Centerfield

We could use alternative methods to the recovery of the costs of producing intellectual property. The main cost of drugs is the research program to develop them. The actual manufacturing costs are low, which results in high fixed costs and low variable costs, ironically much like software development. It also leads to side issues like reimportation of the drugs from Canada or alleged overcharging the in 3rd world.

The author of the book reviewed in this article, Marcia Angell, made the point in an article she wrote in another periodical (which I assume is based on the book) that the drug companies don't spend that much (relatively)on research and development. She claims that most of the real innovations in drugs come from NIH and other government-sponsored research. She argues (and others have as well) that most drugs now coming on the market from the drug companies are "me-too" drugs that are simply variations on existing treatments. That might be somewhat of an exaggeration, but to the extent that Angell is correct, it suggests that the drug companies' arguments about needing high prices to fund research are overstated.

If drug reimportation is so good and is not a reality because of Republicans, than how come a reimportation bill that passed with overwhelming support by both parties in the 90's was never implemented by Bill Clinton and Donna Shalala due to "administrative concerns." I think drug reimportation is a fluffy reform that politicians love because it makes them look good, but in reality those who have to actually implement the policy deem it to be dangerous, costly, and burdensome. Furthermore, drug reimportation is nothing more than a band aid on a problem that is bleeding to death, we need to completely revamp our health care system in this country by allowing for market oriented reforms that will force supply and demand controls on drug prices.

Anybody who argues that the power of drug companies will be reduced because of a change in power should take 90 days out of their life and come work in Washington D.C. Blue Cross/Blue Shield and their pals are in the pockets of all politicians of all stripes and colors. Keep in mind that the Medicare bill in large part was enacted because of the strong support of two Democratic Senators, Senator Breaux and Baucus, who rallied support amongst moderate Democrats in the Senate.

The problem my friends is not with one political party, it is with a campaign finance system that constantly favors the rich and powerful over everyone else. We need to reduce the power of drug companies by heavily regulating the lobbying industry and pass sweeping legislation that will forever end the influence that money has on politics. I would go even so far as to say that we should socialize federal elections. If there is anything that the American public should own it is their Democratic system.

Brian,

I agree if that is what we have to do than we should cap prices, but I think we are far from having considered all of our options. Yes, Candada caps prices and provides lower costing drugs, but they do so on the back of R&D that comes directly from the United States. Although I see a certain moral clarity in your argument that we should be able to reduce the quality of drugs if it means lowering prices, politically you are not going to sell that to the majority of American families who do have a healthcare plan that pays for prescription drugs. If the numbers get worse, and more and more Americans cannot afford prescription drugs then we may be talking, but I think we are a long way from desperation and accepting ideas like capping the cost of drugs as a possibility.

I sat with a friend who works for a liberal policy think tank the other night and he said something that I really for the first time considered. He thinks that in the end the business lobby will start pushing for single payer, government health plans just so they are not stuck with the costs anymore. Hmmm... I think if we do not do something to lessen the influence of the insurance industry on healthcare policy so we can consider altenatives outside of the status quo, he may just eventually be right.

Hopely something will bring down the high cost of drugs. daytona beach florida

Matt, IMO, the process is well underway. With few exceptions, every union battle of the last few years has centered on healthcare costs. People with great healthcare plans want the costs to stay low to them, but they want to keep their raises, too. Businesses simply can't continue to shoulder uncontrollable cost growth and kee giving out raises too.

As everyone's healthcare plans inexorably become more costly, more administratively onerous for participants, and less comprehensive, the bulb will go on. The only question is how bad it will have to get, but the handwriting IS on the wall. The only fiscally responsible choices the math allows are "pay more" and "accept less." The "gladly pay you tuesday for a hamburger today" model becomes more untenable with each beat of our more numerous and aging hearts.

That is very true about the unions... You may be right.

What if the government vastly reduced the time a company can hold a patent exclusively on drug/treatment that was based on government funded/sponsored research?

The real problem here isn't that we need price controls or government subsidization of health care.... the problem is that we've created an artificial monopoly on a product that is essential to sustaining life. It would be like allowing some-one a patent on food, water or air.

Now I'm generaly very respectfull of intellectual property rights..... and if a Drug company really does go out and do all the legwork on it's own to discover a new treatment then it deserves to hold those intellectual property rights. However, that is generaly not what is happening, generaly the drug companies are drawing heavly on government funded-subsidized research. This is research that we all pay for with our taxes. Why should a private company be allowed a monoply on a product that is based largely on intellectual property owned by the public?

I think this would go a long way toward resolving the issue. How many people are unable to afford a bottle of aspirin? It is also fair.... if a drug company really does pay for developing something on it's own... it gets intellectual properety rights and an exclusive cash cow.... If the public is footing most of the cost anyway then the drug should be in the public domain shortly after it is developed. Companies will still be able to make a profit on it....afterall are thier companies still producing penicillian?

I think the issue in this article is not whether we need price controls or government subsidization or anything like that. I think the anti-drug company argument here and in other forums is that the companies have used the political and financial power to distort the marketplace for prescription drugs. And, yes, it is not strictly a Republican phenonmenon because it happened under Dems as well. Marcia Angell claims that the largest percentage of drug company costs is for marketing--broadly defined to include such things as direct to patient advertising and lavishing special treatment on doctors to get them to prescribe their products. It's difficult to know because few people have access to the drug company records. In addition, the drug companies have established research relationships with researchers and institutions so that there is a direct financial interest in the results of the research, creating a significant conflict of interest. A lot of other things like that, including working against drug importation, etc. The point that reformers make is, not necessarily that we need price controls on drugs, but that the drug companies have been able to maintain artificially high prices through their influence in the research community and in the political community.

My point was not that drug reimportation is necessarily a panacea (although I see no problem with it especially if you accept Angell's argument that drug company research is overstated) but that the drug companies have too much power and influence over the distribution of drugs. I'm not naive enough to think that the drug companies' influence is limited to only Republicans, but it goes along with the general attitude of this Administration of favoring corporate interests.

I found Mathew's points very interesting and it points up the fact that there is a Republican tradition dating back to Teddy Roosevelt of supporting controls on overweaning corporate power. That's not to say that we need a single payer plan or price controls necessarily, but some degree of regulation may be necessary to allow the market to work in the public interest not against it. Unfortunately, I do not see any kind of legislation having a snowball's chance of hell of getting through this Congress and being signed by this president.

If I may also digress back to a previous post I did a few days ago, I think the almost total lack of willingness of the GOP to take on corporate interests relates to a large extent to the influence of the Southern base of the party. IMO, the extreme pro-corporate views of the South has made it very difficult for the party to even consider business reforms that would increase government regulation.

(As an aside, I just wanted to mention that I thought the comments here were very enlightening and intelligent and I really appreciate the wide range of views on this blog. The reason I say this is I have been looking at several of the partisan liberal sites and, I have to say, while I don't necessarily disagree with them all, the conformity in tone gets rather boring. I enjoy the ability here to actually discuss ideas.)boring in their conformity.)

This is a really good thread.

When Bush pushed through the the Medicare drug benefit, I was feeling like nonreimportation was the way to go, because I felt somebody has to pay the tab for new research.

Now I've flip-flopped on the issue. Now think that we're vastly weakenening the ability of capitalism to help us. We just have one working drug market, really, highly regulated (patents, long approval process, etc). And the rest of the world are free riders. The reality is that if reimportation becomes legal from other markets with high standards, drug companies will stop giving the entire tab to us, because the prices will tend to be at whatever monopolocy price has been negotiated with Canada, Britain, etc.. Therefore, drug companies will renegotiate their contracts. And drugs easier to produce in Canada, the UK, etc., will become cheaper here. Globalization, IMHO must resume in the drug industry. Though I am skeptical that reimportation will happen because of the drug companies' lobby, going back to the main thread topic.

Will reimportation solve everything? No. It's amazing how many problems the medical industry has.... One is that we pretend to livein a world where complete health coverage is both cheap and basic. Another is that the employer pay system means that there's too much concentration into a few incompetent providers, and not enough leveled individual choice (BC/BC TX is as hard to deal with as any government bureaucracy I've seen).

Carla,

Excellent point about Edwards being good to solve the problem since he knows the ins and outs of the industry. Perhaps the Kerry team can use the same logic and bring Kenneth Lay on to run the SEC. I know Sandy Berger would be great as FBI director; he literally has his pants filled to the brim with classified information and he definitely has experience looking for loopholes.

MWS,

The link you provide requires subscription so I only read the excerpt - I'll try to google up Angell to see if I can understand his points better.

As far as drug costs, my health insurance doesn't cover my allergy medicine, but for any drugs we use, we get a statement seeing the actual costs that the health plan paid.

I still think I lack the information to really understand the problem and see where costs are going. This article I googled up is interesting, but it would be nice to find out how much money annually goes to drug costs, doctors costs, hospital costs, health insurance costs, and the associated ineffiencies of each cost center to see how can be improved. It sounds like a techie business-oriented approach to understanding the problem, but most of what I read and hear goes towards deomonizing one element or the other without understanding how much it effects the larger problem.

Could drugs prices come down? Certainly. Are they raping consumers? If Merck is a good example, then they seem no more guilty than most American businesses.

Will,

The original article I read by Marcia Angell is in a recent issue of the New York Review of Books (which, unfortunately, also requires a subscription). Obviously, that's a liberal publication so you can get a gist of the direction of the article.

I agree that it is hard to really get any objective analysis on this issue. There is a lot of ideological baggage with respect to the drug companies. I can say one thing from personal experience (or from knowing someone who is a doctor)--the drug companies lavish a lot of benefits on doctors ostensibly for testing their drugs and it creates, for me, a rather disturbing relationship. Our friend has taken a number of very nice trips to conferences and gotten tickets to ball games courtesy of a drug company. Does this affect how he prescribes? He would say no, of course, but it still creates a problematic situation in my opinion. This, of course, is separate to some extent, from the question of whether drug prices are too high, but it is one reason that many feel the drug companies are using their power counter to the public interest.

Susan said the following:

We defy the laws of economics at our peril. Voters often want the free lunch, and politicians can win elections by giving it to them.

I agree wholeheartedly. On the points that the study of economics makes regarding things like caps, regulations, etc, such things are undeniably troublesome and not to be entered into lightly. But let's also recognize that the vast majority of economists admits that markets beset by oligopolies do not function especially well, and that the good solutions for such troublesome conditions are few, and problematic.

If we are going to seriously entertain economics as a study worthy of understanding in hopes of resolving the problem of rapidly rising healthcare costs, i think we need to be pretty clear that one of our big problems is oligopoly. If we're going to simplistically pretend that the current market passes as free and regulatory measures are bad just because they'll make the market less free, then we're just wasting our time.

The two big problems generally are these, I think:

1)finding leaders who are willing to take an unpopular position against sustained deficit spending to give people more than we can collectively afford

and

2) finding remedies to improve conditions in a market beset by oligopoly that is generating unsustainable cost growth