Market-oriented people have long noted that the US medical consumer is funding cheaper drugs for the entire world.
If we wanted a system that's more equitable, we could create a law that sets the maximum price for medicine in the US at some multiple of what's charged abroad.
For example: we could say that it's illegal to charge a US person more than 2x what you charge for the drug anywhere else in the world.
This would do two things: it would bring down the cost for US consumers, and it would increase the cost for consumers abroad -- effectively reducing the free-rider effect we currently see in Europe.
I have heard it a lot but I'm not sure how true that is. Given all the specifics of essentially abuse/corruption (whatever you might call it) by US medical industry it's hard to believe their claim of subsidizing the world. There's probably some of that going on but I find it unlikely to be as big as claimed.
Ignore US companies completely then -- look at European pharmaceutical companies. They make far more money selling drugs to Americans than Europeans, and they use that money to develop new drugs back in Europe. I'm not sure how you could blame European actions on your US abuse/corruption theory.
Why wouldn’t a European pharma company take advantage of the abuse and corruption in the American system?
It boils down to this: drugs are a pretty anti-competitive market, and the US doesn’t have much in the way of opposing rules that would bring prices down. No surprise that companies make more money compared to European countries.
The real question is: if the US stopped allowing this and brought prices under control, would it wreck pharma R&D? People seem to assume the answer is “yes” when they bring up this disparity but I don’t see it being that obvious.
Is that US price with or without any insurance? Most countries negotiate a lower price with the drug companies the same way insurance companies do. I don’t see how Canadians negotiating a lower group price is worse then Americans paying someone to do that.
It's the average sale price of the drug in the US. So, mostly with insurance (~90% of Americans are covered).
(The study was done by HHS and was focused on Medicare, which sets prices based on a weighted average of market sales price, including negotiated discounts by insurers.)
If marketing was not yielding a return why would they do it? Presumably spending $1.00 to market a drug returns at least $1.01 in profits. If that is true then a lower marketing budget would result in a lower R and D budget provided you keep all the percentages the same.
A lot of marketing is a prisoners’ dilemma. There is little if any gain from the steady state where everyone does it, but you have to do it because if you don’t then your competitors will and they’ll eat you alive.
In which case you could kill this stupid marketing budget without much effect on R&D by outlawing drug advertising.
I thought this was capitalism? Isn't the idea of a company under a capitalist system to generate the maximum amount of profit possible for each product they sell?
Drugs aren't priced relative to what they cost to make or develop any more than airlines price flights based on how much it costs to fly someone between any given city. They're priced at the highest level the market will bear. Is it any surprise that the largest, most powerful economy in the world will bear higher prices? The drugs by definition have higher value because treating someone in a strong economy delivers more marginal value than in other markets. That's math.
Now we can talk about different systems but this is the one being held up today.
Indeed charging the max possible is the idea. The idea is also that the market is free so a competitor could also extract profit by making the same drug for slightly less. Of course another competitor could come in and make it for even less. All these price cutters force the higher priced competitor to lower their price to still produce profit. The lower bound here is the cost of production below which all companies would stop production. So in a capitalist system in a free market profit should always be trending towards zero.
The issue is government allowing companies to be anti competitive. For example, the government is currently entertaining a lawsuit by one insulin company against another company trying to sell insulin for a lower price. While that lawsuit is ongoing Americans must pay the higher price. Thus really government willing to enforce continued monopoly is one of the problems
Is the market for drugs really free though? I believe that in a free market there is supposed to be no coercion between the parties to a transaction. In the case of drug purchases there may be a kind of coercion involved -- a health issue (diabetes, cancer, etc.) that makes one party to the transaction unable to negotiate effectively.
Free markets mean that other sellers are free to compete. This is why food, an essential good, is generally cheap. Any seller of food can charge an arbitrarily high price but cannot exclude competing sellers.
In a free market no outside agent interferes with buyer and seller. Nature has no will and thus no agency and thus is not an agent. Indeed the free market is key to solving the disparity between what someone has versus what someone needs. It is one of the few systems we know that solves this issue efficiently
If I understand you correctly, then it does seem true to me that nature has no agency. However, when the choice a consumer has is to either pay the asking price for a <em>needed</em> drug or to die then I think the consumer has no meaningful choice at all. Given how unequal the bargaining power is between the buyer and seller in this situation, it's hard to see a free market solutions applies: it might be efficient, but it's also brutaly inhumane.
I know I've set up kind of a straw-man. It might be that the consumer could choose to forgo an expensive drug or medical procedure without fatal consequences, but that's not the interesting case.
The choice shouldnt be between whether they need the drug or not but rather who to buy it from. The fact that there exists someone who needs a product is what drives the profit to zero in a free market because newer manufacturers are incentivized to provide the product. The choice is among from whom to buy not whether to buy at all.
Right now insulin is expensive because the government is preventing companies that can produce it for cheaper from selling in the united states because of a lawsuit by the current market holder. That the government even has this power is a textbook example of the danger of governmental interference in the free market. People are literally dying because the government has made the market less free intentionally
Like food, right? If people stopped selling you food you would die, so surely they can charge extortionate rates for it.
Of course, there are competitive markets for both food and insulin in the US. Quoting from a letter to the WSJ yesterday,
> Eli Lilly makes three types of insulin, which in most states you can buy over-the-counter at Wal-Mart for $24 per 1000 unit bottle. One hundred syringes cost $12. I have serious diabetes mellitus and have managed it with Lilly insulin for a decade for under $100 a month.
For some drugs there aren't competitive markets, and in some cases the government prevents competition, but both are typically temporary situations (patents, first-mover advantages) that help to get the drug on the market in the first place. An extortionate price for a drug is better than no access at all, and doubly so when it is going to give way to genuine price competition.
The difference is (1) food isn't a specialty good, you can make it yourself and (2) food is provided by the government free of charge if you can't pay and (3) subsidized by the government to a massive degree even if you can pay. If this is the kind of system you're advocating for prescription drugs, I'm all in!
(1) Food producers unilaterally refusing to sell food could be just as disruptive as drug producers refusing to sell drugs. "You can just grow it yourself" isn't a reasonable distinction -- from a practical standpoint most people can't. The reason we don't need to prohibit that behaviour is that the market works.
(2) The government doesn't grow food. Sometimes it pays for it, and sometimes it gives people money so they can pay for it, but there isn't a public option in case farmers decide not to sell us beef, because the market works. (But yeah, the government does -- and should -- help people pay for drugs they can't afford when the prices are reasonable.)
(3) Food production is subsidised, but it shouldn't be. And these subsidies have little bearing on the possibility of extortion in the market.
If you feel like being specific, free markets have to exist without government regulation, without monopolies, without economic privilege, and without artificial scarcity, which doesn't really work in the real world under capitalism. Almost no markets are truly free markets, even the ones that look free, because there are general regulations you still have to follow (you can't legally sell poisonous handmade goods at a craft fair, for example -- laws about that act as a regulation).
If that's the case, why does a flight from SFO-JFK cost way less than a flight from JFK-LHR in business class? Approximately the same distance, approximately the same cost basis. Dramatically more competition between JFK and LHR. It's not always about competition or cost basis.
Because I said profit is driven zero not revenue. JFK to lhr requires all sorts of international permitting that is a fixed and varying cost that domestic routes do not have.
Airlines are a great example of the race to zero profit. Airline margins are slim and thus the cost of travel often reflects exactly the cost of doing the flight itself. JFK to Heathrow requires participation in multiple markets, currency instability, multiple regulators etc which make the cost more excessive. Also london and new York airports are busier than sfo increasing airport fees. Thus in a market with low basically zero margins, the cost from ny to London is more as competitors that cant make the unit economics work leave the market entirely. New competitora cant enter the market at a lower price point because their profit would be zero.
Why do you think there is more competition to LHR than domestically? The airport has been maxed out for almost 30 years, it is incedibly hard to get landing slots there. Also the weather over the atlantic makes flights longer and use more fuel.
We went through a phase of this in the 1930s-1950s where the government decided that competition was harmful and duplicative. It was a disaster. By your reasoning, we shouldn’t have both iOS and Android—the government should make a single OS where all R&D can be invested without duplication.
You only think this because in the case of iOS and Android you can get your hands dirty and form opinions for one versus the other.
In the case of the blood pressure medicine, that process is not possible for the consumer, and as you say, not practiced by the labs. But that doesn’t mean there aren’t a hundred possible pros and cons for one type of molecule versus another to treat XYZ condition in ABC population, with potentially huge variation between patients both explained and unexplained.
> But that doesn’t mean there aren’t a hundred possible pros and cons for one type of molecule versus another to treat XYZ condition in ABC population, with potentially huge variation between patients both explained and unexplained.
There really aren't when comparing different molecules with the same mechanism of action. Individual hospitals and health systems will usually tender out their contracts to the cheapest molecule in each class, or sign up with a buying group that does.
It simplifies prescribing, inventory, distribution and administration too.
> we could create a law that sets the maximum price for medicine in the US at some multiple of what's charged abroad.
Why create more laws and complexity? Why not simply repeal the laws that prohibit importation of drugs and possibly also refuse to enforce private contracts prohibiting reimportation? The reason drugs are cheaper in Canada and Europe than in America is because of American laws that prevent importation.
Because we not only want to pay less for drugs in America, we would like other countries to pay a bit more too and help shoulder the cost of R&D for new drugs and treatments.
An analogy: you live in an apartment building in which every other apartment has rent control. Because of this you're going to pay every extra expense for the entire building.
You could decide to become a rent controlled unit as well -- but the building owners would have less money to improve the building, and it would fall into disrepair.
Or, instead, you could try and find a way to get everyone to equitably share the improvements to the building.
R&D costs are more than covered by the price paid in Canada and indeed most nations; the US is merely funding massive pharma profit margins and fat executive bonuses.
So what? They clearly believe the marketing helps them make more revenue with the drug; that has nothing to do with covering the cost of R&D.
Your argument would make sense if marketing reduced their ROI, but they clearly believe it does the opposite.
I'm sure developers in San Francisco spend more on housing than on professional/personal development, but that doesn't mean one is precluding the other.
I think it demonstrates pharma has excess cash. Also in countries where there’s a public system pharma usually has 0 advertising because people have no choice anyway.
It's only "excess cash" if you assume the ROI on marketing is negative, which is a bold and unsubstantiated claim.
> Also in countries where there’s a public system pharma usually has 0 advertising because people have no choice anyway.
Direct-to-consumer advertising is only one tiny portion of marketing. European pharmaceutical companies spend massive amounts of money on marketing within Europe.
Why does RÓI have to be negative? Do you think that if marketing has good ROI then whatever money they put in they get back, meaning it creates a positive circle? Am I getting this right?
If you allow drugs to be imported it will make it impossible for a company to sell the same drug cheaper elsewhere. It will have the same effect, wouldn't it?
The only sane way I can map the problem in question onto your analogy is by subletting rent controlled units, thereby increasing their value and decreasing the value of the uncontrolled unit. I don’t think it’s a good analogy because people have all sorts of subjective bias based on experience. Also real estate is inherently sparse and illiquid. The drug market isn’t sparse and has more liquidity.
I think explaining the economic dynamics directly leads to a self evident conclusion: internationally drug prices would increase as US consumers add to demand on foreign markets. Domestic prices would fall for the same reason
The government mostly doesn't pay for drugs in Canada. Each province has its own insurer, and the biggest ones don't cover pharmaceuticals in the general case.
OHIP (the government-run insurer in Ontario, to which taxpayers pay the Ontario Health Premium directly) will sometimes pay some or all the cost of some pharmaceuticals in some cases (i.e, antibiotic-corticosteroid ear drops if you are under 25 or over 65, and have been experiencing an ear infection for longer than 30 days) for some classes of people (mostly youth and seniors); but by no means is there a single buyer in Canada, and there isn't one per province either.
I have bought more pharmaceuticals out of pocket in Canada than I have ever been provided during a covered clinic or emergency department visit, and I technically qualify for the youth drug coverage.
No, but the pharmacies hold only a little bit of power over that stuff. If the single payer health plan won't cover x medicine because y is cheaper and just as effective, x is rarely going to be ordered. X being an equal price to y means x might be some doctor's first line treatment.
“Market-oriented people have long noted that the US medical consumer is funding cheaper drugs for the entire world.”
They have claimed that but I have my doubts it’s true. It seems more likely that they make good profits outside US and obscene profits in the US. And why should the US subsidize other counties? Maybe we should also pay 200k for a Honda Civic so other countries have cheaper cars?
(Note the first source is data collected together by someone at Pfizer; the second source is a study by an NYU Business School professor. These are public financials, you can run the numbers yourself on Yahoo Finance.)
> Does Intel (not to mention Google or Facebook) make “obscene profits?”
Nope but no-one dies in the US because they didn't get access to a 7th generation Intel CPU because they got replaced by a 9th generation that's 2% better and twice as expensive.
That’s an argument for having the government pay for drugs, not for changing the process by which the drugs are developed. From the supply side, either private sector innovation works or it doesn’t.
According to IDC, North America spends $750 billion a year on IT, twice as much as it does on pharmaceuticals. People would save a lot of money if those costs came down. Can we do that by having the government come in and regulate the price of computers and IT contracts? Profits may go down, but that would be okay, because we’d get the same IT products and services for cheaper, right? Why don’t we do that?
We don’t do it because when it comes to less emotionally charged issues, we think clearly. We know that if we did that, talent and capital would leave for greener pastures, and that would compromise innovation.
The point is that if drug prices in the US go lower maybe profit will go down but drug development won’t stop because they still will be making profit.
It's not enough to make a non-zero profit. You have to be as profitable as similarly risky industries, or else capital will flow to those industries instead. Drug development is similar to tech in many respects--a lot of the work is done by startups (which are later acquired by the big companies). If profits go down, the money for acquisitions goes down, and the incentives to form and invest in the startups goes down. Instead, the capital goes elsewhere.
If the government decided that Internet tech companies were "obscenely profitable" and started regulated prices so profits went down to 10% (instead of 30%+ for some companies like Facebook), do you think Silicon Valley would still produce the same output?
> This would do two things: it would bring down the cost for US consumers, and it would increase the cost for consumers abroad -- effectively reducing the free-rider effect we currently see in Europe.
In most European countries, a government regulator fixes the prices with industry. It's not freeloading in that case, they have the choice between negotiating a fair price or not having access to the market at all. And because they're not idiots, they choose to have access to the market.
Most of that money doesn't go to fund R&D and go back to their shareholders anyway :-)
Charging exploitative prices for necessities of life slowly will be merged into a larger body of unfair and deceptive practices. Charging someone 50% or 90% more for a lifesaving treatment because they're not on the right 'club'-- some enterprising lawyer somewhere will eventually pick up the right collection of cases to demonstrate this isn't a proper way to make a buck, under the law of most U.S. states.
This is wrong. The companies are making profits abroad (example, insulin costs $6 to produce and in Canada they sell for $36). If you are claiming American consumers are paying for research via high drug prices, this is wrong too, since most of the research is funded by the government via universities and other orgs. In other words, US citizens AND the rest of the world can have low drug costs.
> And they spend even more or marketing which is allowed only in the US and few other nations.
No, most marketing is not direct-to-consumer marketing. Marketing absolutely is allowed in Europe, as evidenced by the massive amounts of money that drug companies spend on marketing within Europe.
How is this a good thing ? Corporate research is more susceptible to bias and their focus is on what's profitable. What incentive do they have on making drugs that cure vs those thay address symptoms?
"what's charged abroad" includes poor countries that will never be able to afford prices comparable to the US. Companies are able to make money in those markets too, as long as the marginal cost of production is lower than the price they can ask there. Prohibiting this doesn't look very market-oriented to me.
I don't think that implementing something that would raise the price for non-US citizens would do anything positive, mainly if I'm understanding you it will disproportionately affect low-income individuals in Canada
Separately, the Trump administration is pursuing a regulation that would tie what Medicare pays for drugs administered in doctors’ offices to lower international prices.
>If we wanted a system that's more equitable, we could create a law that sets the maximum price for medicine in the US at some multiple of what's charged abroad.
Should people in third world countries being excluded from the chance of receiving lifesaving drugs just because they happen to live in a place that isn't as economically successful as the US? Maybe I could be convinced if you pegged the prices to some measure of local purchasing power, but almost any proposal that amounts to poor people not being able to afford medical care in the name of capitalism is verging on immoral in my opinion.
EDIT: It is disappointing that I get downvoted on HN for basically stating the controversial opinion that "people shouldn't die from being poor".
I completely agree with your point. But as someone that lives in the US and is married to a person that requires prescriptions that can cost $30,000+/month each (cystic fibrosis), I'm in a first world country and am being excluded from the chance to receive lifesaving drugs.
Or maybe that's just an excuse pharma companies use because they'd like to have their cake and eat it, too. If they didn't actually want to sell their drugs for pennies on the dollar in some countries, they wouldn't.
If they are "forced" to sell there, it's only because of two reasons:
1) the US companies started selling there of their own free will, and after their patents expired in those countries, other companies were free to use the formula
2) Other companies would have created the same drugs with or without their patents, and the American companies would've lost all of that market share/brand image in that country. And I bet the competitors would do it for a tiny fraction of the faux R&D costs Big Pharma likes to claim for inventing a new drug.
Besides, the idea that if a company patents something that means it's the only one that could have ever invented that thing needs to die already. The "first to file" patent system that has been adopted in most major countries because of big companies' lobbying is another dead-giveaway that this whole idea is bogus. Why would you have a "first to file" if you didn't have multiple people inventing the same thing at the same time.
Many people or groups of people can come up with the same invention around the world roughly at the same time. Often, those alternatives don't become popular because their papers are in their native tongue and they lack investment, but the "invention" was already made.
"The Canadian medicine supply is not sufficient to support both Canadian and U.S. consumers," the letter states. "The supply simply does not, and will not, exist within Canada to meet such demands."
Theoretically drug companies can close off the entire market or increase supply. They’re prohibited from raising prices in the market. Since marginal cost is so low, I expect that they’ll keep selling st increased volumes.
It’s a bit odd that the US is taking this tack instead of just regulating drug prices domestically. But there’s a lot of odd things in the health system.
It could, but it could also be cut off by drug companies refusing to allow re-export when they negotiate prices with the provinces. I'm sure the provinces would take a 1-5% discount for avoiding re-export. Also, this isn't BC, Ontario or Quebec's problem -- the federal government doesn't administer this stuff, the provinces do. Y'all need to sort this out for yourselves.
> instead of just regulating drug prices domestically
Perhaps the hope is that US prices will fall, shortages in Canada might cause prices to go up a bit there, but in the end the open market will equalize with lower prices overall.
It will generate a significant amount of income for the Canadian economy and create cheaper drug prices for tons of people. It might be bumpy at the start as the supply side gets in line with the market, but it's better for both sides in the long run IMO.
> instead of just regulating drug prices domestically
The current administration is very anti-regulation, so this would be a bad move. Also, allowing Canadian drugs to enter the country will force current producers to lower pricers, which will organically (capitalism) reduce the price through competition.
What the administration is proposing is effectively to regulate drug prices, but outsource that work to Canada, since it's politically unpalatable to their base here in the US.
I don't fundamentally mind the policy decision. It's bad for Canadians and good for Americans, although we give up some agency in the determination of our own prices by making this play. I just wish the messaging around this didn't have to be so disingenuous.
Also, if I were Canada, I would ban the export of drugs to the United States if the US domestic price for the drug is higher than the Canadian price for the same drug. Because otherwise the effect would be that a single market would exist for the drug, and the average price in Canada would face upward pressure as a result. Although if they did this, an American administration bent on getting the same effect could cap all domestic drug prices to the prices paid by Canadians and skip the pointless importing step. I wonder how Canada would react to that? I guess if I were Canada at that point I would make drug price negotiations secret.
I don't think we know how prices would change in the long run? It could turn out is that increased volume of sales gives Canada more leverage with its suppliers as a larger buyer.
I think it's much more likely that Pharma manufacturers would cut supply to Canada and pressure the government to price match what US end users would end up paying - it's hard to tell but... I don't have a very optimistic view of the morals of drug manufacturers and this would be a highly convenient crow bar.
> It’s a bit odd that the US is taking this tack instead of just regulating drug prices domestically.
The net result of this drug policy is lower drug prices for US public, under the banner of "stop subsidizing the free-riders". The net result of the tariffs is higher wages for industrial workers, under the banner of "fighting the unfair China".
Both are left-wing outcomes, dressed up as not just acceptable but enticing for the conservative public.
Were there more efficient ways? Yes, we could reign in the pharma and force the 1% to raise wages for the 99%, but that would not be accepted by the conservative Americans, while this approach seems to be accepted.
The net result of the former is lower drug prices for the US public and a more complex supply chain that will be (ab)used by our already overly complex healthcare supply chains in the US. More indecipherable drug prices and negative externalities from exporting and then re-importing drugs like higher carbon footprints don't seem desirable, even if they're more palatable to the direct policy-averse conservative public.
The net result of tariffs is some combination of: higher costs on the goods purchased by Americans, lower wages paid to the workers making those good, and reduced demand on foreign goods (which may not have a substitute, which may depress the economy). The latter, reduced demand on foreign goods, may in turn hurt foreign economies, reducing their demand on our exports.
Somewhere in that is "higher wages for industrial workers", but it's unlikely tariffs lead to that outcome except in a handful of cases where the US has production capacity available for a substitute good. US steel might be one of said exceptions, because we have large amounts of unused capacity and a comparable or better product, but aren't able to manufacture it as cheaply. It's highly unlikely tariffs on ... checks notes from [1] Alaska pollack (interesting!), child safety seats, and hydrometers are comparable. I don't expect we have huge amounts of latent labor supply just waiting to make these things or manufacturing facilities configured to do so, but I could be wrong.
The net effect of a massive tax cut that disproportionately impacts the wealthy and tariffs that disproportionately affect (nay, target) consumption goods is a regressive tax hike on the majority of Americans.
These aren't left-wing outcomes, they're just bad policies.
It will also be regulating prices domestically, sort of. Trump mentioned introducing the "Favored Nations" clause. He just doesn't want to rely on that entirely. Regulating prices domestically == letting some idiot who had never run a business decide what products should cost. It's a dead end. Favored nations basically says you can't sell the product to us at a price that's higher you're charging your other customers, which, to me, makes more sense. You retain pricing flexibility, but not too much of it. I don't see why a European should pay less for a drug than a US person, who likely partially funded the early stages of development of that drug with her federal taxes.
Another issue is that even _generic_ drugs are often wildly overpriced in the US. Canada (or some other country, such as e.g. India, which has a strong pharma industry) could pretty easily just make more of them and exert downward price pressure.
What's unfolding before us here is historic. Previous administrations were all too beholden to Big Pharma to even contemplate any of this.
It's kind of ridiculous that the US's response to its own inability to negotiate drug prices is to ... pawn its citizens off on Canadian supply without resolve the root cause.
Sure, Canada could make a positive spin for this, but it's possible it puts their pricing negotiation with big Pharma at risk.
All in all, a cowardly "solution" that will likely result in all sorts of unintended consequences.
An american company develops an american drug, manufactures it in america, ships it to canada, and then its legal to go buy in canada? Instead of fixing the price discrepancy in the first place.
Its just another goofy legal loophole to avoid adressing the issue.
> Its just another goofy legal loophole to avoid adressing the issue.
It's not a legal loophole. It ensures that the price of the drugs in the US will never be more than the price of the drugs in Canada (plus any additional costs of importing).
Almost nobody will actually import the drugs from Canada, but the legality of it provides sufficient market pressure on pharmaceutical companies that they wouldn't be able to charge 100x the amount in the US that they would in Canada.
There is absolutely a relationship between intellectual property law and trade law. The restriction in drug import exists to make the patent effective. Its the same as Costco vs Omega. Import rights are intrinsically intertwined with ownership and sale rights.
> There is absolutely a relationship between intellectual property law and trade law. The restriction in drug import exists to make the patent effective.
No, this is a common misconception. If FooCorp manufactures a drug in the US and exports it to the US, there is no inherent patent issue with a US entity purchasing it from the Canadian middleman.
> It's kind of ridiculous that the US's response to its own inability to negotiate drug prices is to ... pawn its citizens off on Canadian supply without resolve the root cause.
Canada's ability to "negotiate" prices stems from the fact that the US is the single largest market for drugs, accounting for the bulk of revenues that pharmaceutical companies make worldwide.
If drug companies couldn't sell to the US at the high prices they currently do, they wouldn't be able to manage the relatively low prices that they offer to Canada and other countries.
> Do you think folks in the US should be proud of subsidizing the rest of the world?
I don't know what "pride" has anything to do with it. The US does subsidize the rest of the world, implicitly, which is why any effort to reduce drug prices in the US will result in other countries paying more, in the long run.
> Maybe the US should allow governments to negotiate drug prices.
I don't know what you mean by "allow governments to negotiate drug prices". The US doesn't have any say in whether other countries negotiate prices domestically.
> I don't know what you mean by "allow governments to negotiate drug prices". The US doesn't have any say in whether other countries negotiate prices domestically.
State and the Federal governments. The USG isn't the only governmental body in the USA.
All are essentially blocked from negotiations by Federal law/policy.
> State and the Federal governments. The USG isn't the only governmental body in the USA. All are essentially blocked from negotiations by Federal law/policy.
Why should the government "negotiate" prices that it's not paying? The prices are negotiated by the insurers who actually pay them, and they have far greater incentive than the government to keep them down.
This system appears to work in the vast majority of OECD countries, where drug prices are not actually set by a central authority (contrary to popular misconception).
> Medicare and Medicaid are examples of single-payer entities where drug price negotiation is not currently allowed by law.
No, Medicare doesn't negotiate drug prices because Medicare isn't a payer for pharmaceutical coverage. Those prices are negotiated by the private insurers who provide the benefits.
Many of those other countries have a much cheaper health care system that pools national risk and cost.
That, when coupled with bulk pricing pressure negotiations, is very likely to mean marginal increases, if anything.
I understand what you're getting at, but most Canadians have a negative reaction to talking about profiting off healthcare.
Ensuring access to those who need it is the primary concern. If Americans were suffering an unintended shortage, that'd be one thing... But causing an artificial shortage for Canadians in order to profit off Americans would result in near immediate regulation.
No, the government only sets drug prices. AFAIK private pharmacies buy and sell drugs at set prices and add stocking\service fee to sustain their business operations.
In some provinces, the government is also the sole purchaser of some drugs and controls their distribution, as is the case for alcohol imports and cannabis (iirc, ex: Quebec).
This. You have to consider that Canada does not have a singular public health system since they are provincial responsibilities. The Federal government "guarantees" it, but in practice doesn't do anything other than delegating it to the provinces and equalizing funding between the provinces.
In almost all of the systems, medication is not covered unless you're a child, extremely poor, or very old.
In practice about 30% of all healthcare expenditure in Canada comes from private sources, since things like medication, dental care, vision care, and a whole myriad of other critical segments of healthcare are not covered by any government health plan.
Basic economics 101: increased demand will drive up prices. Higher prices will induce new competitors into the market, increasing supply and lowering prices.
That is, of course, how an actual free market works. Healthcare is far from a free market, so instead of embracing the opportunity for growth of the Canadian economy, we get responses like the one above.
Fun fact, Canada spends 1.76% of GDP on pharmaceuticals: https://data.oecd.org/healthres/pharmaceutical-spending.htm. The U.S. spends 2.04%. Cutting pharmaceutical prices to Canadian levels of spending would save about $55 billion per year. Which is not nothing, but it would reduce health care spending by just 1.6%.
If you look at dollars-per-capita, the difference is $389. That doesn't only reflect the price of the drugs, it also reflects the fact that Americans might simply require more drugs than Canadians. For example, obesity rates drive the need for drugs for blood pressure, cholesterol, etc. 25% of Canadians are obese versus 34% of Americans: https://www150.statcan.gc.ca/n1/pub/82-625-x/2011001/article.... That means we would spend a lot more on obesity-related drugs even if they cost the same as in Canada.
From your comment, I’m not sure if you are downplaying the high price of medication in the United States or simply stating a fact, so I’m going to clarify (apologies on my part). Reducing 1.6% of the aggregate healthcare spending isn’t the full picture. That amount is not going to go to reduce the price of over-the-counter Acetaminophen or over-the-counter Ibuprofen: it’s going to go to things like grossly marked-up Epipens and the like.
The point is that the amount of political attention paid to drug spending vastly outweighs the actual impact of drug spending on the economy (or peoples' wallets). My cynical take is that it's easier to fixate on an area where you can demonize a small number of large companies, instead of looking at the structural reasons why the U.S. spends twice as much per person as Canada on healthcare overall.
Okay, let's import all our drugs from Canada and save a few hundred dollars per person on pharmaceuticals. Then let's get rid of all health-insurer profits and save another $180 per person. Now what about the other $5,432 more each American spends than each Canadian?
I don’t think % of gdp is a very useful comparison because there’s not really a clear correlation between healthcare and gdp and there’s so many factors.
I like your data source and I looked at %health and Canada is 16% to the US’ 12%. That doesn’t mean that drugs from Canada will increase health care spending as there’s so many different factors at play.
The US might buy more drugs at lower costs keeping the ratios the same. Without a lot deeper analysis I don’t think it’s fair to say that the US requires more drugs than Canada.
This is a very important point, the price of pharmaceuticals in the US is an incredibly complicated and convoluted thing. While every year it appears as if drug prices rise an unreasonable amount, that is only for the uninsured, and ignores the price after rebates system that insurance companies and occasionally some patients leverage to keep their costs lower.
The big issue is that, often even for those who are in fact insured, they have high deductibles, often times resulting in them paying the full price without rebates.
Recently, PhRMA has been buying a bunch of promoted tweets in my twitter feed claiming that 10% of drugs outside of the US are counterfeit. I'm sure the timing is completely coincidental.
That's true, but track and trace is not setup for drugs imported outside the country. The drug has to be packaged within the US for the appropriate tracking codes to be added.
As we see it, there is no legal or operational way of transforming a drug packaged for a foreign market into a drug that meets the U.S. requirements of our in-progress track-and-trace system. What’s more, there is no way to alter the law to enable importation without undermining the law’s purpose and value.
Obviously it doesn’t work now, since it’s not legal to import drugs like this. Why would we have a functioning system for an illegal activity.
I think it’s important for me to always mention how such a system would be implemented u set new laws. Or why I think the proposed law doesn’t address this need.
If I just say that it’s not currently done, it doesn’t help the conversation much because it’s not a useful fact. Also there’s no drugs exported to Mars and many other not relevant without additional info facts.
A new law will need to provide for this capability. All the laws I’ve seen addressed drug safety in one way or another. But curiously I hear the complaint about safety brought up without the compensating strategies also brought up.
It will be eventually though (at least that's the plan). It will be traceable if it's available in the US, still a WAYS out. These current deadlines are fictitious.
Based on the high level of regulatory capture in the mining and telecom industries in Canada, it doesn't seem like it would be particularly expensive for drug companies to lobby the federal government for stricter export restrictions on drugs.
The best part about the system is that it uses big corp’s Hollywood accounting against them.
Oh, per your US tax return, we see that you earned 0.4% profit on your US sales last year. You’d be fine with a 1% royalty after we sell it for half price, right?
What's to stop drug companies from prohibiting re-export from Canada as part of their sale/negotiation with Provinces? This is an absurd idea. Canada gets lots of its drugs from American companies, why on earth would they permit re-export and undercut themselves? Refusing to address the real problems in the US market and relying on Canadian provinces to negotiate bulk discounts on behalf of American states is almost surreal.
That drug pricing is America's problem, not Ontario's, is a phrase I never thought I'd type out haha.
I should probably do the research for myself, but is there a simple explanation for why it's easier to allow importation from Canada than to lower domestic prices in the US?
Prices are low in Canada because they have the negotiating power of the entire country behind their single payer system driving prices down. To do the same in the US would require taking on the very powerful (because they have huge piles of cash from drug prices being so high) pharma lobby and getting it past the rabidly pro business Republican party. The only real way to do it would be a) move to a more centralized insurance system to negotiate prices (did you know Medicare the largest insurance in the US can't legally negotiate the prices it will pay for drugs?) or b) have legal limits on the prices of drugs set by fiat.
I'm dubious this is going anywhere, it seems like a ploy to get some talking points for the election in 2020.
Strictly speaking, this is not true. The Patented Medicine Prices Review Board does set prices based on comparable prices in other countries, but the actual purchasing happens by a wide variety of public and private payers. Most working Canadians have private insurance that covers pharmaceuticals, and each province maintains its own separate drug insurance scheme for low-income citizens.
In response, pharmaceutical companies inflate prices of new medications, then negotiate confidential deals that make it difficult to get a realistic comparison for the purpose of setting prices. Because we don't actually have a single payer for pharmaceuticals (there is no national pharmacare program), this program fails at price discovery, since the review board does not go about the actual purchasing of said drugs.
The net result is that Canada has the 3rd-highest per capita drug spend in the world (Switzerland is #2).
> pharmaceutical companies inflate prices of new medications, then negotiate confidential deals that make it difficult to get a realistic comparison for the purpose of setting prices.
In reality, this occurs because the “new” product is junk and no better than the cheaper generic it’s replacing. With these government-sanctioned rebates, the manufacturers save themselves the embarrassment of trying to explain why nobody’s insurance will pay for it (it’s expensive junk).
Maybe for some products that are merely isomers of existing off-patent medications, but biologics are pretty amazing - Hep C is basically curable now, for example.
> Prices are low in Canada because they have the negotiating power of the entire country behind their single payer system driving prices down.
This is not correct for a variety of reasons, first and foremost that the Canadian healthcare system (systems, really, each province administers its own) do not cover drugs in most cases. There are public programs for low income earners, otherwise it's out of pocket or covered by private insurance.
The real answer is simply that there are legal caps on pricing for most patented medicines, as a condition of being patented.
United Health Care, one of the largest private insurers in the US covers more lives than the Canadian Government and has every incentive to negotiate low prices.
This simple answer is satisfying to many who otherwise prefer single-payer plans, but doesn't really hold up to scrutiny
Health insurers in most states are subject to a minimum loss ratio that says they must payout 85% of the premiums they take in. Insurers operating near this cap actually have an incentive to pay out more money in order to raise the cap on their profits.
Then competing insurers can steal their insureds away with lower premiums. The caveat is that we must abolish employer sponsored healthcare, dump everyone on healthcare.gov, and provide a sufficient pool of healthy lives to make providing insurance viable.
I don't think that can explain it, because IIRC that rule has only been around since Obamacare, but the US/world price disparity for prescription drugs has existed much longer than that.
> This simple answer is satisfying to many who otherwise prefer single-payer plans, but doesn't really hold up to scrutiny
I mean, it fails the even more basic scrutiny that Canada simply does not have a single payer for pharmaceuticals, or even a handful of single payer provinces. It's much like the US in structure (out of pocket or private insurance), simply with price controls.
Well, if UHC decides to negotiate hard and fails, then people will leave UHC and move to another insurer which is willing to pay those insane prices.
If country X (with single payer plans) does the same thing, the only choice the pharmaceutical company has is to not be covered by insurance, which mean they won't sell their drug.
Also the state can just pass laws to make the pharmaceutical company life's miserable. UHC can't do that.
This can be solved overnight if voters wanted it, however majority seem to think that somehow the system is OK,so why bother? Pharmaceutical companies absolutely should be able to make money,and tons of it,if the drugs are good,but then one needs to ask himself: what's more important,human health,or the company,which will make 1 billion instead of, let's say 2 or 3?
Also people temd to forget thst there a lot of large pharmaceutical companies outside US with no footprint in its market,yet they are pulling billions selling drugs to all those so called poor countries.
Canada has lower drug prices for the same reason Wal-Mart has low prices--exercise of monopsony power: https://www.becker-posner-blog.com/2009/12/should-the-govern.... Because the government can set prices for such a huge proportion of the demand, it can drive the price of a product from suppliers to below market prices.[1]
That may or may not be a good idea. But the reason it's easier to allow imports from Canada, instead of doing what the Canadians do, is politics. The U.S. has a long history of price regulation. After FDR, the government regulated everything from the price of milk to what airlines could charge for a ticket between Chicago and New York. That regime was almost uniformly disastrous, and starting with Jimmy Carter there was a bi-partisan move to eliminate price regulation all over the economy. So there is a huge political opposition in the U.S. to anything that smacks of price regulation.
Allowing imports from Canada effectively outsources the regulatory exercise of price setting to the Canadian government. So the U.S. can achieve the effect of price regulation, without having to actually admit that it's engaging in price regulation.
As others have mentioned, United Healthcare has more patients on it's plan than the population of Canada. In addition, each province of Canada has their own drug plan (some don't and people buy private insurance), so there is no monolithic entity buying drugs for all of Canada.
The real reason is that the gov't simply decides what drugs are worth and then tells the drug companies. If the drug companies don't like it, then the gov't tells them they can't sell them in Canada. Think of it more like "price by fiat" than anything else.
But the only reason "price by fiat" works is because the Canadian government has the authority to set a price ceiling for a huge number of buyers. UHC doesn't have the same market power, because it's competing with other insurers who can potentially cover the same people. If Canada decides that a drug is worth no more than $X, there is no way to sell to Canadians without agreeing to that price. If UHC decides a drug is worth no more than $X, in the short term you can't sell to UHC customers without agreeing to the price, but in the long term you can exert leverage over UHC because people might switch to other insurers who cover more drugs.
You need to know the history: the pharma companies wanted the current system in Canada, because the previous system was compulsory licensing: ie: anyone could manufacture a patented drug as long as they paid a royalty.
It was a lot like playing songs on the radio: nobody could stop you as long as you paid.
Then the system was switched to give the pharma companies total control of the distribution of their patented molecules.
That sounded a lot like nationwide monopsony power. Compare to "Wal-Mart simply decides what TVs are worth and then tells the manufacturers. If the TV manufacturers don't like it, they can't sell them in Wal-Mart."
Perhaps United Healthcare cannot negotiate as much because it's bound by regulation, there's a large number of drugs that it cannot realistically stop covering, and the drug companies know it?
On practical terms, they are acting as a monopsony. They are negotiating with the manufacturers. If the price they set is too low, the manufacturers will indeed stop selling in Canada.
Usually we use the market to set the prices of goods which works unreasonably well. But the pharmaceutical market is so far divorced from any normal market forces that what's the right price probably has very little relation to the prices charged.
And I think there are definitely two different discussions to have. "How much should be spent on pharmaceuticals" and "what should the unit price be?". The holy grail are solutions that reduce the cost of bringing a drug to market. But I'm also very interested in solutions that reduce the unit price without affecting total pharmaceutical spend.
Drugs aren’t a perfectly competitive market involving commodities, like say wheat or corn, but there is oligopolistic competition similar to say mobile phones, internet search, or social media. Would having the government set prices in those markets improve efficiency? Or are they competitive enough—even if not perfectly competitive—where the government probably wouldn’t do better?
You seem to be looking at this like "price setting by proxy" but I think a more natural view would be "stopping the enforcement of government mandated price segmentation".
I'm in 100% agreement that the government shouldn't get involved in markets that look anything like what you'd see in an ECON101 course. But the prices of drugs and healthcare in general are set in a way that is so far removed from ECON101 models that I don't think you can call the price of any pharmaceutical medicine a "market price". There are 100's of market prices, the price negotiated between any given oligopolistic supplier of drugs with a oligopsonic collection of governments and large insurance companies(which all set different price). The actual price an individual pays for a given medication and insurance, and the price the oligopolistic supplier sets for a lone individual.
I'm not sure why we call the price set by one relationship(uninsured individual with large oligopolistic supplier) with the largest negotiating imbalance the "market price".
It seems like this policy has two effects.
"Reduce the unit price of drugs to individuals". Good because more people can access medication, and consumers pay less.
"Reduce funding available for drug R&D". Probably bad because this reduces the number of future drug we have.
I'm don't know whether this will be good or bad on net for U.S. consumers in the long run but I think it requires analysis far more detailed than assuming the highest of a 100 possible prices for a medication is "the market price" and any deviation from it is creating an inefficient market.(Which is a good assumption for most near-perfect markets).
Would the importation from CA incentivize local mfgs to lower prices and disincentivize importation? Barring regulation to render imports illegal of something.
> The word "rent" does not refer specifically to payment on a lease but rather to Adam Smith's division of incomes into profit, wage, and rent.[4] The origin of the term refers to gaining control of land or other natural resources.
Our current regulatory environment sets up a situation where you can only buy medication from either one manufacturer, or a limited set of manufacturers, who then charge whatever they want.
But, going into more detail is very political, and much more political than I think is appropriate for a Hacker News discussion.
It's naive to think that high capital, high knowledge required industries would suddenly be in a neat price competition market if we only just stopped regulating the patents or enforcing manufacturing quality standards.
Expired patents didn't keep generics manufacturers from raising prices on US consumers. And even allegedly colluding on price fixing.
And removal of manufacturing QA is a recipe for flooding the market with counterfeit and ineffective drugs. Imagine if you didn't know if your cancer drug actually had sufficient active ingredients in it or any active ingredients for that matter. Individual testing at scale for something as complex as drugs is massively more expensive and fraught with distributing all sorts of failures.
That is not to say we shouldn't fight for efficient regulation, and against regulatory capture.
The Patented Medicine Prices Review Board [1] regulates drug prices in Canada. Politically it's easier for the US Government to look at band-aid solutions, such as this, rather than address the issue through regulation.
I am not an expert so this is an uneducated guess, but probably because it's easier to allow competition than to force lower prices on a market riddled with regulatory capture.
Conceptually it's the same reason it's far easier for Trump to use executive orders to go after healthcare prices & transparency, than to go through Congress and spend years battling lobbyists only to get nowhere (bought & paid for Congress members will sabotage the efforts, or otherwise dilute it to nothing).
People understandably dislike Trump. His biggest legacy is actually not going to be his obnoxious personality however. It's going to be that he has unleashed the executive order as an acceptable method of action in combating eg the ridiculous US healthcare system. Just wait until the next Democrat is in the White House. If you're big pharma or big healthcare, you better put on your seat belt.
George W Bush vastly expanded the use of executive orders. Libs like myself complained about that to no end.
Then Obama came in and did it even more!
So yes, we've already seen this problem escalate from one president to the next. My history isn't deep enough know for sure, but it might even go back to the Vietnam Police Action. It wasn't a war since congress didn't authorize it you know.
Sheer count's not everything. I thought maybe there was some other analysis that'd support the assertions (first thing I did was check that page, which certainly doesn't support them).
The next Democrat President will be belligerent with the use of EOs against the healthcare industry, thanks the Trump making their use far more acceptable (Trump is flinging them around on anything and everything as he sees fit to pursue his personal agenda). They will pursue policy - such as fixing healthcare industry problems - on things they can't get through Congress, using EOs. The healthcare industry is so disliked at this point, there will be very few defenders standing up against the use of EOs in that manner.
This will also likely be commonly seen in regards to environmental related issues. The next Democrat in the White House will use EOs extremely liberally toward policy in that area. Far more so than any prior Presidents have.
If you're the healthcare industry what are you going to do against a large volume of executive orders each year targeting you? Good luck fighting even a small fraction of them all, executive orders are difficult and costly to turn back. And the President can just keep burying you with them. Over the last few decades the President has increasingly been given ever wider discretion to use EOs, and Congress has largely been reluctant or plain unwilling to roll that power expansion back meaningfully. If you're big healthcare, you'll be battling the 'unlimited' resources of the largest, most powerful entity in world history, good luck.
It will soon become very obvious - if it's not already - that the best way to fix many of the malign parts of the US healthcare system, is through an abusive spamming of executive orders that chokes the whole thing to death and begins modifying how it all works. There is nothing that can be done to stop this approach, if a President decides to do it (Congress is very unlikely to agree to curtail the EO abuse). The healthcare industry would be on its knees begging for mercy in five minutes.
Democrats should properly already recognize there is no means to go through Congress to fix the US healthcare system. They had a supermajority and couldn't come close to fixing the disaster that is the system. There is one route to go and only one. They will use it, just watch. It's the obvious path.
Personally, I'm not a Democrat or Republican, more independent politically. I don't like the abusive use of EOs. At this point, given the entirely broken nature of US healthcare (and that Congress will never agree to anything that would fix it; not even remotely close), I'd support giving the next Democrat President carte blanche to obliterate the healthcare industry using executive orders. Bring it down by any means necessary.
I think we're about to find out there's a lot of asymmetry in the ability to use executive power, in that laws put some sort of ceiling (fuzzy, perhaps, but it's there) on the power of the executive branch in various areas, but there's no court-enforced floor on it, for the most part. So it's easy to, say, stop the CFPB from doing anything at all or cripple the EPA, but much harder to push those offices beyond their congressional mandate.
Restraint in this regard, and (especially) Republican willingness to let agencies, laws, and policies they don't like even sort-of work when they're in power, has essentially been due to courtesy or deference to convention. That may be going away.
FDR had both the Great Depression and World War II during his terms, of course.
The raw counts are unlikely to tell the full story, and I suspect Congress's ongoing ceding of power to the executive has reduced the quantity of them in normal practice as well.
> I'd support giving the next Democrat President carte blanche to obliterate the healthcare industry
The top 5 recipients of healthcare lobbying money for '17 and '18 have been democrats [1]. Democrats received more healthcare lobbying money on both the '08 and '16 elections [1]. No reason to expect the party "for the people" to actually do anything for the people besides make emotional campaign commercials. Both parties are the same. Bernie is leading the way, however. Calling on all Dems to stop accepting their money. (personally, I wish they'd just accept the money and then betray the donors en masse).
> is there a simple explanation for why it's easier to allow importation from Canada than to lower domestic prices in the US?
There is no simple answer to your question.
Here are a few issues:
1. It is fundamentally difficult to price a good with a high fixed cost and a low variable cost. International pricing is even more difficult.
2. Different countries have different regulations around the manufacture and sale of drugs, which can add to the cost to manufacture and distribute in those countries.
3. Many countries with socialized medicine use their monopsony position to negotiate good/better prices for drugs. Sometimes this involves credible threats to ignore patents.
4. Fake drugs are a thing and are a real, serious problem. My understanding is that drugs that pass through Canada (and possibly other places) do no go through the same verification processes that drugs for internal consumption do.
For 4., I’m pretty sure Canada has a similar verification process. It’s whether or not the U.S. considers that process to be the same with in terms of standards, or a threat to whatever vested interests the U.S. verification process protects. The latter point might sound like anti-American rhetoric, but the same thing happens within the U.S. . Consider the bidding process for the U.S. military project involving Amazon, Oracle, and IBM and the latter two companies accused the process of being heavily skewed to favouring Amazon [0].
Canada doesn't get lower prices because they can import drugs as individuals. They get such low prices because the Canadian government is the insurance for the whole country and has the negotiating power to actually get lower prices out of drug companies. Medicare part D in the US can't even actually negotiate for lower prices in the US!
Allowing import from Canada is just a bandaid to make it seem like they're doing something about the actual problem and will only work as long as we assume the supply of Canadian drugs can absorb both it's own demand and the US demand.
This is actually not true. Healthcare is a provincial matter in Canada, not a federal one, and there is no broad-based pharmacare program. Many Canadians have private insurance covering the cost of pharmaceuticals.
This isn't true, Canadian's have private insurance for pharmaceuticals that isn't a part of their broader single payer system for standard healthcare. As a matter of fact, the current proposed medicare for all bill, would go far beyond what exists within Canada in terms of coverage.
Drug companies only have any kind of exclusivity or advantage at the pleasure of governments. They can't go too long playing hardball or countries will just start ignoring their patents.
Maine had a law allowing these imports (and imports from a few other countries) that was struck down as a violation of federal supremacy. While it was in effect, though, it was certainly appreciated by Mainers.
As a Canadian, I will press my representatives as hard as possible to prevent this from happening. It can only impact our healthcare system negatively -- no thanks.
As a Canadian this is really weird. US, the wealthiest and most powerful country in the world, will now grey-market import/smuggle drugs from freaking Canada. All because the US, land of exception-ism and capitalism, couldn't stop pricing gouging. Now US is expecting Canada to supply the entire US' medical drugs' demand. When did Canada become responsible for the well-being of US citizens?
This is akin to asking Hong Kong to supply the entire China's demand for baby formula. This did not end well for HK.
Agree with you, this is likely all bad for Canada. (Sorry to be a bad neighbor mate)
But, the discussion is likely a net good all around. Just in this thread I see lots of new info. Many things I did not know about the US and Canada and how drugs work economically.
Better informed people is likely to be a good thing.
There are many generic drugs that I'm aware of being manufactured in India for consumption in the US. They are required to follow all the FDA manufacturing standards for import. But there are still some quality issues at this time.
I have considered this. While many people worship regulations, I'm willing to take the "risk" of using foreign medication.
I wish I could take the same risk when I get hydrocortisone, but instead I need to pay a physician for a prescription, a pharmacist to fill, and the clinic that stores everything.
Lots of middlemen for something that should be sold on Amazon.
As an American this is pretty embarrassing. Somehow trying to absorb the benefits of another government's regulation and billing it as creating a "freer" market is more popular than solving the problem here? I don't buy it, I can't imagine a lot of other people really do either. I'm also not sure that it would even work. That is supposing Canada wouldn't respond to lukewarm hostility with measures to counter this. It feels like we're civically brain-dead. Said sitting on a stash of decade old epi-pens.
All this will do, unfortunately, is cause drug companies to raise prices in Canada. There's no way that drug companies will allows this loss of revenues from the US.
Why not Mexico also? I'm guessing racism or people will say they are fake drugs. Since I moved to Mexico about 10 months ago my health problems have been treated with Mexican-bought medication only and my symptoms have not gotten any worse. Except for when I run out and need to get more.
I mean there are places like Walmart, some pretty large pharmacy chains, etc. It seems like people would not tolerate a significant amount of counterfeit medication.
Northern Mexico is super dangerous so realistically you would have to fly. And I don't think the TSA will like you carrying a multi year supply of meds back to US
I live in Tijuana and it's actually not super dangerous unless you go to a bad neighborhood. Sure, relatively statistically speaking, there is a higher chance of something bad happening. But it is still a very tiny chance if you stay within nice neighborhoods and are just trying to buy medication. By the way, unfortunately the only part that of Tijuana that a lot of Americans see is the one designated for maximum debauchery and is one of the worst neighborhoods.
The pharmacies right by the border are fine, but if you want a nicer area, walk across the PedWest crossing and stand in the Uber waiting area for an Uber to go to Playas. Then you can go somewhere like Farmacias Roma or Farmacias del Ahorro or a bunch of other nice stores with people wearing lab coats. You could also just go to Walmart for medication if you want but recently they seem to be missing basic things I needed so they probably aren't the best.
This morning I drove town to Tijuana and bought my "refill" from Farmacia Roma 3 blocks from the border for $15. My US doctor wanted to charge me $200 for additional tests and then $30 for the same meds. This is for a simple bacterial infection.
Border towns might be a decent idea. I was only considering crossing northern Mexico by car which natives visiting the US have told me is something they never do.
OK, so I live in the US. And I take lots of drugs. Some of which are priced obscenely. So I buy some drugs through online pharmacies, and it's mailed to me. Mostly from Asia.
How is this different than the existing importation of generic drugs from places like India? Is it that this is cutting out the US middleman in the transaction?
Every time I watch or read a debate on US healthcare issues the debaters conveniently ignore a reality that every single entrepreneur dealing with physical products is keenly aware of: Cost drivers
Doing business in the US is very expensive. In the case of pharmaceuticals we have high regulatory costs and, perhaps worst than that, high legal costs.
If you want to develop and sell a medical device in the US you have to accept the fact that it will take a ton of time and money to deal with the FDA. Not trivial, at all, even for relatively simple products (say, basic hearing aids).
Worse than that, once you enter the market you have to expect the near certainty of having to face one or more nasty lawsuits. Medical product manufacturers, be it drugs or hardware, get pounded with lawsuits. From someone manufacturing a simple cane to prescription drugs. Lawsuits are so common most companies have complete legal departments on staff.
Given that reality, yes, definitely yes, there will be a difference in cost when selling drug A in the US vs. Canada, Peru or Italy. No question about it.
Yet, during debates between politicians all we hear about is how changing health insurance in one direction or another will reduce healthcare costs.
That's just nonsense. It has to start with tort reform and educational loan reforms that reduce the cost of education. A doctor graduating with $300K in debt has no choice but to charge very high fees for his or her services.
Now fill a hospital with people with multi-100K student debt and see if you can lower operating costs. Add to that an expensive regulatory framework and even more expensive legal landscape and the answer is simple: You can't. It doesn't matter how you twist and contort health insurance. If the underlying cost structure is high, no amount of magic hand waving is going to make things better.
That's our problem.
There's an asymptotic lower limit to what medical professionals have to earn in order to have a life. And there's another asymptotic limit to what the entire medical industry service and supply chain, from component suppliers to OEM's, doctors and hospitals have to charge in order to deal with regulatory and legal costs. Pretending none of this exists while talking about health insurance is kind of silly.
If you bring prescription drugs in from abroad, it will not take long until a MOAL (Mother of All Lawsuits) costs someone a ton of cash and imported drugs become just as expensive as anything else gotten locally.
Nobody seems interested in addressing the real issues, probably because he political value isn't as clear as beating on the low hanging fruit, even when this will fix nothing.
Ever wonder why we've been talking about healthcare reform for decades and nothing ever really changes? Well, now you know.
The real reason that prescription drug prices in the US don't match the prices seen in other countries is that patients in the US have no leverage in demand like that seen in supply. When a market has a power imbalance where the producer has a near-infinite production capacity (drugs cost infinitely less to manufacture than discover) and monopoly protections (pharmaceutical patents), then the consumer is at the whim of the producer and will eventually/inevitably pay whatever price the producer demands.
This is econ 101 stuff.
What we need is an advocate to organize consumers so they have leverage over producers and can set a bulk price. This would also work in any industry that has a natural monopoly like water, electricity or (gasp) telecommunications:
Note that we aren't talking about why electricity costs $10 per kilowatt hour, because decades ago we didn't have the "government is bad" mentality introduced by the Reagan administration, so Carter was able to form the US Department of Energy (and really various energy commissions had made the electrical grid part of the commons decades before that).
So this proposal of importing prescription drugs (whether it happens or not) is only looking at the supply side, and for the reasons I listed above, will certainly fail eventually.
The reason the rest of the world is eating our lunch is that they have no qualms about bolstering the demand side. That may mean: using a single-payer system instead of insurance companies, limiting the prices of key drugs, regulating pharmaceutical companies at a deeper level than what is done in the US, producing drugs at the state level (whether they're patented or not), or some combination of these and other measures that put consumers on an even playing field with producers.
Now, we could look at US insurance companies as being an advocate to keep drug prices down. But someone realized decades ago (indeed, as early as Nixon's Health Maintenance Organization Act of 1973), that a pool of money that large is ripe for exploitation and corruption. It was predicted very early on by (labor/leftists/Keynesians/socialists/radicals/insert boogeymen here) that we would find ourselves in the situation we're in now. It's just that wealth inequality wasn't at nearly the levels we see today, and older folks from the WWII generation felt a certain patriotic duty to rip off the rest of the world instead of their fellow Americans, and we still had a manufacturing base in the US so we didn't fall into these zero-sum games of squeezing profit from stone.
Ok that last paragraph was fairly opinionated on my part. But as the influencers of the tech world, you owe it to yourselves to be informed and know the history of this stuff so that you don't get distracted by the dilluted messaging that keeps people ignorant and divided. Stick to first principles, use critical thinking skills to discern where power imbalance leads to corruption, and find a way to convey what you have learned to people hungry for insight. For me that's the basic supply/demand dichotomy and how it breaks down in natural monopolies, but maybe there are better hacks out there.
They do - check out Tijuana and every other Mexican and Canadian city right at the border. It's all pharmacies and cash-only clinics. Not everybody lives close enough to drive there all the time.
That's a great workaround for small groups of people. As a national solution, it's full of problems and directly avoids the real problem - that government doesn't negotiate drug prices.
If we wanted a system that's more equitable, we could create a law that sets the maximum price for medicine in the US at some multiple of what's charged abroad.
For example: we could say that it's illegal to charge a US person more than 2x what you charge for the drug anywhere else in the world.
This would do two things: it would bring down the cost for US consumers, and it would increase the cost for consumers abroad -- effectively reducing the free-rider effect we currently see in Europe.