I dare say there’s a national consensus that Congress should mandate that the federal government negotiate drug prices with pharma companies:
A new poll shows that the overwhelming majority of Americans favor allowing the government to negotiate prescription drug prices for the Medicare program, suggesting there will be considerable political pressure on the next Congress to do so.
Eight-five percent of the 1,867 adults polled in the Kaiser Family Foundation survey released yesterday said they favored such negotiations, including majorities of Republicans, Democrats and independents.
Heck, at 85% they probably got some senior executives of pharmaceutical companies in there, too. Seriously, PhRMA and the DeLay-ist GOP congress really went a couple of bridges too far on this law. You can’t just reach into the pockets of the taxpayers to the tune of $1.2 trillion over nine years and not expect anyone to notice.
It’s amazing that it’s taken so many years of getting gouged by the pharmas before people finally woke up. Five years ago this would have been unthinkable.
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That being said, pharma spending is only 10% of healthcare spending – and it’s probably the most cost-effective 10%. When are folks going to get as rankled about the other 90% of their healthcare dollars?
how you lefties demonize the pharma companies. Really disgusting.
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These folks are out there doing some of the best stuff you can do – inventing new medicines – and according to liberals they are the villains. They outlay giant amounts of capital at great risk (seen the Pfizer news this week??) and once they invent some amazing new treatment, all of a sudden you think everyone is entitled to it just because they need it. And then the inventors of medicine become the bad guys.
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Where do you think the $1.2 trillion is going to come from? How can you be blind to the fact that you will kill the pharmaceutical industry if you price control it?
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Demonize big oil, ok fine. Demonize big finance, big agribusiness, big walmart, big whatever has become a synonym for evil for you guys. But you really go too far when you demonize big pharma.
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Here’s a suggestion: demonize big government.
When Jason Varitek brings Scott Boras to the table to negotiate his contract, is he “demonizing” the Red Sox? No. He’s negotiating the best possible deal for himself. Why should the federal government unilaterally disarm on behalf of the taxpayers?
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Demolisher, you apparently aren’t aware of the hijinks the pharmaceutical lobby pulls, at the federal and state levels. Check this out.
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BTW, I have a couple of very good friends who work for big pharma companies — great places to work, BTW. But those companies are not entitled to max out their earnings (20%+, as I’ve pointed out in other threads, totally beyond other sectors in the economy) at taxpayer expense.
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Demolisher, what’s a fair profit margin for pharma companies? How much is enough to keep them in business? You tell me.
I dont see how it could be any different – maybe there is a way but I just can’t imagine it. Other governments “negotiate” with the drug companies, that means they have price controls. Most of those countries aren’t inventing alot of new drugs; we still are because our market bears the innovation burden for the rest of the world. You put in price controls, and you’ll knock out the majority of pharmaceutical innovation. You may get today’s drugs cheap, but your children and grandchildren won’t have the incredible new treatments that are now possible to invent due to genomics, etc.
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Forgive me for not reading the entire PBS article. I am aware of multiple hijinx carried out by the pharma industry; Neurontin comes to mind, and Vioxx of course. If you look at what just happend with Torcetrapib, it seems that Vioxx cases are the exception rather than the norm. There are unethical, unscrupulous people all over the place and thats too bad but it would be unrealistic to expect the pharma industry to be free of scandal. Lets not tar the whole group though; bear in mind that they invented the medicines that you and your family and friends use to improve your lives.
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If you ask me how much money we should give the pharma’s at taxpayer expense, i would say $0. However, if the government wants to buy drugs, then they have to pay the price that the pharma’s charge; this is how the market works. You can buy something or not but you can’t choose the price and then still buy it. Not when you are the government, anyway.
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Your assertion about how much profit a pharma is entitled to and your question to me on the subject literally blows my mind. I can barely respond; how godlike must I think I am to tell a company what profit they should earn? This, Charlie, is still a free country. We don’t tell each other how much we can earn. Not yet at least. The market tells us that based on how useful our products and services are.
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Finally, if you are somehow willing to calculate (and bring to pass?) how little pharmas can make and still stay in business; ok. The question you should be asking though isnt how much for them to stay in business; eventually their medicines will become generic and so pushing them out of business is a relatively short term problem. The real question is: if they made more profit, how many new drugs would be being invented? How much more investment and innovation would flow to and from that sector? If they made less profit, then how much less? Given the risk, how much less?
I would like to point out some useful facts. Let’s take this from demo above:
and follow it with this
So now we’ll end with a meeting of the minds so to speak.
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How’s this: We’ll have the U.S. government extend the drug purchasing it already conducts thru the VA Program (Veterans Affairs) with Pharma and “pay the price that the pharma’s charge” so that the rest of us in this country may benefit from this example of “how the market works”.
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Are we all happy now?
taht Canada has price controls? Do you think drugs are just magically cheaper there?
which provides the opportunity for price negotiations. “Aren’t you aware” of that?
My rant, above, while directed at Charlie’s post, did specifically not take aim at allowing or failing to allow Medicare direct negotiation power. That’s a question that I’ve yet to answer for myself.
Ann, you’re cherrypicking.
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You’ve specifically picked the drugs WITHIN THE VA FORMULARY and you’re comparing it to retail. First, VA gets 15% off the Medicaid pricing and Second, can negotiate within its Formulary.
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Let’s try this one: Lipitor.
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VA: Oops, can’t get it.
All the advocates of ‘direct negotiation’ point to VA and cherry pick a few drugs like Zocor to show how comparibly cheap the VA is, however, note that 40% of the VA covered also opt for Medicare D.
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I’ll repeat it differently, 2,000,000 think VA is so good, they spend more and opt for Medicare D.
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Why? The VA’s formulary is poor relative to Medicare D. 1300 drugs and most are irrelevant.
I just did a quick look up on the military pharmacy site. From http://www.tricare.m…
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“Lipid-Lowering Medications (Statins) – As a result of a national pharmaceutical contract for statins, Zocor (simvastatin) is the preferred “high-potency” statin in the TRICARE Mail Order Pharmacy (TMOP). The TMOP will not dispense the medications listed below unless your health care provider provides information showing that it is clinically required to use that product in place of Zocor (simvastatin), and the prior authorization is approved by the TMOP contractor.
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Sounds reasonable to me – it basically says “we have inexpensive stuff that does a great job of lowering cholesterol. If you can demonstrate that you need something else, we’ll give it to you.
But they pay top dollar for it.
Or possibly free.
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Not bad at all.
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It’s very reasonable to have a formulary that stresses certain drugs. One of the reasons that the Vioxx debacle was much less of a problem in Europe than in the US was because in Europe, Vioxx was prescribed rationally because they have formularies based on cost and actual evidence of safety and efficacy. Here we have prescribing patterns based on who has cooler advertisements, and other similar fluff.
You do realize that VA and TriCare are not the same.
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Your link above to TRICARE is worthless for purposes of evaluating the VA claims of success through drug negotiation.
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Tricare and VA are similar – there’s a lot of overlap. Policies are typically quite similar. I just took a look, and the VA’s policy on off-formulary drugs is the same – they’ll pay with pre-authorization.
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Tricare and Va are just as similar as , AARPMedicareRx, MassHealth….
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They’re similar in that there’re all drug plan. It’s like saying “I said chicken but meant hippo, but you know, they’re both similar…animials, you know.”
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That earlier link with the Tricare link, referencing VA formulary, was either deceptive or in error. And, you should admit it rather than cover up with weasel words.
I think that comparing Tricare and VA are like comparing Bill and Hillary Clinton – they are not exactlt the same entity, but…
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In any case, you are correct, I should not have pulled a Tricare link for the VA.
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However, it’s also true (whether inevitable or coincidental), that the VA’s policy is the same as Tricare’s here – they’ll provide Lipitor if one can show medical necessity.
I don’t know if you have real world experience in healthcare or not, but do you think the doctor is going to go out of the way to deal with the paperwork to attempt to stock the more expensive Lipitor, when Zocor is on the formulary. Zocor is “Good enough”.
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Here’s another, Oxycodone. It’s probably on the VA formulary list. I’m not sure. Can the patient get it? No way. BTW, timed released Oxycodone is probably the tops in pain relief. VA formulary of choice is methadone.
Methadone is “good enough”.
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Ok, no Oxycodone, then for pain maybe the patient can’t take triptians, you know morphine, etc…, so instead, maybe Stadol is the solution. Nope, can’t get that one. So, again, methadone is “good enough”.
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Ask youself this: if VA is so good with its negotiating power at getting and selling drugs within its plan, why do 40% of VA qualified also opt (and pay for) medicare D.
Docs already have to do the same thing for many or most private insurers – I’m not sure where your beef lies. Some things are covered, some things are not, and some things are covered if you can overcome some hurdle.
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They do the paperwork if it’s actually needed. Why should a Doc prescribe Lipitor if Zocor is, in fact, “good enough”.
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I have no knowledge of your pain relief scenario, but I’d highly doubt if the VA would not cover opiates.
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Let’s suppose that we had a procedure that could save one life from cancer at a cost of $1 trillion. Would you be in favor of that procedure? I’m thinking not – please correct me if I’m wrong.
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It’s sad, but it’s true – “rationing” and “rational” both come from the same root.
Ok, then if, rationing is the rational thing to do, how should it be done? By VA administrators, Medicare administrators, a board of central doctors, the Single Payer Guru aka wizard of Rx, or on a basis of those who can pay more?
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I have no “beef” with VA. I do have a “beef” with the asinine formulaic argument that single payers throw out:
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1) single payer is great even though we’ve never tried it; 2) look at Canada and France (ignore the bad stuff)
3) let Single Payer negotiate, see how well VA works, even though VA works by self imposed rationing, and allowing Medicare negotiation would derail the, now popular, Medicare law that was just passed last year.
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What you ignore is:
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Most people, who are covered by insurance in the US, like their plans. Medicare D, although I personally opposed it, is very popular with seniors and AARP.
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For the people who are no covered are ‘working poor’ and have little voice.
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The people who have aren’t willing to sacrifice that which they have in order to give coverage to the have nots.
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p.s. in most private plans (i.e. your plan), almost all non-experimental drugs are considered to be within the formulary, with 2 or 3 graduated co-pays.
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p.s.s. I didn’t say that VA didn’t cover opiates. I said, if the person couldn’t tolerate morphine the next best substitute isn’t on the forumulary, so for that patient, it’s back to methodone.
We have tried single payer healthcare – Medicare, of course. It yields world-class results at prices that are substantially lower than private healthcare.
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Let’s try this another way. Is there any circumstance under which you’d agree that, as a factual matter, single-payer healthcare works better than private health care? Or are you wedded to “it is, because it is”? If you do have an open mind, then what would constitute convincing evidence that single-payer healthcare is superior?
You on a price-fixing bender lately?
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Regulate drugs, insurance companies and subsidize insurance ’cause the Connectors going to get it wrong. That cover most of it?
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Run the numbers. This link goes to most recent quarter profitability for the leaders and laggards but you can select ROI, projected free cash, etc…Yahoo finance.
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Don’t run too many numbers or use Yahoo too much. Wouldn’t want to increase their profitability too much.
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Yep, according to the Yahoo link, Drug companies are having a good run. Oops, except for that darn Pfizer who took the billion dollar pipe when the HCL drug turned out to be killing people.
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Last year, housing was hot. Now, not so much.
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I made a buck or too about 10 years ago by shorting Merck–Drug margins sucked back then. 20 years ago I sold the Neikei short. Those darn Japanese were pretty much going to take over the world by … Now, where are they again?
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Yeah, USA is still the most resilient economy on the face of the earth. Let’s change that. Regulate profits; create some humility.
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By your reasoning we ought put shipping companies, security and application software on notice that they’re as profitable as the drug sector and therefore dangerously close to making too much money. Back off, or face regulation.
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Copper too. Slow down there honchos, that 19.6% margin is too much to be charging people for pipes and wires.
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I think we should regulate the cost of Ipods so I can pick up a few in time for Christmas … wait, Apple might make fewer of them. Damn you invisible hand!
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and next –
get the gummit off the backs of those entrpreneurs selling clean drinking water out of the backs of pickup trucks to disaster victims for $10 a gallon.
they’re providing a life-saving service, right ?!
So … price-fixing, funny you should mention it. And funny you should equate “negotiation” with “price-fixing”. I think my Varitek/Boras metaphor still holds.
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Say, Gary, do you think the federal government should constrain itself from negotiating with drug companies, so that unlike Wal-Mart, CVS et al. it can’t get a deal for buying bulk? Or do you think the pharma companies should have the ability to set prices unilaterally, i.e. “fix prices”?
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And this gets right to my other, related point: How do name-brand pharma manufacturers make their money? By selling unique drugs.
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Why are those drugs unique? Because no one else can make them for a few years.
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Why can no one else make them? Because the government grants a patent — i.e. a monopoly — so that the creator of a drug can be rewarded.
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No government regulation = no big pharma profits.
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This is the big difference between pharma and, say, copper or shipping. (I’m not aware of a time when the feds said, “OK, UPS, you’ve got exclusive right to Tallahassee!” or some such. Maybe I’m wrong.)
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The government should indeed provide enough incentive to encourage the making of new drugs (and works of art, and other inventions), but it’s under no obligation to provide super-duper shareholder value for pharma co’s at taxpayer expense. I might also suggest that Pfizer’s travails notwithstanding, those awesome profit margins in the pharma industry are indication that perhaps we could afford to dial back the monopoly time for drugs.
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It’s funny, but in the context of the Medicare drug coverage, I don’t even know what your question means.
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Medicare doesn’t presently buy ‘bulk’.
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The system is set up as a bunch of competing private plans. Each plan negotiates a ‘formulary’–a list of drugs that the particular plan covers. And each plan negotiates pricing within the formulary.
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Off that particular formulary, there are some mandated government savings initiatives, like, for example, drug makers have to give a discount off “the average manufacturer price” for most brand-name drugs that are also covered under MassHealth.
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So, now, what you propose is that Medicare set up a Negotiation Division to intervene into the private plan’s pricing, and, I guess establish some sort of maximum price for each drug within the formulary.
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So, for example, you have Plan A that negotiates a price of Lipitor, the hot cholesterol drug based on high volumn and a low price.
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Then, to continue the example, you have Plan B that prices based on a formulary with a generic, and cheaper, cholesterol drug and upcharges for Lipitor. It will pay more for Lipitor because of its low volumn.
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Your proposed “medicare negotiation” plan would then say, no Medicare Pricing rules and Lipitor must cost $1.00. Plan A provider would be pissed because it negotiated a lower price; Plan A would get a windfall because it priced its plan based on low volumn.
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Your “medicare negotiation” derails the Formulary process and Medicare drug pricing.
The exact way to construct the bargaining is indeed a challenge, for the reasons you point out. Saying something is tricky doesn’t mean it shouldn’t be done.
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It’s taxpayer money paying for those drugs. The taxpayers should get a deal based how much they’re buying, not for the atomized buying power of a zillion little plans. The principle stands. Congress got us into this mess, let them get us out.
Notice the Medicaid spending decreased for the first time since 1965, at least in part due to Medicare D.
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I was no fan of Medicare D when it passed, but certainly the grey terrorists are.
Re: patents.
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I don’t know if the period allowed ‘on-patent’ is too long or too short.
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Somehow, I have a pretty good idea that if you eliminated patent protection competely, you’d see a dramatic end to R&D.
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If you shortened it by a year or two, I think it’s reasonable to assume that you’d adversely affect R&D, but by how much I have no idea.
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But, to shorten the patent protection simply because the profits are high, just as Copper sector, Shipping sector, Oil and Gas sector, is hasty. Every dog has his day, and the Pharma is having a good run, but that’s not to say next year will be so good.
..to say that because government grants and protects intellectual property that they can then set prices on that property? IP is a weird kind of property so it needs special rules but do you really think that gives the government carte blanche to start grabbing at profits? I dont.
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Kind of reminds me of the occasional argument I hear that the govt. can tax the crap out of us because, well, after all we’ve benefited from this society which the government has provided parts of… seems like circular/snowball argument to me.
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Other than costing less while getting better outcomes, you’re correct – it’s a bad idea.
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Just curious – how do you feel about privatizing all of our nation’s roads?
… when they really need a life saving treatment without a waiting list huh? Wonder how thats gonna play out – if I were foreigners I’d probably be donating to the anti-single payer in the US lobby.
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Costs here are a nightmare but we’ve got artifically constrained supply, so it can’t be fixed so long as our government stands in the way of supply. Nothing about single payer will change this in the least.
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I dont understand how you think increasing the demand side of the equation alone will achieve anything. You buy the line that the government is more efficient at managing health care or whatever?
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As for privatizing roads, I’d be interested to see a few experimental cases but no, I’m pretty fine with roads being the purview of the government. Military, police, courts, all fine. Even regulation of monopolies and public health! I’m not an anarchist, after all!
… that you probably want to save cost by using price controls. (shoulda seen that coming!) Onwards we march to socialism!
Other than working better and costing less, single-payer universal healthcare is a very bad idea.
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Similarly, why shouldn’t the roads be privatized? What’s your theory behind that?
When you find the single-payer country where it’s more successful than the U.S., call me. Here’s what you’ll find on single payer:
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“I system in [name your country] is so much better than the U.S., except for [all the bad stuff].”
for this:
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that’s insurance-co promulgated crap. and you seem to be lapping it up and spewing it back out. show me the data. i’ve showed you lots of mine. and make sure you scroll down to the international comparisons section.
I know where this is headed: I’ll post re: Canada and someone will say, yah, but how about France, Kenya, Estonia…Can we at least agree to not compare the US to third world. Otherwise,
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–Canada has the highest 5-year survival for childhood leukemia and for kidney and liver transplants. You cite that in your data link.
However, Canada also had the highest acute myocardial infarction 30-day case fatality rates. So if I’m a kid dying of leukemia or I’m a kidney or liver transfer, then Bon Jour Quebec, but if I have a heart attack, gimme made in usa.
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–Your data link boasts of low in hospital mortality from MI but doesn’t mention 5 year survival rate. Why? Bias: it’s data source is from Physicians for a National Healthcare Program.
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–A broadbrush, quick synopsis of the Canadian from NE Journal here. Bias? You decide.
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–Canada has such a good program, that a Quebec Court ordered that some form of private care must be allowed because the public brand was being offered inequitably. Stupid frogs, what do they know, right?
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–You are aware that there are 2 classes of health coverage in Canada, a public system and a smaller private one that wealthier patients tend to use. Separate but equal? Again, YMMV.
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–I have no idea how happy Canadians are with their ‘wait time benchmarks’ and be very curious to see data.
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My point stands. You can’t point to one country and claim that they do it better without also stating that they’re not happy with their system either.
e.g., http://www.harrisint…
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Medical care is frustrating everywhere – some problems can be avoided, some cannot.
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In a similar vein, within the US Medicare recipients are more satisfied then recipients of private health insurance. From http://www.cmwf.org/…
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“In their report, Davis and coauthors find that elderly Medicare beneficiaries are more likely than enrollees in employer-sponsored plans to rate their health insurance as excellent (32% vs. 20%) and less likely to report negative experiences with their insurance plans (43% vs. 61%). Medicare beneficiaries are also less likely than those with private insurance to go without needed care owing to costs (18% vs. 22%). The survey also finds that elderly Medicare beneficiaries are more likely to report being very satisfied with the care they received compared with those with private insurance (62% vs. 51%).
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I’ve also seen the similar results for the VA.
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Costs less, covers more, better outcomes, recipients are happier. I’m still not seeing a problem with public healthcare or private roads – they just work better.
oh man you guys always with your polls and statistics…
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Here we are screaming about waiting lists and the end of innovation and you’ve got your fingers in your ears singing kumbaya.
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Is it really the law of unintended consequences if you were well warned in advance?
Show us the data. Link or slink.
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We have the worst, or almost the worst, medical outcomes in the first world, e.g.:
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http://blueworksbett… (my blog)
http://www.journalno…
America is officially dead. The news is that S 1873 and or the companion bill HR 5533 have passed the Senate. This means the creation of BARDA or Biodefense Advanced Research and Development Agency will be created to “manage” all things drug.
What does this really mean for the little guy?
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First off you will be ordered to line up for mandatory vaccination.
Two. Should this vaccination cause you to become a vegetable you and your family have absolutely zero legal recourse.
Three. “News” of these newly created vegetables will be “managed” in the interest of national security by a super secret agency that answers to no one.
Sound like a good post 911 deal for this post 911 world and the holy crusade of endless global war?
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True I am being highly cynical but just imagine yourself as CEO of the world.
How long would you put up with a mere 300 million energy sucking brats when there are 6 billion easily exploitable souls available. Which profit margin would you prefer?
and I imiagine that they’d also like a more robust economy so their Medicare program could be funded more appropriately. And they’d like the U.S. for-profit health insurance industry lobbyists to STAY OUT of their Parliment and out of their health care system. Very insidious dealings going on up there on that front. I imaginethat you know that Canada spends about half or maybe it’s one third LESS per person on health care compared to spending in the U.S. And overall they get much better health outcomes and better, more person-focused individualized care.
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As this CRIC Canadian poll will show, the Canadian Health care system is of utmost value to the people of Canada.
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And this
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Would that we had such an open and civilized approach to health system planning and implementation in the United States. Or in Massachusetts for that matter. Patrick/Murray Team, are you listening? Do you care?
however shined up with the whole “opinion” vs. “judgement” wax, its interesting to note and looks on the surface to be realistic.
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makes me think 2 things:
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1. boy once you get people on the dole you just can’t ever get them off. Entitlements will suffocate us all!
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2. I wonder how many people in the US would answer the question “should we do away with our healthcare system” in the affirmative…
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That’s the question!
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-Elderly will say no, we like Medicare;
-Poor will say no, we like Medicaid; City and State employees will say, no, we like our 85% paid for health insurance;
-working folks will say no because we like the various new drugs and test that we can get with a simple referral;
-Doctors say no, we like our autonomity.
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The people who’ll say yes:
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–AnnEm, because I really think she sincere about it;
–The working poor. But nobody cares enough about them to sacrifice existing coverage.
when last they were asked on a ballot, somerville seemed to think that scrapping our current broken system was something they wanted.
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and i can vouch from personal observation that somerville contains elderly, poor, working folks, doctors, the working poor, small business owners, veterans and children. (i’m not sure about AnnEM)
that is a VERY different question than the one in the canadian poll you know, just to summarize:
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Canada poll:
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Would you like to scrap our health care system?
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Somerville poll:
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Would you like to get free health care?
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…
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When you offer people free stuff, alot of people are going to say yes thats great. Even more in a liberal bastion like Somerville. The offering and acceptance of free stuff is the welfare state snowball that we’re mercifully far behind Europe in, but nonetheless quite advanced down the hill. Trouble is, the hill gets real nasty as you descend into socialism and beyond comprehension if you get past that.
I hereby copy and past the language, verbatim, that appeared on the Somerville ballot (and that appeared on many other local ballots around the state over the years, all of which have won quite handily, I believe. do correct me if I’m wrong, please)
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I do not see the words “Would you like to get free health care?” anywhere in the language. Do you?
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BTW this demo. person seems to be a real jerk and a mean-spirited trouble maker. henceforth I will (try to) cease and desist being pulled in by that kind of energy.
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fairdeal, i’m now on the boston side of the riva’
I stand by my characterization; the actual text is even more happy and idealistic than a simple “get free healthcare” because it says the public will not only pay for it, but it will somehow retain the attributes of choice which it currently has. Summarize is different than quote verbatim, but thanks for posting it anyway.
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Mean spirited trouble maker? Pssht. I’m just trying to save you from your own idealistic misguidedness. What do you think is going to happen to nurses when, say, 30% more patients show up to consume your already overdemanded services? What do you think will happen to your compensation when price controls go into effect? Will price controls increase or decrease the quantity and quality of people taking on health careers?
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I’ve not seen any of you address the supply side of the picture; why not?
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If you are agitating for sweeping change of this nature, then it is incumbent upon you to carefully consider the possible negative consequences. One great place to start would be to give alot of attention to what the opposition is saying. Not so you can try to refute it, but so you can understand it.
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You can address these problems now before they occur, or later when they do occur.
Demolisher, what you think our private health care system is doing to us? Ask the local municipalities what health care costs are doing to them. GM. Ford. Any employer you like, anywhere.
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The US health care sector is holding the rest of the economy hostage.
I’d say it is burdening us all, to be sure. But not suffocating; the vast majority of American business are still going strong. I mightily disagree with your contention that health care is the main problem with the US auto industry. Surely you can find other maladies? I’d say the unions are the main problem; they absolutely tie the hands of management to really change much at all. Management doesn’t seem to bright either, in many cases. Why is that? Not sure. Maybe the suffocation by the unions drives qualified candidates elsewhere? (no backup for that one, just conjecture)
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Charley I like your posts and comments alot but I find that you really cherry pick my points and grab only the most controversial to debate. Why do you skip the rest? I wonder if you accept my points or just steer around them?
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What will we do about the supply side of health care? Is it possible? On the state level? What will be the backlash when the doctors mobilize against it? Shouldn’t we try that before trying single payer, since it will have to be solved anyway?
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