[a_puppy]

I don't think this article's analysis makes sense.

If pharma companies lose revenue, they have to cut something. Presumably the intention is to force them to cut profits. I found this analysis of global pharma industry profitability: https://www.ispor.org/docs/default-source/euro2023/poster-is... They found that the average profit margin across the pharma industry was around 20%. So even if pharma companies cut their profits to zero, prices would only drop 20%, right?

And even the idea of cutting profits to zero isn't realistic. Pharma investment is similar to venture capital; investors make risky bets in the hopes that a few of them will pay off big. Why would investors agree to take that risk if they get zero profit in return?

Some people propose things like "the government should fund drug development". OK, that's a fine proposal; it has pros and cons. But that's a very different proposal than "the government should institute price caps on privately-developed drugs". Don't try to justify the latter proposal by conflating it with the former.

[complaintdept]

Pharma spends more on marketing drugs than developing them. If marketing drugs is prohibited, especially through dubious kickback schemes with doctors and hospitals, there'd be a lot more room for lowering prices.

The profit motive really doesn't deliver great outcomes in medicine, between the enormous information asymmetry between patient and doctor (and even other doctors), doctors with perverse financial incentives, and believing (whether it's true or not) that your life or wellbeing are on the line if you're wrong, it's ideal for all sorts of chicanery. (/rant)

[LorenPechtel]

I do agree there would be a benefit from removing the marketing. But the benefit would be little more than what is spent on said marketing.

It comes back to the same thing--where is the money going to come from? Few medicines actually have a high per-unit production cost. The cost is usually mostly amortizing R&D and the production equipment. (And looking at R&D overall--you have to count the spending on the failures as well as on the successes.) Sell fewer pills and you don't cut that R&D cost, you just distribute it across fewer pills.

[a_puppy]

Hmmm, the marketing question is complicated and I'm not sure what to think.

From a profit point of view, presumably the advertising department pays for itself; in other words, the advertising department generates money for the R&D department, rather than taking money from the R&D department.

But, the advertising presumably increases the number of people taking the drug. If it's teaching patients/doctors about a valuable new drug that will make peoples' lives better, then it's a social good. But if it's persuading patients/doctors to buy the drug unnecessarily, then it's a waste.

(Also, sometimes two pharma companies have competing drugs that are basically equivalent. So they get trapped in a "Red Queen's race" where they both spend money on advertising to try to gain market share. In the end they've both spent a bunch of money on ads and ended up back where they started. For those cases, banning marketing would be a clear win.)

Edit: Also, keep in mind that "ban/regulate pharma advertising" is a different proposal than "medicare negotiation".

[lathiat]

In Australia, prescription drugs generally cannot be advertised to consumers. Additionally, prescriptions for all drugs are written in the generic drug name form and not the branded form.

That said, where this currently seems to fall apart is the pharamacies.. most only stock a single "brand" and pricepoint for many drugs, two at most. Most pharamcies aren't online so you can't easily compare prices. In practice, I have frequently observed over many different prescriptions a price different of 1-2x between pharamcies in the same area for the exact same thing and dosage. Additionally, the way we fill scripts here you don't even get the price until you go to pay and theyve already labelled your box with your script, etc.

There's also largely no pricing on the shelves, even if you can see the behind the counter ones.

The only thing that saves us, is that "many" but not all drugs are subsidised by our public health care and the government negotiates the price. But for any non-subsidised drug it's open season and also much of the pricing is "per dispense" and not at all related to the drug quantity.

e.g. 4x10mg or 28x5mg of the same drug has the same price.

Also recently the much-publicised Ozempic which is used for weightloss and diabetes which is $150/dose here, because the price is fixed by that government negotiated price for diabetic patients but off-label prescribers get the same price even when not subsised by the government and they actually have to pay the full $150. They launched the literal exact same drug for weight loss as "Wegovy" but they vary the recommended dosages a little so that in practice you can't cross-fulfill the prescription. The exact same 1mg is $150 when sold as Ozempic and $250 when sold as Wegovy :) And for some straight reason the weight loss dose is "2.8mg" but the diabetic doses are 1mg and 3mg.

[Loughla]

I hear that a lot, but have never seen numbers. Googling it doesn't help me either. Would you know of any resources?

[sudosysgen]

This is especially true since marketing drugs is essentially a negative sum game, it's banned in most developed countries with no discernible drawback.

[AnthonyMouse]

> Some people propose things like "the government should fund drug development". OK, that's a fine proposal; it has pros and cons.

Not only that, it's complementary to private investment. Did public investment produce a valuable new drug? Great! Make sure the law doesn't allow anyone to patent drugs developed entirely with public funding so it immediately becomes a cheap generic.

But if a different drug is developed with private financing under the assumption that they'll get returns during the patent term to justify the cost and risk, well, that's why they're doing it. And paying a higher price for that drug is better than not having it all, or else why is anybody willing to pay the higher price for it?

[schneems]

Profit is revenue minus costs. How many of those “costs” are things like private planes for executives? How much for reps that visit doctors and give out free samples and swag and tickets to Cancun?

Famously some major tech companies aim to have zero profit as they want to reinvest everything back in the company. It doesn’t mean they don’t have any wiggle room to drop prices.

[rileymat2]

But doesn’t the high price come, largely from government blessed IP creating an artificial monopoly? Controlling prices in the context of a created monopoly makes some sense to me.

But yes, balancing incentives is critical.