Why do prescription drugs costmore in the US? | Hacker News Reader

Why do prescription drugs costmore in the US?

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11 pointssophcw6 comments

Because we don't have cost controls!! It's as simple as that. Every other advanced (or whatever you want to call them) country on earth has cost controls on their health care.

EDIT: every one of the countries cited in the article have cost controls except us.

Also, collective negotiation. The whole of the British National Health Service buys drugs and medical devices through a single process, as do most other nationalised health services. The NHS are particularly good at price negotiation and the prices they pay are publicly available[0], so other health services frequently use them as a basis for negotiation.

The fragmentation of the American healthcare system diminishes negotiating power, and creates perverse incentives between the people who buy drugs, the people who authorise that cost and the people who ultimately fund the system.

[0] http://www.drugtariff.nhsbsa.nhs.uk/#/00241786-FA/FA00241713...

If the US had health care cost controls (and if every state expanded Medicaid), its healthcare system would be pretty good. It's already quite similar to the Swiss system, except for this critical lack of cost regulation.

As far as I know, Massachusetts's "Romneycare" (the blueprint for Obamacare) was improved to add these cost controls, but I don't know how it has worked out for them. They seem to have very high per capita health care costs relative to the rest of the country.

Not as a criticism of your logic but out of curiosity I woul love to know if the per capita health care cost statistics you read or are thinking of, are including or excluding people not paying for health care. Its a common tactic in the manipulation of population statistics to "chose what's included" and in this case the inclusion of people not paying would lower the per capita cost and excluding the would raise it. If the Massachusetts and nation stats don't make the same choice on this matter it makes them much harder to compare fairly.

Actually, thanks for prompting me to check on that stat. It came from here: http://kff.org/other/state-indicator/health-spending-per-cap...

And in returning to it, I realized that it's from 2009!

That said, it seems like it's simply total health care spending divided by population per state. But I'm not sure. Either way, it's pretty outdated.

> Every other advanced country

This meme is repeated so much and it's really glossing over the truth. It's usually referring to Europe, Australia, and Canada. Sometimes Japan. What's left out is that most of those countries are economically stagnant, have massive youth unemployment, and exercise almost no international influence. The West has been in a rut for a couple of decades and the US is actually the shining star of the bunch. We have the most productive, most innovative, and most dynamic economy of all of these countries. We are wealthier per capita than pretty much all of them, save for a couple city-states and oil-rich countries. Let's keep that in mind when we use this "every other advanced country" meme.

By centralizing all procurement of a drug for an entire country through a single contract, of course countries are able to negotiate better prices than what Americans pay in a more free market. This is especially true given the structure of the pharma business, with massive up-front costs and almost-zero marginal costs. You could do the same with countless products. But this is it's own kind of abuse. Instead of being paid the market price, pharma companies are paid the lowest-price they could absolutely tolerate. They also have to worry about the political fallout of walking away from a deal when the cheap-skating government tries to blame them for the lack of a deal.

There's definitely ways in which drug pricing can become abusive and needs to be regulated, especially because government intervention via patents is partially responsible for enabling these abuses. But let's not throw out the baby with the bath water. A free market for drugs makes sure that companies can recoup their investments and make a reasonable profit. If pharma companies don't feel that they can do that, they won't invest in new drugs. Also, I don't want to live in a place where the availability of a treatment is determined by some government committee that determines what the value of a month of my life is.

A final thought, sticker prices for drugs are thrown around as evidence that drugs are overpriced, but 1) no one ever pays the sticker price, it's always negotiated way down and 2) these drugs provide immense value. Antiretroviral drugs, for example, turn HIV from an imminent death sentence into a very manageable disease like diabetes. Thousands of dollars a month is pretty reasonable when you consider that.

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