly, there was no other expert invited to deconstruct this sickening Orwellian bafflegab.
2
What stopped you from adding what the ACA did in the way of addressing drug costs? Why not mention, although it was passed exclusively by democrats and signed by a democratic president, it tied the hands of the government AND made things worse! Worse how: one example is the ACA gave biological drugs patent protection for 12 years instead of the normal 5 years. There are other examples, but suffice it to say the democrats caved to Big Pharma because they are for sale just like the republicans. Opinion pieces like yours do a disservice to readers because you omit facts that are necessary to understand the problem. Both the democrats and republicans are owned by Big Pharma. One day we will elect honest people. One day we will elect people not for sale. One day we will elect people who will put the interests of the American people before their personal gain. I assure you those people will not belong to either the present democratic or republican parties.
1
Maybe voters will get angry enough to call their elected representatives en mass if we call what Big Pharma is doing what it actually is: price gouging.
1
If you are in favor of Medicare negotiating lower price, make sure that President Trump is not the negotiation team of Medicare. He just gave the shop to Netanyahu on Jerusalem and got nothing in exchange.
Not only is Trump reneging on his promise to cut drug prices but his budget has additional cuts to Medicare and other programs that serve seniors and people with disabilities. I wonder if his supporters who only listen to a daily diet of right wing propaganda are even hearing about these cuts.
4
I like the Reagan joke. It's so true.
Krugman is right on point about this monumental scam by Big Pharma and Big Bought And Paid For Government working together in the worst interests of We the People.
Case in point: within the last 3 months my wife & I spent a month in the third world country of Zambia where we had NO INSURANCE COVERAGE, nada, none. One of us must use a very well known inhaler once a day in order to breath properly. It is seen on tv in America most every night as the maker spends millions a year in prime time advertising to get you to ask your Dr., but it does in fact work and works well.
Nevertheless, In America under Medicare Part D this drug, for 30 days, costs $80 in in insurance copays and over $ 500 if not covered by insurance, not to mention its impact on seniors reaching the infamous Medicare Donut Hole so maliciously created by our Congress just in time to ruin Xmas each year.
When in Zambia, the same exact drug, same maker, same everything, packaged and labelled to meet local legal requirements that appear to be just like ours cost a grand total of $35 US dollars with no insurance and no copay.
That fact says it all. We, the American People are, as Krugman so elegantly states, being suckered.
And this Trumpian do nothing announcement about fixing the problem only confirms that The Art of the Deal is a continuation of the obscenity that is America's unafordable Medical and healthcare scam.
Even 3rd World countries do not do this to their people.
1
I have an incredibly simple solution: allow Americans to buy their prescription drugs from Canada, or the U.K., or any other first world country. Countries that have told drug companies that they can't sell drugs in their countries for astronomical costs.
1
Every member of our species should have access to healthcare. It is the humanitarian thing to do and we will all benefit from a healthy World. Essentially, our evolved collective immune system gives us a pretty good chance of avoiding a plague, epidemic, or prolonged pain from accidents and forces of nature.
I don't really think that our derivative of market-based capitalism can deliver the healthcare required by our society but I also note there is strong resistance to providing healthcare to all of our members. A major flaw is the consumers of healthcare are woefully ignorant of the basics of physiology and their own health needs.
So, I suggest that we include physiology, nutrition, and endocrinology in the K-12 curriculum so high school graduates would enable a better informed future market.
2nd, I strongly believe from experience with the military healthcare system that physicians should be encouraged to work in salaried, well equipped clinics including service in mobile systems to serve underpopulated rural areas.
3rd, dental, hearing, and eye care should also be included in a universal health care system.
Work should continue in developing AI systems to continuously monitor human health so that we can keep a record of individual health for the use of our research industry so we can see the performance of drugs and the effects of certain environmental factors and life style factors on the health of our species.
Last thought, health is a "natural monopoly."
2
America is DONE. And this article lays out exactly why we are done as a nation. Corporations control the government and have bought off just about every politician from both parties along with many democratic institutions in order to guarantee obscene profit and dominance above all else....including life itself and our precious environment.
7
Under Alex Azar CEO of Eli Lilly the price of insulin more than doubled. When will the electorate wake up and elect a Congress and President not in the pockets of Drug and Insurance companies. Novartis not only hired Michael Cohen but their former CEO wrote Medicare Part D for the Bush Administration. We need to elect a President like Teddy Roosevelt who was the first to advocate for single payer.
5
My apologies for a nit-picky slightly wonky comment. Drug companies can't "charge whatever they want." Even drug companies face a demand curve, albeit at times a very inelastic one. They can't charge more that a buyer is willing and able to pay.
One way to make a joke of his announced desire to get tough with the drug companies was for Trump to appoint drug company executive Alex Azar Secretary of Health and Human Services. Mr. Azar's obvious dedication to protecting Big Pharma's profits rather than the economic interests of American consumers was evident in his interview with PBS Newshour host Peggy Woodruff last night. This country, (in our proud tradition of exceptionalism), shares only with New Zealand laws which permit drug companies to advertise prescription drugs. (The combined marketing costs of ads directed at medical practitioners and consumers exceeds the costs allotted for scientific research.) Thus it comes as no surprise to hear Secretary Azar conjuring up scenarios in which consumers bring to their conferences with their doctors pages of advertising they have torn out of magazines. As in any fairy tale, there are certain questions one just doesn't ask. For example, why would a lay magazine reader be better informed than her doctor? Or, don't doctors have a responsibility to keep up with the professional literature rather than depend on ads brought into their offices by patients? And, most important of all, wouldn't the billions spent on advertising be better devoted to keeping exorbitant drug prices within the budget of ordinary consumers?
6
A couple of points not made in the article.
First, while Mr. Trump is now the president, no mention was made of the eight years Mr. Obama was in charge and did nothing to curtail the rise of prices, despite health care being the cornerstone of his presidential legacy.
Second, “Trump Breaks Another of His Populist Promises” is an interesting headline, yet in related news, he is being criticized for keeping his campaign promise to move the US Embassy to Jerusalem.
Lastly, while it may offend those of you who are closet (or not so closet) socialists, the concept that the drug companies charge whatever they like (and the market will bear) is a logical extension of the idea that I can sell something I own at a price I like, and you have the option of buying it or not.
Um, you don't have the option if you need the drug to save your life and there's only one company that sells it and they set the price to whatever they want it to be. Health care (and drugs) are pubic goods, not mere commodities. You might want to rethink the relative merits of "the market" for drugs and health care before you or one of your loved ones needs chemotherapy or some super-expensive drug to stay alive, but isn't covered by your "market-based" insurance company.
3
Yes, we have the choice to buy it or not, but genuine “communities” recognize that you can’t price life saving drugs out of reach of all but the rich. Unrestrained capitalism leads to a society of “have it all” or” have nothing”. Your support of capitalism over compassion shows what kind of human being you are.
1
Great Article Pauli, you are truly a jewel in the NYT firmament.
I would only add an aside- It seems horribly ironic that two of the most simple and logical moves that the Trump Administration could have implemented to make the lives of his largely blue collar Deplorables easier and more bearable, would have been for Trump fulfill his campaign promises to promote the bargaining power of Medicare and Medicaid recipients for prescription drugs, and to ignite the nation wide availability of good paying blue collar and small business jobs by pushing through the rebuilding of our nation's pitifully inadequate and crumbling infrastructure.
Instead, however, we get Alex Azar, a former star of Big Pharma as czar of HHS, and more empty promises to "Rein in drug prices" -with zero to nothing to back it up. And we get Tax Cuts for the Rich as far as the eye can see.
8
If there is anyone out there who doubts that drug companies are awash in excess profit, just watch TV at night. Drug ads abound. And they're tax deductible.
6
So how far out of whack are U.S. healthcare costs?
The OECD reported that in 2015, the U.S. spent about $1,162 per person on pharma drugs, versus $800 in Canada, $670 in France, and $497 in the UK.
Overall, the U.S. spends about $10,000 per person on healthcare, roughly 17% GDP. That is $3,000 per person or 5% GDP more than the OECD average, or about $1 trillion per year in total, with comparable or worse results.
Experts say the solution is simple: Give the government more bargaining power to force down prices. Medicare for All would accomplish this, but even "ACA on Steroids" could work with the right laws.
However, we also have to be aware that eliminating insurance companies and forcing down doctor and hospital prices by one-third would be very disruptive, although the savings could then be deployed to other industries, creating jobs there.
4
Paul Krugman's article highlights how little the government is doing to the level the playing field regarding drug pricing - happy to continue for patients to go on (and on) paying through the nose.
It reminds me of an English cartoon many years ago. At the time, the coal mining unions repeatedly struck and held the nation up to ransom for excessive wage increases. The government just kept giving in to demands. This was illustrated in a cartoon showing the prime minister of the time tipping an enormous bag of money over an open pit shaft and shouting down to those below: "Just say when!".
You'd think Donald would be unhappy with Big Pharma, based on the utter failure of Propecia/Finasteride to provide him with a luxuriant mane. And no one can deny that hair, those shafts of tough protein/keratin sprouting from little bulbs anchored in skin as follicles (or not, in his case) is a matter of Big concern to golden boy. Think of the time, spray, dye.
If it's not about hair, it must be about $. And it is.
2
Why hasn't Congress ever passed legislation so that Medicare can bargain directly with the suppliers? Just follow the money - the election campaign funding and enormous lobbying organizations by the pharmaceutical companies explain all.
This is the American system of government and it certainly isn't restricted to medication or hospital care.
2
A couple of comments: First, there is a fair amount of abuse tied to patents. Minor modifications can result in patent extensions, for example see https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3146086/. Also, drug companies with patents can strike deals with generic companies not to enter a market when a patent expires - I believe Novartis did that with their drug Gleevec. Second, the problem is not just about patented drugs, it very much includes generics, for example see https://www.npr.org/2018/03/07/590217561/probe-into-generic-drug-price-f.... The non-availability and high price of generic drugs, and their exorbitant prices is also a problem.
1
Alex Arar managed run around every question Judy Woodruff posed to him about Trump’s drug policies. A very adroit and articulate spokesperson for the Trump agenda.
And an example of how a person expert in his field cannot be adequately interviewed by an amateur with only a list of prepared questions without a knowledgeable picture of ways in which they might be answered. Particularly when the one interviewed, unlike most in the GOP and in the Trump operation, actually knows the terrain and is not blind and/or brain-dead.
5
Those of us long-of-tooth and sparse-of-scalp follicles can recall the days when advertising drugs was not just unethical but verboten. Back in the bad old days, we didn't know more about drugs than our doctors did, unlike the current situation where we are told to "ask" our physician is Drug X is "right" for us. "Ask", of course, is just a euphemism for "tell the fool to write the prescription or you'll just find a doctor will do what he's told."
Drug costs in those days were not insignificant, but we weren't subject to the financial rape that has become the standard for each new "miracle" pharmaceutical the chemists come up with. Oftentimes, these "new" drugs are merely an old (approaching 17 years on the market) one with couple of molecules re-arranged and little more and "Voila," the old once-miracle is reborn anew, outrageous price and all.
The declining efficacy of antibiotics due to the germs' resistance to their effects is a direct consequence of the above.
Now, we have a fool and a liar in the White House who thinks the solution is to make the obscenely rich even richer by forcing the rest of the world to pay what we in America do for our self medication.
There was more wisdom in the old adage that "an apple a day keeps the doctor way" than in the modern "ask your doctor" standard for pharmaceutical intervention.
5
Where I come from it is just called "bait and switch." Trump's specialty.
2
The nexus is drug companies, health insurance companies, and their 'bought and paid for" legislators. Tough nut to crack.
1
Mr Krugman you are absolutely right without any defects!!! Well done!!!
2
What we need is a new register receipt that gives more information that cost and tax or insurance amount and total.
Price of Drug..................................$30.00
Insurance Discount.........................$10.00
Price of Drug Out side of US............$20.00
Price w/o Insurance........................$30.00
Political Corruption U/S ..................$10.00
Corruption w/o insurance................
Percentage of Total for Corruption....50 %
Let people see there republican surcharge.
1
Bravo, Paul, re "good christian" Billy Tauzin today in NYT.
My wife earned $21,000 p/a teaching math to Pharma CEO Billy Tauzin's kid at Arlington Va Catholic O'Connell High School and few years later called him at his home residence to tell him my wife's Multiple Myeloma cancer drug, Celgene's Revlimid (50 year old Thalidomide), was costing $21,000 per month. He suggested I take our Rx and find the free drug Pharma bus circulating the USA if we could not afford it. This onetime both GOP and Dem Louisiana dumber than dirt Rep negotiated the $82 billion Medicare D non-negotiable bill for pharma industry.
3
Azar, however, is a superb pitchman....
When interviewed by Judy Woodruff last night, he made nothing burgers look like filet mignon....
It's likely that his skills at tilting reality are why he was chosen....
More pigs at the trough....
2
Yesterday I read an article in an on-line medical journal about a woman who needed foot surgery that required the placement of four small titanium screws into the bones in her toes. Those screws cost $3500 each. I read an article in the NYT last year about a woman who was charged $40,000 to have a laceration in her leg sutured in an emergency room. Yes, the drug industry needs reform and also competition because the industry has become very consolidated over the past twenty years-excluding biotechs-but also in generic suppliers. Let's reform the drug industry by eliminating DTC ads but let's do it as part of a much larger reform that is needed in all healthcare.
Hey Trump, I think I speak for all Australians when I say it will be a cold day in hell (or Trump Tower, take your pick) before Australians will permit their government to take marching orders on drug prices from you. If the US has a messed up prescription drug system fix it yourself by letting Medicare do what we do here - negotiate directly with drug companies and get the most competitive prices. But then again, big pharma like other corporations now owns America. Congress is complicit in this dis functional system too.
3
When customers don't pay directly for something they know little about from someone with quasi monopoly power, markets don't work. So let's not pretend otherwise. Given that the government pays for most drugs and pays for most of the research , it should negotiate prices. Banning advertising would cut costs. Web sites can offer consumer information. Allowances for company research should be factored in along with other forms of compensation for drug development. We subsidize the industry both as consumers and tax payers. Let's stop.
4
Pharmaceutical businesses are under constant pressure from investors to increase profits. This profit incentive is perfectly acceptable for competitive business. However, "Pharma" gets legal monopoly via patents, so some regulation is called for until the patent expires. Other monopoly industries are required be regulated for the public good. I speak of Electricity, Water, Gas, etc.
=======================================
Clever efforts to create competition in these regulated industries released some from onerous regulation. E.g., I can buy electricity from two different suppliers over the same wire line infrastructure. Before there were multiple suppliers: local, state, and Federal law regulated my electricity.
========================================
Until any patented pharmaceutical, validated by the FDA in the USA, is past patent protection, it must be regulated as a utility responsible for the safety of USA citizens. Anything less is unconscionable.
1
Through Medicare, I get my expensive drugs for Parkinson's Disease, paying a modest co-pay. In order to stay out of the dreaded "donut hole" where I have to pay the lion's share for these drugs, I buy one drug from Canada, where the full retail cost is about the same as my Medicare co-pay. Since Congress will do nothing to control drug prices, I'd like to thank all you taxpayers who are paying for my drugs.
83
Sigh. Obamacare eliminated the donut hole, actually.
3
Let's say, for the sake of argument, that the list price for your expensive drug is $500/month and your drug plan has a 20% co-pay or $100/month and you can buy your drug in Canada for $120.
In reality, your drug plan gats a 60% rebate on the plan, so if you bought through the plan, you would still make a $100 copay and the drug plan would pay, net of rebates $100. Someone using the drug plan as designed, pays $1200 per year and the insurer pays $1200 per year. That means premiums are lower for all participants than they would be if the users of high cost drugs paid a 20% co-pay of actual price $200 or $40.
Kruger would have you believe that Americans are paying $500 while Canadians are paying $120. Reality is that Americans are paying $200 while Canadians are paying $120. Still a higher price, but providing sufficient revenue and profits for drug R & D to continue.
Obamacare was designed to increase the opacity of drug pricing to benefit the big medicine drug and insurance companies to have pools of excess funds to game onto their bottom line.
People like you have also figured out how to game the system for your personal benefit, and the taxpayer subsidy has to increase because of your gaming, increasing the premiums for others in your plan.
If the US did what Canada has done and set the controlled price at $120, your premiums would not decline, prices for non Medicare users of your drug would increase to maintain the profit of the drug and insurance companies.
1
Actually I believe that the ACA was slowly closing the donut hole (and indeed it will be fully eliminated eventually) but as of 2018 there is still a donut hole.
"We’re still the only major nation that lets the drug companies charge whatever they like."
That's a euphemism for blackmail. Simple, obvious, unmitigated blackmail.
"Want to keep your child alive? Pay us billions!"
I've heard the arguments about R&D; while not complete nonsense, they are grotesquely inadequate in the big picture. Consider the classic story of Martin Shkreli, Daraprim, Turing Pharmaceuticals and a price increase of 5,600 percent in a life saving drug. That had nothing to do with R&D and everything to do with, "Hey, we can charge a whole lot more, so let's do it! Sure, people will suffer - but we'll have more money!"
Two interesting observations:
1. Mr. Shkreli was not penalized in any way for ripping off sick people - he went to prison for ripping off rich people.
2. Daraprim continues to be sold at the price set by Turing Pharmaceuticals.
Our entire "health care" system is a scam. It's not "health care," it's "I can get rich off your suffering!"
4
You know, life now is so crazy and unjust that I have to be humorous in disbelief and point out an irony about big Pharma; when the occasional crook holds up a drug store to steal cash or drugs, every darn cop in the area descends on the scene to solve the crime and the TV vans show up to make money off the drug store's plight while the owner calmly combs his hair, then appears before the camera to plead for help in finding the robber. But you know, the drug companies rip off everyone all the time and everyone in law enforcement and this government yawns in cynicism enabling the thefts.
3
The same goes for banks and other businesses.
Once again Paul Krugman is spot on. Trump’s campaign bluster is just that - bluster . Trump and his cabinet officials are behaving as if they are lobbyists for Big Pharma. The likely outcome will be to make Pharma’s monopoly great (again ) at the expense of consumers.
1
Big Pharma's main argument against allowing Medicare to negotiate drug prices will stifle innovation. This is garbage.
A pharmacist once told me that the federal government--i.e., the taxpayers--fund over half of all pharmaceutical research in the US. But the pharmaceutical companies whom the taxpayers paid to perform the research then get the patents under the Bayh-Dole Act. Socialism, anyone?
This forces the American taxpayer pays twice for the resulting drugs. First, we pay for the R&D costs. Then we pay a second time when we pay a monopoly price for those drugs.
Thus, allowing Medicare to negotiate drug prices for drugs whose R&D costs were paid for by the America taxpayer cannot discourage pharmaceutical R&D. It would merely allow the American taxpayer to recapture the socialist subsidy we have already gifted to Big Pharm. The American taxpayer, not Big Pharma, should reap the benefits of taxpayer-funded socialism.
1
Americans should be able to buy a drug at the lowest price that drug is sold to any other country.
1
Basically, we're the kid paying $50 for an ice cream cone so that the ice cream guy an sell all the other kids cones for $1.00.
Art of the Deal indeed!
2
Most mind-boggling to me is how many poor misguided Americans still think Trump ever has their interests in mind
4
Basically, big Pharma is stealing from older Americans. Clearly there is no shame and no justice.
1
Big Pharma with the help of their paid flunkies in Congress has created a system that is completely opaque. This allows them to set prices as they wish with no brakes on their plundering, heartless greed. They claim that R and D is the main reason for high prices, but the details are hidden and fuzzy.
Perhaps expensive advertising, the bane of TV watchers every where is much of our drug money goes. Then there is the slight of hand that bills drugs as new, but are merely knock off from older drugs. And then there is the profits of share holders who demand that companies only watch their bottom line and care nothing for the struggles of people needing to pay for vital drugs. And beyond this are the payoffs to doctors and Congress people who tout useless drugs and overlook the practices of price gouging companies.
These are all factors that government needs to address in our search for lower drug prices. But we need first of all an open accounting of where our money goes as it filters through our corrupt system. The suffering people who rely on vital drugs, but can not afford them deserve better than a system that only exploits there need.
1
Canada, Australia, France, UK - just look at provision of affordable drugs and health care in these countries and ask why you have been conned so comprehensively and for so long. You will then have your solution.
1
It'd be nice if Republican voters bashed these corporate "weflare" queens, instead of the poor. The GOP know-nothing party is really built on the know-nothing base.
3
Might somebody point out to Trump that it is drug advertising that keeps all those MSM network TV news shows going?
People should look at Chris Collins in NY's 27 District for another bought and paid for lobbyist ...this one still in office !!!
Get rid of Collins and make a step for a less corrupt government when it comes to healthcare.
What we should do is force pharmaceutical companies to sell their products in the US for the same price they sell in other developed countries.
It would force an equalization of prices, lower in the US and an increase abroad.
Pharmaceutical companies would still be free to set their own prices.
We could even develop a tiered system, allowing for lower prices in less developed nations that can't afford the prices that the developed (G7) can. .
Less regulation, no need for trade deals. If you sell it in England or Germany for X then you got to sell it here for X too.
I believe this is the simplest way to level the field.
2
I worked in several pharmaceutical companies. Their research monies were not spent on drug research as much as they were on market research. Market research includes selecting a catchy name for the new drug, having focus groups to figure out how to sell it to the public, what sort of packaging is attractive. And then they take out their ads and almost all of them feature healthy looking people instead of the ill people who are the ones needing the medication. Some of these drugs have serious side effects which are stated as quickly as possible in order for patients to overlook them.
The idea here is not our health and well being. It's lining the drug companies pockets with money so that they can pay their CEOs outsized salaries, research "new" formulations to prolong their patents, and hire lawyers to protect themselves if anyone is foolish enough to sue them. To put the cherry on the sundae, pharmaceutical companies have caused many of the problems they accuse patients of causing: drug resistance to antibiotics, opioid addiction, noncompliance because patients can't afford the medication, and our demanding medication we don't need.
It's too bad our elected officials don't display the same courage to our wealth care industry in limiting them that they display towards working Americans in making it easier for us to forgo needed medical care because it costs too much. Then again, when it comes to campaign donations working Americans always lose.
5
Is it true that the Veterans Administration can (and does) bargain with Big Pharma over drug prices? If so, is it effective in any important way?
1
The direct advertising of drugs to the public on TV is not helpful ; has no purpose except to try to sell pharmaceuticals ; and is not done in other countries. The all too familiar line of "ask your doctor for..." is rather disgusting. It should be outlawed.
3
The bottom line has and always been about ungodly profit with Big Pharma. Hence the line; There is money in treatment but not in cures. One's wellbeing and actually getting healthier is no where on the balance sheet of these drug companies. For all those folks wo voted for Trump your bill to pay for your life saving drugs will increase and will not go down even it will bankrupt you and your insurer. I don't call that winning.
1
Paul, do some research on the tremendous ecological and aesthetic value of wetlands and then stop using the phrase "drain the swamp". Why not say "Pump out the sewage tank" instead? Sewage tanks need to be pumped out. Swamps should be left alone.
1
The problem is in the unholy alliance of GOP lawmakers and president with Big Pharma. Bush Jr. started it by letting a Big Pharma executive write the law forbidding price negotiation. Where is our capitalistic system based on free market competition, if you forbid competition? When I traveled abroad I bought for full price same drug which I got here via my insurance. However, the full price abroad was lower that my copay here! Best, this drug is manufactured in a factory in Sweden just like the one I get here. The swamp gets deeper each time GOP gets power. Remember November 2018!
1
If the drug companies sell their products in other countries where the prices have been negotiated downward, what is so hard about it in America? It's quite simple, really.
The drug companies, like so many other industries in America, have access to members of Congress that no other groups can match. Historically, America's corporations frequently have sent select executives to the halls of Congress where they work on the inside as congressional "staffers" and "aides" to industry-friendly members of the House and Senate. Not only does this cut the cost of lobbying, their operatives get paychecks from the American taxpayers whose dilusional thinking convinces them that their representatives are actually working for The People.
This is the infamous "revolving door" of industry shills rotating in and out of government.
As for the higher prices of drugs in America, let's take the Medicare vs. the VA as an example. Though the VA successully negotiated for lower drug prices for our veterans (a truly noble effort), it was former Louisiana congressman, Billy Tauzin, who killed a similar bill for Medicare. Apparently, Tauzin and his cohorts in Congress (all Republicans, in case this was not already obvious) felt that America's seniors were just too flush with cash to deserve any consideration for lower drug prices.
Immediately after Tauzin carried buckets of water for Big Pharma, he "retired" and took the $1M job to be the CEO of Big Pharma's lobbying group, PhRMA. 'Nuff said.
3
"Bear in mind that the way the drug business works can’t and doesn’t bear any resemblance to the Econ 101, supply-and-demand stories beloved by free-market enthusiasts..." misses a larger point ... many drugs (and a lot of medical care in general) are not, really, optional. You can decide to wait til next year to buy a TV when the price comes down or for a swoopier smartphone. If you're having a stroke, shopping around for a better price for TPA is not an option.
2
The bottom line is that American exceptionalism has prevailed again: We’re still the only major nation that lets the drug companies charge whatever they like."
Why is America also the only major nation that lets its Politicians be bought , bribed and corrupted by drug companies (and just about every other special interest, lobby and industry there is) so they can charge whatever they like?
And no one should call such things (and there are so many of them) as "American Exceptionalism"...that's just a term invented to misquote or deflect things that are nothing more than a combination of Excuses, Illegalities, Morally Repugnant Behaviour and Weak Justification for what are mostly and clearly WRONG.
It is clearly long past the time on so many issues afflicting America, rather than continue applying false labels by way as a reason or excuse to continue doing nothing about these issues and letting them continue...but to do what should , must and so very clearly needs to be done...to Right these Wrongs.
It's that simple and not as complicated as so many say it is and so many agree it must be so no real attempts are ever made to right these wrongs, so nothing changes.
The column is mostly spot on, but (and this is no excuse for Trump's fake populism)--the innovation is very real when it comes to developing radically new treatments for life-threatening and debilitating illness. A real proposal (not this one) should address soaring costs for all manner of drugs, including many that have long existed, and others that make only trivial changes, while preserving cutting edge innovation that in many real cases is a matter of life or death.
Walking is man's best medicine was averred by Hippocrates 2500 years ago and pretty much ignored ever since. But if that truth does sink in it will be interesting to see if the price of running shoes soars like a miracle drug.
Just where does all that innovation actually originate? I&D equals marketing.
Voters have been propagandized to believe that taxes and big govt are bad for our Freedoms, so they vote for those who cut taxes and weaken regulations on corporations.
Then the tax burden is effectively transferred to average citizens, while funds for the public good are cut, while the rich and corporations pay the lowest rates in generations. This leaves them more profit to share with the politicians we elect. Then we taxpayers are forced to subsidize the profits of insurance and drug companies, while govt does not protect us from exploitation.
Our power is removed and in a real twist, this is identified with 'democracy'.
We are plagued with constant drug commercials on the media, while European TV viewers aren’t ---they are banned there. They think medicine is supposed to be between doctor & patient, not marketed like any consumer product. Their drug makers don't have huge marketing budgets adding to drug prices.
Pharma ad spending on US TV has soared, as our election spending by mega donors has also.
Per W. Post---- AMA urges ban on TV drug ads, since marketing costs fuel escalating drug prices.
Dozens of EU nations accept basic govt regulation of insurance & drug costs. We need NYT columnists to compare and contrast European drug costs to consumers and also profits of their drug makers in regulated countries, with those in the US. See what works, what doesn't. Put it in the op ed page, and cable tv news.
1
Between drug mfgs and the drug buyers is a long list of moochers, just playing musical chairs, negotiating a bigger piece of the pie for themselves. Will it ever change. So my solution is for the feds to indirectly help Mr. Buyer with a tax advantage since the Feds are not responsible or smart enough to protect its citizens from Pharma. You see, Trump lowered taxes for Pharma, which drove profits up, which really means he allowed an increase in revenue without raising drug prices. So, why not help Mr. Buyer by allowing a tax credit of 25% on drug purchases. If the GOP doesn't care about fiscal responsibility why allow Pharma to pay less taxes, but not Mr. Buyer of drugs. And by the way, Mr. Buyer buys drugs to stay alive, Pharma mfgs drugs to make more money.
2
Sputter with anger as much as you want to but the fact remains that Trump is enjoying rising support by Republican Party voters, who think he is doing an increasingly fine job.
That level of support explains why his so-called drug reform plan was nothing but a marketing ploy designed with one eye focused on the mid-term elections and the other on the 2020 Presidential elections.
And you thought it was about Trump helping all Americans cope with obscene and rising drug prices? Seriously?
1
Obama waded into the big pharma swamp, too, so they would throw their might behind ACA, and as a reward, Obama abandoned his force-them-to-negotiate campaign promise, and then he packed his TPP full of patent extensions for big pharma.
1
Congress needs to handle Big Pharma like they did Big Tobacco https://www.huffingtonpost.com/entry/bernie-sanders-big-pharma-opioids_u...
Do you remember how reluctant people were to tackle big tobacco but when they finally did, millions of lives were saved.
Big Pharma is symbolic of epic greed and Americans are complicit. https://www.usnews.com/opinion/articles/2017-08-30/bernie-sanders-take-o...
Big Pharma has made our country SICK.
"Since 1998, the pharmaceutical industry has spent more than $3 billion on lobbying, and they have spent hundreds of millions of dollars on campaign contributions to buy politicians. In 2016, they hired 1,380 lobbyists – nearly 14 for each member of the Senate – to get Congress to do their bidding."
Turn on the TV, all prime time ad is a drug company promoting drugs. If you follow the money you will find American physicians, insurance companies and Big Pharma, are all complicit in keeping drug prices ridiculously high, unaffordable and unreasonable.
3
In the last thirty years, we have become so used to corruption in Congress – sometimes made worse by the White House, occasionally fought without much success by the sitting president – that we tend to feel resigned and helpless.
During those three decades, the Senate and the House either have been controlled by Republicans or there were enough Republicans to block any meaningful reform.
During those three decades, there either was a Republican president eager to make being corrupt easier for Congress or a Democrat hamstrung by a Congress determined to make him a one-term president for being an African-American with the audacity to challenge the Capitol Hill good-old-boy, pay-for-play system.
Americans care (and worry) deeply about their healthcare costs, and Obamacare provided one brief, shining moment. But, Obamacare was not designed to address exorbitant prescription drug costs directly.
We hoped that would come from Barack Obama’s successor, since she knew healthcare delivery financing backward and forward.
Instead, we got a huckster with false promises to get rid of the Bush-era prohibition against government negotiating with Big Pharma over price.
Americans will continue to subsidize the world’s lower pharmaceutical costs until we change the party controlling Congress and the people in the seats.
1
Great reporting on Republican Tauzin et al. Do you realize that our, um, their government, is now entirely a Republican Monopoly? With the crooks in power, the crooks are emboldened, and in the case of big Pharma, given free reign to price gouge with all the artistic oratory justifications inherent in the Republican Television show in Congress.
Medicare For ALL -2020. It's the only real solution.
PERIOD.
3
Lost in translation is the additional research funded by the U.S. taxpayers (government) to pharma industry giants to generate patents. Big Pharma uses those patents to make drugs that are sold to U.S. residents at exorbitant prices. https://www.ted.com/talks/mariana_mazzucato_government_investor_risk_tak...
Crazy health care world we live in in this country. I just learned yesterday that a certain procedure for finding and diagnosing prostate cancer is covered if all you have is Medicare A and B but if you add supplemental coverage the Insurance company denies coverage and Medicaid wont pick it up. Where do they dream theses things up??
In this piece Paul has got to the point: venality. Government bought and paid for. And not by just anybody, but a grasping short-sighted self-centered few among America’s billionaires who have completely outFoxed the saner billionaires and the public in general.
2
Paul Krugman says we are suckers because we are the only country in the world that doesn't have price controls. Then, in a complete non sequitur, he says that, if they can do it, so can we.
That is wrong. The only reason that other rich countries can control prices, and still have access to new drugs, is BECAUSE the US doesn't have price controls. In plain English, they are parasites.
The reason other rich countries can afford lower drug prices than the US is no secret. They don’t pay the economic price for the drugs they use. They free ride. The same policies that explain why, say, Europeans pay less for drugs than Americans, also explain why Europe has been replaced by the US as the pharmacy of the world.
What would happen to drug development if the US adopted EU-type price regulation? Estimates vary, but they all agree that there would be a reduction in new medicines. Put another way, today's high drug prices are tomorrow's new drugs. Cut one and you cut the other. EU-style price controls would basically trade off the health of future generations for cost savings for current pharmaceutical consumers.” (Golec & Vernon, 2006).
Krugman should try explaining that to his grandkids.
3
I was a democratic State Senator who was in the 1980 congressional race in which Billy Tauzin became the eventual winner. Had I won, this injustice would never have happened.
Elections matter!
1
The stab at "American Exceptionalism" was great. Americans are consistently exceptional at one thing, letting big money take advantage of the citizenry and harping about how great it is.
2
The only reason our government does not negotiate the Medicare prices of prescription drugs and a host of medical devices (hearing aids, eyeglasses) is because Pharma/Medical Device is the largest lobbying group (and campaign contributors) in the country.
Add up the next several lobbies including defense contractors, AARP and the NRA, and you don't get close to what Pharma spends to bribe our politicians.
It is a travesty that forces Medicare patients to needlessly suffer and die. The elderly woman on a fixed income shouldn't have to choose between her heart medicine and paying her electric bill.
Our politicians are bought and paid for by Big Pharma, and pathetically there is no solution in sight.
1
No mention of Obama's huge concession to Pharma in the initial stages of building the Affordable Care bill. The first thing Obama did was announce that there would be no single payor, and the second thing Obama did was announce that there would be no negotiation on drug prices. Meaning, one of Obama's first actions as President in early 2009 was to cut a deal with the insurance and drug companies...no since payor and no drug pricing control period. Blame Trump all you want, but this in no way started with Trump.
Why are Americans so scared of so-called "socialist" medicine? It's not a perfect solution but it works rather well in other industrialized countries. It offers healthcare and prescription drugs at manageable costs to patients. Shouldn't that be the bottom line?
1
Pure ignorance, it has to be...
It is always about the money. Name any problem and look for the money. Drugs: huge profits and payoffs to politicians. Jerusalem embassy: massive donations from Sheldon Adelson. Bad water in Flint, MI: no spending for black people. Puerto Rico: no relief for brown people who don't vote and can't make donations.
The most important function of government is trying to level the playing field. It is a never ending battle.
1
Dear Paul,
Mick Mulvaney hit the nail on the head when it came to the flap over $600 EpiPens:
https://www.youtube.com/watch?v=7vyz2LnJVCM
Suffice it to say his arguments are different from yours.
It doesn’t matter that Trump’s prescription drug plan is all nonsense. It only has to hang around—and NOT be conspicuously disproven—or exposed as basically fraudulent--until the midterm elections. After that, the plan gets quietly lost in the shuffle, and the drug companies will go their merry way without interference from the Trump administration or anyone else. Red state voters probably won’t notice that they’ve been had; they don’t seem to notice very much these days, lost in their vision of a return to Calvin Coolidge’s America.
And after the midterms, I’ll bet we won’t hear anything more about reducing the price of prescription drugs until a few months before the 2020 election. Here’s a wild guess: the red state voters will believe Trump then, too.
1
Republicans preach unregulated markets, greed is good, and there is no common good. Moderation and fairness are never mentioned. So in a world defined and ruled by Republicans, access to medications is determined by your financial means. Republicans accuse the 90% of taking money from the 10%, and then Republicans proudly support policies which could take your life if you are unable to afford life saving drugs. For Republicans, "my money" trumps "your life".
1
This is another example of government as a wealth transfer machine. Government policies are enriching Big Pharma at the Public's expense.
When conservatives loudly condemn the idea of economic redistribution in any form, it's a sham. They're just fine with anything that redistributes money upwards.
1
Both parties are owned by Big Pharma.
First and foremost, we must recognize that the market for drugs is not a competitive(free) market. It is market where the manufacturer has a temporary monopoly based on current patent laws.
Assuming that it is good policy to keep patent laws in place to promote innovation in the pharmaceutical industry, it seems that to control prices for the consumer you have two basic choices to offset the temporary monopoly power given pharmaceutical companies by the patent system.
1. Use monopsony power on the part of buyers to offset the monopoly power of the firms to lower prices. Given the number and types of different payers on the demand side, this would be difficult to implement effectively. This would really require the insurance companies and federal government as third party payers to collectively bargain on the part of the consumer.
2. Use the natural monopoly framework, like that of the electric utility industry, where a government entity is able to regulate the price of the product without stifling innovation.
Living in England, there are things I miss about America but not that diabolical healthcare system.
You want to bring drug prices down? You want to eliminate gouging the consumer? You want to eliminate the byzantine bureaucratic nonsense of insurance companies?
Then you want universal healthcare for all where the government bargains with the pharmacies and hospitals as to what they charge.
189
I spent most of my life in England and so am familiar with the NHS. I have now lived in the US for several years and am in a position to compare my personal experiences.
The NHS has its problems but unless you are seriously wealthy the US system has enormous shortcomings - not generally in medical care but in the cost to the patient.
25
The United Kingdom does not bargain with drug companies. They have a bureaucrat assign a "fair" price and the drug company either takes it or leaves it, which means that some high cost drugs, notably chemotherapy drugs, are not available, which is a factor in the lower survival rates of cancer in England relative to America. [The other reason for lower survival rates is the six month delay in treatment that is the result of rationing by delay.]
In all probability, you either have not detected the defects in the English system because you are healthy or because you have a supplemental private insurance plan with low premiums. With the bulk of your expensive costs covered by the "universal" plan, you pay for private coverage so that you can jump the line if the need arises.
As in most socialist schemes, all animals are equal, but some animals are more equal than others.
I've noticed that all of the "socialist" health care models are throwing in the towel and converting to the chaotic, expensive, medical bankruptcy common system that the US has.
Right? There's all the argument necessary.
As I understand, the drug companies negotiate discounts that allow them access to the formularies of health insurers. They generally refuse to grant discounts, however, on true monopoly drugs which, as a general matter, the insurers must place on their formularies or deprive their insureds of possibly life saving care. Professor Krugman suggests that the government could obtain discounts for the monopoly drugs that are currently not offered to insurers by refusing Medicare patients access to those drugs. Perhaps that would work but it seems like a significant risk that should require a rigorous analysis before it accepted as part of a cure. What, for example, has happened to the prices and access re true monopoly drugs in countries where the governments negotiate drug prices?
I knew there was something terribly wrong with the drug industry way back when medicine was introduced as a treatment for "Restless Leg Syndrome". Think about that a while.
Q. How much of the social value of HIV/AIDS drugs went to pharma companies?
A. The social value of an innovation is comprised of the value to consumers and the value to innovators. We estimate that for the HIV/AIDS therapies that entered the market from the late 1980’s onwards, innovators appropriated only 5% of the social surplus arising from these new technologies. Despite the high annual costs of these drugs to patients, the low share of social surplus going to innovators raises concerns about advocating cost-effectiveness criteria that would further reduce this share, and hence further reduce incentives for innovation.
Tomas J. Philipson and Anupam B. Jena (2006) "Who Benefits from New Medical Technologies? Estimates of Consumer and Producer Surpluses for HIV/AIDS Drugs," Forum for Health Economics & Policy: Vol. 9: Iss. 2 (Biomedical Research and the Economy), Article 3.
http://www.bepress.com/fhep/biomedical_research/3
If big pharma got only 5% of the benefit from basically ending the scourge of HIV/AIDS, then doesn't that suggest that we are UNDERpaying drug companies for the miracle drugs they develop?
Imagine how much bigger the social surplus would be if we allowed drug companies just a slightly bigger share of it.
Let's take off our green eyeshades and start imagining the better world that is within our reach.
There is no justification for the price of drugs. This is drug companies living off the fat of the American people. People should get there drugs from Canada and forget about changing the head set here in America. GOP did everything to destroy health care in this country, yes, they voted against anything that made sense. Laughed at Bernie Sanders, well being told you have cancer is not a laughing matter. We are a country that believes the lifestyles of corporate presidents are more important than regular people lives. Mrs. Trump had a procedure done yesterday how many American people can afford that type of expensive operation or five days in the hospital etc etc. or have a doctor who believes there ight be something wrong We should be outraged that American lives aren't worth anything.
Many of us in the pharma industry agree with you.
It's incorrect to assume that every on-patent drug can be sold at monopoly prices. The most lucrative markets (oncology, psychiatric, cardiology, and of course ED) have many different actives competing for the same indications.
1
Big pharma was probably told to go draft the legislation and hand it back to Congress. That's why stock prices are soaring. The only good news is there's slim chance any measure will pass the House before November. If Democrats get a victory, we're at least back to the negotiating table. I don't think this new abomination is going to squeak through unchallenged. Actually, presenting a bill before election is only going to hurt Republican chances more. Shining a light on any deal with Pharma is not going to look good.
As the saying goes, "follow the money".
The drug industry 'scam' has a long history. Many years ago they argued that they needed high profit margins to fund expensive and risky research. Back then, during a visit to one of the largest pharmas, I asked the company's representative how the industry maintained such consistently high profits if it's business was indeed 'risky'. I never got a substantive answer.
A 2017 GAO study of the industry found:
"We looked into changes in the drug industry and found that pharmaceutical and biotechnology sales revenue increased from $534 billion to $775 billion between 2006 and 2015. Additionally, 67% of drug companies increased their annual profit margins during the same period—with margins up to 20 percent for some companies in certain years. Drug industry spending for research and development increased from $82 billion in 2008 to $89 billion in 2014."
Stare hard at those numbers. Revenue up $241 billion, R&D flat. The money that could have gone to R&D went to TV ads to convince people they have novel diseases with 'cute' acronyms or their life would be enhanced by taking an wildly expensive new drug (which, BTW, might kill you but the TV 'patients' are all smiles.)
We're being scammed and our political system has been bought by the industry. Yet another 'benefit' of Citizens United".
1
Too many issues to make a big dent, but that doesn't mean we shouldn't start. Media advertising for prescription medication should be treated just the same as tobacco. We have become addicted to prescription drugs and addicted to medical services that work as placebos. Big pharma does its best to increase demand and use monopoly power as a tool for extortion. I wish for a president more like Teddy Roosevelt.
Much of the 'innovation" in the pharmaceutical industry occurs in the me-too drugs, where the improvements are slight to non-existent. This should not be heavily rewarded.
Healthcare, including pharmaceuticals, does not work well as a free-market model, and should be treated as a utility instead. This calls for appropriate regulation with pharmaceutical companies making an appropriate profit (and since most of the innovations in medicine occur in academia anyway, the universities should share).
3
There's monopoly and there's monopoly. If a company monopolizes cell phone access or corners the market in oatmeal, that's bad. But a monopoly in life-saving drugs has a component of evil in it, when that monopoly is used to maximize profit and potentially deny some people the medication that would improve -- or save -- their lives.
4
I worked for a large pharma company. When the CEO was replaced, the new CEO was very honest that they raised prices in the US as a way of bettering their profits for Wall St. He called the process an addictive drug that they wanted to quit... but they kept doing it, I noticed.
1
What Trump is proposing "is at odds with what he said during the campaign". What a surprise. Also at odds, is what his supporters say, "He's doing what he said he was going to do", and reality. Another surprise.
3
A couple of thoughts on negotiation of drug prices. While you state that giving Medicare the right to negotiate drug prices might not significantly bring down those prices, I'd be interested in what Kaiser Permanente does. Kaiser runs its own pharmacies, with specialists who identify less expensive generic versions of drugs and review drugs to eliminate those that may have problems posing an unacceptable risk of harm. I'm sure they also use their size to leverage better prices. This would seem to be a reasonable model for Medicare. And since other countries provide the same drugs as sold in the US, why should Medicare or people in general be prohibited from buying those drugs? Seems like a reasonable way to foster some competition for pharmaceuticals. Our government should be protecting us, not the pharmaceutical industry.
4
My wife, a retired pharmacist, noticed that as soon as drug advertisements became legal she started to see steep increases in drug prices. Surely not a coincidence!
It has been reported that drug companies spend 3 times as much on ads as they do research and development, and that simply making drug ads illegal (as was the case pre-1983) could save $100 Billion annually! That would be a good start at controlling drug costs..... with the side benefit of eliminating all the nauseating drug ads we are continually exposed to.
4
In addition to being a monopoly, let's not forget another market failure, the inelastic demand for many drugs. It is the textbook example used in economics courses. For many, taking a drug keeps the patient alive, so they have no choice but to pay whatever price they must. Still a third failure has to do with information, a requirement for an efficient market. Many patients don't know if other drugs or treatments are available. If any market needs regulation, this is it.
2
"we haven’t even gotten to the point of letting Medicare try to bring prices down"
Last night on PBS Azar claimed that the law fully empowers Medicare to do so. Who is right?
Direct negotiation sounds attractive until you start thinking about how it actually would work. If Medicare has the power to exclude certain drugs as too expensive, that means there will be a formulary of approved drugs, and a committee that decides what is on that list. These will be difficult decisions, often involving value judgments based on incomplete or contradictory clinical data, and they will be momentous decisions, determining whether a company earns tens of billions on a drug or not. I just don't see how you keep that process from being politicized. Yes, other countries do it, but none of them have anything like the potential impact of Medicare to make or break a company, even a large pharmaceutical corporation.
Fact is: Negotiation works in all the other developed countries. Countries that ALL have better a health outcome for their population than the US.
2
Last night on the PBS News Hour, Judy Woodruff interviewed Alex Azar (HHS Director). He said that their plan to reduce drug prices is actually much better than what Trump had promised. According to Mr. Azar, authorizing health insurance companies to negotiate prices with pharmaceutical companies on behalf of Medicare is more effective than having Medicare officials negotiate directly. He used the example of the military buying $400 toilet seats to show that the government isn't very good at negotiating prices. I can understand why it makes sense for insurance companies to negotiate prices on claims that they will have to pay, but on Medicare claims, the government (taxpayers) pays. He's a very good speaker and almost had me convinced that their plan was being misinterpreted by political opponents and the media. I can see how he was a very effective drug company CEO. Now, I'm wondering why, if the Trump/Azar plan will be so much better at lowering drug prices, then why did drug companies lobby for it and why have their stocks risen? Are we being scammed or what?
5
I saw the same interview last night, and all I could think of when Azar was talking were his connections to big pharma. And he'll be back in big pharma after his time in the Trump Administration.
My husband and I looked at each other and said, "And Pharma stock prices are on the rise! Why is that??"
Sadly, that question wasn't asked in the interview.
1
Posting this again since Krugman continues to ignore the elephant in the room--marketing costs. Alan Sager of BU has found that the marketing costs of Big Pharma eat up about a third of their budget and are about 3 times what they spend on R &D.
So what are these costs? Well, first of all, there are the irritating ads that saturate the air waves and the print media. The first one was on May 19, 1983. The only other country that allows prescription drug ads is New Zealand. A simple act of Congress or a regulation by the FDA could eliminate them.
Then there are the pushers that infest doctors' offices. These are totally unqualified salesmen whose main purpose seems to be to get doctors to use drugs in unapproved procedures.
Finally, of course, there are the payments to physician, both under and over the table. These range from free lunches, to paid vacations at expensive resorts under the cover of a lecture or two so they can call it a conference, to huge contracts as consultants.
The purpose of the ads is to get us to ask for drugs our doctors do not think we need while the pushers and the payments are to get physicians to prescribe new expensive drugs even when older cheaper drugs do as well if not better.
It has been conservatively estimated that if this marketing is eliminated, it would lower the cost of health care by $100 Billion each and every year.
http://www.theatlantic.com/doc/200604/drug-reps.
http://www.nytimes.com/2007/11/25/magazine/25memoir-t.html
9
Many years ago, we saw in the news that numerous people were crossing the border into Canada to purchase pharmaceutical drugs made in the USA for a fraction of the prices paid in this country for the very same drugs. The reply was like flicking a light switch: instantly, a Congressional chorus ensued to "protect" US citizens from possibly bogus drugs in Canada--a totally nonexistent problem in that country at the time. Incredibly, a law was passed forbidding Americans from going to Canada to buy their drugs.
How is it done in Europe, Canada and elsewhere? Do they get different diseases than Americans? Are they using drugs that are ineffective? If not, why can't Medicare and independent pharmacies just purchase the same alternative drugs consumed by Canadians, and French, and British and other citizens? If that were possibly, you would see drug prices in this country come down as quickly as the enactment of those "don't buy in Canada laws."
1
Why is it not mentioned that most drugs are not developed by pharma companies but at US universities funded by NIH grant money? We not only pay top prices, but our tax money funds the expensive R&D that drug companies cite to justify exorbitant prices. Pfizer just raised the price of Ibrance (FDA approval 2015 to treat metastatic breast cancer) 13%. The 2017 price was $10,000 for 21 capsules (one month supply). The drug was not developed by Pfizer but purchased from UCLA researchers who worked on it for over a decade with plenty of grant money. They bore all the risk. The high cost of developing effective drugs reflects not only actual direct costs, but the cost of many failures that never make it to market. The pharma companies don’t step in until they are quite sure they are buying a proven winner. Nothing wrong with that, but the price they pay factors in a reliable market. At some point this process became disfunctional. Underfunding of university basic research led them to rely more heavily on industry for funding. That’s the process we should be reevaluating.
5
Someone mentioned that R&D should be run at Universities. As someone that did research on Medicinal Chemistry, I can tell you that a lot of screening work is already done by Universities and Research Institutions, at grate savings for Big Pharma.
What we really need is to provide protection for enough years so that they can make a profit on their investment. Lets say they spent $100 for R&D and clinical trials. How much would be the minimum profit we should would allow them to make on those costs, for something that can be considered a necessity and not a "want"? And they do know to a "t" how much they spent on that development (marketing is on their dollar, like for every other product!).
And what about failed drugs, you might argue? We can either give them a tax brake, that conservatives like so much. Or we can let them add the costs (properly documented) into one of those patented and commercialized drugs when the calculation of how much they can make in monopoly conditions is done.
Mr. Krugman,
First let me tell you that you are most respected here.
Okay, my concern is this whole "drain the swamp" imaging.
Swamps are vibrant thriving ecosystems. Draining them would cause considerable damage to all the vegetation and animals who thrive within.
And the stunning beauty would disappear.
Draining = destruction. Just what this person who is POTUS is doing to our great nation.
My wife needs medication that costs $600+ here and $285 in Canada. It's inconvenient to order from Canada but it is a significant savings.
3
A visit to any of these companies will leave you with the distinct impression of wealth and opulence. For example, my wife works as a researcher for a pharma company. The campus looks like a resort. They have a state of the art gym, a food court reminiscent of smorgasburg, and other amazing perks. Thousands of employees are given catered gourmet breakfasts and lunches daily far in excess of the necessary amount, so much so that she and others began taking food home for us to eat because it is often better than what we can cook (we are good cooks). The company hosts opulent parties for everyone multiple times per year, booking out an ENTIRE hotel. She and other employees get paid >3x the salary of what they could for similar work at universities and unbelievable benefits (great for us). According to her the budget given for R&D projects vastly exceeds what is necessary and she actually has to look for things to spend extra money on.
What does this company do you might ask? It sells a small number of highly expensive drugs for a handful of very rare diseases at exorbitant prices. It is the perfect example of how our skewed policy benefits these companies at the expense of society.
6
Until the issues and problems of dispensing and selling drugs, medications, pills or whatever word you choose to use is addressed, doctors that prescribe and all of us who demand them (drugs) for our real and/or imaginary problems, your are only applying a Band-Aid to the true problem of cost. Economics 101, supply and demand. We are a society of pill lovers. We use tobacco, alcohol, and eat unhealthy foods until we develop an ailment that requires a visit to the doctor. Then we may require or better yet we demand a pill. No personal responsibility for our own health issues, just give me a pill and I'll be on my way. Drug companies love us, they spend billions on advertising and we just keep coming back for more like hogs to the feed trough. All the cost reforms and laws to reduce the price of drugs may help somewhat, but the real problem is looking back at us in the mirror.
3
Early in my adult life I worked as a pharmaceutical company representative to support my wife and our daughter before heading off to graduate school and a career as a mental health researcher and advocate. One of our daughters, a multiple beauty contest winner, also pursued such a career and became a top drug rep in her first year as did my brother who stayed with it for his entire working life. We learned what the drug companies knew, access and loyalty could be bought through food for staff and perks for docs including academic appointments and careers. Misleading 'science' was for sale. Independent objective appraisal of relevance and efficacy cannot arise in such for profit environments. Medicine is an industry with all the attendant corruption, misinformation and failures in regulation. The question to be asked for us is what will create competent, evidence based medical interventions that serve the public interest? Krugman certainly understands that but does not say it. He should.
3
Apart from legislated prohibition of negotiation by Medicare, the history of "pricing failure "of meds are related to uninforced collusion by pharma to pay generic makers to not make generic alternatives, unbridled greed and neglect of responsibilities on the part of elected officials. Martin Skrelli was the bad boy example of greed gone amuk. But there are innumerable examples of absurd costs for dated or generic medications. There is medicine called colchicine, which has literally been used for centuries to treat gout. As a frequently prescribed generic drug with lots of competitors, it cost pennies for my patients during most of my career, but now costs 2-5 $ a pill rather than the 40 cents it costs in Canada. In 2007, the FDA mandated that drug manufacturers prove the value of “grandfathered” meds, which was not unreasonable. However, the FDA thereafter allowed not only the 3 year exclusive rights to the one manufacturer that demonstrated that colchicine was effective, but also allowed for an additional 7 year monopoly on that drug, since it was applied as an “Orphan” drug to treat another disorder. The cost of colchicine went from a dime per pill to 5$ each. There are now other generic products available in the US, but the cost – surprise!- has not come down.
We should be embarrassed as well as outraged.
2
You should add the cost of mergers and acquisitions to the equation to understand what is driving up costs. Pharma A buys Pharma B in a billion dollar merger. Pharma AB now has tons of debt costs that need to be covered. No problem, raise the price of the drugs that are protected by patents or now have no competitor in the market.
On top of this madness, the federal government subsidizes the acquisition by allowing Pharma AB to depreciate a billion dollars in goodwill providing a substantial tax shield.
This same is happening in the hospital business. Naked capitalism is having a field day that will someday come to a crashing end.
4
Here we go again. Over the last several years some form of this essay has been published hundreds of times either as opinion pieces or news about an individual's circumstances or an outlandish move by a Pharma company.
All that's needed to understand it is summarized in one sentence. "Politicians have been bought off by Big Pharma." All that's needed to fix it is some form of price control. And that will never happen.
4
The mystery is why do so many working class and middle class Americans vote for a party that facilitates this exploitation of a most basic need. We're back to Mencken. No one (including pharmaceutical corporations) ever went broke etc.
90
Agreed. But. Where is the political competition that strongly campaigns for a rational fair alternative and can be trusted to deliver on the promise when next they gain power?
11
This is exactly the question. When will they learn? Will they learn?
3
Obamacare increased the profits of big medicine while hospitals serving large proportions of the poor were closed because they lost the supplemental Medicaid payments that were compensating them for the fact that Medicare reimbursement rates do not generally cover the cost of care. [They didn't have anyone at the bargaining table when the goodies were being divvied up, so they became one of the "savings" that were going to materialize like magic.]
Americans pay more for care because big medicine charges more. Obamacare reduced the availability of care and yet increased costs. Universal insurance coverage guarantees that big medicine will get paid for high cost care, even if the consumers aren't covering their deductibles and copays.
The majority of voters with a college degree saw through the sham of Democrat rhetoric and voted for Trump.
The 1% vote overwhelmingly for Democrats to preserve their crony benefits, as do the PhDs, who are famous for knowing a great deal about a tiny field of knowledge and not famous for common sense or for seeing the big picture.
If you segregate the 1% and the PhDs from the voting population, the more educated and higher the income level and the smarter voters are, the more likely they are to vote Republican and in fact voted for Trump.
The 1%, the PhDs and those who lack a high school diploma voted for Hillary. There is no mystery why they vote Democrat. Gruber explained it well, to the laughter of the elitists.
As a patient I have long benefited greatly from expensive biologic drugs to treat my arthritis. In 2010, as a consultant to major employer benefit plans, I analyzed the implications to insurance pools and employer affordability. I concluded Canadian insurer pools were too small to withstand the costs that were coming and recommended integrating public and private drug plans in Canada. Ongoing analysis has proven my cost projections correct. This despite a more generous private insurance industry in Canada than the US. Here, the insurers have continued to pool high cost claims indefinitely, unlike the US where high cost claims are charged back to the employer after a period of time. A small employer cannot afford to pick up a $100,000 or $1,000,000 annual claim.
I look in horror at the amounts the US allow brand drug industry to charge. If a brand drug company prices in their R&D charges, then why not cap that as the price, after negotiations, and allow only consumer price (CPI) changes during the life of the patent. If, beyond the patent period, R&D charges should be removed from the price, but still limited to CPI. It would eliminate $40 drugs from becoming $40,000 drugs.
The hidden nature of drug pricing via non-disclosure agreements should be prohibited and there should be one price, no matter the payer. As an increasingly important component of healthcare, drugs should not be subject to unfettered prices, by a profit maximizing industry. Regulations are needed.
8
Why not establish a reasonable price for a drug and allow the developer of that drug to maintain the monopoly until the developer realizes a profit marging of a fixed percentage of the costs it has incurred: for development, manufacturing, sales, and overhead.
It's really not that difficult an accounting problem.
3
Unless they do what the movie "accountants" do when
they are calculating "profit". It is amazing how a loss can be generated
It’s easy to debate details and forget that our country is drifting toward a single payer system. The federal government already supports health insurance for half of the US population –and growing. Low wage earners and the poor require a government subsidy such as Medicaid. The elderly and the disabled are covered by Medicare; and the military, by the VA system. The rest of us have private insurance – mostly through our employer. However, many employers are looking for ways to limit health insurance benefits because it is their most unpredictable personnel expense.
So does anyone think things will get better? Don't count on it. I can’t imagine cost cuts coming from for-profit health care companies, especially when they have cozy relationships with Congress. Most likely, the status quo will prevail, and health costs will continue to rise -- until the system fails. In that scenario, millions more Americans will become uninsured, flooding hospitals and bankrupting the health care delivery system. That will precipitate a crisis, America’s favorite instrument of change. Then, the single payer will get the serious attention it deserves.
3
Big Pharma, as every other American Company spends pathetically little on R and D. To allow this to be used year after year as an excuse for high prices is obscene. The windfalls of tax free reapropriation totalling trillions and tax cuts enjoyed by big business from Apple to a Pfizer have resulted in windfalls for executives and shareholders as their options and shares have soared, not so much for R and D. Eliminating lobbying and eliminating private insurance companies are the only way to single payer, given the complete control the lobbyists exert over our bought and paid for elected official and the millions of people employed in insurance it will never happen, they have better lobbyists than the millions of formerly employed factory workers.
4
THE NOTION That lower drug prices would stifle innovation is an out and out PACK OF LIES! The fact is that the monetization of drug research, begun during the era of Ronnie Ray Gun, has brought things to the point where they deprive people of medications rather than supporting their development. The con job of the "free market" being better for the consumers of prescription medication than the more traditional adequate funding for basic Research and Development by the National Institutes of Health, has come to fruition, with more emphasis placed on lining the pockets of those who own stock in Big Pharma, rather than in using discoveries funded by taxpayers to advance the capability of Big Pharma to make a reasonable profit off of taxpayer funded R & D. A return to that model is long overdue. But I'm not holding my breath for the R & D model to return. We're stuck in a flood up economic paradigm, where the wealth of the 99% floods up to line the pockets of the top 1% of the US who own 40% of the worth of the nation.
4
The medical - industrial complex is the enemy and Trump sides with them. Helping the ill of the working class is not on their minds.
Better healthcare for all only will only come from the dismantling of the medical-industrial complex and its replacement by efficient, universal systems like Medicare and Medicaid. Taking advertising out of healthcare might help also.
It is all gonna get very very bad, very soon, with the repeal of Clean Air and Clean Water Acts colliding with an ever expanding and more expensive profit-driven 'healthcare' system.
2
Physicians, insurance companies, bio tech, are all complicit. Keeping drug prices high they roll in wealth and keep our Congress a share of their gains by funding and financing their elections.
1
Drug companies, like those in other industries, exist to make money and provide a return on investment to their shareholders. Unfortunately, expecting those objectives to peacefully coexist with a broader commitment to social welfare isn't realistic, or it would be the norm. That does not mean that the federal government should take a laissez-faire stance toward the rapacious greed and outsized profits of the pharmaceutical industry, but to expect it to do otherwise is unrealistic if desirable.
Washington has long provided subsidies of one form or another to myriad and diverse industries ranging from tobacco farming to oil and gas, under the guise of supporting private enterprise. Social benefit to the masses has not always been the determinant of such largesse. The economic well-being that our elected officials support even more than the general public's is their own. Being bought and paid for by such industries has long prevented their doing the right thing.
Public support of private industry has its place, but not when it sacrifices the well-being of America's health and welfare. Pseudo-populists like Donald Trump may talk a good game in order to get elected, but when it comes down to nut-cutting time, it's not the little guy who counts. It's the big dollars that politicians stand to reap by aligning with private interests that matter, not the public's well-being.
Gosh. It's enough to drive us to drugs.
6
There is so much more to this story. The one US government agency that very successfully bargains down pharmaceutical prices is... the Veteran's Administration. They are a single payer that negotiates prices and are willing to walk away from over-priced drugs. An FDA sanctioned study over ten years ago showed that on average the VA pays far less for drugs than any other large American purchaser.
One reason the Koch Brothers fund Concerned Veterans for America is to get rid of this successful single payer example of negotiating prices. If the VA's success were more widely known, Americans might demand Medicare and other government programs take the same approach.
72
I love the way Americans talk around and around and around in circles about their health care issues. Face it, the health care industry is an uber-profit-making scam that the "consumers" (let's not call ourselves patients) have no control over. After having lived in Europe for a number of years, I have witnessed a number of health care models that are far more efficient in terms of cost and outcomes than the present system in the U.S. Sure, you have to wait for some procedures longer, but Europeans are happy with their systems.
I can't wait to move back to Italy: a country fraught with many problems, but when people need to see a doctor or get medication, they don't risk going bankrupt because of medical bills. Here in the states, not only are the hospitals, doctors and big pharma a bunch of vultures, but god forbid you can't pay because there's a whole group of other mega-vultures waiting to pick you clean (the insurance companies, the collection agencies, etc.). WOW, America truly is "exceptional."
24
I recently stayed over night in a Hospital for dehydration. I am on Medicare and have supplemental insurance. A month later I got a bill showing the "services" I received. One item caught my attention. It was a charge of $1,154.00 for an inhaler that I get from my pharmacy for about $30.00. When I questioned the charge I was told it was "customary" I refused to pay it as I never needed it . They knew from previous visits that I was asthmatic but at the time it was under control. Ultimately I was sent a revised bill showing the charge had been removed.
2
It is insulting to compare the corruption in Washington, which has only gotten worse with this administration and the Republicans in control, to a swamp. Swamps are wonderfully rich ecosystems with diverse and often unique plants and animals. Like marshes, they also hold water in the ground and prevent erosion.
15
There is no justification for the price of medication paid for prescription medication in the US. This includes newly developed as well as generics. Completion should be a drive down the cost of medication once it becomes available as a generic but recent trends have shown that even a number of generic drugs have seen large price increases.
https://www.marketwatch.com/story/on-the-very-day-of-a-senate-hearing-on...
We have learned from previous promises made by Trump that he is not to be relied on to follow through and this would be another example. Drug companies too appear to feel they will not be harmed by his latest plans as their stock prices rose again after his announcement. It's time to serve the American people and not big business/special interest. If this trend continues the cost of medical care will rise well above 17.9 % of GDP reported for 2016.
1
Everyone wants to feed at the public trough.
The United States spends huge sums on defense and who are the prime beneficiaries of this spending? The defense contractors such as Boeing, Lockheed, United Technologies, etc. who have bought the right people in congress.
As the Good Professor points out here, the United States spends vastly more than any other country on health care. And again we have a situation where the congress is bought and paid for by "Big Pharma," health insurance companies, hospitals, doctors, etc.
The same situation exist in education except on a smaller scale. The Obama administration was trying to rein in the "For Profit" colleges. The way "For Profit" colleges work is that they get students to take out student loans to finance a high priced but often substandard education from said college. Many times the student does not get a degree, or cannot get a job if he/she does, but he/she does get to be on the hook for big student loans. Needless to say "For profit" schools know where to make contributions to the right people. The Trump/DeVos Administration is lightning up on "For Profit" colleges and would love to encourage "For Profit" charters schools in K-12.
There are other "profit centers" in the federal government. These are just a few examples but you get the idea.
If you want to make money in America, one way to do it is to sell to the federal government. But first you need to buy your congress people/politicians.
6
No Congress-critter charges anything near the value they provide. Pretty surprising actually, that they don't charge more. Much more. Billions in value for a few thousand, sometimes ten.
For sure - I wish I had some spare cash hanging around.
4
The second way is to make sure they stay bought.
Let's look at another aspect of the high drug costs and medical expenses. 20% of our local school budget is to pay for health insurance for teachers. Teachers are obviously so important for our communities yet our school system is essentially a health insurance program for small part of our population. A reasonable health provider programs, a.k.a. single payer system, would allow for increased funding for education or at least lower local taxes (granted that higher taxes elsewhere might pay for the health costs but at least not taken from education).
61
My wife is a retired teacher, and even though health insurance was available through my employer, hers was much better. Now that I am on medicare, I am blown away by how much more the teachers' health insurance paid. With her insurance, my GP charged $190 for a brief visit - that was the retail rate - and the school insurance paid the whole $190. With Medicare, the charge is still $190, but Medicare pays about $80. Oh - and it gets worse - the school is self insured, meaning it pays the entire cost - the only function of the insurance company is clerical.
4
One time back in grad school I did an estimate of how many Americans have tax payer funded health care. Besides the Medi-biggies, you have all government employees and their families, and then the same with the military. Although harder to divine percentages, add all the employees and families of them working on military contracts, from building military jets to delivering soda and making uniforms.
It turned out that something like 3/4 of Americans have taxpayer funded health care already.
Let's just tidy this up to Universal Health Care.
7
Medical expense are about 17% of GDP. Just saying.
But if your 20% is true, then it speaks to me about how little the teachers are getting paid.
2
I love when the extreme conservatives say we need the innovative American drug companies to maximize their profits and help pay for all their work to help Americans have the best health care.
Looks like it is really working. We are at or near the bottom re our peer countries with key indicators like life expectancy, child deaths, etc.
Keep up the good work guys.
13
Drug companies spend a lot of time and energy not on innovative new pharmaceuticals but on "me, too" drugs-- a "knock off" of an existing drug with a slight alteration
(perhaps hoping for fewer side effects, a once a day form of a twice a day drug, etc.) to compete with a successful drug from another company -- and they then spend millions of dollars trying to convince prescribers that their drug is SO much better. Hardly discovering penicillin. To give you an idea of the scope of this issue, for medical insurers, pharmacy costs can be greater than in-patient hospital care costs.
9
Here's what it all boils down to. The "capitalist" medical system we have in this country has gotten us where exactly? And we look at other "socialist" places in the world where health care is guaranteed for all and drug prices are half (and in some places much less) what they are here. If we had a single payer system and drug prices were negotiated (like utility prices are for electricity-at least in New York), would there be negatives to that? Yes there would. Are there negatives to the existing (and previous) system? Yes. The major difference is that in the U.S. the #1 factor in developing the system is not to have government interference in profit making. The welfare of the patient and what's best for society as a whole? Not at the top of the list. Where it should be. And Trump's approach is to make it look like he cares about the patient when all he cares about is the profit.
22
What we need is for all the people with prescriptions to be bandaged together in a voluntary cooperative. Then we need to develop a list of cooperating pharmacies throughout . . Canada.
Then we determine how many scripts each individual pharmacy in Canada can handle on a daily basis. We distribute copies of the scripts to the participating pharmacies. When the script needs refilling, the pharmacy does a refill, the money for the script is debited and the script goes in the mail directly to the recipient.
Customers with Medicaare and Medicaid or private medical prescription insurance are immediately reimbursed for all or part, after shipping.
The cooperative agrees to a $0.50 handling charge that goes to running the prescription filling program and the not 100% healthy amongst us won't have health-care anxiety.
42
Sadly, Phil, what you propose is against current law, which is exactly how Big Pharma wants it. Federal law prohibits the importation and re-importation of drugs because, supposedly, the FDA can not certify their safety and efficacy, even though some of them are manufactured here and exported to Canada. Some people get around this by ordering them on the internet or taking monthly trips to Canada to fill their scripts, in some cases groups on chartered buses.
46
We should treat that law the way marijuana smokers have treated laws against cannabis.
Can you imagine the disastrous public relation nightmare if the Government put in jail people who violate the law to get cheaper medicine? How they will explain why people are wiling to suffer legal consequence to get medicine at an affordable price?
It is untrue that drug companies get "to charge whatever they want." They have to negotiate with insurance companies many which have customer bases that rival many countries. The fault with the system is that those with Medicaid (under poverty line) and Medicare (through Part D) are covered only by the government. This means that the drug companies are free to increase their list prices increasing their Medicaid and Medicare revenue while extending additional discounts to insurance companies. This is like a direct subsidy to pharma by the government. The US government could solve the problem by outsourcing the Medicaid and Medicare program to private insurance companies who could negotiate on their behalf. The reason this would be better is that it would lead to improved lobbying from insurance companies to counter the pharma industry resulting in the right political alignment to lower overall prices.
You are assuming that it is in the interest of the insurance companies to negotiate lower drug prices.
I don't see how or why two competing monopolies will lower the price of anything. It's not in their interest to do so.
It seems far more likely that both monopolies will maximize their profits and consumers will pay whatever both monopolies require them to pay.
17
"The US government could solve the problem by outsourcing the Medicaid and Medicare program to private insurance companies who could negotiate on their behalf."
False. Patients who are "covered" by "private insurance" still pay far more for drugs than those covered by government controlled programs in other countries
14
One needs to look no further than Costco - I got my AARP / Unitedhealthcare drugs from Costco at a lower price at RETAIL than I could from UHC on mail order!
Costco's markup was smaller than a giant like UHC despite its larger market power. UHC was part of the problem, not part of the solution.
It is up to Congress not the President to allow the HHS Secretary to negotiate discounts on behalf of Medicare. This President is months ahead of Congress. The last President became extremely frustrated by Congress and choose to use pen and paper to walk around the Constitution.
You are right Trump cannot do this on his own. But he could propose legislation to Congress. Trump has a Republican Congress that seems eager to please him - or at least not to upset him. Allowing Medicare to negotiate drug prices would also be easy for Democrats to support.
6
How about one small step. Ban the public advertisement of prescription medications. That should add tons of money to pharma's R&D budget while sparing us from an early evening TV onslaught of vivid descriptions of incontinence, diarrhea, shingles, various fungi and side effects too gross to mention in polite company. And, maybe patients won't as often pester doctors for medications they don't really need.
82
Often wondered how many patients mention these drugs by name, thereby implying that the caregiver's knowledge & expertise in treatment is lacking in the "knowledge & expertise" developed by the patient through their exposure to a 15 or 30 second "infomercial" using paid actors. Interestingly (but understandably) the actors are inevitably smiling with children or friends following treatment, thereby suggesting no adverse side effects of which the caregiver is quite possibly well aware. Patient active participation in treatment is extremely important, but the ads would be ineffective if patients didn't strongly advocate a drug not overlooked (and not prescribed) by the caregiver (paid actor vs trained caregiver, actor wins). Having trouble imagining a conversation with a caregiver where the caregiver says "gee, I didn't think of that".
2
A big reason for our high drug prices is that the USA is almost unique in allowing such advertising, which is responsible for more pharma spending than their R&D expenditures. Sometimes those aggravating, inescapable ads become so overwhelming that I have to switch to PBS or turn off the TV altogether, since switching to another commercial station often lands me in another pharma ad, even more disgusting than the first. And we're paying for them.
3
My late father was a physician in the 1940s-1970s. Only the medical journals advertised drugs - advertising on tv or magazines wasn’t allowed then. Now docs are burdened with patients responding to “ask your doctor if (fill in drug name) is right for you”...
1
Two facts need to be brought into this analysis.
First, the Feds strongly negotiate drug prices for other programs, just not for Medicare, as outlined here:
https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebat...
If you want to sell your drugs to Medicaid programs, you have to agree to a rebate. If you want to sell to the VA, you have to agree to a "most favored nation" clause and offer the VA the lowest price that you offer anyone.
Medicare leverages off the Medicaid rebate via the 340B program. Currently, the majority of drugs provided to Medicare in the hospital setting are purchased, at the Medicaid discounted rate, via the 340B program.
For Part B covered drugs, Medicare's contractors can and do make the decision that certain drugs are therapeutically equivalent, and then pay for the cheapest drug within a narrowly-defined therapeutic class.
So the government is not entirely a passive player. The only place where the government's hands have been tied by law is Medicare Part D.
The other key fact is that the single largest payer for outpatient prescription drugs is private health insurance (40%), then Medicare (30%), then everybody else. If you want to assess blame for high drug costs, there's plenty of blame to go around.
And that, in fact, they do negotiate some Medicare drug prices. So to say that they can't do it is not fully correct.
For Medicaid, there's a statutory rebate.
3
Ahhh....yes, here we go again. The pied piper of socialist economics is at it again. Says Krugman,
"There is, in fact, a very strong case for government action to limit the prices drug companies can charge".
Yes, Mr. Krugman--except for one thing: these are private companies. They are not government entities-they are not charities. They are not out in the marketplace intentionally causing harm. Quite the opposite--they are trying to better the lives of afflicted peoples--whether it be curing baldness, high blood pressure, diabetes, or cancer. They spend billions in research to produce products we need--only have a short window to recoup their investments, before generics come in. And then, they often have to defend their products against not only competitors--but against ambulance-chasers in court.
Pharmaceutical companies offer their products for sale. No government should have the right to say what they can charge--no more than they can set the price of an MRI machine--or an automobile.
Krugman is a socialist...perhaps not of the classical definition, but he is a socialist nonetheless. He comes here as always--to argue that government should control our lives. He stops short of advocating government control over the means of production--but he wants businesses to be so heavily regulated, that it feels that way.
2
If we were talking about chewing gum or hula-hoops, I'd agree. But we're talking about life-saving drugs often developed by piggybacking on the results of federally funded biomedical research. What negotiating power do we allow Medicare and Medicade for drug prices? Shouldn't the customer, in this case a large customer (the US government) have some power to negotiate lower prices? Isn't this just socialism for drug companies?
But, the take-home message here is that Krugman is . . .gasp . . . a socialist! Aren't labels wonderful?
19
@Jimbo...labels can be wonderful things. In a word or two, they can convey complex philosophies or ideas--without the need for long explanations.
True Socialism is thought by many to imply that all property is owned by the state, including the means of production. However equally as pernicious is "Socialism-Lite", which allows for private property and privately owned companies--but whereby the use of private property is so heavily controlled, and the activities of companies so tightly regulated, that there's very little daylight between the two models.
But inherent in each is the stultifying lack of freedom--which squelches innovation and risk-taking.
There is a reason why Google, Apple, Microsoft, Intel, Facebook, Phizer, Johnson & Johson and Amgen all happened here. There is a reason why they weren't invented in France, Germany, South Africa, Columbia, Cuba, Russia or Japan. There is a reason why the fingerprint of American technology and innovation reaches into even the tiniest, most remote villages around the globe. We have (by and large), resisted the European model of heavy-handed government control. And we move in that direction at our peril.
The combining of Socialism and Capitalism as Mr. Krugman reliably advocates, is like mixing alcohol and barbiturates. It may not kill you, but in the end, someone always ends up with a very large headache.
Better a democratic socialist than a greedy "conservative" capitalist.
The American goal is "a more perfect union", the common good, not an aristocracy (as Thomas warned against).
1
When I got my MBA almost 40 years ago we learned one concept: profit maximation. Peter Drucker said a firm exists to find and service customers. As an instructor in a College of Business we now teach business ethics.
Unfortunately we reward profit maximization. EpiPen is an allergic reaction injector. It was developed by the DOD for a nerve agent injector. It was then patented by a drug company. Finally, instead of an 18 year patent we are now into a 40 year patent protection system called evergreening.
Looking for returns Wall Street is now buying orphan drugs to raise prices 1,000-5,000%.
Inheritance babies like Trump, the kochs, Waltons etc. feel a sense of entitlement to steal from the rest of us. They have created a conservative echo chamber to get the deplorables to vote for them. Until they smarten up and reject the propaganda we are in trouble.
95
Seems this article can be applied to most any corporate entity favored in this or that nations or region. All else being equal, high consumer prices here leads to more employment here rather than there in target domains.
To attain erquity goals there should be international policy emphasis on equalizing consumer costs since it is pretty clear that humans are humans. The mere hint that this or that tribe is more attuned to this or that enterprise seems to get in the way of smooth commerce at both the production and consumption end of the process.
We already got the message that less constraints on commerce between nations is a good thing, Trump not withstanding. Now it's time to manage cost within regions and between states to further acknowledge that we are not tribes in commerce, but rather we are a single race of beings.
Moral adjustments need be emphasized to keep containment of harm that can be done in the interest of individual profit as well.
2
Alas, there is a story of similar weasely complicity from the Obama administration.
Obama too had promised to let Medicare negotiate drug prices, and was in a unique position to extend Government negotiation of Rx prices down into the >65 insurance cohorts.
Instead he caved to Max Baucus, Kent Conrad, Rahm Emanuel, Jim Messina, Tom Daschle, and some other political geniuses (NOT!) who caved in turn to that same Billy Tauzin, then head of PhMRMA.
And also to an imagined threat for a an ad campaign repeat of Harry and Louise from 1993's Hillary Care.
Any repeat of Harry and Louise would have been completely drowned out in the noise of the Summer of 2009 when the right had already mounted a furious anti-Obamacare program which shrieked hysterically 24/7 to the point of Town Hall dreadfuls shouting out for the "Gummint to keep its hands off my Medicare!"
But let's look ahead.
Though it won't happen under Trump and a Republican House and Senate, we should start pressing for Government putting brakes on PhRMA's land office business in Rxs not just by having Medicare take over Medicare Part D the way it controls Parts A and B, but also we should set up a Government controlled entity which competes in the generic and orphan drug sectors.
No more Martin Schkrelis!
And, in the meantime, relentlessly politicize the bought and paid for aspect of the Trump "plan" to "reduce" Rx prices, as PK is beginning to do.
6
The Democrats use a cast of alternating villains to block legislation that they need to appear in favour of to keep from riling their base. Their funders demand it and it supplies a convenient excuse to keep the charade alive. We are being played.
A little long but well said.
"The bottom line is that American exceptionalism has prevailed again: We’re still the only major nation that lets the drug companies charge whatever they like."
So can the economist columnist give Americans more than 1 sentence on this?
Why can't this be publicized on our media in some concrete detail that US voters can grasp?
Just how do govts abroad regulate drug prices for the benefit of their citizens? Do their rw parties try to destroy these controls? Do corporations donate to lawmakers to get laws in their favor? How do they limit campaign donations?
Compare other countries on regulations, taxes and profits with US drug makers. Is that too much too ask?
9
Canadians do pay less than Americans for drugs, but more than Mexicans. Prescription drugs in British Columbia (each province has its own system of coverage) are covered based on a family maximum expenditure as a deductible.
The amount of the annual deductible is based on a previous year's net income, with reduction if you can show hardship from a decrease in income.
Drug prices are negotiated, and some drugs are not covered if there is an effectively similar, less expensive alternative. Doctors can generally request inclusion of exempted drugs by writing a letter explaining the reason for prescribing the more expensive drug. This does occasionally cause disputes. Nothing is perfect, some drugs (such as Viagra are considered "lifestyle" and are not covered.
Some provinces cover more, but unlike general medical expenses, this is not federally regulated. However, the Federal government does have a law against consumer advertisements for prescription drugs. I believe this is a major factor in keeping costs down.
Drug companies can promote directly to physicians, but even then, there are some restrictions to keep it from becoming "bribery" . This means that doctors are expected to prescribe the best, least expensive drug, one that will have the desired outcome.
Doctors do not sell prescriptions, only licensed pharmacists. On occasion, doctors may give samples (supplied by the drug company) , so the patient can see if it is effective.
12
In Canada, Bernie got a hero's welcome. He repeatedly says we have a lot to learn from Canada. Here's a first hand witness report:
https://khn.org/news/postcard-from-canada-in-the-land-of-single-payer-be...
1
We shouldn't forget that nearly all basic science research that leads to breakthrough medicines has been -- and is -- conducted at universities or labs funded by the National Science Foundation or the National Institutes of Health, both of which are public institutions.
Pharma giant Genentech began at a small laboratory at UC Berkeley; biotech giant Chiron was formed by three UC Berkeley professors and dozens of other pharmaceutical companies began as academic research.
US taxpayers are effectively the early venture capitalists that support and fund academic research. But unlike private investors who make massive profits, US taxpayers get nothing in return for the crucial basic investment that accrues as billions in profit for wealthy private investors.
Trump reads his campaign script about outrageous drug prices while inviting big pharma to send their agents to take over federal regulatory agencies that police them.
A few months ago I was in line for my prescriptions at a local pharmacy. Ahead of me was a senior doing the same. The pharmacist asked him if he was aware that the prescribed medication was $3000 a dose and not covered by insurance. I was stunned. I can only imagine that the senior was doubly stunned. He sighed and walked away.
Short of denying patents for essential drugs -- like India -- the appropriate public action is to levy heavy taxes on big pharma profits.
What's the point of miracle drugs if it takes a miracle to afford them?
125
Recently I checked the price of a generic medication I take. I go to a small, non-chain pharmacy. There I pay $10 for a 30-day supply. Then I checked at 2 major chains for the same one-month supply, same generic medication and dose. They asked if I had insurance. I don’t. One quoted $65. Another quoted $84. How does this make sense?
1
"US taxpayers are effectively the early venture capitalists that support and fund academic research. But unlike private investors who make massive profits, US taxpayers get nothing in return for the crucial basic investment that accrues as billions in profit for wealthy private investors."
Socialism for the risks, capitalism for the profits. This is what our Congress wants and that's what they -- and we -- get.
4
There are lots of ways we could improve the US healthcare system, if Congress and Trump wanted to. But they don't want to. The current system suits the wealthy just fine, so why should they change? Besides, clear and simple improvements (e.g., making price information easily available to patients and doctors) would cut into the profits of Big Pharma, so they will fight them tooth and nail. Congress cares more about Big Pharma than they do about us peons, and things will continue to get worse until and unless we vote the current Congress and President out.
7
Has Krugman gone completely off his rocker?
1. As Krugman admits, the American consumer subsidizes the rest of the world. Whose fault is that? Remember that KRUGMAN has opposed trade agreements that would have begun to force other rich countries to pay their fair share.
2. "Nothing about the logic of the patent system says that patent owners should be free to exploit their monopolies to the max." What sort of gibberish is this? We (the people) made a deal with the drug companies. They would disclose the science underlying their discoveries and in return we would give them a limited period (in practice probably less than 14 years) during which they could charge what they wanted. After that, their intellectual property would belong to the world. Krugman wants us to break our word.
Answer me this. Krugman has a monopoly over his home. It is unique. When he sells it, does he price it at the max the market will bear -- or does he exercise restraint and give the buyer a 20 or 50% discount?
3. Krugman assures us that price controls won't discourage innovation. If you believe that, I have a bridge in Brooklyn..., and I won't price it to the max. Look, it is (temporary) high prices that drive the innovation process. Drug companies literally bet the firm on one or two drugs because blockbuster medicines can earn huge returns. Today's profits are tomorrow's new drugs. It's our kids' lives he's talking about!
There is more....
2
Right Maitland, there is more. And it is much more realistic than insipid analogies. The most commonly used solution is called value-based pricing. In other words, you show me what your product costs and I'll decide if it's worth that much to me. In the purely theoretical dreamworld called "free market" with atomistic competition and associated varieties of baloney, pricing based only on supply and demand may work. In the real world, where the sellers of a patented drugs can ask for whatever price they need to reach the rate of profit they want, it is definitely not the case. And the good professor is correct, negotiating prices is a solution. There are enough countries where negotiations are already used effectively. Even in Switzerland, a country where the "research-based" pharmaceutical companies have a strong economic position, the prices of newly patented drugs are negotiated: they are allowed only up to a 20% mark-up over the current standard of treatment for the therapeutic indication for which they are intended. If the manufacturer cannot provide evidence of improved cost-effectiveness then there's no mark-up. If it can, then the level of mark-up is negotiated with a central agency based on the evidence provided.
Basically and "wonkishly", this kind of negotiation approach is based on the Coase theorem. I think the guy who developed that analysis is also a Nobel Laureate.
17
To add to what BJMoose has said, here in Australia we have used ‘value-based’ pricing since the early 1990s. To use the analogy of automobiles, even if you had the money you would not pay the price of a S class Mercedes for a Toyota Corolla. In that comparison the consumers are clear what they are getting for their money. But most of us who need prescription medicines cannot make a value for money judgment. Nor, often can our physicians. Governments in several countries, like Australia Canada and the UK have appointed expert committees, comprising doctors, statisticians and economists to assess value and inform price negotiations on behalf of their publics. The USA has refused to do this and pays scandalously high prices, which are passed on to insurers or consumers, causing hardship. The idea that the US consumers subsidize patients in other countries is laughable. Big Pharma exploits market failure to rip off US consumers and spends its revenues on executive bonuses, advertising and patent lawyers. Pharma spending on R&D, proportionally, is not very high. Please don’t blame patients in other countries, who can afford their medications, for your own failings.
I disagree. Countries with price control are reasonable and negotiate with pharma companies for fair deals. Clusters of medical R&D tend to form in areas with good connectivity and a large pool of highly educated people with innovative universities that produce spinoffs and have great hospitals. Belgium for example, with its tuition free high quality universities, has an important pharma research hub. Focusing on these things drives innovation a lot more than the prospect of predatory pricing in one market.
8
"Basically, when it comes to drugs, we’re Big Pharma’s sucker of last resort."
"Bear in mind that the way the drug business works can’t and doesn’t bear any resemblance to the Econ 101, supply-and-demand stories beloved by free-market enthusiasts."
That's probably because the U.S. government consumes more health care (and drugs) than any other single entity. You see the same upward spiraling of college costs because the federal government handles student loans. The more you subsidize something, the more it gets used. It doesn't necessarily follow that prices will come down.
"There is, in fact, a very strong case for government action to limit the prices drug companies can charge..."
Well, Paul, state your case.
"Of course, draconian controls on drug prices could discourage innovation."
Democrats would love nothing more than to fix prices for every aspect of health care, including prescription drugs.
"...remember that before 2003, Medicare didn’t pay for drugs at all."
When Medicare was enacted, there were no limits to the amount of health care seniors received. What was the result of that, Paul?
"...polls show overwhelming public support (92 percent!) for allowing Medicare to negotiate lower prices..."
I'm sure most Americans polled would overwhelmingly approve a tax-free check of $10,000 from the government every month too, Paul.
"We’re still the only major nation that lets the drug companies charge whatever they like."
Get the government out of health care.
2
“Pharma has bought itself enough politicians to block policies that might reduce its profits.”
So how, realistically, can we fix this problem? Who, of any political persuasion, will do it? And when will it happen?
And how many people will drop dead waiting for the answer?
3
Dr. Krugman, it would be good to have a definitive source on how much of pharmaceutical research is actually funded by public sources/Government. Or how much was started there before the Private industry took over.
Please don't overlook how much of the research was funded by Universities, public and private and various "Non-Profit" Foundations."
Most of us who have bothered to look at election financing look at the wonderful work of opensecrets.org and we know that both political parties get a lot of donations from the Pharma industry.
This is a "gift" that will keep on giving until there is a radical solution.
1
There was one very good idea in the speech that would not lower drug prices but would lower the cost of medical care, i.e., the idea to make more drugs available over the counter. In most other countries a much larger number of drugs can be gotten from a pharmacist with no super high priced doctor needed. I paid an ophthalmologist $500 to get a prescription and year later, I was able to get a similar treatment for $1 in another country at a pharmacy no prescription needed.
2
This is not always that simple. Taking a drug implies that the person knows their diagnosis and is choosing the right treatment. In many cases this is fine. But consider this: you have nausea and dizziness - if the more potent drugs for this were OTC you might buy one to manage the symptoms. But if you had to go to a doctor, he/she would rule out hypertension, tumors, poor blood flow to the brain, etc. Any one of these could be masked by the medication, thus leaving you vulnerable to a dangerous but treatable condition.
The drug company mantra is that the high price of drugs is due to research costs and forcing cuts in drug prices will strangle development of new drugs. But even a cursory look at publicly available financial data for the big pharmaceutical companies suggests that this is not true. Their actual cost of goods is about 25% of their total revenue. Their operating expenses, is where their research and development costs are reported. Even the largest companies spend about the same as the smallest on R & D. In fact, the major component of operating expenses, which far outstrips the R & D costs, is selling, general and administrative. These include executive compensation, advertising, marketing and lobbying. After these costs are deducted, one gets the pure profit after all costs, including all employee salaries and executive compensation. This profit is as much as 30-40% of their total revenue. In fact, the companies that spend the least on research make the most profit. Thus they can lobby and advertise, deduct it as expenses, pay huge executive salaries and still have some of the highest profit margins in the USA. The insidious role that these factors play in drug prices is shown by the fact that operating expenses for drug companies are proportionally higher than those of industries that make and sell food, an equally necessary commodity. Drug costs can be reduced without harming innovation. But it will harm corporate profits and executive salaries.
38
Another factor is that much R&D is spent not to innovate but rather to provide an on-patent (highly profitable) product to replace an equal but inexpensive older drug. Sometimes the "new" drug is more dangerous than what it temporarily replaces!
5
The high cost of patented drugs is a main reason for rising healthcare cost.
It maybe too radical but if the patent system on life-saving drugs can be eliminated by taxpayers paying the entire R&D budgets of all US based pharmaceutical companies, generic copies of newly discovered drugs could be immediately manufactured immediately. Close to half of the R&D budget is promotional expenses, which would become unnecessary. The cost will not exceed $75 billion annually.
The drug companies need not worry about the cost of drug development. And they can work on orphan-drugs for rare diseases, as well as on much wider vaccine developments. They need not worry about whether a cure for certain diseases is commercially viable.
On top of that both their researchers and the respective companies could be awarded prizes including monetary rewards.
If the drug prices fall, from the current $325 billion or so annually to say, $200-250 billion, one by one other costs for healthcare also could come down.
1
And about Billy Tauzin, who steered the Medicare PartD bill, took a job as the chief lobbyist for Big Pharma on about $2 million salary - watch a short, important CBS-60-minutes video aired in 2007 http://www.cbsnews.com/video/watch/?id=3108688n
Tauzin has left that job since.
I tend to come up with unpopular or on the surface unworkable ideas. And I would say pay the Congress members to the tune of $1 million and attractive pension packages also. They then don't have to hunt for lucrative deals that are so much more costly to taxpayers, as the Medicare Part D provision that prohibits bargaining for lower drug prices. Further we will then get different crop of Congress members than we now have.
4
'pay the Congress members to the tune of $1 million and attractive pension packages also. They then don't have to hunt for lucrative deals' Nice idea in theory. Except, this has been tried in developing countries and it still has not stopped graft there.
True. But, a decent pay in a CAPITALIST country is necessary. That can substantially lessen corruption.
If campaign finance reform with spending limits on elections & only taxpayer funds are allowed, that would further lessen corruption. If an elected official breakes law, he/she would end up in prison as many have.
Right now the Congress is not effective. They're beholden to their donors, which is anathema to democracy.
And Alex Azar's stated views are at odds with just about everybody else except drug company execs and Trump, For our high cost of drugs Asar blames America's trading partners "because they’re using socialist price controls, market access controls, to get unfair pricing." That's about as ridiculous of an argument as I've heard.
23
There is some compelling research by Andy Lo at MIT on the use of financial engineering to discover important drugs that big Pharma doesn't bother with because the payoff is too small (intuitive). The model is a bit too arcane to describe here, but it's essentially that a well-capitalized hedge fund could profit by funding many small research projects. Although there is a small probability that any one will find useful drug, there will still be enough winners to compensate investors and improve social welfare. The point is that the "research incentives" problem can be tackled separately via public markets without relying on big Pharma.
8
@Maggie, here is one link about Prof. Andy Lo's research to get readers started: https://endpts.com/think-your-odds-of-rd-success-are-miserable-mits-andr...
I have worked as an engineer in the medical device industry which is similar to the drug industry. the capitalist system is based on greed, but it is the only system that produces. if you want to work on a new product, you need to raise money. when you are raising money, you are competing against the next facebook. dot coms conduct no expensive time consuming clinical trials. while patents may be of some importance to facebook, they have a brand that people will stick to. with drugs or medical devices, once the patent expires, others will sell a copy of your product. so you better come up with something else. for a while the company I worked for was owned by Eli Lilly. those were the days of prozac and Lilly's stock price was higher then, 20 + years ago. for the total value of facebook, you can buy lots of big drug companies. so if you have a successful drug or device, you have to charge what you can as long as you can. yes we pay too much and others pay too little. but if the total coming in drops, who will invest in new drugs and devices?
2
That is why some things - those things we can consider a human right - can't be 100% for profit and/or must be tightly controlled so that a maximum of citizens, sometimes all, can benefit.
That doesn't mean that pharmaceutical companies can't profit or that device manufacturers can't profit. There must be a balance. Right now, that balance is completely out of whack, with the Shkrelis and the Heather Bresches (daughter of Senator Manchin) can't do what they did.
Government funded a lot of projects that led to profitable sectors of the economy and innovation that propelled this nation forward.
Controlling healthcare and investing in research will make it available to all and it will remain a profitable enterprise for most of today's players, minus the profiteering we are seeing today.
8
Many years ago, fresh out of medical school, I would see patients in various clinics as part of my internal medicine training. Yet, even at that time, some 40 years ago, many patients failed to follow treatments plans because of high costs of medications. Fast forward to May 2018. For instance, in a recent review of idiopathic pulmonary fibrosis published in a major medical journal , the authors correctly advocated the use of various medications for treatment of this chronic and usually lethal disease. As is the custom in such articles, the cost of the medications was not detailed. However, a short trip to the various web pages shows yearly medication costs between 25,000 to 100,000 dollars! Of course, in other countries, these same medications cost are about one third to one half the price (still substantial). And this is the cost for one medication for one disease. Just think if the patient also has Crohn's colitis or rheumatoid arthritis or psoriasis? Now go to the State of Iowa and pick towns at random and read the average household incomes. Ames Iowa? Decorah Iowa? Waterloo Iowa. Yes, Iowa is where our current president came numerous times, descending to talk to the crowds before ascending to the Tower. And, yes, Iowa turned red and sent Mr Trump to the White House so he could...What?
143
The current system is dysfunctional for every interest in society EXCEPT for Big Pharma. People are no damned good about money – doesn’t matter who, it’s really everyone. In this case, regulation is needed so long as it’s not excessive. Problem is that whenever you implement regulation of this kind – price controls -- it tends to GET excessive pretty fast because elected leaders have interests, too; and, like taxes, voters will respond to dramatically lower drug prices that make them more accessible to insurance plans and more affordable for EVERONE to live better and longer lives. When that happens, drug makers stop innovating, creating NEW wonder drugs. Why do you suppose that most of the patents for new drugs are generated by OUR pharma?
There’s a legitimate case to be made that the world, on yet another issue, is being subsidized yugely by America.
So, it needs to be a balancing act, with so many perverse, opposed and powerful interests to balance. How far do you go?
Paul, surprising given his training in an Economics that is supposed to be all ABOUT understanding implications, is for a Euro system here that negotiates with pharma to keep drug prices at their minimum sustainable while allowing companies to make what elites believe is a reasonable profit. What he doesn’t seem to understand is that this creates the requirement for a global subsidy program for which there MUST be a sugar daddy. If we do it too, sugar daddy goes away; and innovation dies.
1
When the tax bill was being floated, I argued for a multi-tier corporate tax framework whose lower levels would be earned by companies acting in socially responsible and beneficial ways. I’m exhuming the argument for pharma, with differences.
First, we need a mechanism for getting current drug prices to a rational level relative to their cost to produce, which would have the effect of a one-time lowering of prices on many of them to the levels at which they were kept before the immense hikes of the past few years were imposed, plus adjustments for inflation. From that point, why not let pharma increase prices on mature drugs up to a cap per year consistent with inflation or some multiple of inflation? But ALSO plug in a federal tax system (that proportionally also would affect state taxes) wherein serious incentives are offered for new drugs that attack collectively-targeted diseases and conditions, and for demonstrable investment in such programs that require years of investment to succeed (or fail)? The more they contribute to the general weal, the lower their effective tax rate, for some negotiated period of time – which would go right to their bottom lines, and could help make up for lower overall prices.
We’d need to agree as well on initial pricing methods for such new drugs, such as a negotiated acceptable rate of return (but not whatever a desperate market can bear) over the life of a patent for the investment made, the risk undertaken, and perhaps other factors.
2
Now, this is hardly a conservative’s dream: it has strong elements of government intrusion in the general interest. Yet, at the same time it’s no liberal’s dream, either. It doesn’t enslave Pharma as a mere tool to do the bidding of political elites, rendering business nothing but an arm of whatever flavor of government rules in the moment … because Paul and some of you think that’s “right”.
It should appeal to moderates in BOTH parties, though, as a workable means of allowing companies to drive large profits, keep drug prices manageable, and while ALSO protecting and incentivizing innovation.
There are researchers who want to develop new treatments to save lives and ease suffering. In order for medicine to make money, such researchers must be controlled and kept from power, and funding for them must be used to get what they discover and make money from it. Historically, some of these researchers have been funded by governments, but the power of money has stopped that.
2
Depending on who does the counting, what the nation pays for the prescription drugs is between 12 and 17% of the overall healthcare spending - which is roughly in line with other developed countries. Reducing this number will allow to claim a victory over everybody's bugaboo (Big Pharma) but will do zilch in terms of solving the overall medical costs problem. Most everyone knows a doctor or a RN or someone working in the doctor's office, so they don't think that these fine people should take a hit on their pay (despite it being at least 2x of what their peers elsewhere make proportionately to the average salary for the country); very few however know a pharma researcher, and industry's PR campaigns are uniquely inept... should all our zeal be aimed at punishing those who are mostly responsible for the average lifespan going up by 15 years since 1960s, and whose work if not deprived of funding will bring new wonders?
19
So the overall costs of healthcare are driven by excessive salaries to a broad swath of medical workers, but drug costs are in line with other markets at 12-17% of that inflated number? If the base is inflated, isn't the number reported as a % of it inflated as well?
Also, calling the industry's PR campaign inept is a bit off. They are very capable, just not targeted to support pricing. They are supported at driving demand and keeping politicians in their pockets.
32
" .. We’re still the only major nation that lets the drug companies charge whatever they like .."
.. and most of those "major nations" have, for decades, refused to pay their fair share of global medical costs, based on U. of Rochester data.
Finally, those with strong spines have said, "Europe and Asia, y'all need to pay what the USA is paying."
And as for government monopolies -- Colorado defeated the single-payer theory at ballot, 79% to 21%. Reality has not yet been defeated, Mr. Krugman.
"Y'all need to pay what the USA is paying."
Why?
So that our pharmaceutical industries can reap even more obscene profits?
Big Pharma are the Johns, politicians are the prostitutes. It's really that simple. It time to clean up the streetwalkers ( Congresspersons ) AND the Escort Service Pros ( Senators ). How ??? It starts in November.
VOTE. Absolutely vote against every single candidate on the GOP Ticket.
The next big step : Medicare For ALL-2020. It's the only way to stop this thievery and abuse. Just saying.
20
Research and development of drugs should be a function of the federal government and universities. It should not be a profit-making enterprise. The big problem in our nation is that doctoring and drugs are for profit businesses. This leads to our current problem, that rich people get better medical care than everyone else. How is this consistent with the idea of democracy, that everyone is equal under the law?
175
"Research and development of drugs should be a function of the federal government and universities. It should not be a profit-making enterprise."
The problem with that is government is very inefficient with other people's money.
"This leads to our current problem, that rich people get better medical care than everyone else. How is this consistent with the idea of democracy, that everyone is equal under the law?"
Would you argue that everyone should get the same type of home, car, and any other thing you can come up with in the name of equality?
5
The government and universities do basic research, which benefits the for-profit drug companies as they do not pay for it. The taxpayers do. Again, we have a system where costs are socialized, and profits are privatized.
No one expects everyone to have the same car, home, etc. But those are just things. Being able to stay alive is vastly more important than the things you own. No one should have to die simply because they can't afford medicine.
Democracy 101:
Everyone was never intended to be "equal under the law". Everyone was intended to have EQUAL OPPORTUNITIES under the law. What we do with those opportunities -- supposedly available to everyone -- is up to the individual.
Sadly, in our for-profit democracy, healing is an art and medicine is a science, but health care has become a business.
Politicians who profit off the business of health care need to be made accountable for it in the voting booth.
15
On the side of the angels, on this one - kudos...
Tauzin was outgoing - don't forget about Newt, who came back as Speaker Emeritus...
https://economix.blogs.nytimes.com/2013/11/19/medicare-part-d-republican...
"...Although out of Congress, the former speaker, Newt Gingrich, wrote a commentary in The Wall Street Journal on Nov. 20, 2003, urging all Republicans to vote yes...
That was just the metaphorical fin above the waterline…
The irony - all of this makes it that much more likely the Chinese will have a clear field to take the lead in computational chemistry...
Can't fault them - all of the science out there in plain sight, just waiting for bigger and bigger supercomputing...
3
"The bottom line is that American exceptionalism has prevailed again: We’re still the only major nation that lets the drug companies charge whatever they like."
American exceptionalism also allows corporations almost unlimited spending to buy influence as long as they are precise in their record keeping. Novartis disclosed $8,759,510 in 2017 lobbying efforts. Of course that does not include undisclosed million dollar consulting contracts for connected morons selling access.
Michael Cohen may not have been Novartis' most cost effective purchase. that's still to be determined, but the shotgun approach that they and other pharmaceuticals take to injecting money into the political system would seem to be bargain even at the $279,572,483(!) of disclosed lobbying they spent in 2017 per opensecrets.org.
10
Our eminent columnist economist should give us some details. Compare other countries drug makers on regulations, taxes and profits with US drug makers. Is that too much too ask?
Just how do govts abroad regulate drug prices for the benefit of their citizens? Do their rw parties try to destroy these controls? Do corporations donate to lawmakers to get laws in their favor? How do they limit campaign donations?
1
"American exceptionalism also allows corporations almost unlimited spending to buy influence as long as they are precise in their record keeping."
Actually it's crony capitalism that allows corporations and other special interest groups to buy influence. A great argument for a limited federal government.
1
@hm1342 in response to my comment, you argue for limited government as a solution to money in politics and crony capitalism. In another comment on this article, you write "Get the government out of health care."
Are you really suggesting that we get rid of Medicare, Medicaid, the FDA, and coporate taxes so that the healthcare industry doesn't feel compelled to spend $561 million on lobbying as they did in 2017?
Would you also disband the Military to keep the Defense sector from spending $127 million in lobbying per year?
If you just reduced the role of government in these sectors wouldn't stakeholders still pay lobbyists and donate to politicians to increase it?
A more "limited government" may have certain virtues in some areas, but it is not a realistic cure for the outsized role of money in politics.
So once again we see that, in the Trump Presidency, everything is for sale, and that we can expect his tough talk against Big Pharma will be a big nothing burger, with extra cheese. I have a decent health plan through my employer, but to keep premiums reasonable I have a huge deductible, meaning my real 'health plan' is to not get sick. And today I learned that my mother has to go to a full time care facility that will first take all of her and my late father's hard-earned savings before Medicare would kick in. Such is the way this country treats its senior citizens. Everything is for sale.
33
Medicare will never "kick in." After all your parent's savings are eaten up, Medicaid will "kick in", if you are lucky and there is still any Medicaid left after the Republicans are finished with it.
1
Facts don't matter. Money, for the rich, and feelings, for the stupid, matter. The causes are the repeal of the Fairness Doctrine (free 24 hour a day right wing hatred in all talk radio and most electronic media) and the radical activists in the Courts.
7
I still remember Billy Tauzin's two million dollar sell-out to big pharma in 2003 and how it turned my stomach at the time. He was also a Democrat, let's recall. The man was the lowest sort of prostitute pure and simple, though he has plenty of company spread across both parties.
The drug companies have so much money to throw around, they have expanded their TV advertising even to those niche channels where the usual commercials are for miracle slicers and reverse mortgages. Many of these medications treat extremely rare conditions experienced by only a fraction of a percent of Americans. The only conclusion is that the profits on a single user must be unimaginable and totally unjustified. It's the same logic that shysters who blanket the airwaves looking for victims of mesothelioma employ. How many undiagnosed people could there possibly still be out there to justify all that advertising? Well, given the ROI, all they need is a few a year to cash in.
3
He became a Republican in 1995, let's recall.
1
I don't like to see the big drug companies bad mouthed so much considering how important their products are to our well being especially when old or sick. Sure, they charge a lot, especially for drugs with a small patient base but where would those patients be without those drugs. "Your money or your life." As Jack Benny used to say, "I'm thinking about it."
Sometimes it looks like the President is running a protection racket doesn't it. "Nice country/company/industry you there. It would be a shame if something happened to it, but don't worry I'll make you an offer you can't refuse or I could go public." I'm half kidding, at best.
9
Once again. If we would regulate the advertising and show Americans that it is simply not normal to take a bunch of drugs simply because the TV shows us pictures of happy drugged actors, this problem would quickly resolve itself. Europe, China, India laugh at Americans because we take these drugs / supplements to live longer. Like Trump said, stop being suckers. The jury is still out on if Trump keeps this promise.
61
All these stupid ads for medicines (with the occasional small side effect such as death) have the line: tell your doctor about ______. My extremely sensible doctor's response to this is "show me your medical degree and I will let you determine what medicines you should take." My pharmacist father had a rule that the less medicines you take, the better. He even cut aspirin in pieces for me and put it in a gel-cap back in the day before baby aspirin..as if half a pill took away the ache then 1 pill was too much. And, yes, I am that old.(70)
6
Well, gee, Pi, HRC spent 2x more than her foe in 2016. How'd that turn out?
So much for the real-world validity of "Citizens United" and the value of advertising. Just ask Eric Cantor.
Keep in mind that the most expensive drugs are those that treat rare/ultra rare diseases and/or high risk conditions (carcinomas, non-small cell LC, etc). Hate to tell you this, but you aren't going to survive mid-late stage NSCLC by taking your supplements. You need your chemo cocktail produced by, you know the answer... big Pharma! Pharma often becomes the scapegoat of healthcare exorbitance because they are the easy targets. They are so corporate, they're in it for $$ only, etc. But what you forget is the amount of time and $ spent to bring a drug to market. It takes nearly 10 years on average and costs roughly $1bn to do so, and much of that cost goes into ensuring that the product is compliant and safe. The FDA is very stringent in its regulation. In addition, I will go out on a limb here and say that the US has some of the best healthcare options available in terms of physician skill and available products produced by the pharma companies. If you really want lower cost on your drugs while maintaining the level of excellence you have in breakthrough products and treating physicians who are extremely capable, why not significantly increase taxes so the gov't can fund academic centers to research and develop drugs as a non-profit? Maybe throw in some gov't run hospitals (not for profit as well) and jack taxes up? I'm not being sarcastic, either - this is a potential option.
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Thank you, Prof. Krugman, for exposing the lies.
We dislike the Congress, but we continue to be influenced by the lobbyists misinformation, and elect the same crooked politicians. We get what we deserve. Plundering of the nation by the well connected goes on.
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in addition to cracking down on schemes to extend patent protections, I would propose two new policies:
1) Create an expecited procedure to allow manufacturers from OECD countries to sell drugs in the U.S. This would put a crimp in the shenanigans of ‘pharma bros’ like Skrelli who jack up prices for long-out-of -patent drugs who have only 1 U.S. manufacturer.
2) Adopt a ‘least favored nation’ policy for on patent drugs sold to government programs,requiring the government to pay no more than the highest price that a company sells for in any other nation. This would avoid the problem of having the U.S. government set a price, but would force drug companies to consider the overall impact on their bottom line of the deep discounts they give to other countries, instead of just sucking us dry and the taking whatever pittance another country offers them as a little on the side.
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Want change in drug prices? VOTE November 6, 2018.
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What you have to understand is that Big Pharma has the business model the mugger: Your money or your life!
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In order for drug companies to justify their prices they should agree to be audited yearly by an independent entity and have the results made public. How much revenue goes to advertising, R & D, shareholders, management, lobbying, etc. Show us the numbers.
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These numbers are publicly available. Just go to yahoo finance or any other financial web site. Please see my post above. The numbers tell a sorry tale.
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CW, you must be joking. Health care is one of the most heavily-regulated industries in the USA and world. That's why it costs so much, all the overhead involved.
You are welcome.
You write:
> draconian controls on drug prices could discourage innovation
I'm not so sure. There is a world wide community of scientists who are already doing science not because, say cosmology or biochemistry, is a path to riches and private planes but because science is a higher calling and a very fulfilling life. If we (the people) turned pharmaceutical development and production over to the graduate student community and bumped their stipends a little closer to minimum wage there's a good chance we'd see the same level of innovation with fundamentally lower costs. Once the army of under employed post-grads were getting enough to eat on a regular basis the billable for lab testing at least, paid to the universities, would plummet. Yes it would destabilize the insurance industry. There might also be a downside.
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"Pharma has bought itself enough politicians to block policies that might reduce its profits."
The oldest profession, prostitution, has taken various forms over the years. Harlotry among politicians is why action is required to take the big money out of our political system. Until that is done, seduction of elected officials will remain common and the public/common good will continue to be ignored, as is the case with drug costs.
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This is a drugged out nation. there is a demand for drug cures for almost everything, from ingrown toenails to hair loss, there seems to be the belief drugs can cure everything.
As a drug producer yiu have to guess the market and produce one that satisfies a need. R&D testing FDA approval are very expensive, they take capital investment. Some drugs only treat a rare disease that a very small portion of the population has.
So to start with before you express all the opinions, get a copy of a company's 10K, see the ROI, long term debt, debt to equity, and profit rate compared to other industries. Also just google suits against drug companies. Producing drugs it the trial lawyers full employment act.
Notice that such suits are far fewer in other countries, like Germany and Canada. How do you decide what price a drug should sell for? Worse yet, there are genetic drugs in the pipeline, and they will be even more costly. The patent system gives an invention a monopoly, without it, why would any company bother to create a new one?
I do not know of any drug companies that are public supported charities.. Now, some drug patents have been bought by some unscrupulous investors, who then hike the price far above justifiable prices. that needs to be legislated to prevent such.
But try legislation prices in general, and you will wonder where all the drugs went.
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Ask Germany and Switzerland how they do it. They don't seem to have a problem with regulation of their insurance companies and the drug prices.
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There's no evidence (that I'm aware of) that first-mover advantages are not sufficient to generate the profits pharmaceutical companies need to financially justify development of new drugs. In any case, excess profits are not needed.
The U.S. Government may have offloaded the costs of testing new drugs' safety to the same companies who will profit from them, but as Prof. Krugman notes, "the fact that taxpayers pay a large share of drug costs ... reinforces the case" for not paying excess profits. He should note that the NIH has "march in" authority for exactly this reason, but that it remains unused.
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"Everything that can be invented has been invented."
I say that it is high time to close the Patent Office. We can likely muddle through our future health care crises without the heavy dose of national extortion we are enduring today. Maybe a bake sale or two to tide us through "the greatest scandal in American history".
(What a waste of a great nation.)
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To refer to a 2003 deal is more than misleading.
The ACA was signed into law on March 23, 2019
President Obama's Party had absolute majorities in both the House and the Senate. I was a small contributor, voting for him.
President Obama gave big Pharma what it wanted, responding to pressure by the Democratic Party not to offend his campaing donors. [1]
Absolutely no fan of Trump but being independent of campaign contributions, he is taking on big Pharmacy
As a former public editor of the NY Times observe ed, Paul
Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes [2]
This Op Ed is an example.
[1] https://www.commondreams.org/news/2010/01/12/obama-received-20-million-h...
[2] https://www.nytimes.com/2005/05/22/weekinreview/13-things-i-meant-to-wri...
This is what happens when the citizens of this country can't be trusted to vote for people who are looking out for them. It turns out that we as a nation are too dumb to know who has our back, and unless some drug company comes up with smart pills we're never going to learn.
Our president is a proud cheat, scam artist and shameless narcissistic ignoramus who would sell out the entire country for the thrill of duping the public just to boost some drug company's bottom line. He's got a record, after all, having paid $25 million to settle claims against his fraudulent real estate university. This toad isn't going to change his spots.
Our representatives in Congress are no help, because many of them are in on the scam. They came within one thumb of killing Obamacare, but only managed to wound it thanks to an ailing John McCain.
Business in general is engaging in a feeding frenzy. Trivial tax cuts for the middle class are multi-billion dollar giveaways to businesses, who are salivating at the chance to rake consumers over the coals.
When it comes to this drug fiasco America has chosen to take the red pill. They'll happily slog along in a dreamworld, underpaid, overcharged and happily voting for idiots who promise to rob them blind.
But the smart money is on black--a dark, dismal future where corporations (who are people now) don't even pretend to care whether we live or die. They get paid either way.
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It's called "Welfare" and the only difference between this form of government assistance and individual assistance has to do with color. That color is green. One entity owns politics and the other has to live with those, bought, politicians.
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Pharmaceutical companies, which self servingly claim dedication to providing treatment for the ill, are first and foremost about shareholder profit and as such represent one of the three pillars of the enormous and corrupt medical industrial complex. The other two pillars are ably provided by the insurance industry and the large hospital systems, some of which are ridiculously designated as "not-for-profit" .
And, what of that common deception, even quoted here by Mr Krugman, that reducing drug prices will suffocate innovation? Drug companies in the USA spend significantly more money on advertising and promotion (including direct to consumer advertising) than they do on research and development.
The reason that we do not have rational pricing controls which allow reasonable profits for pharmaceutical companies and encourage R&D, while preventing obscene profits, is simple arithmetic. The pharma industry has spent on average over $240,000,000 a year on lobbying since 2008, and 2018 is on track to exceed that (https://www.opensecrets.org/lobby/indusclient.php?id=h04).
Buying expensive fancy cars, or designer clothing is a personal choice; paying for medications is not, and some reasonable government control is essential.
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There’s no incentive to drain the swamp, Paul, when elections are manipulated through voter suppression, gerrymandering, big money, and computerized voting. Computer security experts have proven over and over that electronic voting machines are easily hackable, and it can be done with self-deleting code.
Credit card companies and banks cannot make their computer systems 100% secure despite the fact that they have a lot of money to spend on security. Spoonamore explains in the video below that the credit card industry has a 2-1/2 percent fraud rate.
Stephen Spoonamore, Computer Security Guru, Election Theft with Voter Machines https://tinyurl.com/y7855vmp
“There is no voting system in the world that cannot be hacked. You cannot have secure electronic voting, it doesn't exist. [Hand-counted] paper ballots is the only way to make voting secure."
Victoria Collier on computerized voting: https://tinyurl.com/y9xx63f6
“Experts describe appalling security flaws from the potential for system-wide vote rigging viruses to the use of cheap, easily replaced keys -- the same kind used on jukeboxes, and hotel mini–bars -- to open the machines themselves.
“In 2005, the non-partisan Commission on Federal Election Reform, chaired by Jimmy Carter and James Baker, stated that the greatest threats to secure voting are insiders with direct access to the machines. ‘There is no reason to trust insiders in the election industry any more than in other industries.’”
#SayNoToFaithBasedVoting
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Why would election officials destroy the ballots during pending litigation and before 22 months as required by federal law?
Politico: Experts [Say] Broward’s Election Chief Broke Law Destroying Ballots https://tinyurl.com/ybkktvf9
Steven Rosenfeld: In Violation of Federal Law, Ohio's 2004 Presidential Election Records Are Destroyed or Missing https://tinyurl.com/y9eo4ovp
Cliff Arnebeck: “On the one hand, people will now say you can't prove the fraud, but the rule of law says that when evidence is destroyed it creates a presumption that the people who destroyed evidence did so because it would have proved the contention of the other side.”
Jonathan Simon: How Much Faith Do You Have in the Vote Counting Process? https://tinyurl.com/yd9p2rg7
“The amount of evidence that has been produced says we’re not sure who’s committing this crime but there is a dead body. We have all these elections where you’re getting these results whether you look at the exit polls, cumulative vote share analysis, individual anecdotes that we see votes flipping on touch screen machines, poll watcher reports. All these things are very strongly probative that something significant, targeted, and directional is taking place, and there is no interest in taking any further steps in reporting it or investigating it.”
More Simon’s interviews: http://codered2014.com/. You will learn new information from each one. He’s the author of "Code Red: Computerized Election Theft and the New American Century."
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It's Yes to every Robber Baron,
About Patient's health Trump ain't carin'
And his slimy cahooters
Devoid of straight shooters
Not one single halo is wearin'.
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Dr. Krugman! Donald Trump's "speech" was written by Big Pharma. There is no "plan." There never was a "plan." Don't forget the right-wing echo chamber: "rationing;" "socialism;" Reagan's "government is the problem." That's why there is "a very strong case for government action to limit the prices drug companies can charge" but it will never see the light of day. Congress is bought and we're too lazy to turn them out.
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In New Zealand the government set up a pharmaceutical buying agency years ago. Its basic premise is that drugs that have the same therapeutic effect will be subsidized by the tax payer only to the level of the cheapest of them with the same medical efficacy. Drug companies can charge what they like, but charges higher than the subsidized price result in patient co-pays. Not surprisingly, this brings all the pricing down. It’s called competition. You should try it sometime.
PS. These arrangements caused a large number of US senators to co-sign a letter to the NZ government decrying competition for pharmaceutical pricing, ostensibly on intellectual property protection grounds. Did you all know your tax dollars were subsidizing pharma lobbying by your own senate?
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How dare you mention NZ? The first democratic primary vote for Democrats abroad was cast for Bernie Sanders. Majority, upwards of 65% democrats living abroad, voted for Bernie, because his vision matched theirs, they knew America could do much better. Status quo meant Americans lagging way behind the rest of the developed world, when it came to universal health coverage care, drug pricing and subsidizing.
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NZ is a very small island in the middle of nowhere. It is nothing like the USA or Asia.
And as for government monopolies -- y'all want another V.A. or Flint Water? IMHO, that is just insane.
The US is one of two countries, along with New Zealand, to permit direct-to-consumer prescription drug advertisements.
Imagine, only 2 countries. Elsewhere do they think medicine is between doctor/patient, and not to be marketed for profit like any consumer product?
So please explain this effect on NZ drug prices and their political attitudes.
We are swamped with drug ads 24/7. Our drug prices are world's most expensive (like our election campaigns.)
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No surprise here, Mr. Krugman. It's just like the gun industry.
But as a refinement to your argument, I'd add that it is not just the drug companies, but the whole supply chain through which drugs are produced and sold which includes R&D firms, manufacturers of bulk drugs, wholesalers, distributors, insurance companies, PBMs (pharmacy benefits managers) -- all the people Heather Bresch mentions in her convoluted explanation of why EpiPens cost so much.
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I think, POTUS is being unfairly criticized on this issue. Obama and democrats were in power for 8 years; passed a major healthcare legislation (ACA) but did not do anything about drug prices. Republicans are trying to do something which is long overdue. Their proposal is far from perfect but we have to start somewhere. Toxic partisanship is not going to bring down drug prices, while proposed policies might.
2
Correction. Democrats were in power for two years and obstructed and nullified for six of those eight years. Just look up John Boehner, Paul Ryan, and Mitch McConnell.
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"Obama and democrats were in power for 8 years". Not even close, Alice. Republicans, with obstruction as their sole agenda, took over Congress after Year 2 of the Obama administration. And you should remember that Year 1 began with McConnell declaring that the unified goal of the Republicans would be to make Obama a one-term president. Doing "anything about drug prices" was obviously not part of that goal.
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Republicans controlled the U.S. House for six of Obama’s eight years and during his first two years were able to block almost everything in the U.S. Senate and what did make it through had to be heavily watered down to suit conservatives.
Democrats never had a filibuster-proof majority in the Senate. Senator Franken was seated late due to Republican court challenges and by the time he was seated Senator Kennedy was dying of cancer and mostly absent. It was only a few weeks that they were both nominally in the Senate together before Senator Kennedy died, and even during that time there were really only 59 Democrats because Senator Specter was elected as a Republican.
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Tom Price, while in Congress, owned lots of medical stocks and tried to use his position to promote or prevent approvals based on the stocks he owned. He delayed the approval of a hip resurfacing product because he owned stock in a competitor.
My partner's LA physician (widely renowned but now semi-retired) recommended the unapproved hardware for the other hip. She went to Ghent, Belgium, had the whole surgery done at 25% of the US cost, with the right hardware, done by another renowned surgeon.
Now Price is prancing around proclaiming that all US citizens should have affordable health care. The man is a snake, and he must have found some angle to make some bucks out of his current pose.
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Medical tourism is a thing. People have gotten hip replacements knee replacements even valve replacements done in Indian hospitals for a fraction of cost, including travel back and forth and rehab recovery. Go figure.
Obamacare did not solve the problem of high drug prices, expensive health care costs, and people are still traveling abroad for cheaper services.
3
A fine thesis, but it puts the cart before the horse. Allowing government negotiation of drug prices, even in a large-pool setting such as Medicare, will, effectively be pushing on a string until the system negotiates prices for care itself. To put it plainly: the benefits of imposing a single-payer system for drug prices will be muted until there is a single-payer system for the underlying service itself.
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Our increasingly corrupt political system has been saying yes, not only to Big Pharma, but a whole slew of industries over the decades. Some of those industries have, by their actions and their oblivion of the most basic codes of ethics, actually killed Americans or, at the very least, kept them from the human right to healthcare.
Drug pricing is an integral part to delivering healthcare. Pricing in any part of healthcare is an integral part of the delivery of that basic human right and a society's promise to itself to take care of its own.
Between this set of issues, the elephant in the room that is the "gig economy" in post-Great Recession America, and the coming world without work, absolutely nothing gets resolved in a political system that is corrupt beyond belief, without a national conversation about where we go from here as a people, who it is we serve through what is supposed to be a "government of the people, by the people."
Both parties gave us the healthcare delivery system we have. Both parties said yes to special interests and, by doing so, knowingly caused healthcare to only be delivered to some, and at very high cost. Both parties are equally responsible for the opioid crisis. https://wp.me/p2KJ3H-2gN
Until voters say no to the corruption of money in politics, life in America will only get harder for the many. Triangulation got us here. We need to find the way out.
https://wp.me/p2KJ3H-2Jr
Oligarchies work like mafias. That explains both Cohen and Trump.
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