Couple this with a medical insurance system and you'll have a copy-paste model for pretty much every development country (and the United States cough)
Cost sharing induces patients to be price conscious, inducing downward pressure on prices. Most common procedures have prices listed on a sign, for less common stuff you need to ask the doctor for the price.
It doesn't usually cover birth control, psychologists, etc, nor is it a redistribution scheme in disguise.
The system works quite well. The rest of the world should learn from India.
I.e., I pay my average cost, not the average over the whole pool.
If you are a smoking man aged 50-55, BMI 32-35, with diabetes, you'll pay more. You'll pay the insurance companies best estimate of your average cost, not our average cost.
That said, we aren't doing it right at the moment since it's taking us about 16% GDP to do it when other countries have managed to do much better financially with better overall outcomes.
Price consciousness is a marginally good thing in health care. If people are going to get treated for the sniffles, they can easily price discriminate. The real problem is that price transparency, for all the expensive things in health care, doesn't actually help. You can only price discriminate when you understand what you're buying. When you don't understand, price becomes a signal of quality, and people don't compromise with their health like they would with cars. They also are paying with other people's money. In fact, some case studies have found that price transparency causes the lower price guys to simply raise their prices to compete with the higher price guys regardless of quality because patients don't care about price except to the degree it signals quality.
(Assuming "we" means India, though I don't live there anymore.) Fix corruption, the licensing system, the protectionism, etc, so that they become wealthier. Make the rest of the economy as capitalistic as the medical system. It's hard to fix anything with a GDP/capita < 1 lac/year.
The real problem is that price transparency, for all the expensive things in health care, doesn't actually help. You can only price discriminate when you understand what you're buying.
(I think now you are talking about the US.) Strangely, when Indians pay out of their own pocket (in whole or in part), they routinely price shop. Is price shopping a weird skill that Indians have but Americans don't? I suspect not, given that my uninsured mother routinely does it.
Price shopping happens when the payer is directly affected by the costs (note: you mentioned your mother is uninsured) and when you can evaluate the quality (or don't care). It's actually very difficult to evaluate who's good and who isn't because a) statistics aren't often released (because hospitals and doctors block them) and b) the statistics can be difficult to interpret (a good doctor with bad stats can just have a sicker overall population). A big problem was that the data capture to adjust for these factors wasn't there (records were frequently kept on paper and billing codes barely correspond to reality). A big problem has been simply that even when the data was there, it is incredibly expensive to aggregate and report it.
In the US, we are attempting to fix some of these things. Medicare has implemented Quality Metrics and the requirement that doctors implement electronic medical record systems that measure some of the easier things to measure (patient counseled about managing diabetes, summary slip issued at end of visit, et cetera). Hopefully, price transparency plus a modern statistical reporting system will result in price shopping being viable in the next decade (of course the patient must be willing to discriminate).
False. Every other developed country has solved this problem while paying less - in most cases substantially less - than the USA. This while, according to a variety of statistics, getting better health outcomes.
There are a lot of reasons why medicine costs so much in the USA, but the factor that you identified is more of a convenient excuse than "the reason".
[0]http://www.yeshasvini.kar.nic.in/about.htm#about
[1]http://www.narayanahospitals.com/services/corporate-social-r...
Edit: No need for downvoting. This behaviour even has a Wikipedia article. I am ashamed living on a planet where such things occur.
The story has more to do with suing someone for the personal injury that landed the patient in the hospital in the first place, but it's meant to refer to lawyers going out of their way to recruit clients who might not have even wanted to file suit in the first place, or to unethical, enterprising lawyers in general.
It's just that it doesn't grant a patent on A because the patent of C expired and the company decided to call it A or if rejected then applied again by calling it B.
jm2c.
The Indian supreme court recently rejected Novartis' patent on Glivec, because the formulation wasn't different enough to merit a new patent (I don't know enough to know whether that was the right decision; just pointing out that the patent situation is different). The Indian government also has pricing restrictions on ~350 drugs deemed "essential".
On top of this, compared to the US, there's little to no drug marketing in India (yet). Plus lower labor/capital costs, etc.
If every country adopts that policy, which is the direction things are headed because it's the dominant strategy, the rate of medical advancement will be much lower. To quantify, about 58% of US medical funding is provided by private industry. Pharmaceuticals alone spend more than the NIH. NIH in the US spends 29 times more than NHS in the UK on health research, despite having only 6 times more people. The US spends 4 times more per capita than Australia on medical research. This is one of the two gigantic elephants in the healthcare debate auditorium, the other being patient outcomes for comparable patients. Of course US aggregate data is skewed because of the general health of the population (fatness), and those without insurance, but what happens when comparing patient outcomes between people with insurance in the US, with people that are comparably healthy (i.e. fatness and related issues) in other countries. The whole thing is basically a health-and-wealth transfer scheme from the insured to the uninsured.
We see basically the same thing whenever space research is discussed. Pompous Europeans bash US progress and "meager space funding", while the US outspends the entire world combined over 3 to 1 on space research. In the end, the "solution" to both is to cut spending to both medical and space research to global per-capita levels, and let the advanced research go undone, unless other countries choose to start contributing. Of course, that would be a true tragedy of the commons.
Except for when the company makes a tiny modification to the drug that doesn't change its effectiveness and files for a renewed patent, like in the Novartis suit that India's Supreme Court recently (and rightfully) rejected.
Their actions seem to suggest that they do believe the modification increases the drugs effectiveness, but they don't want to pay for any of the R&D behind that.
What's the use of medical advancement that can't help more than 10% of humanity?
It's far more important that we move to a world in which all human beings have access to basic sanitation and healthcare than it is to spend billions of dollars attacking statistically rare diseases producing medicines that will help only a few rich people.
In fact, I'd go one step further and argue that your statement is actually false in the long term. A world where all humans have access to good healthcare and education would actually be a world in which more people contribute to research and development of new drugs and one in which knowledge would advance faster.
A drug under patent might be accessible to 10% of the population now, but considering the number of people who will be able to access it in the future the total percentage looks very different. 50 years from now, long after the drug has gone generic, what percentage of the population who lived over that time would have had access? It would be far more than 50%.
When the patent expires everybody benefits. Until then, it's available to everyone, but they must help pay for the drugs development. If nobody pays, the drug isn't developed, and nobody gets any benefit.
It's far more important that we move to a world in which all human beings have access to basic sanitation and healthcare than it is to spend billions of dollars attacking statistically rare diseases producing medicines that will help only a few rich people.
Would you die for that? You expect others to, no? That's kind of totalitarian. At the same time, this argument is fallacious in the sense that it assumes we should address no problem until the lowest level problem is solved for everyone. That's undesirable for a large number of obvious reasons I will not bother enumerating.
Do the "few rich people" that are helped not end up paying for the R&D of the treatment for everyone else in perpetuity?
In fact, I'd go one step further and argue that your statement is actually false in the long term. A world where all humans have access to good healthcare and education would actually be a world in which more people contribute to research and development of new drugs and one in which knowledge would advance faster.
That's a nice thought. Unfortunately, there is a huge advantage to not paying development costs, in that you can externalize them to others and reap the benefits, which is what many countries, including India and the UK, have chosen to do. In India it's ignoring the patent, in the UK it's setting a price ceiling, which effectively shifts the burden to the US since the profit maximizing strategy is still to sell the drug in the UK because marginal revenue exceeds marginal cost. If the US stops paying, the drug never gets produced, or gets produced much later because there is no private incentive to produce.
All I said was that your hypothesis of a slower rate of medical advancement in the short term might be acceptable if it ensures that (a) more people have access to critical drugs and (b) more human beings have access to basic necessities of life that are taken for granted in most of the western world. Might be good if you respond to this claim instead of setting up a whole bunch of poorly thought out strawmen.
When the patent expires everybody benefits.
You do realize that drug patents are full legal in India, don't you? And the only thing that isn't allowed anymore is evergreening, which is of dubious benefit to society anyway. Further, India has issued exactly ONE compulsory licence (for an expensive cancer drug) ever. There is no evidence for your initial claim that India ignores patents.
I'm now going to ignore the strawman you've put about totalitarianism but I will make one remark about this statement.
Do the "few rich people" that are helped not end up paying for the R&D of the treatment for everyone else in perpetuity?
What is wrong with this? Don't we all benefit from inventions and ideas of many other humans, most of whom aren't rewarded financially from our successes?
If the US stops paying, the drug never gets produced, or gets produced much later because there is no private incentive to produce.
I would like to see citations on your claim that private capital (i.e., not money from the NIH, HHMI etc.) is responsible for the high rate of drug discovery in the US.
http://www.rsc.org/chemistryworld/2013/01/india-supreme-cour... http://healthcare.blogs.ihs.com/2012/11/26/clinical-trial-co... http://www.ahrp.org/cms/content/view/898/84/