US drug prices are not because of R&D. This title presents a false dichotomy
Drug companies have enough capital at this point that they don't need old drugs to fund new drugs. They can charge a high price for new drugs to recoup their development costs, & then charge closer to the cost of production once that development has been covered
Reformulation does not extend patents, it creates a new patent on the new substance. The substance in the existing patent can be manufactured as a generic after the existing patent expires.
The wrinkle is that the new and existing substances are not equivalent, and thus cannot be substituted for one another. Thus, if a doctor prescribes the new one, that is what needs to be dispensed.
You have just described the patent system. They get a period of patent protection to charge high prices, then anyone can make the drug and competition lowers prices.
There are some places where this falls down, i.e. there are some generic drugs that have high prices due to a lack of competition, but that's not the common case. Have a look at the price of Ibuprofen to see how unpatented generics ought to work.
What really causes the failures is the amount of bureaucratic overhead which deters other companies from entering the generics market. When the market for a drug isn't very large, the return from selling a generic is less than the regulatory cost required to enter the market, so nobody does. Lower the compliance costs and that doesn't happen as much.
Some new drugs are not that critical to have. Others might be. Given that we don't / can't know which drugs will be developed in the future, it's kind of impossible to answer with certainty.
Suggestion: Congress debates if developing slightly fewer medicines is OK if it means lower prices
The suggestion was sadly too long by 6. I’ve gone with “Congress asks if developing slightly fewer medicines is OK if it lowers prices”.
And even if we weren't, it doesn't follow that moving resources from one place to the other is the right choice. When you have two things that both produce benefits exceeding their costs, you're better off to do both of them.
Given the choice between higher prices or not having treatment at all, I suspect those whose medications would be culled would gladly choose higher prices.
I'm not saying that your position is wrong--medical innovation is really important. I'm saying you're being reductionist. There are really hard questions here, and accusing others of privilege does nothing to make this discussion more productive.
I suspect a better set of regulations around generics would solve the problem with ordinary market forces. Probably there are quite a few policies that protect the existing drug companies that don't make any sense for generics.
If there are two drugs available for a condition then not covering one because it's too expensive is more viable. Take one of those companies out of the market and what does that do to your leverage when you're "negotiating" with the other one?
Only instead of determining by a board of doctors whether you are entitled to care, a bureaucratic measure to determine whether a company should investigate cures to what ails you. Better for society, worse for you as an individual.
If the government makes this decision, your backstop becomes "move to a new polity."
This is the core of the argument, that the government should not have this power. Say what you will of the sad state of the US health situation, there are potential solutions not involving this level of "We choose who can have what."
I'm not one with exotic health problems, the kind that involve going to a hospital for a week for a batter of tests and analysis, but I know people for whom this is the case. I suppose those people are the ones this is writing off.
Then, because most people do actually have insurance, the insurance pays for the more expensive version and so that's the only one anybody makes. The market for "regular" insulin is limited to people without insurance, which isn't a big enough market to justify all the regulatory work needed to manufacture it.
What's really needed there is to make it easier for generics manufacturers to get regulatory approval.
That seems like a sensible solution to the extent the quality/safety itself is not compromised. For instance maybe there is difficulty importing from other countries, but there should be no problem importing regular insulin from Germany, for instance.
Yes, in an imaginary world we can invest in all the good things at the same time.
In the real world you have a limited amount of resources, so you can't do everything at the same time without borrowing money. But guess what, borrowing money is moving resources from one place to an other.
I'm European and the whole concept of a doctor prescribing a "brand" sounds alien to me.
Yes, but it requires the patient (or their pharmacist) to request such.
> It seems like that would be an easy fix: a law that requires doctors to give you the alternative name for a generic, and make the sponsored version an optional upgrade.
> I'm European and the whole concept of a doctor prescribing a "brand" sounds alien to me.
The issue is that the two drugs are not equivalent, and is not about prescribing a "brand". Occasionally, a doctor insists on the brand for some reason (seems to be most common with Synthroid for some reason), but generally the prescription is treated as a prescription for the compound, even if the doctor uses a brand name.
The trouble with reformulation patents is that there is no generic for the reformulated compound. It is sufficiently different from the previous that it cannot be substituted by the pharmacist (otherwise it wouldn't have been patentable). In that case, the "brand" is the only thing available.
In principle, there is no difference between this outcome and what HMOs like Kaiser do to this very day.
If there are a hundred HMOs and there is a treatment which cures a disease which ten of them choose not to cover, it still exists and you can pay for it out of pocket or do whatever it takes to switch to a different insurance company etc.
If everyone is on the same federal plan and the government chooses not to cover something, the provider isn't going to get enough business to continue operating and then they're gone and that treatment option is eliminated for everyone.
This is purely an on-paper difference. In practice, most Americans (where this conversation is relevant) don't actually have the ability to choose between an open market of health care providers. If they have access to it at all, its within the framework of what their workplace has negotiated for them, which may or may not be good. Certainly there is no individual recourse other than to choose between existing plans (which may all be from one provider).
So in that context, its actually exactly the same "systemic risk" problem only without the scrutiny of a general public. Plans are not public, and it is not unheard of for people with health issues to be quietly terminated to get them off plans. Pre-existing condition coverage is all over the map, with only the wealthiest citizens and workers having access to fair treatment. Even for someone like me, I struggle to get good health care when I run my own business because I am a cancer survivor.
So I think this concern you have is valid but the American system actually exacerbates it rather than protects against it. Both my partner and I face the auditing of unaccountable corporate "death panels" every time we go to the doctor.
So maybe you can tell me how if I suffer from this condition while being within the top percentile of earners in the US, the market approach has done anything to fix it. I have a history of successful Startup participation (and I've exited my own in a profitable fashion), but as I get older the health care situation is so bad, I'm forced out of participating in startups because their health coverage is so bad. Is this outcome better than what other public options have got?