#PrescriptionDrugs #DrugPriceNegotiations #DrugCompanies #tgovernment #PrivateSector
The United States is the only country in the world that puts medical care in the free market.
That tells the country that you get what you can afford, or, perhaps, you suffer or die.
The large drug companies, as well as academic research institutions, do the research that creates the newest, perhaps blockbuster, drugs, therapies and treatments.
That research, in the case of private companies, is funded largely by the (mostly U.S.) profits it makes from drugs, when they are approved and sold.
These companies want to maximize their profit initially because they know that drugs will eventually come off patent and can be duplicated by rivals.
That will lower the cost of the drug, usually.
Once a drug is developed and approved, the cost of manufacturing usually drops. Some drugs that cost relative pennies per dose to make are sold for up to thousands of dollars because the companies are trying to recover all their research costs.
So, the question becomes: why should a drug that has been prescribed for many years, that costs relative pennies to make, still cost so much long after the companies have recovered most or all of their research costs?
Perhaps it could be argued that the company is trying to pay for current research on drugs not yet approved. (What will they charge for that drug later, if approved?) Perhaps it could be argued that the companies are also trying to recover research costs on drugs that turned out to be busts, and never approved for sale.
Most of the drugs in the initial rollout of Medicare price negotiations with companies are drugs that have been around awhile. The companies by now should have recovered most, if not all, of their research costs on those drugs.
In some cases, companies are spending millions of dollars on television and other advertising to get people to ask their doctors about these drugs.
Perhaps, when Medicare starts negotiating prices it will pay for some of those drugs, the TV ads for those drugs will stop, or be cut back. That’s not good news for the TV networks and other media outlets that depend on such advertising.
In essentially every other country, drug price negotiations are the norm. There is usually only one buyer – the government – for the whole country. That gives those countries leverage to determine how much drugs will cost within their boundaries. (That’s why a lot of Americans buy their drugs from Canada or Mexico).
Because most medical care in the U.S. is in the free market, that hasn’t been possible here. Because of that, people not only had to be concerned whether a drug, or other medical treatment, was going to be the best for their conditions, they had to worry how they were going to pay for it. That’s stress atop stress unnecessarily.
In the U.S. private sector, a large-volume buyer usually negotiates prices. The more one buys, the lower the price per unit. The sellers want to sell lots of product. The buyer wants to pay as little as possible. So, they negotiate. Medicare is a bulk buyer of prescription drugs, and has never been allowed to negotiate prices – until now.
There is no telling yet how much prescription drug price negotiations will bring down the federal deficit, but, very likely, it could be considerable over a few years.
Therefore, there could be a two-part bang for the buck here. Medicare, and, ultimately, patients will pay less for the drugs they need, and the federal deficit could come down a lot. As a bonus, the drug companies will still make plenty of money.
And, over time, as the number of drugs that are subject to price negotiation increases, the difference could be huge, compared to the current situation.
The actual results have not yet been realized, but the whole idea could be a game-changer for the country.
Peter