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Off Topics > Why do prescription drugs cost so much?
 
 
divebomber
Heliman
Location: California

My Posts This: Topic  Forum		I've noticed that one of the threads has diverted to a discussion on perscription drugs and their cost here in the US vs. their cost across the boarder in Canada and Mexico.

I get the impression that many people believe that this disparity is because of the evil drug companies lining their pockets on the backs of Americans while the fearless leaders of Canada refuse such intimidation and thus get better pricing.

My understanding of the situation is very different and doesn't involve the 'omnipotent power' of the President.

Reason one: Advertisement. Have you noticed that name brand perscription drug prices have gone up since they began to be advertised? That flashy commercial for Levitra during the Superbowl costs money, folks, and that gets rolled into the cost. Advertising also drives up demand, making existing stock more valuable, thus more expensive.

Reason two: Frivolous lawsuits. Ambulance chasers have made huge fortunes in this country by sueing drug companies for not being perfect. I'm not saying that there are some legitimate cases out there, but most of these cases are idiotic and unrealistic. And when a company gets fined multiple millions, the lawyers recieve a good chunk of that and the consumer of the product pays the fine.

Reason three: FDA approval. No other country has the 'no risk' policy attitudes we have, and thus the FDA is placed in the unreasonable position of making sure each drug is 100% safe, or else deal with Reason two. So, it takes $millions to get final FDA approval. And those millions go to the price of the pill.

So why does Canada get the same drugs for cheaper?

Reason one: Legal protection. The drug companies aren't faced with the same ridiculous civil liabilities over the border.

Reason two: The governments buy the drugs in bulk, and thus get better pricing. Of course, they also control who gets the drug.

Reason three: Patent rights are not as strictly inforced, thus generics and knock-offs are more readily produced over the borders.

In short, even if we import drugs from other countries, we would still be faced with the same litigious issues that drive up costs. Plus, the government would control who gets what when.

And if you think two lawyers as President and Vice President will make this situation better, think again.

I'm not in the pharmacutical or medical field, so this information is based on what I've found through researching the topic. I would like to hear from those who are in the business. Please feel free to correct any of my assertions or conclusions if they are incorrect.
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HS748
Senior Heliman
Location: online

My Posts This: Topic  Forum		interesting thoughts...........
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sabooo
Veteran
Location: Allentown, PA area

My Posts This: Topic  Forum		I live within 30 miles of 2 major pharmacutical manufacturers. All you would have to do is see the extravagence and decadence of their offices to understand how much profit these organizations are earning.

While your points are certainly valid, these companies are businesses first. They are in the practice of making money, and they are very good at it.



I was going to take up Origami, but someone said the local club folded.
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FLYINFOOL
Key Veteran
Location: Cudahy, WI

My Posts This: Topic  Forum		Let me start by saying that I am not involved in the drug industry at all.
My understanding of the issue was that the Canadian gov is controlling the price of the drugs.
As in if you want to import drug X into this country this is what you will be paid for it.
The cost that the Canada gov specifies does still allow the mfr to make a profit, it has to or they would not get any drugs.
The reason that USA cost is so high is that we are making up the difference in the profit margin and R&D cost from the controlled pricing.
Granted a major portion of that profit margin goes to the lawyers.
If there were no price controls in other countries then our cost for drugs would be less.


Jeff Borowski
Gohbee Field Rep
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divebomber
Heliman
Location: California

My Posts This: Topic  Forum		That's an interesting point, sabooo.

I've visited many Corporate headquarters, and I've found very few that are modest. (In fact, I can't think of any off of the top of my head.) Take Sun Microsystems. They have not only lavish facilities, but incredible social settings at the corporate buildings ("campuses"). Yet, their stock has gone from $60+ a share to roughly $5 a share.

I'm not denying that pharmacutical companies make lots of money, but they have to in order to keep their stockholders happy. (Again, witness Sun.) They are, afterall, a business (as you've pointed out) and it is business, not government, that made this country the wealthy nation it is. And ALL of us are wealthy compared to the majority of the world's population.

There are many people who villify coroporate profit and demand that politicians 'level the playing field'. And many politicians promise to do so, even they know that to do so would be economic suicide, because those corporations provide jobs for taxpayers and pay corporate taxes for the hungry federal machine. So even though they may promise to 'take it from the man', they won't.

So what's the alternative? Government controlling drug companies? (Socialism) How long would you stay in a business if the government told you how to set pricing and that you have to unionize? You'd simply go to another country that allowed the profit and operations structure you wanted and then sell the drugs to your former country. (Sound familiar?)

What about Government-owned pharmacutical companies? (Communism) Free, low quality drugs for everyone and virtually no R&D for new drugs. Societal health stagnation and decline.
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Bg_
Senior Heliman
Location: Penn. State U.

My Posts This: Topic  Forum
Quote 
In short, even if we import drugs from other countries, we would still be faced with the same litigious issues that drive up costs. Plus, the government would control who gets what when.


I dont' see how these conclusions follow from the reasons you've listed.
Would US lawyers be able to sue Canadian drug companies?
Why wouldn't the protection the canadian govt gives to canadian drug companies apply in terms of getting sued in the U.S.?
Why is the government (i assume you mean U.S.) responsible for importation (and thus control distribution)?
Why can't a private company import?
Can't individuial U.S. citizens buy drugs from canadian corporations?
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spaceman spiff
Key Veteran
Location: Tucson

My Posts This: Topic  Forum		I design and sell plastics forming equipment for biopharm and medical compaines. What i can see from my vantage point is there are 3 things these guys fear 1)FDA 2) litigation 3) competion.

When i sell a machine typical price tag is aroud 30,000$. typically first thing these guys do is put a team of engineers and techs on it to go thru a lengthy process of validation. They go thru the machine to make sure it does the same thing every time. ussually they will spend 3 to 4 times the cost of the machine itself just to fill out the paperwork and do the necissary tests to cover their ass in the event of and FDA audit. FDA has a similar effect on each part of the process from development to delivery.

I have no idea how much litigation comes into play, but we should be able to get a rough idea by finding out how much these companies pay in insurance against lawsuits. i have read that the cost of this insurance is quite high for doctors and has become so significant that they will move from one state to another in order to find lower insurance rates.

These guys also fear competition, so there is littel doubt there is some greed going on, but i have no idea how to quantify that. good place to start might be to get numbers of what various products cost here VS in Canada.
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nipps85
Heliman
Location: gurnee illinois

My Posts This: Topic  Forum		I work for a pharmaceutical company, so I know this pretty well... FDA is the biggest reason drugs cost so much. They should be replaced with a voluntary organization similar to the underwriters labs UL stamp you see on electronics. If you want cheap, but minimally tested drugs, get non-stamped drugs. If you want to pay more for fully tested drugs, buy the stamped ones. Leave the choice up to the consumer. It's another example of government thinking that it knows what is best for us. The FDA ends more lives than it saves by prohibiting people from getting the drugs they need either because they cost too much or aren't approved yet.
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eSmith
Veteran
Location: Edmonton, Alberta, Canada

My Posts This: Topic  Forum		-

http://www.edmheli.ca
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spaceman spiff
Key Veteran
Location: Tucson

My Posts This: Topic  Forum		bayer has a plant in Berkely that was providing desease free (artificially grown) Factor 8 for hemopheliacs. FDA shut them down because they didn't like how they ran their water thru the plant. lives were lost because many had to go back to factor 8 from blood banks.
lots of jobs were lost too.

good job FDA!

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divebomber
Heliman
Location: California

My Posts This: Topic  Forum		Good questions, Bg_,

Quote 
Would US lawyers be able to sue Canadian drug companies?


No, I don't believe so, except maybe through the world courts, which really have no jurisdiction. However, the importing company could very easily be sued, as well as any doctor that prescribed the drug, etc. The issue isn't Canada's liability, but everyone involved with the importation of the drug. However, in order to import have their drugs legal for importation, Canada (and any other country) will have to go through the same FDA approval system that indigenous companies go through, thus raising the cost in that aspect.

Quote 
Why is the government (i assume you mean U.S.) responsible for importation (and thus control distribution)?


That's what Kerry's advocating (as well as many others. In order to secure the type of pricing that is touted by the proponents, the government would have to be the buyer. And once the government becomes the buyer, it controls the distribution.

Here's a link with some of the information regarding this very complex matter.

FDA testimony on drug imports
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spaceman spiff
Key Veteran
Location: Tucson

My Posts This: Topic  Forum		good link dive'

here was an intresting statement

"Studies of patented drug prices often ignore how competition in the U.S. today, ...... Generic drugs comprise over half of all U.S. prescriptions, a much higher percentage than in most other countries. Furthermore, low generic prices are fully compatible with strong incentives for research and development of new drug products, because generics are allowed in the U.S. only after patents expire. The U.S. policy has meant that patent law and competition, not price controls, are the primary mechanism by which to affect incentives for innovation.

Competition in the U.S. has provided U.S. consumers with some of the lowest priced generic drugs in the world. For example, recent studies examined the prices for seven drugs that are the biggest selling chronic-use drugs for which the first U.S. entry of a generic version occurred in the last ten years (alprazolam, clonazepam, enalapril, fluoxetine, lisinopril, metformin, and metoprolol). Five of the seven U.S. generic drugs were found to be significantly cheaper than the generic version of the same drug available in Canada. Five of the same seven generics were also more expensive in Australia than in the United States, with some prices being many times greater than the comparable U.S. price. "
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divebomber
Heliman
Location: California

My Posts This: Topic  Forum		Wow, the posts are coming in fast!

eSmith,

I appreciate your points on this. However, there are some negatives that exist in your system that, to me, are fatal flaws.

First off, socialized medicine is great for average ailements when you have time to wait. However, most Canadians, when they want quick or specialized treatments, cross the border to the US. In a way, they're getting the best of both worlds.

We have something similar; it's called Medicaid and (here in CA) MediCal. And we all know how screwed up that is.

Secondly, soacialized medicine takes away individual incentive. For example, how many medical breakthroughs come from outside of the US? There are many, but the US makes up proportionally many more because of the individual incentives to be sucessful.

Quote 
It may not be true but we hear stories of people needing treatment being turned away at hospitals because of an inability to pay, we find that cruel and unusual punishment.


Let's address this point. In the US, there are private and public hospitals. Private hospitals will 'turn away' a patient without ability to pay as long as there is a suitable alternative in the form of a public hospital. The stories you hear are intentionally spun to give the impression of people being 'turned away', but they don't continue with the story. In fact, if any hospital turns someone away without an alternative facility they can be sued. Plus, nobody wants to see truely ill people go without treatment. And in reality, hospitals write of millions of dollars in losses every year from people who can't or won't pay their bills.

But we digress.
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divebomber
Heliman
Location: California

My Posts This: Topic  Forum		Yeah, Spiffy, there's a lot of good info in that link.

Same holds for generic Raptor parts.
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eSmith
Veteran
Location: Edmonton, Alberta, Canada

My Posts This: Topic  Forum		-

http://www.edmheli.ca
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spaceman spiff
Key Veteran
Location: Tucson

My Posts This: Topic  Forum		There are enough assholes in the world, why would we want to create new ones?
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jamesdh
Senior Heliman
Location: Houston, TX

My Posts This: Topic  Forum
Quote 

You keep paying our nurses better than we do and we get left with the bottom of the barrel after your recurters reach our universities. (Ok, so I can't fault you there really, even though I want to, I'd do it to you guy's if the roles were reversed)


Excatly what would happen to our health care system if we went socialized medicine.
Get rid of the frivilous law suits and open drugs up for more competition.. will drive down the prices.
Get rid of the FDA and get the UL type system.

Just my thoughts

Let's bring back survival of the fitest.
ΜΟΛΩΝ ΛΑΒE
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Chem Geek
Senior Heliman
Location: Sarasota, FL

My Posts This: Topic  Forum		I feel that advertising is a large part of the high prices of name brand drugs. Besides all the TV adds and such, it's the drug reps. A buddy of mine works in a Dr.'s office, and they come around with loads of free gifts. I'm sure you'll all seen them, the pens, pads, etc with the drugs name on it. But they also take the Dr.'s out to dinner and drinks on their corporate tab. All this and they're paid fairly well themselves. All of it's done to get the doctor's to prescribe their brand of medicine.

Combine that with the overwhelming number of television and print ads for drugs, and I would think that account for a decent sized portion of their price tags.

Remember the days when you didn't see little unhappy blobs bouncing along on the screen being told their day will be brightened by the latest anti-depressant?
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spaceman spiff
Key Veteran
Location: Tucson

My Posts This: Topic  Forum		medical malpractice

http://www.nga.org/cda/files/1102MEDMALPRACTICE.pdf

http://www.camedicalmalpractice.net/

" ... There’s no doubt about it – the number of malpractice lawsuits is rising in epidemic proportions. "


" in some states Medical insurors are getting out of the market....the insurance companies that remain are quoting physician's rates double or triple of previous year."
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eSmith
Veteran
Location: Edmonton, Alberta, Canada

My Posts This: Topic  Forum		-

http://www.edmheli.ca
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