Do US Citizens Subsidize Cheap Drugs to Rest of World?

AppOnboard anon818
Jun 6 26 Comments

Listening to the NYTimes daily podcast about HIV drug Truvada got me thinking about the huge disparity between drug prices in the US versus everywhere else. If US consumers have to pay astronomical prices because of patent protection and an inability to negotiate prices down while the rest of the world gets the same drugs at pennies on the dollar, doesn’t that mean that the US citizens are subsidizing the cost of drugs to the rest of the world? So basically US citizens foot the bill for everyone else to have great drugs. This seems like something we should fix so that rather than Americans going broke to get the drugs they need, they should have the rest of the world pay a more equitable share of the drug costs.

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TOP 26 Comments
  • Amazon kOWu38
    Hold your horses there Captain America..US FDA in collusion with drug companies and lobbies removed price ceiling regulations...this allows American companies to price medicines exorbitantly..they use high development cost as an excuse to justify the higher price..what you call lobby is known as corruption in rest of the world..and this is where America stops being a capitalist economy and becomes an oligarchy..and media pushes narrative to blame everyone else in the world but the unethical and uncapitalistic dealings of government and companies..
    Jun 6 7
    • AppOnboard anon818
      OP
      Totally fair, the pharma lobby has a stranglehold on government that needs to get slapped down. Big profits do help new drugs get developed, so I don’t mind profitable businesses, just a more equitable division of the cost across locales.
      Jun 6
    • Amazon kOWu38
      Again the underlying assumption that pharma companies are pricing ethically is flawed..so it is about pharma companies need to be ethical and accountable in their pricing in the US and charge fair price and not all other countries to remove price control..
      Jun 6
    • Apple / Eng Marijuana
      Okay. So let's say we (USA) legislated drug prices. Do you think pharma companies will just take the hit?
      Jun 6
    • Amazon kOWu38
      They took the hit and are still selling it in other countries..they would not sell in those countries if it did not make sense financially..in US they can twist laws and get away with high prices..also let’s say we legislated drug prices in US, do you think pharma companies will just shut shop? No, they will learn to become efficient or will be replaced with companies that will product cost effectively..that is true capitalism..but alas America is oligarchy where old rich companies create barrier to entry for new efficient companies and hold customers hostage to limited suboptimal options..
      Jun 6
    • Apple / Eng Marijuana
      They're able to take the hit elsewhere because they have the USA as a large high-margin market.

      If we legislate drug prices in the US, they will "learn" to negotiate harder in other countries.
      Jun 7
    • Amazon kOWu38
      Again the underlying assumption that companies are noble and are forced to raise prices in US in order to compensate for losses elsewhere is flawed and only shifts blames away from pharma companies.. Higher prices and higher advertisement spend on medicines in US are because US companies are driven to make more profit at the cost of American lives..for example Insulin was invented in 1922 in Canada. The cost of insulin has doubled in US from 2012 to 2016. Any cost of insulin invention has been long recouped and there is no need to increase prices on US customers..but US drug companies follow a value based pricing strategy, wherein they price necessary products higher because you need to buy them no matter the cost and are better off selling to lesser number of customers at higher margins..
      Jun 7
    • Apple / Eng Marijuana
      First, to clarify: I'm not suggesting they make *losses* elsewhere. I'm saying they are less profitable elsewhere.

      Second, it's not just US drug companies. European (including Swiss and UK) companies have the exact same strategy.

      But the point of difference is that I disagree that drug prices in (say) Western Europe will stay low if we legislate lower drug prices. Clearly customers there can afford to pay more as well.
      Jun 7
  • New / Finance MWSt70
    Yes.

    Brazil pays 75 cents per dose for Truvada.

    In the USA, Truvada is $2000 per month.

    Same manufacturer, same pills.
    Jun 6 4
    • Amazon kOWu38
      Because Brazil does not let pharma companies get away with murder but US does
      Jun 6
    • DoubleVerify Karius123
      Poor logic.
      Truvada charges such a premium in USA since they are free to charge any price if there's no competing product, irrespective of the cost of development and manufacture.
      Brazil on the other hand prevents it's citizens from being sucked dry in this instance..
      Jun 6
    • New / Finance MWSt70
      Disagree.

      Truvada is $1000 a month in Canada. The NHS Pays $3000-$4000 pounds a year for Truvada. Clearly, first world countries are subsidizing everyone else’s
      Jun 6
    • Amazon Bill.
      Subsidizing implies we are paying for others to benefit. There are other interpretations.

      The simplest is that they will charge as much as they can. In the US, when insured, they overcharge the insurance companies and since it is not out of pocket, people don't complain. In the end people do pay in terms of higher insurance premiums and blame the insurer rather than the drug manufacturer or health care provider. Alternatively, when you are not insured, you can often get large discounts. This was Shkreli's defense, but it is basically because the person would not be able to pay anyways. So whatever the insurer covers gets maxed out in pricing, which is not a true market price.
      Jun 6
  • Google wHtB0a
    Sort of?

    It's like software. The initial cost is sunk, and the drug company is just trying to recover as much money as it can. And last time I checked patients in India can't pay US prices.

    That said Western Europe needs to pull their weight. Either pay up or put the savings back in research.
    Jun 6 2
  • Twitter Oomnj
    Of course it does: medicine would be a few decades behind it not for the US
    Jun 6 0
  • New / Mktg
    CHPN08

    New Mktg

    PRE
    Amazon
    CHPN08more
    It is absolutely true that the high cost of US drugs benefits other countries. A lot of innovation in the medical industry has come directly because of the incentive of the US market.

    One solution people have floated around is the US government removing patents but awarding a “prize” to scientists that come out with massive medical breakthroughs (say, 1 billion dollars). It would allow drugs to be cheaper in the US but still encourage innovation. All a theory, of course.

    https://www.google.com/amp/s/slate.com/technology/2008/01/should-the-government-start-handing-out-prizes-for-science-breakthroughs.amp
    Jun 6 0
  • Medidata Solutions chocopar
    If you google "average profit margin by industry", you'll see that pharmaceuticals are around 14%.

    That is well under the 24% profit margin of Internet software.

    The media loves calling out big pharma because they are so easy target. But you might want to look at your own industry before calling out another as greedy.
    Jun 6 1
    • Intel D’s🥜
      Paying off Congress gets expensive
      Jun 7
  • New / Eng
    🔥HODL🔥

    New Eng

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    I'm a generalist soft eng who loves to work on hard tasks and open-source. I have experience in many domains (low-level, web, data science, security, etc.).
    🔥HODL🔥more
    iirc the US provide a high revenue average but Europe provides a stable income no matter if the economy is bad (thanks to state healthcare that most European countries have). So these two sources of revenue are complementary.
    Jun 6 0
  • Oracle lHEA77
    the stupid thing is that the majority of the research costs for new drugs is already shouldered by taxpayers anyway, even before they get sold back to us at exorbitant prices
    Jun 6 1
    • Ipsos excelbae
      Do you mean NIH grants to universities? I don't think universities are the ones paying for drug discovery programs and clinical trials. Can you expand on what you mean by taxpayers shouldering research costs?
      Jun 6
  • OpenTable Meliodas
    Yes, just as passengers paying full fare subsidize the discount tickets.

    The bigger question is, when Truvada is covered by employer insurance, do we add $24K to TC?
    Jun 6 0
  • Medidata Solutions chocopar
    Yes, America is subsidizing the development of drugs for the rest of the world. No big deal - many countries subsidize production or other industries for us. That's how the global economy works.

    Blaming drug companies for being "unethical" is simplistic and not an accurate reflection of cause and effect. Drugs cost billions in up front costs to bring to market. That money must be recouped in some way, with profit, or new drugs would not be manufactured.
    Jun 6 0
  • Comcast G0ku
    Rest of world isn’t underpaying, US consumers are overpaying. Pharma’s profit margins and business practices are outrageous

    And research cost is a BS excuse they spend way more on sales/mktg
    Jun 6 0

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