The Price of Price Controls: Innovation Likely to Suffer in Drug Pricing Debate

By Gene Quinn
May 14, 2019

“While price controls that prevent a drug company from selling a particular drug for more than a certain amount might make that particular drug cheaper, it will destroy innovation in the industry.”

Is Congress really going to do anything useful with respect to lowering drug prices? When the question is presented that way the answer almost seems painfully obvious. Of course not. The question is just how bad they will mess things up, and will they destroy the incentive to innovate as they attempt to seek a very worthwhile solution for the problem of growing costs for healthcare.

The Dangers of Political Theater

Unfortunately, the political climate in the United States has increasingly become more circus and circumspect than bold and visionary. It is better to do something entertaining and memorable that plays to the crowd than to go about the business of governing the country, not just for the moment, but for the future. And the political structures in place create outright gerrymandering that practically ensure the overwhelming percentage of Representatives have more to fear from a primary challenge than from a contender in the general election. It is no wonder nothing truly useful can get accomplished in Washington, DC.

Sadly, the fact that nothing useful can be accomplished doesn’t mean that nothing at all can or will get done.

No one likes paying high prices for drugs. But we all say we want innovation.  In the biotech and pharmaceutical industries, innovation means new drugs, vaccines, treatments and cures. While we can and should have a conversation about whether it is appropriate to count the advertising costs into the overall amount of money it takes a bio-pharma company to take a drug or biologic to market, no one can seriously argue that it does not require extraordinary investment to go from conception of a lead compound in a laboratory through the byzantine process that is the FDA approval process. It takes many years and many hundreds of millions of dollars, and frequently runs into the billions of dollars just on the science the regulatory procedures.

During the most recent hearing in the Senate, there was a moment of complete honesty when Senator Kennedy explained that he is not in favor of price controls, but that if the pharmaceutical industry does not propose some kind of workable solution, that is what will happen. Kennedy explained that people are upset that the same drug costs much more in the United States than it does overseas. He is right, and people have a right to be upset by the fact that the price of drugs is lower in other countries. It is appalling and unacceptable, period.

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The Cost of Cheap

The reason drugs are cheaper in other countries is because those other countries have price controls. If pharmaceutical companies want to sell into those countries, they have to charge those low prices. And if the required low price is set above the marginal cost to produce the drug, then the pharmaceutical company makes money on the sale because the research and development and cost of regulatory approvals are already paid. Therefore, when the pharmaceutical company sells for a low price, they are not recouping a fair portion of R&D and regulatory costs, and instead just making a profit when those innovation costs are not considered. This means the American consumer is left to pay for the innovation costs (i.e., the research, development and regulatory process to ensure the drug is safe) because there are no price controls in the United States. So, U.S. citizens are now and have been subsidizing cheap drugs for the world.

Will Congress do anything productive and appropriate to stop U.S. citizens from subsidizing cheap drugs for the world? That seems doubtful because a solution that will not kill the golden goose that is biopharma innovation will be extremely difficult, will take real determination, and won’t be easy to explain on a bumper-sticker or in a campaign slogan. Instead, what Congress seems to be contemplating is introducing price controls like other countries. And while price controls that prevent a drug company from selling a particular drug for more than a certain amount might make that particular drug cheaper, it will destroy innovation in the industry.

Raising the Risk

It is already risky enough to invest in pharmaceutical research and development, with only a small fraction of drugs ever being profitable. Why would anyone invest the hundreds of millions, or billions of dollars required if 9 out of 10 drugs are unlikely to succeed and the one that does succeed will be subjected to price controls? Investors would have to be insane to take the risks given the reward.

If Congress wants drug prices to be lower, and they should, price controls are a bad idea that will stifle innovation and cause long term damage to our healthcare system. Instead, Congress needs to look outside the United States and place blame on free-riding nations that demand low prices for market access. U.S. citizens have subsidized healthcare in these free-riding nations for long enough.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 33 Comments comments. Join the discussion.

  1. Greg DeLassus May 14, 2019 4:56 pm

    Instead, Congress needs to look outside the United States and place blame on free-riding nations that demand low prices for market access. U.S. citizens have subsidized healthcare in these free-riding nations for long enough.

    Wait a second. This is, no doubt, a very popular “solution” to the problem (“blame the foreigners!”), but this is not going to get you anywhere that you really want to go.

    The Europeans, Japanese, Australians, Canadians, etc, have no control over prices in the U.S. There is no aspect of EP, JP, AU, CA (etc) law that you can change that will result in lower U.S. prices.

    To the extent that one hopes to achieve actual improvements for U.S. consumers, you must change U.S. law. No amount of jawboning the hated Canadians can lower the costs paid by U.S. consumers.

  2. Anon May 14, 2019 5:31 pm

    Excellent write-up Gene, but I would add one ardent caveat.

    Those consumers in the US are forced into a conscripted and profit-buoying role because of the non-forced choice of Big Pharma to enter into agreements to supply product at reduced prices in other geographic markets.

    The option is always present to say “No.”

    But by saying “Yes,” and accepting the lower margins, the pressure is UNFAIRLY placed on US consumers to make up that difference.

    It may be a bit “cold” for me to say this, but that option to say “no” to forced lower prices in other geographic regions may mean that those regions simply go without those medicines. I do believe that long enough of going without out would have the populace imploring those other Sovereigns to be more “reasonable” in sharing the target profit margins of Big Pharma, and the US consumer would end up paying a much more fair share.

    As I have also recently noted, IF Big Pharma wants to play their geographic market game and voluntarily submit to lower prices elsewhere, I have NO PROBLEM with our government demanding that those same low prices by carried over into this country.

    To me, this removes the gamesmanship that Big Pharma chooses to play.

  3. Anon May 14, 2019 5:33 pm

    Greg @ post 1 is clearly wrong.

    Prices can be made to be tied to foreign prices (and Big Pharma’s voluntary choices of prices there).

    And I am more than willing to note that Greg is a patent attorney working in (captured in) Big Pharma.

  4. St. John Mountbatten May 14, 2019 9:02 pm

    Anon @2 [T]he non-forced choice of Big Pharma to enter into agreements to supply product at reduced prices in other geographic markets.

    The option is always present to say “No.”… [T]hat option to say “no” to forced lower prices in other geographic regions may mean that those regions simply go without those medicines.

    Thus speaks a man who has no idea what he is talking about. Most of those other jurisdictions have working requirements in their patent laws. If the patented seller does not supply (e.g.) the Chinese market, then the CN government (under CN law) has the authority to allow someone(s) other than the patentee to supply the market. Under no circumstances will “saying ‘no'” mean that the population goes without the drug. Rather, “saying ‘no'” merely means that the patentee goes without the profits from the sale, and those profits go to someone else. Without this “go without” chokepoint to build popular pressure, what is the mechanism by which you imagine that “saying ‘no'” will achieve any sort of end that you wish to achieve?

  5. St. John Mountbatten May 14, 2019 9:09 pm

    Anon @2 US [consumers] are forced into a conscripted and profit-buoying role because of the non-forced choice of Big Pharma to enter into agreements to supply product at reduced prices in other geographic markets… [T]he pressure is UNFAIRLY placed on US consumers to make up that difference… [L]ong enough of going without out would have the populace imploring those other Sovereigns to be more “reasonable” in sharing the target profit margins of Big Pharma, and the US consumer would end up paying a much more fair share.

    N.B. the economic model implicit in talking of “making up” and “fair share.” The author here clearly imagines that there is some lump sum of profit that the patentee expects to make, and that he is content to get it all from one source, or in shares from many, but that once he gets that “fair” sum, he will be content. In this line of thinking, the patentee demands more from the U.S. because he fails to squeeze enough from (e.g.) Japan.

    This is nonsense. No business runs this way. A sane businessman takes as much as he can get from each customer, quite regardless of what he gets from other customers. If X is willing to pay $10 for a widget, then the sane businessman takes $10. If Y is only willing to pay $5 for the same widget, then the businessman takes the $5. Better to make $15 in sales than only $10 or only $5.

    But if Y decides that, on second thought, he is willing to pay $7.50, no sane business man runs after X to say “wait, you can have $2.50 back! I do not need $10 from you.” That is not how business works. Clearly Anon knows nothing about business, and only deals in airy, fairy “theories” about the pharma industry.

  6. xtian May 15, 2019 9:38 am

    St. John Mountbatten @4 – 100% correct and in agreement. I would also add the “working requirements” in India and Canada too. Bottom line – Pharma can enter the foreign market and make some money (because prices set by the local regulatory authority), or not enter the foreign market and have their drug forcible taken from them. Not much of a choice.

    I asked this on another thread, is the complaint that on-patent new medicines are too expensive, or that off-patented drugs are still too expensive?

    Why not seek advice of the insurance market actuary tables? Here’s an example, Spark Therapeutics Sets Price Of Blindness-Treating Gene Therapy At $850,000.
    https://www.forbes.com/sites/matthewherper/2018/01/03/spark-therapeutics-sets-price-of-blindness-curing-gene-therapy-at-850000/#4870f0107dc3 It is a curative one-time treatment!!!

    Is $850K too expensive? I don’t know. But think about the costs to treat/service that child through the course of his or her life because of blindness. If this drug eliminates those costs, then the parity point for the cost of this drug would be the sum of those health care costs.

    Is this a model approach to drug pricing?

  7. Anon May 15, 2019 9:51 am

    Quite to the contrary St. John Mountbatten, I DO know what I am talking about.

    Instead of seeking to throw out the position entirely (one can easily guess as to your own vested position), you would have been much better off by attempting to modify my (still correct) comment with the additional consideration as to why a “just say no” path may be chosen not to be taken.

    Instead, you weaken your position and strengthen mine, even though you actually did have something meaningful to add to the discussion.

    Your second post is complete poppycock. I do not know where you studied economic theory, but you should try to get your money back.

  8. Anon2 May 15, 2019 10:42 am

    @Anon and St. JM

    The cost to access all geographies hits the bottom line of the company, while at the same time the company tries to maximize profits in each and every geography. The mere fact that “price” to the consumer in one geography is greater than in another is not, in and of itself, evidence of “subsidy”. Some geographies impose more costly regulation for access to their markets than others. Some impose price controls, some impose stringent regulations and standards, others have onerous tax burdens.

    Global pharma can do research and development and create new drugs anywhere in the developed world. The fact that some geographies drive up the costs to develop, market, distribute or license drugs in the aggregate, would constitute a drag on profits imposed by that particular geography.

    Now *imagine* two countries with the exact same populations but the first country imposed heavy tax and regulatory burdens while the second country was essentially a free market with IP protected as private property (libs would call a backwater).

    You might ask: “should” citizens of the second country with less onerous regulations and taxes etc. “subsidize” citizens of the first country with those extra costly requirements, by “paying” the same amount for the drugs when the costs are being artificially driven up by the first country?

    You might ask: “should” the company raise the price in the first more costly geography to “fairly” obtain the same “profit margin” in each geography?

    Perhaps one should ask the most coherent business question: what “should” the company do to maximize profits?
    Answer: Charge the greatest amount the market will bear in each jurisdiction.

  9. Gene Quinn May 15, 2019 11:03 am

    Greg @1…

    You say: “The Europeans, Japanese, Australians, Canadians, etc, have no control over prices in the U.S.”

    Clever. While a true statement what you write almost intentionally misinterprets the article and my point — as well as the truth.

    The “foreigners” as you call them control market entry into their own countries. And if pharmaceutical companies want to sell into those countries they must abide by whatever market access requirements are imposed, which often include price controls. So, while those other countries do not demand higher prices in the U.S., because they do have price controls that set drug prices artificially too low to take into account their fair share of R&D and speculative funding costs it is left for Americans to pay the full load.

  10. mike May 15, 2019 11:09 am

    @St. John Mountbatten,

    The analysis has to go deeper than that. You are only considering sales figures, and tossing out all the research and development sunk costs. If you go back to the planning stage, a sane businessman is going to look at his potential market and decide, “it will cost me $10,000 to bring my first widget to market. After that, each widget will cost me $4.99 to produce. There is a population out there that the government will allow me to charge as much as I want for a very limited time, and marketing research suggests I might be able to get 2000 of them to pay as much as $10 for a widget during that time period, while I could get 5000 to buy it at $5. The rest of the population is only allowed to pay $5 a widget, and there might be another 2000 who would buy at that price during the same time period. After that time period, anybody can make and sell the widget, but nobody would be willing to pay more than $5.”

    Given that situation, which is where the drug industry is, it only makes sense to charge $10 a widget to the 2000 that will buy it at that price during your time of exclusivity, to recoup the development costs, because the 4000 that would buy it at $5 certainly wouldn’t be worth your development costs. After your time of exclusivity, anyone else can sell the same widget without worrying about the development costs, so their extra $.01 would be pure profit while you are still struggling to pay the costs incurred by your research if you sold at $5 from the beginning. Of course, if you can obtain even a miniscule amount of profit from people who are not legally allowed to pay enough to contribute significantly to your development costs, it is still worth serving them while obtaining the bulk of your development costs from customers legally permitted to pay a higher price, just to build some brand recognition and try to maintain a profit stream after competitors launch their products.

  11. CP in DC May 15, 2019 11:25 am

    Finally a discussion about pharma that makes sense.

    A few responses to the comments:

    Greg says
    The Europeans, Japanese, Australians, Canadians, etc, have no control over prices in the U.S. There is no aspect of EP, JP, AU, CA (etc) law that you can change that will result in lower U.S. prices.

    Well, guess what the high prices in the US are not only from US companies. No one argues that high prices are only from Pfizer, Merck, Abbott, etc, etc, etc. And that the European, Japanese, Australian, Canadian (etc) companies sell their drugs in the US at lower prices or god forbid “cheap” or the same price they offer in those markets. No, Otsuka, AstraZeneca, Glaxo, and the rest also charge high prices in the US to make up those research costs. Why not? If they can, the will.

    As St. John points out, to say “no” to any market is to cede the market to anyone that will make the drug and make a profit (no cost for R&D, ok some cost). This anyone may be generics or worse government (China I’m looking at you) that allows a company free from infringement (assuming you have a patent in that region) to make and sell the drug. Now all these “alternative providers” are still going to sell it for a profit, but the profit doesn’t have to be so large to cover the sunk costs of R&D. And some don’t do a good job, Ranbaxy for instance.

    Today it was reported that Boehringer settled a case on Abbvie’s humira drug. Humira makes 20 billion a year and 14 billion comes from the US market. This is an example of the problem people are trying to solve and I get it. What the article also mentioned was that Boeringer joined the long list with eight other providers that agreed to settle and enter at a later date in 2023. I think these agreements need a close look, especially after the Actavis Supreme Court case.

    So let the debate rage, but keep in mind the facts before ruining it all. Haven’t we been down this road before, say around 2012.

  12. Greg DeLassus May 15, 2019 12:37 pm

    Gene @9 So, while those other countries do not demand higher prices in the U.S., because they do have price controls that set drug prices artificially too low to take into account their fair share of R&D and speculative funding costs it is left for Americans to pay the full load.

    CP in DC @11 Otsuka, AstraZeneca, Glaxo, and the rest also charge high prices in the US to make up those research costs. Why not? If they can, the will.

    I hope that Mr. Quinn takes note of CP’s #11. CP’s common sense assertion makes my point for me better than I ever did. Yes, “[i]f they can, the[y] will.” Even if (e.g.) Roche could charge more in (e.g.) Switzerland than it it presently allowed to do, it would not then charge less in the U.S. Roche is always going to charge the revenue-maximizing price for the U.S. market—i.e., the highest price that it can get actual consumers (or rather, their insurers) to pay.

    U.S. prices reflect the sum that the U.S. market will bear. Full stop. They are not “artificially” higher because of “artificially” lower Swiss prices. There is no hydraulic connection between the US and Swiss markets, where lowering the price level in one must necessarily raise it in another.

    You cannot lower U.S. prices by getting other jurisdictions to raise their price caps. All that might achieved by raising (e.g.) French price caps is to raise overall profits in the pharma industry. I work in the pharma industry, so I am all in favor of higher pharma industry profits, but I just want everyone to approach this discussion in clarity and accuracy. Raising EP price caps will not lower U.S. prices even one farthing. If you want to lower U.S. prices, you must adjust U.S. law, not (e.g.) U.K. law, or Canadian law, or Japanese law (etc).

  13. Ternary May 15, 2019 12:44 pm

    Rising drug prices over the last decade have nothing to do with the cost of R&D, recouping R&D or re-investing in R&D. A protected drug is an economic resource to be exploited to the max by its owners and distributors. There are other products that have enormous development costs, like airplanes and new semiconductor devices. The cost of a new semi fab is now in the multi-billion dollar range. While real cost of chips go down.

    Furthermore, the already sunk cost of R&D have been recouped multiple times in many drugs, of which the price are being consistently raised. These drugs have become a free ride to profits, where expenses are mainly marketing, advertising, bonuses and stock buy back. The profits are so enormous that patent extension with even a couple of months is worth billions.

    Reality is that the insane pricing structure of our drug market keeps attracting companies to market old drugs here, not new ones. (how many foreign hypertension drugs do you really need? Many fouled with carcinogenic compounds). The notion that the pharma-industrial complex will lower its prices in this market, if only we could force other countries to pay more, is economic nonsense and based on nothing but wishful thinking.

  14. St. John Mountbatten May 15, 2019 1:19 pm

    Anon @7 Quite to the contrary St. John Mountbatten, I DO know what I am talking about.

    Anton Chekhov supposedly said “Don’t tell me the moon is shining; show me the glint of light on broken glass.” You cannot tell me that you know what you are talking about after you have already shown me that you do not. You have enough egg on your face right now. You stop your uninformed gum flapping and wipe the egg off, instead of cracking more cartons over your forehead, shouting all the while “what eggs do you mean?”.

  15. Anon May 15, 2019 3:04 pm

    Sorry St. John, but what it is that you think that you have been shown is only your own errors.

    As it is, I have zero egg on my face.

    I “get” that you don’t like that and I “get” that you may have had points that may have modified the conversation, but your tactics have ONLY put egg on your face.

    You cannot did yourself out of the hole that you have dug yourself into. Leastwise, not by continuing to shovel as you have been doing.

  16. Anon May 15, 2019 3:07 pm

    Ternary,

    Perhaps then you would agree with the view that I have expressed across several recent threads in that an answer would be more readily forthcoming were we to require clarity.

    Some of the same “Pharma” types have objected even to that view.

  17. St. John Mountbatten May 15, 2019 4:54 pm

    Anon @15 As it is, I have zero egg on my face.

    … he said, as a dried ovalbumin sheen glistened on his nose and cheeks, and a small orange stalagtite of yolk, hanging from his chin, gathered itself into a drop.

    (Eat your heart out, Mr. Chekhov.)

  18. CP in DC May 15, 2019 5:40 pm

    Greg @ 12 misinterprets the post

    Basically, all companies regardless of country of origin exploit the US market. Japanese, EU, Australian, etc., etc., they all recoup investment by using the US market. Not one is selling for less.

    The answer is obvious, price match. So the rest of the world charges “what the market will bear” and still make a profit. I don’t want to deny pharma a profit, so I pay them what they believe is a profitable price by matching what other countries pay. I don’t have to make EU, Japan, or the rest pass any law, I just use the free market.

    Obviously, pharma won’t make those substantial profits anymore. And if they need to make up those R&D costs, then they have to distribute them in all the countries they sell. No law necessary and I still get the same effect.

    Just imagine if Humira makes 7 billion in the rest of the world, then the won’t be making 14 in the US alone.

  19. Anon May 15, 2019 8:37 pm

    SJM,

    Try spending just a little time on actual substantive matters (as opposed to patting yourself on the back for nothing).

    Yes, your pro-Pharma bias is glaring.

  20. Xtian May 16, 2019 9:46 am

    I would be curious to know if anyone has done a study which shows a list of the top 50 selling drugs (by volume, not $$) in the U.S. versus the availability of those drugs in other countries? Has anyone seen a study like this?

  21. Greg DeLassus May 16, 2019 11:42 am

    CP @18 Greg @ 12 misinterprets the post

    It is always possible that I am misunderstanding the point you had made, but I wonder if you are not rather misunderstanding my point. I think that we are actually agreeing.

    Basically, all companies regardless of country of origin exploit the US market. Japanese, EU, Australian, etc., etc., they all recoup investment by using the US market. Not one is selling for less.

    See, I agree with this. 100%. No qualifications.

    The answer is obvious, price match. So the rest of the world charges “what the market will bear” and still make a profit. I don’t want to deny pharma a profit, so I pay them what they believe is a profitable price by matching what other countries pay. I don’t have to make EU, Japan, or the rest pass any law, I just use the free market.

    Once again, I agree with this almost entirely. If you want to constrain U.S. prices, then the obvious answer (as you suggest above), is to institute U.S. statutory price caps. As you say, this does not depend on convincing any other sovereign to take an action that they do not want to (or cannot) take. Rather, our sovereign makes the choice to implement U.S. price caps. That can work.

    My only quibble here is that I do not understand what you mean at the end of that paragraph by asserting that you are “us[ing] the free market.” What you are talking about are statutory price caps. Words like “free market” are notoriously slippery, so it is never 100% clear what is intended when someone speaks of the “free market,” but usually the term is intended as the opposite of statutory price controls, which is what you are proposing.

    Obviously, pharma won’t make those substantial profits anymore. And if they need to make up those R&D costs, then they have to distribute them in all the countries they sell. No law necessary and I still get the same effect.

    Wait a minute, what do you mean by “no law necessary”? You just said, only one paragraph before, that you mean to limit U.S. prices to whatever the rest of the world pays. That is going to require a U.S. law. How else do you mean to make drug companies abide by this “U.S. price cannot be higher than ex-US price” rule that you are touting in your immediately previous paragraph?

    Also, how do you intend to make R&D costs distribute among various countries. If Japan has a law in place that says that Johnson & Johnson cannot charge more than $100 for 500 mg of infliximab, then that is the most that J&J can charge. They cannot “distribute” this cost to Japan unless Japan rescinds its law, which brings us back to your immediately previous paragraph where you admitted that you do not intend to “have… Japan… pass any law… .”

    Somewhere here, something does not compute. Can you please clarify what you are meaning to propose?

  22. Greg DeLassus May 16, 2019 11:48 am

    Ternary @13 The notion that the pharma-industrial complex will lower its prices in this market, if only we could force other countries to pay more, is economic nonsense and based on nothing but wishful thinking.

    I agree 100%. Based on some of the responses on this thread, however, it is clear that most do not understand that. Basically, you, me, SJM, and Anon2 appear to have grasped this point. For better or worse, however, this discussion is mostly proving the intuitive superiority of wishful thinking over clear thinking.

  23. CP in DC May 16, 2019 2:09 pm

    Greg @ 21

    You wrote:
    The Europeans, Japanese, Australians, Canadians, etc, have no control over prices in the U.S. There is no aspect of EP, JP, AU, CA (etc) law that you can change that will result in lower U.S. prices.

    I said there is no need for a law (referring to what you wrote) that would be necessary.

    How the policy is instituted may not require a US law, PTO has statutory authority to set it’s own prices, but the law does not establish the price. FDA operates differently. Currently insurance companies (not a sovereign) set the price they pay. How it’s done, well set up a committee and study the method you like the most. It’s possible.

    The market participants can either decide to sell or not, that is a free market. I just decide what price I’m willing to pay or not pay (also part of the free market). Again, no law necessary

    If other countries place artificial caps, then you KNOW they are asking the US to subsidize the research costs. Perhaps the pharma companies should speak to those countries, but for now there is no need as long as the US continues to make up the difference.

  24. St. John Mountbatten May 16, 2019 2:30 pm

    Anon @19 “Try spending just a little time on actual substantive matters (as opposed to patting yourself on the back for nothing).”

    You don’t diminish the appearance of ignorance by also looking peevish. Your credibility hole is only growing deeper. You should stop digging.

    “Yes, your pro-Pharma bias is glaring.”

    As is your anti-pharma bias. We each have our own perspective. What of it?

  25. Anon May 16, 2019 4:17 pm

    Greg has been chastised for misinterpreting CP in DC’s post, and likely now does the same with Ternary @ 13.

    The lead in from Ternary is something that Greg — as a (captured) Big Pharma person — cannot be said to be in agreement with:

    Rising drug prices over the last decade have nothing to do with the cost of R&D, recouping R&D or re-investing in R&D.

    Instead, Greg acts like some other point makes the entire view expressed by Ternary to be “in accord” with the overall position of the obviously-Big-Pharma-biased posters across these recent threads.

    That’s more than a bit disingenuous.

  26. Greg DeLassus May 16, 2019 4:54 pm

    Ternary @13 Rising drug prices over the last decade have nothing to do with the cost of R&D, recouping R&D or re-investing in R&D.

    “Nothing” seems too strong a word to me. Surely some of the price increase has to do with R&D. I think, however, that you would be on safe ground to say that “surprisingly little” of the price increases can be accounted by R&D. After all, if Daraprim can see 56-fold price increase, then clearly it is possible for prices to increase without any sort of R&D justification.

    Pharma prices (like all prices, basically) are a function of supply and demand. So long as buyers are willing to pay increasing prices, then the sellers will continue to hike the prices. All prices in a free market naturally migrate to the point where the supply and demand curves meet. If we want lower market prices, we must either increase supply or lower demand. Changing the prices in some other (e.g., Korean, French, Australian) market, however, does not affect either the U.S. supply or the U.S. demand, and will therefore never affect the U.S. market price.

  27. Greg DeLassus May 16, 2019 5:04 pm

    CP @23 Currently insurance companies (not a sovereign) set the price they pay… The market participants can either decide to sell or not, that is a free market. I just decide what price I’m willing to pay or not pay (also part of the free market).

    If I am understanding you correctly (please correct me if I misunderstand), you are proposing that health insurance companies get together and form a buyer’s collective to negotiate down drug prices. I expect that this would succeed in lowering prices if the insurance companies could stick to it, but what makes you think that they can?

    Insurance companies already have an incentive to form such a buyer’s collective, and yet they do not. That tells me that there is some obstacle in place to prevent it. I think that you will find that actual legislation is necessary to clear that obstacle. Mere exhortation will not suffice.

  28. Anon May 16, 2019 9:41 pm

    SJM,

    Heed your own advice.

    The “Malcolm Mooney Accuse Others” meme does not work for him and it certainly does not work for you.

  29. Anon May 17, 2019 8:37 am

    SJM quips:

    As is your anti-pharma bias. We each have our own perspective. What of it?

    What exactly is my anti-pharma bias?

    That I want clarity?

    That I do not want forced altruism on my part as a US consumer to foot the chosen lower margins so that Big Pharma can push into other geographic regions?

    That I don’t want Big Pharma to mess with natural secondary markets for the very items that they have already chosen to put into the stream of commerce?

    If that is “anti,” then you are coming to have to come up with a much better game plan in your attempt to smear me.

    That’s “what of it.”

  30. Anon May 17, 2019 8:38 am

    “then you are coming to have to”

    Should read

    “then you are going to have to”

  31. Anon May 17, 2019 8:48 am

    Two other Chekhov quotes for consideration:

    “Doctors are the same as lawyers; the only difference is that lawyers merely rob you, whereas doctors rob you and kill you too.”

    “Love, friendship and respect do not unite people as much as a common hatred for something.”

  32. CP in DC May 17, 2019 9:22 am

    Greg @ 27

    You misunderstand my post again.

    You posted:
    you are proposing that health insurance companies get together and form a buyer’s collective to negotiate down drug prices.

    No, I did not.

    I suggest using market share and market power to affect pricing. These are legal and Walmart and Amazon are good examples of such actors.

    What YOU suggest is the collective (a word not found in my post). Collusion by private parties to fix pricing is an antitrust violation.

    While I have enjoyed our exchange of ideas, I see we have deviated from the original topic and turned into economics. Be forewarned that I will not indulge in another reply on this thread.

  33. Anon May 18, 2019 1:12 pm

    I will note (again) that Greg is NOT being inte11ectually honest concerning the discussion points here.

    Taking his comment from post 22: “Based on some of the responses on this thread, however, it is clear that most do not understand that. Basically, you, me, SJM, and Anon2 appear to have grasped this point. For better or worse, however, this discussion is mostly proving the intuitive superiority of wishful thinking over clear thinking.

    I would posit that his choice to align what he views as merely PRO-Big Pharma as being “clear” as opposed to “wishful” and those whom he deigns as having “grasped the point” in contrast to those who have not is disingenuous (at best).

    Quite in fact, Greg, SJM, and Anon2 are the ones who have clearly NOT “grasped the point.” While Anon2 typically has a better grasp of things, at least the other two have clear bias that impedes their grasp.

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