Cheap Meds From Canada, Eh?

Price controls have a price of their own.


"For the first time in HHS history, we are open to importation," Secretary of Health and Human Services (HHS) Alex Azar told reporters in July. The Trump administration hopes this policy change will lead to cheaper prescription drugs for American consumers. Alas, it's not quite that simple.

The "importation" Azar was referring to, sometimes called "reimportation" or "parallel trade," involves importing drugs to the U.S. that are already available here. That doesn't make a lot of sense until you consider that the Canadian government, a prime target market for parallel trade, negotiates prices with pharmaceutical manufacturers, while in the United States prices are set by a complex interaction between drug makers, insurance plans, and Medicare bureaucrats. The result is that a manufacturer can sell the same cholesterol medication, made in the same type of factory under nearly identical conditions, for more in the U.S. than it can in Canada. To Americans, it can appear that Canadians are better served by their health care system than we are by ours.

While the Food and Drug Administration (FDA) has historically looked the other way when patients import personal amounts of noncontrolled substances, importing any drug from another country's domestic market in wholesale quantities is currently unlawful. The HHS and the FDA argued for years that parallel trade would expose American consumers to counterfeiting and contamination. Drugmakers have made the same argument, though they also have other considerations.

Canadian drug price controls exist because the U.S. doesn't have them. The same could be said for price controls throughout the Organisation for Economic Co-operation and Development (OECD), which are even more stringent than Canada's. Americans indirectly pick up the slack. In 2018, we imported 18.2 percent of prescription drugs globally, more than twice as much as the next largest importer. We also paid the highest prices and spent the most tax dollars on research and development. Put another way, countries with socialized medicine aren't driving or paying for innovation; we are.

American consumers can't do anything about free-riders in the OECD, which is probably why so many seem eager to join them. But even though HHS has supposedly come around to the idea, Canadians know that their discount depends on us paying full freight. STAT News reported in July that "Canadian organizations representing hospitals, pharmacies, distributors, physicians, and patients" have asked the Canadian government to block parallel trade to the U.S. if it threatens the country's domestic drug supply.

If the Canadian government or provincial governments can't or won't block exports to the U.S., Reason contributing editor and Hoover Institution economist David Henderson has suggested that parallel trade might lead to drug shortages in Canada, which could lead Canadians to revolt against the very price controls that make their market appealing to American consumers. Pharmaceutical companies could also negotiate with the Canadian government to prohibit them from exporting drugs to the United States, or they could renegotiate price caps with Canada and other OECD members to make prices higher in those countries.

Regardless of how the drug industry might respond to parallel trade, it's practically impossible for Canada, a country of 37 million people, to extend its government-subsidized drug prices to 329 million Americans. Canada will block exports before they pay more for their own drugs. If they do nothing, they'll face shortages.

Parallel trade is likely to remain in the realm of speculative economics for the foreseeable future. For a given state to receive HHS approval for wholesale drug importation, it must design import protocols that comply with the Drug Supply Chain Security Act. That means states will not only need to monitor their own domestic importers and distributors but also manufacturers and exporters in Canada. Meanwhile, HHS is unlikely to approve any state scheme that costs more to run than it saves in drug costs.

Buying cheap Canadian meds might look like a quick solution to a pressing problem, but it's harder to do than the Trump administration has let on.

Were we to bring Canadian-style price controls to the U.S.—another populist proposition—we could expect drugmakers to reinvest accordingly. They might spend less money researching long-shot cures and more on fighting generic drugmakers in court. The only thing we know for certain is that price controls have a price of their own. Americans should think twice before they ask to pay it.

NEXT: Brickbat: Police State

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  1. Or, follow me here, the US is getting gouged by their own companies and Canada is paying the normal price. Which could also be true. Considering the record profits greedy drug companies make. So maybe we shouldn’t defend them and construct some apology matrix where we pretend Americans are somehow picking up the slack when we aren’t getting overcharged.


    is what you sound like. That’s not going to play anywhere.

    1. It’ll play in Libertopia. This is the crowd that says “Bring back Polio – for freedom!” after all.

      1. First polio is addressed with a vaccine not drugs. Secondly Jonas Salk never patented his vaccine, as he wanted it to be available and help people. Imagine if every drug manufacturer took that attitude about their product?

        1. Pretty soon there would be no drug makers, or very limited with little to no innovation as their ability to make any profit completely disappears.

          1. All of the legal risk and none of the profits – what could go wrong?

        2. I’m doubting Jonas Salk spent $2.6Billion (or the equivalent at the time) on development of the polio vaccine, and there wasn’t much of an FDA approval process for him or anyone else to have to navigate at the time (which came with some significant downside to be sure).

          There’s nothing that requires the capital invested in drug companies to be spent on developing, manufacturing and distributing medications that save and improve millions of lives. Eliminate the ROI, and a lot of it will get redirected to do something that would be lucrative, like trying to develop the next “Farmville” or “Angry Birds”. Personally, I’d prefer to have more motives and incentives at play for effort to be spent on doing the more important things so that there’s more activity in those sectors; there’s no way to tell beforehand which line of research will ultimately lead to an important cure so it’s better to have as many lines running simultaneously as possible.

      2. They’re the worst, let her tell you: he knows.

    2. Off with your head!
      Those ‘greedy drug companies’ make up a significant part of many 401k portfolios.
      In other words, YOU are the ‘greedy drug company’.

      1. Oh shush.
        You’re ruining the good spirit of complaining. It’s meant to be done without extensive thought.

    3. If you really think there are “record profits” easily available to “greedy drug companies”, why don’t you start one of your own? You’re a good person. Surely you could run your own company and do the same things at a less-greedy profit. Then everyone would win. Less-greedy would still leave you lots of cash and the rest of us would get lower prices.

      Put your money where your mouth is. Start your own company and show us how it should be done.

      1. Surely you could run your own company and do the same things at a less-greedy profit.

        The barriers to entry are extremely high. That diminishes supply and raises costs. That doesn’t mean that drug companies are greedy, but it doesn’t prevent them from being so either.

    4. Get up off of your knees.

    5. ‘the US is getting gouged by their own companies and Canada is paying the normal price.”‘

      What’s the normal price? It appears Canada is paying a price subsided by Americans.

    6. October.8.2019 at 6:31 am
      “Or, follow me here, the US is getting gouged by their own companies and Canada is paying the normal price.”

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    8. My prescriptions in Canada cost 1/3 the price the identical drugs from the same manufacturer do in America. The heart of this story when HHS was considering the parallel trade was MAJOR news in Canada earlier this year. Canada may institute a law to prevent resale to the U.S. One of the BIG reasons that the USMCA hasn’t been fully signed off on is that Trump built in a MAJOR pad for big pharma and forcing Canada to raise its domestic drug prices. Canada also have several large manufacturers of GENERIC drugs that can’t be sold in the U.S. (TEVA & APO come to mind), The American version of the USMCA would force Canada to adopt the waiver of the patent time limit on drugs. Trump would allow an extension of patents (currently 18 years) to close to 30. Canada refuses to be bound by American patents on drugs and cuts off protection at 18 years so that a generic manufacturer can pick it up. In Canada, 30 tablets of APO-Losec (for heartburn) runs around $25CAD. The same drug by the non-generic manufacturer is close to $100CAD. America in general, but especially GOP and Libertarians, MUST get over allowing Corporations to run roughshod over the public and common sense.

  2. This is what happens every time governments get involved with anything.

  3. I’m not sure how you can write this whole article without bringing up the subject of marginal pricing.

    You can go to the airport and buy a stand-by ticket for half-price or less – you only fly if there’s a seat available. The plane’s flying with or without you and the airline figures making *some* amount of money on the seat is better than flying an empty seat. It’s the same way you can go to Walmart and find clothing on the clearance rack for half-price – it’s better to get *some* amount of money for the clothes rather than dealing with the costs of inventorying them.

    But not everybody can fly stand-by and Walmart can’t clearance-price everything, it’s only because those who are paying full-price are underwriting the costs of the marginal airliner seat or the marginal Oak Ridge Boys T-shirt that they can afford to do it.

    You see this quite often when people complain that a $40 pill only has 30 cents worth of ingredients in it, which is true, but only if you think the several billion dollars it took to develop that pill aren’t part of the ingredients. The first pill cost $3 billion to produce, the second pill cost 30 cents. Which pill would you buy? American pill-buyers are paying the $3 billion, Canadian pill-buyers get the 30 cent pills *because* the Americans are paying the $3 billion. If we all start buying Canadian drugs, the drug companies are going to have to start charging Canada more for the pills to recoup the $3 billion.

    “Marginal pricing”. It’s a basic concept of economics, related to “start-up costs”.

    1. It is important to note that “develop that pill” may involve many areas and may not represent all the companies money or money going to drug development. A lot of pharmaceuticals are based on government funded research. The company is funding the part that takes the basics research to application. Not insignificant but also not the whole cost. Once developed and approved the company can look at off label application that increase sales at a minor additional expenses. The company also holds on to patients using minor tweaks. So miracle drug X now becomes new improved miracle x. More money little cost. Finally there is the cost of marketing. Those slick commercials cost a lot of money. So I am not all together buying the billions on drug development. Here is a simple solution. You need millions to fund research on drugs, you open your books so we see how that money is spent.

      1. So ‘government funded” means “free,” just like unicorn farts, right?

        Fuck off slaver.

        1. No government funded means that I as a tax payer contributed funds to develop the basic knowledge that was used in developing a drug. So you don’t get to say we spent billions, like it was all the company’s money that developed a drug.

          1. “Basic knowledge”

            Should everyone else whose labor or efforts benefit from accesses to that “basic knowledge” also be subject to claim by the government?

            Is government created information free for all or only free for some (but only if you don’t actually turn a profit.)

            What part of “fuck off slaver” did you not understand?

            1. Nice rant, irrelevant and nonsensical slogans, totally useless to him/her … but you get the JOY of saying “fuck off slaver!”

              Do you feel better? Because you have achieved nothing but that. Our house is burning down, while you’re in the basement, jacking off.

              You make libertarians look like assholes, to people coming here for solutions, or for different viewpoints to consider. Conservatives have been doing that to us for decades, competing against liberals to see who can damage liberty the worst.

              The damage is now at crisis levels, so let’s pour more gasoline on the fire.

              Oh yeah, and snarl, “Fuck off slaver,” which is so mature.

              1. Fuck off, slaver.

                1. … but you get the JOY of saying “fuck off slaver!”

                  Fuck off, slaver.

                  Does he get ENOUGH joy from this to orgasm? That MAY be the only way he can, if his dick is too tiny to stroke.

                  We’ve long known, Psychology 101, that overly aggressive bullies suffer low self esteem and feelings of inadequacy (to be fair, not just from tiny dicks)

                  How empty must one’s life be, to log on multiple pages per day, read perhaps a thousand comments, looking for ones to “Fuck off, slaver?” Or longer versions of the same mindless rage?

                  Apparently, even he knows he has nothing of value to share in an open forum. Nothing at all, from the evidence.

                  On the other hand (no pun intended) SEE how any orgasms he enjoys, on this page alone!.

              2. Sevo speaks for himself not all libertarians.

                And it’s retard progressives that are enemies of liberty.

                1. That’s another Hihn sock.

                  1. And Obama is a Kenyan.
                    Russians colluded with Hillary
                    Those space aliens in Roswell New Mexico
                    And whatever wacko conspiracies are hot at the moment.

                2. No more so than retard conservatives.
                  Left – Right = Zero

                  P.S. He “speaks” for NO libertarians.
                  The Authoritarian Right have always been aggressors.
                  Now … McCarthyism for the Internet Age.

          2. So you don’t get to say we spent billions, like it was all the company’s money that developed a drug.

            You have falsely conflated two separate issues. What destroys our prescription drug prices is not the development costs, but the stringent FDA testing required. The cost of approval, not of development.

            No other country, especially Canada, has anywhere near as costly approval demands as we do, even per person. Plus, out testing can take up to twice as long, averaging over 10 years..

            Do the math. If the testing costs $500 million more here, and it takes 5 years longer to start generating revenue … somebody has to pay for that. Americans!

            If you borrowed $600 million for 12 years in the US, but only $100 billion for 5 years average worldwide, is it possible, even remotely, that you’d pay a hell of a lot more to your US lenders. (Costs are also lower per person, because of the single-payer systems in those countries. Costs are recovered in pricing which is ultimately paid by the insurer … roughly 50/50 insurance/government here, but entirely by government elsewhere. Again, do the math. Canada doesn’t whine about “greedy insurance companies.” because THERE it’s all them, government/taxpayers, 100%.

            Overall, our government + private health care must recover MUCH greater costs, spent in the US, from prices in the US.

            Still with me? Next math problem. If drug manufacturers can no longer recover all their US testing costs with US sales, what happens? What would you do, increase your prices in Canada? Or go bankrupt?

            That’s why it will never happen. which Reason mentions here, only remotely, missing the real issue,. Another math problem. What happens if drug manufacturers, are no longer able to recover costs from 350 million Americans, so must recover the SAME AMOUNT from only 35 million Canadians, what happens. Canadians spend 10x as much per person as we would. for which they recieve … not a damn thing.

            Now do you see it.

            Canada will not allow it! Their government cannot afford to. That’s why importing from Canada collapsed last time. Their Parliament began considering bills to … ban exports! They have NO alternative … CANNOT allow it.

            Full stop.

            Cleaning up some details, you also missed how costs are recovered. If the prices were set TOTALLY by accounting, no market considerations, then those development costs will allocate by an IDENTICAL amount .. everywhere … because THOSE costs were spent for sales everywhere. Those costs equate to fixed costs. The testing costs are variable costs.

            In ANY product, the fixed costs allocate apply the same amount, to the penny, to each dollar of revenues. The variable costs are incurred by WHERE the costs vary. If it cost YOU $100 per unit to sell here, but only $25 per unit in Canada … would YOU have the same prices in both countries?

            Will Canada ban exports it we start importing? Do politicians act like politicians? Or do they compete, each wanting to bear all the blame for problems created elsewhere? (Stop laughing)

            Finally, in one study, deaths were compared by waiting times for approval. EVERYONE gets new drugs before we do (few exceptions). So they start saving lives before we do. OUR approval demands trace back to avoiding the thalidomide crisis, tro save lives. But, with our current FDA policies, compared worldwide … our delays kill more people than they save

            FACT. Costs have consequences

            1. No other country, especially Canada, has anywhere near as costly approval demands as we do, even per person. Plus, out testing can take up to twice as long, averaging over 10 years..

              That’s simply not true. IDK about Canada – but the approval process/time/cost in the EU v the US is virtually identical. Both require clinical studies (by far the biggest cost) of the same rigor. Sometimes the approval time may vary – but mostly re orphan-type drugs not the blockbusters.

              What does differ is the standards for what is deemed patentable (eg many insulin ‘innovations’ in the US are seen as mostly nonsense in EU – so they aren’t patented there but are here – which is why insulin (including generic) costs about 5-10x more here than there).

              What really differs is the approval process for generics. EU still views generics as a way to encourage lower prices once drugs go off patent. Even more so, developing world. US now seems to view generics as a threat to the patent system and the FDA has been completely captured by pharma now re that. The result here is that generics rise in price in lockstep with new pharma patents. Generics everywhere else constrain pharma prices.

              1. Do I believe JFree, defending his Progressives?
                Or Cato, Heritage and many other think tanks

              2. – but the approval process/time/cost in the EU v the US is virtually identical.

                This is patently and demonstrably false.

                1. Well I can demonstrate that it is true – eg here’s a comparative study of 35 oncology drugs. Can show you similar evidence re the actual process flow charts, the comparisons of the clinical trials phases, etc.

                  You got anything other than vehement assertions backed by nothing?

                  1. Diversion. For those who don’t know, oncology means cancer.
                    When testing cancer drugs are so different, that rings a loud bell to non-tribals. I’m a patient. Because cancer is so widespread, oncology drugs have been given special care, to get them out faster, and perhaps keep the costs down. One 10-week series of chemo drips can cost $250,000 or more. (Other diseases get the special testing, but I don’t recall which ones.)

                    Plus, not sure about the drugs, but multiple drugs are tested, at the same time, on the same person! Chemotherapy includes a “cocktail” mix of drugs. I’ve seen as many as five. all mixed together into a single drip. (Each patient gets a different cocktail, based on their specific cancer and stage (severity)

                    Unbiased, and/or nonpartisan individuals look for reliable data and methods, and context. We don’t search for (or accept) what we want to know. On any issue, BOTH sides promote and distribute propaganda to their targets. Akin to Fake News.

                    1. Fine. Then I’m sure you can show me actual evidence rather than some horse shit about why oncology drugs aren’t really meds.

                    2. JFree, here we go again!

                      Fine. Then I’m sure you can show me actual evidence rather than some horse shit about why oncology drugs aren’t really meds.

                      You admitted using ONLY cancer drugs to “prove” approval times for ALL meds. The horseshit is yours.

                      1) Cancer drugs are a SMALL percentage of all meds,

                      2) As a cancer patient myself, I even EXPLAINED TO YOU why cancer drugs are approved more quickly.

                      3) Other diseases are either (a) approved faster, and/or (b) terminal patients can be prescribed drugs before they’re approved.

                      Why would such drugs get special treatment? Drug testing is to protect the patient from deadly side effects since the Thalidomide disaster. Do you see it now?

                      Terminal patients will die anyhow, from those diseases!

                      Here’s the argument that won, adapted.
                      Imagine you, JFree, have been diagnosed with stage three cancer. Treatment failed (chemo, radiation, whatever) You are told to expect a year to a year-and-a-half of life.

                      You’re offered an option. A new drug. Testing has barely begun. The risks are high. At the very worst, it might kill you sooner.

                      Would YOU take the risk, your only chance for a cure, and to live out your life? But it could kill you 9 months earlier. … You should be able to choose either one, of course. Which is why the FDA would have got their ass kicked to deny it.

              3. Here’s how it works in Canada.


                There aren’t many pharmaceuticals in Canada. Maybe 20?

                1. When I worked in Canada, I tried to learn as much about their health care as possible. LOTS of costly stuff is just not available in a nation that size.

                  Your link reminds me. Their regulatory structure seemed MUCH deeper, but also much shorter. (I was a regional sales manager up there, and handled the government accounts personally)

                  They are MUCH smarter. For teachers, the certification was 2 years of college (perhaps less), and …. get this .. . a B or better grade in the subject you’ll teach (high school and junior high)
                  If you’ve mastered the subject matter, teaching skills are a snap.
                  (I also ran a large corporate training department, where my instructors had NO training on instruction, just some coaching for a few weeks.)

            2. The costs and time involved with getting FDA approval in the U.S. are insane and there has to be some potential for serious streamlining.

              There’s a lot more cost in pursuing the lines of research which don’t lead directly to a useful compound (although there are very few that don’t lead to some useful knowledge), and there’s no way to know which will and won’t lead to the discovery of a productive treatment, so it’s impossible to choose not to do the “unproductive” research and only do the “productive” investigations.

              Tens (or even hundreds) of $Millions to get through the FDA is too much, but it’s not the primary factor that’s leading to an average cost to come up with a new treatment being in the $2-3Billion range.

              The burden of the approval system is more of a factor for older meds which have expired patents and could get into “generic” production. Since the real price reductions come when there are at least three competing products (one “brand name” and two or more “generics”), the delays and expense of getting a new generic approved are almost certainly doing more harm than good.

              1. Yep. Thanks. I tried to stay with the error on development vs approval costs, plus the magnitude. There are, indeed, several other very costly issues, many of which have nothing to do with regulatory burdens,

                I recall only one study which included the costs of FAILED research, development and testing with the ones who make it to market. (That one was beyond just manufacturers)

                The regulatory burden is why we see the WHINING about prescription costs of several hundred thousand per person, and I MAY recall (uncertain) over a million.

                If it costs even one billion for a drug to treat only a few hundred people, there are two option: Charge an astronomical price to government/private insurers. Or let them die. Personally, I am DELIGHTED by such advances.

                Too much of this is like chimpanzees trying to explain quantum physics. But, that’s part of human nature.

                Thanks for adding/sharing that!

          3. Then repeal the Bayh-Dole act instead of blaming the pharma industry.

        2. He’s saying, “you didn’t build that.”

          1. No I am saying “you didn’t build that all by yourself”. We live in a first world country in 2019. While we work hard we have to acknowledge that we benefit for the “commons’ provided by the government. That includes basic research, basic infrastructure, etc. And after your build it you can ask for a government monopoly in the form of a patient.

            1. Oh, that’s totally different.


            2. “”We live in a first world country in 2019. “”

              What was the last year we were not a first world country?

            3. That’s a bit dishonest .. twisted into a progressive distortion. Like your strange comment n our drug prices vs research and development.

              You TOTALLY misrepresent the commons, but not as crazy as Obama. The commons traces to things like shared cow pastures .
              You can tell the ranchers that they didn’t raise the cows by themself, but the commons is like insurance, spreading risk vs sparing the cost.

              It’s shameful to say we have some debt or obligation for THOSE commons, because it’s no different than that shared cow pasture.
              Do the ranchers have some debt or obligation to …a field of grass?

              Bullshit. They OWN that field, to share costs
              We also OWN government, in part to spread the costs

              What you’re saying is … if I hire somebody, I am somehow indebted to them, DEPENDENT on them.
              Bullhsihit. My my sole “debt” is their paycheck, and that debt disappears every Friday, or however often they get paid.

              Do you know what taxes are?. And their purpose?

              I may not like all of it being an obligation, but that’ comes with living here. Whatever that obligation, it disappears on April 15th (federal). Beyond that, you (speaking for government) have NO claim on my life or work … which was determined by consent of the governed. We call that liberty, Morally, no different than the ranchers agreeing to share that field.

              Oh yeah, a “patent monopoly” is like the “monopoly” I have over my car. We call THAT property rights.

            4. Other than the basic k-12 education the government supplies little knowkedge that does not come from weapon development.
              We the people, private sector people, built the infrastructure, not the government.
              The government is force and violence, trying to make it a kittie cat is a fools errand.
              You must invent it, not just build it. A private patent system would be better.

    2. Oak Ridge Boys. Lol.

  4. negotiates prices with pharmaceutical manufacturers

    Is negotiate really the right word here?

    1. You don’t negotiate with a monopoly. You can only bludgeon it.
      And THAT monopoly is no different than the “monopoly” I have over my home, my car, and everything I own.

  5. It’s pretty well known that price controls are a bad idea and lead to shortages. The only thing worse than expensive life-saving drugs is cheap life-saving drugs you can’t find anywhere.

  6. I’m struck by something David Goldhill, author of “How American Health Care Killed My Father”, life long Democrat and CEO of GSN, wrote. People getting their free Medicare, actually pay a greater share of their income on health care than seniors did before Medicare existed. Government did that.

    The problem with drug prices, is government is so involved in the heath insurance and health care business, when it shouldn’t be involved at all. Arguing about price controls when so much else is controlled by government, diverts attention from the problem.

    1. Have you noticed what has happened to the cost of higher education since the government started “subsidizing” it?

      1. Yeah it went from the cost of higher education to the higher cost of education.

        Who cares what the price is. I’ll get a loan, then complain about the price later.

    2. We haven’t had an actual market in health care for decades. Medical prices mean nothing. There are so many layers of third parties between the checkbook and the patient prices are meaningless. It’s not even actuarial based. The numbers are all made up.

      And when government “free” Medicare only pays 80% of the bill, all the bills get bumped up an extra 20% to cover it. And since Medicare bases what it pays on what the “market” pays, prices go up 20% every time they readjust their rate schedule.

      1. That Medicare flaw is actually why the govt should switch to a VA model. A completely separate medical delivery system – or in terms that those with employer coverage would understand as a PPO in-network/out-of-network system. Where those who are covered by some govt plan (whether retirees or veterans or poor or govt employees) get the vast majority of their care inside a govt delivery network. That would probably mean existing VA hospitals, muni/county-owned hospitals, teaching/research hospitals associated with public universities, and probably many of the existing non-profit hospitals would join that govt provider network. Still some behind the scenes payments and risk-pooling between the two network systems (re stuff like EMTALA, tertiary care) but that is far easier to manage at network type level.

        The existing Medicare system drives up costs by paying for everything as a one-time procedure. One bypass, one transplant, etc. Completely fucked up way of putting taxpayers on the hook and having rentseekers milk them dry. A provider network essentially allows for the creation of ‘bulk purchase’ – buy 1000 cardiac surgeries at wholesale simply by equipping/staffing the fixed costs of that so that only the marginal costs are paid direct by patients.

        If that network sucks compared to the private network, then it will lose patients but those patients will also no longer be able to suck on the govt tit. If it works well, then it is very easy/cheap to allow new patients into that network (until that network hits its capacity utilization max).

        1. JFree
          October.8.2019 at 11:59 am

          “That Medicare flaw is actually why the govt should switch to a VA model…”

          JFree actually posted that.

  7. Golly gee wotta surprise. Libertarians who no longer even freaking understand that patenting is a government grant of monopoly.

    So hey let’s not question the potential cronyism. Or the crossing of a line where patents are granted for discovery rather than invention – with the consequence that said patenting actually reduces innovation by raising the costs of new discovery. Or where the US grants extra protection to existing patentholders by eliminating the market competition and price-reduction function of generics.

    1. Hell – if you wanna argue that higher pharma prices are the cause of innovation, then please explain the time-series graph on p2 of Pharma Prices around the World – Why is US the outlier

      Was France the innovative pharma country before the mid1990’s? Did the US suddenly become ‘innovative’ in the early-1990’s – or is that just when we started allowing patented pharmas to be advertised direct to consumers on TV while they get paid for via insurance?

      1. It appears Switzerland is more of an outlier than the US. They went from second lowest to second highest. The US was always higher.

        1. FFS. Look at the 1990’s. Are you people so fucking obsessed with Obama that you think time itself didn’t even exist before 2008?

          1. FFS, lets just cherrypick the part of the graph you like.

            1. You mean the part of the graph that obliterates your The US was always higher lie?

              1. No, the part where it says nothing about relative medication costs, just per-capita spending

      2. Also, that spike in US prices corresponds perfectly with the implementation of Obamacare.

        1. Should have scrolled more.

      3. How is per capita spending relevant when most of the costs are borne by the older members of society? Around the time the baby boom generation starts getting old, the US pulls ahead of everyone. Doesn’t seem like any kind of conspiracy.

        1. Beat me to it.

      4. That last spike right around the time Obamacare was enacted is interesting.

      5. if you wanna argue that higher pharma prices are the cause of innovation

        Sloppy phrasing. But it was “argued” here.

        Short version: we’re the outlier because our FDA approval and time span are MASSIVELY the highest, No, that’s NOT mindless whining about gummint. I walk you through some fairly simple examples.

        Oh, wait. You already read it, and responded with … umm, ..your tribe is just as badly manipulated as Trump’s tribe.

        It’s not your fault .. except placing your trust badly, Also like Trump’s tribe. And many others. It’s now endemic in America.

      6. You should actually read the paper, it’s rather comical. The authors go through great pains to avoid any mention of price controls in OECD countries in the first half or so of the paper. But when they actually get to the meat of their analysis, the section labeled “The Primacy of Price,” they finally drop this beaut of a quote on us: “One reason U.S. prescription drug prices are higher may be the relative lack of price control strategies. Unlike the U.S., many other countries employ centralized price negotiations, national formularies, and comparative and cost-effectiveness research for determining price ceilings.” This complex and jargon-filled sentence boils down to one thing; it’s the price controls, stupid. The fact is, the other OECD countries know that if they tack on a reasonable profit for pharmaceutical companies to the national approval, manufacture, and distribution costs, it is in the interests of drug companies to sell to these countries, even though these prices do not allow the companies to recoup their R&D costs.

    2. I understand it. I don’t like patents. They’re coercive and immoral. But unfortunately they’re part of the hand we have to play. We can’t get rid of them, but I would love dearly to limit their terms and scopes.

      Patents no longer have to be novel or non-obvious. All it takes is being the first one to file. Literally. The medical company I work for is filing for a patent on the product I am on. No one working on the product sees anything novel about it. It’s just the next obvious iteration. It’s a good product, but it’s not ground breaking. The only reason no one has done it before is because the market for this kind of product is so small.

      1. Patents are neither immoral or coercive. They are a guarantee of your intellectual property the same way a deed is a guarantee of actual property rights to farm land, a factory, or store front. Nobody can just start planting crops on your land, or walk into your factory and start producing their own goods. Nobody should be able to take your idea and make money off it without your permission. Same goes for copyright.

      2. “”but I would love dearly to limit their terms and scopes. “”

        There term is limited. I think it’s 20 years, then the drug can go generic.

        1. “The first factor that makes drug patent timelines vary is that the 20-year time period begins at the time of the drug’s creation. In other words, a pharmaceutical company might be developing and getting Federal Drug Administration (FDA) approval for a drug without selling it for eight or more years into its patent life.”

      3. Patents no longer have to be novel or non-obvious. All it takes is being the first one to file

        Those are two separate issues, both incorrect.

        Of course, the first to file. How many years should the Patent Office wait to see if a second filing? The first to file, but loses the patent if someone later can PROVE they had the idea first (a few other details). In that regard, it’s similar to copyrights, but copyrights a much easier to challenge, because they deal with exact or near-exact words, which leaves only time.

        Should we eliminate Copyrights and Trademarks?

        The only reason no one has done it before is because the market for this kind of product is so small.

        How is that remotely relevant? And how can there be a market for a product that never existed?.

      4. “I don’t like patents.”
        “The medical company I work for is filing for a patent on the product I am on.”

        Do you even understand on which side your bread is buttered?

        1. Looks like both sides there too!

    3. Libertarians who no longer even freaking understand that patenting is a government grant of monopoly.

      Wrong again. WE know, have always known, that patents are a subset of property rights. A patent is not a grant; it’s more like recording the deed to my house, or my auto title
      They even work the same. I do have monopoly control of my home and car. Or would you seize them too?.

      Part of a patent application is proving that you own the property (idea, concept). Here’s where you lose. If somebody comes later, can prove THEY created the property … you lose your patent!

      A patent is like a registered deed.

      1. Correction. Of myself (lol)

        Part of a patent application is proving that you own the property (idea, concept)

        Or swearing that you do, but the patent can later be challenged and ownership changed.

  8. The solution is easy. After a drug has been approved, KEEP IT APPROVED!. No more having to undergo all the FDA approvals to make a generic. It’s been approved already. No need to do it all over again. Just demonstrate the safety of your factory and that should be that.

    It’s why EpiPen was so expensive, no one else was allowed to manufacture such epinephrine pens. No one else was allowed. By law. Fucking leftists don’t understand that the same bloated government they agitate for is what’s causing the problem. Legalize epinephrine pens and watch the price plummet.

    Ditto for all other other drugs off of patent.

    Oh, and cut pack on the crazy patent giveaway. Only grant patents for novel and non-obvious inventions. Don’t be extending patents just because they “invented” putting the existing drug in a gelcap. Sheesh.

    1. The approval process (proof of similar bioavailability) for most generic drugs is relatively cheap compared to the expense of building and maintaining a proper human drug production line for that generic. Compared to the NDA process for a the original new drug product it is a drop in the bucket.

      Epipen was not an issue of the actual drug – epinephrine solution for injection has been generic for decades. The issue with that product was the delivery device. That had it’s own patent. Other people could make an autoinjector, it just couldn’t be of the same design. And anything being of different design required more than normal bioavailability testing.

      Anaphylaxis treatment kits, containing epinephrine for injection, existed long before Epipen came along. The problem was over reliance on a very easy to use device rather than spending some time and effort to provide simple training on subcutaneous injection. Something we teach diabetics as a matter of course.

      1. And yet Europe manages to have one. But it’s illegal to buy the European equivalent of epipen. Thanks FDA. Thanks for killing people.

        1. Yes patent protections differ between countries. The manufacturer of the European device could have sought approval for sale in the US yet they didn’t.

          1. BTW it’s not illegal to buy or possess the European device.

        2. Canada has adopted “automatic” granting of generics, if proven to be identical. In just read that from a source posted here. Probably by you. 🙂

    2. Only grant patents for novel and non-obvious inventions

      We long ago crossed that line. Every patent grant for a chemical (or a gene sequence) is a patent on a DISCOVERY not an invention. Wasn’t that way always/everywhere. In the 19th century, there were two different models re that – the UK (where patents were granted on both the chemical itself and the process first used to synthesize it) and Germany (where chemical structures were deemed ‘discoveries’ not ‘inventions’ – and only the synthesizing process was patentable). The result was stark.

      The UK became a backwater because their system essentially made all chemicals an artisan-type manufacturing process so they couldn’t compete on cost or eventually on innovation either. Germany became the world leader in both innovation and cost. The US followed the UK legal model and was a backwater for everything except petrochemicals – where we led solely because we had a virtual monopoly on the input feedstock of crude petroleum.

      That changed in the 20th century but not because the innovation model changed. It changed because a)in WW1 we stole all the existing German innovation via Trading with the Enemy Act and Office of Alien Property Custodian – and then periodically thereafter and b)govt created the ‘pharma industry’ by using the ‘German’ model re antibiotics (where the product – penicillin – was not patented and the govt invented and then gave away the synthezing/fermenting process) and then reimposed the UK model on ourselves (Patent Act of 1952) and then the world (Patent Cooperation Treaty of 1970).

      1. Every patent grant for a chemical (or a gene sequence) is a patent on a DISCOVERY not an invention.

        I wouldn’t say that. Many times you’re synthesizing a chemical that has never existed before, at least not at detectable concentrations. Same thing with a gene sequence. People can copyright books and music, but they didn’t invent the alphabet, the language it was written in, or music. For some mechanical device, the inventor uses existing materials and even existing processes to make something new. I don’t see how chemicals and gene sequences are any different. *I’m not making any claims about the morality of the idea of intellectual property here. That’s a different argument.

        1. Many times you’re synthesizing a chemical that has never existed before, at least not at detectable concentrations.

          The process of synthesizing that chemical is an invention. The chemical itself – and the properties (eg medical efficacy) OF that chemical – is a discovery.

          Even Ayn Rand understood the difference (though she was dead wrong about the reality of what we allow as patents)

          It is important to note, in this connection, that a discovery cannot be patented, only an invention. A scientific or philosophical discovery, which identifies a law of nature, a principle or a fact of reality not previously known, cannot be the exclusive property of the discoverer because: (a) he did not create it, and (b) if he cares to make his discovery public, claiming it to be true, he cannot demand that men continue to pursue or practice falsehoods except by his permission.

          There may be a ‘need’ to reward discovery in order to encourage more of same. But rewarding ‘invention’ is qualitatively different than rewarding ‘discovery’. eg – the clinical study is a process of discovering medical efficacy not inventing it. Bundling that with a patent creates a huge conflict of interest and can incentivize both fraud and secrecy.

          1. Last I checked, inventions are the same as discoveries but used in different contexts. Thus the distinction, while accurate. has no relevance to the issues on this page One either crates something or stumbles across it. If I discover gold in my yard … I own it.

  9. Wait, so unfair trade practices in a country whose name starts with C are costing US consumers in the form of de facto subsidy?

    1. Also costing all those rich people in, say, sub-Saharan Africa, so the poor people in Canada can get their cheap meds.

      1. I LOVE threads which are all satire!.
        There are no subsidies, which is a Progressive pipe dream (that’s kinda wacky)

  10. American consumers can’t do anything about free-riders in the OECD

    Oh sure we can — legalize re-importation from all OECD countries. After that, drug manufacturers would then have to establish something close to a level global price among all OECD countries (which you’d expect to be somewhere in between what the U.S. and the rest of the OECD are paying).

    Or for a more heavy-handed approach. Require all pharma companies to offer drugs in the U.S. at their lowest OECD price. That would have the same effect — drug companies would have to end the sweetheart deals for the socialists.

    1. “Or for a more heavy-handed approach. Require all pharma companies to offer drugs in the U.S. at their lowest OECD price. That would have the same effect — drug companies would have to end the sweetheart deals for the socialists.”

      So you’d prefer no new medical developments?
      Fuck off, slaver.

      1. Most likely result of that plan is that the OECD companies suddenly can’t buy meds unless they pay more. The drug companies make more selling to America than they do the OECD companies. They’d make more money not selling to the user guys and keeping our prices the same, unless other countries are willing to sweeten the deal.

        1. ^^This^^

    2. So …. you want every other nation on earth to subsidize … the nation richest nation on earth. What a guy! Do the math. If every country on earth subsidizes our prices, then THEIR prices will necessarily increase, which is how Sevo’s sarcasm is caused.

      If you live in a town with only two residents, you can fight to achieve lower property taxes for your low-income neighbor. Just understand that his savings will be reimbursed by higher taxes on you … to the penny, if done properly.

      And it’s only greed (YOU say) to base prices of a product on the cost of a product. Wow. Testing and approval costs vary immensely from one country to another. So you have been brainwashed (not your fault) to blame drug manufacturers for excessive prices caused by our own government.

      1. So …. you want every other nation on earth to subsidize … the nation richest nation on earth.

        Subsidize? No. And ‘every other nation’? Again, no. This would only be with wealthy OECD nations (Canada, the EU, Japan, Australia, South Korea) — we would want to continue to allow pharma to sell cheaply to developing nations. As for subsidizing — do all the other OECD nations now subsidize our BMWs, iPhones, and all the other products we buy in common because there are no import restrictions? That’s a strange idea of subsidizing.

        1. Subsidize? No.

          Again: “Do the math. If every country on earth subsidizes our prices, then THEIR prices will necessarily increase, which is how Sevo’s sarcasm is caused.”

          Not every nation? I missed that, but it’s irrelevant overall. The math is simple. If our prices are forced down … pharma is forbidden to recover the bloated costs of our FDA testing requirements, they will have no alternative but to recover those costs elsewhere. Worldwide. THEY will pay OUR FDA testing,

          Sorry ,there is an alternative. Sell at a loss, in the biggest market on earth . What are the odds?

          for subsidizing — do all the other OECD nations now subsidize our BMWs, iPhones, and all the other products we buy in common because there are no import restrictions? ? That’s a strange idea of subsidizing.

          That’s a bizarre analogy, which suggests you have no idea why our prices are higher The COSTS of marketing in the US are so much higher.

          Our FDA testing requirements are much higher — over $1 billion per drug, on average, adjusted for population — and the delay is longer — 12 years. This is common knowledge. It’s why Canada will never allow exports. The last time that looked likely, their Parliament began considering how to ban the exports, BECAUSE their costs would skyrocket, which is referenced here.

          Again, math. Costs are recovered across all sales in a market. If manufacturers cannot recover costs of (say) $300 millon here, in a market of 350 million, then they have to recover that same amount from only 50 million Canadians, which would be 7x higher per person. (Actual comparison would be number of patients in each country)

          Where we DO import, say from Germany, our prices are still higher! Also FDA approval. If one buys the fantasy of price controls as the cure, then that’s the reason for it. To the misinformed.

          It’s a double whammy. If YOU had to spend $500 million more to sell here, and wait much longer to start selling, what will you do, shrug your shoulders? Or increase prices.

          Marker libertarians should admit, YES. there is monopoly pricing.
          But it’s a VERY high risk business. Roughly half the drugs never make it to market. Where are THOSE costs recovered? The most spectacular advances are spectacular, BECAUSE the risks/coasts are so high. Monopoly pricing is the cost medical breakthrough.

          But … mostly … it’s bullshit for the gullible. EVERY patent is a monopoly, DUH. The ONLY reason it affects drugs this sway is … government approval is the ONLY difference, country to country. Add that to the simple math!

          (Reason really sucked this time)

  11. First of all, if the US is paying the bill (medicare, VA and etc) they are not using price controls, but engaging in a price negotiation as the consumer.

    I don’t have the clout to negotiate my own price, I can only avoid purchasing a drug. However, I am paying for other people’s use of the drug through my taxes or by paying my insurance company premium.

    How about we do this? Let buyers form cartels. I can join as an individual. My insurance company can join. That way consumers can have clout.

    Lastly, when was the last time we really got a break-through drug? Often the new expensive drugs are not any better than the old cheap ones. Then, 6-8 years later we finally find out how dangerous (or not) they truly are.

    1. We don’t need cartels for that. All you’re talking about is price differences in a single market. That market IS competitive. one reason we have co-pays! If dumbass Bernie gets his zero co-pays, THEN it will become a non-competitive market.

      We could adjust co-pays to dollars instead of percentages, MASSIVE increases in overhead/processing, to get you the dollar you shopped for. Oh, wait. Before you shop around to earn that dollar. you insurance premiums will increase $3.

      Which will you work harder at to reduce prices. Savings into your pocket, or higher profits for insurance companies?

  12. This is where blind ideological thinking is idiotic. There is no free market anywhere for drugs. Other countries negotiate on a state level, bulk buy and discount. We end up paying for that. So if we did the same then everyone else who is free riding gets a price increase. We get a decrease-probably not what we’d be hoping for.

    Currently they pay un-free market lower rates and we pay un free market higher rates. Unless we convince everyone else to stop–you join in. Otherwise we are just paying for their free riding on our higher prices.

    And don’t worry they will still be investing here–don’t need to be the sucker market for that. You can change other things, like give patent holders exclusive (but required) generic licensing rights. This would clean up the crap forumularies and increase their payback.

    1. “Currently they pay un-free market lower rates and we pay un free market higher rates. Unless we convince everyone else to stop–you join in. Otherwise we are just paying for their free riding on our higher prices.”

      Try again; we pay non-regulated prices.

    2. Other countries negotiate on a state level, bulk buy and discount.
      I rather suspect ‘negotiate’ in this context really means “This is what we will pay you. If you don’t agree we will declare the patent void in our country and let one of our local generic producers make it.”

    3. Andrew, we don’t have competitive pricing in the manner you describe. But we have co-pays, they do not. It’s the co-pays that keep prices lowest –else lose customers to a competitors.

      In other words, you see the effects of free market competition, without realizing the cause. It’s those other countries, with their socialist bullshit (zero co-pays) that have the non-competitive markets.

      Free market prices are set by consumers … ONLY if they keep any savings they EARN (and multiple suppliers, competition)

      Also high-deductible insurance, if we did it smarter.

  13. Abolish all IP laws

  14. If we put forth price controls like Canada has then it seems to me the drug companies would charge customers that negotiate like Canada does a different and higher price since if we all negotiate then the price will even out to cover the same industry costs.

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