"Rome said the companies seem to be maximizing prices while negotiating discounts behind the scenes with health and drug insurers and then setting yet another price for direct-to-consumer cash-pay sales."
This describes the biggest problem in US healthcare. No clear and consistent pricing. If we had a real market, you would get a prescription and then go to the seller with the lowest price. And everybody would get the same price. This whole business with PBMs that are owned by the insurance companies, discount cards and other shenanigans just invites corruption.
> "Rome said the companies seem to be maximizing prices while negotiating discounts behind the scenes with health and drug insurers and then setting yet another price for direct-to-consumer cash-pay sales."
This sounds like typical negotiating 101. You know you are going to be forced to lower from your starting position, so increase your starting position so when you do negotiate down you are closer to where you wanted to be.
In practice, the whole system is set up in a way that discourages asking questions. Waste of time. It's truly the opposite of the transparent ideal market.
"And everybody would get the same price. This whole business with PBMs that are owned by the insurance companies, discount cards and other shenanigans just invites corruption."
It's hard to say that it isn't racketeering at this point.
"Specifically, a racket was defined by this coinage as being a service that calls forth its own demand, and would not have been needed otherwise."
There's demand for the meds, but the demand for discount cards, forcing people to use specific services/companies, and related programs is all invented by the companies themselves.
As a european living in the US, the idea there is a market at all is laughable. I tried to get price quotes for treatments several time just to get a "well, it's hard to say" or "it's very complicated".
Here in Brazil, we have something called 'Genéricos.' These are essentially the same medications as the brand-name versions, produced with the same chemical ingredients, but they often cost half the price, sometimes even cheaper than that.
But prices are going up. Look at the statements your insurance company provides about the reimbursed "cost" of covered generics:
Some experts report that PBMs overcharge for generics; The Wall Street Journal estimated that Cigna and CVS Health, both of which own PBM services, are able to charge prices for specialty generic drugs that are 24 times higher than what manufacturers charge.
So this must be worldwide. It seems like the patents held by big pharma are the root of the corruption. What is the guarantee here? That the chemicals are pure, or just that the companies are getting their cut?
Generic is the English word for it. The brand name drugs have a limited time patent and they are supposed to help cover the initial research and development costs of bringing that drug to market.
Health insurance in general is the problem; PBMs/discount cards are just a cherry on top. Insurance is fundamentally incompatible with clear and consistent pricing.
Insurance companies do not force the sellers to use complex billing practices, they would benefit from more transparent pricing (since they are seeking to pay less).
The root cause is healthcare is inherently complicated and complex, it has a problem of supply being nowhere near demand, and since prices for things are so high (including liability), there is a lot of cover your ass and fraud prevention going on.
Don’t do pro bono PR for those companies. Healthcare isn’t so complicated that every other country in the world hasn’t been able to solve it for significantly less money and far less stress for users, not to mention better health outcomes in most cases.
Providing a chain of reasoning to support a logical conclusion is not “pro bono PR for those companies”. Claiming that someone doing that seems like an emotional kneejerk reaction to an idea that does not jive with the model of the world you would like to have.
I even provided an example of a healthcare provider choosing to be more transparent. It is always Eli Lilly’s choice to sell their medicine at a flat price to everyone. But it is also in Eli Lilly’s benefit to engage in price discrimination, so that they get paid more by people who can pay more:
Another example of this was when I was in college, US textbooks cost multiple times more than the international
version of the textbook I could buy on Abe books or whatever website. Or, coupons for grocery stores. The insurance company has no hand in this.
To be clear, insurance companies also cause waste, because the government does not audit them, and the insurance companies are not staffed appropriately to resolve disputes in a timely manner.
> it has a problem of supply being nowhere near demand,
Get rid of the patents and this will solve itself in no time.
> The insurance company has no hand in this.
False. Insurance companies in the US own stock in big pharma firms like Pfizer, Johnson & Johnson, Eli Lilly, etc. They maintain substantial investment portfolios and generate returns on premiums and reserves. They also have voting rights as institutional investors.
Yes, no one is stopping US (or other countries’) taxpayers from paying for all the drug trials so that the resulting medicines are in the public domain.
> Drugmakers plan to raise U.S. prices on at least 350 branded medications including vaccines against COVID, RSV and shingles and blockbuster cancer treatment Ibrance, even as the Trump administration pressures them for cuts
Few days ago, Donald Trump pressured Emmanuel Macron to raise the prices of all medicines. The pressure was made with unspoken threats [1].
But of a paywall there, can't tell if raw materials and precursors are costing more, or R&D spend is up, or employee wages and salaries have risen. Those are usually the "pressures" on prices. I can't understand what or who might be applying "pressure" to lower prices on oligopolistic pharmaceutical makers.
big Pharma has properties unlike many other business. The R&D is very, very expensive and, income is not directly related to expenses each year. The natural "moat" is such that only a relatively few, giant and wealthy, companies exist over time.
Why does the US consumer of said medications subsidize many other countries who have access to the same medications for a fraction of the US sticker price?
Lots of reasons. One of them is that other countries negotiate deals country wide and can get bulk discounts. The US does this with the VA and Medicare, and people using those services generally pay less than the rest of Americans. In the end, it is largely a policy choice, as having a single payer could get better negotiated deals on drugs.
Bah! Begone with your socialist mumbo jumbo! Fox News Entertainent channel tells me about you communist and your “single payer” sham all the time! We have the best healthcare! Merica!
Do you believe that the deals they make are unprofitable given the discount? Do you think the other countries are keeping guns to their heads or what?
The discounts are there because they can be, not because other countries want to pay below the break-even price.
It is in the US where the drug companies can invest in the government just enough to recoup that with massive premiums in the convoluted medical system.
US voters have no principles. Even republicans started artistically screaming about nationalizing companies when they didn’t want to play ball with the president.
This is not like IT where the Americans are completely dominant and clearly superior.
The European pharma companies are doing more than fine, despite their main market being heavily regulated and price-controlled.
The less charitable explanation is that US companies want to charge outrageous prices, and the American system let them to, so they do it.
That's what the USA are: a machine to prioritize profits over people. Sometimes it turns out fine, like for the startup scene. Sometimes it's terrible, like when lives at stake.
There are a lot of bad health outcomes built into our society, yes, but by the time people are confronted with the health impacts of cars, agriculture subsidies, for-profit healthcare, etc. it is likely that drugs will be necessary to treat the very real, immediate problems which any given patient has. Reversing the subsidies for things like car-dependency would positively benefit millions of people but it’s a generational change, not something most individuals can do.
>Maybe drugs, or these drugs, aren't the most efficient solutions. Shouldn't we direct resources toward more efficient ones?
Turns out all the low hanging fruit have already been picked, so the only "more efficient ones" left are stuff like gene therapy, which are absurdly expensive, but still theoretically cheaper than a lifetime of care. Unsurprisingly the high sticker price draws much backlash from the public and politicians.
> all the low hanging fruit have already been picked
What is that based on?
Also, I'm not talking about 'low hanging fruit' necessarily; only solutons that become cost effective for vendors if drug prices aren't so extreme.
There's reason to think there is low-hanging fruit: Research is incentivized for the most profitable solutions for the vendors, not the most cost-effective solutions for patients.
Rueters doesn't show a paywall for me. The source of the pressure described is in the headline though. I'm not sure why OP editorialized it: Exclusive: Drugmakers raise US prices on 350 medicines despite pressure from Trump.
The article is about drug pricing, which is the part I found interesting (and by extension thought we’d find interesting). I thought taking it out both saved space and made the comments less likely to veer into flamebait.
Thanks for filling that in. I, too, am interested in this topic, because the oligopolistic market in the US, and the multinational corporations in the oligopoly, cause unusual, counter-intuitive and counter-doctrinal economic results. We're not in a recession or depression, so I was curious about causes of downward pressure on prices.
There's a character limit on the titles you can submit, probably wasn't intentionally editorializing. I assumed from the HN title that the pressure was from the Trump admin just based on the current state of US politics.
I think its obvious: theres a LOT of love for Trump here in VC circles. So anything speaking ill of his laughable policies, EO's, and other garbage is -1'ed or flagged to oblivion.
Why is the supreme-court slow-walking the tariff decision which is crystal clear as lower courts clearly demonstrate only Congress can set taxes/tariffs?
It would end inflation within 90 days
Even their silly 15% tariff fallback law abuse would be more sane than the 50-150% currently
It slowed down Americans because we aren't recently used to it. The rich did adapt relatively quickly by buying up all the housing they could at negative real interest, stocks, gold, and to a lesser extent crypto.
The lesson has been learned by this point though, even a day laborer is holding silver and crypto nowadays because we have in recent memory the COVID shenanigans of mass QE.
People in China and Russia have basically taken for granted so long that their currency is completely manipulated, they all already knew to not be hoodwinked.
Mate, this Supreme Court ruled that the President is immune to prosecution and de facto outside and above the law. I’m honestly not sure what to tell you if you’re still hoping for rule-of-law decisions to come out of it.
"Rome said the companies seem to be maximizing prices while negotiating discounts behind the scenes with health and drug insurers and then setting yet another price for direct-to-consumer cash-pay sales."
This describes the biggest problem in US healthcare. No clear and consistent pricing. If we had a real market, you would get a prescription and then go to the seller with the lowest price. And everybody would get the same price. This whole business with PBMs that are owned by the insurance companies, discount cards and other shenanigans just invites corruption.
> "Rome said the companies seem to be maximizing prices while negotiating discounts behind the scenes with health and drug insurers and then setting yet another price for direct-to-consumer cash-pay sales."
This sounds like typical negotiating 101. You know you are going to be forced to lower from your starting position, so increase your starting position so when you do negotiate down you are closer to where you wanted to be.
Last year I needed to get blood work done, some of which may or may not be covered.
It took me two weeks, dozens of phone calls, and multiple "escalations" to learn what would be covered and what the price would be if it wasn't
Totally insane. The kicker is that after all that, the price I was billed wasn't even the price I was given (thankfully it was less though).
[delayed]
In practice, the whole system is set up in a way that discourages asking questions. Waste of time. It's truly the opposite of the transparent ideal market.
"And everybody would get the same price. This whole business with PBMs that are owned by the insurance companies, discount cards and other shenanigans just invites corruption."
It's hard to say that it isn't racketeering at this point.
"Specifically, a racket was defined by this coinage as being a service that calls forth its own demand, and would not have been needed otherwise."
There's demand for the meds, but the demand for discount cards, forcing people to use specific services/companies, and related programs is all invented by the companies themselves.
As a european living in the US, the idea there is a market at all is laughable. I tried to get price quotes for treatments several time just to get a "well, it's hard to say" or "it's very complicated".
Here in Brazil, we have something called 'Genéricos.' These are essentially the same medications as the brand-name versions, produced with the same chemical ingredients, but they often cost half the price, sometimes even cheaper than that.
Insanely comical.
Now look into the places that manufacture these generic versions. Not all factories are equal, and some are not of the best of reputations.
Those are available in America too
But prices are going up. Look at the statements your insurance company provides about the reimbursed "cost" of covered generics:
Some experts report that PBMs overcharge for generics; The Wall Street Journal estimated that Cigna and CVS Health, both of which own PBM services, are able to charge prices for specialty generic drugs that are 24 times higher than what manufacturers charge.
https://www.americanprogress.org/article/5-things-to-know-ab...
So this must be worldwide. It seems like the patents held by big pharma are the root of the corruption. What is the guarantee here? That the chemicals are pure, or just that the companies are getting their cut?
Generic is the English word for it. The brand name drugs have a limited time patent and they are supposed to help cover the initial research and development costs of bringing that drug to market.
Generics can only be made after the patent expires. And due to pressure from western countries, these are enforced worldwide.
That's what he said. Brazil is in (South) America.
Health insurance in general is the problem; PBMs/discount cards are just a cherry on top. Insurance is fundamentally incompatible with clear and consistent pricing.
Pharmaceutical companies, hospitals, and doctors are free to charge by the medicine, by the night, and by the minute.
For example, this place does it:
https://surgerycenterok.com/surgery-prices/
Insurance companies do not force the sellers to use complex billing practices, they would benefit from more transparent pricing (since they are seeking to pay less).
The root cause is healthcare is inherently complicated and complex, it has a problem of supply being nowhere near demand, and since prices for things are so high (including liability), there is a lot of cover your ass and fraud prevention going on.
Don’t do pro bono PR for those companies. Healthcare isn’t so complicated that every other country in the world hasn’t been able to solve it for significantly less money and far less stress for users, not to mention better health outcomes in most cases.
Providing a chain of reasoning to support a logical conclusion is not “pro bono PR for those companies”. Claiming that someone doing that seems like an emotional kneejerk reaction to an idea that does not jive with the model of the world you would like to have.
I even provided an example of a healthcare provider choosing to be more transparent. It is always Eli Lilly’s choice to sell their medicine at a flat price to everyone. But it is also in Eli Lilly’s benefit to engage in price discrimination, so that they get paid more by people who can pay more:
https://en.wikipedia.org/wiki/Price_discrimination
Another example of this was when I was in college, US textbooks cost multiple times more than the international version of the textbook I could buy on Abe books or whatever website. Or, coupons for grocery stores. The insurance company has no hand in this.
To be clear, insurance companies also cause waste, because the government does not audit them, and the insurance companies are not staffed appropriately to resolve disputes in a timely manner.
> it has a problem of supply being nowhere near demand,
Get rid of the patents and this will solve itself in no time.
> The insurance company has no hand in this.
False. Insurance companies in the US own stock in big pharma firms like Pfizer, Johnson & Johnson, Eli Lilly, etc. They maintain substantial investment portfolios and generate returns on premiums and reserves. They also have voting rights as institutional investors.
Yes, no one is stopping US (or other countries’) taxpayers from paying for all the drug trials so that the resulting medicines are in the public domain.
> Drugmakers plan to raise U.S. prices on at least 350 branded medications including vaccines against COVID, RSV and shingles and blockbuster cancer treatment Ibrance, even as the Trump administration pressures them for cuts
Few days ago, Donald Trump pressured Emmanuel Macron to raise the prices of all medicines. The pressure was made with unspoken threats [1].
[1]: https://www.tf1info.fr/international/trump-se-vante-d-avoir-...
But of a paywall there, can't tell if raw materials and precursors are costing more, or R&D spend is up, or employee wages and salaries have risen. Those are usually the "pressures" on prices. I can't understand what or who might be applying "pressure" to lower prices on oligopolistic pharmaceutical makers.
big Pharma has properties unlike many other business. The R&D is very, very expensive and, income is not directly related to expenses each year. The natural "moat" is such that only a relatively few, giant and wealthy, companies exist over time.
ref- The Billion Dollar Molecule
> big Pharma has properties unlike many other business. The R&D is very, very expensive and, income is not directly related to expenses each year
Isn’t this any capital-intensive business with variable demand?
Why does the US consumer of said medications subsidize many other countries who have access to the same medications for a fraction of the US sticker price?
Lots of reasons. One of them is that other countries negotiate deals country wide and can get bulk discounts. The US does this with the VA and Medicare, and people using those services generally pay less than the rest of Americans. In the end, it is largely a policy choice, as having a single payer could get better negotiated deals on drugs.
https://www.healthsystemtracker.org/brief/how-medicare-negot...
Bah! Begone with your socialist mumbo jumbo! Fox News Entertainent channel tells me about you communist and your “single payer” sham all the time! We have the best healthcare! Merica!
This is satire btw.
"If Canada is getting a 30% discount we can make it up by baking it into the hundreds of smaller negotiations with American providers."
Drug maker thinking
Do you believe that the deals they make are unprofitable given the discount? Do you think the other countries are keeping guns to their heads or what? The discounts are there because they can be, not because other countries want to pay below the break-even price. It is in the US where the drug companies can invest in the government just enough to recoup that with massive premiums in the convoluted medical system.
If you pitched a pharma company with the thesis of "We'll charge US customers less and global customers more", what would stop that from working?
I can think of a number of things.
Because US voters prefer the free market as opposed to government regulation and nationalized healthcare.
It is certainly a market, but I wouldn’t call it a free market.
Healthcare, like real estate, is a dysfunctional marketplace lacking real competition
US voters have no principles. Even republicans started artistically screaming about nationalizing companies when they didn’t want to play ball with the president.
Can you provide evidence for the claim? Polling from pew and Gallup suggest this isn't the case.
I think surveys show voters prefer the opposite, but certain powers are able to overcome that.
This is not like IT where the Americans are completely dominant and clearly superior.
The European pharma companies are doing more than fine, despite their main market being heavily regulated and price-controlled.
The less charitable explanation is that US companies want to charge outrageous prices, and the American system let them to, so they do it.
That's what the USA are: a machine to prioritize profits over people. Sometimes it turns out fine, like for the startup scene. Sometimes it's terrible, like when lives at stake.
Other explanations sound like heavy copium to me.
Many of those European pharma companies do most of their work and make most of their money in the US.
While it's true that the exposure of top European firms can be often 50%+ of total revenue from U.S, that:
- Doesn't make them non viable without the American market, just less rich.
- Doesn't reflect the 5 to 10 times higher price Americans pay for the same drugs.
You can have a healthy industries with plenty of billions to be around and have decently priced drugs.
What you get in the US is uber profitable industries and people scrapping around.
Those European companies make most their profit in the US. They would be much smaller without access to the US market.
Maybe drugs, or these drugs, aren't the most efficient solutions. Shouldn't we direct resources toward more efficient ones?
There are a lot of bad health outcomes built into our society, yes, but by the time people are confronted with the health impacts of cars, agriculture subsidies, for-profit healthcare, etc. it is likely that drugs will be necessary to treat the very real, immediate problems which any given patient has. Reversing the subsidies for things like car-dependency would positively benefit millions of people but it’s a generational change, not something most individuals can do.
>Maybe drugs, or these drugs, aren't the most efficient solutions. Shouldn't we direct resources toward more efficient ones?
Turns out all the low hanging fruit have already been picked, so the only "more efficient ones" left are stuff like gene therapy, which are absurdly expensive, but still theoretically cheaper than a lifetime of care. Unsurprisingly the high sticker price draws much backlash from the public and politicians.
> all the low hanging fruit have already been picked
What is that based on?
Also, I'm not talking about 'low hanging fruit' necessarily; only solutons that become cost effective for vendors if drug prices aren't so extreme.
There's reason to think there is low-hanging fruit: Research is incentivized for the most profitable solutions for the vendors, not the most cost-effective solutions for patients.
Rueters doesn't show a paywall for me. The source of the pressure described is in the headline though. I'm not sure why OP editorialized it: Exclusive: Drugmakers raise US prices on 350 medicines despite pressure from Trump.
> not sure why OP editorialized it
The article is about drug pricing, which is the part I found interesting (and by extension thought we’d find interesting). I thought taking it out both saved space and made the comments less likely to veer into flamebait.
Thanks for filling that in. I, too, am interested in this topic, because the oligopolistic market in the US, and the multinational corporations in the oligopoly, cause unusual, counter-intuitive and counter-doctrinal economic results. We're not in a recession or depression, so I was curious about causes of downward pressure on prices.
There's a character limit on the titles you can submit, probably wasn't intentionally editorializing. I assumed from the HN title that the pressure was from the Trump admin just based on the current state of US politics.
Char limit is 80, the full title would fit, even with “Exclusive”.
I think its obvious: theres a LOT of love for Trump here in VC circles. So anything speaking ill of his laughable policies, EO's, and other garbage is -1'ed or flagged to oblivion.
If you choose to self censor a headline for fear of getting voted down on news.ycombinator.com, that says as much about you as the -1ers.
What does it say?
That you have no spine, no conviction, mostly.
Why is the supreme-court slow-walking the tariff decision which is crystal clear as lower courts clearly demonstrate only Congress can set taxes/tariffs?
It would end inflation within 90 days
Even their silly 15% tariff fallback law abuse would be more sane than the 50-150% currently
Next few years is going to be insanity
There was a lot of inflation before tariffs, and it didn't even have the effect of slowing China down economically or Russia militarily.
It slowed down Americans because we aren't recently used to it. The rich did adapt relatively quickly by buying up all the housing they could at negative real interest, stocks, gold, and to a lesser extent crypto.
The lesson has been learned by this point though, even a day laborer is holding silver and crypto nowadays because we have in recent memory the COVID shenanigans of mass QE.
People in China and Russia have basically taken for granted so long that their currency is completely manipulated, they all already knew to not be hoodwinked.
Inflation is low (relative to the last few years) and so far tariff related inflation hasn't manifested.
Mate, this Supreme Court ruled that the President is immune to prosecution and de facto outside and above the law. I’m honestly not sure what to tell you if you’re still hoping for rule-of-law decisions to come out of it.