Prescription drug pricing.........am I missing something?

[Ann Hedonia]

I was prescribed an eardrop for a chronically itchy ear a few months ago. It is called Acetasol HC and it is a hydrocortisone and acetic acid solution, in other words white vinegar mixed with the active ingredient in a popular over the counter anti-itch medication. There are no other active ingredients and it comes in a 10ml bottle. It is a GENERIC medication according to the manufacturer Actavis.

a few months ago my health insurer "accidentally" cancelled my policy in some sort of administrative snafu. As a result, they sent me a bill for for these eardrops..........for $190.00. WTF.................................

So I checked the price on drugstore.com and it turns out Aetna was actually giving me quite the deal, their 11% DISCOUNTED price was $209.97.

I don't get it.......I know usurious pricing on prescription drugs is rather the norm but I can't see how they can get away with charging a price like this for a few tablespoons of ingredients that probably cost less than the cheap plastic squeeze bottle, and there is probably minimal R&D involved with a simple med such as this.

I am putting this in GQ because I am wondering if there really is some factual factor I'm missing here....otherwise it's beyond me.

BTW, Aetna fixed their error so I wasn't actually faced with paying for this.

[Philster]

Many hoops to jump through to get med to market, and then company has a risk to cover., which is reflected in the price.

I am not saying we have a perfect system, but we have a system that adds costs through litigious people, long and expensive trials, and various federal regulations.

If they are jacking up their profit margins by gouging, you can invest in their stock.

[RealityChuck]

Drug companies' profit margins are high enough without having to do any more gouging than they already do.

[Hirka T'Bawa]

In order to get FDA approval for the medication they had to go through clinical trials, and other tests. It costs an average of $897,000,000 to get a new drug to market (cite (http://csdd.tufts.edu/NewsEvents/RecentNews.asp?newsid=29)), at your drug company price of $190, it would take selling 4,721,052 units just to make that up. Now, I'm sure that average includes research, which they didn't have to do for this drug, and the units sold doesn't account for the cost of production. But over all I would expect the amount to be lower for this particular drug.

However... the drug companies also need to recoup the cost of developing drugs that didn't get through clinical trials. If something fails the Phase III trials, then it already cost about that much, while not making a profit for itself.

Now, don't get me wrong, I'm not on the side of the drug companies at all, personally, I wish they would stop spending all the money they do on advertising. I think DTC advertising is one of the worse things in a long time.

[minor7flat5]

I'm totally in agreement with you on this. Not just prescription drugs, but healthcare in general. A friend's child broke his arm a couple of months back and the emergency room bill for x-rays, setting the bone, and a temporary cast were >$10,000.

However...

A few years ago I was at a pharma industry conference, and the head of the FDA gave a quite compelling keynote talk addressing this very issue. He went very deep into the subject with lots of data and slides, but the take home message was this: on the average, a new drug today takes 14 years to come to market and costs $800 million.

And from within the industry, one can see that no one is rolling in the dough; it is a business like any other. You can see the sheer number of scientists and the amount of testing involved in Drug Discovery (http://en.wikipedia.org/wiki/Drug_discovery), identifying potential new drug candidates from millions of existing compounds and combinatorial modifications of compounds. A telling statistic about this stage is that there are hundreds of thousands, if not millions, of compounds evaluated, but only tens or hundreds that have made it beyond this stage in any big pharma's lifetime.
The equipment used in Discovery is not cheap. I recall hearing that an outage in a typical high throughput screening (http://en.wikipedia.org/wiki/High_throughput_screening) operation might cost a company hundreds of thousands per day of down time.

Once promising candidates have been found, a great quantity of preclinical (http://en.wikipedia.org/wiki/Pre-clinical_development) work is done, analyzing the drug safety and toxicology, identifying its metabolites, performing preclinical studies in animals to generate the reams of data needed before the FDA will allow a drug to be tested in humans.
From this point on, all work is done in facilities that must meet very rigorous standards (http://en.wikipedia.org/wiki/Good_Laboratory_Practice) set down by the FDA in the Seventies after they found that the honor system just wasn’t working.
These studies are very costly, and many millions will have been invested in a compound before it is ever tried in humans.

Beyond this there are clinical trials (http://en.wikipedia.org/wiki/Clinical_trial). The first phase uses a small group (20-50) of healthy volunteers, only to prove the drug's safety. Once proven relatively safe, phase two uses ~20-300 volunteers to assess the effectiveness of the drug. In phase three, the drug is tested on a much larger randomized controlled group (300-3000), to establish the definitive assessment of the drug.

For each clinical trial, there are patients, doctors, nurses, facilities, and many supporting people. The trials have to have proper controls and be properly randomized and blinded. The data needs to be collected and evaluated.

I once heard that the supporting documentation for a New Drug Application would fill a full-sized tractor trailer, at least before the digital age.

This doesn't exactly make me not care about high drug prices, but it does explain where much of that expense goes.

One other thought: most pharmaceutical companies are living off of the profits of a few key blockbuster drugs, but they continue to research drugs that will never have the same large number of customers. Why should they research a drug that will address a condition that only a few thousand people have when they can research a drug that addresses a condition experienced by 20 million? Blockbuster drugs carry the load for the rest.

A positive note: the scientists I know and work with all are highly driven individuals, focused on their particular part in discovering a new drug. They studied many years to be able to piece together the right molecules, perform the intensive testing, identify the metabolites that have been generated, etcetera. In other words, the great majority of the individuals in the Pharma Industry seem to be doing the work because the want to make a difference—the pay is not stellar, especially considering the years of education needed.
I imagine the same can be said of most health care professionals: the bills may be outrageous, but the ER doctor who pieced together my friend's kid's arm was focused on that kid and nothing more.

[SeaDragonTattoo]

I just checked one of my suppliers and found 2 products:

AA-HC Otic Soln (Acetasol HC) 2% 10ml/Bt Generic Product 1 @ $23.14

Acetasol HC Otic Sol 2% 10ml/Bt Actavis Mid Atlantic-Alpharma 1 @ $413.47

There's your generic vs. name brand pricing. The mark-up is up to your insurance company and the pharmacy.

[Chief Pedant]

The entire health and drug system is so bizarrely screwed up I seldom even bother posting.

I agree with the sentiment that, if a given company is gouging the public and making obscene profits, the great thing about capitalism is that you can simply invest in their stock and let the green salve of your profits soothe your pain and pay your bills.

This is not to pretend that ridiculous price gouging does not go on. It does.

I note, as a physician, with wry amusement that the same individual who complains about the cost of a drug is the target audience for tort attorneys anxious to find any and all harmed by that drug in the hope a multimillion-dollar settlement is at the other end of the transaction.

We are all gougers when we get the chance.

[Tom Tildrum]

It's probably like the rack rate at a hotel: no one ever actually pays that amount. Insurers and government programs might pay some contractually-agreed or legally prescribed amount that is far lower. The high amount may just be a placeholder for legal or contractual purposes. I.e., maybe the insurers pay a price that is calculated as x% of rack rate, or perhaps this drug's price is part of some "basket" of several prices that are somehow averaged for some purpose.

[Alex_Dubinsky]

Many hoops to jump through to get med to market, and then company has a risk to cover., which is reflected in the price.
You WISH it was that. Wishful thinking nonsense.

It's simple market dynamics. The drug company charges that because it can. Now, why can it? Because competition is so broken. Where does choice and value factor into decision-making? Do you get to shop around for the med? No. Does anyone ask you if you'd like to use a cheaper alternative? No. Does the insurance argue when asked to pay? No. Does the doctor do the research for you or care about prescribing you the most effective med for the lowest cost? NO!

The doctor tells you to use Acetasol, and the insurance company (or you) pay for it. Hence, the manufacturer can charge a high price. (And with this having gone on so long, noone even thinks it's a high price, so it goes on.) The market system is broken. If anyone with power (eg, insurance company) ever got pissed about the price of Acetasol, they'd maybe send out a top-down decree to not prescribe it or demand that it cost less. And would do the trick. But it's not a dynamic system. There's no ever-present, flexible, evolutionary forces that favor the price to reflect cost. There is no competition.

It's the same everywhere in medicine. A lot of focus is on pharmaceuticals, or else people think doctors charge too much. In fact, a big problem are the medical devices.

[Alex_Dubinsky]

I agree with the sentiment that, if a given company is gouging the public and making obscene profits, the great thing about capitalism is that you can simply invest in their stock and let the green salve of your profits soothe your pain and pay your bills.
Again, you wish. Why would highly profitable corporations take their hard-earned money and give it to the public? Yeah, it's their legal and moral obligation, but come on... Instead, they consume their profits as wages. Or else, it's simply consumed by inefficiency. Many industries with much market power to set high prices are actually not that profitable. They've let costs get out of hand, systemically. (The hospital charges stupid money, but then it spends it on over-priced gear. The manufacturers charge stupid money, but don't efficiently utilize their engineers or find low-cost suppliers. Etc.)

A broken market with inflated prices doesn't typically make shareholders rich, no.

[Harriet the Spry]

I just checked one of my suppliers and found 2 products:

AA-HC Otic Soln (Acetasol HC) 2% 10ml/Bt Generic Product 1 @ $23.14

Acetasol HC Otic Sol 2% 10ml/Bt Actavis Mid Atlantic-Alpharma 1 @ $413.47

There's your generic vs. name brand pricing. The mark-up is up to your insurance company and the pharmacy.

Reading this plus the OP, the conclusion I'm coming to is that the OP thought they were getting a generic, but were actually getting billed for the name brand at an insurance-discounted price. Is that right?

[Ann Hedonia]

I just checked one of my suppliers and found 2 products:

AA-HC Otic Soln (Acetasol HC) 2% 10ml/Bt Generic Product 1 @ $23.14

Acetasol HC Otic Sol 2% 10ml/Bt Actavis Mid Atlantic-Alpharma 1 @ $413.47

There's your generic vs. name brand pricing. The mark-up is up to your insurance company and the pharmacy.

Thanks, this gives me something to discuss with the pharmacist. Mine is the Activas and I assumed it was the generic because Activas's website portrays them as a leading generic manufacturer.

I am certainly aware of the costs of research and development but this eardrop is little more than a souped-up home remedy. My other medications, an antidepressant and a birth control pill....certainly carry more risk and required more R&D but seem in line with prescription drug pricing as I think of it, ( I was billed about 30 bucks for the generic antidepressnt and about 60 for the name brand birth control pill).

So either my doctor forgot to check the generic box on the scrip or my pharmacist has some 'splaining to do. And I will ask him, that is why I go to a small neighborhood pharmacy and not a chain store.

[Chief Pedant]

Again, you wish. Why would highly profitable corporations take their hard-earned money and give it to the public? Yeah, it's their legal and moral obligation, but come on... Instead, they consume their profits as wages. Or else, it's simply consumed by inefficiency. Many industries with much market power to set high prices are actually not that profitable. They've let costs get out of hand, systemically. (The hospital charges stupid money, but then it spends it on over-priced gear. The manufacturers charge stupid money, but don't efficiently utilize their engineers or find low-cost suppliers. Etc.)

A broken market with inflated prices doesn't typically make shareholders rich, no.

Got it. Thanks. I should have known those greedy capitalists were at fault again, somehow. The only time they are efficient and caring is with their own compensation.

[Markxxx]

I am wondering about the cost if it's available in generic or the ingredients are simple? Something doesn't seem right here. Could there be a delivery method that has a patent?

I ask 'cause I used to use an asthma inhaler that cost $15.00 generic. Then the government banned CFCs and now there are no more generic asthma inhalers. Now I have to pay $54.00 for a brand name. This is the same ingredients but a new delivery method without CFCs.

(Actually I don't pay, if I needed one I'd go to my doctor who gives me free samples. He only charges $50/visit)

[OldGuy]

I agree with the sentiment that, if a given company is gouging the public and making obscene profits, the great thing about capitalism is that you can simply invest in their stock and let the green salve of your profits soothe your pain and pay your bills.

Unfortunately this is not really true. Suppose an item costs $1 to produce and it "should" sell for $1.10 to give a company a "normal" profit. A company making only this sells 1,000,000 of them a year earning $100,000. Suppose it it proper to capitalize this at 10%. Then the company is worth 100,000/.1 = $1 million.

Now if the company sold them for $2 apiece and made 1,000,000 a year that would be great for you if you bought the company at the $1,000,000 price. You'd earn 100% per year. Unfortunately, the company is probably selling for 1,000,000/.1 = $10 million. So you still get only a 10% rate of return.

So who makes all the money? The people who bought in early and rode the price up to $10 million. Just buying in at any old time will not give you any benefit.

Capitalism works not so much by letting you share in the "outrageous" profits but rather by competition. Another company comes along and sells the same thing for the "proper" price of $1.10 and drives the first company out of business. or forces them to lower its prices.

But this only works after the patent expires and if the public believes the the generic drug is as good as the brand name and doctors know about the generic to prescribe it or pharmacists are allowed to make the substitution, etc.

[minor7flat5]

A very apropos moment came about today at work...

A colleague sent me a spreadsheet of terminated compounds, complete with the year, indication, molecule class, clinical trial phase, and most importantly, why it was terminated. Typical reasons might be that a drug failed to demonstrate efficacy or that there were manufacturing issues.

Though the list was relatively short, it was not lost on me the cost represented by those failed drugs. Several of them had failed in phase 2 clinical trials. By the time a drug has reached phase 2 trials, the company has sunk many millions of dollars into it.

[Chief Pedant]

Unfortunately this is not really true. Suppose an item costs $1 to produce and it "should" sell for $1.10 to give a company a "normal" profit. A company making only this sells 1,000,000 of them a year earning $100,000. Suppose it it proper to capitalize this at 10%. Then the company is worth 100,000/.1 = $1 million.

Now if the company sold them for $2 apiece and made 1,000,000 a year that would be great for you if you bought the company at the $1,000,000 price. You'd earn 100% per year. Unfortunately, the company is probably selling for 1,000,000/.1 = $10 million. So you still get only a 10% rate of return.

So who makes all the money? The people who bought in early and rode the price up to $10 million. Just buying in at any old time will not give you any benefit.

Capitalism works not so much by letting you share in the "outrageous" profits but rather by competition. Another company comes along and sells the same thing for the "proper" price of $1.10 and drives the first company out of business. or forces them to lower its prices.

But this only works after the patent expires and if the public believes the the generic drug is as good as the brand name and doctors know about the generic to prescribe it or pharmacists are allowed to make the substitution, etc.

But with drugs, it is exactly the point. And it is not true at all that most of the folks who make money in the market are the ones who buy shares early. A lot of folks who get in on the ground floor of companies lose their shirt because that's also the riskiest time to get in.

All drugs produced by a given company factor into the price. The duds along with the winners. So "obscene" profits in one area are canceled out by losses in another. That's why it's simplistic to simply complain about "obscene profits." If they are all that obscene, just buy shares.

While your example might hold for a single-item company, it has little bearing on how the market works for established companies--the vast majority of all companies.

Again, I am not saying that a given drug is not obscenely priced. Only that it's rather childish to lash out as if companies were raping the masses. And again, the nice thing about capitalism is that if those companies have it so good, you can simply invest in them. With the drug companies in particular, it hasn't been a straight graph up. $30 bucks invested in Merck about 5 years ago is about...$30 bucks today.

[Alex_Dubinsky]

I assumed it was the generic because Activas's website portrays them as a leading generic manufacturer.
The web of marketing lies is maddening. So Activa is positioning its over-priced brand-name medicine as "generic" to capitalize on demand? Did I get that right?

[Alex_Dubinsky]

Pharmaceutical Company Profits and Salaries (http://www.actupny.org/reports/durban-licensing.html)
Merck spends just 6.3% of its revenues on R&D. Presumably, this means all those expensive trials. So the argument that that's what jacks up the prices is bullshit. (Other companies claim higher R&D, but nothing strangling.)

Where the reported profits of powerful, money-swimming companies go is a true mystery. Take Ebay (which requisitions about 10% of all my revenue). It made $9 billion in revenues last year--placing it in the same league as many a pharma corp. Its profits were $2 billion. WHERE DID SEVEN BILLION DOLLARS GO? ALL IT DOES IS RUN A FUCKING WEBSITE. YOU CAN DO THAT WITH DRIER LINT.

So no, the reported profitability of a company/industry does not indicate whether its prices are fair vs costs. It's not true for Ebay, it's not true for oil giants (who "only made 8% profits in 2007"), and it's not true for pharmaceutical companies. I can only speculation which fraction of the money is embezzled, which squandered. But its absence proves nothing.

[Hirka T'Bawa]

The web of marketing lies is maddening. So Activa is positioning its over-priced brand-name medicine as "generic" to capitalize on demand? Did I get that right?

Actually, in this case it isn't marketing lies. Actavis is a major generic manufacture, in fact they are in the top 5 of the world. However, just because they are mainly a manufacturer of generic drugs doesn't mean they don't produce their own brands. In fact, a lot of time "Big Pharma" will sell chemical entities they produce to a smaller (and mainly generic) manufacturer, due to the sole reason that they don't think it is worth them focusing on.

[Hirka T'Bawa]

Merck spends just 6.3% of its revenues on R&D. Presumably, this means all those expensive trials. So the argument that that's what jacks up the prices is bullshit. (Other companies claim higher R&D, but nothing strangling.)

Where the reported profits of powerful, money-swimming companies go is a true mystery.

Oh, the money "Big Pharma" spends isn't that big of a mystory. They spend it the same places a lot of companies spend it... Trying to grow their business. In the case of the pharmacutical companies, they spend a LOT of money on DTC advertising. In fact, most drug companies are currently spending more on DTC advertising then on R&D. Now, IMHO this is a bad thing, there is no reason for a company to advertise prescription drugs directly to the public, the people they should be advertising to is Doctors, Pharmacists, Hospitals, etc...

Oh, and since you brought up Merck's finances, don't forget they also had a $4.5 BILLION settlement recently (as in last year) for Vioxx.

[Chief Pedant]

Pharmaceutical Company Profits and Salaries (http://www.actupny.org/reports/durban-licensing.html)
I can only speculation which fraction of the money is embezzled, which squandered. But its absence proves nothing.
As a publicly held company their books are public.
http://media.corporate-ir.net/media_files/irol/73/73184/MRKForm10K2008final.pdf

You could, indeed, only speculate. Or you could go reasearch it and stop speculating. Or you could take your speculation public with some specifics as to just who is stealing money and who is wasting it. This would be a fine service to their shareholders, and a nice way to improve the world.

Or you could just stop speculating. I speculate you won't, though. Some paradigms, including Big Bad Corporations are Stealing us Blind, are hard to give up--especially since some of them are. Let me know if it looks like you find some definitely getting by with it, so I can get in on their stock.

[Fuzzy Dunlop]

This is really wacky.


Does anyone ask you if you'd like to use a cheaper alternative?


Yes, absolutely. My doctor offers to try a generic alternative if cost is an issue. He'll say something like "I think this would be best for you but there's an older medication available as a generic that would probably be good, if cost is an issue". I take my dad to about 5 different specialists and they always try to find the cheapest alternatives that will do the job.

Does the insurance argue when asked to pay?


Absolutely!! Not my insurer, but seemingly everyone else's that costs less. I hear about insurers demanding a generic alternative or proof that it's absolutely required all the time.


Does the doctor do the research for you or care about prescribing you the most effective med for the lowest cost? NO!

Yes, absolutely.

[Alex_Dubinsky]

Yes, absolutely. My doctor offers to try a generic alternative if cost is an issue. He'll say something like "I think this would be best for you but there's an older medication available as a generic that would probably be good, if cost is an issue". I take my dad to about 5 different specialists and they always try to find the cheapest alternatives that will do the job.

Absolutely!! Not my insurer, but seemingly everyone else's that costs less. I hear about insurers demanding a generic alternative or proof that it's absolutely required all the time.
Then why can brand-name medicines get away with charging so much? There is some mechanism behind the phenomenon. I gave a mechanism that would produce such an outcome, but if you are right that this mechanism is false in practice, then what is happening in its place?

Maybe I was wrong: it's not that prices don't factor in at all or options aren't presented, but that people don't have all the information to make a choice. E.g., "there is an older medication that would probably be good" gives no concrete numbers, no reliable comparison and really no information for someone to cooly say, "I've evaluated the options, and medicine B is 90% of the results for 10% of the cost." So, people might just "trust" to pick expensive medicine A, as they insist on the brand name versions of chemicals available as generic. Perhaps that is the reason... some alternatives are presented to the patient, but the patient reactively picks the expensive treatments out of ignorance.

There is some mechanism there in the market. We need to identify it so that we can solve it. Solving it bottom-up through dynamic forces is the only solution. Not top-down decrees or micromanaging regulation.

[King Bobo]

Sound Mind,

I am hijacking your thread a bit as I want to ask you if this drug/eardrop works.

I have had chronic itchy ear "syndrome" for more than a year. My miseries with this are legion to me. Does this drug work?
I would gladly pay whatever it cost to get rid of this nasty complaint.

[Alex_Dubinsky]

As a publicly held company their books are public.
http://media.corporate-ir.net/media_files/irol/73/73184/MRKForm10K2008final.pdf

You could, indeed, only speculate. Or you could go reasearch it and stop speculating. Or you could take your speculation public with some specifics as to just who is stealing money and who is wasting it. This would be a fine service to their shareholders, and a nice way to improve the world.

Or you could just stop speculating. I speculate you won't, though. Some paradigms, including Big Bad Corporations are Stealing us Blind, are hard to give up--especially since some of them are. Let me know if it looks like you find some definitely getting by with it, so I can get in on their stock.
Problem is that looking through their coarse-grained books won't reveal anything. This prospectus doesn't list how much they're paying for their screws, or how much they're paying their secretaries (for their screws).

Investors are told very little.

I don't come from the "Big Bad Corporations" bend. I'm simply pointing out the strange phenomenon that many industries that have huge operating margins don't have huge profits.

One could even propose a "rational" explanation for this: firms try hard to grow to maximize future potential for profits rather than present profits. It's the incentive that the stock market creates. In any case, lack of profits != company is charging low, fair prices.

[Alex_Dubinsky]

Sound Mind,

I am hijacking your thread a bit as I want to ask you if this drug/eardrop works.

I have had chronic itchy ear "syndrome" for more than a year. My miseries with this are legion to me. Does this drug work?
I would gladly pay whatever it cost to get rid of this nasty complaint.
I wonder if you could create this medicine yourself? You'd just need to take hemorrhoid cream and thin it with something... probably plain water.

Btw, it seems Acetasol is made up of 2% vinegar and 1% hydrocortisone. You can't get 1% solution by using 1% cream, but 0.5% should still be effective. You can make 2% acetic acid solution using store-bough vinegar, but I doubt you should. The vinegar is there to kill bacteria in the case of an ear infection. You don't need it if that's not what you have, and it's questionable if antibiotics/anitseptics should be used to treat ear infections (since they kill beneficial bacteria too). Don't use Acetasol-like preparations if you have a perferated ear drum or herpes.

[Fuzzy Dunlop]

Maybe I was wrong: it's not that prices don't factor in at all or options aren't presented, but that people don't have all the information to make a choice. E.g., "there is an older medication that would probably be good" gives no concrete numbers, no reliable comparison and really no information for someone to cooly say, "I've evaluated the options, and medicine B is 90% of the results for 10% of the cost." So, people might just "trust" to pick expensive medicine A, as they insist on the brand name versions of chemicals available as generic. Perhaps that is the reason... some alternatives are presented to the patient, but the patient reactively picks the expensive treatments out of ignorance.

For what it's worth, unless I'm misunderstanding you, I think you misunderstood my point about older medicine. I'm not saying the doctor prescribes brand name drugs unless I'd prefer a less expensive generic. I'm saying my doctor would say "I think this cholesterol drug is going to be most effective but if money is a problem I will prescribe an entirely different older cholesterol drug which is available in a generic". I've never been in a situation where I was invited to choose a brand drug vs. a chemically identical generic. The doctor wouldn't be willing to insist on it, the pharmacy wouldn't fill it unless he insisted, and my insurer would throw a tantrum about it if he tried.

This is supposed to be a factual question, so I've given my personal experience and I won't keep posting about it because I'm not willing to do research into it. I just wanted to share that my personal experience has been vastly different from what you say takes place.

[Alex_Dubinsky]

Ok, so from your experience, you always get the expensive patent med because your insurance covers it? (Sorry, I may have misunderstood you.)

[Fuzzy Dunlop]

Ok, so from your experience, you always get the expensive patent med because your insurance covers it? (Sorry, I may have misunderstood you.)

No, not in the least. I have taken one generic blood pressure drug for years, the second bp drug lost patent protection a few years ago and my cholesterol medication is patent protected and brand name only. I've never taken any other medication long term but generally medication I've taken has been generic.

But at the risk of sounding like an ass, I make a lot of money and buy very good insurance because it's important to me. There are lots of examples of things I spend a lot more money on than I really need to. They're not good examples of general problems, and I'm not a representative example of prescription drug consumers. As far as I can tell your position is that doctors, pharmacists, pharmaceutical companies, and insurers are the problem when in my experience all except pharmaceutical companies are eager to use generics when medically feasible. For instance, in my case I'm willing to take the more expensive cholesterol drug because the insurer carries it. My doctor generally expresses a willingness to try an older drug available generically not because he hopes that some patients may prefer the lower cost one, but because he knows many many of his patients - even those with insurance - will wind up paying more out of pocket for the brand name drug. It's only in my particular case that it doesn`t really matter. He's not suggesting people consider cheaper options hoping they'll be generous to the insurance company, he's acknowledging that they may be much cheaper for the patient.

[drachillix]

Where the reported profits of powerful, money-swimming companies go is a true mystery. Take Ebay (which requisitions about 10% of all my revenue). It made $9 billion in revenues last year--placing it in the same league as many a pharma corp. Its profits were $2 billion. WHERE DID SEVEN BILLION DOLLARS GO? ALL IT DOES IS RUN A FUCKING WEBSITE. YOU CAN DO THAT WITH DRIER LINT.

Me thinks you have little clue of the costs involved in web domains of that scale.

Ebay is not running on a $12,000 dell server sitting in someones back bedroom.

Its more like thousands if not tens of thousands of those servers to store and manage all of auctions at any given time.
Thousands of servers will require a serious IT staff
Customers will occasionally need support, it would not shock me if ebay has hundreds of people just to answer support emails.
Ebay actually offers many levels and styles of service to many different types of customers.
Throw in merchant processing for how many thousands of transactions per second.
Maintaining massive high speed internet connections from probably 2 if not 3 separate ISP's to minimize downtime issues.
All the employees providing this functionality need HR support, supervisors, managers, people requisitioning parts.

When you have a website making about $1,026,694 an hour, you dont skimp on things. [end hijack]

[billy]

There is some mechanism there in the market. We need to identify it so that we can solve it. Solving it bottom-up through dynamic forces is the only solution. Not top-down decrees or micromanaging regulation.

Alex,
The mechanism you are looking for is called the "free market system." This free market allows for innovative companies to have a monopoly on a specific drug for the life of the patent, at which point market forces will quickly drive down prices so they are more in line with manufacturing costs.

If you do not allow for a period of healthy (obscene) profits after they spend $1B in development, they would quickly curtail a great deal of innovation, instead limiting development to a few select drugs that they were confident could be made to work; not necessarily those that may fail but could change our way of life like so many drugs can do.

If you are so frustrated by the cost of new, better, less toxic medicines, DO NOT BUY THEM. Wait until the patents expire and the cost comes down. If your life depends on a new drug, then you should be out in the street praising the free market system that provided the incentive for the pharma company to spend $1,000,000,000 to develop it.