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I ran across a story in the acclaimed “medical journal”, International Business Times, about how an old PMS medication from the 60s might be an Alzheimer's cure. Considering the source, I don't put a ton of stock in the story but it was interesting enough to look around a little more. That led me first to wikipedia to learn a little more about the drug in question (sounds like it has nasty side effects), which is when I got totally sidetracked:
Mefenamic acid is generic and is available worldwide under many brand names.[5]
In the USA, wholesale price of a week's supply of generic mefenamic acid has been quoted as $426.90 in 2014. Brand-name Ponstel is $571.70.[15] In contrast, in the UK, a weeks supply is £1.66, or £8.17 for branded Ponstan.[16] In the Philippines, 10 tablets of 500 mg generic mefenamic acid cost PHP39.00 (or the equivalent of $0.88USD) as of October 25, 2014.
The numbers in wikipedia may be extreme, but not by much. Looking online, I see that thirty 250mg tablets cost at least $111 at Walmart. In an almost direct reversal of the quantity and price numbers, one hundred 250mg tablets cost $35 from a UK manufacturer, but to get the drug at that price, you must break Federal law.
The rest of my comment would be a long string of expletives which I shall omit.
(Score: 4, Interesting) by Anonymous Coward on Monday August 15 2016, @02:10AM
The remedy might sit in monopoly law.
Well, I mean, the REAL remedy is to reform the USA's idiotic IP laws, but that will happen just as soon as Disney and the RIAA permit it, which is to say never, so let's stick to something more possible.
If you're the only manufacturer of a medicinally valuable substance or medical equipment, you may not offer it, wholesale, at anything over 5% + prime of production cost - a simple regulation that, despite being somewhat onerous, prevents profiteering on the health of americans, while permitting a reasonable return on investment so that nobody goes broke serving a valuable need.
If you're not the only manufacturer of a medicinally valuable substance, or medical device, the price may be what the market will bear - but under the strictest standards defined under monopoly law, which does not even require deliberate collusion to support a finding of improper conduct, and you forfeit to the public domain all relevant IP that your business or its parents, partners or subsidiaries hold.
Conduct held to undermine the intent of the statute (such as offering things on paper, but not actually offering them for sale so as to help someone else extract high profits) shall be treated as de facto evidence of bad faith, and constitute justification for decertification, fines, forfeit of IP to the public domain, dissolution of the company in question, withdrawal of the corporate veil so as to personally indict and prosecute officers of the company, and so on.
Discuss.
(Score: 0) by Anonymous Coward on Monday August 15 2016, @02:49AM
And if a manufacturer decides 5% isn't enough of a profit margin so the drug doesn't get produced, what then?
(Score: 0) by Anonymous Coward on Monday August 15 2016, @02:59AM
5% over the prime lending rate is actually a pretty darned decent profit margin. It doesn't sound like much today when the prime lending rate is sub 1%, but, given things like amortisation of assets, comes to quite a tidy amount.
The basic calculation in this case is: do I have something more profitable in which to sink my investment money? Bonds? No. Nothing better than a junk bond will get you anything like 5% over prime. Stocks? ... maybe. If you're lucky. A fancy startup? Odds are you'll lose all your money. Real Estate? The myth of its invulnerability has been thoroughly debunked. It turns pharmaceuticals into a healthy, reliable money-spinner. Give or take some details you can double your money in well under two decades (better than that when you allow for depreciation and related expenses) with strong confidence that the market on your overall production lines is locked in for at least as long as it takes the FDA to approve competing products - i.e. decades.
The willingness of investors to put their money to 5% over prime is not something I'm remotely worried about.
(Score: 1, Informative) by Anonymous Coward on Monday August 15 2016, @03:26AM
Congratulations on avoiding the question, but to answer your reply-
The pharmaceutical industry also has high R&D and approval costs, with numerous failures for every success, so if their successes are going to be limited, shouldn't the failures be subsidized?
5% return isn't in comparison to stocks or bonds, but in relation to other drugs that could be produced. Why bother with a 5% return when those resources could go to a drug that has a 10% return? You may be shocked to learn that there are often drug shortages for this very reason.
And quite a few drugs are loss leaders, as they are required to keep a supply on hand. Do they get a tax write-off for them? How do you calculate the costs under your model?
The willingness of investors to put their money to 5% over prime is not something I'm remotely worried about.
Well then it seems this is a prime opportunity for you to raise capital to produce this drug yourself. I mean sheesh, you should have no problem getting production started and savor those sweet, sweet returns yourself.
Or just maybe the pharmaceutical market is a hell of a lot more complex than you make it out to be.
(Score: 3, Insightful) by Anonymous Coward on Monday August 15 2016, @03:36AM
What are the R&D costs associated with a drug that has been on the market since the 60's ? They have long since recouped those costs and are just profiteering now.
(Score: 3, Informative) by archfeld on Monday August 15 2016, @03:41AM
I go to Mexico and buy medications all the time. I'll check out the cost at the Purple Stores in Algodones next time I head over the border. Most items are available at a fraction of the cost and despite all the publicity I've never had Customs blink when bringing medicines back even when they are proscription, provided you can show a doctors script. There are limits on the quantity but the exact same medications are available the labels are just in Spanish.
For the NSA : Explosives, guns, assassination, conspiracy, primers, detonators, initiators, main charge, nuclear charge
(Score: 0) by Anonymous Coward on Monday August 15 2016, @03:42AM
Well gee, you might have a point if they were no longer involved in any type of R&D since the 60s as well.
Here, let me simplify your argument for you-
"Bad regulation is what got us into this mess."
"Well then obviously we need even more regulation."
I'm done here.
(Score: 0) by Anonymous Coward on Monday August 15 2016, @03:57AM
Lets not forget Martin Shkreli, who raised the cost of a life-saving drug 4,000 percent overnight after buying the rights to the drug.
(Score: 1, Insightful) by Anonymous Coward on Monday August 15 2016, @04:10AM
Pyrimethamine has been available since 1953,[12] and is not subject to any unexpired patent.[13] However, in the United States, the market for this product is sufficiently small that no generic manufacturer has emerged.
Let's not forget the rights to the drug were sold twice before he got it since NO ONE ELSE COULD MAKE A PROFIT ON IT.
And screw you for putting me in the position of defending him.
(Score: 1, Interesting) by Anonymous Coward on Monday August 15 2016, @03:44AM
The whole story was about generic drugs that are being delivered at much higher prices in the USA than elsewhere. These are already approved drugs.
As for R&D and approval costs, there's no reason those can't be counted into capitalisation of a product line the same way that expenses are turned into capitalisation when a hot internet startup buys expensive chairs and other crap then goes public.
I am happy to grant you that people might decide to sell other drugs - and bully for them should they do so - but trying to paint the problems that you're raising as mysteriously insoluble is to ignore the fact that the accounting world has been facing, and solving these problems for centuries. You're proposing that there are costs that, somehow, don't count as costs? Or can't count as costs? Every dirt-covered farmer in the USA deals with that sort of thing, and has for a long time.
The short answer to what you're asking is: supply and demand carries on as before. We just delineate some conduct as problematic with respect to monopoly law, and consequently place some limits on it. Boom, there's your answer. The details around costs that need to be counted - well, that's why almost every community college in the country has at least a basic accounting course or three. If the FDA places a requirement that certain things be produced and warehoused as a condition for other activities, then the costs of doing precisely that constitute a (regulatorily imposed) cost of production.
And as for companies stopping production right now? Yeah, that's a thing, and the problem there is one, nine times out of ten, of over-regulation. Lighten the regulations, ease the system, and let the companies actually function as such. If you want to put the screws to them so much that it hurts, simply say that if your necessary drug is not available on the market, the IP obviously isn't relevant, release it to the public domain and every compounding pharmacy from sea to shining sea can go nuts cranking it out like candy.
(Score: 3, Insightful) by sjames on Monday August 15 2016, @07:06AM
Don't forget, they have to get the drugs approved in the EU as well and they freely choose to do so, even though they won't get more than a fraction of what they can sell for in the U.S. Apparently they still find that profitable enough to do it every time.
(Score: 2) by compro01 on Monday August 15 2016, @09:12PM
Then we say "fuck the market" and set up a Crown Corporation to make it.
(Score: 3, Interesting) by Mykl on Monday August 15 2016, @02:52AM
I think the remedy is simpler and less onerous than this - have reps from the Pharmaceutical Benefits Scheme and other medical legislative teams visit a few other countries (e.g. UK, Australia, Canada, almost anywhere else in the developed world) to see how they manage to achieve this in their own countries. The US is about the only country in the world with such ridiculously high medical costs. No, it's not because the US are subsidising the rest of the world - it's because pharmaceutical companies are allowed to charge the prices they do there.
I would also be _very_ interested to see how much health insurers pay for these meds vs the general public. I don't believe for a minute that the prices are even remotely similar. Perhaps if manufacturers had to offer medical goods and services to the public at the same price as they offer insurers, that might alter the cost a bit?
Finalyl, given that this medication is well outside of any patent claims, it seems crazy that the price should be any different to other prices around the world.
Just checked Australian prices for the branded product (Ponstan) - AUD$13.99 (US$10.71) for 50x250mg.
(Score: 0) by Anonymous Coward on Monday August 15 2016, @03:13AM
Sure, you could do that, but translating the legislative and constitutional environment would not be easy. This is a law that would be feasible, constitutional and effective.
But sure, I can see how it would be onerous, so we can always add a rider to the effect that the law sunsets ten calendar years after the USA's medicine costs are no higher than the median of those in the G20, measured over a calendar year with figures to be certified by the FDA, the CBO and, since this is an IP-related issue, the LoC, this certification to be repeated and checked during each of the ten calendar years of delay, and the sunset to be rescinded if the certification is no longer operative.
You know; give them something to shoot for.
(Score: 4, Insightful) by hemocyanin on Monday August 15 2016, @03:12AM
Or how about this -- what's good for the goose is good for the gander -- if it's OK to ship all of our good paying jobs out the country, the people should at least be able to import cheap products without facing Federal criminal charges. All of our "free trade" deals are really just rigged trade that screw the common person.
(Score: 0) by Anonymous Coward on Monday August 15 2016, @03:15AM
I'm down with that. Medical tourism just got expanded to the US Postal Service. Easy, clean, and what the hell, let the FDA open an office through which doctors and patients can get drugs tested for purity. Or the DEA. Whichever.
(Score: 2) by Whoever on Monday August 15 2016, @03:32AM
No, the remedy is in the laws surrounding generic drugs. These laws effectively allow companies to create an benefit from a monopoly on a drug that lots of other manufacturers should be able to make, but are not allowed to. Remember that Martin Shkreli was selling a generic drug at a huge markup.
(Score: 2) by Capt. Obvious on Monday August 15 2016, @05:21AM
There are no IP laws at play here, it's already a generic. I know that's a common target of ire, but there are other reasons for market failures. In particular, the startup costs are huge, and the expected profits low (if they compete on price). Also, I don't know the advantage of the second mover competing on price is.
(Score: 3, Interesting) by migz on Monday August 15 2016, @07:15AM
This is NOT market failure. As you can see in other markets the drugs are affordable. This is distinctly ANTI-market failure. The absurd American IP laws combined with the ridiculous drug licensing regulation. The problem here is government preventing competition, stop trying to blame the market.
(Score: 2) by Capt. Obvious on Monday August 15 2016, @03:56PM
Again, there are no IP laws in play here (well, trademark if you wanted to name the drug the same). But we are dealing with generics. That means, there is no patent, and there is no brand name to trademark. Anyone can make the pills.
Your response seems to betray a total lack of understanding of what a market failure is. The government isn't preventing competition. It requires high start up costs (that is, fixed costs) and there's no reason to pay those if you are only going to make almost nothing a pill. Okay, actually, let's take a step back. Have you ever taken a microeconomics course?
(Score: 2) by migz on Monday August 15 2016, @07:19PM
The government is responsible for those high start up costs. Somehow, in other countries, it is possible to manufacture the drug at a lower price.
Furthermore it is government that makes it illegal to import the cheaper drugs from those other markets.
Marvelous, an ad-hominum attack.
(Score: 2) by Capt. Obvious on Monday August 15 2016, @08:03PM
Other countries set the prices by governmental decree/national health service negotiation. It's the opposite of "other countries are libertarian paradises." It has nothing to do with a lower cost of production. See, cost of production and cost of a good aren't always equal to each other....
Which brings back the question of "have you ever taken a microeconomics course?" Using terms that you spent a while learning in that class would expedite the communication. Using terms which can be interpreted differently would have the opposite effect.
Also, point of fact, even if I had meant "you're an idiot who is wrong" (which is not what I was saying), it would not be an ad hominem. It'd be an insult. It's only an ad hominem if I were to use it as an argument against your point.
(Score: 2) by migz on Tuesday August 16 2016, @06:51AM
Thanks for admitting your insult. Was the insult intended to reduce my credibility, and by association the credibility of my argument? Attempting to undermine my argument by casting disparaging remarks about my alleged lack of formal economic education is an ad-hominum attack. It is a rhetorical device used to reduce the credibility of the argument by "attacking-the-man" and not refuting the argument.
If I would trot out what my academic credentials were then I might considered to be guilty of using an "argument-from-authority", which is the other rhetorical device employed, when you (implicitly) claimed higher academic credentials than I.
I will not partake in this rhetoric, as my qualifications (and yours) are of no bearing on the argument.
I dispute your claim that other countries set prices by government decree / NHS negotiation, this is not universally true. I have not made any claims regarding "libertarian paradises", this is a straw-man argument. I do not consider the US libertarian at all. Nor to I consider libertarianism the ideal.
If cost of production > price, then the goods will not be manufactured. If cost of production + profit price and profit is high then there is incentive for new entrants into the market. Price controls generally result is shortages, if the price is below cost, depending on the price-elasticity of demand as well as the production possibilities frontier. The positive economics on this are well established.
Furthermore profit need not be monetary, nor even true. A false belief in some personal glory is sufficient profit to favor production of the good, however without breakeven the enterprise would fail, and the remaining capital goods redeployed to more profitable use.
(Score: 2) by Capt. Obvious on Wednesday August 17 2016, @08:52AM
It's not universally true. But it certainly is true in a great and growing number of countries. Further, those countries include all Western/industrial the countries with the lowest perscription drug costs. Citation [pharmatimes.com]
Except, they aren't. You're spewing theory. Meanwhile, the real world disagrees.
Lastly, I want to address your misunderstanding of fallacies and insults. This diversion is primarily to help you communicate better. First, I never did insult you, nor apologize for insulting you. I needed to know if I could use words like "monopsony" and use the huge amount of implications I could leverage. You obviously haven't taken a course. There's no reason to be embarrassed, and I don't think it makes you unable to speak about this topic. But it does mean I have to communicate differently.
But, you really, really, love to refer to fallacies when it's not relevant. I never used an ad homenem, I asked if you took a course. I never used an appeal to authority, although frankly in this case I might be able to legitimately. Remember, it's not "an appeal to authority", it's "an appeal to illegitimate authority". That is, a medical doctor is no authority on macroeconomics, but it is considered a legitimate argument if you're talking about if you have cancer. Authorities only offer some evidence, and obviously shouldn't shut down the conversation, But they inform it. My assuming you thought libertarian policies would be preferred are based on your understanding of economics. But it was not a strawman argument. It wasn't even an argument.
If you really want to refer to fallacies, you have to learn to distinguish between something that looks similar, and an actually flawed argument.
(Score: 2) by migz on Wednesday August 17 2016, @08:00PM
"Price Controls Are Disastrous for Venezuela, and Everywhere Else"
https://mises.org/blog/price-controls-are-disastrous-venezuela-and-everywhere-else [mises.org]
(Score: 2) by Capt. Obvious on Wednesday August 17 2016, @11:55PM
That piece was long on theory, and short on real world evidence. I would, trivially, point to the economic downturns in Qatar, Saudi Arabia and Russia as evidence that it's the price of oil that has the most to do with Venezuela's situation. Yes, their internal policies exacerbate the issue, but petro-dollars are not what they once were.
Not all industries are the same. Healthcare, in particular, has low elasticity, low information consumers. Things that work well with toilet paper, may not work on lifesaving drugs.
Did you read my citation about drug prices in the UK and Norway (coming soon to Germany?)
(Score: 0) by Anonymous Coward on Monday August 15 2016, @06:17PM
You can regulate the prices thru law.
The *real* way to drive prices down is competition.
If you wanted to fix many of these things you would not allow companies to merge together. Think about this for a second. You can still buy from circuit city, wards, and radio shack. Zombie companies with 'assets' that were bought out and turned into another monster. Or think about this. I say James Bond you think Sony/MGM. You should be thinking United Artists. MGM is a left over band from mergers and they abandoned the UA name. Drugs are no different. If our country was really serious about this sort of thing they would say 'dead company' intellectual assets are now public domain.