Under a single-payer or required-insurance scheme, why wouldn’t drug company profits naturally increase? After all, their customer base will have increased–universal health care means more people are buying health services, doesn’t it?
Under required insurance (with numerous choices of insurers available) then yeah, pharmaceutical companies’ profits may increase.
Under single payer, I’m not so sure. A single payer can, to some extent, dictate what it will pay for a given drug. The manufacturers would have no place else to sell their product. Of course, if the single payer sets too low a price for a given drug, that drug simply won’t be produced, but the payer could refuse to pay anything above bare profitability. Whether or not that would be offset by increased sales volume, I can’t say.
In Canada, the provinces have considerable clout when it comes to negotiating with pharmaceutical companies. Even more so when many provinces work together to get the best price, which is the way things are going now
It was one of the big giveaways of the 2003 Medicare Prescription Drug, Improvement, and Modernization Act that Medicare, which has a similar amount of clout to a Canadian province, wouldn’t be allowed to use that clout to negotiate lower drug prices.
So there seems to be tacit admission that this might be done in the US and it is a realistic enough possibility to require laws to prohibit it.
Does anyone know whether or not the Veterans Administration Healthcare is able to negotiate low prices with pharmaceutical companies?
I heard that it does on a recent NPR show.
It would decrease profits because a single payer system that uses bulk negotiation tactics would reduce the profit margin of pharmaceuticals more than the companies would gain in more customers.
When the affordable care act was passed one tactic to stay on the good side of the pharmaceutical industry was to not negotiate drug prices, also to not add legislation allowing people to import drugs from countries that do negotiate prices (Canada, France, etc).
That’s a hell of a word.
RE: The OP. Dunno, why don’t you look at the healthcare models of every other developed country in the world for an answer?
Still don’t know about drug costs but this tells a story - you could knock yourself out all day on this:
http://www.nationmaster.com/graph/hea_spe_per_per-health-spending-per-person
Those stats are outdated, the US spends about 8k per capita now.
Those are PPP stats though.
The US subsidizes drug development for the entire world. The real profit is made on the US market, which pays for most of the development of new drugs. Sometimes when other countries mock our health care system, I think - you should probably hope we keep it indefinitely, because we’re paying for all of the great medicatons you’re getting cheaply.
If the US were to become a single player system and pay the same rates as other countries, drug profits would plummet instantly and the total money spent on developing drugs would nosedive.
That said, I don’t like the idea of the rest of the world getting a free ride at the expense of the US (same with military defense), so if there were negotiations, I’d like to see some sort of normalization of world prices amongst developed nations. They should have to kick in their share.
I’ve seen people make both this claim and its opposite. Where can I find out the truth about it?
Here is one apparently well-documented article which argues for the opposite. It is eight years old, though, and I do not know if the journal it’s in is peer-reviewed.
ETA: It is peer reviewed fwiw.
Or, you’re getting ripped off.
Pharm companies love the easy US marketplace. Like doctors and everyone else, they charge whatever the hell they like because it’s all charged to insurance.
I don’t understand that either–it’s not as though the insurance companies will simply pay whatever the medical providers charge.
And it’s not totally true, either. But insurers for the most part don’t care. because Americans love advancing drug science if they get the results and will pay for it. Now, as for the charge that the “American drug market is easy,” … well, that’s a point of view, or an interpretation fo the facts. The basic truth is that:
(a) Americans pay a lot more for drugs and,
(b) Beucase of this, we tend to get first access and fund a lot more drug development.
That’s the plain fact. Whether you like it or think it worthwhile, or not, really doesn’t matter. Nobody cares what you think. An awful lot of people do think it worthwhile, and are willing to pony up an awful lot of money for that in the United States. Now, I’ve heard the insane claim that it doesn’t really foster new drug development for all kinds of reasons. This is what is known as self-induced delusion. It most patently does, and has been shown a dozen times over. The basic free-market is at work, and if people will pay lots of new drugs, then anyone who can will pay lots to develop them.
Now, the U.S. market doesn’t alone pay for them, and you can frame the question in any number of ways depending on what you consider “normal.” However, anyone’s opinion of normalcy is irrelevant: we have a clear cause and a clear effect. To Americans, it seems that we get stuck with a large bill, and can’t really understand why other advanced nations don’t want to pay for more goodies. We’re thinking, ultimately, of all the good things we could have with the additional money. Others, content with less sophisticated treatments, are content to sit back and use the inexpensive, especially since they eventually get all our goodies, too.
Since I worry about the effect on future generations, I should prefer that. I also think those other countries wouldn’t like the results if we stopped paying for the advancement of drug science.
Those other countries would carry on developing drugs quite nicely thank you.
Believe me, I’ve spent 13 years watching it first hand. I’ve seen the inefficiencies first hand. If the money was halved from the USA then there would be a drive from all sides to chop costs and wastes off the clinical trials and regulatory procedures. the one thing you won’t do is stop people thinking and inventing.
About 40% of research is funded by the public sector and private donors, with industry doing the other 60%. The National science foundation says about 15-20 billion in pharma R&D is done by the industry, although the industry itself claims closer to 40 billion.
Plus most new drugs on the market aren’t new, they are pre-existing classes of drugs that have been tweaked. Lipitor instead of Zocor instead of crestor, etc. There are some differences, but they aren’t creating new classes of cholesterol lowering medications, just creating new meds that act through the HMG-coa pathway.
http://www.cbo.gov/ftpdocs/76xx/doc7615/10-02-DrugR-D.pdf
I’d pay more in taxes to fund extra pharma R&D in exchange for single payer. An extra $20 billion a year spent on things like matching funds or rewards to the private sector could create more motivation in the private sector to investigate drug research. Do what they do with the x-prize as an example, offer a large prize in exchange for R&D into pharmaceuticals that can treat specific diseases.
Wonderful argument. I particularly like how it dismisses billions upon billions of dollars with a sniff and pretends there would be no change. First off, the U.S. develops something like more than half of all new drugs - based on that very money stream I mentioned. Second, if you want to pretend that cutting the money stream substantially would do nothing, then I can recommend a few economics textx which would, at the least, cast a wary eye at that assertion.
So the argument is it’s better to have 40 million Americans uninsured and to fund a higher level of research…