Politics: Onward from New Hampshire

[Mmmm, Burger (C.J.)]

Originally posted by sgtclub
You may be right for particular drugs made by particular companies, but to say drug companies in general are not facing true markets is ridiculous, and even for those drugs where they have a monopoly, you have not shown evidence of predatory pricing (I am not convinced that because they charge less in Canada they are engaged in predatory pricing in the States).

Setting aside my discomfort with regulating pricing in general, your exchange rate plan is interesting, but presumably would raise prices in the 7 other countries, which could have the effect of lower aggregate demand.

The pricing plan would apply only to US sales/purchasese by a 3d party/gov't payor.

They're not predatory pricing, they're price discriminating, which is often used to show market power, that is, a monopoly. IF the markets were competitive, there would be no arbitrage opportunities for consumers to bring in drugs from Canada and save money.

It's true it's not about all drugs, but it is about high-priced drugs. Where there's plenty of generic competition, there really isn't an issue. It's where there is no generic competition that prices are high, and monopolisitc.

[Mmmm, Burger (C.J.)]

Originally posted by Tyrone_Slothrop
my question for you is this: If R&D is such a wonderful thing, why not spend government money to encourage it?

Um, it does. Between NIH and other gov't agencies and indirect sponsorship of research at universities, the government puts a fair amount towards R&D.

[Secret_Agent_Man]

Originally posted by bilmore
There will be a benefit of coverage where there was none. I was simply pointing out (what I think was) Hank's point, that such a system is self-perpetuating and usually more expensive. I have not seen many systems where the government can do tasks that are being done by the private sector for as cheaply as the private sector does them.

Oddly enough, appropos of this conversation, one of the systems in which the government has demonstrated that it can do tasks done by the private sector as cheaply/efficiently is in the administration of a health insurance system.

To wit, the overhead costs for the Medicare program [I think that's the one] consistently run at about 1.1% -- which is significantly less than the best/lowest overhead percentage for a private insurer.

People refuse to believe this -- just like most people seem to think foreign aid is about 1/3 of our budget -- but, as the man said, "You can look it up."

S_A_M

[Sidd Finch]

Originally posted by Hank Chinaski
now you are ready for the red pill. About a year ago both Fluffy and I laid out in reasoned details the support for invading Canada. The time is now, the challenge one we cannot shirk.

I just want to note that I was the one who coined the name "Fluffy."

Did morph into another sock? Or did he disappear?

[Sidd Finch]

Originally posted by sgtclub
We do not need to ensure that pharma earns competitive profits, we just need to not prohibit them from doing so. It is necessary for big pharma to be entitled to earn profits competitive with its competitors to (1) incentivize technological advancement, risk taking, and wealth and creation and (2) allow them to compete in the market place for alternative capital and debt sources.

Do we also have to ensure that big pharma is able to make up in this country the profit margins they are denied by policies enacted by other countries?

Is the U.S. the only country with an interest in seeing new drugs developed?

[Sidd Finch]

Originally posted by bilmore
(Well, not counting shit like Viagra, for which no self-respecting insurer should ever fork out dough.)

Aw, c'mon Bilmore. Even an insurer deserves a hard-on every once in awhile.

[Replaced_Texan]

Originally posted by Secret_Agent_Man
Oddly enough, appropos of this conversation, one of the systems in which the government has demonstrated that it can do tasks done by the private sector as cheaply/efficiently is in the administration of a health insurance system.

To wit, the overhead costs for the Medicare program [I think that's the one] consistently run at about 1.1% -- which is significantly less than the best/lowest overhead percentage for a private insurer.

People refuse to believe this -- just like most people seem to think foreign aid is about 1/3 of our budget -- but, as the man said, "You can look it up."

S_A_M

And they always pay on time and with the least amount of quibble. RVRBS may be lower than some of the health plans, but you're generally assured that when you submit a clean claim to Medicare, you'll be paid. The same cannot be said for any of the private health insurance companies. When HIPAA's Transactions and Code Set standards are finally implemented across the board, my guess is that at least two or three major insurance companies will go under, because they will not be able to hold up payment as long as they have been in the past.

[sgtclub]

Originally posted by Mmmm, Burger (C.J.)
IF the markets were competitive, there would be no arbitrage opportunities for consumers to bring in drugs from Canada and save money.

It's true it's not about all drugs, but it is about high-priced drugs. Where there's plenty of generic competition, there really isn't an issue. It's where there is no generic competition that prices are high, and monopolisitc.

You keep insisting that the markets are not competitive because of the patent/monopoly, but I'm not convinced about that. Drugs used for the same purpose but under 2 or more patents do compete against one another, even during the monopoly period. As for arbitrage opportunities, these exist in every market where you have price discrepencies between markets, so long as it is more efficient to buy/import from the other market.

[sgtclub]

Originally posted by Sidd Finch
Do we also have to ensure that big pharma is able to make up in this country the profit margins they are denied by policies enacted by other countries?

Is the U.S. the only country with an interest in seeing new drugs developed?

No, but the alternative is not very attractive.

[Tyrone Slothrop]

Originally posted by Hank Chinaski
and every drug has substitutes. There may be the hottest-newest, but there are certianly substitutes for them all.

Patents are seldom broad enough to prevent competition from providing a parallel Ty.

Once again, you are ignoring Burger's point about profits, which tends to suggest that you are wrong. Maybe you can work polygamy into your schtick.

[Mmmm, Burger (C.J.)]

Originally posted by sgtclub
[1]You keep insisting that the markets are not competitive because of the patent/monopoly, but I'm not convinced about that.
[2] Drugs used for the same purpose but under 2 or more patents do compete against one another, even during the monopoly period.
[3]As for arbitrage opportunities, these exist in every market where you have price discrepencies between markets, so long as it is more efficient to buy/import from the other market.

[1] That, and the extensive regulation/demand subsidization.
[2] true, they do, but my guess is that's the exception not the rule, and, if you want, you can substitute the phrase "duopoly" or "oligopoly" for "monopoly" and nearly the same arguments apply. Price competition is not agressive in any of those circumstances.
[3] Sure, but that's not the point. The point is that the cos. are able to price discriminate. That suggests that arbitrage opportunities are hindered by something, here laws banning reimportation, or just hte practicality of it. Given low transport costs, drug prices would not be so different in different countries absent certain regulatory barriers, which are a market imperfection.

[Tyrone Slothrop]

Originally posted by Mmmm, Burger (C.J.)
Um, it does. Between NIH and other gov't agencies and indirect sponsorship of research at universities, the government puts a fair amount towards R&D.

No kidding. The point I was working towards was that if there is something so magical about pharma R&D, perhaps we could spend govt money on it, rather than hoping that pharma companies will spend their money on it instead of distributing same to their shareholders.

Club, your view about the connection between profits and R&D expenditure remains elusive. My suggestion: how much pharma invests in R&D is a function of the expected rate of return, not a question of how much cash they have on hand, e.g. because they are currently enjoying lots of profits. It appears that you oppose anything that might cut into pharma profits for fear that they will invest less on R&D. I can't figure out where this principle ends, though.

[sgtclub]

Originally posted by Mmmm, Burger (C.J.)
[1] That, and the extensive regulation/demand subsidization.
[2] true, they do, but my guess is that's the exception not the rule, and, if you want, you can substitute the phrase "duopoly" or "oligopoly" for "monopoly" and nearly the same arguments apply. Price competition is not agressive in any of those circumstances.
[3] Sure, but that's not the point. The point is that the cos. are able to price discriminate. That suggests that arbitrage opportunities are hindered by something, here laws banning reimportation, or just hte practicality of it. Given low transport costs, drug prices would not be so different in different countries absent certain regulatory barriers, which are a market imperfection.

[1] we are in agreement on regulation if you are speaking in terms of barriers to entry. Absolutely in agreement on subsidization.

[2] My guess is the opposite for most drugs, but I am not in the mood to google, so we can agree that we have different assumptions on this. As for the ologopoly, my feeling is that the presense of even a second player in the market (let alone multiple players), absent collusion, does place sufficient restrants on pricing power.

[3] I think we agree on this. I misread your prior post.

[sgtclub]

Originally posted by Tyrone_Slothrop
No kidding. The point I was working towards was that if there is something so magical about pharma R&D, perhaps we could spend govt money on it, rather than hoping that pharma companies will spend their money on it instead of distributing same to their shareholders.

Club, your view about the connection between profits and R&D expenditure remains elusive. My suggestion: how much pharma invests in R&D is a function of the expected rate of return, not a question of how much cash they have on hand, e.g. because they are currently enjoying lots of profits. It appears that you oppose anything that might cut into pharma profits for fear that they will invest less on R&D. I can't figure out where this principle ends, though.

Of course it's a partially a functon of expected return (i.e., profits), but it is also a function of available resources. Think of it this way, if pharma co determines it's expected rate of return on R&D is 30%, then the more resources put towards R&D, the more net profit they will realize (assuming they couldn't earn more using the resources in a different manner), and the more innovation we should ultimately enjoy as a society.

I more properly oppose anything that would unreasonable infringe on revenues. I'll let pharma co decide how much should go to R&D because I believe pharmo co is in the best position to make that determination because all of the incentives point in that direction.

[Hank Chinaski]

Originally posted by Tyrone_Slothrop
Once again, you are ignoring Burger's point about profits, which tends to suggest that you are wrong. Maybe you can work polygamy into your schtick.

burger and I have reached agreement. He thinks that perhaps some limited price control over drugs in the patent period might result in a more optimum amount of research. I say, you're right it might, but 1) the risk isn't worth it 2) who to say the gov't can pick the right amount and 3) why make this industry different than everywhere else where innovation is made its own reward- Burger says because drugs are very important- i say all the more reason not to mess with it.

if you want to have apolygamy angle, consider- just as no one has the monopoly on wife/pussy- one can always find a slightly worse (or better) substitute/ addition; so to are drugs. there are no drugs that are the sole solution to any problem*.

*beside JWblack