This is a separate issue from large emergency medical bills. You can get a drug prescribed for a chronic condition just about anywhere, but if it's produced by a monopolist then you're forced to pay whatever absurd price the manufacturer demands. Adequate competition without IP restrictions can drive drug prices very, very low. This can be seen in the Indian pharma industry.
Drug prices in US go up because of collusion between Insurance Companies and Drug manufacturers.
Would I buy expensive health insurance if drugs cost me $100 a month? Most probably never.
What if the sticker price for my monthly dose of drugs was $10,000 or $50,000? You bet I'd go get an insurance that'd cost $500 a month.
With such sticker shock, manufacturer reaps in profits. Insurance companies get to charge higher premiums.
Solution:
Fix IP laws for drugs in US. If the drug costs beyond the 2x or 5X of what it costs in India, or than the average of drug prices in a few countries, then that drug loses all its IP protections in US. Manufacturer is still free to charge zillions for that product, but there'll be no restrictions on copycats or generic versions from outside US taking over the market.
It'll help in keeping a sensible profit margin for manufacturers without ripping off Americans.
Most problems in healthcare costs in US, are due to insurance companies dictating terms.
India has aggressively forced international pharmas to offer exceptionally low domestic pricing ... if they refuse, the alternative is that the Indian government authorizes generics, regardless of the patent status of the commercial drug.
India also has a "last mile" problem with medical care. It's still too common for villagers to slip through the cracks and not receive regular diagnosis or treatment.
I get the feeling that there is simply no way to get exorbitantly priced drugs to the masses without bankrupting any kind of fund that provides for this (govt/national agency etc). The mistake in your argument is that you assume pharmas are losing out from the market in poorer countries like India. While this may be true to a certain extent, the sales of such drugs would be significantly low if they were bought at the original price. Also, the Indian govt./private sector doesn't provide any kind of healthcare benefits, AFAIK most healthcare is self-sponsored, which is different from US where big insurance companies handle much of the costs.
There is a grey area here. It isn't simply that you try to protect your IP at all costs or try to be over-zealously righteous. As another commenter mentioned, this kind of idea stealing happens all the time, and although it may not be strictly legal, it has done much more good to us than sticking to laws would have.
Politics aside, this is such an interesting market dynamic from the economics point of view. In a competitive market, pharmaceutical manufacturers would all compete on making the same drug at the cheapest price. But patents make this a Government-granted monopoly. On the demand side, patients would like to buy the same drug from the cheapest vendor but because of insurance agencies, do not even see the full cost of the drug individually. This lack of pricing information, combined with the demand for medicines being inelastic (and also not following the law of diminishing returns), makes the demand curve completely vertical.
While the insurance agencies could negotiate with drug makers for competitive prices on similar drugs, they are also competing with the Government-backed insurance entities like Medicare which have vastly different incentives. Clearly lawmakers and budget-conscious bureaucrats would like to get the best price from the drug makers but given a near perfect inelastic demand curve and a monopolistic supplier, there is absolutely nothing they can do.
Since Government granted this very monopoly for the sake of encouraging innovation, any attempt to revoke IP rights that threaten the monopolies' entire business, will be met with extreme resistance. Is it better for the consumers to be in a monopoly market where a necessary medicine costs twice the annual per capita income or risk being in a competitive market where no such medicine might exist if the IP right advocates are to be believed?
Aligning the incentives for all entities properly in this market is not straightforward, especially if you consider US and the rest of the world as being indirectly linked. Gilead knows they can charge $84,000 in the US because of their monopoly. This makes it possible for the rest of the world to get the same medicine cheaper. What remains unknown is, without US being such a cash-cow for pharmaceuticals, how would the rate of innovation in drug formulation change? If Merck, BMS, Pzifer, and J&J can't charge what they want, will pharmaceuticals and India and China take over and create new drugs? Manufacturing drugs is a minor variable cost. Question is, will the fixed cost to create new drugs be made by others? If so, why isn't it being done already at the same scale?
The prices pharma companies ask for is ridiculous and makes the drug unavailable to 90% of the people that need it.
if they priced their drug to make it more accessible they could easily make the development cost back by making money off the 90% they left to die or hunt for drugs on the Indian market.
There needs to be a balance between getting drugs to the people that need it and making a profit. Currently that balance is non existent and pharma companies charge ridiculous amounts knowing full well that us insurance companies will pay it.
You know how the rest of the planet feels when your insurance company refuses to pay for your drugs and you have to pay for it yourself.
I've watched the prices of patented drugs quadruple in less than 5 years, to the point where a 30 day prescription can cost thousands of dollars despite the same medication costing $40 in countries like the UK. Drug companies have absolutely no reason to drive down prices of the patented treatments they have a literal monopoly on.
Drug costs are a great example of where the USA could easily improve, if the lobbyists allowed. Because they are predictable and unceasing, drug costs for chronic conditions should not be covered by an insurance regime. It's as silly as purchasing food or clothing with insurance. Of course, once actual consumers are buying, competition will drive costs down.
That isn't to say I don't have sympathy for those who need extremely expensive drugs on an ongoing basis. That is a hardship, which could be ameliorated by government payments, e.g. Medicare, Medicaid, or something similar. But there should also be a middle category, of drugs that are expensive but which most patients can reasonably afford without government assistance. Drugs in that category will tend to see swift price drops as soon as the FDA allows generic competition.
As long as there is more than one pharma company, there's an incentive to cure chronic conditions because you'll take all of your competitor's business away and can charge a price equal to the lifetime costs of the chronic treatment.
pharmaceutical companies are granted a monopoly on their IP (as everyone else is) because of the extensive, expensive, long term research required to develop the IP. manufacturing costs are almost trivial compared to the costs of R&D--that is to say, there isn't much improvement to be made there.
retail costs can go down, as they do in the rest of the world when governments set price controls, but if every country on earth set a low price on pharmaceuticals, you would begin to worry that these companies would no longer have an incentive to innovate, which is potentially as or more dangerous than the status quo insofar as newer treatments would be less likely to occur in our lifetime.
Your problem aren't patents. Pharmaceutical patents exist all over the world, including in countries with mandatory general public healthcare (i.e. pretty much all of the developed world except the US). The problem is the lack of oversight on prescribed medicine and medical services. Patents are a government mandated monopoly. That's fine, as long as government also mandates and/or negotiates prices as a condition bound to the patent. It seems so obvious, I kind of feel bad to spell out such a trivial interrelationship.
The problem isn't monopolized pharmaceuticals, other countries deal with that as well nor is it too much regulation, it's too little.
Other countries simply accept that there is a monopoly and that therefore the prices will be sky high, if they allow the companies to just set the prices to whatever they want, so these governments set prices and negotiate or empower consumers.
The situation in the US would be very different, if you had nationwide insurance agencies and medicare negotiating drug prices and being able to say no to drugs that provide little to no benefit.
This doesn't make any sense. If you are the sole provider of a drug that is the only drug that can cure a certain illness then it makes sense to charge every single customer exactly as much as they can afford. (probably enough to bankrupt them) You'd expect extreme price discrepancy in those cases.
This applies even if the drug is just the best one for what it does.
edit
Unless you mean that regulation in the form of patent protections.
Okay let me give you a specific case. There is a drug for Hepatitis which is crazy expensive in US at $85K. They are licensing it for $2K in India. Even when you factor for cost of living differences, it is still less expensive in India. The drug companies don't care because they can make their profits in the US while making it cheaper elsewhere.
Once drugs are not protected by patents, competition should reduce prices. Unless competition is not working because of price fixing or something else related.
India like many countries uses [selective] price controls. If you cannot meet the stipulated price you cannot sell your drug at all.
Many countries can get away with it because manufacturers figure it's better to make a tiny profit than to be completely cut off from a market. And fighting it can be too much effort when you're dealing with small markets. American consumers in a lot of ways are subsidizing the rest of the world. One idea to fix it was to mandate that a drug company cannot sell to non-American consumers at a cheaper price.
When it doesn't work as well, drug availability is impacted and criminals make billions illegally exporting these drugs. And pharmaceutical corporations suffer, but that's not a problem for most countries.
(1) Medicine has a very inelastic demand function. If you need substance X to stay alive, you'll pay anything to get it.
(2) Costs are hidden from consumers. If insurance / Medicare is paying for it, it literally makes no difference to the end user if it's $5, $50, or $50,000.
(3) Free-market forces are distorted by patent monopolies and lack of diversity in the supply chain. With a patent, you can crank up the price as high as you want. Ditto if you're the only supplier and it'll take some time for competitors to bring production online, or you can deny them access to samples for the equivalence testing your competitors need to prove to regulators that their drug is the same as your drug.
(4) Broken incentives for developing new drugs. A patient's going to be taking a drug to treat their diabetes / ED / high blood pressure for the rest of their life, whereas something like an antibiotic is only taken for a couple weeks. Guess which one is more profitable, hence attracts more R&D money?
What's the solution? I don't know. Maybe market reforms to align the incentives; perhaps even bounding pharmaceutical companies' profit margin to some multiple of their costs (but of course you'd have to be careful about the wording of the regulation and auditing for compliance, to make sure it can't be gamed by e.g. deliberately inflating the costs). Or perhaps even some kind of socialism where the government tells people what to produce or how much to sell it for (agricultural subsidies might be regarded similarly -- the government is deliberately manipulating the market to push down the price and push up the supply of goods necessary to sustain life, so shocks don't result in lethal shortages).
Bernie Sanders at one point talked about replacing patents for new drugs with prizes, but I think he may have given up on that.
They charge everyone as much as they can get away with, its still the same old supply and demand. The issue is that say France/Egypt/India can provide an organize front when dealing with pharmaceutical companies so they get better deals.
Ever seen the video with Ron Paul being asked a question with what should happen to a person who has no insurance but needs immediate medical care and the audience shouted "Let him die!". There's your answer.
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