On the surface, it sounds like a great idea. Now, how to get the Big Pharma lobby in line, considering how much money they pay to members of Congress.
Any drug for which people are paying 1,000 times the cost to cure a deadly disease should be regulated.
1
This analogy is bogus. Australia is not paying a billion Aussie dollars to INVENT (research and test) a new drug for Hep C. They are paying for a drug already existing. That’s like paying for a show Netflix already has on the shelf.
More does need to be done to keep research for important break throughs going while keeping those miracles affordable, but this article simply inflames with misguided logic.
1
Just the threat of canceling patent protection when Pharma grossly overcharges for medicines would take care of a lot of drug price gouging. This would allow generic producers to immediately jump into the market.
If Google and Apple wanted to permanently endear themselves to the country, they would divert some of their billions into a generic drug production company, with the goal of producing any generic drug that other producers are overcharging for. Just the threat of this happening would be enough to restrain the current drug producers.
Average the price paid for a drug by a percentage of western countries, then only allow a Medicare reimbursement of this amount +25%. If the average by the % of western countries is 500.00 a month, add 25% of 125.00 and set the reimbursement at 625.00. Insurance companies will follow this model as they do for other Medicare reimbursements. Don't negotiate, just set this up and do it. We must stop paying 95,000 a month for a drug that other countries pay 850.00 a month for. If the Rx company won't accept the reimbursement from Medicare, Medicare can drop the drug altogether. Yes, recipients will suffer until the company realizes that a drop of 60 million customers is worse than making a small profit. Why was this ever allowed? No wonder Medicare is going in the red.
Why is it that every time a red state has to cut spending in one place to spend money in another the first thing they choose to cut is Education? This has been a strategy of the Republicans for decades. Cut education spending. There is nothing more important to the quality of life than an education. Without one poverty is just a vicious cycle. But I'm sure Republicans know that. The poor and unhealthy and uneducated are the easiest to control.
pbs.gov.au has a list of all approved medications
Fascinating idea. In my neurology practice, drugs for multiple sclerosis that cost 30k annually 7-10 yrs ago are now 70k and up. No change in effectiveness, no change in ease of administration, no change in dosage.
These drug prices are an obscene scandal.
Ms Rosenberg's editorial does a great service towards advancing this discussion.
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@Michael
Yeah, and the number of government regulations involved have gone up 300%.
Strong correlation? Of course. Seriously.
@Michael
For some reason -- has Krugman explained it? -- 2% inflation per annum is considered healthy for the economy!! or somehow magically makes a healthy economy.
Congress of course does not care. They have "better" things to make a mess of. In fact they succeeded in making a mess of drug pricing!! Name names!
@Bang Ding Ow
Regulators do not set drug prices. And the GOP had complete control over the government from 2016 to 2019, so take it up with them. Seriously.
7
I published a book about Big Pharma’s greed and dirty tricks, entitled ‘In Jake’s Company’, that no one has read, just as no one has read any of the other dozens of exposés that explain how the wizard CEOs “behind the curtains” run their Oz-like kingdoms and maintain profit margins that - in the U.S. - exceed those of any other industry.
The U.S. provides the huge profits that compensate multinational Big Pharma companies for the thin profit margins they achieve in countries that have sane healthcare policies - countries, by the way, that have lower infant mortality rates and longer life expectancies than we have in the U.S. Glybera, the most expensive drug in the world, costs $1.2 million per year! Soliris can cost patients up to $700,000 per year! We, via our taxes and our insurance premiums, indirectly pay for that! Take a look at this list: https://www.thebalance.com/the-8-most-expensive-prescription-drugs-in-the-world-2663232
1
Campaign finance in the US is legal BRIBERY. And the people who cannot afford the drugs are too dumb to get together and force the corruption out of the political system. Instead they would rather march for climate, or women's rights, or LGBT rights, or gun control, or whatever. Unfocused and nothing changes. As long as congressmen are forced to pander to who pays their election costs, none of the above will change. So it would be smart to lay the groundwork for all the other good changes by everyone marching to Washington DC for one thing only- campaign finance reform. Expect that the rich and the rich corporations will fight you, trick you, and try to get you to focus on all the other things. But stay focused on the one thing, and you might end up getting all the others as well. Or you can stay short-sighted and march for your own little issue and get nothing. Your choice.
Oddly enough, there doesn't seem to be a spate of deaths from tainted drugs in other first world countries. If folks in the US could order them from abroad, for a fraction of the cost, I bet Big Pharma would take notice. And just maybe, the US pricing would come down to something reasonable.
Since it is understood that millions, if not more, of PHARMS costs are tied up in advertising to the general public, is there a way to perhaps limit those annoying ads, once again? The required listing of possible dangers and side effects are as long as the ads themselves. What a relief it would be to go back to the time when advertising of pharmaceutical products was prohibited. What a cost-saver, as well!
1
Drug costs in Canada are a fraction of what they are here. The drug companies that sell in Canada are still making a profit so we must be really getting ripped off here. The Canadian government apparently better serves its people than does the American government.
1
"Why can’t the United States?" I asked my doctor the same thing. Her answer: "Congress is bought and paid for by big Pharma." Overcoming that will be one of the biggest obstacles for the citizens of this country, and possibly not possible in my lifetime.
3
AND
instead of drug company ads, maybe we need more ads- like the ones about what smoking can do to you (these are few and far between as of late) for things like HepC and AIDS and antibiotic resistance. People often really do not know or do not believe. (The mind is a very peculiar instrument in terms of what it will and won't believe. Not so rational in fact! and then there are all the other biological factors e.g. cravings.) Maybe there should be ads for behaviors (two minute exercise segments) and not for new TV shows for the couch potatoes. (This timed to go with Melania's attack on the media -- which made Trump BTW.)
The difference is the govt of Australia works for the people. The US govt and politicians work for the oligarchs and the industry.
3
Two things strike me: First this proposal addresses a few drugs and could surely do some good, but the problem underlying is not addressed. Second the proposal seems to assume that Netflix is massively profitable - which it is not. It is massively in debt and increasing its debt. I happen to quite like Netflix, but as the streaming world evolves rapidly, I would not be surprised to see Netflix collapse in a few years.
But in some sense I think the underlying problem is that my/our health is perhaps not best addressed by a profit-motivated system. Drug companies don't want me to be well. They want me to be chronically ill - but not to die.
1
Our public tax dollars already subsidize the pharmaceutical industry to a tremendous degree. Much basic and specific drug research is done by the NIH and the VA. In fact, these Hepatitis C drugs were developed in conjunction with the Veterans Administration healthcare system. Perhaps more audacious than anything stated in this well written article, initially the company that utilized all of the resources of the VA to develop their HepC cure was charging the agency and my fellow veterans full price for their drug! The pharmaceutical industry is as corrupt as it gets.
1
Finally, a workable plan to lower drug prices while funding past and future research.
1
Comparing medicines to Netflix is completely flawed. One is a virtual and the other is tangible. A picture of medicinal tablet in not the same as having a tablet in your hand.
It’s like comparing a rubber stamp impression to a sticker. While you can stamp a million times with a stamp, each sticker needs paper and glue to make.
There are tangible goods that go into making medicines, like herbs or fish oil or turmeric, calcium from shell or capsaicin from chilies and while prices of these goods can go low on s wholesale. A race to get prices lower will only mean that farmers who grow the chilies are exploited. Or fish that is harvested unsustainably. Or water resources used to grow these crops are depleted at rates that is unsustainable.
1
I am a researcher in Academia. Not "big pharma" and yet I work hard. To say that nobody is working on developing new antibiotics is just false! Compagnies and public researchers do search. Science is just a bit harder and much more expensive that this article makes it think. Governments heavily support research, but we don't just have to research to find things. I am exhausting of explaining that no, we don't hide new drugs to make money. The simple answer is universal insurance. Australia tax payers put a lot of money together each year to get this kind of perks, and it benefits everyone at this end.
1
While we have a very different pricing model for prescription drugs than the U.S., and as a result are much more effective at keeping the cost of drugs somewhat affordable, employers continue to be hit with higher and higher costs for drugs in their benefit plans. New biologics especially are running in the 10s of thousands of dollars for a course of treatment.
When I was asked to provide the Employer perspective at a big pharma conference, I focused on their pricing methods compared to other industries. They front end load all of their R&D - product by product. I know of no other industry that does that. Imagine if a company that had 50 products already producing massive profits, introduced a new product but priced that product in such a way to recoup all of their development costs, and a good portion of their marketing costs (which just happen to somehow fall under the umbrella of "research") and a nice chunk of their overhead for the entire company - on to that one product.
No other business can get away with that, but big pharma has because they are producing something people will pay any price for - their health, sometimes their life. (A discussion on the efficacy of these drugs is a whole other thing.)
I managed to get out of the conference without harm, but my message certainly wasn't appreciated by the drug execs in the audience.
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@Abruptly Biff I thought the provinces paid for everything in Canada and private payment was banned. Your comment seems to correct that error. I’d welcome more info on the role of corporate benefits in Canadian Medicare.
@Terry Nugent
You may find this article, explaining how drug coverage works in Canada and the push to get "universal" coverage, informative:
https://www.cbc.ca/news/politics/pharmacare-drug-agency-council-1.5044673
Prescription drugs, while covered for some segments of the population under the public government plans, are not mandated to be covered under the current governing legislation for our public health plans - The Canada Health Act.
I suppose that this makes good economic sense for a public health condition like Hep C. The states would certainly save money, given the number of doses their populations need. But I would hate to adopt this kluge for the wider pharmaceutical problem, because it avoids doing what needs to be done, namely getting tough with Big Pharma on pricing. The bulk pricing for unlimited supply supposedly compensates companies for the research they have undertaken, but much of that basic and applied science has already been paid for by US taxpayers, through grants from NIH and NSF. It obscures the fact that drug makers spend enormous amounts on advertising and rep ‘samples’, which street pushers call ‘first hit free’. And it ignores the immoral profiteering such companies engage in, by enriching themselves and their investors through human misery. A pox — no, a Hep C — on all their houses.
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@Ockham9
Spot on!
1
@Ockham9 basic Rand D may have been paid for by the government, but that is a pittance in the overall development costs. Clinical trials are the big expense and that falls on the companies.
2
@lcr999 Exactly. And at least the approach advocated in the piece represents progress. In this case the "perfect" (complete public control of drug prices - the dream of the left) is the enemy of the good (some progress on prices).
1
To those who rail on the "outrageous" advertising and costly giveaways to prescribers, recognize that a) with the advent of the "Sunshine Act," all of these interactions are reportable and reported. If you peruse them, you will see that the cost of such giveaways are minimal (granted it should be zero, but professionals [just like business owners] have a right to be compensated for their time and expertise; b) most institutions now prohibit any and all transfer of anything of value from the pharmaceutical industry to physicians or other prescribers (nurse practitioners, physician assistants); and c) the average cost of bringing a new drug to market usually ranges in the BILLIONS of dollars. Yes, much of the preliminary research is paid for by NIH, NSF, DOD, etc. but taking that research, turning it into a molecule that can affect the pathway identified, performing medicinal chemistry to ensure the properties of the molecule are optimized to have the intended effect, testing to ensure safety, efficacy, and ultimately that it is better than what exists is a costly model. For every drug that comes to market, perhaps 50-100 are tested but are rejected along the way because of side effects, toxicity, ineffectiveness, etc.
I say all this to mean that it's a complex issue with many moving parts. How much is one life worth in dollars? If it's your loved one, you may very well be willing to pay quite a bit.
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@EW
Yes, one may be willing to pay quite a bit, reflecting the giant costs of R & D for that particular product. But very few are ABLE to pay $30, 40, 50 or up to $80,000 no matter how much we love the patient who needs those meds.
2
@EW You can't ignore the fact that pharmacy companies can expect Americans to pay for all their R & D and huge profits at the same time when, in the end and to further enhance profits, some of the drugs are made in India. When you ask the value of a life, do you consider that lives are being lost in the US because of cost? I'd say the higher the price of the pharmaceutical, the lower the value in pharmacy's eyes of human life. Foregoing wildly disproportionate profits to save more lives--are the lives worth it?
1
@EW. "Yes, much of the preliminary research is paid for by NIH, NSF, DOD, etc. but taking that research, turning it into a molecule that can affect the pathway identified, performing medicinal chemistry to ensure the properties of the molecule are optimized to have the intended effect, testing to ensure safety, efficacy, and ultimately that it is better than what exists is a costly model."
And yet somehow, pharmaceutical companies still manage to make billions and billions dollars of profit over-and-above their R&D and advertising costs.
4
While this solution doesn't get at the heart of the problem, it's a good step in the right direction for new blockbuster drugs like DAAs for hepatitis C. However, there is no justification for extensive negotiations and special arrangements to protect profits for manufacturers for old, essential drugs like insulin. Americans should be able to import these drugs from other countries as a stopgap measure until strong legislation curtails price-gouging and corporate greed in the pharmaceutical industry.
27
Since entering medicine about 50 years ago, I have seen a progression in the relentless attack on patients by the pharmaceutical industry. First, it's profits over patients through tweaking patents and formulations to squeeze out generic manufacturers. Then, it's a legion of "me-too" drugs hardly different from their competitors. There are almost as many cephalosporin antibiotics or non-steroidal anti-inflammatory drugs as there are different types of mustards in a large supermarket.
Drugs we need are scarce. Worldwide, TB and malaria kill millions but drugs for them languish because Americans don't get these diseases as often as our poorer co-inhabitants on the planet. New antibiotics, even successful ones, are rarely developed because their very success limits their use to a short course in an individual patient and widespread use is discouraged to prevent development of resistance. But PD5 inhibitors to treat erectile dysfunction (Viagra et. al) flourish.
I would put Big Pharma on notice. Either play fair or I would favor nationalization of the industry. Making money off of human misery is unconscionable.
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@Douglas McNeill isn’t that what all of healthcare does, including physicians? In a free market it is unfair to condemn anyone for providing services for a price. It is fair to criticize pricing levels.
Even in a single payer system, real and corporate persons get paid for goods and services rendered. They just generally get paid less.
Here's another idea: The spoils should go to those who "invent" the drug--not those who produce & market it.
In other words, let's pay the doctor/researcher $1million as a reward for his/her work, then a half percent royalties on gross sales for 5 years. The cost of producing that drug would be relegated to FDA-approved manufacturing facilities (such as those that produce generics), with pricing carefully regulated, and quality assured.
So the price of a drug would not include the cost of commercials, glamorous marketing to physicians, executive obscene compensation, shareholder dividends, etc etc. In short, everything that is parasitic would be eliminated from the price of a drug.
Now watch as the research phase goes into highly innovative mode because of the $ incentive.
So when BigPharma says it costs so much to develop a new drug and that the profits are needed to "re-invest," don't be fooled by the fancy words. And BTW, a lot of research takes place in university centers & NIH laboratories, funded by the taxpayer...which BioPharma then uses to extract its profits.
What a deal.
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@nicole Sorry to tell you that the inventor is already reaping the reward. The solo researcher inventing and proving a drug in an academic setting is movie fiction. The innovation sits in smaller biotech firms which find investors willing to shoulder the huge risk. They can't afford to efficiently advance and market their innovation so they license/sell it to big pharma who gets it to market. For those small firms, they reap outsized rewards already.
4
Netflix has all kinds of competition, and nobody will die or be sick without it.
In the U.S., the medical-industrial complex does pretty much whatever it wants because of massive bribery of elected officials in the form of campaign contributions and the promise of employment after their political career ends.
When a government confronts these companies and negotiates the terms for an entire country, the companies will bargain and still make a good profit. But that requires a national health care system that speaks with one voice. It's a basic premise of economics: a buyer who controls larger purchases can negotiate more favorable terms from a seller.
Of course here in the U.S. we are the sole outlier in the civilized world with our predatory for-profit health care system, brought to you and maintained by wealthy right-wing interests who like the profits and the freedom to gouge desperate sick people of the current system just fine, thank you very much.
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Well said. Part of our “public outrage” should include refusing to vote for candidates who take big contributions from or have ties to big pharma. It is pointless to complain about drug prices and then vote for people who are in the pocket of the pharmaceutical industry. It is one of the many ways so many Americans vote against their own best interests.
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@Sandy
Unfortunately, it seems that all our Congressmen/women have their hand out (or take the hand out) from BigPharma. I looked up (on Open Secrets) how much each member of the Senate Judiciary Committee - holding hearings on high drug prices last week - had taken from this industry and it was an eye popper. Even the committee chair, Grassley, had taken money - though he has been a rare critic of BigPharma over time. So there will be no one to vote for unless candidates start running on our "little people" contributions - as some now are.
19
Why not ??? Two words: Campaign Donations.
Period.
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The "free market" does not produce desirable results consistently in healthcare. Other countries figured that out.
2
People are already doing active research in this area but it's not just a scientific problem. It's not just the Netflex model, but really the music royalty model that can be adopted for drugs:
https://www.sciencedirect.com/science/article/pii/S1359644614002530
Australia has always had control of the med market—controlling which drugs get in to the marketplace, what they will cost, etc. The drug manufacturers already understood Australia did not have an open market.
Wholly different scenario than the US. But it’s heartening some states are taking some control.
3
Now hear this, all who work in Big Pharmacy as anything except a research scientist. You are paid too much for us to EVER expect medicine to be affordable! I suggest we eliminate the executive and sales staff of Big Pharma companies, and have the national institute of health hire the scientists who actually develop the product. If you are not a scientist, you bring ZERO VALUE to the equation. Go work on Wall Street where all of the other people who bring ZERO VALUE work.
4
This is why for decades the big American pharmaceutical companies have been trying to destroy the Pharmaceutical Benefits Scheme (PBS) in Australia (that bulk buys drugs).
Usually they try to insert some clause or specific wording into International trade agreements that would allow them to take legal action in Australia or something else that would hamstring the process, but Australian negotiators are wise to them now and keep an eye out.
The tobacco industry tried to sue the Australian government over plain cigarette packaging (basic brand name, large graphic health warnings) claiming it infringed on their intellectual property (the design of the cigarette packet).
The NRA (and gun industry) also tries to weaken our gun laws, and they have succeeded to some extent by nickle and diming it. Small exemptions, looser restrictions and deliberate loopholes have gradually weakened the laws to the point that another mass shooting is a possibility - at which point the NRA will go "told you it didn't work" while hiding that they broke it.
Whenever a Democrat politician mentions Australia's gun laws, a whole bunch of false propaganda appears painting Australia as some hellscape because of the restrictions on firearms, we generally laugh at how ridiculous it seems, but don't realize it's purpose is to convince those living in a right wing news bubble in the U.S.
11
2.And then there is our compulsory voting system (along with preferential voting) that ensures the major parties have to appeal to the moderate majority (somewhat).
Once in a while the conservative party (called the Liberal party…it's short for liberal conservatives, this isn't a upside down thing) suggest getting rid of compulsory voting, usually after some fact finding tour of the U.S. It's obvious that the idea comes from Republican operatives, as the risk is that such a system could be adopted in America, and that is starting to happen - some Democrats have suggested automatic voter registration as a counter to voter suppression.
Also as is pointed out in Australia whenever this comes up, they just want to discourage younger voters, to game the system. But their party mainstream are worried about being overrun by the extremist nut jobs (been happening lately due to Murdoch press and talkback radio following U.S trends, but the next elections are looking like punishing them for going too far right,).
The U.S. operatives probably hoped that if they can get a oligarch friendly government in Australia with a guaranteed voter base that such a government could then begin dismantling the other Australian innovations that set a "bad" example to the plebs in the U.S.
Australia, showing the way forward* despite American interference.
*In some areas only, in others we're quite backwards.
And it's probably also our small population base that helps make radical changes easier.
2
Absolutely brilliant idea!
the main reason that big pharma can get away with charging so much for drugs is because it is a government sanctioned monopoly. in the us big pharma is protected from foreign competition and along with doctors and pharmacies enjoys a government sanctioned monopoly on the distribution of medicine. imagine what we would by paying for water, natural gas, and electricity if those government sanctioned monopoly suppliers were not controlled to a degree by public utility commissions.
2
It seems there is only one major US government agency that negotiates drug pricing in a way that significantly reduces cost. It's the Veterans Administration and a study showed they pay significantly less than any other US provider.
Guess what. The Koch Brothers helped fund a "grass roots" 501(c)4 organization, Concerned Veterans for America, to convince Republicans to privatize the VA.
POTUS already has a star chamber group in FL recommending changes to move the service to private providers. I wonder who will set drug prices when these changes go into effect?
The best government money can buy.
8
How about we ALL pay some amount a month and get ALL drugs free? Speaking for myself, I took almost no prescription drugs for a majority of my life, and many people don't. But when you do become ill, treatment should not bankrupt you.
I also think that we need a government controlled not for profit drug manufacturer that can supply the US with the perfectly good generics and other inexpensive but necessary products. I'm a nurse and the general public has no idea how many shortages of basic things like IV fluid and anesthesia medications we suffer with due to dwindling manufacturers who don't want to bother with these basic products that don't make a huge profit.
Congress needs to stop the for profit pharmaceutical companies to keep changing their "recipe" a tiny amount to keep charging full non generic prices. The laws seem to favor the Pharm companies, not the public.
10
@Celeste Paying a monthly fee (premium) whether you need the product or not and then getting what you need when you do need it -- I think you have just given a working definition of insurance! (Although one could quibble over whether you should pay a modest co-pay for the drugs or not.) Yes, a national insurance plan like I have here in Australia would certainly be a good idea, although of course the devil is always in the details in order to get access to the newest/best treatment.
The idea of a government not-for-profit to fill the market failure that keeps occurring in drug manufacturing is a great idea. That's the exact sort of scenario where the creation of a government business is called for -- market failure in the provision of goods and services that are necessary for the health and welfare of society.
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This is a paper from someone who pretends to be part of journalists rigorous in reporting social problems ???
You have no idea of how what you develop about Netflix and Hulu is so wrong !
Netflix never spent a dollar at funding creativity . Just distributes mediocre cheap films . And refuses to pay taxes and copyright on quality production in Europe .
How can you call that rigorous reporting ???
1
@JPH When you say "mediocre cheap films" are you referring to the $150 million Six Underground movie or the Academy Award winning Roma?
1
@Melbourne Town I don't even know Six underground > And I work in film. And Roma yes it is Ok but not breaking any concept and it cost nothing to film and Netflix is buying its artistic alibi there when it refuses to distribute good european films and cheats in Europe to pay zero taxes and does not invest anything in creative production. And refuses to pay rights on good quality production.Everybody in the film profession knows that. Netflix is bad. I cannot find anything to watch on Netflix.There is not even 1 Fellini or Pasolini or Godard film or Antonioni for the most famous. Only bad cheap American B films.
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@JPH I'm not sure if what JPH is saying about the business model holds up, but the point about Netflix's overall mediocrity is valid. I don't see any "Breaking Bad," "Sopranos," "Game of Thrones," or "Mad Men" on it. If you rate those shows as nines and the average network shows as fours, Netflix's average would be around a six. It's nearly all for teenagers.
"With widespread treatment, hep C could be eradicated." Of course, that should be the goal. Well, don't expect the makers of the new hep C drugs to provide enough low cost medication to make that possible. That would be killing the goose that lays the golden eggs, wouldn't it? This is a good example of how unrestricted capitalism works directly against the public good.
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Reason #1,876 why we need to vote the Republican Party out of existence.
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Better not hope for medecine to be treated like Netflix treats cinema because Netflix is the death of cinema !
Netflix cheats to pay zero taxes while invading the market in Europe, makes money by distributing cheap films and refuses to distribute quality production.
Netflix is banned from the Festival de Cannes.
Worth mentioning, there is also no advertising allowed of prescription drugs on Australian TV. Only over-the-counter. As such, corporate media, even Murdoch, cannot get in the way of the government regulating drug prices.
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@EC
TO expand, only over-the-counter drugs can be advertised direct to the public.
I don't know how much ad revenue US network and cable stations make from advertising prescription pharmaceutical drugs, but I am sure it ain't small.
5
I grew up in the '50s. Penicillin was the first laboratory antibiotic ---and to be the first, the research related to its discovery, the work involved in its development ---now that was a feat that changed the world. The price for a prescription in my childhood? About $3. Today's cost is $25. I didn't see mention in this article of the degree to which the obscenely huge salaries of big pharma execs contribute to the equally obscene prices of drugs. I recently read a $22 million figure for one company's CEO. Does any decent human on the planet need $22 million? Alexander Fleming, perhaps. And he didn't get it. As a by the way, in the 1950s you could also get a decent seat at a baseball game for about $1.00. And you could have attended the 1969 Woodstock Festival without tickets...for free.
1
There would be no new breakthrough drugs without the USA and the opportunity for the pharma companies to break even on their investment before patent expiration. No business can stay alive if it does not recoup its expenses. These companies cannot be pioneers if they can’t stay in business. We do the heavy lifting for the world !
1
@Unhappy JD. that’s not true at all. There are new drugs discovered in several countries. The US has such high costs and barriers to market drugs here, the overseas companies sell or license them to US companies. One way the government protects Big Pharma.
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@Citizen60 And let's not forget who's really funding most of the research pharmaceutical companies do: It's us, via government breaks and incentives.
There will be no action in Washington unless Democrats can miraculously take the White House and Senate.
The Republican Party (and a good number of Democrats) pretty much do whatever drug company lobbyists tell them to. Good ideas mean nothing to them.
And the drug industry won't stop raising prices until they have vacuumed up the last dollar in America and bankrupted 350 million people.
1
Not every 'Netflix' drug is eligible, however. The scheme that supports affordable medicines in Australia has a name. It's called the Pharmaceutical Benefits Scheme (PBS), instituted by a post-war Labor government decades ago. It's important to note that the PBS is not a free for all, in terms of providing a subsidy to every drug there is. That doesn't happen. It's controlled and the frequency of repeat prescriptions is limited. New drugs listed on the PBS go through a process of recommendation and expert assessment and all the way up to the health minister (secretary) or cabinet for final sign off. I take PBS-listed medicines that would cost much more for no good reason (apparently) if they were not listed, or in America. The PBS has strong support in Australia, as a fundamental pillar of healthcare in this country. Australians ought to know how lucky we are to have the PBS. We need to keep voting for it.
3
Since Ms. Rosenberg raised the movie analogy, it's also worth talking about how the blockbuster phenomenon affects drug pricing. Drug R&D is costly, whether done by small or large firms, and hence high risk. So yes, a lot of money gets spent for just a handful of approved drugs per year. So those drugs had better be blockbusters - as in the movies, a lot of people must want/need them and be willing to pay.
So many diseases go without drug research because they too few people have them, or they're people who can't afford medicine. Follow the money. The investing model begets the pricing model.
2
When writers start to talk about the cost of manufacturing and materials as a significant factor in drug costs it undermines any credibility they might have. Streaming services are nothing like pharmaceuticals. Why? Because even the worst film will often make money over the years. Streaming, airlines, foreign distributions, network tv are all revenue opportunities. When a drug is a flop it is never released and there is zero return, only expenses. There hasn't been a film yet with a billion dollar budget, but that's the cost to bring the average drug to market.
Sorry Tina Rosenberg I give your analogy two big thumbs down.
1
However the payments are structured, Australia pays only production coat, while we shoulder the development cost.
@Dan Ari That's not true. Most of these drugs don't cost very much to actually manufacture. The additional cost is each customer's share of the R&D, marketing, etc. (And marketing expenses would be a lot lower but for the insane amount of drug marketing that I see everytime I go home to the US for a visit. I bet you some of the big pharma companies spend more on marketing than they do on R&D.)
More importantly, Australia does an incredible amount of medical research, much of it funded by government grants, which are ultimately funded by Australian taxpayers, like myself. Important new innovations such as the Gardasil vaccine were developed in Australia. Considering the small population here, I'd say that Australia punches well above its weight on the medical research front.
3
For some strange reason, the United States has refused, for the most part (including Medicare) to negotiate drug prices with the pharmaceutical industry. Oh, wait a sec, could it be that Congress has forbidden it? And could that be because Congress has been lobbied (bribed) by big Pharma?
When you see all those irate congresspeople demanding explanations from big Pharma, take a close look below the desk. They’re counting the $$$$ that they receive from the industry they refuse to bring to heel. It’s a scam, a charade. There is absolutely no reason why drugs should cost so much more in the U.S. than they do in Canada or France or Mexico or Australia. Unless, of course, you think Congressional bribery is a an acceptable reason.
25
What would also make sense, when it comes to Hep-C, is safe injection sites, like we have in Vancouver.
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Dr Gee is a practicing physician appointed by a Democratic Governor...a formula for success....No wonder she is working to lower the cost of drugs to the people of her state. If she were appointed by a Republican she would be working to limit planned parenthood...
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Would is be sinister to think big pharma do not want certain diseases under control as a healthy populace is bad for business.
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So whats happening in Washington State? The article mentions both Louisiana and Washington State ("In the United States, Louisiana and Washington State are following Australia."), but then discusses only Louisiana.
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Three letters why not...G - O - P.
They have succeeded in convincing a large segment of the US population that US Corps must suck every penny of profit from the US population. The GOP has never balked at how other nations push hard for lower Rx prices, and/or that the US market subsidizes the world markets.
The Dems are having their campaign platforms written for them with stories like this. But they cant see the trees for the forest. Each one reaching for the tree tops, instead of focusing on the forest floor, where the trees start out...
They must go after the foundational problems first. That's where the work is, that's where the changes can most take place and make a difference.
The Dems need to go after the State Repub Gov's who keep refusing to do the will of the voters - and rolling back medicare expansion. Among many other initiatives voters passed...
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1. The U.S. government needs to nationalize one of the major pharmaceutical companies. This is Company A.
2. Company A approaches any number of universities and makes a contract with the grad students. The students perform R&D; Company A licenses the new medicine and splits royalties with the school.
Pros:
(1) the government (us) gets a pipeline of new drugs at a fraction of the cost (2) the schools are flush with licensing royalties and can offer reduced or no tuition. (3) students have jobs and can pay off their tuition
Cons:
No more greedy pharmaceutical companies.
No more worthless stock buybacks that produce no value except CEO raises
No more outrageous drug price increases
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If the heirs to a former British Empire penal colony can figure this drug pricing cost benefit analysis thing out then why can't the heirs to the first colony to successfully rebel against the British Empire?
See " The Half Has Never Been Told: Slavery and the Making of American Capitalism" Edward Baptist; " Slavery by Another Name: The Re-Enslavement of Black America from Reconstruction to World War II" Douglas Blackmon: " Dog-Whistle Politics: How Coded Racial Appeals Reinvented Racism and Wrecked the Middle Class" Ian Haney Lopez
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Why can’t we do like Australia in regard to med costs? Well, the answer can’t be because we're the greatest country in the world. However, maybe this is a way to make America great again. I think we should try that approach. We can levy a one percent income tax on the one percent. Should be enough, don’t you think? If we don’t try, we’ll never know.
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Australia has a representative democracy designed to serve its 25 million citizens.
America has a representative oligarchy designed to serve 330,000 citizens, also known as the richest 0.1% .... 99.9% be damned to premature death.
Game over.....until every radical right-wing profiteering propagandist Republican is thrown out of office and a single-payer campaign finance is implemented.
Sociopathic American greed is the root of American evil.
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Here's the rub: "With widespread treatment, hep C could be eradicated." Then what would big pharma do? They would much rather treat chronic diseases that don't quite kill you than actually cure everyone with anything.
A cynical part of me suspects that big pharma might be behind some of the ante-vax movement, too. If you keep a little bit of the disease alive in the wild, the need to treatments - and the vaccines won't go away.
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This is an unAmerican anti-capitalist proposal. Bif Pharma has the God-given right in a capitalism system to exploit the sick in order to maximize profits. They do not have an obligation to provide medicines to people who cannot pay their prices. People who cannot afford to pay their high prices simply cannot afford to live in our capitalist system. And why would our capitalist system want people who cannot afford to live in it?
In short, we can either have a capitalist system where poor people die because they cannot afford to live or we can have a socially just system that denies Big Pharma their god-given right to exploitative monopoly profits.
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@Benjamin ben-baruch
Wow! That's harsh! What you are saying is only rich people deserve to live because they can pay.
By your estimation most of us would be dead, in which case, there will not be much of a society left. And what happens to all those tasks performed by the poor people who have died. I think you underestimate their value to society just because their salaries do not pay them enough to afford medical care.
Why are Americans so resistant to the concept of social medicine that has been in place in many countries for years?
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@cl-Reread the second paragraph. He is not really advocating for letting people die.
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@cl
I think that Benjamin's post was missing the "/s" tag. It gets harder and harder to be sarcastic these days.
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This is Trump’s most major let down. He was so cavalier when he promised lower drug prices. So self assured and asking for trust. Why is there no revolt? This affects us all.
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The US government is going to provide health care for all? Gee, you lost me there. How many states have now voted for medicare expansion, but the governors and state legislatures have refused to enact the expansion?
I am not saying that there are not problems with the cost of drugs.
Innovation needs to be supported and paid for with higher drug costs while they are covered by patents and regulatory protections.
The prices of old drugs should be tied to their cost of production, distribution, etc. No ever increasing prices for insulin and epipens.
If you are going to have the government buy in bulk for everyone though, you are not going to have choices. I know, many do not have a choice now as they cannot afford drugs. Choices in small markets where drugs become available substantially later in the US as there is little reason to jump through regulatory hurdles early for such a small market are different from considerations in the US.
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@Colleen M
Here here! Choice! Liberty! And the freedom to declare bankruptcy or die thanks to the cost of health care.
The "problem" with the Netflix model is that it is much more equitable in delivering to the masses what it sells. That's not the pharmaceutical industry model, or for that matter, much of the rest of the healthcare delivery system in the U.S.
Pharma's sales algorithms include a percentage of those who need the drug will be able to pay for it one way or another: Medicare Part D, other insurance, second loan on your home, whatever. They decorate the model with special deals if the patient meets the profile the company decides. They are in control which is just they way they want it with no government regulation.
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The author's Netflix analogy is strong, but only considers one half of the company's business model, taking advantage of marginal costs that approach zero. This is true for Netflix, and applies to nearly all digital goods, from song downloads to Microsoft Office installations.
A bigger factor in Netflix's success-one that's been well understood by cable (and satellite) TV providers for a long time-is aggregation or bundling. Netflix buys all sorts of programming, and makes it all available to every customer, even though most are only interested in a very small portion. Knock on the doors of four or five neighbors in any Manhattan apartment building and you may find as many Netflix subscribers. But it may be that none of them watches the same programming: one binges on cooking shows, another favors English mysteries, a third is catching up on classic sitcoms...and so on.
It's easy to find healthcare industry analogs for the bundling part of Netflix's business model. In fact what may be the most reported-on aspect of the Affordable Care Act is an example: the individual mandate.
It's easy to imagine a community of customers pooling resources to subscribe to access to many medications. Most will never need most of the drugs, but that's the point.
Alas, as we've observed for over a decade now, those whose mission is to preserve the status quo are innovators too, albeit in the less appealing (to most) fields of fear-mongering and dirty politics.
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No solutions for reform of the current drug pricing system will get anywhere as long as the Drug Company lobby is the most powerful buyer of influence in Washington D.C. From 1998 to 2018 Pharmaceutical Companies paid $4,043,737,166 to our politicians. That means they get to write laws and torpedo any efforts to cut into their profits. No wonder they charge so much. They also have to pay $10-15 million to their CEO's. All based on how much money they bring in.
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@Big Mike--Right. Corporations are not people, and no one should be able to commit unlimited funds to politicians.
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Can Netflix Show Americans How to cut the cost of:
> Drugs ?
> Gasoline ?
> Medical care ?
> Hospital Associations?
> Metals
> Food
> You name it it has lobbyist...
If the USA could do something about the 10,000 - 17,000 registered lobbyists, and listen more to the "People", then perhaps costs on all things would come down!!!!!!!
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@Majortrout--Someone from Montreal should know that Americans pay substantially less for gasoline than Canadians or Europeans. We should be paying more, not less, and for that I hold lobbying, corporations as citizens, and rich folks being able to commit vast sums accountable.
I think an organization such as NATO or the U.N. should take up this endeavor. With countries banding together to purchase these medications, the health of those nations would be moderated. The money now used for these drugs could be put elsewhere. I know the U.N. already works on medical issues, but many times it is when a situation has become untenable. This format would allow countries to bring into play an effort that would stabilize populations, thereby being able to utilize monies for medical innovation.
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Any peer country has long abandoned our de facto criminal health care system including drugs.
Any country, take your pick, we are in the Middle Ages.
Even many third world systems have a better system. (to counter the bait and switch conservatives who will jump on this, I mean that have a universal, affordable system, just not quality since they are still third world countries, but they have the system in place.)
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If developing, testing and marketing drugs required no more intellectual, clinical and technological efforts than distributing movies via the internet, this idea might work. I mean to say that it's a misguided fantasy that spells no innovation and no risk taking.
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I wish I had any confidence that the U.S. would consider a smart reform like this one.
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Interesting, but essential health-care and prescription medications are simply not the same as Netflix or other entertainment, fun but not essential to anyone's life.
Modeling prescription drug or health-care coats on Netflix is simply misleading.
In terms of skyrocketing costs of essential medications (and acute shortages of some (like Buspar, as the Times recently reported) and government action a la Australia...
...look no further than Mylan, documented price-gouger for EpiPens, run by Heather Bresch, daughter of Joe Manchin, powerful Senator, who has been providing cover for Mylan for years, along with the likes of Big Coal, Big Pharma, and major polluters in how own state.
Until the USA eliminates such blatant, conflict-of-interest double-dealing, we'll never "fix" the problems with prescriptions, healthcare, or anything else! Which may mean never, sad to say.
And as context, Heather Bresch's salary rose 671% from 2007 to 2015, from $2,453,456 to $18,931,068! Greed, price-gouging, and corrupt commingling of public-private interests!
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There are companies that offer many/most drugs for a flat fee. They are called health insurance companies. And just like Netflix, they do not develop their own content, they simply build infrastructure to deliver it and keep raising their prices as their cost of "content" increases. Big Pharma is more like a movie studio, and they sure as heck don't charge a flat rate for their product. The more in demand the movie is, the higher price they charge to the limit of Netflix (and Amazons) willingness to pay or ability to pass it along. But people can't live without drugs the way they can movies....
Big pharma is not going to sell drugs they paid millions to develop for a flat rate, they are going to extract the most value. And if that gets limited, we will get few new drugs. That's how the market works.
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@LeonidisMT You have just showed why pharmaceuticals should NOT be subject to a free-market system, and their production should instead be regulated, like most if not all of the health-care "system" in the U.S. As it stands, enormous profits are made out of human suffering and death, by drug companies, health insurers, hospitals, doctors... I find that immoral, don't you?
2
Because this capitallistic system is, or can be, so efficient, it has been called 'creative destruction', as competition removes the least efficient (effectiveness being the same, if time and effort are overlooked), and rewards the most brutally advanced corporation. That is why we come up with newer drugs when the potential to make a buck is present. Now, we have Big Pharma that seems out of control for lack of sensible regulation and public supervision, and also missing the ethics required to be more pragmatic; in other words, we are witnessing selfishness and greed instead. This, we must change, and the sooner the better, the sick can't wait much longer before exitus letalis comes.
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You have very innovative suggestions. But why? No other industry has profit margins, benefits, and incentives as the drug companies. Just because their products are to do with human health cannot justify their extremely high prices. You are taking their lobbying efforts to pass laws only benefit them as a matter of fact of capitalism. But this is the only thing that is capitalist; most of the solutions you suggest are not offered to other industries, they avoid any market competition by laws that are passed by their cronies in the congress, they get a lot of incentives from the government that only military and oil industries get, they abuse patent laws constantly, they pay university professors and research organizations "research grants" to get their drugs approved etc. etc. Enough is enough. if because of pricing only 1000 infected people get hep C treatment out of 90000 or Australia pays $7532 for the same treatment, a citizen of this country pays to an American drug company more than 10 times then something is terribly wrong. No need to bend over the greed of these companies to get what we deserve.
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AUSTRALIA Is far more effective in addressing the needs of its citizens for a number of reasons, not the least of which is that there is compulsory voting. 96% of Australians are registered to vote. Voting days are always on Saturday and involve a national day of grilling sausages for people to snack on while waiting to vote. So how come the Australians are such hot dogs and we're a bunch of weenees (AKA wimps) here in the US? Money in politics is one of the major causes. In 1996, there was a mass shooting at Fort Arthur, where some 35 killed and 32 wounded. That's almost as many as get killed or wounded in one mass shootings in schools in the US. The Australians passed a buy back of guns and outlawed automatic weapons. The results were a drastic reduction in homicides within the first year, about 67%. Why can't we have it here in the US? Because of money in politics. Now the Aussies have come up with another brilliant plan of getting new medications to those in need at very reasonable cost. They pay drug companies a set sum of $1 billion for all the medication they can use for 5 years. After that, I believe that generics can be produced. We could have a far more equitable, peaceful and healthy country if we got corporations to be "people" no longer. And put the lives of citizens above the rights of corporations to exploit all of us--to bleed us dry. But will changes happen with Trump wrecking the US? You have your answer right there. Do like the Aussies!
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@John Jones
Great post. Thank you.
3
can somewhat understand a high price for a new wonder drug, but insulin has been around for years and years..That price, which folks do get charged is thievery
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How about making them an offer they can't refuse...
Like being allowed to continue to exist in a country that spends almost $40B/year, through its National Institute of Health, on discovery-level clinical science...
Or - we could show them how Napster cut the cost of movies in America a while back...
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I am a physician and am stunned by the prices of drugs. There is only one reason for this: greed. Look at compensation of executives in the pharmaceutical industry.
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@Jon Tolins, re "There is only one reason for [the high prices of drugs in America]: greed. Look at compensation of executives in the pharmaceutical industry."
There's another reason, too: Direct-to-consumer marketing. The pharmaceutical industry spends MUCH, MUCH more on advertising prescription medicines than it does by over-paying its executives. And what does that get us? A pharmaceutical industry that emphasizes product marketing over product efficacy or innovation. At much higher consumer prices, to boot.
Direct-to-consumer marketing or prescription drugs serves no useful medical purpose whatsoever -- consumers still need to see physicians anyway, for prescriptions. The U.S. is one of only THREE jurisdictions on Earth that allow direct-to-consumer marketing of prescription medications; the other two are New Zealand and Hong Kong.
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@Jon Tolins
...not to mention all the high priced 24/7 marketing blits on TV + all the promotional medical "conferences" in expensive golf & luxury resorts. Greed at every level.
1
Movies don't cost billions to develop. Unfortunately, new medicines do.
Perhaps relax FDA demands for demonstration of efficacy (Phase III trials). Let it be demonstrated in use (Phase IV).
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@Jonathan Katz
Movies cost hundreds of millions and sometimes bring in billions. They can also flop.
Drugs can cost billions (some of that cost already borne by the taxpayer with no benefit) and over their patent lifetime bring in dozens more billions. Drugs never flop.
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@Jonathan Katz Movies get a 75 year copyright - drugs get 20 year patent - 12 years to develop = 8 years to make money. The comparison with the movie business is simplistic and wrong.
1
What a great way to solve the issue of the high price of drugs that the American public has to bear in order to satiate Big Pharma's profits. This is a market based solution that works and is a realistic way to combat the explosion in health care costs without resorting to a government takeover of health care.
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As this article mentions, one of the biggest challenges we are already facing and which is growing more critical all the time is the lack of new antibiotics to treat (MRSA) “superbugs” which are resistant to the older generations of antibiotics. I’ve read serious articles by medical scientists about the antibiotic crisis that made my hair stand on end. Unless drug companies can be persuaded, by whatever means, to put more money and urgency into this research there just might be a lot fewer patients for them to sell drugs to in the future.
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Take money out of politics in the US and many of these problems will suddenly find solutions. The founding fathers would be aghast to see how influence is bought and sold today.
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In theory, this is what insurance companies do through their collective buying power.
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I hope we can find the will to encourage "Big Pharma" to look carefully at this plan. Big Pharma need not worry a great deal about caps on profits as anyone who invested in Netflix 10 years ago can attest.
1
None of the articles about the high cost of prescription drugs mention the outrageous saturation of TV and other media with advertising nor of the costly marketing giveaways to professionals.
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@hopeE
yes re: advertising but the giveaways went away about 5 years ago. Drug reps don't visit offices anymore with lunch and gifts. That is a good thing.
1
@hopeE
Never mind those commercials. How about the fine print in the commercials or the voice-overs "informing" the viewer how many harmful contrindications there can possibly be with the drugs These drugs are supposed to make you better!
3
Why should big Pharma agree to anything that caps their profits? Even the basic operation of the free market system has been prohibited by Republican laws. Medicare, for example is not allowed to even negotiate drug prices.
The Republicans, they got big Pharma's back.
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This is smart, innovative thinking. Win-win for consumers and pharmaceutical companies.
Shout out to the Solutions Journalism Network - you all are doing great and important work!
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