This is what the breakdown of working competitive markets look like, and in this case it takes both government monopolies, as well as well as overwhelming short-term greed on the part of the private companies.
Long term don't these companies think that charging outrageous prices for drugs will cause a future voter/government backlash of some sort... or maybe they think they should extract profits now because of a chance of drug price regulation coming to the US in the future?
>Long term don't these companies think that charging outrageous prices for drugs will cause a future voter/government backlash of some sort
No, because it demonstrably won't. People say they're angry and then do nothing about it. The US has an entire political party angrily decrying any effort to regulate healthcare as socialist slavery.
The drug companies know they'll be just fine. Maybe some token slaps on the wrist and public performance of cosmetic changes to appease people now and then, but nothing will happen to them.
the US has an entire political party angrily decrying any effort to regulate healthcare as socialist slavery.
Argubly regulation is the problem we're in this mess. Do you think an epipen would cost $600 if there weren't a Government granted monopoly?
We have two parties who love the current amount of regulations on competition - you need to go to an AMA approved medical school to become a doctor, there aren't H1Bs for health care workers, and the government gets to pick and chose who's allowed to sell medication.
They just disagree on the amount of subsidies for poor people. One party thinks prepaid consumption with cross subsidies is insurance and the other party thinks that insurance shouldn't be so binding if you get sick.
Regulations can put pressure on prices (and if you look at epipens in particular, part of the regulations allowing the increase of their price have nothing to do with monopoly and a lot to do with getting policy placed into areas where organizations are required to keep an epipen on hand by regulation...).
But in terms of overall effect, one can't ignore other nations which pay much lower prices for healthcare with both regulation for drug patents, as well as regulation on drug prices. That combination manages to deliver better care at lower costs than the US (we pay on average double per capita). So I don't think one can generically fault "regulation" for a poorly performing health market in the US.
> The mandate that emergency rooms treat anyone who enters is onerous and there's no free lunch, paying customers are stuck with the bill.
I don't think that's onerous, I think that is a minimal, and admittedly imperfect, expression of our societal intent that people shouldn't die unnecessarily in emergency rooms - either from lack of being able to pay; nor from a practical standpoint, lack or delay of on-hand proof of ability to pay.
Removing those regulations would cause all sorts of other problems. Someone arrives in an ambulance near-death, if I lack morals then one level of maximized extraction price is to have those patients commit to pay a value that represents the earning potential for that person for the rest of their life. They have to agree before getting admitted. Even more profitable, if I judge that person as having a well connected social network, I can charge even more because I know their friends and colleagues would chip in to save them... I'm not sure how a competitive market with no regulation changes the worst case for this transaction - if someone is near death then moving on to another emergency room is out of the question.
I see universal healthcare with a shared cost-pool as the lowest overhead way to provide for our social moral desires (but then I'm not in fear of the regulation with may be needed to implement that policy).
Insurace with a shared risk pool is a technically workable, but adds even more overhead, and ends up a more expensive way to do the same thing... but again regulations are involved (and fixing very flawed ones at that).
I concur. The argument that healthcare in the US is broken because its a market almost triggers me. It has profound regulations that affect its market behavior.
Also, we live in a country where most places they don't even allow opening a new hospital without the permission of surrounding hospitals, and all of the recent healthcare regulations have encouraged a seriously problematic consolidation just like the big banks.
As an industry, healthcare is so over-regulated it isn't even funny. The good news is that drug prices are still generally falling outside of big examples like Daraprim and Epipens and there are fairly effective solutions to the spikes we could have if the FDA would get onto more reciprocity with other nations: http://marginalrevolution.com/marginalrevolution/2016/02/the...
I don't find that first link well argued at all: because corporations have achieved some degree of regulatory capture from the FDA, we need to eliminate regulations and let those same corporations run completely rampant and somehow that will result in better performance? That makes no sense to me.
Also, the comparison there in the drug vs the chair market there is poor too. The key difference between manufacturing drugs and chairs (as in the example), is that anyone could enter the chair making with one guys who has had high school woodshop. Manufacturing a drug has a much much higher bar...
>Argubly regulation is the problem we're in this mess.
No, that's not even arguable. Other countries with even more highly regulated healthcare manage to provide it for much, much less. You're just regurgitating mindless libertarian talking points that have no relation to the real world.
The particular form of regulation in the US may be a problem, but regulation in general is demonstrably not.
The epipen delivery system and the Epinephrine inside of it should be sold at cost. Both were developed by the US Military (taxpayers) and American taxpayers should own it.
I sometimes feel like "free-market" types are actually incapable of understanding this point. The idea that markets and property exist as some sort of independent, empirical objects is baked so deeply into their ideology that it's almost as if they lack the symbolic vocabulary to even conceptualize the idea that property itself is created by regulations.
You seem very strongly invested in this point, which is strange considering how easily refuted it is:
Property existed long before third-party regulation.
Rather than ownership being enforced by a third party with monopoly on violence, it was enforced by the threat of escalating violence from the property owners themselves.
Eg. You take one goat from my herd and refuse to give it back, and we are now at war. Result: Nobody takes any goats.
So the property was defined by mutual understanding and mutual enforcement, not regulation.
This is still done in some societies and sub cultures (Eg. Criminals). Even animals do it, with things like territory or sharing food from a kill.
A mutual cultural belief in property strengthens this mechanism and makes it work more smoothly. This cultural belief is part of what ""free-market" types" (sic) would like to spread.
Property is created by government, but markets are more like evolution or society; a system that emerges naturally out of multiple separate but interacting agents given the right set of conditions (namely, scarcity and the ability to exchange goods and services).
Even in places like East Germany or prison where overt markets are suppressed, people still exchange things with each other, even developing bootleg currencies such as loose cigarettes. And if there’s a sudden shortage of a specific good inside these black markets, the price will go up; likewise if there’s a sudden surplus, the price will go down; likewise; if there’s a sudden surplus in whatever good is used as a currency (e.g. cigarettes) then there will be inflation, at least until its cost-effective to switch currencies.
Perhaps, though I think I'm more energized personally voting & with campaign involvement in the upcoming elections this year than ever before. And part of that is knowing that it might help Medicare for all or other universal healthcare options - maybe not this election or the even the next - but personally I feel it has to happen and is worth working towards.
I suspect that at some point there will be a backlash in the form of someone or some people with nothing to lose becoming violent in the face of an effective death sentence in the form of unaffordable healthcare.
"Ultima ratio regum" is an appalling way to enforce fairness, but it doesn't seem to me that greed in general will stop short of a true class war or an external threat ala a World War.
Also to be clear I am definitely not advocating this route, I'm trying to figure out what anyone can do to prevent it and thus far I am at a loss.
I'm trying to figure out what anyone can do to prevent it and thus far I am at a loss.
You quietly find another path and make these insanely expensive drugs vastly less relevant. The real challenge is effectively spreading the word. Something truly disruptive in this area seems to be about the most offensive thing a human being can do.
The funny thing is that pharmaceuticals are simply one of a number of unconscionable negative-sum-games that are being played these days.
I just don't understand how people can make such a blatantly destructive set of choices when it's really clear that it will come back and bite them in a way even the most psychopathically mercenary people should understand, let alone anyone with a more advanced morality than "I got mine".
Currently, the world actively makes it hard to make any other choice. I have made other choices. Part of the result:
I spent ~5.7 years homeless while classist assholes (online and off) shit all over me.
I believe part of this is happenstance. Humans are little monkeys with brains designed to parse a social order for a tribe of 150 members. With 7 billion people on the planet and a global economy by necessity, the paradigms developed to parse our tribe break in the face of a sudden new world order.
It is actively dangerous to give a damn about the welfare of other people. Some of that is also happenstance. Strangers from extremely different backgrounds face substantial obstacles to good communication.
But, we really need to solve this, even if we are all cold hearted sociopaths who don't give a damn about anyone but ourselves. Like you said: If we don't, this will eventually go very bad places.
Given the recent mass shooting in Las Vegas, the record destruction of hurricanes in Texas and Florida, and the ongoing fires in California, I think it is reasonable to assert that our choices are already coming back to bite us. We can do something more sensible or continue to suffer the consequences.
Don’t get lost barking up the partisan tree, most Americans aren’t the enemy. Both parties are different flavors of corrupt (Gore Vidal’s Property party): one ignores their base while taking corporate money and the other panders to extremists and also takes the same blood money.
It's a sliding scale, but it's not close to balanced right now. Saying things along the line of 'different sides of the same coin' does not make sense.
Businesses have no concern over their long term viability. Executives are not incentivized in anyway to care about long term interests. In fact all their bonuses and compensation explicitly reward the short term. Compounding the problem is a simple cost benefit analysis means they've already costed out the future "backlash," and still find themselves to be more profitable.
The "long term" is nothing but a mental exercise with no real world manifestation for businesses. The closest you can probably get to it having meaning is for business school grad students doing case studies.
No, this is exactly what a 'working competitive market' looks like. If you somehow still believe the simplistic fantasies of economics 101 with a clean partition between 'the market' and the meta-market game, then you urgently need to wake-up.
Enbrel didn't receive a patent extension.[1] In 2011, a patent was issued that covered certain aspects of Enbrel that had originally been applied for in 1990. Under the rules applicable to pre-1995 patents, the life of that patent runs 17 years from the date of issuance (or 2028). That could not happen under the current law. Patents issued after 1995 are only valid for 20 years from the date of filing, with current limited adjustments due to delays at the USPTO.
[1] There isn't really any such thing, at least as a way to resurrect patents that would otherwise expire.
It's a difficult balance to strike - you want the companies to keep developing drugs, you want onerous regulation on those drugs to make sure they're produced and tested for safety and efficacy. But then you want them to be cheap for patients and insurance companies.
The best solution is probably to simply drop patent extensions for these things and allow generic drug manufacturers to do what they do best, but if you do that too early you risk damaging funding for new drug development. Too late and you wind up with companies just building up piles of cash like we have today. You need to hit that point of "we need to develop new drugs to make a profit" - what that is, I'm not sure.
You want pharma companies to keep doing drug discovery why not ban outright any kind of marketing or advertising for their products? R&D spend across the industry is a fraction of the marketing spend. Think of all the good research that money would fund once pharma companies were freed from spending it on advertising.
Whenever I visit the US I find it insane how much advertising for drugs is shown on TV, with the usual "ask your doctor about..." disclaimer at the end.
Seems like a reasonable idea to me, has anyone attempted to apply some of the less controversial possible solutions here in the US? Like shorter patent lifetimes or a ban or reduction on drug advertising?
Ideally, the government should just straight-up pay companies to do drug discovery using something similar to cost-plus defense contracts (and establish DCAA-style auditing practices to keep them honest).
Establish strict price controls, ban drug patents, and make production volume guarantees a hard condition of receiving federal drug discovery money. And the money should be large enough to be worth it. Ideally, 90%+ of a drug company's income should be from federal contracts and not from sales.
And if that turns out to not be feasible, just nationalize them. The federal government can hire drug-discovery chemists and manufacture the drugs themselves.
That's a very left-wing view of things - I don't necessarily disagree with it, but I think there are far less drastic changes that can be made to achieve a comparable result.
You'll have a hard time selling a plan like that to anyone even slightly right leaning - think about it politically for a second. The government decides what drug development gets priority? Remember the death panels talk from a few years ago?
It's viable, but involves a lot of trust in government, so much that even as a fairly left-leaning person myself I'd have to think twice about it.
I agree that trusting the government is out of the question, perhaps we could try an open source solution. Publish drug data, studies, manufacturing knowledge, and all of the usual pages of warnings, indications, contraindications, pharmacokinetics, etc. GitDrugs.org? I think India might have the right strategy with prioritizing human need over economic factors, at least in the short term. I think the problem with funding is a multidisciplinary one, unrelated to how much they can charge for the product. If we can figure out how to match problems->researchers->funding efficiently and effectively, finding drugs and researching existing ones won't be a problem.
> The government decides what drug development gets priority?
This might become necessary if we're to avoid an antibiotic crisis. Bacteria are becoming resistant to antibiotics at a greater rate than antibiotics are being developed. The problem isn't that we've tapped out what antibiotics can do, but rather that drug companies have little to no interest in developing antibiotics because there's very little money in it. Antibiotics are un-sexy drugs that don't make for good marketing campaigns.
Ultimately, if we want to continue to have effective antibiotics, a large entity with no profit motive, nigh infinite money, and a monopoly on force (i.e. the government) will have to get involved.
My problem is: It's in the public interest for these drugs to exist, but how do we keep drug companies from becoming an industrial complex ala Lockheed/Boeing?
Developing drugs is very expensive. It takes years of research, most of which fails. I.e. out of the various molecules being researched, only few actually make it through all the trials and approval and get to market.
Due to the risk, investors are looking for high returns from successful drugs.
Due to that risk, the wast majority of base research aren't funded by investors. NiH funding for medical research is the single biggest researcher in the world, with a annual research budget of $26.4 billion. All that is paid double by the citizens, first through taxes and then again through insurance/drug cost.
Now imagine if we had a regulation that both forbade universities from issuing patents and limited the price of any drug that is initially based on public funded research.
Unfortunately, no other class of drug class has worked, and the traditional delivery methods (ie - pill form) caused measurable hearing damage, just from the trial periods.
If you take the oral version (as opposed to the patch version) you can get it from India (where the patents have expired). A site I've used in the past that's reliable is AllDayChemist. Search for Selegiline and you can get it for as cheap as 18 cents per 5mg tablet.
Good luck!
Edit: Sorry, read below that you need the trans-dermal version.
Long term don't these companies think that charging outrageous prices for drugs will cause a future voter/government backlash of some sort... or maybe they think they should extract profits now because of a chance of drug price regulation coming to the US in the future?