Cost of medicines

Discussion in 'Health and medical' started by Edward Elliott, Feb 14, 2004.

  1. Cost of Medicines

    Did you ever wonder how much it costs a drug company for the active Ingredient in prescription
    medications? Some people think it must cost a lot, since many drugs sell for more than $2.00 per
    tablet. We did a search of offshore chemical synthesizers that supply the active ingredients found
    in drugs approved by the FDA. As we have revealed in past issues of Life Extension, a significant
    percentage of drugs sold in the United States contain active ingredients made in other countries.

    In our independent investigation of how much profit drug companies really make, we obtained the
    actual price of active ingredients used in some of the most popular drugs sold in America. The chart
    below speaks for itself.

    Celebrex 100 mg Consumer price (100 tablets): $130.27 Cost of general active ingredients: $0.60
    Percent markup: 21,712%

    Claritin 10 mg Consumer Price (100 tablets): $215.17 Cost of general active ingredients: $0.71
    Percent markup: 30,306%

    Keflex 250 mg Consumer Price (100 tablets): $157.39 Cost of general active ingredients: $1.88
    Percent markup: 8,372%

    Lipitor 20 mg Consumer Price (100 tablets): $272.37 Cost of general active ingredients: $5.80
    Percent markup: 4,696%

    Norvasc 10 mg Consumer price (100 tablets): $188.29 Cost of general active ingredients: $0.14
    Percent markup: 134,493%

    Paxil 20 mg Consumer price (100 tablets): $220.27 Cost of general active ingredients: $7.60 Percent
    markup: 2,898%

    Prevacid 30 mg Consumer price (100 tablets): $44.77 Cost of general active ingredients: $1.01
    Percent markup: 34,136%

    Prilosec 20 mg Consumer price (100 tablets): $360.97 Cost of general active ingredients $0.52
    Percent markup: 69,417%

    Prozac 20 mg Consumer price (100 tablets) : $247.47 Cost of general active ingredients: $0.11
    Percent markup: 224,973%

    Tenormin 50 mg Consumer price (100 tablets): $104.47 Cost of general active ingredients: $0.13
    Percent markup: 80,362%

    Vasotec 10 mg Consumer price (100 tablets): $102.37 Cost of general active ingredients: $0.20
    Percent markup: 51,185

    Xanax 1 mg Consumer price (100 tablets) : $136.79 Cost of general active ingredients: $0.024 Percent
    markup: 569,958%

    Zestril 20 mg Consumer price (100 tablets) $89.89 Cost of general active ingredients $3.20 Percent
    markup: 2,809%

    Zithromax 600 mg Consumer price (100 tablets): $1,482.19 Cost of general active ingredients: $18.78
    Percent markup: 7,892%

    Zocor 40 mg Consumer price (100 tablets): $350.27 Cost of general active ingredients: $8.63 Percent
    markup: 4,059%

    Zoloft 50 mg Consumer price: $206.87 Cost of general active ingredients: $1.75 Percent
    markup: 11,821%

    Since the cost of prescription drugs is so outrageous, I thought everyone I knew should know about
    this. Please read the following and pass it on. It pays to shop around. This helps to solve the
    mystery as to why they can afford to put a Walgreens on every corner.

    On Monday night, Steve Wilson, an investigative reporter for channel 7 News in Detroit, did a
    story on generic drug price gouging by pharmacies. He found in his investigation, that some of
    these generic drugs were marked up as much as 3,000% or more. Yes, that's not a typo.....three
    thousand percent!

    So often, we blame the drug companies for the high cost of drugs, and usually rightfully so. But in
    this case, the fault clearly lies with the pharmacies themselves. For example, if you had to buy a
    prescription drug, and bought the name brand, you might pay $100 for 100 pills. The pharmacist might
    tell you that if you get the generic equivalent, they would only cost $80, making you think you are
    "saving" $20. What the pharmacist is not telling you is that those 100 generic pills may have only
    cost him $10!

    At the end of the report, one of the anchors asked Mr. Wilson whether or not there were any
    pharmacies that did not adhere to this practice, and he said that Costco consistently charged little
    over their cost for the generic drugs. I went to the Costco site, where you can look up any drug,
    and get its online price. It says that the in-store prices are consistent with the online prices. I
    was appalled.

    Just to give you one example from my own experience, I had to use the drug, Compazine, which helps
    prevent nausea in chemo patients. I used the generic equivalent, which cost $54.99 for 60 pills at
    CVS. I checked the price at Costco, and I could have bought 100 pills for $19.89. For 145 of my
    pain pills, I paid $72.57. I could have got 150 at Costco for $28.08. I would like to mention,
    that although Costco is a "membership" type store, you do NOT have to be a member to buy
    prescriptions there, as it is a federally regulated substance. You just tell them at the door that
    you wish to use the pharmacy, and they will let you in (this is true, I went there this past
    Thursday and asked them.)

    I am asking each of you to please help me by copying this letter, and pasting it into your own
    email, and send it to everyone you know with an email address.

    Sharon L. Davis Budget Analyst U.S. Department of Commerce Room 6839 Office Ph: 202-482-4458 Office
    Fax: 202-482-5480 Email Address: [email protected]

    Mary Palmer Budget Analyst Bureau of Economic Analysis Office of Budget & Finance Voice: (202) 606-
    9295 Fax: (202) 606-5324
     
    Tags:


  2. Listen troll. This issue has been brought up and beaten to death. If you are so ignorant to think
    that the cost of pills should only be based on the cost of active ingredients then you probably are
    not intelligent enough to discuss the issue in its entirety.

    Although I agree some drug prices seem ridiculous you conveniently have left out the millions of
    dollars the drug companies have spent in trying to bring that drug to market. This includes
    probably hundreds of different drugs created and tested just to get one drug to pass the FDA
    standards for approval.

    So I imagine if you have an attorney that charges you a couple thousand dollars for his/her services
    and he/she only uses $2.00 worth of paper and a $1.00 worth of stamps they should charge you for
    their services based on the cost of the supplies used rather than the going rate? What your really
    paying for is knowledge and it isn't much different with prescription drugs. You are paying for the
    millions of dollars it took for the drug company to come up with a drug not for the manufacturing
    costs of the drugs.

    If you were stuck in the middle of nowhere, it's raining and your car died and you needed to get
    somewhere would you be willing to pay $50 for somebody to fix your car? Most likely yes. But what if
    when the person arrived they knew from previous experience that all they had to do was push a reset
    button on your fuel pump safety switch and it takes all of 30 seconds to get you on the road again.
    Well that is $100 a minute and $6000 dollars an hour. What a ripoff!!! Now all of a sudden your
    pissed off and feel like you got taken. You didn't get taken. You got your car fixed and you sure as
    hell couldn't do it. There is no difference with RX drugs. You can't make them and so you need to
    buy them at whatever the going price is.

    As far as you bitching about how in this particular example the generic, although cheaper and saving
    you more money than purchasing brand name, should have been cheaper still because the pharmacy
    didn't pay as much for the generic as it did in relation to the brand name, your ridiculous.

    If everybody sold things for what they cost they nobody would be in business because who is
    going to pay for the pharmacist salary, the techs salary, computers, phones, long distance
    bills, paper supplies, pens, space lease, electricity, renewal fees for licensing, etc. Somebody
    has to pay for it.

    And your list isn't exactly correct. The Prilosec and Claritin is now OTC and much cheaper than you
    have listed.

    If you want to go to Costco to buy your meds then do so, get off your soap box and take your issue
    up via a different venue.

    CaptainKrunch

    "Edward Elliott" <[email protected]> wrote in message news:[email protected]...
    >
    > Cost of Medicines
    >
    > Did you ever wonder how much it costs a drug company for the active Ingredient in prescription
    > medications? Some people think it must cost a lot, since many drugs sell for more than $2.00 per
    > tablet. We did a search of offshore chemical synthesizers that supply the active ingredients found
    > in drugs approved by the FDA. As we have revealed in past issues of Life Extension, a significant
    > percentage of drugs sold in the United States contain active ingredients made in other countries.
    >
    > In our independent investigation of how much profit drug companies really make, we obtained the
    > actual price of active ingredients used in some of the most popular drugs sold in America. The
    > chart below speaks for itself.
    >
    > Celebrex 100 mg Consumer price (100 tablets): $130.27 Cost of general active ingredients: $0.60
    > Percent markup: 21,712%
    >
    > Claritin 10 mg Consumer Price (100 tablets): $215.17 Cost of general active ingredients: $0.71
    > Percent markup: 30,306%
    >
    > Keflex 250 mg Consumer Price (100 tablets): $157.39 Cost of general active ingredients: $1.88
    > Percent markup: 8,372%
    >
    > Lipitor 20 mg Consumer Price (100 tablets): $272.37 Cost of general active ingredients: $5.80
    > Percent markup: 4,696%
    >
    > Norvasc 10 mg Consumer price (100 tablets): $188.29 Cost of general active ingredients: $0.14
    > Percent markup: 134,493%
    >
    > Paxil 20 mg Consumer price (100 tablets): $220.27 Cost of general active ingredients: $7.60
    > Percent markup: 2,898%
    >
    > Prevacid 30 mg Consumer price (100 tablets): $44.77 Cost of general active ingredients: $1.01
    > Percent markup: 34,136%
    >
    > Prilosec 20 mg Consumer price (100 tablets): $360.97 Cost of general active ingredients $0.52
    > Percent markup: 69,417%
    >
    > Prozac 20 mg Consumer price (100 tablets) : $247.47 Cost of general active ingredients: $0.11
    > Percent markup: 224,973%
    >
    > Tenormin 50 mg Consumer price (100 tablets): $104.47 Cost of general active ingredients: $0.13
    > Percent markup: 80,362%
    >
    > Vasotec 10 mg Consumer price (100 tablets): $102.37 Cost of general active ingredients: $0.20
    > Percent markup: 51,185
    >
    > Xanax 1 mg Consumer price (100 tablets) : $136.79 Cost of general active ingredients: $0.024
    > Percent markup: 569,958%
    >
    > Zestril 20 mg Consumer price (100 tablets) $89.89 Cost of general active ingredients $3.20 Percent
    > markup: 2,809%
    >
    > Zithromax 600 mg Consumer price (100 tablets): $1,482.19 Cost of general active ingredients:
    > $18.78 Percent markup: 7,892%
    >
    > Zocor 40 mg Consumer price (100 tablets): $350.27 Cost of general active ingredients: $8.63
    > Percent markup: 4,059%
    >
    > Zoloft 50 mg Consumer price: $206.87 Cost of general active ingredients: $1.75 Percent
    > markup: 11,821%
    >
    > Since the cost of prescription drugs is so outrageous, I thought everyone I knew should know about
    > this. Please read the following and pass it on. It pays to shop around. This helps to solve the
    > mystery as to why they can afford to put a Walgreens on every corner.
    >
    > On Monday night, Steve Wilson, an investigative reporter for channel 7 News in Detroit, did a
    > story on generic drug price gouging by pharmacies. He found in his investigation, that some of
    > these generic drugs were marked up as much as 3,000% or more. Yes, that's not a typo.....three
    > thousand percent!
    >
    > So often, we blame the drug companies for the high cost of drugs, and usually rightfully so. But
    > in this case, the fault clearly lies with the pharmacies themselves. For example, if you had to
    > buy a prescription drug, and bought the name brand, you might pay $100 for 100 pills. The
    > pharmacist might tell you that if you get the generic equivalent, they would only cost $80, making
    > you think you are "saving" $20. What the pharmacist is not telling you is that those 100 generic
    > pills may have only cost him $10!
    >
    > At the end of the report, one of the anchors asked Mr. Wilson whether or not there were any
    > pharmacies that did not adhere to this practice, and he said that Costco consistently charged
    > little over their cost for the generic drugs. I went to the Costco site, where you can look up any
    > drug, and get its online price. It says that the in-store prices are consistent with the online
    > prices. I was appalled.
    >
    > Just to give you one example from my own experience, I had to use the drug, Compazine, which helps
    > prevent nausea in chemo patients. I used the generic equivalent, which cost $54.99 for 60 pills at
    > CVS. I checked the price at Costco, and I could have bought 100 pills for $19.89. For 145 of my
    > pain pills, I paid $72.57. I could have got 150 at Costco for $28.08. I would like to mention,
    > that although Costco is a "membership" type store, you do NOT have to be a member to buy
    > prescriptions there, as it is a federally regulated substance. You just tell them at the door that
    > you wish to use the pharmacy, and they will let you in (this is true, I went there this past
    > Thursday and asked them.)
    >
    > I am asking each of you to please help me by copying this letter, and pasting it into your own
    > email, and send it to everyone you know with an email address.
    >
    > Sharon L. Davis Budget Analyst U.S. Department of Commerce Room 6839 Office Ph: 202-482-4458
    > Office Fax: 202-482-5480 Email Address: [email protected]
    >
    > Mary Palmer Budget Analyst Bureau of Economic Analysis Office of Budget & Finance Voice: (202) 606-
    > 9295 Fax: (202) 606-5324
     
  3. Andrew White

    Andrew White Guest

    Edward Elliott <[email protected]> wrote:

    >
    >Cost of Medicines

    Ever heard of this little expensive and highly risky thing called R&D?
     
  4. Giuliano

    Giuliano Guest

    "CaptainKrunch" <[email protected]> ha scritto nel messaggio
    news:[email protected]...
    > Although I agree some drug prices seem ridiculous you conveniently have left out the millions of
    > dollars the drug companies have spent in trying to bring that drug to market. This includes
    > probably hundreds of different drugs created and tested just to get one drug to pass the FDA
    > standards for approval.
    >
    However drugs in United States are very expensive. Almost all medication, not generic, which appears
    in list, in Italy has a price between one third and one half of United States one. In some cases is
    terrible, for example here 28 Prozac tablets has a cost of 14 ?, while the difference is so slight
    for beta-blockers. Maybe you should buy medication in Italy :)
     
  5. me

    me Guest

    >>Cost of Medicines
    >
    >Ever heard of this little expensive and highly risky thing called R&D?

    I'll assume at least some of us are in R&D and realize that drug prices could be cut in half and
    still put big bucks in our bosses pockets. Now, lets talk about the poor guys that provide made-to-
    order precursors, play a role in R&D and never reap the benefit.
     
  6. me

    me Guest

    >>>Cost of Medicines
    >>
    >>Ever heard of this little expensive and highly risky thing called R&D?

    ...risk is also declining with HTS and on-site specialties (e.g., crystallographers).

    >I'll assume at least some of us are in R&D and realize that drug prices could be cut in half and
    >still put big bucks in our bosses pockets. Now, lets talk about the poor guys that provide made-to-
    >order precursors, play a role in R&D and never reap the benefit.
     
  7. Hankg

    Hankg Guest

    "Edward Elliott" <[email protected]> wrote in message
    news:[email protected]...
    >
    > Cost of Medicines ".....We did a search of offshore chemical synthesizers that supply the active
    > ingredients found in drugs approved by the FDA. As we have revealed in past issues of Life
    > Extension, a significant percentage of drugs sold in the United States contain active ingredients
    > made in other
    countries."

    Many offshore chemical companies manufacture pharmaceutical ingredients. Many of these companies are
    NOT approved by the FDA as suppliers to US pharmaceutical companies. I assume you are talking about
    approved companies.

    "......we obtained the actual price of active
    > ingredients used in some of the most popular drugs sold in America. The chart below speaks for
    > itself."

    > Celebrex 100 mg Consumer price (100 tablets): $130.27 Cost of general active ingredients: $0.60
    > Percent markup: 21,712% "

    You state the cost of ingredients as the cost per 100 tablets in order to come up with your figure.
    If this is the case (0.6 cents per unit - I doubt it), then those bastards overseas have been raking
    us over the coals. After all, if they can sell it to us for $0.60, then it must cost them between
    one and two cents. $0.60 per capsule seems more like it. If you understand how business operates,
    you know that no organization can afford to stay in business and not make a realistic profit

    You paint a very simplistic view of this complicated picture. Beside the obvious costs of Research
    and Development, alluded to by Andrew White, there are many activities within a pharmaceutical
    company which must come together, before the tablets/capsules start rolling off of the presses. Add
    to that the many support activities, which are ongoing, you wind up with a comprehensive
    organization, consisting of many indiduals.

    Don't forget the distribution channels at the wholesale and retail levels. Each organization adds
    its cost of operation to the total picture. And yes, having that bottle of tablets on the pharmacy
    shelf conveys a cost, albeit an invisible one.

    Would you deny the workers at every level a good living? Would you deny the corporation a profit on
    top of its cost of operating? Or, would you suggest sending our jobs overseas to reduce cost? Hey,
    come to think of it, maybe some public sector jobs should be sent there as well.

    HankG

    ---
    Outgoing mail is certified Virus Free. Checked by AVG anti-virus system (http://www.grisoft.com).
    Version: 6.0.587 / Virus Database: 371 - Release Date: 2/12/2004
     
  8. Talkback

    Talkback Guest

    HankG wrote:

    > "Edward Elliott" <[email protected]> wrote in message news:[email protected]...
    >
    >>Cost of Medicines

    I have looked at this question in some detail, and I must say that I'm no closer to a position one
    way or the other. On one hand, the high costs are a tremendous burden on individuals and the health
    care system and insurers. On the other hand, I'd hate to think what would happen if we killed the
    golden goose that funds research. Clearly a manufacturer selling substitute generic formulations for
    a fraction of the original manufactures price is not in a position to pour huge amounts of money
    into R&D. I don't know the answer, and could argue both positions.
     
  9. Anon

    Anon Guest

    On 2004-02-15 00:41:04 -0500, Edward Elliott <[email protected]> said:

    > Did you ever wonder how much it costs a drug company for the active Ingredient in prescription
    > medications?

    No, because it's irrelevant. Trying to compare the retail price of a drug with the wholesale cost of
    its raw materials is assinine. You might was well accuse software companies of ripping you off,
    since CD-ROMs cost only pennies to burn.
     
  10. "CaptainKrunch" <[email protected]> wrote in
    news:[email protected]:

    > Listen troll. This issue has been brought up and beaten to death. If you are so ignorant to think
    > that the cost of pills should only be based on the cost of active ingredients then you probably
    > are not intelligent enough to discuss the issue in its entirety.
    >
    > Although I agree some drug prices seem ridiculous you conveniently have left out the millions of
    > dollars the drug companies have spent in trying to bring that drug to market. This includes
    > probably hundreds of different drugs created and tested just to get one drug to pass the FDA
    > standards for approval.

    And people who defend the pharmaceutical companies conveniently leave out the taxpayer supported
    funds and research facilities and universities that are used in the development of drugs. The
    pharmaceutical industry is heavily subsidized, but they try to make people believe that they foot
    the entire bill for drug research.

    --
    Dan Solomon
     
  11. Talkback

    Talkback Guest

    Daniel Solomon wrote:
    > "CaptainKrunch" <[email protected]> wrote in news:[email protected]:
    >
    >
    >>Listen troll. This issue has been brought up and beaten to death. If you are so ignorant to think
    >>that the cost of pills should only be based on the cost of active ingredients then you probably
    >>are not intelligent enough to discuss the issue in its entirety.
    >>
    >>Although I agree some drug prices seem ridiculous you conveniently have left out the millions of
    >>dollars the drug companies have spent in trying to bring that drug to market. This includes
    >>probably hundreds of different drugs created and tested just to get one drug to pass the FDA
    >>standards for approval.
    >
    >
    > And people who defend the pharmaceutical companies conveniently leave out the taxpayer supported
    > funds and research facilities and universities that are used in the development of drugs. The
    > pharmaceutical industry is heavily subsidized, but they try to make people believe that they foot
    > the entire bill for drug research.
    >
    > --
    > Dan Solomon

    Maybe so. But subsidies are used in many industries. The point is, if the subsidies were
    removed the cost of the drugs would be higher. And please don't start any nonsense like they
    make enough already, etc. Last I checked business was business and I don't recall any socialist
    revolution recently.
     
  12. Kurt Ullman

    Kurt Ullman Guest

    In article <[email protected]>, Daniel Solomon <[email protected]>
    wrote: for approval.
    >
    >And people who defend the pharmaceutical companies conveniently leave out the taxpayer supported
    >funds and research facilities and universities that are used in the development of drugs. The
    >pharmaceutical industry is heavily subsidized, but they try to make people believe that they foot
    >the entire bill for drug research.
    >

    Of course, the ENTIRE NIH research budget is less than half of the money paid by pharms and this
    includes many studies that have nothing to do with pharm company's needs (indeed they do much of
    the old drug vs new drug comparisons).
     
  13. Daniel Solomon <[email protected]> wrote in message news:<[email protected]>...
    > "CaptainKrunch" <[email protected]> wrote in news:[email protected]:
    >
    > > Listen troll. This issue has been brought up and beaten to death. If you are so ignorant to
    > > think that the cost of pills should only be based on the cost of active ingredients then you
    > > probably are not intelligent enough to discuss the issue in its entirety.
    > >
    > > Although I agree some drug prices seem ridiculous you conveniently have left out the millions of
    > > dollars the drug companies have spent in trying to bring that drug to market. This includes
    > > probably hundreds of different drugs created and tested just to get one drug to pass the FDA
    > > standards for approval.
    >
    > And people who defend the pharmaceutical companies conveniently leave out the taxpayer supported
    > funds and research facilities and universities that are used in the development of drugs.

    This is a commonly trotted out factoid though I have yet to see specific evidence that the
    participation by NIH and/or university medical centers in the drug research process is altruistic.
    There are shared programs between the public and private sectors that are funded on a shared basis.
    The ownership of the outcomes of the research is shared as well. The benefit of these endeavors
    accrues to the patient and to the creators (royalties, patents, etc.), and ultimately to patients,
    so the taxpayer does benefit.

    > The pharmaceutical industry is heavily subsidized, but they try to make people believe that they
    > foot the entire bill for drug research.

    I haven't seen a single subsidy paid to the pharmaceutical industry. The accounting costs ae handled
    the same as with any business, the tax incentives to do research are intended to promote a valuable
    activity and are available to any research intensive company. What "heavily subsidized" examples can
    you share? Specifics would be nice - preferably from credible sources, not Time magazine.

    js
     
  14. In article <[email protected]>,
    Edward Elliott <[email protected]> wrote:
    >Did you ever wonder how much it costs a drug company for the active Ingredient in prescription
    >medications? Some people think it must cost a lot

    Nope. The drug industry's products are much like those in the entertainment industry: the costs of
    developing a product (the "fixed costs") are high, while the costs of making new copies of the
    product (the "marginal costs") are low.

    This sort of product, when put in a market of consumers that have very widely ranging abilities or
    desires to pay for it, gives a very strong incentive to price discrimination. Setting a uniform
    price for goods may make your market too small or too low-margin to earn a profit. On the other
    hand, if you can charge differently based on expected ability to pay, you can make money all around.
    In this case, the American market represents the high-paying customers, who effectively cover the
    fixed costs, whereas the foreign markets, who pay less, still cover the lower marginal costs, so
    drug makers are able to profit from both kinds of market. But if you're a middle-class American
    consumer, the burden of paying for the drug falls largely on you.

    The other thing you tend to see in this kind of market is a strong push towards government-sponsored
    monopolies. (Without monopolies, competitors tend to discourage developing new products involving
    high fixed costs, and also tend to undercut price discrimination.) In the drug industry, that
    monopoly is granted in the form of patents; in the entertainment industry, it comes as copyright. In
    both cases, some degree of monopoly protection is a good thing (since it helps innovators recover
    their fixed costs, giving an incentive to create new products that otherwise would not exist). But
    it can also be taken too far, to the detriment of consumers. (And the producers have incentives to
    extend this monopoly power as far as they can.) Monopoly enforcement can be more of a problem, both
    for manufacturers and consumers, when consumers find ways around the price discrimination vendors
    have set up (such as by buying drugs abroad, or using P2P networks to get copies of movies or
    recorded music). Producers see an erosion of their markets; consumers see erosions of their freedoms
    as pressure is imposed to restore the pre-existing markets.

    Here are some things consumers who are suffering under the current drug market can do:

    -- Buy generic when you can. Generic drugs are those for which monopoly protection has expired,
    so they're much more competitively priced than patented drugs. And in the US, their preparation
    is also closely regulated, so you'll usually get a product that's indistinguishable from the
    brand name.

    -- Encourage your doctor to consider drugs that are already in the public domain (and can thus be
    generic) as well as new drugs.

    Doctors are subject to a lot of marketing for patented drugs (which patients also pay for when
    they buy those drugs), and older proven remedies may get short shrift as a result. While in
    many cases new drugs really are the best ones to use, often they have little or no real
    advantage for many patients over older remedies that are in the public domain. (Most drugs
    marketed before the mid-1980s are now in the public domain.) Moreover, many of these older
    drugs have a longer track record of studies showing their safety and effectiveness. And you'll
    often pay a lot less for them.

    If you can't afford the newer drugs, it's particularly important to consider alternatives.
    There's no point in getting a prescription for a new drug that gets rid of 90% of your problem
    if you can't afford to have it filled, when you could pay for a cheaper drug that takes care of
    80% of the problem.

    -- Encourage your legislators to make and maintain reasonable patent laws. Often they only hear
    from industry lobbyists, who have an understandably one-sided agenda on the issue. (In related
    monopoly legislation, the entertainment industry has severely unbalanced copyright law in recent
    years, for instance.) Special sweetheart patent extensions, which occasionally make it through
    Congress, should be resisted, as should wholesale expansion of patent terms or powers.

    -- Encourage both government and drug companies to make special arrangements to provide drugs that
    are particularly crucial to patients who can't afford them at normal retail. If there's going to
    be price discrimination in the patented market, it can also be used for good purposes. If drugs go
    to the people who really couldn't get them any other way, at prices not much higher than the
    marginal costs, then everyone can benefit: more people get the treatment they need, and the drug
    companies still make money.

    John Mark Ockerbloom
     
  15. Talkback

    Talkback Guest

  16. [email protected] (John Ockerbloom) wrote in message news:<[email protected]>...
    > In article <[email protected]>, Edward Elliott <[email protected]> wrote:
    > >Did you ever wonder how much it costs a drug company for the active Ingredient in prescription
    > >medications? Some people think it must cost a lot
    >
    > Nope. The drug industry's products are much like those in the entertainment industry: the costs of
    > developing a product (the "fixed costs") are high, while the costs of making new copies of the
    > product (the "marginal costs") are low.
    >
    > This sort of product, when put in a market of consumers that have very widely ranging abilities or
    > desires to pay for it, gives a very strong incentive to price discrimination.

    Which, according to economic models, provides the greatest societal value.

    > Setting a uniform price for goods may make your market too small or too low-margin to earn a
    > profit. On the other hand, if you can charge differently based on expected ability to pay,

    willingness, not ability?

    > you can make money all around. In this case, the American market represents the high-paying
    > customers,

    How do you know this is true? You just suggested that price discrimination is an objective and now
    you take 50 or 60 percent of the world market for pharmaceuticals and call it a single market?
    Hardly evidence of effective price discrimination. Perhaps you'd like to revisit that comment. Is
    the US a single price market?

    > who effectively cover the fixed costs, whereas the foreign markets, who pay less, still cover the
    > lower marginal costs, so drug makers are able to profit from both kinds of market.

    Are you implying that all foreign markets pay less and equally less than all US markets? I would
    argue that this is not true at all.

    One of the largest "fixed" costs is the FDA. That is uniquely American. No question that there are
    regulatory agencies elsewhere but then again, once you have the FDA ok, licensure requirements are
    likely marginal in cost elsewhere.

    > But if you're a middle-class American consumer, the burden of paying for the drug falls
    > largely on you.

    If you are one of the 85% of US consumers with health/drug insurance, the cost of medications falls
    on your insurer. Are US insurers not equally as good negotiators as European governments?

    > The other thing you tend to see in this kind of market is a strong push towards government-
    > sponsored monopolies. (Without monopolies, competitors tend to discourage developing new products
    > involving high fixed costs, and also tend to undercut price discrimination.) In the drug industry,
    > that monopoly is granted in the form of patents; in the entertainment industry, it comes as
    > copyright. In both cases, some degree of monopoly protection is a good thing (since it helps
    > innovators recover their fixed costs, giving an incentive to create new products that otherwise
    > would not exist). But it can also be taken too far, to the detriment of consumers. (And the
    > producers have incentives to extend this monopoly power as far as they can.)

    You should consider the actual patent life and the effective patent life arguments. The effective
    patent life is measured in months in the pharmaceutical industry. Competition is therapeutic based,
    not chemical based. The instability indices attest to this dynamic. The advantage of monopolistic
    competition (this is a bonafide economics term) in terms of market behavior is in its ability to
    support innovative competition while still maintaing a certain level of price competition.
    Considering that penicillin doesn't work a third of the time or more, it sure is nice to have
    macrolides and cephlasporins don't you think?

    > Monopoly enforcement can be more of a problem, both for manufacturers and consumers, when
    > consumers find ways around the price discrimination

    You've confused some terms, here, I think. Your suggestion of "enforcement" of monopoly (this would
    be patent protection) and the "ways around price discrimination" (this would be arbitrage) are not
    interchangeable. For example, in the EU, parallel imports often are the mechanism by which
    distributors finese the price discrimination issue - but it is hardly a patent concern.

    > vendors have set up (such as by buying drugs abroad, or using P2P networks to get copies of movies
    > or recorded music). Producers see an erosion of their markets; consumers see erosions of their
    > freedoms as pressure is imposed to restore the pre-existing markets.

    Your drug example is one of arbitrage, your music example is one of trademark/copyright
    infringement. These are not the same.

    > Here are some things consumers who are suffering under the current drug market can do:
    >
    > -- Buy generic when you can. Generic drugs are those for which monopoly protection has expired,
    > so they're much more competitively priced than patented drugs. And in the US, their preparation
    > is also closely regulated, so you'll usually get a product that's indistinguishable from the
    > brand name.

    Some have argued brand loyalty and quality but for the general case, this is an effective way of
    managing drug costs. It is unfortunate that this competitiveness in the US market is not better
    publicized.

    > -- Encourage your doctor to consider drugs that are already in the public domain (and can thus
    > be generic) as well as new drugs.

    No drugs are "in the public domain" per se. The only drugs that cannot bve patented are ones derived
    from "plant" products - though there are some real technical issues here.

    > Doctors are subject to a lot of marketing for patented drugs (which patients also pay for
    > when they buy those drugs), and older proven remedies may get short shrift as a result. While
    > in many cases new drugs really are the best ones to use, often they have little or no real
    > advantage for many patients over older remedies that are in the public domain.

    What you describe here is what I was referring to earlier. The competition is not at the molecule
    level but at the therapeutic level. Your observation that some newer drugs provide only
    incremental benefits is a valid one. However, some of these benefits have more than incremental
    value in some patients. For example, there is an argument in support of diuretics rather than ACE
    inhibitors in the treatment of hypertension. The unfortunate thing is that control on diuretics
    alone is short lived.

    > (Most drugs marketed before the mid-1980s are now in the public domain.) Moreover, many of
    > these older drugs have a longer track record of studies showing their safety and
    > effectiveness. And you'll often pay a lot less for them.

    And they also have serious side effects along with marginal efficacy. But, then again, the choice is
    left to the patient and doctor.

    > If you can't afford the newer drugs, it's particularly important to consider alternatives.
    > There's no point in getting a prescription for a new drug that gets rid of 90% of your
    > problem if you can't afford to have it filled, when you could pay for a cheaper drug that
    > takes care of 80% of the problem.

    Or you can have your physician contact the manufacturer. According to the PMA, many companies have
    programs for low income (seniors?) to get the drugs they need at a cost they can afford.

    > -- Encourage your legislators to make and maintain reasonable patent laws. Often they only hear
    > from industry lobbyists, who have an understandably one-sided agenda on the issue.

    There is no rreason why patent laws should be tailored to specific industries. Considering the
    length of time a drug spends in development and not on the market, I don't think patent protection
    is a concern for consumers.

    > (In related monopoly legislation, the entertainment industry has severely unbalanced copyright law
    > in recent years, for instance.) Special sweetheart patent extensions, which occasionally make it
    > through Congress, should be resisted, as should wholesale expansion of patent terms or powers.

    patents are an effective public policy tool. Two examples: In an effort to promote the User Fee Act,
    Congress allowed patent extension of regulatory delays. In order to promote research in diseases
    with small economic value, the Congress implemented the Orphan Drug Act. In an effort to promote
    research of adult drugs for use in kids, the Congress provided for patent extensions for pediatric
    reesearch.

    > -- Encourage both government and drug companies to make special arrangements to provide drugs
    > that are particularly crucial to patients who can't afford them at normal retail. If there's
    > going to be price discrimination in the patented market, it can also be used for good purposes.
    > If drugs go to the people who really couldn't get them any other way, at prices not much higher
    > than the marginal costs, then everyone can benefit: more people get the treatment they need, and
    > the drug companies still make money.

    This is an interesting comment. I remember a year or three ago companies were being challenged to
    provide South Africa with low cost HIV drugs. In response, a number of these companies priced these
    drugs at manufacturers cost. Rather than applauding this effort, the response from Sidney Wolf at
    Public Citizen was that they were still too expensive and if they could afford to sell them so cheap
    in Africa they should sell them at theat price in the US, too.

    John - drug development and computer science had a lot less in common than you might think.

    js
     
  17. Kurt Ullman

    Kurt Ullman Guest

    In article <[email protected]>,
    [email protected] (Jonathan Smith) wrote:

    >If you are one of the 85% of US consumers with health/drug insurance, the cost of medications falls
    >on your insurer. Are US insurers not equally as good negotiators as European governments?
    >

    It has nothing to do with negotiating ability. In most Euro areas (and Canada) the governments
    don't negotiate prices. They SET them. The governments are what the econ-types call monopsonists,
    or monopolistic buyers for ease of understanding. In Canada, for instance, the government
    sometimes doesn't even tell pharm companies what they can charge for a new med until a few months
    AFTER it is out. Thus, pharm companies, if they guess wrong on the formula, have to give back
    "overcharges". Don't know of a US Insurer that can do either.

    >
    >You should consider the actual patent life and the effective patent life arguments. The effective
    >patent life is measured in months in the pharmaceutical industry. Competition is therapeutic based,
    >not chemical based. The instability indices attest to this dynamic. The advantage of monopolistic
    >competition (this is a bonafide economics term) in terms of market behavior is in its ability to
    >support innovative competition while still maintaing a certain level of price competition.
    >Considering that penicillin doesn't work a third of the time or more, it sure is nice to have
    >macrolides and cephlasporins don't you think?

    And there are any number of other cases where first-in-class meds get
    supplanted by follow ons that have been tweaked for different side effects or

    instance, over the next few quarters.

    >What you describe here is what I was referring to earlier. The competition is not at the molecule
    >level but at the therapeutic level. Your observation that some newer drugs provide only
    >incremental benefits is a valid one. However, some of these benefits have more than incremental
    >value in some patients. For example, there is an argument in support of diuretics rather than ACE
    >inhibitors in the treatment of hypertension. The unfortunate thing is that control on diuretics
    >alone is short lived.
    There are also many instances where medications of the same class just plain don't work the
    same at the individual level. For instance, it is well established that a person may not
    respond to one antidepressant (say Prozac) but will for a different member of the same class
    (say Zoloft). Many other kinds and types of medications have been shown to work in the same
    strange way. Personally, I am beginning to think that "Me-too" drug may not be a viable
    discussion point any more.
     
  18. talkback wrote:

    > Daniel Solomon wrote:
    >> "CaptainKrunch" <[email protected]> wrote in news:[email protected]:
    >>
    >>
    >>>Listen troll. This issue has been brought up and beaten to death. If you are so ignorant to think
    >>>that the cost of pills should only be based on the cost of active ingredients then you probably
    >>>are not intelligent enough to discuss the issue in its entirety.
    >>>
    >>>Although I agree some drug prices seem ridiculous you conveniently have left out the millions of
    >>>dollars the drug companies have spent in trying to bring that drug to market. This includes
    >>>probably hundreds of different drugs created and tested just to get one drug to pass the FDA
    >>>standards for approval.
    >>
    >>
    >> And people who defend the pharmaceutical companies conveniently leave out the taxpayer supported
    >> funds and research facilities and universities that are used in the development of drugs. The
    >> pharmaceutical industry is heavily subsidized, but they try to make people believe that they foot
    >> the entire bill for drug research.
    >>
    >> --
    >> Dan Solomon
    >
    > Maybe so. But subsidies are used in many industries. The point is, if the subsidies were removed
    > the cost of the drugs would be higher. And please don't start any nonsense like they make enough
    > already, etc. Last I checked business was business and I don't recall any socialist revolution
    > recently.

    Increase subsidies/tax benies and remove patent protection.

    --

    Pramesh Rutajit - [email protected] - remove tongue to reply.
     
  19. [email protected] (Kurt Ullman) wrote in message news:<[email protected]>...
    > In article <[email protected]>, [email protected] (Jonathan
    > Smith) wrote:
    >
    >
    > >If you are one of the 85% of US consumers with health/drug insurance, the cost of medications
    > >falls on your insurer. Are US insurers not equally as good negotiators as European governments?
    > >
    >
    > It has nothing to do with negotiating ability. In most Euro areas (and Canada) the governments
    > don't negotiate prices. They SET them.

    No, they do not - they negotiate reimbursement status and listing. France is a very extreme case.
    Germany has fairly open pricing. The UK has free pricing but limits "profitability" and uses
    technology assessment to priovide recommendations to NHS. Italy sets maximum prices for inpatient
    drugs and limits reimbursement for outpatient drugs.

    > The governments are what the econ-types call monopsonists, or monopolistic buyers for ease of
    > understanding.

    The health systems which may or may not be government run (for example, germany is an exception) are
    large buyers. As such, they control the shape of the demand function and can influence price. The
    term monopsonist refers to the control of the demand function whereas the term monopolist refers to
    control of the supply function.

    > In Canada, for instance, the government sometimes doesn't even tell pharm companies what they
    > can charge for a new med until a few months AFTER it is out. Thus, pharm companies, if they
    > guess wrong on the formula, have to give back "overcharges". Don't know of a US Insurer that
    > can do either.

    The Canadian government does not control pharmaceutical prices in Canada directly - it is done
    indirectly through the PMPRB and administered at the province level and it is done under the guise
    of a provincial formulary system.

    US insurers are no different than any other large purchaser - and why should they be? Medicaid gets
    rebates based on a reference pricing scheme.

    > >You should consider the actual patent life and the effective patent life arguments. The effective
    > >patent life is measured in months in the pharmaceutical industry. Competition is therapeutic
    > >based, not chemical based. The instability indices attest to this dynamic. The advantage of
    > >monopolistic competition (this is a bonafide economics term) in terms of market behavior is in
    > >its ability to support innovative competition while still maintaing a certain level of price
    > >competition. Considering that penicillin doesn't work a third of the time or more, it sure is
    > >nice to have macrolides and cephlasporins don't you think?
    >
    > And there are any number of other cases where first-in-class meds get
    > supplanted by follow ons that have been tweaked for different side effects or

    > instance, over the next few quarters.

    I wouldn't know about that. The effect is therapeutic not chemical competition. This is a
    good thing.

    > >What you describe here is what I was referring to earlier. The competition is not at the molecule
    > >level but at the therapeutic level. Your observation that some newer drugs provide only
    > >incremental benefits is a valid one. However, some of these benefits have more than incremental
    > >value in some patients. For example, there is an argument in support of diuretics rather than ACE
    > >inhibitors in the treatment of hypertension. The unfortunate thing is that control on diuretics
    > >alone is short lived.

    > There are also many instances where medications of the same class just plain don't work the
    > same at the individual level. For instance, it is well established that a person may not
    > respond to one antidepressant (say Prozac) but will for a different member of the same class
    > (say Zoloft). Many other kinds and types of medications have been shown to work in the same
    > strange way. Personally, I am beginning to think that "Me-too" drug may not be a viable
    > discussion point any more.

    Chemical, mechanistic, target, or market definitions are useful inexplaining competition.

    I think, in general, we are in agreement. I would recommend, though, making an effort to go beyond
    the NHS sound bite and investigate pricing at the country/payer level more closely. If you find
    differences between how large purchasers act based on geography, let me know. So far, in my
    experience, they don't. They use the same approaches, just that they have different constituencies
    to whom they answer. No one pays more than they need to.

    js
     
  20. Governments get discounts on full retail pricing including the America VA system and so do
    private insurance carriers. The person who gets shafted is the poor consumer without any
    healthcare insurance. He can be charged almost anything as he has no cost basis to know how much
    markup he is paying.

    They say only in America and South Africa are people not provided health care as part of the
    national health policy.
     
Loading...