Healthcare going forward

[Kulindahr]

^QFT.

In the US, thanks to the ACA we now know that in 2016, pharmaceutical companies made $8.18 billion in payments to US physicians to [STRIKE]bribe[/STRIKE] encourage them to prescribe their products. If those payments were eliminated, the cost to consumers could be decreased proportionally.

Holy crap -- that's obscene.

This is what happens when you mess up the free market by forbidding certain companies to engage in negotiations for prices. The crazy thing is that GOP folks think that Walmart using its great purchasing volume to force suppliers into cutting prices -- but when it's consumers in large numbers wanting to throw around their purchasing volume, the GOP screams about it.

 

[Benvolio]

I am not aware that consumers in large numbers are impeded from negotiating. The objection is to government “negotiating” since it amounts to “price controls”, and impedes R&D.

 

[ballcaphair]

I am not aware that consumers in large numbers are impeded from negotiating. The objection is to government “negotiating” since it amounts to “price controls”, and impedes R&D.

You must surely see the irony of this comment.

 

[Benvolio]

You must surely see the irony of this comment.

No, I do not.

 

[KaraBulut]

Yes, but look again at what I said. ‘Canadian Drugs are sold legally in the US through pharmacies....” I am not talking about direct sales from Canada US individuals, but legal sales through US pharmacies.
‘’ Over half of [Canada’s ] production is exported and mostly to the United States.”
https://www.statista.com/statistics/422621/canadian-pharmaceutical-exports-and-imports/
Canadian companies can advertise in the US and sell without price controls.

Your use of "Canadian drugs" makes little sense in this context.

To my knowledge, there is only one brand-name pharmaceutical company that is headquartered in Canada: Valeant. Valeant makes contact lens and ophthalmic products under the name "Bausch & Lomb". They also produce older drugs (e.g. Isuprel, Nitropress, Retin-A etc) that do not require any R&D or advertising.

Apotex is also based in Canada but Apotex manufactures generic drugs (which require no R&D). Canada is one of the major producers of generic drugs (which require no R&D) and these are exported to the US. Generic manufacturers have low advertising budgets.

The other companies with production plants in Canada- Teva and Johnson & Johnson aren't Canadian countries, though. Teva produces generics in Canada under the Actavis brand-name and Canada is where a lot of the penicillin (generic, no R&D or advertising) used in the US originates. Johnson & Johnson is known for things like Band-Aids.

 

[Benvolio]

Your use of "Canadian drugs" makes little sense in this context.

To my knowledge, there is only one brand-name pharmaceutical company that is headquartered in Canada: Valeant. Valeant makes contact lens and ophthalmic products under the name "Bausch & Lomb". They also produce older drugs (e.g. Isuprel, Nitropress, Retin-A etc) that do not require any R&D or advertising.

Apotex is also based in Canada but Apotex manufactures generic drugs (which require no R&D). Canada is one of the major producers of generic drugs (which require no R&D) and these are exported to the US. Generic manufacturers have low advertising budgets.

The other companies with production plants in Canada- Teva and Johnson & Johnson aren't Canadian countries, though. Teva produces generics in Canada under the Actavis brand-name and Canada is where a lot of the penicillin (generic, no R&D or advertising) used in the US originates. Johnson & Johnson is known for things like Band-Aids.

I was responding to gsdx claim that Canadian companies do significant research without needing to advertise..

 

[ballcaphair]

I am not aware that consumers in large numbers are impeded from negotiating. The objection is to government “negotiating” since it amounts to “price controls”, and impedes R&D.

You must surely see the irony of this comment.

No, I do not.

consumers in large numbers are the government
“negotiating” is basically free market

I appreciate the debate, because we definitely need one.

This is not a tit for tat with you. You could even be more correct than I. On a daily basis, I see clients who fear the cost of meds of maintenance.

 

[Benvolio]

consumers in large numbers are the government
“negotiating” is basically free market

I appreciate the debate, because we definitely need one.

This is not a tit for tat with you. You could even be more correct than I. On a daily basis, I see clients who fear the cost of meds of maintenance.

The government is not the same as “number” of consumers. It is a single very large entity representing so much of the market as to effectively dictate the price. It is big enough to say, here is what the US will pay, take it or leave it. At one point US companies stopped producing vaccines because the government paid too little. The other problem is that anyone who negotiates starts with a very high or low figure to leave room to move and end where they want to be. So drug companies will start with an enflated which it claims it charges regularly. Then it negtialtes down—it hopes—to its real price. BUT it has to continue charging other consumers the inflated price to prevent the negotiation from being a fraud, and to preserve the inflated price as a starting point for the next negotiation.

 

[ballcaphair]

We still have flu vaccine I'll find its cost and who's paying for what, in real life. Or, actually in my real life. I'll let you know when I know. I'm processing your negotiation concept.

 

[Benvolio]

We still have flu vaccine I'll find its cost and who's paying for what, in real life. Or, actually in my real life. I'll let you know when I know. I'm processing your negotiation concept.

If you google "vaccine price negotiation and shortage" you will find a number of articles. Here is one: https://www.google.com/url?sa=t&rct...at-cost.html&usg=AOvVaw2LQyuFzXci07-oZwTSCBmh

 

[KaraBulut]

We still have flu vaccine I'll find its cost and who's paying for what, in real life. Or, actually in my real life. I'll let you know when I know. I'm processing your negotiation concept.

Well, he's giving you a biased view of the situation.

The vaccine market is about $24 billion per year but that's only about 2% of the total pharmaceutical market.

It's true that governments and the World Health Organization are the biggest purchasers of vaccines. And it's true that their bulk purchasing of vaccines allows them to set prices.

The biggest driver of pricing is that the public expects the shots to be cheap- mostly because they received the shots for low prices or for free when they were children.

But the low-profit margins on vaccines existed for decades- in fact, the manufacturers knew that the immunizations were low profitability but they viewed this as part of a "public good" mission that the industry has long since abandoned. Many of these vaccines were developed by publicly-funded research- the taxpayers paid to develop them. There's no marketing needed- most of these vaccines are mandated for school-age children and employers; the government guaranteed that they would buy millions of doses, so even with slim margins, the manufacturers were guaranteed that there would be a market.

The 1986 National Childhood Vaccine Injury Act gives manufacturers legal immunity from injuries caused by their vaccines.

Low margins in exchange for low R&D costs, low marketing costs and immunity from lawsuits- that was the bargain that the manufacturers agreed to. But in an industry that depends on increasingly absurd prices and patents to drive shareholder profits, the mission of providing some products for public good is largely a thing of the past.

The big change that we saw in the past was that many physician offices stopped offering immunizations because a vaccine that the government purchased for $20 per dose would cost $50 if purchased by a physician office. That has changed because the ACA now mandates that vaccines are covered at 100% so there's an incentive for physicians, clinics and pharmacies to offer vaccination services.

 

[gsdx]

We still have flu vaccine I'll find its cost and who's paying for what, in real life. Or, actually in my real life. I'll let you know when I know. I'm processing your negotiation concept.

Would I be out of place mentioning that our flu vaccine is free?

 

[Benvolio]

Well, he's giving you a biased view of the situation.

The vaccine market is about $24 billion per year but that's only about 2% of the total pharmaceutical market.

It's true that governments and the World Health Organization are the biggest purchasers of vaccines. And it's true that their bulk purchasing of vaccines allows them to set prices.

The biggest driver of pricing is that the public expects the shots to be cheap- mostly because they received the shots for low prices or for free when they were children.

But the low-profit margins on vaccines existed for decades- in fact, the manufacturers knew that the immunizations were low profitability but they viewed this as part of a "public good" mission that the industry has long since abandoned. Many of these vaccines were developed by publicly-funded research- the taxpayers paid to develop them. There's no marketing needed- most of these vaccines are mandated for school-age children and employers; the government guaranteed that they would buy millions of doses, so even with slim margins, the manufacturers were guaranteed that there would be a market.

The 1986 National Childhood Vaccine Injury Act gives manufacturers legal immunity from injuries caused by their vaccines.

Low margins in exchange for low R&D costs, low marketing costs and immunity from lawsuits- that was the bargain that the manufacturers agreed to. But in an industry that depends on increasingly absurd prices and patents to drive shareholder profits, the mission of providing some products for public good is largely a thing of the past.

The big change that we saw in the past was that many physician offices stopped offering immunizations because a vaccine that the government purchased for $20 per dose would cost $50 if purchased by a physician office. That has changed because the ACA now mandates that vaccines are covered at 100% so there's an incentive for physicians, clinics and pharmacies to offer vaccination services.

You seem agree with my point that the “negotiation” by the government of bulk purchases “allows them to set the price”. Vaccines were an example of that. That problem would be exacerbated if applied to other drugs which require R&D, clinical trials, approval, and which afford no liability protection, require marketing etc. A company which created new drugs at low profitability for the public good would not last long. Notice that there are no new drugs being developed and marketed at low probability even by socialists, liberals, communists, or saints like Mother Theresa. Even the vaccines are mostly produce by companies making profits from other drugs. It is just not possible. It is only another pipe dream of what someone ELSE should do.

 

[KaraBulut]

You seem agree with my point that the “negotiation” by the government of bulk purchases “allows them to set the price”. Vaccines were an example of that. That problem would be exacerbated if applied to other drugs which require R&D, clinical trials, approval, and which afford no liability protection, require marketing etc. A company which created new drugs at low profitability for the public good would not last long. Notice that there are no new drugs being developed and marketed at low probability even by socialists, liberals, communists, or saints like Mother Theresa. Even the vaccines are mostly produce by companies making profits from other drugs. It is just not possible. It is only another pipe dream of what someone ELSE should do.

As I indicated in my previous post, the government does set the price but that's not the full picture of what is happening in a unique sector of the pharmaceutical market (which accounts for 3% of sales).

The reason that both sides (governments and pharmaceutical manufacturers) agreed to contract pricing is that the governments buy millions of doses of these vaccines- whether they actually use them or not. In the case of flu vaccines, these are used. In the case of other unique vaccines, these are largely stockpiled by the government. In exchange for this, vaccine manufacturers have a unique exemption from legal liability for any harm that may result to patients who receive the vaccine.

Once upon a time, thousands of children died or were incapacitated by diseases that most Americans will never see. Thanks to this unique partnership between government and pharmaceutical companies, diseases like polio and pertussis are very rare and smallpox has been eradicated.

You're trying to make an analogy between vaccines that prevent disease and drugs that, for the most part, manage symptoms. You're also comparing bulk purchasing of vaccines to per-prescription purchases of medications. Neither of these is a valid comparison.

We have already seen the effects of government pricing on pharmaceuticals- the VA system negotiates bulk pricing. The VA system has 174,000 patients with hepatitis C. Harvoni, a drug used to treat hepatitis C, was costing the VA $68,000 per patient to administer. When the VA discovered that the drug only cost Gilead $1,400 to manufacture (a $66,600 profit), they negotiated the price down to where the cost per patient was lowered to between $25,000 to $37,500. In exchange, Congress allocated addition funding for the VA program and now the VA pays $696 million, or 17 percent of its total pharmacy budget to buy Harvoni.

So, in this example, the VA was able to reduce cost by 60%, Gilead still makes a profit of $35,600 per patient and Gilead gained another 174,000 patients (netting Gilead $6,194,400,000 in profit).

 

[gsdx]

So, in this example, the VA was able to reduce cost by 60%, Gilead still makes a profit of $35,600 per patient and Gilead gained another 174,000 patients (netting Gilead $6,194,400,000 in profit).

So THAT'S where Martin Shkreli got his idea.

Interesting that there was so much outrage when Shkreli did it, but then it was so public. Are Americans generally ignorant about the pricing practices pharmaceuticals or do they simply accept it as 'what can we do about it?'

 

[Benvolio]

As I indicated in my previous post, the government does set the price but that's not the full picture of what is happening in a unique sector of the pharmaceutical market (which accounts for 3% of sales).

The reason that both sides (governments and pharmaceutical manufacturers) agreed to contract pricing is that the governments buy millions of doses of these vaccines- whether they actually use them or not. In the case of flu vaccines, these are used. In the case of other unique vaccines, these are largely stockpiled by the government. In exchange for this, vaccine manufacturers have a unique exemption from legal liability for any harm that may result to patients who receive the vaccine.

Once upon a time, thousands of children died or were incapacitated by diseases that most Americans will never see. Thanks to this unique partnership between government and pharmaceutical companies, diseases like polio and pertussis are very rare and smallpox has been eradicated.

You're trying to make an analogy between vaccines that prevent disease and drugs that, for the most part, manage symptoms. You're also comparing bulk purchasing of vaccines to per-prescription purchases of medications. Neither of these is a valid comparison.

We have already seen the effects of government pricing on pharmaceuticals- the VA system negotiates bulk pricing. The VA system has 174,000 patients with hepatitis C. Harvoni, a drug used to treat hepatitis C, was costing the VA $68,000 per patient to administer. When the VA discovered that the drug only cost Gilead $1,400 to manufacture (a $66,600 profit), they negotiated the price down to where the cost per patient was lowered to between $25,000 to $37,500. In exchange, Congress allocated addition funding for the VA program and now the VA pays $696 million, or 17 percent of its total pharmacy budget to buy Harvoni.

So, in this example, the VA was able to reduce cost by 60%, Gilead still makes a profit of $35,600 per patient and Gilead gained another 174,000 patients (netting Gilead $6,194,400,000 in profit).

‘’Cost To manufacture” ordinarily does not include R&D, overhead, advertising, liability insurance etc, and therefore does not represent a valid basis, by itself for determining profit. Veterans represent only a part, perhaps a small part of the potential patients. Controlling that small part does not have the same effect on the company that controlling the price to a majority of patients would.

 

[KaraBulut]

‘’Cost To manufacture” ordinarily does not include R&D, overhead, advertising, liability insurance etc, and therefore does not represent a valid basis, by itself for determining profit. Veterans represent only a part, perhaps a small part of the potential patients. Controlling that small part does not have the same effect on the company that controlling the price to a majority of patients would.

The "overhead" is not something that we should be financing for pharmaceutical companies. If a company can't cover their overhead when they are profiting $35,600 per patient for a 60 day course of treatment, then that company should cease operations.

 

[gsdx]

‘’Cost To manufacture” ordinarily does not include R&D, overhead, advertising, liability insurance etc, and therefore does not represent a valid basis, by itself for determining profit.

I've already proved to you that it does, and it was from an article which you supplied. It's a few pages back.

EDIT: It also includes failures and new drugs which never make it to market.

 

[Benvolio]

The "overhead" is not something that we should be financing for pharmaceutical companies. If a company can't cover their overhead when they are profiting $35,600 per patient for a 60 day course of treatment, then that company should cease operations.

The point is that you cannot know the profit without deducting the expenses. By definition profit is what is left of gross profit after deducting all the expenses in accordance with generally accepted accounting principles.

 

[Benvolio]

I've already proved to you that it does, and it was from an article which you supplied. It's a few pages back.

“Cost to manufacture” were not the exact words used.