Market-oriented people have long noted that the US medical consumer is funding cheaper drugs for the entire world.
If we wanted a system that's more equitable, we could create a law that sets the maximum price for medicine in the US at some multiple of what's charged abroad.
For example: we could say that it's illegal to charge a US person more than 2x what you charge for the drug anywhere else in the world.
This would do two things: it would bring down the cost for US consumers, and it would increase the cost for consumers abroad -- effectively reducing the free-rider effect we currently see in Europe.
I have heard it a lot but I'm not sure how true that is. Given all the specifics of essentially abuse/corruption (whatever you might call it) by US medical industry it's hard to believe their claim of subsidizing the world. There's probably some of that going on but I find it unlikely to be as big as claimed.
> we could create a law that sets the maximum price for medicine in the US at some multiple of what's charged abroad.
Why create more laws and complexity? Why not simply repeal the laws that prohibit importation of drugs and possibly also refuse to enforce private contracts prohibiting reimportation? The reason drugs are cheaper in Canada and Europe than in America is because of American laws that prevent importation.
“Market-oriented people have long noted that the US medical consumer is funding cheaper drugs for the entire world.”
They have claimed that but I have my doubts it’s true. It seems more likely that they make good profits outside US and obscene profits in the US. And why should the US subsidize other counties? Maybe we should also pay 200k for a Honda Civic so other countries have cheaper cars?
> This would do two things: it would bring down the cost for US consumers, and it would increase the cost for consumers abroad -- effectively reducing the free-rider effect we currently see in Europe.
In most European countries, a government regulator fixes the prices with industry. It's not freeloading in that case, they have the choice between negotiating a fair price or not having access to the market at all. And because they're not idiots, they choose to have access to the market.
Most of that money doesn't go to fund R&D and go back to their shareholders anyway :-)
Charging exploitative prices for necessities of life slowly will be merged into a larger body of unfair and deceptive practices. Charging someone 50% or 90% more for a lifesaving treatment because they're not on the right 'club'-- some enterprising lawyer somewhere will eventually pick up the right collection of cases to demonstrate this isn't a proper way to make a buck, under the law of most U.S. states.
This is wrong. The companies are making profits abroad (example, insulin costs $6 to produce and in Canada they sell for $36). If you are claiming American consumers are paying for research via high drug prices, this is wrong too, since most of the research is funded by the government via universities and other orgs. In other words, US citizens AND the rest of the world can have low drug costs.
"what's charged abroad" includes poor countries that will never be able to afford prices comparable to the US. Companies are able to make money in those markets too, as long as the marginal cost of production is lower than the price they can ask there. Prohibiting this doesn't look very market-oriented to me.
I don't think that implementing something that would raise the price for non-US citizens would do anything positive, mainly if I'm understanding you it will disproportionately affect low-income individuals in Canada
Separately, the Trump administration is pursuing a regulation that would tie what Medicare pays for drugs administered in doctors’ offices to lower international prices.
>If we wanted a system that's more equitable, we could create a law that sets the maximum price for medicine in the US at some multiple of what's charged abroad.
Should people in third world countries being excluded from the chance of receiving lifesaving drugs just because they happen to live in a place that isn't as economically successful as the US? Maybe I could be convinced if you pegged the prices to some measure of local purchasing power, but almost any proposal that amounts to poor people not being able to afford medical care in the name of capitalism is verging on immoral in my opinion.
EDIT: It is disappointing that I get downvoted on HN for basically stating the controversial opinion that "people shouldn't die from being poor".
Or maybe that's just an excuse pharma companies use because they'd like to have their cake and eat it, too. If they didn't actually want to sell their drugs for pennies on the dollar in some countries, they wouldn't.
If they are "forced" to sell there, it's only because of two reasons:
1) the US companies started selling there of their own free will, and after their patents expired in those countries, other companies were free to use the formula
2) Other companies would have created the same drugs with or without their patents, and the American companies would've lost all of that market share/brand image in that country. And I bet the competitors would do it for a tiny fraction of the faux R&D costs Big Pharma likes to claim for inventing a new drug.
Besides, the idea that if a company patents something that means it's the only one that could have ever invented that thing needs to die already. The "first to file" patent system that has been adopted in most major countries because of big companies' lobbying is another dead-giveaway that this whole idea is bogus. Why would you have a "first to file" if you didn't have multiple people inventing the same thing at the same time.
Many people or groups of people can come up with the same invention around the world roughly at the same time. Often, those alternatives don't become popular because their papers are in their native tongue and they lack investment, but the "invention" was already made.
"The Canadian medicine supply is not sufficient to support both Canadian and U.S. consumers," the letter states. "The supply simply does not, and will not, exist within Canada to meet such demands."
Theoretically drug companies can close off the entire market or increase supply. They’re prohibited from raising prices in the market. Since marginal cost is so low, I expect that they’ll keep selling st increased volumes.
It’s a bit odd that the US is taking this tack instead of just regulating drug prices domestically. But there’s a lot of odd things in the health system.
It's kind of ridiculous that the US's response to its own inability to negotiate drug prices is to ... pawn its citizens off on Canadian supply without resolve the root cause.
Sure, Canada could make a positive spin for this, but it's possible it puts their pricing negotiation with big Pharma at risk.
All in all, a cowardly "solution" that will likely result in all sorts of unintended consequences.
Basic economics 101: increased demand will drive up prices. Higher prices will induce new competitors into the market, increasing supply and lowering prices.
That is, of course, how an actual free market works. Healthcare is far from a free market, so instead of embracing the opportunity for growth of the Canadian economy, we get responses like the one above.
Fun fact, Canada spends 1.76% of GDP on pharmaceuticals: https://data.oecd.org/healthres/pharmaceutical-spending.htm. The U.S. spends 2.04%. Cutting pharmaceutical prices to Canadian levels of spending would save about $55 billion per year. Which is not nothing, but it would reduce health care spending by just 1.6%.
If you look at dollars-per-capita, the difference is $389. That doesn't only reflect the price of the drugs, it also reflects the fact that Americans might simply require more drugs than Canadians. For example, obesity rates drive the need for drugs for blood pressure, cholesterol, etc. 25% of Canadians are obese versus 34% of Americans: https://www150.statcan.gc.ca/n1/pub/82-625-x/2011001/article.... That means we would spend a lot more on obesity-related drugs even if they cost the same as in Canada.
Recently, PhRMA has been buying a bunch of promoted tweets in my twitter feed claiming that 10% of drugs outside of the US are counterfeit. I'm sure the timing is completely coincidental.
Based on the high level of regulatory capture in the mining and telecom industries in Canada, it doesn't seem like it would be particularly expensive for drug companies to lobby the federal government for stricter export restrictions on drugs.
What's to stop drug companies from prohibiting re-export from Canada as part of their sale/negotiation with Provinces? This is an absurd idea. Canada gets lots of its drugs from American companies, why on earth would they permit re-export and undercut themselves? Refusing to address the real problems in the US market and relying on Canadian provinces to negotiate bulk discounts on behalf of American states is almost surreal.
That drug pricing is America's problem, not Ontario's, is a phrase I never thought I'd type out haha.
I should probably do the research for myself, but is there a simple explanation for why it's easier to allow importation from Canada than to lower domestic prices in the US?
Prices are low in Canada because they have the negotiating power of the entire country behind their single payer system driving prices down. To do the same in the US would require taking on the very powerful (because they have huge piles of cash from drug prices being so high) pharma lobby and getting it past the rabidly pro business Republican party. The only real way to do it would be a) move to a more centralized insurance system to negotiate prices (did you know Medicare the largest insurance in the US can't legally negotiate the prices it will pay for drugs?) or b) have legal limits on the prices of drugs set by fiat.
I'm dubious this is going anywhere, it seems like a ploy to get some talking points for the election in 2020.
Canada has lower drug prices for the same reason Wal-Mart has low prices--exercise of monopsony power: https://www.becker-posner-blog.com/2009/12/should-the-govern.... Because the government can set prices for such a huge proportion of the demand, it can drive the price of a product from suppliers to below market prices.[1]
That may or may not be a good idea. But the reason it's easier to allow imports from Canada, instead of doing what the Canadians do, is politics. The U.S. has a long history of price regulation. After FDR, the government regulated everything from the price of milk to what airlines could charge for a ticket between Chicago and New York. That regime was almost uniformly disastrous, and starting with Jimmy Carter there was a bi-partisan move to eliminate price regulation all over the economy. So there is a huge political opposition in the U.S. to anything that smacks of price regulation.
Allowing imports from Canada effectively outsources the regulatory exercise of price setting to the Canadian government. So the U.S. can achieve the effect of price regulation, without having to actually admit that it's engaging in price regulation.
> The word "rent" does not refer specifically to payment on a lease but rather to Adam Smith's division of incomes into profit, wage, and rent.[4] The origin of the term refers to gaining control of land or other natural resources.
Our current regulatory environment sets up a situation where you can only buy medication from either one manufacturer, or a limited set of manufacturers, who then charge whatever they want.
But, going into more detail is very political, and much more political than I think is appropriate for a Hacker News discussion.
The Patented Medicine Prices Review Board [1] regulates drug prices in Canada. Politically it's easier for the US Government to look at band-aid solutions, such as this, rather than address the issue through regulation.
I am not an expert so this is an uneducated guess, but probably because it's easier to allow competition than to force lower prices on a market riddled with regulatory capture.
Maine had a law allowing these imports (and imports from a few other countries) that was struck down as a violation of federal supremacy. While it was in effect, though, it was certainly appreciated by Mainers.
As a Canadian, I will press my representatives as hard as possible to prevent this from happening. It can only impact our healthcare system negatively -- no thanks.
As a Canadian this is really weird. US, the wealthiest and most powerful country in the world, will now grey-market import/smuggle drugs from freaking Canada. All because the US, land of exception-ism and capitalism, couldn't stop pricing gouging. Now US is expecting Canada to supply the entire US' medical drugs' demand. When did Canada become responsible for the well-being of US citizens?
This is akin to asking Hong Kong to supply the entire China's demand for baby formula. This did not end well for HK.
Agree with you, this is likely all bad for Canada. (Sorry to be a bad neighbor mate)
But, the discussion is likely a net good all around. Just in this thread I see lots of new info. Many things I did not know about the US and Canada and how drugs work economically.
Better informed people is likely to be a good thing.
There are many generic drugs that I'm aware of being manufactured in India for consumption in the US. They are required to follow all the FDA manufacturing standards for import. But there are still some quality issues at this time.
I have considered this. While many people worship regulations, I'm willing to take the "risk" of using foreign medication.
I wish I could take the same risk when I get hydrocortisone, but instead I need to pay a physician for a prescription, a pharmacist to fill, and the clinic that stores everything.
Lots of middlemen for something that should be sold on Amazon.
As an American this is pretty embarrassing. Somehow trying to absorb the benefits of another government's regulation and billing it as creating a "freer" market is more popular than solving the problem here? I don't buy it, I can't imagine a lot of other people really do either. I'm also not sure that it would even work. That is supposing Canada wouldn't respond to lukewarm hostility with measures to counter this. It feels like we're civically brain-dead. Said sitting on a stash of decade old epi-pens.
All this will do, unfortunately, is cause drug companies to raise prices in Canada. There's no way that drug companies will allows this loss of revenues from the US.
Why not Mexico also? I'm guessing racism or people will say they are fake drugs. Since I moved to Mexico about 10 months ago my health problems have been treated with Mexican-bought medication only and my symptoms have not gotten any worse. Except for when I run out and need to get more.
I mean there are places like Walmart, some pretty large pharmacy chains, etc. It seems like people would not tolerate a significant amount of counterfeit medication.
OK, so I live in the US. And I take lots of drugs. Some of which are priced obscenely. So I buy some drugs through online pharmacies, and it's mailed to me. Mostly from Asia.
How is this different than the existing importation of generic drugs from places like India? Is it that this is cutting out the US middleman in the transaction?
Every time I watch or read a debate on US healthcare issues the debaters conveniently ignore a reality that every single entrepreneur dealing with physical products is keenly aware of: Cost drivers
Doing business in the US is very expensive. In the case of pharmaceuticals we have high regulatory costs and, perhaps worst than that, high legal costs.
If you want to develop and sell a medical device in the US you have to accept the fact that it will take a ton of time and money to deal with the FDA. Not trivial, at all, even for relatively simple products (say, basic hearing aids).
Worse than that, once you enter the market you have to expect the near certainty of having to face one or more nasty lawsuits. Medical product manufacturers, be it drugs or hardware, get pounded with lawsuits. From someone manufacturing a simple cane to prescription drugs. Lawsuits are so common most companies have complete legal departments on staff.
Given that reality, yes, definitely yes, there will be a difference in cost when selling drug A in the US vs. Canada, Peru or Italy. No question about it.
Yet, during debates between politicians all we hear about is how changing health insurance in one direction or another will reduce healthcare costs.
That's just nonsense. It has to start with tort reform and educational loan reforms that reduce the cost of education. A doctor graduating with $300K in debt has no choice but to charge very high fees for his or her services.
Now fill a hospital with people with multi-100K student debt and see if you can lower operating costs. Add to that an expensive regulatory framework and even more expensive legal landscape and the answer is simple: You can't. It doesn't matter how you twist and contort health insurance. If the underlying cost structure is high, no amount of magic hand waving is going to make things better.
That's our problem.
There's an asymptotic lower limit to what medical professionals have to earn in order to have a life. And there's another asymptotic limit to what the entire medical industry service and supply chain, from component suppliers to OEM's, doctors and hospitals have to charge in order to deal with regulatory and legal costs. Pretending none of this exists while talking about health insurance is kind of silly.
If you bring prescription drugs in from abroad, it will not take long until a MOAL (Mother of All Lawsuits) costs someone a ton of cash and imported drugs become just as expensive as anything else gotten locally.
Nobody seems interested in addressing the real issues, probably because he political value isn't as clear as beating on the low hanging fruit, even when this will fix nothing.
Ever wonder why we've been talking about healthcare reform for decades and nothing ever really changes? Well, now you know.
[+] [-] nostromo|6 years ago|reply
If we wanted a system that's more equitable, we could create a law that sets the maximum price for medicine in the US at some multiple of what's charged abroad.
For example: we could say that it's illegal to charge a US person more than 2x what you charge for the drug anywhere else in the world.
This would do two things: it would bring down the cost for US consumers, and it would increase the cost for consumers abroad -- effectively reducing the free-rider effect we currently see in Europe.
[+] [-] tmd83|6 years ago|reply
[+] [-] dpatru|6 years ago|reply
Why create more laws and complexity? Why not simply repeal the laws that prohibit importation of drugs and possibly also refuse to enforce private contracts prohibiting reimportation? The reason drugs are cheaper in Canada and Europe than in America is because of American laws that prevent importation.
[+] [-] Ididntdothis|6 years ago|reply
They have claimed that but I have my doubts it’s true. It seems more likely that they make good profits outside US and obscene profits in the US. And why should the US subsidize other counties? Maybe we should also pay 200k for a Honda Civic so other countries have cheaper cars?
[+] [-] thatfrenchguy|6 years ago|reply
In most European countries, a government regulator fixes the prices with industry. It's not freeloading in that case, they have the choice between negotiating a fair price or not having access to the market at all. And because they're not idiots, they choose to have access to the market.
Most of that money doesn't go to fund R&D and go back to their shareholders anyway :-)
[+] [-] drtillberg|6 years ago|reply
[+] [-] mempko|6 years ago|reply
[+] [-] danmaz74|6 years ago|reply
[+] [-] Waterluvian|6 years ago|reply
[+] [-] stereographic|6 years ago|reply
[+] [-] ma2rten|6 years ago|reply
Separately, the Trump administration is pursuing a regulation that would tie what Medicare pays for drugs administered in doctors’ offices to lower international prices.
[+] [-] slg|6 years ago|reply
Should people in third world countries being excluded from the chance of receiving lifesaving drugs just because they happen to live in a place that isn't as economically successful as the US? Maybe I could be convinced if you pegged the prices to some measure of local purchasing power, but almost any proposal that amounts to poor people not being able to afford medical care in the name of capitalism is verging on immoral in my opinion.
EDIT: It is disappointing that I get downvoted on HN for basically stating the controversial opinion that "people shouldn't die from being poor".
[+] [-] mtgx|6 years ago|reply
If they are "forced" to sell there, it's only because of two reasons:
1) the US companies started selling there of their own free will, and after their patents expired in those countries, other companies were free to use the formula
2) Other companies would have created the same drugs with or without their patents, and the American companies would've lost all of that market share/brand image in that country. And I bet the competitors would do it for a tiny fraction of the faux R&D costs Big Pharma likes to claim for inventing a new drug.
Besides, the idea that if a company patents something that means it's the only one that could have ever invented that thing needs to die already. The "first to file" patent system that has been adopted in most major countries because of big companies' lobbying is another dead-giveaway that this whole idea is bogus. Why would you have a "first to file" if you didn't have multiple people inventing the same thing at the same time.
Many people or groups of people can come up with the same invention around the world roughly at the same time. Often, those alternatives don't become popular because their papers are in their native tongue and they lack investment, but the "invention" was already made.
[+] [-] tastygreenapple|6 years ago|reply
[deleted]
[+] [-] refurb|6 years ago|reply
"The Canadian medicine supply is not sufficient to support both Canadian and U.S. consumers," the letter states. "The supply simply does not, and will not, exist within Canada to meet such demands."
[1]https://www.cbc.ca/news/canada/toronto/american-demand-canad...
[+] [-] prepend|6 years ago|reply
Theoretically drug companies can close off the entire market or increase supply. They’re prohibited from raising prices in the market. Since marginal cost is so low, I expect that they’ll keep selling st increased volumes.
It’s a bit odd that the US is taking this tack instead of just regulating drug prices domestically. But there’s a lot of odd things in the health system.
[+] [-] r00fus|6 years ago|reply
Sure, Canada could make a positive spin for this, but it's possible it puts their pricing negotiation with big Pharma at risk.
All in all, a cowardly "solution" that will likely result in all sorts of unintended consequences.
[+] [-] unknown|6 years ago|reply
[deleted]
[+] [-] b_tterc_p|6 years ago|reply
[+] [-] clarkmoody|6 years ago|reply
That is, of course, how an actual free market works. Healthcare is far from a free market, so instead of embracing the opportunity for growth of the Canadian economy, we get responses like the one above.
[+] [-] rayiner|6 years ago|reply
If you look at dollars-per-capita, the difference is $389. That doesn't only reflect the price of the drugs, it also reflects the fact that Americans might simply require more drugs than Canadians. For example, obesity rates drive the need for drugs for blood pressure, cholesterol, etc. 25% of Canadians are obese versus 34% of Americans: https://www150.statcan.gc.ca/n1/pub/82-625-x/2011001/article.... That means we would spend a lot more on obesity-related drugs even if they cost the same as in Canada.
[+] [-] xxpor|6 years ago|reply
[+] [-] ProAm|6 years ago|reply
[+] [-] e1ven|6 years ago|reply
Wouldn't mass-importation from Canada encourage drug companies to raise Canada's pricing to match US levels?
That seems like something Canada wouldn't be particularly fond of.
[+] [-] CoolGuySteve|6 years ago|reply
[+] [-] Scoundreller|6 years ago|reply
[+] [-] arcticbull|6 years ago|reply
That drug pricing is America's problem, not Ontario's, is a phrase I never thought I'd type out haha.
[+] [-] mwambua|6 years ago|reply
[+] [-] rtkwe|6 years ago|reply
I'm dubious this is going anywhere, it seems like a ploy to get some talking points for the election in 2020.
[+] [-] rayiner|6 years ago|reply
That may or may not be a good idea. But the reason it's easier to allow imports from Canada, instead of doing what the Canadians do, is politics. The U.S. has a long history of price regulation. After FDR, the government regulated everything from the price of milk to what airlines could charge for a ticket between Chicago and New York. That regime was almost uniformly disastrous, and starting with Jimmy Carter there was a bi-partisan move to eliminate price regulation all over the economy. So there is a huge political opposition in the U.S. to anything that smacks of price regulation.
Allowing imports from Canada effectively outsources the regulatory exercise of price setting to the Canadian government. So the U.S. can achieve the effect of price regulation, without having to actually admit that it's engaging in price regulation.
[1] https://en.wikipedia.org/wiki/Patented_Medicine_Prices_Revie...
> The Review Board establishes the maximum prices that can be charged in Canada for patented drugs.[1][2]
[+] [-] gwbas1c|6 years ago|reply
From https://en.wikipedia.org/wiki/Rent-seeking
> The word "rent" does not refer specifically to payment on a lease but rather to Adam Smith's division of incomes into profit, wage, and rent.[4] The origin of the term refers to gaining control of land or other natural resources.
Our current regulatory environment sets up a situation where you can only buy medication from either one manufacturer, or a limited set of manufacturers, who then charge whatever they want.
But, going into more detail is very political, and much more political than I think is appropriate for a Hacker News discussion.
[+] [-] alex_anglin|6 years ago|reply
[1]http://pmprb-cepmb.gc.ca/home
[+] [-] MegaButts|6 years ago|reply
[+] [-] flyingfences|6 years ago|reply
[+] [-] btbuildem|6 years ago|reply
[+] [-] guardiangod|6 years ago|reply
This is akin to asking Hong Kong to supply the entire China's demand for baby formula. This did not end well for HK.
Edit: Oh sure, down-vote me into oblivion.
[+] [-] ddingus|6 years ago|reply
Agree with you, this is likely all bad for Canada. (Sorry to be a bad neighbor mate)
But, the discussion is likely a net good all around. Just in this thread I see lots of new info. Many things I did not know about the US and Canada and how drugs work economically.
Better informed people is likely to be a good thing.
[+] [-] baybal2|6 years ago|reply
In any normal country private importation of whatever you want not explicitly prohibited is not a state's f*ing business.
[+] [-] pkaye|6 years ago|reply
https://www.statnews.com/2019/07/22/indian-pharmaceutical-in...
[+] [-] massel|6 years ago|reply
[+] [-] HNisCurated|6 years ago|reply
I wish I could take the same risk when I get hydrocortisone, but instead I need to pay a physician for a prescription, a pharmacist to fill, and the clinic that stores everything.
Lots of middlemen for something that should be sold on Amazon.
[+] [-] sunshinelackof|6 years ago|reply
[+] [-] docker_up|6 years ago|reply
[+] [-] ilaksh|6 years ago|reply
I mean there are places like Walmart, some pretty large pharmacy chains, etc. It seems like people would not tolerate a significant amount of counterfeit medication.
[+] [-] beepboopbeep|6 years ago|reply
[+] [-] mirimir|6 years ago|reply
[+] [-] testplzignore|6 years ago|reply
[+] [-] crb002|6 years ago|reply
[+] [-] neonate|6 years ago|reply
[+] [-] robomartin|6 years ago|reply
Doing business in the US is very expensive. In the case of pharmaceuticals we have high regulatory costs and, perhaps worst than that, high legal costs.
If you want to develop and sell a medical device in the US you have to accept the fact that it will take a ton of time and money to deal with the FDA. Not trivial, at all, even for relatively simple products (say, basic hearing aids).
Worse than that, once you enter the market you have to expect the near certainty of having to face one or more nasty lawsuits. Medical product manufacturers, be it drugs or hardware, get pounded with lawsuits. From someone manufacturing a simple cane to prescription drugs. Lawsuits are so common most companies have complete legal departments on staff.
Given that reality, yes, definitely yes, there will be a difference in cost when selling drug A in the US vs. Canada, Peru or Italy. No question about it.
Yet, during debates between politicians all we hear about is how changing health insurance in one direction or another will reduce healthcare costs.
That's just nonsense. It has to start with tort reform and educational loan reforms that reduce the cost of education. A doctor graduating with $300K in debt has no choice but to charge very high fees for his or her services.
Now fill a hospital with people with multi-100K student debt and see if you can lower operating costs. Add to that an expensive regulatory framework and even more expensive legal landscape and the answer is simple: You can't. It doesn't matter how you twist and contort health insurance. If the underlying cost structure is high, no amount of magic hand waving is going to make things better.
That's our problem.
There's an asymptotic lower limit to what medical professionals have to earn in order to have a life. And there's another asymptotic limit to what the entire medical industry service and supply chain, from component suppliers to OEM's, doctors and hospitals have to charge in order to deal with regulatory and legal costs. Pretending none of this exists while talking about health insurance is kind of silly.
If you bring prescription drugs in from abroad, it will not take long until a MOAL (Mother of All Lawsuits) costs someone a ton of cash and imported drugs become just as expensive as anything else gotten locally.
Nobody seems interested in addressing the real issues, probably because he political value isn't as clear as beating on the low hanging fruit, even when this will fix nothing.
Ever wonder why we've been talking about healthcare reform for decades and nothing ever really changes? Well, now you know.