[maui_hawaii]

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

It hasn't been revised in any way and was fired off in about 30 minutes. Please try to overlook any grammar or other errors.

[maui_hawaii]

ping

Comments?

[nmh]

Canada subsidizes drugs for the sheeple hence prices are lower. In the U.S. the government does not so drug companies set the price they want.

[reed_inthe_wind]

Throw in a few comments about the need to keep American jobs.

[CamelRiding4U]

Probably the threat of lawsuits drives the price up in the States too.

[Reeses]

Don't forget to factor in the cost of American trial lawyers. There is no legal lotto system in Canada or Mexico therefore the cost to provide heathcare services and products is much less.

Drugs would be much cheaper if drug companies didn't have to pay huge liability insurance premiums, in other words trial lawyer payments.

[DMCA]

Drug companies also have to recoup the expense of advertising in the USA. Not all countries allow drug companies to advertise like they can in America.

[nuconvert]

Good points. How about lawsuits against drug companies here in U.S.? That increases the price.

[TidalBore]

You are partially right ... but you forgot that hidden element called "Corporate Welfare". That is what angers American citizens... Why should taxpayers have to pay on both ends? Companies are subsidized to keep costs down, or so we are told. But those companies that take your tax dollars to develop those medications have to make a profit before the patent runs out and they stick it to you every time.

[brydic1]

The solution is to refuse to sell to any countries unwilling to pay the same prices charged in the US market. If they steal the formulas, then slap a total trade embargo on them both ways. Ship them nothing and buy nothing from the thieves, and for good measure bar their people from coming here as illegal or legal aliens.

[marktwain]

Your analysis is essentially correct, although, of course, it ignores that much of the enormous cost of bringing the drug to market is because of hugely inefficient regulation by the FDA, with hardly any cost to benefit concerns.

As for research subsidized by Universities, most of them have programs that patent drugs invented there and use them to enrich their own pockets. Consider Warfarin and the University of Wisconsin as an example.

[motherof 3]

On a program about this they said that a new drug had not been developed in Canada for forty years. Do they just sit around and wait for us to do it?

[doc30]

The author fails to mention that marketing costs for a new drug can easily be greater than the R&D costs. That's one reason why drug advertising is banned in Canada. THe other reason is that the Canadian government does not want a glut of patients going to their doctors to get a prescription as a response to the advertising. Business would be up for doctors and that would make the government have to pay more for healthcare. Free speech is another victim of socialism in Canada.

[<1/1,000,000th%]

Very good. But you left out the part about the patent expiring in 7 years. That's all the time the manufacturer gets to recover their costs and any profit. After that, anybody gets the right to manufacture the drug with NO R&D costs.

[lainde]

You are exactly right. There have been no other pipelines of major drugs except with US pharmaceutical companies. The last time they were threatened (by Hillarycare) they cut back on R&D and we had no new antibiotics for YEARS! Antibiotics called cephaloporins were big at that time and then for YEARS there was nothing major until the quinolones were developed (drugs like Cipro). I ask you, what major drugs come from Canada or any other socilaist country? But you are right, I don't understand why they should get cheap drugs and we subsidize R&D and the Canadian patients.

[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.

[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.

[MissAmericanPie]

It's all about soaking the rich Americans. Price gouging, suppose to be illegal, but never fear, our laws will be enforced regarding that nassy problem, some day.

[hosepipe]

[ Why are drugs cheaper in Canada (and elsewhere)? ]

because...
DRUGS BASE PRICE IS wharever medi-care will pay for it...
as is virtually every other bell, whistle or toot medi-care will pay for.. so this why insurance companys adjust to what medi-care will pay too.....

Force medi-care to lower its price threshold and VOILA! SHAZZAM lower prices for EVERTHING, not just drugs..

[PA Engineer]

I posted the following position paper/study some time ago on FR. It is long and well worth the read. The costs everyone gripes about can be laid back at the doorstep of the FDA. The demon of high costs is well documented here.

Reforming the FDA

[elli1]

Another way to look at it is this hypothetical scenario: General Motors makes cars. The cars sell for $30,000. But the Canucks say: ''No way. $30,000 is way too much to pay for a car. We're not going to pay that much. We'll only pay $20,000 for that car.''

So, General Motors says: ''That's OK. We'll sell you that car for $20,000 and then, to make up the difference, we'll charge Americans $40,000 for the same car.''

What would happen is that no Canadian car industry would develop; General Motors would control the car market in Canada and Americans would get to pay for their car and the profit margin that GM lost when they sold cars to Canadians. Not a few Americans would be screaming from the top of buildings over unfair business practices & quite a few Americans woudld be sneaking off to Canada to buy their new cars. Then General Motors would start whining to the government to outlaw Americans from importing cars from Canada. And the American consumer gets shafted on prices and both Americans & the rest of car-purchasing world has less selection because the development of competing product has been squelched by artifically manipulating prices.

However, quite a few Americans would take the position that this is an OK deal because General Motors builds really fine cars & we ought not monkey around w/ a business model that produces such fine automobiles.