Alright, I'm tired of debating healthcare. I'm just going to give some information for everyone.
The US leads the world in obesity rates, and obese people pay $1,500+ per year more than non-obese.
The US leads(or nearly) the world in diabetes rates. Diabetics spend 2.3 times as much on healthcare than non-diabetics.
The US pays double the price for branded prescription drugs compared with Europe. Europe uses price controls, and pharmaceutical companies lose money on drugs they sell there. They make their profit by jacking up the price in America.
Surgeons, Doctors, and Nurses earn approximately double in the US compared to the OECD average.
Traffic accident mortality rates in the US are double the OECD average, and total accident rates are triple.
The 'overpayment' of Americans on healthcare for each category are as follows:
Obesity: $95 billion
Diabetes: $115 billion
Prescriptions: $125 billion
Salaries: $220 billion+
Traffic: $100 billion
Or $2,100 per person.
Interestingly, in 2006 the US was only $1900 per capita above the trend line for spending across countries. I just thought, maybe, some of you might be interested in the real reasons why US healthcare costs more than it 'should'.
On top of that, the US enjoys some of the best healthcare in the world. Here are some examples.
2 months or longer to see a specialist(%)
AUS CAN UK US
29 42 33 10
Average length of stay(days)
AUS CAN UK US
6 7.2 7.5 5.6
6 months or longer for elective surgery(%)
AUS CAN UK US
9 14 15 4
No blood pressure check within past year(%)
AUS CAN UK US
19 20 33 12
No pap test within past three years(%)
AUS CAN UK US
20 23 22 10
Dead from cancer within 5 years(%)
AUS CAN UK US
31.7 29.5 48 26.2
More than 30 minute wait in ER(%)
AUS CAN UK US
67 80 74 66
More than 4 hour wait in ER(%)
AUS CAN UK US
16 31 4 13
Then how come we come in at #37 in the workd healthcare ratings?
Because the WHO attributes less than 25% of its ranking to the outcome provided by a healthcare system.
I mean, seriously, who cares about the results?
Jaxson, can you provide a source for that? Based on my limited checking, I don't see this statement as being accurate.
Yeah, I can provide sources for everything I say, because I base everything I say on sources. I don't automatically provide them because it's a pain to provide dozens of sources for every topic, when people on these forums constantly show preference for 3rd-party sources over primary-source data.
http://en.wikipedia.org/wiki/World_Heal … ethodology
Primary source: www.who.int/whr/2000/en/whr00_en.pdf
50% is based on life expectancy. 25% on the actual figure and 25% on life expectancy distribution. Neither figure accounts for the causes of life expectancy. The US is the highest in the world, or nearly so, for accidental deaths, homicides, obesity, diabetes, and cancer, to name a few. Life expectancy doesn't compare the efficacy of treatment, it just assumes that better treatment means higher life expectancy, and that each country has the same incidence of diseases.
25% is based on 'fair financial contribution'. They consider public money to be better than private money. So if the government taxes you $100 to pay for healthcare, that's good. If you pay $100 out of your own paycheck, that's bad. The don't account for incidence of diseases either. The US leads in obesity rates worldwide, and an obese person averages $1500/year more in health expenses. Again, they assume that every country is on equal footing for incidence.
The last 25% is based on speed of service, privacy, and 'quality of amenities'.
There isn't a single statistic they use that actually compares outcome of treatment country to to country. Probably because there have been very few studies that do that, and none that cover all WHO members. My 25% figure is actually being generous, as 0% of the ranking is directly related to the outcome of treatment. 50%(life expectancy) is indirectly related.
It's important to provide the sources because as we saw the other day sometimes those sources are horribly unreliable (which is understandable) but the source is essential to the validity of the data.
Yes, Josak, you countered one of my sources, one time, without providing your own source. Ironic, isn't it?
As I said, I'd be happy to discuss the OECD's response to that study, but they haven't made it available online, it's in a $50 book.
The fact remains, life-expectancy figures don't adjust for incidence of diseases, homicides, or accidents.
Every person who dies before their time in the US in an accident(28,000 more per year than if we were at the OECD average) is counted as a failure of the healthcare system.
So don't talk to me about sources Josak. The best you ever do is a news article. People on this forum constantly ignore my original sources, or call them lies, because they don't agree with what a NYTimes article or a BBC article said.
As a purely practical matter, it would be nearly impossible to directly analyze the outcome of treatment, don't you think? Would you measure the outcome of all treatments, from a minor skin rash to lung cancer? Do all nations keep these statistics, and would their recordkeeping methods be comparable?
I fail to see how it could be done. The absence of this particular measure does not mean that the other measures that were used are invalid.
Right, it is impractical.
So what do people do? They take the WHO report from 2000(getting pretty outdated at this point), and pretend that it actually does a good job of ranking countries.
In other words, in the absence of good data, let's pretend that crap data is good data.
Not all nations keep statistics, not all nations measure statistics in the same way. It really can't be done at this point.
The absence of this particular measure doesn't make the WHO report good. You can't say 'Well, we can't actually say which healthcare systems are better at treating illness, so we'll just base which one is best on everything except for how good of a job it actuallly does.' The WHO report just doesn't work.
The WHO results data are bottom line results including mortality for people who get health care and those for various reasons, mainly poverty, denials by insurance companies for preexisting conditions, people who are laid off and lose their coverage, etc. That's the only accurate way to evaluate a country's health care system. Mayo, Cleveland Clinic and Sloan Kettering may well be the best in the world, but not many Americans get that kind of care.
Counting people who die in car accidents and are murdered as failings of the healthcare system is not a good measure.
Thinking that a country with twice as many obese people per capita should have the same results and same costs is simply lunacy.
The WHO results don't look at ANY bottom-line results. The closest thing they look at is life expectancy, and I've clearly pointed out, several times, how that is a poor measure to use.
To try and use that measure, you have to agree with some on this forum that the US has high diabetes rates, high obesity rates, high cancer rates, because of poor healthcare not stopping citizens from stuffing their faces with grease, fat, sugar, preservatives, aspartame, pink slime(ammonia), etc etc etc.
Because health care in the U.S. is quite good for the people who can afford it. It is lousy for the uninsured and poor who suffer from malnutrition, lack of good prenatal care, pediatric care and adult preventive care. Basically, poverty and mal-distribution of income are what drags the U.S. down compared to other advanced countries.
It's because the WHO attributes less than 25% of their ranking to the actual health outcome of a healthcare system.
Yeah, we could do better at getting everyone covered, but still our system gets the best results in many categories, and all the finger-pointing at pharmaceutical companies, insurance companies, and doctors completely misses the real issue.
http://www.pharmatimes.com/article/12-0 … study.aspx
I was looking for support for your claim that the drug companies lose money on sales in Europe, not surprisingly, I couldn't find any such support.
It's basic math. Pharma companies can only charge half the price in Europe they charge in America. The average profit margin for a pharma company is 15%.
PharmCoA has a 15% profit margin. Half of their revenue comes from the US selling each pill for $1. Half of their revenue comes from Europe selling each pill for $0.50.
That would mean they sold twice as many pills in Europe than the US.
50 pills in US for $50
100 pills in Europe for $50
Total sales = $100
15% profit margin means expenses were $87.
$87 to make 150 pills means each pill costs $0.58
Every pill sold in Europe loses them $0.08.
That's the current situation.
Do you really believe that they would sell drugs at a loss?
Whilst governments might be able to control the prices that they sell at, there is no mechanism that I know of that enables them to force companies to sell goods if the company does not want to.
Ok, you explain how a company can sell half of its drugs at $1 and half at $0.50, end up with a 15% profit margin, and still make a profit on the drugs sold for half price.
If half their revenue come from the US, it's not possible. I already showed that, they would lose 9% on each pill.
If 1/3 of their revenue come from the US you get:
50 pills in US for $50
200 pills in Europe for $100
Total sales = $150
15% profit margin means expenses were $130.
$130 to make 250 pills means each pill costs $0.52
Every pill sold in Europe loses them $0.02.
Still losing almost 4% per unit.
So tell me, how are they making money selling drugs for half price, when thier profit margin is only 15%?
I could be wrong about this because I haven't looked into it recently, but I believe that drug companies spend massive amounts of money on direct-to-consumer advertising in the US. I don't think this is allowed in Europe.
Smart people, those Europeans.
Depending on the company, advertising can account for up to 15% of the discrepancy in prices. It's not even close to the majority of the reason for the differences in price.
It's plain and simple. We wouldn't have all the drug R&D that we do if America payed prices similar to the rest of the world.
This source says that pharmaceutical companies spend almost twice as much on direct-to-consumer marketing in the U.S. as they do on R & D.
Ok, according to that article pharmaceutical companies spent 4.2 billion on direct-to-consumer advertising and 7.2 billion on advertising to physicians.
I'll just take it that those figures are correct. PhRMA reports that in the same year, PhRMA members spent $39.9 billion on R&D, and that figure doesn't include spending by pharmaceutical companies that aren't members.
So pharmaceutical companies actually spend less than 10% on DTC advertising as on R&D.
www.phrma.org/sites/default/files/.../p … _final.pdf
Actually more like 20% which is far more than any other type of company makes!
And that is of course after the money spent on R&D(!) advertising, salaries dividends etc etc.
It's been some time since I looked at it, but one big answer used to be that the large majority of R&D for drugs was done in the US. Very little was being developed in Europe.
The real cost of a drug isn't in the raw materials or production of that little pill; it is in the R&D. No research, no costs. No costs, no losses.
But there is much evidence that the drug companies don't pay the lions share of R&D.
John, you keep trying to make that point, and it doesn't matter what the percentages are. It only matters what the dollar figures are.
If a corporation pays $1 billion to develop a new drug, they need to charge enough for that drug to at least make up for that cost. Otherwise, they won't be able to continue doing research.
According to PhRMA it cost $1.3 billion in 2005 for a company to bring one new drug to market.
Your old source is absolutely false. If companies only spent $50-$100 million to bring a drug to market, then why isn't Pfizer bringing 10 to 20 new drugs to market every year with their nearly $10 billion in R&D spending?
Yeah, Celgene, the company John was painting as some evil, money-grubbing group earlier, spends 40% of their GROSS revenues on R&D every year.
There are a lot of international companies that do research. They just get their funding for it by charging higher prices in the US. There's really no difference in where the company is based, they can still fund R&D with sales here.
Do you have a source for that? Based on what I've seen so far, I'm not sure that is accurate.
Source for which part? That Celgene spends 40% of gross income on R&D?
Look at their annual reports.
http://ir.celgene.com/phoenix.zhtml?c=1 … ortsAnnual
http://ir.celgene.com/phoenix.zhtml?c=1 … ualArchive
Recently they have spent between 30 and 40%. Earlier in the 2000s they spent upwards of 65%+, and they spent over 100% in 1999.
Or were you asking about companies getting their funding for R&D from the US?
I just wanted to see where you were getting your figures. You tend to throw out a lot of facts and numbers without substantiating them.
Yes, drug companies spend a disproportionately large portion of their revenues on R&D. One could argue that this is not necessarily a good thing. Many new drugs are nearly identical to already existing drugs and work no better and have about the same level of side effects. How many anti-depressant drugs do we need, anyway? Drug companies want to make money, so they will create something "new" (even if it isn't really new in the way it works or any more effective) and market it as the next great treatment for depression, high blood pressure, diabetes, or whatever.
There is a reason people in the U.S. are the biggest consumers of prescription drugs and that reason is the massive amount of money spent on advertising by big pharma, both directly to consumers and to doctors.
I love when people tell me I need to provide more sources, and then make claims without any sources.
What are the new drugs that are nearly identical? What percentage of new drugs are 'nearly identical'? What does nearly identical mean? How much of a difference should a new drug make over a previous drug to be justified?
Did you know that pharmaceutical companies don't know what the effects of a drug will be when they start developing a new one? That's the whole point. They ask 'what if we do this', then they start running throught simulations, animal tests, and if things go well, human trials. They can't know if a new drug will increase life expectancy of a prostate-cancer patient by a week or by 2 years, until after they have spent hundreds of millions of dollars and years of research.
You are right, I didn't provide a source and I'm sure there are standards as to what makes a drug different enough to be considered a new one. My point is, and I concede I didn't make it well and I'm not providing data to support it, is that all that money spent on R&D by pharmaceuticals is not necessarily a good thing. Here in the U.S., more money is spent on marketing the drugs than in developing them, according to the source I provided above. One could argue whether that is good or bad for people in general, I suppose, but I tend to think that marketing drugs directly to consumers and to doctors is in the interests of the pharmaceutical companies and not sick people.
But to say that with no evidence at all, what's the point?
When you understand that companies don't know the effects of a new drug until after they spend hundreds of millions of dollars and years in testing, then the point is clearly without foundation.
I showed your source to be wrong. Celgene spent $9 billion in R&D last year, all by itself. Your source said that companies spent $4.2 billion in DTC marketing in 2005, and that was nearly double what they spent in R&D in 2005?
It makes no sense. Do you really think that all the pharmaceutical companies spent a total of $2 billion on R&D in 2005? Because you have to, if you want to believe your source.
Beyond that, the source that your source uses for advertising costs doesn't agree with what your source says. CSA uses this source:http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0050001#s4
IMS reports advertising spending of $27 billion, which includes $16 billion for the retail value of samples.
Retail value? Samples don't cost pharmaceutical companies the retail value. They cost wholesale value. CAM estimated the wholesale value at $10 billion less. Then the report takes the higher figure of retail value from IMS, and adds to it the higher marketing and detailing figures from the CAM report, to get their final figure.
Right, so take two reports, and add up the highest figure for each category, tack on $10 billion of invisible 'retail' costs, and Viola!
Oh, and the CSA source agrees that companies only spend $4 billion on DTC advertising, which also disproves CSA's point about pharma companies spending twice as much on DTC advertising as on R&D.
Have I shot your source full of enough holes yet? DTC advertising was less than 10% of R&D spending in 2005. 10% is not 200%.
Well, I do agree that Americans are generally overmedicated, but I am sure that we absolutely should have direct-to-physician marketing. Would you want your doctor to not tell you about a new drug that would ease your Chron's symptoms simply because he didn't read Celgene's latest annual report?
"Celgene spent $9 billion in R&D last year, all by itself."
I did not see a 2011 annual report listed on the page your link landed on, if that is what you meant by "last year." Their 2010 annual report shows they spent $1.1 billion dollars on R&D, a 42% increase from the prior year, and 31.1% of their total revenue.
Am I missing something? I don't want to go further until I understand where you got the $9 billion number.
You're right, the $9 billion figure is from Pfizer, I had both reports open at once.
http://www.pfizer.com/files/annualrepor … al2011.pdf
Okay, I'm going to be honest here and say that I have neither the motivation nor the time to look at all the figures you have given here. The one and only that I checked was wrong, but I can see how the mistake was made.
As far as the differences in figures between the report I linked to and yours, it would take considerable time to wade through it all. One would have to check to see if drug companies report R&D expenditures in the same way that it was measured in each report. I have a feeling the answer is "no" because the CBO doesn't measure advertising expenditures in the same way as the drug companies do, and guess which way favors the drug companies?
As far as my desire for my doctor to know about new drugs, I would prefer she learn about them by reading research reports than from a pharmaceutical rep showing up at her office with a suitcase full of samples and a flashy brochure.
I think we can all agree that pharmaceutical companies want to make money and that they use a good portion of that for R&D. Maybe what we don't agree on is whether the development and sale of medications that could help or harm someone is best handled in a for-profit venue. After all, the cure for the common cold would eliminate the need for a huge number of drugs, so maybe the motivation to find that cure is not so important to existing drug companies.
Which is exactly why I don't bother posting sources for everything. The one figure you checked, I put the wrong company, the number for R&D from a single company was still correct, and still double what all pharmaceutical companies spend on DTC advertising.
I was trying to show the inconsistencies in your own source. It listed the retail price of samples as a cost for pharmaceutical companies. It's pretty clear that such a figure is wrong.
I know people like to claim that companies cheat a lot on what they claim as deductions, expenses, etc... but keep in mind they IRS has teams of people devoted to finding problems with their filings. They aren't likely to get away with grossly exaggerating R&D costs.
Do you think every doctor has time to read through hundreds of research reports every year? I just got a specialist appointment set up, for 2 months from now, because the doctor doesn't have any open time between now and then. There is nothing wrong with educating physicians and the public about new developments. In fact, it's easy to argue that it helps. More people are able to get relief for symptoms, the pharmaceutical companies have more money to research. Both parties benefit.
Nah, there is motivation to find cures. If someone comes up with a cure, they get the monopoly for that market. They will take 100% of all their competition's business in that area, and make a lot of money.
"Which is exactly why I don't bother posting sources for everything. The one figure you checked, I put the wrong company, the number for R&D from a single company was still correct, and still double what all pharmaceutical companies spend on DTC advertising."
You might be right, but like I said, the only way to know for sure would be to wade through all of the figures to see how they measure R&D as well as advertising. For example, you keep referring to DTC advertising, which is a particular type of advertising. The figure for marketing as a whole could be quite different. Again, it would take a lot of time that I don't feel like spending on this subject.
"I was trying to show the inconsistencies in your own source. It listed the retail price of samples as a cost for pharmaceutical companies. It's pretty clear that such a figure is wrong."
I don't know, I'm not an accountant, but perhaps the price one would get if the item were sold is considered the cost of providing a sample.
"Do you think every doctor has time to read through hundreds of research reports every year?"
Of course not; I phrased that poorly. That's what journals are for, to summarize the latest results of research.
"Nah, there is motivation to find cures. If someone comes up with a cure, they get the monopoly for that market. They will take 100% of all their competition's business in that area, and make a lot of money."
Nah, patents expire, so no eternal monopoly. Compare the income to one cure for the cold to the endless list of cold medicines, headache medicines, cough medicines, decongestants, etc.
Your source listed $4.2 billion for DTC advertising, and $7.2 billion for direct-to-physician advertising. Pfizer alone nearly spends that much on R&D. PhRMA members spend tens of billions a year. It doesn't take a lot of time, I provided the sources for that.
An economist would consider that the cost, the opportunity cost. But for how much money a company has to spend to make a sample, that is the value of the sample. The cost is what it cost the company
Well, journals take time to read through and money to acquire. Maybe someone could come up with a new-drug-review service and provide that to doctors for less than what the pharma. companies pay, but the fact remains that these companies advertise because it increases sales. It increases the number of people who are aware of, and willing/able to pay for, new drugs.
Yeah, patents expire. After 20 years. For 20 years, you would be able to charge branded prices for your product. You could make hundreds of billions of dollars by curing any major illness, and people would thank you for it. You would make much more by doing that, than by having another generic-priced option on the shelves.
Just a minor quibble, but it is my understanding that drugs are patented during development so by the time they reach market the patent could expire in as little as 8 years, especially if it is a groundbreaking drug, which generally requires a much longer R&D timeframe.
Also, you can NEVER convince me that pharmaceutical reps are providing a service to doctors that couldn't be better provided by medical research departments at universities, for example. Those reps want to sell drugs, not help doctors provide the best care.
There is no motivation whatsoever to find CURES. There is huge $ motivation to find treatments. As in drugs to TREAT the disease.
Illness, not wellness, is healthcare in the US.
Another issue is that there is a lack of incentives to find drugs to treat rare diseases. The big payoff is for drugs for treating chronic diseases--diabetes, high blood pressure, high cholesterol, etc. which people are told to take every day for the rest of their lives.
Yes, and as you point out below, Ralph, people are put on these drugs instead of being put on a diet/food&exercise regimen. Those practical options are rarely even brought to the table!
Our medical establishment is built on
1. diagnostics -- gotta pay for all those fancy imaging machines and multiple lab tests
2. disease -- you need a wise doctor (who's studied for years $$$) to find out what's "wrong" with you (fear, fear, fear)
3. drug dependence -- here, take these 17 prescriptions ... or else you will die
The whole model is SICK.
Of course there is motivation to find cures. The motivation is money, and kindness. If you don't think kindness exists, look at Celgene. They lost money selling a drug to AIDS patients.
If you developed a cure for cancer, you would completely monopolize the market for that treatment. If you develop a drug that treats symptoms, you might get 5% of the share for that market, and lose out shares as new treatments come out.
If you had the cure, you would get 100% of the market for 20 years. That's at least 20 times the profits.
If you had to invest $1 billion to develop a drug, would you rather make back $1.2 billion, or $24 billion?
As I've said, everything I put out here is substantiated by sources. I do a lot of my own research. Often I will look at dozens of reports, studies, and financial documents before making a point on these forums. I don't normally take the time to source every one of these, because the people on here who disagree with me generally don't care.
Want proof? Ask people how much GE paid in taxes. Across 3 different forums, I provided the SEC 10-K filing, page number, and line number that shows their tax liability. Across those 3 forums, I have had 2 people say 'Oh, they do pay taxes', and well over 30 people either drop out of the conversation at that point, claim that the document is too difficult to understand, or say that GE simply lied to the SEC and IRS.
There is almost no respect for primary source data from people, if it doesn't fit their existing opinions.
I hear you and understand your frustration. Most of us are guilty of not wanting to spend the time trying to understand the source data and preferring to rely on summaries or reporting of it.
However, you have to admit that sometimes it is actually better to depend on a summary by a reliable source than try to understand source data, if one is ill-equipped to do so.
I agree, summaries can be good.
But here, it goes beyond that. I can't understand why people here still go off the NYTimes article, which has been thoroughly disproven, that claimed GE got a tax refund. The NYTimes article came out before GE filed its taxes, but people still prefer that over me giving them a link to GE's 10k, telling them what page number and line number the tax liability is on.
It happens all the time to me. People just discredit the original sources. John Holden called the annual report of Novartis 'flim flam', when it says they spent billions on R&D, in favor of a decade-old report that says it only cost $50 million to $100 million to bring a new drug to market.
How do you explain the difference then? Not inflation surely!
Yes, drug companies research and produce drugs that are little, if any, better than what is already out there.
How will we know no there is no improvement without testing them (R&D)?
Good question. I wonder why companies do it? Because they can then market it their shiny new drug to the public and to doctors. How about we prohibit that, like the rest of the world does?
It's a conspiracy widerness
Pharmaceutical companies know, before spending any money on research, that changing the compound structure of a complex drug by one molecule will increase results by 1% and increase profits by 100%
You can be sarcastic if you want, but if you are motivated by profit, then yes, you will spend money developing a drug that produces no better results statistically than another already existing drug just so you can sell it to people who hope it will make a difference for them.
I'm still looking and studying your other post.
How can they do that on purpose though? How can they know, before testing, what the results of a drug will be?
Obviously, they don't. I am no expert, but I assume that much of their testing results in duds, drugs that are never brought before the FDA. I'm just saying that, since their motive is profit, they will go ahead and promote a drug that is no better than another drug. If profit was not part of their motive, then the production of a drug that is no better than another would not happen and all that money promoting yet another anti-depressant could be better spent on something else.
That's true, but the drug companies aren't bearing all the cost of R&D. Much is subsidized by the federal government and done at universities.
Without the spending on R&D by PhRMA companies in the US, there would be 311 less drugs introduced to the market during the period 2004-2010.
PhRMA companies spent $311 billion over that period, with an average cost to market 1 drug of $1 billion. No, they don't bear all the cost, but without them, we wouldn't have nearly the number of lifesaving and improving drugs that we currently do.
As far as a company is concerned, it doesn't matter how much the govt. or anyone else puts into the R&D, only what the company spends.
Your statement may be, and probably is, true. It just doesn't change the fact that companies spend enormous sums to bring a drug to market and those funds must be re-couped by charging high prices for the drug.
American drug companies have developed many effective and even miraculous drugs. But several of them have paid billions in fines for fraud, unapproved off-label promotion and marketing, and failing to report harmful side effects. Until recently they have been bribing doctors and medical school professors for biased research and delivering speeches written by the drug companies at expensive resorts where doctors are invited to hear sales pitches about drugs. Until recently when I visited my doctor's office around noon box lunches for the entire staff were delivered courtesy of drug company sales people.
You are correct - drug companies spend money on advertising and not all follow the law. Not all companies are ethical and not all researchers in any one company are ethical, either.
Does that mean that much of the cost of a drug is not in R&D? Or are you simply basing drug companies for being like all the other companies out there in regards to promotion and ethics?
Much of the cost of most drugs is R&D and advertising. As indicated by the low cost of generics the materials and production costs are close to insignificant by comparison. They also spend a lot of money lobbying in Washington and on settlements for fraudulent, illegal practices.
Good ole Dr. Drew nailed for accepting money for promoting a Glaxo drug on his show.
http://articles.nydailynews.com/2012-07 … ug-avandia
Glaxo pays $3billion to settle fraud charges.
http://www.huffingtonpost.com/dr-peter- … 56397.html
Pfizer 2009--$2.3billion to settle criminal charges
Eli-Lily--2001--$1.42 billion to settle misdemeanor off label marketing charges
Merck--2008 $650 million for kickbacks to providers for prescribing Merck drugs
BristolMyersSquibb--$510 million for illegal pricing and marketing
Cephalon--$425 million for marketing unapproved drugs
http://finance.yahoo.com/news/factbox-l … 44108.html
I'm sure that much of the cost of drugs is in R&D. Getting FDA approval is a long and costly process. I have no idea what percentage of total cost is represented by research and development.
By the way, your article talks about how Americans spend double on drugs.
It's because we don't create artificial price ceilings. Be thankful we don't, or the whole world would have less life-saving drugs.
And how many of the grossly overpriced drugs are life saving?
How are companies going to spend billions coming up with these drugs if they don't charge high prices?
Again, if America followed the rest of the world, pharma. companies wouldn't have the money they need to do R&D. You should be thankful.
You can try to dismiss drugs, but they do save lives.
"The proof is in the pudding with the case of Thalidomide, a drug that was banned for decades before being brought back with publicly funded research. In the mid-1990s, Dr. Bart Barlogie, who runs the Myeloma Institute for Research and Therapy in Little Rock, Arkansas, found that Thalidomide could dramatically reverse the course of multiple myeloma, a life-threatening blood disorder. In 1999, he published his study results in the New England Journal of Medicine. Shortly thereafter, use of the drug was expanded from being completely banned to being used to treat leprosy and childhood leukemia. Dr. Barlogie’s study was primarily funded by the National Cancer Institute and American government grants. But the drug company was the one to profit.
In response to Dr. Barlogie’s groundbreaking research, Celgene, the manufacturer of Thalidomide, dramatically hiked prices. Before the research was published, Celgene was charging $400 for a month’s supply of the drug. Within six years, it was charging $3,600 per month, an increase of 900 percent!"
http://www.rxrights.org/your-thoughts/w … ally-going
Celgene said that when Thalomid was being used only for AIDS patients, they kept the price lower to make it accessible. When it began being used for other uses, they charged more.
Is that wrong? Everything works off of supply and demand, it's not necessarily bad to charge more for something that more people need.
In 1998, Celgene(evil people) were spending X working on 13 new product to treat cancer, AIDS, RAS, Chron's, and ADHD.
2 years later, they were working on 27 new products. I guess it's bad for them to spend their money trying to find cures and treatments for horrible diseases, right?
Funny, they are clearly such a bad corporation. Never mind the fact that from 1998 through 2000, they lost $102 million dollars, and spent $124 million dollars on R&D. Clearly they were just laughing all the way to the bank.
Where did you pull these stats from?
Constantly insisting the US is better than every other country over and over again becomes very annoying to the large number of people on this site who are not American and have actually experienced these things... Kind of arrogant actually.
Stats came from the CDC, OECD, WHO, among others.
All I did is explain why American healthcare is more expensive per capita, and what that extra expense gets us.
Conversely, it annoys me when people say American healthcare is bad compared to other countries, when it's not true. It also annoys me that other countries use price controls on drugs and make America effectively pay for all private drug R&D.
Actually Jaxson, claiming that health care is more expensive than elsewhere because Americans are less healthy is not a defence of your health care system, quite the opposite!
Healthcare is not the cause of obesity and diabetes. It's not the cause of accidents and homicides.
Americans are more obese and diabetic because of lifestyle and diet, not because of poor healthcare.
But note, the term is "health care" not illness care!
Health care is not just about putting people right when they fail, it's about preventing them from failing in the first place.
Americans are more obese and more likely to suffer diabetes precisely because health care is letting them down.
Remember the Chinese doctors who only got paid when their patients were well, a sick patient and they did not get paid.
Americans are diabetic because we are more sedentary and eat worse foods. There really isn't any preventative care that you can do to stop people from killing themselves.
It's our education and society as a whole letting people down. Healthcare doesn't stop people from eating McDonalds while watching sitcoms every night.
No, it can't stop people doing anything but it can educate them as to the risks.
Come on, that's a pretty lame argument. People don't know that eating fatty/sugary diets and living a sedentary lifestyle is bad for them?
If you want to put blame on people for obesity rates in America, blame Americans for what they do, and blame the government for claiming that genetically modified foods are safe, aspartame and other sweeteners are safe, ammonia-treated foods are safe, etc.
It's not a reflection of healthcare how a population eats.
Jaxon Raine, Mittens and the GOP are more interested in wealth care than in health care.
Claims that U.S. health care is okay are not factual. Cost increases are eating up the economy at an unsustainable rate because drug companies, for profit hospitals and doctors and parasitical health care insurance companies are ripping the rest of us off and doing all they can to block reform.
Ugh. Did you actually look at my first post? Our higher-than-average healthcare has more to do with our accident rates and high rates of obesity and diabetes than the 'predator' drug companies, doctors, hospitals, and insurance companies.
For profit is not a bad thing. The desire for wealth, mixed with competition in a free market, creates efficiencies and innovation.
In 2004, Silverstein, Brouwers, and Wolff found that if the OECD removed price controls on pharmaceutical companies, there would be an additional $17-$22 billion per year for Research and Development, leading to 10-13 new compounds on the market per year.
It's sad. 50-60% of the increase in life expectancy for cancer patients is attributed to new developments in drugs. Over the course of a decade, mortality rates attributable to cardiovascular disease fell 28%. The AIDS-related mortality rate dropped 75% since 1995.
Doctors charge more in America because of the cost of their tuition and because of the cost of medical malpractice insurance. They aren't ripping us off.
Insurance companies contribute 4%.
Did they bother to publish any figures on "medical litigation" or the cost of defending against it...a huge factor in rising medical costs in the USA? Certainly obesity, diabetes, and other such medical conditions bear serious concern but a top notch medical industry can only treat the ravages of such conditions as opposed to eliminating them for many of these conditions are driven by mindsets, diet, exercise and activity levels. While the medical industry can attempt to educate, that educational process can easily be counterbalanced by ignorance and/or apathy which is easy enough to find in the USA today even among the educated. Companies across the nation are attempting "wellness awareness" programs while waging focused attacks on the killer diseases such as cancer, heart issues, and diabetes. All this is being done to try to hold costs to a flatter curve over time. Employees have a vested interest and a potential reward in participating, both in the healthy aspects and in terms of reaping some extra financial benefits but still they persist in their old ways and these programs are currently struggling in many instances. There is an underlying message here that screams for Americans to become personally responsible and accountable to themselves for their health as opposed to looking for some entity to pick up the tab for their shortcomings and downstream damage as a potential solution to the problem. Here again, we attempt to treat the effect rather than the cause. WB
I haven't been able to find any studies about the total cost of malpractice insurance, but I did find that in Florida insurance premiums run from 20k to over $100k per year.
But, you can indirectly get that information by looking at physician salaries, as it is figured in to what they charge. Physicians, surgeons, nurses, they all make about twice as much as their European counterparts.
Sadly, Americans just don't seem to care. 30-40k people die in car accidents every year, but who cares? I still need to shave/change/read the newspaper and talk on the phone while changing the radio station while I'm driving.
I wonder what Progressive's 'Snapshot' program would do to healthcare. Your insurance company tracks your diet, activity levels, BMI, cholesterol, etc etc etc, and gives discounts if you perform well
"Certainly obesity, diabetes, and other such medical conditions bear serious concern but a top notch medical industry can only treat the ravages of such conditions as opposed to eliminating them for many of these conditions are driven by mindsets, diet, exercise and activity levels."
People who are treated primarily in emergency rooms for health crises don't get much advice on ailments due to diet and alcohol. I recall reading somewhere that 5% of the people account for 50% of health care costs. An experiment that focuses a special team approach on this 5%, in NJ I think has produced good results.
@JaxonRaine - your idea of basic math is precisely that BASIC... your lack of knowledge and ability to understand pharma business practices and accounting, or BASIC statistical analysis formulae, are only surpassed by your lack of critical thinking.
In countries with highly functioning healthcare systems, a higher degree of importance is attributed to prevention than to treatment for one SIMPLE economic reason... It is cheaper to prevent diabetes than to treat it... same goes for every single preventable disease, which is why babies are vaccinated for a variety of diseases shortly after birth.
John Holden is right by saying that pharma companies never sell at a loss, even in Europe... the difference between the market and pharmacy cost of drugs in the UK for example is not due to price controls, but rather due to subsidies of drugs, where the insurance covers the difference, and the pharma companies still make their profit margin only not on the back of patients, but through a pooling of resources... the cost of healthcare is lower by 5-8 percentage points of GDP.
I have one suggestion, educate yourself thoroughly, before assuming you are familiar with a subject matter.
Hey startup. Forgive me, in a forum like this it's best not to make things too complicated. If you want to go over balance sheets of pharmaceutical companies, compare sales from continent to continent, and delve deeply into the varying rules, regulations, taxes, and subsidies across dozens of nations, then feel free.
But I can tell you, nobody here is going to read what you post if you do that. I've tried being precise before, it gets no response here. I even offered to walk Ralph here through GE's financial statements to show him their tax liability, but he said it was too complex(only fit for accountants) and stuck to his news article that claimed differently.
I know it is more complicated than what I have put forward, but not really by much. Some countries will force a US pharmaceutical company to export their drugs directly at a reduced price. In that instance, my math stands up perfectly. If you make 15% profit, and half your sales are at half the price of the other half, you can't turn a profit on the half-priced goods.
Now, they do it because technically they still make a profit on those goods, when you only consider the cost to produce and distribute. However, the R&D costs that went into making that drug aren't made back there, they are made back in America where they can charge full price.
That's why they sell drugs overseas 'at a loss'. Technically it's profit, effectively it's loss, but it still helps the bottom line so they can use American money to pay for the R&D for the next drug.
Did you know that the US has the highest levels of 'preventative' screenings? True story.
Screenings aren't preventative. They are diagnostic. You can get a screening and have the doctor say 'Junior, you need to watch your diet or you'll end up being obese', but it doesn't do any good if the person doesn't do anything about it. Americans are bad about diet and lifestyle, which is why we are the most obese.
We have good preventative care in the US, sadly we also have a lot of people slowly killing themselves with diet and lifestyle, and that puts a huge burden on the entire system.
Actually, the UK uses the Pharmaceutical Price Regulation Scheme to, you got it, regulate the price of pharmaceuticals.
Now, PPRS has changed a lot over the years. Companies can price how they want, unless they will make more than X number of pounds, or more than X% return on capital. Then, of course, there are the other 100 pages of regulations, and individual agreements between pharma companies and the DoH.
The net effect of all of this, as of 2004, was that pharmaceutical companies could charge $0.50 on the dollar for branded drugs in the UK. No government or insurance company was subsidizing the difference.
Healthcare, like any other good, comes down to supply and demand. Clearly, the demand for healthcare is much greater in the US (because of unhealthy lifestyles that lead to poor health outcomes).
The supply of healthcare is also problematic, from the exorbitant costs to become a doctor, to the cockeyed health insurance system.
Healthcare is reflective of the larger socioeconomic system in industrialized countries. Europeans, being more egalitarian in their outlook, have developed a system that serves everyone at a more or less decent level. The US, less egalitarian, valuing more risk taking, rewarding winners and punishing losers much more, provides the best healthcare in the world for those who can afford it. Those who cannot afford it are out of luck.
This helps to explain why the US, despite hosting the most advanced healthcare developments, nevertheless performs poorly on life expectancy, teen pregnancy and other measures of societal health. The system is skewed so that the bulk of the total benefits go to the top. Europe takes benefits from the top and redistributes them across the social classes.
Right. Why can't people understand this? We have high healthcare costs because we're obese, diabetic, cancerous people. We aren't obese, diabetic, cancerous people because of poor healthcare.
And I would argue that the insurance companies would be a lot better if the government would simply allow them to operate on free market principles. There are thousands and thousands(I think over 9000) regulations on insurance companies tellling them what they have to cover, from preventative care, to accupressure treatments. Add to that the fact that companies can't compete across state lines, and you can see the problem.
IF insurance companies were allowed to compete with each other, they would be driven to reduce costs and increase efficiencies in order to compete for customers. Just as every other product or service, competition lowers prices.
That being said, insurance companies aren't really the problem... they only add a few percent to the total cost of healthcare.
I certainly agree that health insurers must be allowed to compete across state lines and similar pro-competition measures. There are a number of states where a single health insurance company controls 70% or more of the market.
Nevertheless, the government has a significant role in the actual health of the people. Subsidizing junk food and penalizing the consumption of healthy food are a major example. Eliminating recess, gym class, and pushing soda in schools are others. Inadequate support for public transportation is another, as is viewing drug use as a criminal issue rather than a public health issue (which would lead to less prison time and more treatment options).
I don't support Bloomberg's push to outright ban certain sizes of drinks, but I do support efforts to tax junk food and sodas as a temporary measure to affect consumption patterns.
"We aren't obese, diabetic, cancerous people because of poor healthcare."
That's not entirely true. Many doctors quickly prescribe pills without bothering to suggest an improved diet and regular exercise as a preferable alternative to deal with a medical problem.
"That being said, insurance companies aren't really the problem... they only add a few percent to the total cost of healthcare."
A number of Michiganders are getting refunds from companies whose administrative costs exceeded 20% of total costs including benefits paid. Health care insurance companies are already competing to see who can collect the most premiums and avoid paying out benefits. They are parasites which add no necessary value to the health care system. The U.S. is alone among advanced countries to figure this out and to adopt a single payer system. The most logical approach would have been to phase in Medicare coverage for everyone over a period of years, beginning with pre-natal care, care for children and so forth until everyone was covered. Unfortunately this wasn't politically feasible thanks to the insurance and drug companies.
Haha, true, but I would put just as much blame on the patient as the doctor. Americans prefer a quick fix, they don't want to do the work. Even if the quick fix doesn't really work and might cause itchiness, rash, dizziness, heart attack, leprosy, increased urge to gamble, or death.
I agree with you; however, many doctors are complicit in offering that quick fix. I recently went to a new doctor (I moved to a different state) for a recurring shoulder problem resulting from an old rotator cuff injury. He started writing a prescription for Meloxicam. My previous doctor would send me to physical therapy and that always cured it, so I asked for physical therapy instead of the drug. He looked surprised, then went on to say that physical therapy doesn't always help. I asked him, does the drug always help? He said "you have a point."
Reminds me of a visit to my doctor many years ago. As he started to write out a prescription he said "these'll clear it up in about a week" I asked him how long it would take to clear up if I didn't take the prescription. He tapped his pen on the desk, stared at the ceiling and finally looked at me and said "about 7 days"!
I read many a post.
then fell sick from numbers.
It occurred to me then .
That money is the problem .
We should do away with it!
Corporate corruption is growing, public confidence declining--
http://www.nytimes.com/2012/07/11/busin … ef=economy
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