U.S. Consumers Foot the Bill for Cheap Drugs in Europe and Canada

U.S. Consumers Foot the Bill for Cheap Drugs in Europe and Canada(bloomberg.com)

25 points by sunsure 12 years ago | 21 comments

reillyse 12 years ago |

Wait a second.

There are two strange assumptions in this article. One that paying more for something makes it better. And secondly profits gained are always reinvested in research and development.

Paying more for something does not make it better especially in the realm of healthcare. There are lots of reports and studies that show that American spending on healthcare is one of the highest in the world and among comparable nations it's health outcomes are the lowest (basically american consumers are getting fleeced). Here is an article from our friends at Fox News http://www.foxnews.com/health/2013/07/10/united-states-healt...

So paying more for healthcare does not mean better outcomes.

To bring it back to the drugs debate, perhaps it is the American consumers that are getting ripped off and paying higher amounts for drugs doesn't result in better drugs being developed but instead just results in higher profits for drug companies.

Drug companies are private enterprises. They don't exist for the public good, but they exist to make money. So higher profits WILL result in more money being removed and not invested in R&D. If the companies weren't doing this they wouldn't be living up to their responsibilities as corporations.

Symmetry 12 years ago | |

So higher profits WILL result in more money being removed and not invested in R&D. If the companies weren't doing this they wouldn't be living up to their responsibilities as corporations.

That's true at some level, but not in general. Remember that the people who invested the money that paid for the research that caused the drugs to be developed could very well have just sat on their money and not invested it in the first place. Those capitalists had a choice as to how much money to invest in drug discovery, and since they're greedy capitalists they invested the amount of money that they thought would make them the most money. There's a diminishing returns thing going on where there are a whole bunch of possible research avenues open, so the more money they put in the lower percentage return they get. When the percentage return drops below what they could get from other investments, they put money in those investments instead.

To the extent that drugs start to have higher profits then the greedy executives will see that they can make even more money by investing more money in drug research, possibly much more than the increased profits but also possibly much less. It all depends on how fast the investors think that the diminishing returns on investment kick in.

danmaz74 12 years ago | |

I don't agree with the article in general, but the author isn't saying that spending more money on a patient brings a better outcome. She says that the expectation of bigger profits for a successful drug creates an incentive to the creation of successful drugs, and thus more successful drugs - which can help more patients in the long run.

paulgb 12 years ago |

"Abroad, where the “negotiation” consists of governments telling you what they are willing to pay, even as you know that they can always change the law to shorten your patent term so that other countries can manufacture your product, using your research for free."

The author doesn't mention any examples of this actually happening, which makes me wonder if it's just theoretical. Does it happen?

Also, how much of big pharma's costs goes to marketing? They don't have consumer marketing expenses outside the USA.

mikeyouse 12 years ago | |

As of 2008, somewhere near $58 billion/year.

"From this new estimate, it appears that pharmaceutical companies spend almost twice as much on promotion as they do on R&D."

[1] http://www.plosmedicine.org/article/info:doi/10.1371/journal...

reillyse 12 years ago | | |

There's your problem right there. Outside the US there just isn't a huge spend on marketing (they definitely try to influence doctors though). And honestly, I find it really weird that pharmaceutical companies actually advertise to patients. Part of the reason I spend so much money on a medical doctor is so that I don't need to decide what medicine I need to take. In fact I don't think I should be involved in the conversation. The doctor should just do his or her job without me weighing in one way or the other because I've seen some advertisement on television.

brohoolio 12 years ago |

Kind of a crappy article. It focuses on new drug innovation when most of the markup we are seeing in the US is for old drugs. As an individual you can't negotiate when you need a drug.

It's up to a regulatory body to make sure the manufacturers aren't exploiting their position in the market.

moocowduckquack 12 years ago |

"The most hopeful thing I can say, in fact, is that we may naturally be running out of feasible drug candidates, so maybe it doesn’t matter much."

I'd hate to have the mental-state that regarded such a situation as 'the most hopeful thing I can say'. Is almost as though the author has been briefed that higher prices are the aim here.

Also, if you look at research money on the diseases that affect the most people, it is mostly not coming from big-pharma anyway, but rather from state backed research, much of it from the countries that the author reckons are raising US drug prices. Personally, I suspect that the main reason for high drug prices in the US is actually having such a massive army of middlemen who do not have interests aligned with the patient, but that is only a guess.

dnautics 12 years ago | |

I promise you the level of state-backed research for pharmaceuticals is much higher in the US than it is from "the countries that the author reckons are raising US drug prices." I would, however, be the first to tell you that throwing money at drug development is not a solution to good drug development, and may be counterproductive beyond a certain point.

moocowduckquack 12 years ago | | |

Fair. I just had a look at the numbers. Is less clear when you drill down to individual countries and if you only look at the most virulent diseases, also with a lot of the funding, like the global fund for instance, many of the EC countries donate twice, once as part of their EC obligation, and again as a national donation, so you may miss a lot if you just look at EC funds. But you are definitely right overall, the US state spending seems massive in comparison.

Mind you, this got me thinking, if you were going to expect any of that to affect the pricing of essential drugs, you would expect it to push prices down in the US, given there is what amounts to the worlds largest drugs industry subsidy. Also, I notice that big pharma is not generally skint, so if there is a shortage of new drugs (is this actually true in general, or is it just truthiness?), I would agree with you that it is not down to a shortage of money.

msandford 12 years ago |

That's one of the things that sucks about IP law. It'll never be standardized internationally so those places where it's strict, prices are high. In nations where it's looser, prices are low. We pay the government to enforce laws that keep our prices up. It's kind of a bummer.