Why are drugs cheaper in Canada (and elsewhere)?

My Brain

[maui_hawaii]

Also I didn't want to write a book... Just start a discussion about a political issue.

Many here have already made GREAT points.

[DMCA]

Patents expire in 17/20 years. Not 7.

[reed_inthe_wind]

This is a rough outline I wrote while watching the debates.

I don't know about the outline, but your response( Why don't you make a relevant comment.) seems a little rough. Why don't you just post a finished product, and stop soliciting help.

[Waco]

The big mark-up is at the pharmacy. How come no one is addressing this? Check out what the drug co. charges the distributors, then what they charge the pharms, then what the pharms price the product at.

[maui_hawaii]

That doesn't help you make your point, it makes it look like you are trying to hide something.

Of course I made it up. I said that from the get go. I am trying to use a representation to describe a theory.

Don't go into the 'you're hiding' type stuff.

I am flat out saying that I don't know and want other people's input so I can form a better opinion.

[DMCA]

According to ELI LILLY AND COMPANY AND SUBSIDIARIES 10-Q filling they will spend about 2.5 Billion this year on R&D. They are developing more than 5 drugs with that money. During that same time they will spend about 3.75 Billion on advertising. With a profit margin on 21.12 (Source Quotes.Yahoo.Com) they are not hurting too much.

[DMCA]

I was giving you advice. I was looking at this as someone trying to poke holes in your argument, I thought that is what you wanted. Was I incorrect?

[maui_hawaii]

Because I don't know everything. Thats why I am soliciting help.

There might be a doctor here, or a researcher, or many others here that could tell me things I don't know.

I won't apologize at all for soliciting 'help'.

Sorry if the response offended you. Sounded to me like you were attacking me for an honest question.

[Lessismore]

Cost is important only to the extent that a drug company will not produce a drug if it can't sell it for more than the cost of production and distribution.

Since a patent confers a monopoloy on the holder of the patent, a drug company pricing a patented drug will price it so as to maximize the profit. Ideally, the company will also price the drug to different buyers based on their willingness to pay, by segmenting the market and charging higer prices to those segments with greater willingness to pay.

Since US purchasers generally have more money, and are willing to pay higher prices, the drug companies price the drugs higher in the US. This is exacerbated by the fact that many purchasers in the US are insured and the person making the purchasing decision is only exposed to the price of the co-pay. The true value of drugs is obfuscated by misleading advertising to the purchasers. Prescribing physicians are induced by a number of means to prescribe marginially more effective, but far more costly, patented drugs instead of older, but still useful, drugs.

Insurers try to reduce costs by developing formularies, and by negotiating lower prices with the drug companies, but they don't really have that much incentive to get tough or they alienate the people they insure. Besides, the insurance companies have been pretty successful in passing the costs on to corporations through the insurance premiums, and the corporations are now passing them back to the employees. Higher prices and higher premiums make it easier for the insurance companies to cover their overheads and increase their profits.

The bottom line is that the drug companies charge high prices in the United States because they can. The reason that they can is because the buyers of drugs aren't exposed to the actual price per pill at the time of sale, and hence aren't reacting to the correct marketplace price signals.

The solution is to stop all coverage of drugs by insurance schemes until the outlay reaches a fairly high threshold, say $2500 or $5000 in a year.

This would make the purchasers far more aware of the actual prices being charged by the drug companies, and this would make them more reluctant to overspend on patented drugs. It would restore health insurance to its proper function of protecting against extraordinary illness and associated costs, while patients pay for normal healthcare costs out of their own pockets.

[maui_hawaii]

You are right, but try not to get hung up on details like that. I am trying to get a big idea together. Feel free to contribute to that. Thats what I am after.

If my theory can be ammended by using real numbers, please do so. By all means.

[maui_hawaii]

Considering it takes about 5 years or more to develop a drug...

[maui_hawaii]

Thats the idea I am trying to portray.

[maui_hawaii]

Thats fair game for the conversation.

[maui_hawaii]

I imagine each drug is different, but you got the idea there.

[DMCA]

5-17 is 12.
5-20 is 15.
12 > 7
15 > 7

Your position is best served if you have concrete facts. It will be much hard to debate the facts if they are all on your side.

[DMCA]

I have noticed that also as I have a family member who is a vet also. Funny, isn't it?

[maui_hawaii]

The bottom line is that the drug companies charge high prices in the United States because they can.

This isn't all that far off from what I am thinking.