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A solution to pharmaceutical price gouging

Masterhawk

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Unless you have your head in the dirt, you probably know by now that pharmaceutical companies have been getting away with price gouging consumers for life saving drugs. An example of this is when the price of epipens went up from $100 in 2007 to $608 in 2016. They are able to get away with this because they have patents which prohibit competitors.

My proposed solution would be to set a price ceiling for prescription drugs in return for getting a patent. Companies found charging too much will not be fined but rather lose their patent (any competitor may swoop in and sell it for a lower price).
 
R&D and production costs are too variable for a simple formula. You would need a third party with no interest in profit to analyze cost/benefit and fair pricing. The party would have to bring a higher education in medicine, chemistry, and medical areas to the table.

This is not to say it's impossible, but it adds a lot of risk to the companies for producing these (often life-saving) medicines in the first place. So far, price setting in procedures, dx discussions, etc in medicaid and medicare has caused great problems in medical practice. Often causing doctors to worry more about whether they used three methods of dx procedure than focusing on best final outcome.

Add to that, lobbying, health care activism, and purchasing of government officials and this becomes a big mess.

Gouging has to be watched, especially in a monopoly situation, such as medicines. None of the answers are simple or inexpensive, though. I would say your system provides good disincentive, but needs refinement.
 
Unless you have your head in the dirt, you probably know by now that pharmaceutical companies have been getting away with price gouging consumers for life saving drugs. An example of this is when the price of epipens went up from $100 in 2007 to $608 in 2016. They are able to get away with this because they have patents which prohibit competitors.

My proposed solution would be to set a price ceiling for prescription drugs in return for getting a patent. Companies found charging too much will not be fined but rather lose their patent (any competitor may swoop in and sell it for a lower price).

The chances that we are going to do anything about this swindle that Big Pharma is pulling in the foreseeable future are approximately zero.
 
Unless you have your head in the dirt, you probably know by now that pharmaceutical companies have been getting away with price gouging consumers for life saving drugs. An example of this is when the price of epipens went up from $100 in 2007 to $608 in 2016. They are able to get away with this because they have patents which prohibit competitors.

My proposed solution would be to set a price ceiling for prescription drugs in return for getting a patent. Companies found charging too much will not be fined but rather lose their patent (any competitor may swoop in and sell it for a lower price).

I have a better solution: Let the laws of supply and demand deal with it.

Take that EpiPen as an example. Here is what happened when Mylan Pharmaceuticals raised their prices: https://www.consumerreports.org/drug-prices/epipen-alternative-that-costs-just-10-dollars/

The active ingredient...epinephrine...isn't under any patent. Mylan has a patent on the delivery mechanism. There are now at least two devices with a different mechanism, but the same active ingredient, that are sold for less...and are offered with substantial discounts.

That's the free market at work. We don't need more federal laws or FDA regulations.
 
I have a better solution: Let the laws of supply and demand deal with it.

Take that EpiPen as an example. Here is what happened when Mylan Pharmaceuticals raised their prices: https://www.consumerreports.org/drug-prices/epipen-alternative-that-costs-just-10-dollars/

The active ingredient...epinephrine...isn't under any patent. Mylan has a patent on the delivery mechanism. There are now at least two devices with a different mechanism, but the same active ingredient, that are sold for less...and are offered with substantial discounts.

That's the free market at work. We don't need more federal laws or FDA regulations.

And what happen to the people who needed it in the meantime, while other companies were making their knockoffs?
 
And what happen to the people who needed it in the meantime, while other companies were making their knockoffs?

It took less than a year for alternatives to show up. (actually, one of those alternatives has been available even before the public furor over Mylan)

The government would certainly take much longer than that to strip a patent and then award it to someone else, who will then have to ramp up production and distribution. What will happen to the people who need it in the meantime?
 
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And what happen to the people who needed it in the meantime, while other companies were making their knockoffs?

Since it's actually happening it's better than the nothing, and a solution instead of no action, which is where we are currently at.
 
Unless you have your head in the dirt, you probably know by now that pharmaceutical companies have been getting away with price gouging consumers for life saving drugs. An example of this is when the price of epipens went up from $100 in 2007 to $608 in 2016. They are able to get away with this because they have patents which prohibit competitors.

My proposed solution would be to set a price ceiling for prescription drugs in return for getting a patent. Companies found charging too much will not be fined but rather lose their patent (any competitor may swoop in and sell it for a lower price).

The world of researchers and consumers should be allowed to pay for research and marketing if something can be worked out between them as to the costs associated with sales of the final product. If prices are too high the answer is not to get the government involved to set artificial price standards, unless the peoples of the world are happy to erect serious obstacles to future expensive research.
 
single payer is the best answer, as it would have the ability to negotiate prices down. there is also the option of public sector drug development. it's my opinion that we should be doing that right now for antibiotic discovery. though pharmaceutical development is anything if not profitable, we'll probably have to address the cost side of the equation, too. it generally costs something north of a billion dollars to get the average drug to market, and not every drug makes the cut.
 
single payer is the best answer, as it would have the ability to negotiate prices down. there is also the option of public sector drug development. it's my opinion that we should be doing that right now for antibiotic discovery. though pharmaceutical development is anything if not profitable, we'll probably have to address the cost side of the equation, too. it generally costs something north of a billion dollars to get the average drug to market, and not every drug makes the cut.

We don't need single payer to "negotiate prices down". The free market already does that.

Single payer does nothing except use the power of the government to reduce choices.
 
We don't need single payer to "negotiate prices down". The free market already does that.

Single payer does nothing except use the power of the government to reduce choices.

we do need single payer to negotiate prices down. our health care system is ridiculously inefficient and overpriced.
 
The chances that we are going to do anything about this swindle that Big Pharma is pulling in the foreseeable future are approximately zero.

I agree. Until they end the huge influence of Big Pharma through lobbying, nothing will change. The rules are written by those being regulated, a form of fascism.
 
Unless you have your head in the dirt, you probably know by now that pharmaceutical companies have been getting away with price gouging consumers for life saving drugs. An example of this is when the price of epipens went up from $100 in 2007 to $608 in 2016. They are able to get away with this because they have patents which prohibit competitors.

My proposed solution would be to set a price ceiling for prescription drugs in return for getting a patent. Companies found charging too much will not be fined but rather lose their patent (any competitor may swoop in and sell it for a lower price).

This is actually done in the public sector.

The federal government price for drugs is fixed at the cost at launch, and the difference is rebated back, meaning when a drug has been on the market a long time, rebates get into the 90%+ range.

Also, and deal a mfg might cut with a wholesaler or insurer must be matched- do the government always gets the ‘best price’.

The government programs here specifically exclude Medicare, but do include Medicaid, the VA, and the DoD.
 
Since it's actually happening it's better than the nothing, and a solution instead of no action, which is where we are currently at.

And when something similar happens again?
 
And when something similar happens again?

Hoping, in the meantime, people will get off their asses in Congress and make it a ****ing priority to prevent it from happening. How, I do not know. The patent idea in the OP sounds reasonable to me.
 
Unless you have your head in the dirt, you probably know by now that pharmaceutical companies have been getting away with price gouging consumers for life saving drugs. An example of this is when the price of epipens went up from $100 in 2007 to $608 in 2016. They are able to get away with this because they have patents which prohibit competitors.

My proposed solution would be to set a price ceiling for prescription drugs in return for getting a patent. Companies found charging too much will not be fined but rather lose their patent (any competitor may swoop in and sell it for a lower price).

I suspect that if you carefully examine the substance of what most folks mean by "price gouging," you'll find they mean: "Price gouging is the happenstance whereby a seller asks a buyer to pay a price that's higher than the buyer would like to pay, and that yet the buyer is willing to pay."

IMO, there's no such thing as "price gouging."
  • Who determines the sum one will accept for a good/service? The seller.
    • What determines the minimum sum the seller will accept? The seller's profit requirement for the sale.
    • Is there a sound reason for sellers not to attempt to maximize their profit? No.
  • Who determine the sum one is willing to pay for a good/service? The buyer.
    • What determines the maximum sum the buyer will pay? The buyer's assessment of whether the sum paid is worth whatever satisfaction s/he will receive in return and relative to other ways the buyer could spend that same sum of money. ("This" item costs $5. Is it worth more to me to spend my $5 on "this" cup or spend it on "that" other item? Only the buyer gets to make that decision.)
    • Is there a sound reason for buyers not to attempt to minimize their expenditure? No.
  • Who determines the selling price for a good/service? The buyer and the seller, by mutual agreement.
    • No buyer ever purchased anything by paying a sum they were unwilling to pay.
    • No seller ever sold anything by accepting a sum they found unacceptable for the good/service they offered for sale.
If one feels so strongly that one thinks the seller's asking price is more than one is willing to pay, don't buy the item. If enough folks feel that way, the seller will "get the clue" and lower its asking price or accept a lower selling price, such that the selling price becomes one the buyer is willing to pay.


Now one may care to not that the item/service being sold/purchased is one that is essential to the life or death of the buyer. Well, yes, that's quite possible, but when that aspect is present in the buy-don't-buy decision -- what economics calls the decision about utility/satisfaction obtained from a given use of resources -- it merely indicates that some decisions are harder to make/not make than others.

Go ask a general, a police chief, a legislator, a corporate executive, a doctor, an attorney, or any number of other principals about hard decisions and one'll find they almost daily make hard decisions, decisions that affect multiple people's lives. In the example the OP-er posed, the buyer is asked to make a buying decision for how many persons? One.

What one sees is that folks get "chicken****" about having to make hard decisions. I say: One's an adult; act like it. Dealing with and making hard decisions is the core meaning of the saying "life is hard." I'm not telling anyone what decision, nor am I going to force one to make "this or that" decision. I'm not doing either of those things because (1) re: the former, few folks ask for my input and (2) re: the latter, staying out of it is what respecting another's freedom of choice requires of me. I'm saying stop bitching and moaning when presented with a hard decision to make; make it, accept the consequences (responding as need be to them) of having made it, and move on.
 
I agree. Until they end the huge influence of Big Pharma through lobbying, nothing will change. The rules are written by those being regulated, a form of fascism.

There are so many huge problems that cant get fixed till we fix Washington. We cant fix Washington till the American people decide that it needs to be fixed, which will include a new spirit of cooperation and reasonableness that we are no where near. Not only are we not moving towards progress, the rate of disintegration of America is picking up speed.

Big Pain is coming.
 
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