However I think their profit margins in 2017 were almost 40%. I’m seeing gross revenues of 52 billion, and net profits of 21 billion. I guess 40% profit margins aren’t enough. Their R&D spending by contrast were about $7 billion in 2017.
There are easy solutions to high drug prices. Stronger negotiations among public and private providers with medical suppliers. Making it easier to import drugs from overseas and promoting international competition. Making it easier for generic manufacturers to enter the marketplace. patent law reforms. Not only does every other wealthy nation on earth use these tactics, but lots of middle income nations use them too. India and Brazil have much lower drug prices than America.
But none of it will be done in America. Neither political party has any interest in taking on the rich and powerful. So I guess private companies posting 40% profit margins, where a lot of their drugs are invented by the public sector will continue to act like this.
The drugs aren’t invented in the public sector. Manufacturing a workable drug not only means doing the trials and getting FDA approval, it also means taking responsibility if the drug turns out to be dangerous. The universities don’t get sued when the drug they said was a miracle drug turns out to kill people. The drug companies do.
All that being said, I agree though that we need to change the laws when profit margins get too high. Drug margins should be high due to the relative risk, but ever since Wall Street’s big crash I’ve become amenable to the idea that some sectors should not be making so much money and hoovering up all the college talent looking to make big bucks in an industry. 20% margins are more than enough for drugs. And finance margins should be no higher than 5%. That doesn’t mean I favor windfall profits taxes or FORCING profit margins down through blunt measures. But if drug companies are doing 40%, it’s probably time for everyone else to drive a harder bargain, and one way government can make that easier is to make competition easier. When someone can buy an Epipen and jack the price up 900%, something’s not working right in the market.
The workers in pharma aren’t making the big bucks. A lot of them use permatemp labor and I’ve seen jobs as administrative assistants that pay more.
According to this, public sector firms invented half the drugs that got FDA approval from 1970-2009.
The drug daraprim used to ‘only’ be $13, then it got jacked up to $750 a pill. In Brazil and India it costs $0.10 a pill because of generic competition.
But in the US, we don’t really allow generic competition (we have high barriers), and we also do not allow the importation of drugs from foreign nations.
We actually already make drug patents shorter than most patents. Artistic patents are 50 years after the death of the author and in reality seem to actually be forever given that Disney and some other old companies don’t ever want to let go of their lucrative brands.
I’m fine with the temporary patents, but when the patent ends the drug should get really cheap really fast. Sometimes it does, sometimes it doesn’t, and the reasons seem to be pretty random.
As for universities developing drugs, they need to sell them and take responsibility for them if they did all that work. Maybe it would get tuition down if they had drug businesses.
My understanding is part of the problem is that drug manufacturers can tie up expired patents in court to prevent generic competition.
Also supposedly some manufacturers will just pay generic manufacturers millions of dollars to not produce a generic version, so the branded medicine will be the only one available on the market.
I don’t know if the ACA did anything about this, but if it did I’d be surprised. Pharma wouldn’t have jumped on the ACA bandwagon if it cut their margins.
Again, I feel like fixing this issue is easy (on paper). Just change the laws regarding competition, price transparency (make all pharmacies post prices transparently), generics, importation of pharmaceuticals, etc.
The problem is neither party wants to do it because nobody wants to offend the rich.
Plus there’s a lot of games playing at the high levels of society. Laws are black and white for the poor and middle class. But the laws on the books and the law as actually applied are all kinds of shades of grey when it involves things powerful people want.
It’s all about money. No one cares about the middle class. As long as the politicians, CEOs of the insurance and drug companies, and doctors get paid there is no insentive to lower prices.
There is no such thing as an artistic patent. You’re talking about copyright, which is a different form of intellectual property. A patent has a shorter term, but what it protects is much broader. A patent is on an invention, while a copyright is on a particular expression of an idea. A copyright on a book does not prohibit anyone from publishing a different book with the same set of ideas in it, as long as the words are different.
5% doesn’t seem like a truly exorbitant increase. I thought since this was in the Pit, The OP would be about Pfizer pulling a Shkreli. I mean, I agree drug companies suck and all, but this seems almost reasonable on their part (still double inflation, I guess).
2.5 times the rate of inflation (I see one cite saying 1.9% for 2018), so definitely more than any increased costs Pfizer has (and I would expect their costs to actually decline relative to inflation, if they move in any direction). Which explains why medical inflation rate is always higher than generic inflation, I guess.
In the past three years twice I dropped a medication because in January it went from ~$25 to >$500. Happy New Year, your medication is in a higher tier!!
I’m not in medicine or anything, I just don’t see how a medication would naturally go UP that list.
Fuck all these companies. My doctor confirmed that I’ve taken nine different types of pills in 20 years, averaging over 10 a day. I can’t imagine how much money I’ve spent and there are sooo many places in the world that would cost sooo much less.
The FDA licensing system can also be a problem. A company can’t produce a drug in the U.S. without an FDA license, even if the drug is generic. There have been times when the FDA gives an exclusive license for a drug that’s out of patent, which confers a lot of the same benefit that a patent would. It gives a company a legal monopoly, which allows it to charge more than if there were competition. Sometimes there are good reasons for this, such as with orphaned drugs, but there are also cases where this has happened with commonly-prescribed drugs. It’s what allowed Martin Shkreli to jack up the price of Daraprim, for example. I’d like to see legal or regulatory reform of the FDA to prevent the agency from giving exclusive licenses to out-of-patent drugs in most cases.
And be aware that some of that $7 billion — already just a fraction of profits and marketing — was spent on stipends to physicians for having them help “research” a drug by prescribing it to their patients.
“Antitrust”? Oh you mean those 20th-century laws. Some of those laws are still on the books I guess, but they’re used for political revenge these days rather than actual consumer protection.
“Antitrust”? Oh you mean those 20th-century laws. Some of those laws are still on the books I guess, but they’re used for political revenge these days rather than actual consumer protection.