Drugs from canada

[esquire.]

Can anybody here explain the pros and cons of shipping drugs from Canada into the US and selling them for a lower price than what we currently pay? And, why are drugs from Canada are so much cheaper than American drugs?

Maybe, I'm naive, but I find it difficult to believe that politicians could be bought off so easily by lobbyists with regard to this issue. This is something that most voters can easily identify, and recognize how it affects their lives. There's gotta be a better reason than just money.

There seems to be two reasons that are argued against it: safety, and how the profits drive R&D.

I don't believe the safety issue. I just don't believe that drugs from Canada would somehow be less safe than ours.

And, for R&D, I don't know enough to decide if its true or if big business is just being greedy. From a capitalist point of view, they have the right to charge what the market will bear. Yet, they don't want us to be capitalistic in return, where the gov. would use its bulk buying power for lower prices. That was specifically written into the new drug law to prevent.

 

[Kai]

I am in the Pharmaceutical industry, so understand that I have some biases here.

First of all, the current cheap drugs from Canada option will not last much longer, at least in connection with branded, non-generic drugs which are still on patent (which are the ones which are most expensive anyway.) The reason is that the Canadian market is smaller than the market for the New York City metropolitan area, and drug companies are not going to screw up their entire price structure in the US by selling drugs cheap into Canada for resale into the US. They are already tightening up supply to Canada, and new drugs will likely not even get approved in Canada or be for sale in Canada. (Why go to the trouble to gain approval and market the drug there if it's just going to screw up your most lucrative market.)

The reason that drugs in the US are more expensive than drugs overseas, is that generally speaking, the price for drugs overseas is negotiated with a regulatory arm of a foreign government. If you want approval to sell your drug in their markets, you have to negotiate a price in advance with their national health care system. Almost always, this price is going to be lower than the free-market price that one can get in the US. Typically, US drug companies have been willing to accept the lower margins outside of the US, because it didn't affect their higher margins in the US. There are some exceptions, however. Most notably, Bristol Myers told the Japanese to stuff it, when the Japanese health ministry low-balled them on the pricing for Bristol's anti-cancer drug, Taxol. The result is that the Japanese didn't have access to Taxol for more than a year, until consumer demand finally forced the Japanese government to offer BMS a more reasonable price.

As to whether or not Amercian consumers are getting gouged, I would argue that they both are and are not. In general, high drug prices reflect the huge investments, long lead times, and very high risks associated with drug development. For every blockbuster drug that makes tons of money, there are 20 or 30 that never make it, where literally hundreds of millions of dollars (for each one) in development costs go down the drain. The politicians love to point out that a drug which costs $1 to manufacture is being sold for $20. They don't focus on the fact that manufacturing costs are almost irrelevant in the drug industry, and the the real cost of doing business is in development. They also don't like to focus on the fact that drug costs are a tiny percentage of health care costs in the US.

Where Americans are getting screwed is that the American consumer is footing the lion's share of the bill for development, while Europeans and Japanese, and others are getting a ride on the coat-tails of the Americans. This is fundamentally unfair. What needs to happen, is that pharmaceutical companies need to level out their pricing world wide. Charge the Europeans, Canadians, and Japanese more, and the Amereicans less. That would be fair, and I believe it will be the ultimate, long term result. It will be slow in coming however. It will take some pharma company executives with balls and a blockbuster drug to be able to force such a change.

As for safety, assuming that the pharmacy is not inept, fraudulant, and that the drug has been handled correctly in shipping, drugs from Canada and Europe should be just as safe as those purchased in the US. The problem isn't in the drugs, but in the distribution chain. If the source is reliable, the drugs should also be reliable. The problem is that you can't necessarily judge the reliability of some internet pharmacies. Do you really want to wonder about whether or not your drugs are really cheap because they are out of date?

Just my 3 cents.

 

[faustian bargain]

just to add another small wrinkle, one reason why the development costs for pharmaceuticals are so high is that the FDA requires pretty extensive - read expensive - testing for each drug that is proposed. they have to actually go so far as to build a prototype manufacturing facility and manufacture finished product, before it's approved. and this is already after a long process of lab testing required by the FDA.

if you want the government to be responsible for the safety of your drugs, you have to be willing to swallow (or make other people swallow) the associated cost. another fact which is usually glossed-over by popular political ideology.

 

[esquire.]

I totally understand the high costs of research. Its a business, and I believe this industry is one of the most profitable industries around. But, don't they spend more on advertising than actual R&D?

My big complaint is how the new medicare law was written by lobbyists where they said the gov. couldn't use its bulk purchasing power to get lower prices. For most commodities, if you're a big buyer, you will get special discounts. I fail to see what's so wrong with the gov. demanding a special discount if its going to buy so many drugs. Most items have a built mark up because you don't know how many items will get sold. If you offer them a steady stream of business, then most businesses are willing to mark it up less. People like verogroup are always talking about how great the market is, but big business is trying to discourage true commerce.

 

[Kai]

I totally understand the high costs of research. Its a business, and I believe this industry is one of the most profitable industries around. But, don't they spend more on advertising than actual R&D?

My big complaint is how the new medicare law was written by lobbyists where they said the gov. couldn't use its bulk purchasing power to get lower prices. For most commodities, if you're a big buyer, you will get special discounts. I fail to see what's so wrong with the gov. demanding a special discount if its going to buy so many drugs. Most items have a built mark up because you don't know how many items will get sold. If you offer them a steady stream of business, then most businesses are willing to mark it up less. People like verogroup are always talking about how great the market is, but big business is trying to discourage true commerce.

Advertising costs don't come anywhere close to research costs for the majority of prescription drugs. There are some exceptions (Viagra, Rogaine), but the majority of prescription drugs are marketed relatively cheaply primarily through pharmacy, prescriber and hospital channels, rather than targeting mass market consumers.

As for medicaid and purchasing power: The government does get a lower price because of its bulk purchasing power. For many drugs, medicaid reimbursement levels are lower than those paid by many private parties. Medicaid reimbursment levels are competive with private sector purchases.

The real problem with health care costs in the US isn't the fact that Big Business is stifling competition. The reason health care costs are spiraling upward is that the consumer of health care is not the person who pays the bills, at least not directly. America has an insurance model of paying for health care, whether private insurance or medicaid coverage. This model encourages waste and abuse and is by its very nature anti-competitive. If consumers were required to pay a larger portion of their own routine health care costs, and insurance was more focused on protection from catastrophic and unusual expenses, consumption would drop to a more reasonable level, and the entire market would become more competitive, because consumers would become more cost conscious and the market would be more price sensitive.

 

[faustian bargain]

I fail to see what's so wrong with the gov. demanding a special discount if its going to buy so many drugs.

not to get overly political about this, but with the government involved the 'healthcare industry' is by definition currently not a free market. the degree to which the government is involved is the degree to which it is not a free market. i don't know enough to say this with certainty, but i would speculate that the rise of healthcare costs could be linked to increasing government involvement, and to the creation of bureaucratic, centralized insurance systems (as Kai mentioned).

/andrew

 

[esquire.]

Okay, so we've established that gov. has bulk purchasing power with Medicaid patients, but what about Medicare. From what I've read, it doesn't seem like it does. And, the gov is going to spend far more supporting Medicare, than Medicaid which helps the poor.

As to the escalating costs, I've never understood the reasoning behind preventive care. To me, it just seems like you're pushing back the start of any illness, and that if you don't get ill from one thing, you'll get ill from something else.

The costs of health care is so high because of the fact that medicine is geared towards prolonging the patient's life, no matter the odds. I've got a family friend, who's got cancer and its already spread. So, this means there's not really any chance of saving her, but they've already spent over a million dollars anyways for chemo and hospital treatment, etc.. Of course, if she or her family had to pay for it, they couldn't afford it. So, in a way, insurance is resposnible yet there's no way people could afford health care without it.

 

[BarePaw]

just to add another small wrinkle, one reason why the development costs for pharmaceuticals are so high is that the FDA requires pretty extensive - read expensive - testing for each drug that is proposed.

Much of this testing, depending on the need for the drug, is subisdised by the government. Often times, the drug companies play up the research costs and then fail to mention that the taxpayers already paid for them. It is true that other countries are benefiting from research costs that Americans pay, however it is not necessarily just the Americans buying the drugs who are paying, but all Americans who pay taxes.
I am currently a pharmacy student hoping to one day run an independant pharmacy. What I would like to see is for American pharmacies to be allowed to import drugs from foreign distributors. This would be the quickest way to break down the price differences. It would also be the best for the patient in that the responsibility for quality control is placed back on the shoulders of a pharmacist that they see face to face every time they go to buy their medication.

 

[Kai]

Much of this testing, depending on the need for the drug, is subisdised by the government. Often times, the drug companies play up the research costs and then fail to mention that the taxpayers already paid for them. It is true that other countries are benefiting from research costs that Americans pay, however it is not necessarily just the Americans buying the drugs who are paying, but all Americans who pay taxes.

This is simply not a true statement. In almost all cases, the government does not subsidize drug testing. The only successful drug in the past decade which had significant government investment in clinical testing was Taxol, and BMS purchased the government's data for considerably more than the government's investment. Even though Taxol represents probably the extreme example of government involvment in drug testing, the government's investment in Taxol was probably less than 1 percent of the development costs BMS expended to get the drug approved.

It is true that the government spends tons of money on research. The NIH budget is huge. However, almost all of this money is spent on basic research which very seldom leads to an actual drug product. Very little of this money is spent on clinical testing.

The government does not subsidize the clinical testing of pharmaceutical companies at all. If you believe this, then you are simply not aware of how the drug development process works in the US.

The way that all of the US taxpayers pay for drug research costs is by the US paying medicare and medicaid prices which are higher than those paid by people outside the US. This is a price issue, not a testing subsidy, however.

 

[johnapril]

http://www.newyorker.com/critics/atlarge/

 

[nightowl6261a]

Much better coming out of Columbia, more bang for your buck....