U.S. to set up plan aimed at allowing prescription drugs from Canada

https://www.latimes.com/politics/story/2019-07-31/trump-administration-drugs-canada

by ilamont • 7 years ago

169 227 7 years ago

mwambua• 7 years ago

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?

maximente• 7 years ago

i think companies can charge a lot more because individuals can't import from abroad, so this is an important step on that path

alex_anglin2• 7 years ago

... until the supply to Canadians becomes affected, making the government impose export restrictions.

rtkwe2• 7 years ago

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.

alex_anglin2• 7 years ago

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.

[1]http://pmprb-cepmb.gc.ca/home

MegaButts• 7 years ago

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.

adventured2• 7 years ago

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.

rtkwe2• 7 years ago

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.

cal5k3• 7 years ago

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).

replicatorblog• 7 years ago

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

msbarnett2• 7 years ago

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.

throw0101a• 7 years ago

Prices are low in Canada because they have the negotiating power of the entire country behind their single payer system driving prices down.

A clarification: Canada does not have a single payer system. Rather it has multiple single payer systems.

Canada is a federation, in that while it has one national government, it also has ten provincial governments (and three territories).

Health care is the responsibility of the provinces, and so there is not "national" health care system (like in France or UK's NHS).

cosmodisk2• 7 years ago

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.

gwbas1c• 7 years ago

It's basic rent-seeking.

From https://en.wikipedia.org/wiki/Rent-seeking

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.

dv_dt3• 7 years ago

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.

nordsieck• 7 years ago

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.

tareqak2• 7 years ago

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].

[0] https://www.businessinsider.com/heres-why-amazon-is-heavily-...

rayiner10• 7 years ago

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.

[1] https://en.wikipedia.org/wiki/Patented_Medicine_Prices_Revie...

The Review Board establishes the maximum prices that can be charged in Canada for patented drugs.[1][2]

mc32• 7 years ago

Would the importation from CA incentivize local mfgs to lower prices and disincentivize importation? Barring regulation to render imports illegal of something.

refurb6• 7 years ago

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.

guelo• 7 years ago

That regime was almost uniformly disastrous

Weird then that we became the richest most powerful country in the world precisely during that same time period.

JamesBarney2• 7 years ago

And the pharmaceutical companies are a monopoly.

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.

paulmd• 7 years ago

Canada negotiates drug prices before they're approved, the US lets drug companies charge whatever they want.

testplzignore• 7 years ago

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?

ilaksh3• 7 years ago

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.

nullwasamistake2• 7 years ago

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

ilaksh3• 7 years ago

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.

xxpor• 7 years ago

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.

ProAm2• 7 years ago

Track and Trace stops that within the US

refurb6• 7 years ago

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.

[1]https://www.drugchannels.net/2019/07/our-stat-op-ed-state-dr...

baybal2• 7 years ago

Question, if Canadian drugs are finally OK, why not Indian or anybody's else drugs for that matter?

In any normal country private importation of whatever you want not explicitly prohibited is not a state's f*ing business.

HNisCurated• 7 years ago

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.

pkaye2• 7 years ago

Is this hydrocontisone stronger than the over the counter variety?

massel• 7 years ago

The Canadian drug and medical device certification process is far more stringent than that of the USA.

pkaye2• 7 years ago

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.

https://www.statnews.com/2019/07/22/indian-pharmaceutical-in...

e1ven3• 7 years ago

I'm all for solutions that lower drug prices in the US.

Wouldn't mass-importation from Canada encourage drug companies to raise Canada's pricing to match US levels?

That seems like something Canada wouldn't be particularly fond of.

CoolGuySteve• 7 years ago

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.

Scoundreller14• 7 years ago

Canada’s pricing basically works like this: manufacturers are allowed to charge the median price of industrialized countries.

e1ven3• 7 years ago

I understand that's their current policy.

If the US began importing high quantities of drugs from Canada, what prevents Pharma companies from insisting that Canada pay current US prices?

If Canada declines, the companies could stop selling in Canada.

I would think in many cases the profit from selling in Canada at all is less than what they'd lose from allowing them to be imported to the US.

refurb6• 7 years ago

Canada is not so hot on the idea.[1]

"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."

[1]https://www.cbc.ca/news/canada/toronto/american-demand-canad...

prepend4• 7 years ago

Fortunately that supply can increase.

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.

droithomme• 7 years ago

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.

yellowarchangel• 7 years ago

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.

arcticbull6• 7 years ago

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.

DenisM• 7 years ago

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.

m0zg• 7 years ago

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.

clarkmoody• 7 years ago

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.

sword_smith• 7 years ago

Basic economics is not popular on this site. Unfortunately.

acollins1331• 7 years ago

Yeah except drug patents

b_tterc_p• 7 years ago

Does Canada not profit or break even on sale of drugs?

amadeusw• 7 years ago

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.

scj• 7 years ago

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.

r00fus4• 7 years ago

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.

dantheman• 7 years ago

The solution is to allow people to order drugs from anywhere.

chimeracoder11• 7 years ago

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.

guardiangod• 7 years ago

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.

Edit: Oh sure, down-vote me into oblivion.

ddingus4• 7 years ago

Fair questions!

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.

flyingfences• 7 years ago

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.

rayiner10• 7 years ago

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.

tareqak2• 7 years ago

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.

rayiner10• 7 years ago

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?

prepend4• 7 years ago

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.

zjaffee2• 7 years ago

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.

btbuildem• 7 years ago

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.

nostromo5• 7 years ago

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.

tmd83• 7 years ago

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.

nostromo5• 7 years ago

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.

Scoundreller14• 7 years ago

If we’re worried about funding innovation, we could do a lot by only funding the innovator.

When every manufacturer has their own statin or their own ARB inhibitor, etc., the revenue is split between a true innovator and a bunch of copycats.

Fixing that could allow much more reward for true innovators, at lower prices but profits protected by volume.

mtgx• 7 years ago

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.

mempko2• 7 years ago

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.

losvedir• 7 years ago

Er, no? Drug companies spend on average about $1-2 billion in R&D per new drug[0].

[0] https://www.sciencedirect.com/science/article/pii/S016762961...

slg2• 7 years ago

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".

programbreeding• 7 years ago

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.

Ididntdothis2• 7 years ago

“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?

rayiner10• 7 years ago

What is an “obscene profit?” Drug company return on investment is similar to other high-tech, capital and skilled-labor intensive industries: https://www.forbes.com/sites/johnlamattina/2018/01/23/about-.... Their net margins are somewhere between software and semiconductors: http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/.... Does Intel (not to mention Google or Facebook) make “obscene profits?”

(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.)

stereographic• 7 years ago

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

drtillberg• 7 years ago

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.

dpatru2• 7 years ago

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.

bwb• 7 years ago

quality standards is the reason, same for any protections around import/export.

Read about the raids on generics in India meant for the USA.

nostromo5• 7 years ago

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.

BrainInAJar• 7 years ago

The reason drugs are cheaper in Canada and Europe than in America is because of American laws that prevent importation.

The reason drugs are cheaper in Canada and Europe is because of the massive negotiating power of a single buyer

ma2rten2• 7 years ago

Sounds like they are doing something similar:

Separately, the Trump administration is pursuing a regulation that would tie what Medicare pays for drugs administered in doctors’ offices to lower international prices.

danmaz742• 7 years ago

"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.

thatfrenchguy2• 7 years ago

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 :-)

Waterluvian• 7 years ago

That sounds positively awful. They'll just chop off the lower end and let people in developing nations die. They're not a huge revenue source anyway.

arcticbull6• 7 years ago

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.

beepboopbeep• 7 years ago

No need to fix the crisis at home, just leach off of other people who are able to get their shit together.

sunshinelackof• 7 years ago

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.

docker_up• 7 years ago

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.

neonate• 7 years ago

http://archive.is/qPREl

zackmorris• 7 years ago

I don't have confidence that the Trump administration will pull this off, because I watched the George W Bush administration punt it in 2002:

https://www.nytimes.com/2002/07/18/us/plan-import-drugs-cana...

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:

https://en.wikipedia.org/wiki/Natural_monopoly

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.

mirimir2• 7 years ago

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.

robomartin• 7 years ago

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.

OrgNet• 7 years ago

Like it or not, the Trump administration has good ideas

crb002• 7 years ago

Or change Medicaid rules to price compare a company's drugs globally as by law they have to offer Medicaid their lowest price.

U.S. to set up plan aimed at allowing prescription drugs from Canada

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