[kenhwang]

Europe is one of the primary reasons US drug pricing is so messed up. Many European countries negotiate drug pricing on cost to manufacturer (practically nothing) with a negotiated slim profit margin. Then the drug companies just offload the rest of the R&D cost onto the US consumer. But, almost the entire cost of a drug is in the R&D.

Imagine if the rest of the world only paid for CPUs based on the per unit cost of silicon but none of the fab or engineering cost. So $20 CPUs for the rest of the world and $20k CPUs for the US since the US consumer has to cover the 10s of billions for fab/R&D cost while the rest of the world only pays for the silicon.

That's what happening with drug pricing right now. People _need_ medicine, which is how we got into this mess of drug pricing since it's frowned on to price people out of medicine. But European countries aren't exactly poor struggling post-war economies anymore. They can afford to shoulder more of the R&D cost instead of laughing at the US subsidizing the world.

[flumpcakes]

You're subsidising paying other Americans extremely high salaries. You're also subsidising share holders and C-level people's luxury lifestyle. The same drug wouldn't cost $2b to create in any other country. It's not Europe's fault you treat basic healthcare like any other business to make money from.

[kenhwang]

If that were actually the case, Europe should've had a huge competitive advantage in drug development and priced the majority American drug companies out of business. Isn't anywhere close to happening, is it?

[danaris]

The barrier to entry to the pharmaceutical business is fairly high. Not only is it a pretty heavily regulated field (for damn good reasons), the equipment needed to start a drug company is significant and expensive, and the time between first investment and first payoff can be very long.

[flumpcakes]

Various reasons, including patents. Cost is not a "huge competetive advantage" or literally everything would be produced by other countries with fewer regulations for cheaper. There's plently of protected industries in nearly every country.

[RobertoG]

So, are you saying that the European countries should stop being so selfish and stop negotiating collectively to get better prizes?

Would not be the logic solution that the USA started negotiating as a block too?

[kenhwang]

The US negotiating as a block would be the logical solution. And the US sorta does, between the megasized insurance companies and Medicare, it's not a single block, but it's far from nothing. But the US isn't going to bankrupt a US company over it. So then it becomes a nation-nation negotiation via trade pacts (which are happening, much to Europe's annoyance).

Pharma is just a zero sum game; for the US to win, someone has to lose.

[DanBC]

> Then the drug companies just offload the rest of the R&D cost onto the US consumer. But, almost the entire cost of a drug is in the R&D.

How much do drug companies spend on advertising in EU vs US?

[kenhwang]

Usually the marketing spend ranges from half to double the spend compared to R&D. However, advertising (specifically the direct to consumer variety that's uniquely allowed in the US) only consists of ~10% of the marketing budget. Over half the marketing budget is free samples and a quarter is physician outreach/training, which happens in both the EU and US.

So there's potential for ~3-7% cost improvement if direct-to-consumer advertising is banned in the US.

US pharma R&D intensity averages ~40%, which is more than double of Europe's average intensity.

[candiodari]

Those are the numbers that always make one wonder. If you look at margins of pharma companies, you see the potential for price improvement: from 2% to about 20%.

And this is not what anyone of the people complaining are looking for. That would make somewhat optimistically make Remdesivir $350 per vial, and that pricing would cause ... exactly the same outrage.

The actual issue is "too many" medicines. More and more effective and specialized medicine. But, of course, that you can just sidestep as an individual (you'll have to have your doctor on board, but that may be doable). It boils down to the same thing: if you're willing to forego the most expensive treatments and best possible outcomes you can avoid a lot of the financial problem. There's just zero willingness to do that.

Best possible treatments, no matter the human effort required to do that, at zero cost to anyone (not carried by the actual patients, not collectively carried by insurance, not carried by government, not by church, institutions or charitable giving). And we're not willing to give anywhere (for instance, cheaper drug trials, something the government could simply decide to provide at frankly minimal costs). This is not happening.

There just doesn't seem to be any solution here that I can see.