This is another issue I don’t fully understand. Don’t we have things in place to balance trade, like tariffs? Why are prescription drugs any different? It seems to me that if an isolationist attitude toward automobiles didn’t work in the 60s and 70s, the same attitude toward prescription drugs won’t work now.
I don’t buy the safety reasons. Cars have safety issues too, and we handled that just fine (mostly).
Good question – what is the history of artificially propping up U.S. industries against foreign competition? Are there success stories? Has it ever worked for more than the short term? Should we consider setting up some plan to protect the NBA?
There are two relevant concerns: A) Americans pay more than other people for drugs. B) Why?
Safety isn’t the answer to B. Drugs sold in Canada or whereever are the same damn thing as the drugs sold here. If bought from a reputable pharmacy, they’re perfectly safe (or, at least, no more dangerous than what you’ll get in the US). So if you buy drugs from Canada, you’ll save a bundle.
The why part is only partially answered by the fact that in other countries the price of pharmaceuticals is much more tightly regulated than here. But this beggars yet another question: Do we pay too much, or they too little? Are we being unfairly gouged by pharmaceutical companies, or are we being unfairly expected to subsidise the development of the world’s pharmaceuticals.
My guess is, it’s some of both. We are being taken advantage of by Pharma to an extent, largely because there’s nothing stopping drug companies from asking whatever prices they like, so long as the demand can support it. However, without the enormous profits realized from American consumers of pharmaceuticals, the revenue needed to fund R&D would be dramatically slashed. It takes hundreds of millions of dollars, quite literally, to get a drug from the bench to the bedside. If drug companies cannot justify the risk of incurring such enormous costs with high profits, they will stop innovating. All future research will then need to be funded by public money collected from tax revenue. If there is no money for research, it will stop.
The money has to come from somewhere. If you are an American, it’s largely coming out of your pocket; and that’s unfair. But to make things more fair, everybody needs to take a hit; and that won’t be an easy change to make in the market at all. Not at all.
Well there are several arguments against this.
Alot of new drugs are not innovative, amazing discoveries. They are just newer versions of existing drugs. Vioxx and Celebrex are just aspirin with bells and whistles and a few less side effects. paxil vs prozac, etc. Naturally i’m not a doctor (obviously) but alot of new drugs don’t do much more than the existing drugs.
Much drug research is publically funded in universities or private labs by the US government. So US citizens pay twice. We pay the taxes then we pay high drug prices.
Pharmaceutical companies only spend about 13% of their income on R&D.
The cost of new drugs may be closer to $240 million instead of the often touted $800 million pricetag.
Well, yes, but I’d guess that the drug companies spend a HUGE amount of money on lobbyists.
That money has to come from somewhere, no? :rolleyes:
Well, there’s some truth to that statement. Some of the putative benefits of the coxibs turned out to be no more than that, but their use is associated with, for instance, less risk of gastrointestinal haemorrhage, and that is a plus. Do the benefits justify the costs? That’s a decision for the patient and the doctor to make, on an individual basis. The drug companies do an awful lot of hyping to get their drugs sold, and drug consumers would certainly be better served by less hype and more hard facts. Unless there are legal restrictions placed on advertising, and unless consumers make more effort to get at the facts, the hype is all the general public usually sees. But is this not true of almost every product on the market?
Yeah, but public researchers are typically not in the business of doing hard-core proof-of-principle, formulation, funding clinical trials, manufacturing, distributing, etc. I don’t see how it can be argued people pay “twice”. I’ve worked in both academia and industry, and often the focus is just completely different. Having said that, lots of exclusively basic research is also done in an industry setting, right from the synthesis of the molecule all the way up to putting it in a bottle. And these days, many academic researchers with good ideas are involved in private interests quite heavily. The lines between public and private are becoming increasingly blurred. This can cause problems with the integrity of data coming out of the public research field; not so much because of lies being reported, but because some things are not reported at all. A healthy separation between academia and industrial interests is best, IMO; and both are needed, because they often serve quite different functions. Academics can afford to take any approach that interests them, sometimes just for the sake of learning something new. For-profit organizations cannot take this scattershot approach to R&D all the time; investors would never stand for it.
Huh. Well, I don’t think that’s always true. Ironically, some analysts have criticized firms pretty badly because they consider such-and-such firm’s P/E ratio to be unfavorable, and attribute this to overspending on R&D. So I guess you can spend too much on discovery? It seems like you can’t make Wall Street and public health advocates happy at the same time.
I must add to this the caveat that I am not in what is traditionally called “Pharmaceuticals”. I have very little practical experience with “big pharma”. I admittedly don’t pay a lot of attention to their financials, and I would have little knowledge of even my employer’s financials if it weren’t a salient topic in some of our corporate literature, since that stuff bores me to tears. I must say, though, a LOT of public research does get funded by big-pharma, too. I’ve seen that firsthand in academia. Not as much as from public money, but the private contribution is pretty substantial.
I’ve honestly never heard the $800M figure quoted. I actually would have pegged it at $200-$300M, which is in line with what you quoted. That’s still a hell of a lot of money, though! You have to understand that hundreds of millions still get spent on drugs that never make it to the market. Since the ratio of drugs that do make it to drugs that don’t is very small, it’s hard to estimate the true cost of any particular drug.
Do you have figures on that? This is not meant to be a rhetorical attack; I honestly don’t know what the spending is myself.
Nor do I. But considering the issue of fighting off low-cost foreign competition, the use of lobbyists seems like a no-brainer.
What foreign competition?
The essence of the drug policy dispute is where a drug company holds the rights to a particular medicine and sells it at one price in one location and another in the US. The economic term is called “price discrimination” and companies of all sorts attempt to do it all the time.
What’s unusual here is that the drug companies have convinced the FDA and some of the public to support the discrimination by making it illegal to import. It’s not foreign competition, it’s the same company and the same drug from often the same plant.
The agrument that allowing importation might lower the available funds for R&D assumes that more R&D funds are better than less. If that’s really true, then the agrument SHOULD BE to increase the price elsewhere so even more funds would be available for R&D.
Of course, the drug companies don’t make that agrument because Canadians and others will have none of it.
We can be fairly confident that the drugs we are referring to are not regualrly being sold at the loss in Canada.
Ummm, isn’t GlaxoSmithKline one of the biggest drug companies in the world? And they’re, ummm gasp NOT AMERICAN?!
Yeah, but they sell drugs to American consumers for just as much money as the American firms do. And if there are lobyists, you can bet that Merck and Glaxo and all the other European and Japanese firms are paying them to protect the American market as well. They profit just as handsomely as the Liley’s and the J&Js.
The only “cheap foreign competition” I can think of that would be relevant here are the drug firms in places like India who produce pharmaceuticals in violation of patents. This has been especially contraversial in the field of AIDS medications (which I have absolutely no financial stake in whatsoever). On the one hand, I agree, Big Pharma asks more than 3rd-world nations can pay for these drugs, even with the enormous discounts they provide. However, why should Europeans or Canadians spend little more, and Americans bear the bulk of the financial burden? This is not true for cars, or clothes, or any other commodity that I can think of. Only pharmaceuticals.
Like I argued above, I think everybody is going to have to feel it, if we want the price of drugs to come down. Importing drugs from places where the prices are artificially low will probably have as detrimental an impact as paying for it in a place where the price is artificially high.
GSK cut off supplying Canadian on-line pharmacies last year.
Why do you suppose they did that? It seems pretty clear. They didn’t want US customers to buy their products in Canada(lower wholesale price), instead of buying in the US(higher wholesale prices).
Mainly, it’s not about Americans wanting to substitute “product A” in the USA for “product B” at a lower price, but buying “product A” where it is lower.
I’d be a lot more sympathetic to the plight of drug companies and American prescription drug users and their burden of financing the world’s drug research if the drug companies didn’t spend twice as much on advertising as they do on research. (Cite) Your high drug prices aren’t subsidizing research. They’re subsidizing those stupid ads that are probably on balance detrimental to public health.
I think that’s a wonderful idea, but you basically have to ban advertising to put this into effect. These are for-profit organizations, and they compete with other organizations. If one is allowed to advertise, then another is going to want to. Also, I’ve traveled a lot and even lived overseas. There are certainly adverts in other countries for drugs, and they’re at least as stupid as the ads we see here. I don’t think this is unique to the 'States.
Hey, if there could be a law put into effect that said “consumers can only buy these products based upon peer-reviewed empirical evidence, and no form of advertising is allowed”, I, for one, would be all for it. But in the absence of such regulation, any company selling a product that has to compete with other companies for market share will use advertising. It’s the same as with any other commodity.
Aren’t those countries that offer “low” drug prices doing so by artificial, government mandated price controls? If it cost the drug company 1 dollar to produce a pill, but country A will only pay (or allow the company to charge) 75 cents, then the company has to make up that extra 25 cents some place else.
Something tells me that all those “low cost” countries (France, Canada, England, etc) are getting by because its better for the company to shift the extra cost to America than to cut off the foreign market.
And so, once again, the rest of the world suckles at the American teat and hates us for it.
Let me put together an analogy here, to make sure I understand.
Let’s say I own a sterio store. I sell my top of the line sterio for $500. But, when a man in a nice suit walks in I change the price to $700.
Is that about right?
It’s more like a country sets the price at $1,the cost of production is 75 cents and the county could get $1.50 without the limit. If a price set by government is below a company’s costs, the product or service disappears from the market.
“Artificial, government mandated price controls” is a long phrase to simply describe price limits. The US has many already, the concept of price limitation is widely accepted. TV cable rates, electricity rates in many states, laws against price gouging during natural emergencies, usury rates, the Medicare system. In this debate, pro importation forces are more free market than price control however.
A company that owns the rights to a particular medicine sold in Canada and the US is making money in each market. The US consumer wants to import so they pay the cheaper price and the company is against the importation for exactly the same reason. The views of both are completely understandable.
In order for this to be true the drug companies would need the revenue for R&D. Alot of people have talked about how drug companies have insanely high profit margins, how only 13% of budget goes to R&D and how alot of research is done by universities and the NIH and the drug company just picks up on it. Plus there is still the fact that alot of new drugs are just old drugs with bells and whistles. Thats not to say there aren’t important drugs just that making costs so high seniors can’t get drugs they need to live so Eli Lilly can create a drug which is just aspirin with bells and whistles isn’t worth it.
What would be a better method would be for government to either slightly raise taxes (the tax raise would be less than the cost of increasing drug prices) and devote that money to drug research. That way about 85% of revenue (minus 15% for bureaucracy) would go to pharmaceutical R&D instead of 13% that comes from pharmaceutical income.
By this I meant the governments of the US, France, UK, Italy, Japan, etc. Instead of them paying more for drugs their governments should just contribute more to pharma research.
What are these “bells and whistles”? The coxibs, which you referenced in an earlier post, could be said to have fewer “bells and whistles”, because they target only one isoform of cyclooxygenase, rather than two. The science suggested targeting COX-2 might spare the GI tract mucosa (where COX-1 is constitutively expressed, and COX-2 differentially expressed), since dual-inhibition has been demonstrated to lead to ulcerations in the small intestine (both by the use of dual-inhibitors like aspirin, or COX-isoform-specific inhibitors concomitantly).
What we’re finding in the clinic is that coxibs must be used judiciously. Combining coxibs with other NSAIDs can make things worse, not better, if the NSAID inhibits COX-1. This becomes an issue with heart patients, who may be prescribed aspirin; if they ditch the aspirin, they lose the anti-thrombotic benefits; if they keep the aspirin, but add a coxib, it can be counterproductive. Renal patients may have issues, as prostaglandin synthesis can become important with chronic renal disease sufferers. And so on. The added benefits in reduced GI ulceration may come with costs. So, in the end, coxibs are not necessarily “better” NSAIDS than aspirin. They didn’t live up to that hype. But they still might be a very good option for some patients (arthritis sufferers with no heart disease, for instance), and still have a role to play in the clinic. Prescribers and the prescribed must think harder about when and why to use coxibs than the initial hype would have had them believe, it would appear. Such readjustments to new pharmaceuticals are not at all unusual. This is partly a bad symptom of unscientific advertising, but it’s also due to the fact that clinical trials cannot address all patient eventualities. Caution must be exercised with any new drug, when an old standard is doing the job. Unfortunately, sometimes consumers do not approach drug advertising (or any advertising) very skeptically.
Again, I’m all for limiting the scope and style of advertising, but this can only be accomplished through legislation and more openness and thoroughness in trials. The current regulatory structure is more of a disincentive than anything to making such positive changes. It’s hard to expect one drug company to open its books and lay off hyperbolic claims when their competition won’t. It also must be remembered that Wall Street rewards money spent on advertising, if it generates results. Again, there are strong incentives for spending money on marketing, when disincentives would probably be more in the public interest.