Posted on 11/21/2006 4:41:50 AM PST by Brilliant
NEWLY EMPOWERED Democrats' vow to cut health-care costs might spell bad news for the brand-name pharmaceutical industry, but their efforts could provide new momentum for the generic-drug rivals' agenda.
Boosting the generics industry may prove to be a politically palatable way to follow up on the party's campaign promises. That's because making more room for generics is meant to cut prices through increased competition -- a solution that is easier to sell as pro-market than other proposals Republicans will portray as precursors to federal price controls. In addition, some legislation that must be renewed in 2007, including laws providing vital funding to the Food and Drug Administration and encouraging studies of drugs' use in children, could provide gridlock-proof vehicles for generics provisions.
"Overall, because of the shift in Congress, next year could be the most important year to the generics industry since 1984," when Congress passed the law that opened the door to the modern generics business, says Jake Hansen, a vice president at generics maker Barr Pharmaceuticals Inc...
The most important question will likely be how and whether to create a legal pathway for the FDA to approve generic versions of biotechnology drugs. The 1984 law that created a framework enabling the FDA to approve generic drugs focuses on traditional, chemically derived drugs such as Prozac, but didn't give the agency a way to approve generic versions of most biotech products. Now, the issue will get a push from several key Democrats, though it will be difficult to pass such a complicated and contentious change in 2007.
An array of other measures aimed at smoothing the way for traditional generic drugs will also get attention, and could well be tucked into broader bills next year. Among them are proposals to limit branded-drug company tactics that thwart generic competitors...
(Excerpt) Read more at online.wsj.com ...
Yes. Shop around. Take the damn regulations off the Drug companies. Medical advancement and declining drug prices are prevented entirely by Government meddling and regulation of the medical system. The total price of medical care rises on its own because drug companies are spending more and more on drugs to cure the things that were untreatable at all only a short time ago and things that were just "old age" a short while before that. The longer medicine keeps us alive the more it costs to keep us alive. Government price meddling such as Medicare and effective subsidy of employer-paid "insurance" runs up the total cost tremendously even if we only count the cost of paying the tremendous army of bureaucrats that must be paid munificently and redundantly to "manage" the system, not to mention the the corruption and waste that is inherent in any government regulation of anything.
ANY "solution" arrived at by government is inherently socialist and will raise costs, if not nominal prices, unless it is the solution to get out of the business and leave it to the market.
Buying meds in Canada reduces the American price to the Canadian price. And reducing the American price to the Canadian price is simply a way of evading the cost of R&D.Democrats would argue that the R&D cost of today's medicines is a sunk cost, and that is true. But the effect of preventing Merck et. al. from recovering past R&D costs (which include testing all the drugs that didn't pan out) would be to undermine the business model under which Merck et. al. are investing money to develop future drugs.
Socialist policies directly undermine the engines of progress. That's why Big Journalism calls such policies "progressive."
The purpose of the strategy, though, is to force Canada to raise their prices so that they are making a contribution to R&D. Obviously, there is no point in doing it if that doesn't happen. But in order to get the Canadians (and others) off the dime, you need to threaten them with this kind of thing, and then follow thru if they don't change their policy.
Unfortunately, that is the way these international trade disputes are fought. Just sitting here and doing nothing is not working. We're paying the cost of R&D for the whole world.
In the case of Canada, the "buy Canadian drugs" idea has almost the same effect as the no-discrimination policy. If you can buy drugs in Canada at the regulated price, then it's almost the same as telling the drug companies that they can't sell them in Canada for less than they do in the US. And that is the reason the Canadian government is reluctant to let Americans buy drugs in Canada. If they do, then the drug companies are simply going to call a halt to the discrimination, and that means Canada will have to pay the same (high) price we are paying.
I don't have a link, but it's my understanding that the prices are regulated in Can. (also subsidized). Gotta remember that it's the government that runs healthcare there. They tell the drug companies what they are gonna pay, and they tell the consumer what he's gonna pay.
I think that is true to some degree, but it doesn't explain everything. Otherwise, why are generics less expensive? They have the same liability laws to deal with.
And even generics are regulated, so if there were truly free competition, the price would be even lower than what the generic companies charge.
Bringing new Biotech drugs onto the market has been slow for years, but Biotech companies are turning the corner and many new miracle treatments should be hitting the market within a year or so. The rats may screw that up.
That's true, and in a sense that is natural. You don't expect some subsistence farmer in Africa to pay for it. So you really have no objection if Big Pharm sells their products in Africa, for local consumption, at a price which covers only the incremental cost of production plus a nominal profit on that cost.The reality is that the Canadian national health care system creates a monopsony - a single buyer - of medicine for the whole country. And that monopsony assays to negotiate for Canada - which is a First World and not a Third World country - exactly the same deal that the African subsistence farmer gets. Canada wants to be treated as a charity case.
And the Democratic Party wants all American health care - nay, all American consumption - to be handled on the same basis. The oil companies should give away gasoline, the supermarkets should give away food, etc. etc. etc.
I don't have any difficulty with some kind of exception being made for Uganda, etc., which could probably be worked out administratively. But I don't see why the US consumer should be subsidizing Canadian consumers, Japanese consumers, European consumers, or Russian consumers.
If we can get rid of the worst abuses, I would be perfectly happy letting the drug companies make a few more cents by discriminating in favor of Ethiopian tribesman.
But the fact is that they don't make a whole lot of money off those folks anyway, and I don't think that should be driving our trade policy on drugs.
Alberto Mingardi: A drug-price path to avoid (Democrats and drug prices)
The curious thing about this idea of drug price regulation is that it only works if you're the only one who's doing it. If everyone did it, then drug companies would have no incentive to invest in R&D. But if you're the only nation that's doing it, then you get the benefit of other nation's R&D expenditure, and don't pay your own fair share.
So it makes perfect sense that the Italians, the Germans, and the Canadians would want to convince us that even though they have regulated systems, our system is much better, and we should continue doing what we're now doing.
I don't think we should regulate prices, but I do think that we should put pressure on foreign nations to deregulate their prices and pay their fair share of the R&D cost. One way to do that would be to tell the drug companies that they can't discriminate against the US consumer, as they are doing now.
-PJ
Yes, for the most part. Except that you've gotta get FDA approval even to sell a generic. So some generics themselves are able to command high prices due to the fact that they have no competition from other generics.
Thank you Arthurus and well-said! I love to see the so-called conservatives attack the drug companies, without having a clue as to the consequences of their actions. Why don't we demand that food companies charge less or go after the oil companies? Oh, that's right, the liberals are already going after big oil. Pathetic.
Hey, Brilliant and sure-fine, name one breakthough, life-saving drug brought to market with the profits made by generic companies. And, believe me, they make lots of profits. They just don't contribute anything back to society.
And don't give me the line about choosing between food and medicine. The food companies don't have patient assistaence programs for their products and the pharmaceutical companies will get free drugs to whoever needs them, at a rate of several billion dollars per year.
We could have a whole lot more new miracle drugs if the drug companies were to extract the same R&D premium from foreigners that they do from Americans. The current situation is designed to foist the entire burden of R&D onto the American consumer. That is not good for the American consumer, and it's not the best way to encourage R&D.
I see no reason why we should be compelled to pay 3X the price or more than Canadians do for the same drug. The Canadians should be paying for the R&D as well. And the only way that is going to happen is if we confront the drug companies and demand that the discrimination stop. Give them a choice between charging more in Canada or less in the US. Ideally, the price will rise in Canada and that will encourage even more investment in R&D than we have.
Allowing Americans to buy Canadian drugs is a camel's nose under the tent that shelters this price discrimination. A better way to handle it would be simply to tell them that if they sell a drug in Canada at a low price, then they can't charge more in the US. But I don't expect Congress to figure that one out.
That's just drug company FUD, and a prime reason why voters rejected special-interest Republicans this year. Canada has no power to "force" foreign pharma to discount prices; all it does is make a single price offer for a huge quantity - buying for the whole country at one time - of each type of medication. The drug company can sell at this price, or refuse the offer. In 57% of all cases, US companies DO refuse to sell, meaning that Canadians don't get that drug from its government health system.
There is such a thing as the TRIPS agreement, which allows foreign countries to break US patents and make their own medications for AIDS and other life-critical diseases if prices get "too high" (whatever that means), but Canada has never invoked TRIPS. The countries that have threatened to do so are typically Third World dumps without any actual means for drug production, especially for export. Our whole patent/copyright system has in any case become such a horrible mess, actually holding back innovation, that I wouldn't mind seeing Brazil or China just thumb their noses at the whole concept and let production blast free.
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