When this gets brought up as a positive to our high healthcare spending (which you're not exactly doing, more just making note of the existence of the argument) it's such a head-scratcher for me.
1) OK... maybe we should stop, then? Like, that seems like a terrible deal? How is that a justification at all? It seems like just a description of something very stupid we're doing.
2) This would be a good deal if we were getting other countries to also pay high prices and bringing that money "home", but basically the exact opposite is happening. WTF.
3) More often than not, the side of the issue that raises this as a good thing is also the side full of folks who think we should e.g. reduce spending on foreign aid, so it's especially weird that they're bringing it up.
Plus, I'm very skeptical that the idea that drug development would dramatically slow down if the US stopped over-spending to the tune of 2x-100x on lots of drugs is even true. But setting that aside, it's still just a bizarre line of argument, to me.
> OK... maybe we should stop, then? Like, that seems like a terrible deal? How is that a justification at all? It seems like just a description of something very stupid we're doing.
The US pays for drug development and then the rest of the world caps prices and gets the drugs cheaper. If the US stops then the money for drug development goes down, which is not great. What you really want is to get the other countries to pay their share, but how do you propose to do that?
The reality is we have no evidence that other countries other countries wouldn't start developing drugs. Our fear that no one else would do is not grounded in the rational and we shouldn't let irrational fears decide what we do. This isn't something we can logic out ahead of time, we simply need to commit to not doing it.
People always forget it's "what the market will bear".
Price caps set a very explicit bar and then ask a company to think very carefully if they truly think the drug can't be sold at that price (and surprise: turns out when motivated a ton of them discover that yes, it can be).
What the market will bear affects an already existing product. R&D is driven by one of two things:
1. An expectation of profit at the end.
2. A highly desired outcome from a motivated pool of Investors.
Price caps can dampen #1. Which can put more of the burden on #2 as a source of funding. Whether you think that is an improvement or not probably depends on your particular ideological position around markets and healthcare.
But there is definitely an objective argument to be made that this might decrease the speed of improvements in healthcare technology.
> But there is definitely an objective argument to be made that this might decrease the speed of improvements in healthcare technology.
Every American posts about "healthcare improvements" like they're a millionaire and that cancer wouldn't bankrupt them (and then also get them fired from their job when their insurer casually mentions the "bad risk" they've got which is driving up the cost right now).
Let the market figure it out—it’ll adjust, companies will raise prices in other markets and simply not serve the ones that won’t let them charge enough to make it worth it—and then explicitly, collectively subsidize it if that produces a shortfall? Pinning the bill for a subsidy on the sick people—but only in our country—we’re claiming to be trying to help, while also claiming our entire country is and must remain, uniquely, a martyr to the cause is a deeply weird way to go about providing a subsidy.
The market has figured it out. The market has figured out, that tech bros will charge you as much as possible for that last dyeing grasp, seeking as much profit, while just glossing over mistakes and oversites that unalive you and your loved ones. The very best of luck with that. Hope you have an immediate and effective alternative.
I meant use monopsony government buying power and/or price controls like 100% of the rest of the developed world, and let the market figure it out. Though I definitely didn’t make that clear, my bad.
Then subsidize, on purpose and directly, not by some lopsided roundabout more-expensive-than-it-needs-to-be scheme, if problems arise.
It is notable that the industry spends more on marketing than R&D. Virtually all of this spend is in the US; very few countries allow the marketing of prescription drugs to consumers.
Quite a bit of the high pricing for Americans is also by companies who _don’t even do_ R&D to any significant extent; companies who only make generic price them dramatically higher in the US than elsewhere.
> > other countries to pay their share, but how do you propose to do that?
They cannot pay with money, but honestly speaking they could "pay" with risk taking, I mean trying drugs that the FDA is too risk averse to approve . For example the risk profile of basically every day activity is much much higher in India or Nigeria compared to the U.S. and so the same should be for drugs, medicine is an extremely risk averse field as it is, but with the FDA being the world authority over medicine safety basically the risk profile of the US is being transferred over to the rest of the world which is nuts. Consider for example the risk profile of daily driving in the U.S. vs India or Thailand where everybody goes around in scooters without helmets, it works for them, their economy would collapse if they tried to have the safety of the U.S. drivers going around with 20ft long 7500lbs cars.
The unfortunate thing is that the whole world relies not only on the U.S. for drug research but also drug approval. If the FDA says no to something then not even Lesotho would try it , even though maybe from a risk reward standpoint it would make so much sense for Lesotho to try it .
What the US could do is cap prices in the US at some modest multiple of the cheapest price charged in other countries. The drug maker would then have a choice: cater to either the US market at an elevated price while losing the cheaper markets, or abandon the US market to have a possibly larger market elsewhere at lower prices.
That is one option. It would mean that some drugs, especially those for rare conditions, are never brought to market in the first place because the expected worldwide revenue would be too low to justify spending $1B+ on a stage-3 clinical trial that might fail. Is that a good trade-off? Depends on your perspective I guess.
We have people dying of treatable ailments that have been understood for decades which cost less than the labour used to deny them treatment and lobby against their interests.
A slower pace for rare ailments seems like an obviously acceptable trade off.
Well then we have a game theory problem. Every country wants to freeload on drug development spending to minimize their own expenses. It's unrealistic to expect that countries like India or France will voluntarily accept higher drug prices just to incentivize new drug development. If the USA decides to stop subsidizing the rest of the world then the most likely outcome will be a permanent reduction in the rate of new drug development. Would that be an improvement?
If advertising wasn't net positive for drug companies, they wouldn't do it, ie. paying for advertising means paying less. But if you disagree with that reasoning, advertising accounts for ~3% of US drug spending, so taking it or leaving it isn't going to make a big difference in prices.
You see, development of new drugs, devices, and treatments is definitely something that we must continue at breakneck pace, by any means necessary, because people keep discovering how awful and harmful the existing ones are, so we need to make consistent progress beyond the status quo.
If you move faster than the science and the lawsuits, then you can keep selling deadly crap to a naïve and trusting populace.
1) OK... maybe we should stop, then? Like, that seems like a terrible deal? How is that a justification at all? It seems like just a description of something very stupid we're doing.
2) This would be a good deal if we were getting other countries to also pay high prices and bringing that money "home", but basically the exact opposite is happening. WTF.
3) More often than not, the side of the issue that raises this as a good thing is also the side full of folks who think we should e.g. reduce spending on foreign aid, so it's especially weird that they're bringing it up.
Plus, I'm very skeptical that the idea that drug development would dramatically slow down if the US stopped over-spending to the tune of 2x-100x on lots of drugs is even true. But setting that aside, it's still just a bizarre line of argument, to me.