The price of basic drug

[JDL49]

You really don't understand the system.

1) In the US almost every hospital has to eat millions in services to the poor. Those costs are tacked onto your bill. In the state run systems the state pays for those. If that happened here you bill would shrink a fair bit.

2) In state run systems suing is not as big a thing as it is here and as a result liability insurance for health providers is much less. That adds a TON of costs here.

3) In state run systems there is less perceived need to practice defensively. That lowers costs at the price of increased medical errors.

4) Medical education costs in the US are borne by the practitioners and it aint cheap. That raises costs to the patient.

TL: DR These are very different systems.

[Najnaj]

Funny thing but when I looked at the Financials for E. I. Lilly for 2016 & 2017 there were no obscene profits for the company. The net income
percentage, exclusive of one-off and other similar items was in the mid-teens. For a risky business like Pharma that's reasonable. And
yet we have these obscene prices on some drugs in the US. So WTF is going on ? I don't know for sure but I have a Masters in Accounting so
I do know the only possibilities which simply put are something is wrong with the revenues or something is wrong with the expenses.

1) Before going any farther forget any notion that the financial numbers are fiction. Not possible in any meaningful way.

2) Revenues#1. If almost everyone outside of the US is fixing prices extremely low then the difference is being made up on the backs of the US
customers. If you force the Drug companies to match prices then either they a) stop all R&D, go to minimal marketing, & slash admin salaries
or b) go out of business. In any case the long run they go out of business. It depends on how profitable those overseas revenues really are.

3) Revenues#2. Since the total revenues for the company aren't obscenely high but those for some products are then it could be that some
of the other drugs are so low profit that they are diluting things.

4) Expenses#1. Annual R&D for Lilly was around 23%-24% of Revenues. It could be that they are not having a lot of success. If so there are fewer
new drugs to spread those expenses over which will necessitate raised prices on the the drugs that are profitable.

5) Expenses#2. Marketing & Admin costs are about 28% of Revenues. You could have some obscene salaries I suppose BUT this is not the sort of
business where admin people's decisions are all that critical so if so they would really stand out.

There is probably something I'm overlooking but that will have to to do for now.

No one is selling products below cost to other countries and then make up the difference in the US. If this was correct they would simply stop selling abroad and make a bigger profit. Many European buyers get huge discounts due to being huge customers. In some cases one buyer for certain products per country.

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What a lot of people don't realise about what Martin did was he charged insurance companies the greatly inflated amounts yet gave the Medicine to the people that desperately needed it at close to nothing just as a way to say fuck you to the companies. But he was vilified in the Media as most that fuck with corporations generally are.

so what...all pharma companies have some half hearted charity program to make themselves look better. He started a company with the express intention of buying the rights to medications with only one producer and then hike the prices. The insurance companies will not absorb the cost, they will pass in on to their consumers.

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This shit ain't new. The specific insulin (Humalog, aka insulin lispro) mentioned in the story was released in 1996.

Yeah, this is a strange one. It isn't under any patent so anyone with the ability could produce it. Even at the very reduced price it is sold for in the UK they would be able to make a fat profit. I saw somewhere that you could produce most insulin for around $100 per person per year and still make a profit so at the UK price that is still thousands of percent markup given that these perimeters apply to this specific drug.

[exochaft]

No one is selling products below cost to other countries and then make up the difference in the US. If this was correct they would simply stop selling abroad and make a bigger profit. Many European buyers get huge discounts due to being huge customers. In some cases one buyer for certain products per country.

I forget the name of the specific position that does this, but I believe it's Pharmacy Benefit Managers. It's basically a middleman between pharma companies and everyone else, and that's where the market price response just disappears (or rather the market response gets pressured to make prices go higher). PBM's make money based upon the rebates and savings they get, and if a drug company has to raise prices to off set costs of developing new drugs, they have to increase it even more to compensate for PBM's. Basically, it's a double-price hike due to the middleman. However, the big point is that the money the PBM's make is based upon the savings for list price, which is what things like co-pays are based upon... so list prices go artificially higher due to PBM's while the customers pay more because everything is priced upon the list price. Now this have come more to light in recent times, as pharma company profits in general have actually been decreasing with the prices still rising, and the existence of PBM's is now more public than ever.

[Zan15]

I forget the name of the specific position that does this, but I believe it's Pharmacy Benefit Managers. It's basically a middleman between pharma companies and everyone else, and that's where the market price response just disappears (or rather the market response gets pressured to make prices go higher). PBM's make money based upon the rebates and savings they get, and if a drug company has to raise prices to off set costs of developing new drugs, they have to increase it even more to compensate for PBM's. Basically, it's a double-price hike due to the middleman. However, the big point is that the money the PBM's make is based upon the savings for list price, which is what things like co-pays are based upon... so list prices go artificially higher due to PBM's while the customers pay more because everything is priced upon the list price. Now this have come more to light in recent times, as pharma company profits in general have actually been decreasing with the prices still rising, and the existence of PBM's is now more public than ever.

Do you have a source for this, I looked at the top 10 pharma companies and I see a mostly flat or slowly rising profit margins.

[Vash The Stampede]

Capitalism working as intended. Also I don't go by inflation as I see it as an excuse to raise prices. Did wages go up as much as inflation? If not then just companies raising prices cause they can and they will. I'm for disruptive technology that can cure Diabetes 1 and watch the pharmaceuticals collapse and ask for bailouts. Like gene therapy which might give these people the ability to produce their own insulin. Also this wouldn't be a thing if we had Universal Health Care cause the US government isn't going to pay those prices for medical treatment, especially drugs.

[Zan15]

No one is selling products below cost to other countries and then make up the difference in the US. If this was correct they would simply stop selling abroad and make a bigger profit. Many European buyers get huge discounts due to being huge customers. In some cases one buyer for certain products per country.
.

Not true.

Sometimes volume is more important than selling at a profit in order to keep the company visible in a country. This is why the two most important items you look at are profit growth and underlying revenue growth. Good press and relationship can help them in many ways in to the future so they sell some drugs under cost.


There are countries that also negotiate with the company as a whole. So they might end up actually losing money on some drugs while making it up with others. They might also have to sell high visibility and highly politicalized drugs/treatments at a loss or face even more problems with pricing and approvals going forward.


US prices are defiantly impacted by how other countries regulate and negotiate rates and we do subsidize their whole RD more so then those countries.

[JDL49]

No one is selling products below cost to other countries and then make up the difference in the US. If this was correct they would simply stop selling abroad and make a bigger profit. Many European buyers get huge discounts due to being huge customers. In some cases one buyer for certain products per country.

Nothing I said touched on selling products below cost although that in fact does happen in some poorer countries for what I think are public relations reasons. For example: HIV drugs in Africa.

[Najnaj]

Not true.

Sometimes volume is more important than selling at a profit in order to keep the company visible in a country. This is why the two most important items you look at are profit growth and underlying revenue growth. Good press and relationship can help them in many ways in to the future so they sell some drugs under cost.


There are countries that also negotiate with the company as a whole. So they might end up actually losing money on some drugs while making it up with others. They might also have to sell high visibility and highly politicalized drugs/treatments at a loss or face even more problems with pricing and approvals going forward.


US prices are defiantly impacted by how other countries regulate and negotiate rates and we do subsidize their whole RD more so then those countries.

Only if you are at war with a competitor. Selling large volume at a loss is just a large loss.

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Nothing I said touched on selling products below cost although that in fact does happen in some poorer countries for what I think are public relations reasons. For example: HIV drugs in Africa.

"the difference is being made up on the backs of the US" is the quote and this is not correct. That Americans are paying 5 times as much has nothing to do with prices in the rest of the world.

[Wyrt]

Welcome to capitalism. This is why every other fucking country in the west doesn't do healthcare this way. The US is being retarded and extreme in their insistence on "free" market healthcare.

[beanman12345]

A few years back I was on an high dosage of an anti-psychotic Invega. There was no generic version, and for a two week supply it was about $6,000. It was not covered under my insurance, and while not a basic drug i suppose, I still would not be able to function adequately without it, and things started to get really bad before I was on it. This was for several years before they finally came out with a generic version and the price came down, but even still it's quite expensive, several hundred dollars, and the same thousands of dollars amount for non generic. This isn't something that I could have prevented by eating right or whatever, or using my savings on to pay for the medicine. I had to use "samples" they gave to my doctor, so thankfully I never had to pay that cash, not that I would have been able to. I have moved on to another medicine.

3,000 a week for medicine is more insane than I am.

[breadisfunny]

for some reason i keep reading the thread title as "the price of basic dung".

[breslin]

I wonder what the price of the drug is when you factor in shipping and storage.

[Zan15]

Only if you are at war with a competitor. Selling large volume at a loss is just a large loss.

.

Till the competitor goes out of business because he does not have the financial resources to outlast you and your cash pile stashed overseas.
or till he suffers enough and you buy him out.

All of which happens in the drug industry already. Although in the last 10 or so years you don't have much competition left because of their monopoly power and under the table agreement not to compete against each other.

"the difference is being made up on the backs of the US" is the quote and this is not correct. That Americans are paying 5 times as much has nothing to do with prices in the rest of the world.

it sure does. They are expected to have so much revenue and profit gains a year to make wall street, their investors and their board happy. if prices overseas lets say get regulated tomorrow for a 10% drop in the EU, Canada and UK....where do you think they are going to raise prices to make up for that huge drop? You think they are just going to absorb the loss???

[Najnaj]

Till the competitor goes out of business because he does not have the financial resources to outlast you and your cash pile stashed overseas.
or till he suffers enough and you buy him out.

All of which happens in the drug industry already. Although in the last 10 or so years you don't have much competition left because of their monopoly power and under the table agreement not to compete against each other.






it sure does. They are expected to have so much revenue and profit gains a year to make wall street, their investors and their board happy. if prices overseas lets say get regulated tomorrow for a 10% drop in the EU, Canada and UK....where do you think they are going to raise prices to make up for that huge drop? You think they are just going to absorb the loss???

The pharmaceutical industry is not particularly full of monopolies unless you count patents. Compounding means that it is more diverse than grocery stores for most products.


Canada first off all is a very different market. The EU's prices are set in negotiations between a seller and a usually very strong buyer central. The US and Canada markets are similar with a ton of buyers at much higher cost for the seller. I live with someone who used to sell pharmaceuticals by the way.

[Tiwack]

you people wanted health insurance, well the price you pay for an entire literal market that needs to be propped up alongside the healthcare industry is higher healthcare costs.

but no, keep blaming the evil pharmaceuticals

It's not a market, it's a racket without negotiating.

[Orlong]

Holy crap, $275? That looks about the same size as the insulin I use, and I go through one of those in a week. I pay almost that much per month in rent.

And if they had insurance it wouldnt be $275. It would be $15 for me under my insurance. People who refuse to buy insurance are gonna pay higher prices instead, and I dont want to hear anything about people being too poor to buy insurance because if you are truly poor you can get on Medicaid or highly subsidized Obamacare. People, especially young people think its a waste of money to buy insurance because they cant do anything with it. If its not food or entertainment, they dont want to spend any money on it, and yeah $275 might be a huge profit but the majority of that profit goes into R&D for new drugs or to subsidize other countries with socialized healthcare refusing to pay market value for their drugs, so we get screwed.

[Zan15]

And if they had insurance it wouldnt be $275. It would be $15 for me under my insurance. People who refuse to buy insurance are gonna pay higher prices instead, and I dont want to hear anything about people being too poor to buy insurance because if you are truly poor you can get on Medicaid or highly subsidized Obamacare. People, especially young people think its a waste of money to buy insurance because they cant do anything with it. If its not food or entertainment, they dont want to spend any money on it, and yeah $275 might be a huge profit but the majority of that profit goes into R&D for new drugs or to subsidize other countries with socialized healthcare refusing to pay market value for their drugs, so we get screwed.

"It's only 15 for me"
Umm till you factor in how much your company pays for their portion And how that effects your premium and your total compensation and future raises...

And it's already been proven time and time again the vast majority of the money goes into profit, stock enhancements and marketing . R&D is fourth on that list and you can look at any 10k to see that proof

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The pharmaceutical industry is not particularly full of monopolies unless you count patents. Compounding means that it is more diverse than grocery stores for most products.


Canada first off all is a very different market. The EU's prices are set in negotiations between a seller and a usually very strong buyer central. The US and Canada markets are similar with a ton of buyers at much higher cost for the seller. I live with someone who used to sell pharmaceuticals by the way.

So basically it's full of Monopolies....since they exist. Sigh....

[Masark]

Yeah, this is a strange one. It isn't under any patent so anyone with the ability could produce it.

Ability is presumably the issue. To produce their insulin, you'd need to duplicate their genetically engineered yeast, as they sure as hell aren't going to sell you it.

[Splenda]

I don’t expect change to happen. Corporate greed always wins, even when the government steps in because they can be paid off. The system is broken, and it will always remain broken.

I agree with this- It would take a LOT of stink for change, and I think too many people are indifferent if it doesn't effect them.

[Tech614]

And if they had insurance it wouldnt be $275. It would be $15 for me under my insurance. People who refuse to buy insurance are gonna pay higher prices instead, and I dont want to hear anything about people being too poor to buy insurance because if you are truly poor you can get on Medicaid or highly subsidized Obamacare. People, especially young people think its a waste of money to buy insurance because they cant do anything with it. If its not food or entertainment, they dont want to spend any money on it, and yeah $275 might be a huge profit but the majority of that profit goes into R&D for new drugs or to subsidize other countries with socialized healthcare refusing to pay market value for their drugs, so we get screwed.

Meds that you need to actually live shouldn't cost even $15 if we're being honest. High blood pressure medicine doesn't cost $15 even without insurance... it costs $4 or less depending on the pharmacy.

The insulin price gauging is disgusting, let's not try to deflect and defend it.