Wait, it sounds like you are saying that buy paying higher prices, the USA is subsidizing the rest of the worlds healthcare costs. Is that true?
For Q1 2022, pharmaceutical sales only...
AbbVie: 10.345 Bn US vs. 3.19 Bn ex-US [0]
Roche: 5.292 Bn US vs. 5.308 Bn ex-US [1]
BMS: 7.694 Bn US vs. 3.954 Bn ex-US [2]
So US provides at least >= 50% of total revenue, and in some cases considerably more. Also, given the higher prices, it's likely that the US represents a considerably higher proportion of profit than this - and therefore a major change in drug pricing in the US would be hugely disruptive for the industry.
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[0] https://investors.abbvie.com/static-files/b37af441-45e9-4e16...
[1] https://www.roche.com/cec228fd-2a55-41e7-a718-19e658c7048d
[2] https://news.bms.com/news/details/2022/Bristol-Myers-Squibb-...
That's the wrong way to look at it.
Your companies are just skinning you alive, because you're letting them.
So MANY of these discussions are pointless when we've had huge changes in the past and 5 years later people can barely remember the past discussions.
Fear of change is huge, the impact of the average change is in general quite small, in the medium to long term.
Unfortunately, this requires the intellectual honesty for people to admit that profits do in fact Drive Innovation which seems to be a sticking point for most.
The rate of innovation would slip for global drug development without the promise of high prices and blockbuster profits in the US market.
I have worked for a couple different Pharma companies, including those HQ'ed in Europe, and this is basically the situation. EU based Pharma companies make most of their profit in the US (almost every pharma company does).
There are other ways to incentivize drug development and/or defray the financial risk of development, of course... but this is situation today... has been for a long time.
Govt then auctions rights to productize drugs. Industry pays govt a royalty. Modulate the royalty to incentivize desired outcomes. eg zero (or negative) royalty for malaria, 3000% for esteem remedies like viagra.
Further, when there is no market demand for obvious public health priorities, govt contracts with industry, paying for mfg, distribution, marketing, training, whatever.
* Clearly, this would hugely disrupt the current pharma business model.
* One obvious initial response would be to limit investment into research. However, this isn't a viable long-term solution, given research is the lifeblood of continuing success in the industry. It would therefore increase pressure for regulatory reform - essentially to reverse the trend of recent years, and make medicines easier/quicker (and therefore cheaper) to develop.
* Other typical business-leader responses: cost-cutting, job losses, mergers, etc.
* Pressure on developed countries outside the US to pay higher prices
* Longer-term, it might disrupt the current model of drug research funding altogether. The industry is already at a point where development of many drugs is close to unprofitable, and that trend is worsening as regulators become ever-more conservative, and of course with each new successful drug, the next one becomes progressively more difficult to find. The change we're discussing might well mean that drug discovery and development is simply no longer an area where profit can be reliably made - and as such shareholders remove their investments, and pharma companies would merge/struggle/fold. Faced with this, governments and regulators would presumably need to work together to find ways to continue the funding of drug development - and make up a overall shortfall in research and development funding similar to the GDP of a decent-sized country.
(To be clear, I'm not disagreeing at all that the US is effectively supporting the industry - just the term subsidy in the way it was used.)
citation needed
> as regulators become ever-more conservative
... cough
the simple problem is that the drugs that work very well are hard (eg. personalized gene therapy) and there whole healthy-industrial complex is not set up to solve hard problems, it's set up to sell treatments to the market, keep the machine churning, buy promising new formulas from small research labs, do the larger trials, manage the FDA, market the shit out of those that make the cut, rework formulas to keep generics at bay, and so on.
the other trivial problem is that no one wants to confront basic problems affecting health. (obesity comes to mind. nutritional studies are so underpowered it's laughable. also let's say mental health. tinkering with the brain always has the nasty side effect of oh what if the drug accidentally makes you feel funny/good instead of just not-miserable - see the weak results of the esketamine, also see how psychiatrists are afraid to use desoxyn [meth], because oh the paperwork & peer pressure.)
note, I'm not saying that the current setup does not deliver results, and that your predictions are without merit. (they are realistic.) what I'm trying to make explicit is that the industry is already ripe for structural reform. (the easiest no-brainer would be to simply fast track drugs already approved by the EU EMA; tax waste spending [spending that is not R&D or manufacturing - eg. marketing/sales]; make the FDA approval process a lot more standardized and faster; start running publicly funded trials on drugs that are already prescribed by doctors but are not authorized to be marketed)
Look into eroom's law of drug development. There are a lot of papers on the subject. It describes R&D cost, which covers more than just discovery, but gets the point across.
https://www.google.com/search?q=eroom%27s+law&tbm=isch&ved=2...
And development would continue there.
I'm guessing that'd be the best for everyone except for the profit maximizing pharma companies in the US
Didn't know about NHI.
If both countries are limited to a gross margin of $1 and you expect the lifetime gross income to be 0.2B this is now going to be a massive net loss. So you will not invest in it.
If the whale suddenly stops paying, you can continue to profit from regular customers you just don’t make the obscene profit from before.
Can corporations continue to survive with less profit? I think some individuals have to learn to live with less income, so I’m sure a big pharmaceutical company can figure it out, I’ve had to cut out most meat from my diet in lean times, I’m sure pharmaceutical executives can do something similar.
Given you already have the drug, sure, it makes sense to keep selling it. But if you try to research more drugs and make more games with no whales, you will quickly go out of business. The video game analogy is apt. These kinds of video games are only possible because of whales. If whales could not exist due to regulations similar to drugs, they would not be developed / researched
As others pointed out, it would affect decisions for future research. Because you can't just rake in the money in the US you must be more wise with spending your research money.
> If they could raise the prices they would have already.
Good point
The government literally tells you "you sell it for this much".
And guess what, "that much" already covers their costs plus profit, so they keep selling.
It's just profitable for them to price gouge you, and you don't fight back, at all.
As a general rule, defending the "big guy" on their behalf is generally a losing strategy. They can defend themselves already, no need to stand up for them.
2. I have family working in the medical and pharma fields.
3. I doesn't even matter what and who I know, this tells you everything you need to know:
https://www.macrotrends.net/stocks/charts/PFE/pfizer/gross-p...
The profit graphs for most of the Big Pharmas look similar.
They're hugely profitable. For sure they could lose a chunk of that and do fine.
It's just greed. A bit of greed shows ambition. A lot of greed corrodes everything. It's just pathological at some point (money is not points on a mobile game leaderboard!).
I have seen revenue projections for go/no go development decisions. US and EU revenue are primary considerations, and heavily weighted to the US.
Some products are never expected to turn a profit in small countries even if the product has already been developed. Passing the regulatory barriers in these cases is done for humanitarian reasons.
A lot of that healthcare spend is wasted on administrative overhead of the US system.
"U.S. insurers and providers spent $812 billion on administration, amounting to $2497 per capita (34.2% of national health expenditures) versus $551 per capita (17.0%) in Canada: $844 versus $146 on insurers' overhead; $933 versus $196 for hospital administration; $255 versus $123 for nursing home, home care, and hospice administration; and $465 versus $87 for physicians' insurance-related costs. Of the 3.2-percentage point increase in administration's share of U.S. health expenditures since 1999, 2.4 percentage points was due to growth in private insurers' overhead, mostly because of high overhead in their Medicare and Medicaid managed-care plans." https://pubmed.ncbi.nlm.nih.gov/31905376/
The medical industry in the US has such a huge overhead, it's scandalous. You're feeding millions of administrative leeches.
Companies contract when they have losses... (or when their revenue goes down, but only if they predict it will keep going down, while in this case this would be a 1-time shock).
I see a bunch of people defending these corporations, I have to ask: why? Why are you defending corporations with tens if not hundreds of thousands of employees and decades of years of profits in the mid-to-high tens of billions of dollars? Their abuses are well documented, is it Stockholm syndrome?
At one place I worked, our general manager literally said, in a meeting, that if too much Canadian product crossed over into the US market, the company would stop selling to Canada. US prices for our drugs were higher than every other country in world, often times by 3x or more. Almost every other country in the world, besides the US, negotiates price as part of the drug approval process.
It is insane that the US continues with the status quo.
https://www.statista.com/statistics/267810/expenditure-on-re...
You didn’t really make a claim so I don’t know how to refute anything
The metric is not useful to the point you’re making.
You get what you measure. Americans decided they want to measure profit and so they think their pharmaceutical companies must be working well because of how profitable they are. Sure, the people are miserable, many can't afford medication they need, but there's so much profit that means it's success right?
Nope.
The owner's hilltop mansion and two yachts don't actually make sick children well, or prevent heart failure or anything like that, spending on R&D is not in fact linked to company profits, instead it's necessary for these companies to survive because innovation is their lifeblood. The profits are an excess.
What we actually wanted wasn't richer executives, or more approval paperwork, it was healthier people, and the US scores very badly on that.
And there's no need for making medicines which merely "used to be new" any more profitable than say, felt tip pens or flour. I take Levothyroxine every morning (for the rest of my life) and they figured out how to synthesize that about a hundred years ago. Nobody who worked on that project is even alive still, let alone relying on some hypothetical profits from their work. But guess what, in the US it'll cost more than it does here because the US values profit for pharmaceutical executives over healthcare for its citizens.
The whole point is that the US being profitable allows research for new drugs, not that profits aren’t high in the US. Heck, Pfizer sells stuff at cost to about pretty large portion of the world now.
No, because the US is not the center of the universe.