Harvard Study Reveals Drug Prices are High in U.S. Because Government Grants Monopoly to Big Pharma

A new study by the medical school of Harvard University in Cambridge, Massachusetts has revealed that the high cost of drugs in the United States is due to the country’s government granting of monopoly to the big pharmaceutical companies manufacturing the drugs.

Researchers of the study reviewed medical and health policy literature in the United States from January 2005 to July 2016, looking at articles addressing the source, justification and consequences of drug prices in the country. The study was accepted in the Journal of American Medical Association on August 23, 2016. The Brigham and Women’s Hospital in Boston, Massachusetts also supported the study.

Leading Anti-Marijuana Academics Being Paid by Big Pharma
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Harvard Study Reveals Drug Prices are High in U.S. Because Government Grants Monopoly to Big Pharma

Well, what do you know, it's not a CT anymore that Big Pharma has a hold on healthcare, gasp. With all the current news coning out lately on the Big Pharma front, it's of course less of a shocker to those new to the subject.

Here's a recap on the highlights;
With the news of Kratom to be Schedule I : Update:

WASHINGTON, Sept. 12, 2016 /PRNewswire-USNewswire/ --
Hundreds of Americans from across the U.S. will march outside the White House at 12:30 p.m. EDT Tuesday (September 13, 2016) to protest the unfounded and anti-scientific push by the Drug Enforcement Agency (DEA) to classify kratom, a natural herb in the coffee family, as a Class 1 narcotic.

Organizers of the March will hold a news conference in Lafayette Park near the White House to present the White House with a petition signed by more than 100,000 citizens opposing the DEA's cynical attack on a legal product that is used without incident by hundreds of thousands of Americans.

White House Rally To Call Out DEA For Making Mockery Of Opioid Epidemic By Ban Push Targeting Coffee-Related, Natural Herbal Product

As well as, with the news of;
Leading Anti-Marijuana Academics Being Paid by Big Pharma

It appears a great number of these researchers are receiving compensation by some of the biggest names in the pharmaceutical industry to remain anti-marijuana. The main reason being that marijuana could easily take the place of some of these companies’ highest grossing drugs.

azmarijuana

Now what? I suggest writing local Reps and your presidential hopeful(depending on and for what it's worth), participating in the demonstrations the petition circulation participation.

Monopoly is one facet, high cost of insurance another.

They charge hi prices because Insurance only pays a portion of the asking price, so they charge ridiculous prices to get a little more. People without insurance can't afford it, are the ones eating the huge costs.

This is one issue that I was really proud of Bernie for speaking about, that has seemingly been swept under the rug.

Hopefully some questions pertaining to this issue will be asked of the two candidates during the debates.

The government has been creating inflation in the medical industry(to include insurance) for 5 decades now. From the managed care system to obamacare today.

Pharmaceuticals, equipment, tools, sanitation products, the list goes on. None of this stuff actually costs a lot to make(mostly, there are notable exceptions). Between government regulation, constant lawsuits, and HUGE insurance costs for the doctors themselves because of the above mentioned issues, the costs are passed onto patients. Insurance goes up the more we pour gas(tax payer money) on the fire.

a reply to: dreamingawake

Yeah, this has been well known for years.

We pay hundreds for the exact same drug that cost pennies overseas because the FDA is in the pharmaceutical industry's pocket.

Legal Government Sanctioned Monopoly which shamelessly overcharges us because our government officials get kick-backs called campaign contributions.

Why hasn't the Messiah In Chief done anything about His FDA on this?

I wish them luck on the Kratom march. It was His DEA that did it. It was His DEA that didn't reschedule cannabis this summer, after letting everyone come to expect it.

TO those of you who have accepted Him and His government into your hearts, and want to defend Him. Remember: in Dubya's day He too took ALL the blame for this kind of stuff (and I was there with you on it then).

a reply to: projectvxn

, constant lawsuits, and HUGE insurance costs for the doctors themselves because of the above mentioned issues, the costs are passed onto patients.

Sources

Do you believe the elderly lady that spilled hot coffee in her lap at McDonalds is the cause of the $1 menu prices going up due to her award from her law suit?

Again sources for your opinion that the lawsuits and insurance costs causing our costs to not be inline with other industrialized countries.

a reply to: dreamingawake

And we needed a Harvard study to tell us this??? Its the oldest story in the book of civilization; Gov't gets involved with industry (FDA with Pharma), and quality diminishes while prices inflate.

This took a Harvard study to figure out? ?? I'd rank big pharma ahead of the Mexican cartels in terms of power and ruthlessness.

originally posted by: infolurker
a reply to: dreamingawake

Yeah, this has been well known for years.

We pay hundreds for the exact same drug that cost pennies overseas because the FDA is in the pharmaceutical industry's pocket.
Legal Government Sanctioned Monopoly which shamelessly overcharges us because our government officials get kick-backs called campaign contributions.

No, it is because the US is effectively subsidizing other countries. The cost to develop a drug has to be recouped. The monopoly is supposed to allow the pharmaceutical company to profit so they know their investment in the intellectual property is protected.

Put it like this, you run Drug Company A. You invested $50 million to develop a cure for a disease. Company B comes along and basically rips off your invention selling a generic version of your medicine. They didn't put up the money to create the medicine. So if you are Drug Company A, what is your incentive to develop wonder drugs if a competitor is just going to rip off your intellectual property?

The problem is other countries are not charging what needs to charged to spread around the actual cost. You essentially have the US market subsidizing other markets that won't pay what it actually cost to develop the drug.

a reply to: Edumakated

How can anyone who doesn't have access to the internal cost numbers of R and D, marketing testing and manufacturing actually know what the cost of a drug "should" be.

I don't have any sources to back up the feeling that drug costs are pushed up to the point of many times what are allowed in places like Canada. Look at epipen, they just slashed the price by 33%. Are they going out of business? No, the CEO just received a large raise, and her pay equates to roughly 44,000 units having to be sold just to pay her.

How many times do we hear of an old drug being bought and the cost goes up 300% so they can come up with the next miracle drug? They were supposed to make the money off the high cost in the first 17 years of patent protection, this is supposed to pay for the next drug.

originally posted by: seasonal
a reply to: Edumakated

How can anyone who doesn't have access to the internal cost numbers of R and D, marketing testing and manufacturing actually know what the cost of a drug "should" be.

I don't have any sources to back up the feeling that drug costs are pushed up to the point of many times what are allowed in places like Canada. Look at epipen, they just slashed the price by 33%. Are they going out of business? No, the CEO just received a large raise, and her pay equates to roughly 44,000 units having to be sold just to pay her.

How many times do we hear of an old drug being bought and the cost goes up 300% so they can come up with the next miracle drug? They were supposed to make the money off the high cost in the first 17 years of patent protection, this is supposed to pay for the next drug.

I'm not going to defend every pharmaceutical company and all the bonehead things they do. I am talking in generalities as to how the market works. My understanding is that the Epi-Pen issue is because the delivery device is patented, not so much the medicine. In other words, you can get the medicine cheaper in a syringe form, but the Epi-pen version you can't. Supposedly, the FDA has not allowed alternatives yet because they had some issues with drug delivery so they won't approve competitors products which would lower costs. CEO pay is an entirely different topic.

It really boils down to simple math. Let's say you have 100,000 people who want your product. 50,000 in the US and 50,000 in Europe. It cost you $100 million to develop the new wonder drug. So $1,000 per person. Europe says you can only sell your drug for a price that amounts to say $500 per person. So now the drug company has to charge $1500 to the US customers while the Europe customers only pay $500 to recoup the cost.

$100,000,000 investment / 100,000 market = $1,000 per person.

What is actually happening is:

US pays: 50,000 market size * 1500 = $75,000,000
Europe pays: 50,000 market size * 500 = $25,000,000
Total:$100,000,000

This is how the US winds up subsidizing everyone else.

The US should be paying less and Europe should be paying more.

a reply to: Edumakated

The pharm co's will not develop a drug if there isn't demand, period.

Look at the $80,000 treatment for hepatitis, when the CEO talked about the price he didn't mention R and D, he compared it to the cost of a liver transplant.

Believe what you will, big pharma will bitch that prices must go up, and consumers will bitch that they must go down. Who do you believe, and why?

CAPTAIN OBVIOUS GETS A COOKIE! 😐 (Rolling Eyes)

It's also a global market where one can easily order what they need from far cheaper pharmacies.

originally posted by: seasonal
a reply to: Edumakated

The pharm co's will not develop a drug if there isn't demand, period.

Look at the $80,000 treatment for hepatitis, when the CEO talked about the price he didn't mention R and D, he compared it to the cost of a liver transplant.

Believe what you will, big pharma will bitch that prices must go up, and consumers will bitch that they must go down. Who do you believe, and why?

The US offers incentives for pharma companies to develop drugs with small market potential. These are called Orphan Drugs. For example, some weird disease where maybe only 500 people in the world ever contract it in a given year.

For the Hepatitis drug, $80k is a bargain if the alternative is a liver transplant that cost $500,000. Sure, it is still expensive, but given that insurance is paying the cost in most cases, the $80k is bargain and the demand is there. Would it be nice if the cost were say $5000? Sure, but that isn't the reality yet and won't be until there are more competitors.

The challenge with the drug market is that it is by in large intellectual property that can be easily reproduced after R&D is completed. Drug companies have to believe that their research and development will pay off to ensure they continue to invest in new drugs. No company wants to invest in a product only to have it ripped off by a competitor.

a reply to: dreamingawake

When a company develops a pill that cost in excess of $400 million dollars how is the company going to recoup those losses for the next research project? Its why they are allowed patents and why generic drugs are restricted to years after the release of the first pill.

a reply to: Edumakated

It really boils down to simple math. Let's say you have 100,000 people who want your product. 50,000 in the US and 50,000 in Europe. It cost you $100 million to develop the new wonder drug. So $1,000 per person. Europe says you can only sell your drug for a price that amounts to say $500 per person. So now the drug company has to charge $1500 to the US customers while the Europe customers only pay $500 to recoup the cost.

$100,000,000 investment / 100,000 market = $1,000 per person.

What is actually happening is:

US pays: 50,000 market size * 1500 = $75,000,000
Europe pays: 50,000 market size * 500 = $25,000,000
Total:$100,000,000

This is how the US winds up subsidizing everyone else.

There is one missing varible to your equation , 'Time'. So maybe that drug that costs $1000 per person is actually per month. Then the cost $1000 cost would be divided by 12 and now its only just over $80. But lets not stop there, how about the number of years they have a patent on the drug? Someone mentioned 17 years and now the cost to recoup is only $5 and thats not even adding on increase in the world population each year that might need the drug.

Also considering Europe has 750,000,000 people while the US has a mear 318,000,000 people you estimation of a 50/50 market share would seem to be off as well. It would more likley be 70/30 and thats not even counting a small share from the remaining worlds population.

Quite simply big pharma chasrges a lot in the US simply because it can and not because it has to. Your government lets them get away with it because its not only about the drug companies profits, its also about the debt that is created from all the cost that isnt covered by the insurance companies. Think of all the unpaid debt that can then be written off as a tax loss that eventually gets resold to debt collecting companies who only ever try to recover a small percentage of it before reselling it to another debt colleting agencies and on and on and on....

The US is one giant money making operation and to try to blame it all on europe is just much easier than facing the truth.

I thought Monopolies were supposed to be illegal constitutionally. Why are we allowing this?

originally posted by: Puppylove
I thought Monopolies were supposed to be illegal constitutionally. Why are we allowing this?

By federal law and not in the constitution. Some segments of our economy are somewhat exempt, for lack of a better term, for one reason or another (some legitimate some not).

Not many companies can afford investing several hundred million dollars developing a drug and in this realm competition can be problematic. Given how the FDA process works when it comes to drug trials and all that mess.

The other factor is how much money the federal government allocates to medical research and how that slice of the pie is further divided up into the individual areas (cancer research, aids research, neurological research, etc etc).

I would also imagine the guidelines in place for medical companies would also preclude a lot of companies from being able to get involved. Factor in insurance requirements / waivers for human testing.. you get the idea.