A modest proposal for controlling prescription drug prices

[billroper]

Prompted by a post from shsilver, I throw out the following proposal because I'd be interested to see folks take potshots at it:

Conceding that drug companies spend a lot of money on marketing, it's also true that they spend a lot of money on research and development. As someone who benefits from modern pharmaceutical research, I'm loathe to strangle the goose that's laying the golden pills. On the other hand, I know that we pay more for prescription drugs than most other places on the planet. And to some extent, that's ok.

The U.S. is the richest and most powerful nation on the planet. We consume a lot of the world's resources. I look at higher prescription prices in the U.S. and say to myself, "Ok, we're subsidizing these drugs for the poorer countries of the world." And maybe that's not such a bad thing. We should subsidize these drugs for the benefit of the third world.

But why should we subsidize these drugs for the benefit of first world nations such as Britain, Germany, France, and Canada? If I understand correctly, those governments negotiate lower prescription prices with the threat of expropriation of patents if the drug companies don't comply and -- as we've seen in the press a lot in the last few years -- they're paying a lot less than we are. (I'd add Japan to the list, but I really haven't seen any discussion of how this is handled there.)

Ok, so suppose we picked out a representative group of first world nations and announced to the drug companies that we were going to fix prices at a generous 110% of the average price that they charge in those countries? We'd still be paying more than anyone in the rest of the world for our drugs -- thus subsidizing drug research to a lesser extent -- but we'd effectively be demanding that the other first world nations pay their fair share of the research subsidies.

Is this a good idea? A bad idea? Enquiring minds want to know.

Comments

[katyhh.livejournal.com]

Out of curiosity: How much *do* you pay for prescription drugs - is there any percentage / rate you can give me? I would look up what it is here, don't know it by heart exactly cuz I don't take all that much prescription medicine on a regular basis ...
I don't really have the feeling that it is particularly cheap in this country, though ...

[billroper]

Well, let's pick on Actos 30 mg, which I take for Type 2 diabetes.

At drugstore.com, they charge $141.99 for 30 pills, $409.97 for 90 pills.

At Canadian Pharmacy Trust, they charge $252.50 (US) for 90 pills.

I pay $25 for 30 pills ($50 for 90 pills via mail-order) with my prescription card. My health insurance picks up some amount of the difference, depending on what they've negotiated with the company that makes the drug.

I don't know what the price is in Germany (and haven't been able to find it in a cursory web search). But Canada's prices look to be about 62% of ours in this case. That's a pretty good discount.

[billroper]

Here's a brief Congressional report on the subject:

Prescription Drug Prices in Canada, Europe, and Japan

[kevinnickerson.livejournal.com]

It's not a bad idea, but it's not going to happen either. We played with price controls in the Nixon era (I can't recall if that covered drugs). I don't think it will happen again. Instead, we prefer to piggyback off of someone else's price controls.

[backrubbear.livejournal.com]

with the threat of expropriation of patents

Ok, I don't get this.

The whole intellectual property tower of cards depends on mutual respect for each other's IP. If they ignore our drug patents, we ignore their patents on something else, yadda yadda yadda.

I really can't believe that they'd outright say this.

On the other hand, I've seen it said by many African countries over such things as HIV drugs - and to some extent, I can agree with them.

[billroper]

The threat of patent expropriation is commonly used by third world countries in these cases, but I recall -- and sadly, can't place the reference -- that some of the first world nations have made such threats when dealing with very effective (and high-priced!) drugs that are under patent in order to coerce lower prices.

But that may just be me remembering incorrectly as I don't have a strong recollection of the source.

[shannachie.livejournal.com]

"...But why should we subsidize these drugs for the benefit of first world nations such as Britain, Germany, France, and Canada? ..."

AS far as I know, subsidising drugs to other than third world countries is economically speaking also done to undercut those countries' own chemical or pharmaceutical production. It is not necessarily just a charitable move. Selling at dumping prices to kick out competition is a time-worn procedure, internationally illegal but still much adhered to. Patents are internationally binding. I would be relatively astonished to hear that European countries could actually threaten with the expropriation of patents. Sounds to me more like an excuse to sell drugs at high prices at home while trying to infiltrate other markets at dumping prices.
I bought eye drops today. They are nothing more than artificial tear drops to keep my eyes moist. I paid about 17 $ for a small bottle about 2 inches high. I did not think that was overly cheap.

[billroper]

If I understand correctly, we also use drugs that are patented by foreign firms. Those drugs are also expensive here. So it's not just a case of "dumping" cheaper drugs on Europe to undercut their pharmaceutical firms.

Are the eye drops a prescription item? I agree the price sounds high, but I know I spend about $8 for a similarly-sized bottle of soft contact lens cleaner and that seems high to me. :)

There's no question that there's some incredible markups that occur on some of these items. I recall that I was (within the last few years) able to buy Walmart's house brand of saline for around $1 a bottle when Bausch & Lomb's saline was at least twice that. And that's just preserved sterile salt water...