Shooting for Sweden, Hitting Venezuela

Great Debates
121

It’s already been explained – several times now, actually – why this is completely false as an explanation for high health care costs. Medicare has no meaningful ability to control costs because it can’t do anything about the incredible overhead inherent in the overall system, nor can it just arbitrarily decide to pay less because at some point providers will focus primarily or entirely on privately insured patients who pay more. It doesn’t matter how big Medicare is when it’s just one player in a fragmented and dysfunctional system that it can’t control.

If you compare US costs with those in other countries, particularly those with a similar cost of living (e.g.- Canada) you find that equipment and supply costs are essentially the same, real estate costs are similar, and the big differences are the labor costs: the much higher costs of getting paid by a system whose staggering complexity never ceases to amaze me, and the fact that providers can basically charge what the market will bear. The root causes of US health care costs are so extreme and egregious that it’s not usually the subject of contention.

122

But they don’t negotiate like a government. At least, they don’t negotiate with the extraordinary market power of Iceland.

Why does that someone have to be Americans? Is there a reason our government, who supposedly is “for the people” is refusing to step in and change this dynamic? They are allowing this burden to fall on the backs of hard working Americans, while the lazy socialists across the pond get to pay next to nothing. No wonder they get 6 weeks of vacation, we’re doing all this damn work for their benefit.

This dynamic really irritates me because the party that seems to want to maintain the status quo, also defends that status quo by pointing out that we are subsidizing the socialist health care systems of other countries. It’s mind boggling.

123

I see that in order to prove your point, you have to cite poorer countries with far less developed technology infrastructure. But more developed countries such as Canada and the UK spend half as much as the US and have lower infant mortality and higher life expectancies, and also better quality of life in old age. Survival rates for cancer are similar to the best of the US, better for some cancers and slightly worse for others, but basically similar. Your own cite refutes your claim about US cancer survival rates – the article does not single out the US, but talks about “United States, Canada, Australia and New Zealand, followed by Finland, Iceland, Norway and Sweden”. Moreover, the article cites many cancers with better survival rates in Asia, and for leukemia survival in children, Finland beats out the US, and for brain tumor survival, Sweden and Denmark beat out the US. This is not a winning line of argument for you.

124

I really can’t understand how nationalist America-firsters are adamant that Americans are obligated to pay high drug costs so that people in France can get cheap new drugs.

Are we running a charity here?

125

An interesting comment on the subject of drug prices from the founder and president of one of the US pharma companies, who recently raised the price of an essential antibiotic called nitrofurantoin from about $500 per bottle to more than $2,300. He claimed he had a “moral requirement” to make as much money as he possibly could and praised his kindred spirit Martin Shkreli for having been a fine exemplar of that moral principle. I’m not joking:
“I think it is a moral requirement to make money when you can,” [Nirmal Mulye, founder and president of Nostrum Pharmaceuticals] told the Financial Times, “to sell the product for the highest price.” … According to the Financial Times, the executive defended “Pharma Bro” Martin Shkreli, who was once dubbed the “most hated man in America” after his company raised the price of an AIDS drug by more than 5,000% in 2015. Shkreli was recently sentenced to seven years in prison for fraud due to mismanaging money at his hedge funds.

“I agree with Martin Shkreli that when he raised the price of his drug he was within his rights because he had to reward his shareholders,” Mulye was quoted as saying.

And that, ladies and gentlemen, is why Americans are gouged on drug prices, and not to “fund research”, which is carried out in advanced countries all over the world and develops pharmaceuticals and health technologies for global markets. The difference is that other countries have necessary and responsible regulation of health care costs and drug prices; with respect to drugs, for instance, France has the Economic Committee for Health Products, the UK has the Pharmaceutical Price Regulation Scheme (PPRS), Canada has the Patent Medicine Prices Review Board, and so on. The US has Nirmal Mulye and Martin Shkreli.

126

Americans are NOT subsidizing drug prices for other countries. They are just being gouged because they allowed the drug companies to construct a system that endlessly maximizes their profits.

If everyone else is getting a better price and you’re paying more it’s because you’re over paying. This isn’t complicated, sheesh!

127

In a sane world, that fucker would be dragged from his house and thrown against the wall.

128

I am not an adamant Nationalist American-firster but I think “freeloader” would be part of their answer: “They short-change us on NATO, and they short-change us on drugs. These Marxists know nothing about the virtues of competition but, boy do they know how to J** us down on the price.”

129

I’m sorry, I don’t know what I was thinking. Temporary aggression robbed my sanity for a moment. I meant to say “dragged from his mansion” because no way in shit this parasite lives in a simple house.

130

Yes, as long as it doesn’t benefit poor Americans.

Those losers can go suck it!

131

This thread is starting to look familiar to me. I’m not gonna re-tread old arguments here. But I will point out that some states are trying to expand Medicaid, against the wishes of their Republican overlords. I hope they succeed, because the people want the Medicaid expansion. See the links.

In particular, the guy in Maine is being obstinate. He just wants to end his term and say, “I never expanded Medicaid”. His term ends this year, and he’s breaking the law.

This is how dug in the Pubs are on Medicaid expansion in red states. I think over the next 5 or so years, popular support will chip away at it, and we’ll get almost every state on the expansion, with the exception of some deep-red states in the South. Even there, it’s possible that states like Georgia and Texas might change their view, as demographic trends are turning them closer to purple.

132

That’s the weird thing about the American version of nationalism. You guys are great with the “fuck everyone else” part of it, but you just can’t seem to grasp the “we’re all in this together!” part.

133

Why don’t they negotiate like a government?
The claim is that government run healthcare is cheaper for these reasons. Yet our government run healthcare, which some people to expand to everyone does not take advantage of these ways to cut spending. This is because cutting spending is politically unpopular so no one wants to do it. This will not magically change.
I am old enough to remember when Democrats controlled the Presidency, and both houses of Congress by a large margin. They took that opportunity to impose their version of healthcare on America. Despite this huge amount they did not impose cost controls on Medicare drug purchases. Yet we are asked to believe that having failed to do it on a smaller level they will succeed in doing so when they control the entire system. The savings based on negotiation power is a mirage, if it actually existed we would have seen it already.

134

The claim was that every country with universal healthcare has better outcomes. That claim is refuted.
It is very difficult to measure health outcomes, infant mortality is a bad metric because genetics is involved and different countries measure it differently. Life expectancy is a bad outcome because it is mostly genetic. For example, Hispanics in the US have a longer life expectancy than people in the UK does and Asians in America have a higher life expectancy than any country in the world and it is not because they have their own special healthcare system.
The study listed America first because overall the survival rates are the best, though not much better than Canada, Australia, or New Zealand.

135

Our government doesn’t let them.

Wow. I mean, just wow. We shell out $300 for something that you can buy in the UK for $60 (epi pens) because spending less is “politically unpopular”.

I guess you’re not old enough to remember when the Republicans proposed this plan as the alternative to HillaryCare. That’s OK, I’m old enough to remember that for you.

The savings are not a mirage, they exist. They exist in spades. They exist in literally every industrialized nation besides ours. I am not asking for the impossible, I’m asking for what everyone else already does.

If you want to tell me that America can’t accomplish what every other nation has been doing for decades, we should just give up on the idea that we deserve to be a world leader in anything. Take our place with the Turkeys and Mexicos of the world, at least we can do better than them, right?

136

Nope. Totally wrong; completely, entirely at odds with rudimentary economics, arithmetic, and logic.

First of all, it is obviously silly to suggest “foreigners” aren’t a profitable market for drug companies, for the simple reason that if they were not, drug companies would not be bothered to sell their products there. Why would Pfizer or Sanofi go to the trouble, risk, and legal peril of selling a drug in France they don’t make a lot of money off? Wouldn’t that be stupid?

Secondly, if the USA is where all the profit is, why are there huge pharma companies and CROs based ikn other countries? Novartis is Swiss. I think Roche is, too. Sanofi, who I randomly named just now, is French. (France is a big pharma country.) GSK is British. Of the major contract research orgs, Chiltern is in Britain, ICON is in Ireland, and so on. Funny how the foreigners seem to have made money off this stuff.

Finally, lower drug prices in pother countries have absolutely nothing to do with high drug prices in the USA. Nothing at all.

Allow me to explain. Drug prices in the USA are, to an extent that matters, a completely wide open free market. If Lilly comes up with a new drug, which I’ll call Newdrugutin, and gets it through Phase 3 testing, it will be offered for sale in all the countries they can get approval for (which will be pretty much all of them.) In the USA, that price will be set at what they assume to be the profit maximizing price - the price point at which their net revenue will be maximized. While this won’t be one price all the time (they may offer free samples, for instance, through physicians) it’ll be pretty close to one price, and any variance from that price will mean they make less money. If they correctly set the market clearing price at, say, $50 a dose, then it’s $50 a dose. If it were less, they’d lose money by not charging enough. If it were more, they’d lose money by making more per dose but selling far fewer doses. Over time the drug may have to be cheaper (due to reduced demand, more competitors, etc.) or go up (inflation, increased demand, etc.) but the price will always be set at the profit maximizing price. If it’s not, the drug company appearently doesn’t want to make money.

In, say, Canada, things are different. The price of the drug must be approved with the PMPRB - I’m not going to type it out because who cares - which is effectively a group that determined the price based on

  • A variety of criteria to determine what price is fair and
  • in truth, some unofficial negotiation with the drug maker so they don’t just say “the hell with Canada.”

This is a simplification - it is a complex process and the nature of it depends on whether we’re talking about new drugs, new doses of existing drugs, ANDs, packaging changes, inflationary adjustments, etc. - but you get the idea. At the end of this process, let us suppose that the PMPRB determines that a dose of Newdrugutin should be sold in Canada for $30 a dose.

Tell me; how does that affect the price of the drug in the USA?

It doesn’t. It would make no sense at all for it to. If Lilly, frustrated with only being able to sell Newdrugutin at $30 in Canada, were to raise the price in the USA, they will LOSE MONEY. The price of $50 in America is, as we have seen, the profit maximizing price; increasing it will not make more money. If an increase were to make more money, they would have already raised it no matter what Canadians paid for it; it would make sense to raise it simply for that reason alone, even if Canadians were paying the same amount. The price in the USA is determined by its market forces, nothing else. The price Canadians pay (or people in France, Australia, Germany…) isn’t going to make any measurable difference to the American market.

You cannot get around this. A company cannot just arbitrarily raise the price of one product to make up for lose profit in another. If they could, why doesn’t every drug in the USA literally cost a billion dollars a pill?

137

Seriously? No, that is not the claim. The claim is not “every country”, the claim is “every first world country”.

You could compare the United States with poor countries like Mexico and India and Chad, but it makes a lot more sense to compare us to rich countries like Canada, France, Japan, or Belgium. I don’t want our health care system to be more like Uganda’s, I want our system to be more like Australia’s.

138

Because the Republicans passed a law making it illegal for Medicare to negotiate drug prices.

139

RickJay, while I don’t think it changes the essential wrongness of Americans paying a premium for drugs, there is a nugget of economic theory supporting the idea that the American Premium funds research into drugs. If you are preparing a business case to support investing in drug research, part of that case is going to be the deluge of cash from the US. Without Americans pouring their (apparently) excess cash into your coffers, the business case will look somewhat different. Whether it’s different enough to tip over into “let’s not bother” territory is going to be determined on a case by case basis, and depends on the scale of the American Premium vs. World prices (something I know little about).

I don’t believe this circumstance warrants maintaining the American Premium, but it would suggest a potential resetting of negotiated prices around the world, with everyone chipping in a bit more so that drug research remains a profitable enterprise.

140

The percentage of the price of drugs that go into research is surprisingly lower than I think most people would assume. It’s less than a sixth of gross revenue, and much lower than marketing (in the case of large pharma companies; small speculative ones, usually called “biotech” in the language of the industry, are different, but they have little interest in such matters anyway - most seek to create a single drug and be bought out by the big players) and a huge, huge percentage of that is not, contrary to what I think people assume, paying brilliant scientists to devise new things in a lab. Most of it is the grind of clinical testing in Phases 1 through 4, which is generally just assembling information and studying the underlying statistics. Quite a lot of the expense is necessitated not by research goals but by the extraordinarily high requirements set by regulatory agencies, off whom the FDA, ironically, is the biggest and toughest.

Were the USA to bring drug prices under control, it’s possible prices elsewhere might see some upwards pressure, but, honestly, probably not much, and the effect on human health would be negligible.