Sneaky deals are keeping cheaper generic medicines off the market

https://www.latimes.com/business/lazarus/la-fi-lazarus-generic-drugs-pay-for-delay-20190627-story.html#nws=mcnewsletter

by prostoalex • 7 years ago

100 39 7 years ago

typenil• 7 years ago

I don't see how this doesn't already violate price fixing laws. This isn't the market at work, but a calculated distortion of it within the pharmaceutical oligopoly.

rayiner2• 7 years ago

The Federal Trade Commission estimates that pay-for-delay deals cost American consumers $3.5 billion a year in the form of higher drug prices.

Pay for delay is bad, but let’s put it into perspective. This is 0.1% of healthcare spending.

That’s the most frustrating thing about the healthcare debate in the US. Nobody has a clear idea of where all the money is going.

Germany spends 1.56% of GDP on pharmaceuticals. The US spends 2%. If we forced drug makers to give us discounts to German levels, we’d save $86 billion. To get our overall healthcare expenditures down to German levels (11% of GDP), we need to cut $1.4 trillion. Where is the rest coming from?

iaw• 7 years ago

It's a lot of financial engineering by private equity. Think 1000 papercuts from optimizations intended to increase revenues while sacrificing patient care quality.

harryh• 7 years ago

Where is the rest coming from?

~16 "we spend a bit more on pharmaceuticals than Germany" sized problems.

Snarky answer, but I think probably somewhat close to the truth. There is no silver bullet.

acq_question• 7 years ago

The bulk is spent on inpatient hospital stays I believe. People like to blame pharma, but hospitals charge absurd prices and many times just make people sicker.

ssdjuka3• 7 years ago

Perfect time for me to vent on the topic. My experience confirms your claim.

My wife and baby stayed 3 days at the hospital after the c-section. Charge for room and board item on the bill is $30,000 for her and $50,000 for the baby. In total $80,000 for 3 days.

And it was shared room. There was another woman with her baby with them. That single hospital room's rate is $53,000 a day.

All other charges are 10% of room and board.

Aloha• 7 years ago

It's death by a thousand cuts though - we spend so much money because the entire system is so inefficient.

kgwgk3• 7 years ago

Average compensation for US specialists is [2006 data] $230k (5.7x per capita GDP), for German specialists is $77k (2.7x per capita GDP). If you force US doctors to give you discounts to German levels you'll save another hundred billion dollars at least...

deogeo3• 7 years ago

Don't think German specialists have it so bad - medical school in Germany costs almost nothing, housing and rent cost much less, as does health insurance.

tomcam• 7 years ago

I get your point. It’s a good one. What about the fact that Americans are essentially subsidizing world health care via private R&D? Other countries benefit from our new drugs yet won’t pay market prices for them, and it’s $2 billion to create a new drug these days, minimum. The reason a huge majority of pharma innovation happens here is because there is an incentive for it. Honest question: if we further regulate the amount of money pharma companies can make, who will innovate?

deogeo3• 7 years ago

Other countries benefit from our new drugs yet won’t pay market prices for them, and it’s $2 billion to create a new drug these days, minimum.

What makes you think drug prices in other countries aren't 'market' prices? Is it because they're negotiated on a country-wide level by the governments? I.e. because the buyer is a larger entity than the seller? But when the buyer is smaller than the multinational drug company, such as an individual or a medium-sized insurance company, then the price somehow is a market price?

What about the fact that Americans are essentially subsidizing world health care via private R&D?

This tired argument again. Given that pharmaceutical companies spend more on just marketing than they do on R&D [1], isn't it more accurate to say that the US is subsidizing drug ads? How high would drug prices have to get, and how small the R&D budget, before you'd stop claiming the US is 'subsidizing' R&D? Or would whoever pays the highest price always be hailed as subsidizing R&D, to try and guilt everyone else into paying more?

The reason a huge majority of pharma innovation happens here is because there is an incentive for it.

Given that drugs are sold internationally, pharma could continue their extortionate pricing in the US no matter where the drugs are developed, so the cost of drugs doesn't act as an incentive for where to conduct innovation.

[1] https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...

mhuffman• 7 years ago

won’t pay market prices for them

“Market Prices” are what the market pays (ie. what the customer thinks it is worth). I think you might be confusing it with “suggested retail price” which is what companies think their product is worth.

The customers are the "market"! So the price they pay is literally the market price!

nojvek• 7 years ago

The biggest reason healthcare is nuts in US is insurance. There is a mega complex of middlemen mafia between you and the doctor that need their cut.

For profit insurance means getting the highest premiums while giving out the lowest payouts. That’s American capitalism to you. There is such little transparency that the big players can price set whatever they want and coerce the public into paying it. After all, it’s your life.

America is America because of the mega corps. Some give us 280 characters, some fly shit into space, some let people die because they got no paper.

keenmaster4• 7 years ago

Single-payer healthcare is the answer. Period. If all Americans were in a single pool negotiating for drugs and healthcare, prices would plummet. It worked in Europe and it’ll work here. We are spending somewhere between 150% and 200% of what we should be on healthcare on a national level. We don’t get better outcomes either. So the harsh truth is that the whole industry needs to take a pay cut. That includes doctors, who actually make more than they should be in a well-lubricated market economy. Make no mistake, the healthcare market is colossally broken.

Zero price transparency combined with high price insensitivity (due to extremely high value of life) and no practical substitute services (“protest” healthcare and go uninsured....at your peril) is a toxic combination. It guarantees that people are fleeced for every penny they could pay. Almost no other industry in America works in that way.

Imagine a grocery store with no listed prices. When you roll up to the register and ask for the price, the employees are baffled. How dare you question the value of those who provide you sustenance. Do you even know how many years it took to optimize our supply chain so that you can have organic chicken and avocados? Our executives have to pay off their MBA debt somehow. They then inform you that the price of your basket is probably somewhere between $100-$1000, and that it’s really up to your grocery insurance provider. You call the insurance company, which then ask for the chicken code, avocado code, toilet paper code, etc... 2 hours later, they say they can give you an answer on how much your groceries will take from your deductible, but it’s going to take a week. They can quote the same prices for a couple other in-network grocery stores too, but you have a choice to make. Leave your groceries for today and wait a week for an answer, or buy your damn groceries like 99.9% of other people and get on with your life. You decide to wait. You find out that all the prices are exorbitant, but the grocery store that’s 2 hours away would only charge $300 as opposed to $500. Alas, it’s not even worth taking off work for that.

If that sounds utterly dystopian, that’s healthcare in America today. It’s a game of name-your-price for providers. Insurance companies are in on it too. They want prices to be higher because high total spending results in higher insurance premiums. Businesses mostly shrug at the problem because of tax subsidies and because they want employees to fear losing their insurance along with their job.

Americans must be unapologetic to medical organizations complaining about single-payer (“We’ll literally go out of business! We’ll close rural hospitals! Insurance workers will lose their jobs! Long socialist wait times! Government death panels!”). They want to keep the status quo at the expense of American families. For that reason, I assign close to no value to what healthcare insiders have to say about solving the spending problem. Lastly, consider this: American employees take home less of their paycheck than employees in all other developed nations except Netherlands. Note that this takes into consideration the portion of your premiums paid by your employer, which otherwise would have been paid to you in income. That’s why tax increases seem so unfathomable in the U.S. The healthcare industry is parasitically sucking out all the slack. Imagine if all that economic rent went to education and infrastructure instead.

throwaway342413• 7 years ago

I agree with you on the insanity of the current system, but I have two problems that prevent me from believing that single payer is the simple answer to our health care cost problem:

1) "Europe" is not single payer, England is while the two largest EU countries, Germany and France, are not.

2) Medicare is already an enormous single payer system, covering the demographic that consumes the most health care services, and does not have costs anywhere in line with Europe.

So, I think copying Europe would be reasonable, but that maybe it would be better to draw inspiration from one of the non-single-payer systems instead. The results don't seem to be any worse and it seems a bit safer to have more choices.

prostoalex2• 7 years ago

How would such a single-payer system protect itself against incumbents and beneficiaries subverting it to further their agenda?

We have single-payer k-12 education at state level, where the teachers' unions fund election campaigns, and when it's time to negotiate education contracts, those politicians are "surprisingly" very favorable to their funders and former colleagues.

Other government-run single-payer projects - Amtrak, USPS, etc - are not exactly beacons of efficiency either.

neonate• 7 years ago

http://archive.is/f4TCi

mikece• 7 years ago

There's also the practice of the Big Pharma companies either buying the generics producers or contracting with them not to make generics. I think Big Pharma might be more hated than Congress at this point.

maxxxxx• 7 years ago

It seems everything around heath care billing is sneaky in the US. It's probably the most rotten, inefficient and corrupt sector of the whole economy. I am not talking about the actual health care but only about billing practices.

idDriven• 7 years ago

From the healthcare delivery standpoint there are so many rotten, inefficient and corrupt practices that many days it feels like you are delivering good care despite the system. Certainly not because of it. It's kafa-esque and there is zero incentive for your boss' boss' boss' boss' calling the shots to improve patient care.

Healthcare providers are also just as mystified as to where all the money goes, not the workers doing the direct patient care.

Sneaky deals are keeping cheaper generic medicines off the market

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