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From: Alan Meyer on 29 Sep 2008 13:02
Steve Kramer wrote:
> "R L" <wa5pdk(a)webtv.net> wrote in message
> news:23732-48E05E49-325(a)storefull-3273.bay.webtv.net...
>> After my experience with prostate cancer and trying to follow
>> all of the oncologist's orders I am beginning to wonder why it
>> is necessary for these medications and scans be be
>> "shockingly" expensive.

Some time ago TAP Pharmaceuticals, makers of Lupron, paid a
gigantic fine for price gouging using illegal kickbacks to
doctors and other techniques. However, I'm not sure that the
price has dropped much since then.

....

> Simplified, the alternative is to remove the government and the
> charities and allow the free market to reign. At which time,
> insurance companies will drop their rates and increase their
> coverage and build less skyscrapers. Pharmaceuticals will drop
> their rates and probably slow their research and delay their
> breakthroughs.

It is an interesting question as to what the effects of a free
market in medicine would be. Our market in the U.S. is arguably
freer than in Canada or Europe (but see below on the patent
issue), yet we pay much more for drugs than they do, including
the very same brand name drugs.

I'm no kind of authority on this issue, but it is my
understanding that one of the big problems in drug prices is the
lengthy patent protection offered to drug companies by U.S. law.
The original purpose of these lengthy patents was to enable the
drug companies to make extra profits out of which they would
recoup the costs of research. However, today, the drug companies
do relatively little research. They buy patents from tiny
startup biotech companies, or from universities. The real cost
of the research is paid for by venture capital for the biotech
startups, and largely by tax dollars for the universities. So
the real effect of the law is not to stimulate research but just
to stimulate profit.

We should note that when drugs are protected by patents,
competition seems to have no effect on price. If you doubt this,
consider the price of Viagra before and after the entry of
Levitra and Cialis into the market. As I understand it, the
prices did not change. Instead of competing on price, the three
big companies competed with advertising - which consumers pay
for. The actual cost of manufacturing the drugs is pretty low,
as attested to by the low cost of the Indian knockoffs.

The same is true of the blockbuster blood pressure, cholesterol,
and depression drugs. As more companies enter the market with
patent protected drugs, the prices have not dropped. The prices
only drop when the generics become available. And then they
often drop by a factor of 5 or 10.

....

Alan
From: len on 29 Sep 2008 18:35
On Sep 29, 12:02 pm, Alan Meyer <amey...(a)yahoo.com> wrote:
> Steve Kramer wrote:
>
> > "R L" <wa5...(a)webtv.net> wrote in message
> >news:23732-48E05E49-325(a)storefull-3273.bay.webtv.net...
> >> After my experience with prostate cancer and trying to follow
> >> all of the oncologist's orders I am beginning to wonder why it
> >> is necessary for these medications and scans be be
> >> "shockingly" expensive.
>
> Some time ago TAP Pharmaceuticals, makers of Lupron, paid a
> gigantic fine for price gouging using illegal kickbacks to
> doctors and other techniques. However, I'm not sure that the
> price has dropped much since then.
>
> ...
>
> > Simplified, the alternative is to remove the government and the
> > charities and allow the free market to reign. At which time,
> > insurance companies will drop their rates and increase their
> > coverage and build less skyscrapers. Pharmaceuticals will drop
> > their rates and probably slow their research and delay their
> > breakthroughs.
>
> It is an interesting question as to what the effects of a free
> market in medicine would be. Our market in the U.S. is arguably
> freer than in Canada or Europe (but see below on the patent
> issue), yet we pay much more for drugs than they do, including
> the very same brand name drugs.
>
> I'm no kind of authority on this issue, but it is my
> understanding that one of the big problems in drug prices is the
> lengthy patent protection offered to drug companies by U.S. law.
> The original purpose of these lengthy patents was to enable the
> drug companies to make extra profits out of which they would
> recoup the costs of research. However, today, the drug companies
> do relatively little research. They buy patents from tiny
> startup biotech companies, or from universities. The real cost
> of the research is paid for by venture capital for the biotech
> startups, and largely by tax dollars for the universities. So
> the real effect of the law is not to stimulate research but just
> to stimulate profit.
>
> We should note that when drugs are protected by patents,
> competition seems to have no effect on price. If you doubt this,
> consider the price of Viagra before and after the entry of
> Levitra and Cialis into the market. As I understand it, the
> prices did not change. Instead of competing on price, the three
> big companies competed with advertising - which consumers pay
> for. The actual cost of manufacturing the drugs is pretty low,
> as attested to by the low cost of the Indian knockoffs.
>
> The same is true of the blockbuster blood pressure, cholesterol,
> and depression drugs. As more companies enter the market with
> patent protected drugs, the prices have not dropped. The prices
> only drop when the generics become available. And then they
> often drop by a factor of 5 or 10.
>
> ...
>
> Alan

Also, remember that patients don't choose drugs. Their doctors do.
So the drug companies have always done a lot of work selling to
doctors by offering them lots of goodies. Some doctors learn what
they know about a drug's effectiveness and side effects from drug
representatives. Advertising directly to the public is a more recent
development.

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