Comment by khuey
16 days ago
> Something is systemically wrong in the US when we are cutting off people’s access to meds, like GLP-1s, which have profound health benefits.
Are we cutting off people's access to meds or do they just not want to pay what they cost?
To be fair, most medication in the US is overpriced due to patents and what not. The "cost" is hardly the real, legitimate cost and generally inflated 1000%+ compared to other countries.
This is not really the correct way to think about this.
Pharma is ultra R&D heavy so yes, medications are deeply profitable on a per-pill cost to manufacture basis. However, drug companies by and large are not extremely profitable. This is because to produce a single drug (which is high-margin from point of production), they have to sink billions of dollars into literally thousands of other drug candidates to figure out which ones are viable.
This is all "real, legitimate cost," as is reflected in their rather abysmal overall profitability.
As for the disparity between US and foreign markets, it's a basic tenet of commercialization to sell to every buyer at the highest price they'll accept, so long as that price is above your price to produce. All sorts of companies engage in "price discrimination" to achieve this. For example, cereal manufacturers will sell their own brand at $4/box, and sell the exact same product in a store brand box for $3.25/box. A lot of products in your local retail stores do this.
Overall, no one is really hurt by this per se. Every consumer is making a transaction they're willing to make, and the company is making the most money it can in aggregate, which actually gives it room to push the price at every price point lower than it would be able to if it could only sell to a single segment.
This is actually extremely important in the drug context due to the aforementioned abysmal profitability.
Let's take Trump's attempt to force a Most Favored Nation (MFN) clause onto drug manufacturers which guarantees US consumers pay the same price as the lowest price internationally. The intended effect is for US prices to come down to the level paid elsewhere.
But here's Pfizer CEO: "When [we] do the math, shall we reduce the US price to France’s level or stop supplying France? We [will] stop supplying France. So they will stay without new medicines. The system will force us not to be able to accept the lower prices.”
Not only does this obviously not result in lower US prices, but it very possibly results in higher US prices (since now there is less net revenue from lower priced consumers) and, more troubling in the pharma case, there is now even less net revenue coming in to justify new drug development.
It's hard to overstate how asinine this entire endeavor is. US consumers certainly pay too-high prices for drugs, but this intervention does very little to actually address that problem. The much more proximal issue is the incredible degree of intermediation in the US market between payers, providers, PBMs, GPOs, and more.
> Not only does this obviously not result in lower US prices
Maybe in Pfizer’s portfolio this is true. However, I just watched the Amazon Pharmacy pricing for GLP-1s drop substantially immediately following this. I think you may be being too black and white on claiming this categorically does not work.
Businesses will adapt pricing models, obviously this hurts Pfizer in some way, but Lilly and Novo found the new system was worth negotiating into. Like most things - when people say “always” or “never” - it’s reducing the spectrum of possibilities
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> Not only does this obviously not result in lower US prices, but it very possibly results in higher US prices
Here's the thing: yes, you may "very possibly" be right, but that means you may also "very possibly" be wrong. The truth is, we don't know, and we can't really trust the CEO of any business to openly admit that they could tolerate a policy disadvantageous to them. So how would you suggest testing the case where you're wrong?
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> But here's Pfizer CEO: "When [we] do the math, shall we reduce the US price to France’s level or stop supplying France? We [will] stop supplying France. So they will stay without new medicines. The system will force us not to be able to accept the lower prices.”
This person is a less than neutral source in an industry that's already infamous for lying through its teeth to grind out every red cent from its customers. I would lend precisely zero credence to what he says when he's trying to justify why his poor billion dollar company wouldn't be able to lighten up on its wholesale fleecing of American customers.
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At some point when the compounding was ramping up it was difficult to get the drugs even with a prescription and being willing to pay the full no-insurance price. Nowadays you can mostly get it, but insurance coverage is spotty. Because of weird incentives, the no-insurance prices of drugs are highly inflated so the amount that they cost isn't a realistic price for most people to afford. The manufacturers offer coupons but the conditions on them, and the fact that they still leave you with a pretty inflated price tag means that the compounded versions like what HIMS sell are the most cost effective option for a lot of people - it's still highly marked up, but to a level that is manageable for way more people.
Were people not previously paying what they cost? It sounds like that's the concept we're getting rid of here.
A distinction without a difference...