I knew they spent a lot but holy cow. Talk about wasted health spend. Those are billions.
http://www.ritholtz.com/blog/wp-content/uploads/2015/02/big-pharma.png
http://www.ritholtz.com/blog/wp-content/uploads/2015/02/big-pharma.png
Wow
- Thread starter Neutron Monster
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Stevedangos
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thats is probably in line with most large companies for any product. Developing and manufacturing a product is the easy part. Developing a dealer network, customer base then making sure they get good service and are happy with your company is the hard part.
Just look what it costs to take a half dozen executives out for lunch and a round of golf at a nice country club on either coast
Just look what it costs to take a half dozen executives out for lunch and a round of golf at a nice country club on either coast
Goodness forbid that a company tries to recoup costs, make a profit, and reward shareholders.
Your veiled contention that this is wasted money is ridiculous. The cost to bring ONE new drug to market is between 4 and 11 billion dollars. This number accounts for the high rate of failure of treatments that never make it past clinical trials. The bar for federal approval is high (rightfully so). Understanding the facts brings a bit of reality to the collectivists who believe that these things happen magically. Ever wonder how many new treatments would be introduced without protections (provided by law in the US) for a period of time allowing the developers to recoup cost before the generics are introduced? The number would be small as I don't think that most of the brilliant minds that work to develop these treatments would work for altruistic satisfaction.
Take away the profit and you would have no new drugs.
While I might agree that advertising new treatments to John Q Public (I hope I didn't offend the gender neutral crowd) is problematic and a driver of our out of control medical costs, I do believe that a company has a right to (perish the thought) SELL their product to health care professionals.
A quick note for those of you unfamiliar with how insurance (and government) reimbursement policy has resulted in a nasty connection to the drug companies and advertising. By advertising to the consumer the drug companies are essentially taking the care decision out of the hands of the doctor - where it should rightfully reside. A consumer sees an ad, asks (more typically demands) that the doctor prescribe miracle drug A. Doctor refuses because of a number of factors - they understand the patient history and potential effectiveness (or ineffectiveness) of desired treatment, etc. Patient gets pissed and on their eval form rates the doctor (or hospital) poorly - even though said doctor made the correct decision. Doctor is penalized by decreased payment from insurance for lack of a high rating. The result; to stay in business the doctor must prescribe. Oh, and guess who gets sued if things go south? The winners; Insurance companies, the federal government, bottom feeders (medical malpractice attorneys), and big pharma. BTW, the rating system described above is a big driver behind the reimbursement policy of the ACA. Now you know why big pharma, insurance companies, the ABA, etc. support ACA. Funny, but I can't find many Family Practice Physicians that feel the same way...
Nasty cycle.
Thanks for playing.
Your veiled contention that this is wasted money is ridiculous. The cost to bring ONE new drug to market is between 4 and 11 billion dollars. This number accounts for the high rate of failure of treatments that never make it past clinical trials. The bar for federal approval is high (rightfully so). Understanding the facts brings a bit of reality to the collectivists who believe that these things happen magically. Ever wonder how many new treatments would be introduced without protections (provided by law in the US) for a period of time allowing the developers to recoup cost before the generics are introduced? The number would be small as I don't think that most of the brilliant minds that work to develop these treatments would work for altruistic satisfaction.
Take away the profit and you would have no new drugs.
While I might agree that advertising new treatments to John Q Public (I hope I didn't offend the gender neutral crowd) is problematic and a driver of our out of control medical costs, I do believe that a company has a right to (perish the thought) SELL their product to health care professionals.
A quick note for those of you unfamiliar with how insurance (and government) reimbursement policy has resulted in a nasty connection to the drug companies and advertising. By advertising to the consumer the drug companies are essentially taking the care decision out of the hands of the doctor - where it should rightfully reside. A consumer sees an ad, asks (more typically demands) that the doctor prescribe miracle drug A. Doctor refuses because of a number of factors - they understand the patient history and potential effectiveness (or ineffectiveness) of desired treatment, etc. Patient gets pissed and on their eval form rates the doctor (or hospital) poorly - even though said doctor made the correct decision. Doctor is penalized by decreased payment from insurance for lack of a high rating. The result; to stay in business the doctor must prescribe. Oh, and guess who gets sued if things go south? The winners; Insurance companies, the federal government, bottom feeders (medical malpractice attorneys), and big pharma. BTW, the rating system described above is a big driver behind the reimbursement policy of the ACA. Now you know why big pharma, insurance companies, the ABA, etc. support ACA. Funny, but I can't find many Family Practice Physicians that feel the same way...
Nasty cycle.
Thanks for playing.
I find it odd that the biggest supporters of free markets will back big pharma. I still can't buy prescriptions from Canadian pharmacies legally. How does a legitimate conservative back a protected industry?
So do you not believe in patents? Why would any company develop a product if there was no chance of making a profit? Do you understand basic business principles?
I think the way the system is set up is corrupting, and I would be very much for removing the ability to advertise to the public. However you have to concede that the drug companies need to have the ability to recoup their development costs. Our open market system is directly responsible for the US generally being at the forefront of many of the worlds greatest developments. How many new treatments are spawned from the former Eastern Bloc, and China? Of course the ethical cesspool that is known as China is quite good at stealing ingenuity from Western nations.
BTW - you would see Canada and the other socialized medicine countries change their systems quickly if they were restricted from access to US developed treatments - unless of course their consumers had the share in the cost of development. As it is today the US consumer is subsidizing the Canadian system. If you want to take advantage of Canadian Services then you should rightly have to move to Canada, and pay taxes to the Canadian government. Also of course enjoying the efficiency of the Canadian Health Care System.
Further, I am very much a fan of doctors who are moving away from insurance to a concierge model. I have switched to a dentist that is fee for service only, and am currently considering doing the same for primary care. I want decisions to be in the hands of my doctor and me, rather than some non-medically trained, actuary driven, faceless, government-teet sucking, industry.
I think the way the system is set up is corrupting, and I would be very much for removing the ability to advertise to the public. However you have to concede that the drug companies need to have the ability to recoup their development costs. Our open market system is directly responsible for the US generally being at the forefront of many of the worlds greatest developments. How many new treatments are spawned from the former Eastern Bloc, and China? Of course the ethical cesspool that is known as China is quite good at stealing ingenuity from Western nations.
BTW - you would see Canada and the other socialized medicine countries change their systems quickly if they were restricted from access to US developed treatments - unless of course their consumers had the share in the cost of development. As it is today the US consumer is subsidizing the Canadian system. If you want to take advantage of Canadian Services then you should rightly have to move to Canada, and pay taxes to the Canadian government. Also of course enjoying the efficiency of the Canadian Health Care System.
Further, I am very much a fan of doctors who are moving away from insurance to a concierge model. I have switched to a dentist that is fee for service only, and am currently considering doing the same for primary care. I want decisions to be in the hands of my doctor and me, rather than some non-medically trained, actuary driven, faceless, government-teet sucking, industry.
No, it's not, the % of revenue spent on marketing in pharma is outrageously high. Let's use Pfizer as an example - $11.4 billion of marketing spend. Their revenue was about $50 billion in 2014. They are spending nearly 1/4 of their revenue on sales. That's absurd relative to basically any other business.
Keep in mind that pharma has a huge profit margin relative to other industries; other companies could never afford this level of marketing. Take a very profitable company like Apple. They made over $180 billion of revenue in 2014. Their total for SG&A (which includes more than marketing - you're talking the entirety of corporate general and administrative operations here) was $12 billion. Their sales and marketing is going to be under 5% of their revenue.
Why should it be that the US is forced to pay for everyone else's developments?
Further, big pharma is not the driver of innovation in the US at this point. It buys most of its R&D through M&A. All that marketing spend is about convincing you and your doctor to increase consumption of certain drugs. That is not always in the best interest of consumers.
None of your post addresses why I can't buy cancer meds for a loved one at a greatly reduced cost from Canada. There isn't an open market and those that hold that dear defend the big insurance and pharma monopoly. Why does the Republican party want free trade in everything EXCEPT pharma? Let the market decide. GOP didn't want the big banks to crumble either. Selective free trade is a lot like selective Christianity. It's hooey.
This post was edited on 2/13 11:43 AM by JakeFrmStateFarm
The core point is that this is a tremendous waste of dollars for two reasons:
1. It is artificially high due to the extortionate price of drugs in the US
2. The spend is fundamentally misguided. A huge % of marketing for drugs is on brand name drugs of questionable value. It's the company convincing you or your doctor you need to be on a brand name cholesterol drug when a generic would work just as well for you. Or, that you may have some medical condition that needs treatment.
I remember a day when consumer advertising was banned for pharma. There was a good reason for this - the end result of direct consumer marketing is generally a suboptimal outcome. The drugs we take should generally be selected by experts (your doctor), not by you watching the Viagra car at the Pepsi 400.
Further, the real advances in pharma don't require nearly as significant of consumer advertising to sell themselves. Statins, antidepressants, cancer drugs, etc. The benefits for these products are so high that they sell themselves.
If you dig into the data on what they are marketing, you'd be really depressed. They aren't spending a ton of money to market their breakthrough drugs, and the amount spent on generic drugs is tiny relative to their value to the consumer. Their marketing spend is overweighted towards really profitable brand-name drugs which are of questionable value relative to other treatments (or to no treatment at all). Literally, the purpose of a pretty high percentage of their marketing is to convince you to make a poor choice.
This post was edited on 2/13 11:47 AM by Neutron Monster
It's not just that, it is that the free market fails on Rx because it is a monopoly product due to patent protection. There is no alternative. Its providers can and do extract economic rents for the product. This is a textbook example of a situation where the government has to decide how much regulation is needed to ensure a fair deal for both consumers and provides.
Also LOL at "enjoy the efficiency of the Canadian Health System." Yes, I would enjoy a system that had zero uninsureds and spending of only 11% of GDP (not 18%) that resulted in 3.5 more years of life expectancy than the US.
Seriously, this OMG HAHA OTHERS line on health care is really stupid; nearly every other developed country has a better health care system than the US. Our system costs an outrageous amount more than everyone else without achieving better health outcomes. We are the ones with a major problem that others do not have. We spend 50%+ more than other developed nations with nothing extra to show for it. Our consumers are not healthier nor are they happier.
Seriously, this OMG HAHA OTHERS line on health care is really stupid; nearly every other developed country has a better health care system than the US. Our system costs an outrageous amount more than everyone else without achieving better health outcomes. We are the ones with a major problem that others do not have. We spend 50%+ more than other developed nations with nothing extra to show for it. Our consumers are not healthier nor are they happier.
You should probably have read my initial post. I do not believe that prescription medication should generally be marketed to consumer.
Are you contesting that the cost of bringing one new treatment to the market is less than 4 - 11 billion? Regardless of whether the product is a result of M&A or internal the cost is still basically the same. Also, M&A has it's benefits. In many cases the expertise and expense required to move a product from development, trials, approval, legal, etc. are well outside of the resources available to a relative start-up. Also, you can make a pretty sure bet that the scientists in the organization being acquired are looking to benefit financially from their development, as is their backer(s). Actually, the beneficiary may even be a government entity such as a University. I can assure you that like any investor they are looking for the best deal.
I agree, it sucks that the US consumer is in an unenviable position. It could be solved however by making restrictions by requiring equitable payment (tariff, tax, etc.) being made a requirement for the drug to be distributed across the border. If the Canadian government wants to give away the meds that is their right. Just as it is our right as the supporter of the industry to profit from the consumer (the Canadian government in this case).
Are you contesting that the cost of bringing one new treatment to the market is less than 4 - 11 billion? Regardless of whether the product is a result of M&A or internal the cost is still basically the same. Also, M&A has it's benefits. In many cases the expertise and expense required to move a product from development, trials, approval, legal, etc. are well outside of the resources available to a relative start-up. Also, you can make a pretty sure bet that the scientists in the organization being acquired are looking to benefit financially from their development, as is their backer(s). Actually, the beneficiary may even be a government entity such as a University. I can assure you that like any investor they are looking for the best deal.
I agree, it sucks that the US consumer is in an unenviable position. It could be solved however by making restrictions by requiring equitable payment (tariff, tax, etc.) being made a requirement for the drug to be distributed across the border. If the Canadian government wants to give away the meds that is their right. Just as it is our right as the supporter of the industry to profit from the consumer (the Canadian government in this case).
If you look at the Tufts study its closer to $2.5 billion. But the US can and should look for ways to lower that. It's probably too high.
Probably can't do what you want under our free trade agreements; there's no way that you could put in such an export tax under NAFTA with Canada, for instance.
Also, a number of these pharma companies aren't American; what are you going to do about Sanofi or Roche?
The stated reason for not allowing pharma purchaces from outside the US is consumer protection. The FDA would not be able to ensure your purchace was safe or accurate. While I sissagree with the policy it is not out of line with other items under FDA jurisdiction. Foods grown outside the US can come in only through inspection. If a drug made in the US and purchaced in Canada had to go through the same process it would not be cheaper. Just another example of the cost of "government protection" of consumers.
The industry of my career involves manufacturing many products for the manufacture of pharmaceuticals. The competition to be the first to produce a drug is intense. If you spend a billion dollars to produce a drug that a competitor beats you to, they get the patent and you get the shaft. Advertising is aimed largely at those products a patent is gained for. They have a short window to recoup their expenses (including those on battles for patent lost) and make a profit before it goes generic or OTC.
The industry of my career involves manufacturing many products for the manufacture of pharmaceuticals. The competition to be the first to produce a drug is intense. If you spend a billion dollars to produce a drug that a competitor beats you to, they get the patent and you get the shaft. Advertising is aimed largely at those products a patent is gained for. They have a short window to recoup their expenses (including those on battles for patent lost) and make a profit before it goes generic or OTC.
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Stevedangos
Guest
Yea let Canadians be responsible for developing, manufacturing, testing, approving, marketing their own drugs and see what happens to their health care systems costs.
Do you really thing drug companies want to spend billions on marketing and sales???
if you took Accounting 101 in college you know that comes right off the bottom line of the company. If they didnt need to be doing it to be successfull they would be putting it in their back pockets instead of paying advertising firms and sales people
Do you really thing drug companies want to spend billions on marketing and sales???
if you took Accounting 101 in college you know that comes right off the bottom line of the company. If they didnt need to be doing it to be successfull they would be putting it in their back pockets instead of paying advertising firms and sales people
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Stevedangos
Guest
Yes, let's come up with a hypothetical that will never happen nor is there any reason for it to happen as a justification for...what exactly?
I think they will do what it takes to sell the drugs to drive profits. But, it's a tremendous waste of dollars from a societal perspective. The question is more about the overall system and our level of spending (a macro look), not a micro look at a Pfizer on its own.
Would require a different thread, but let's be honest; the cost of healthcare in the US is highly related to the legal industry in addition to the cost of advances in technology. A reasonable case could be made that the doctor is really the one getting the short end of the stick in the US System. You want to blame someone for higher costs - let's start with the consumer who expects infallibility from their doctor, and further cannot accept outcomes that are not in the hands of the doctor to begin with. Next step; lets sue. The scum bag attorney steps in and based on "available" treatments - even though they might not be the "right" treatments are used as standard of quality of care. "Did you provide "X" treatment? Did you provide "X" drug?" "Yes, or no answer please." It doesn't matter that X treatment is marginally effective, or X drug does not have the proper body of study to show it's efficacy. The doctor is labeled as guilty when they likely had no fault, the insurance company settles out of expediency (not out of right or wrong), and your rates go up. The consumer expects miracles from a doctor, forgetting that they are human.
I don't believe legal rights as it relates to medical malpractice are the same in countries where a more socialized system of medicine is in place. The consumer demands cures for cancer, diabetes, kidney disease, and even ED. That demand is what drives the industry, and the expectation like for any business is profit.
I think our medical system is a mess, however socialized medicine is not the answer either. The problem will never be fixed until there is real courage by our leaders on both sides of the aisle. If you think that the Democrats are any better than the GOP on this issue then you are deluded. Funny how tort reform is a non-starter, and the ABA is one of the biggest backers of the Democratic party.
I don't believe legal rights as it relates to medical malpractice are the same in countries where a more socialized system of medicine is in place. The consumer demands cures for cancer, diabetes, kidney disease, and even ED. That demand is what drives the industry, and the expectation like for any business is profit.
I think our medical system is a mess, however socialized medicine is not the answer either. The problem will never be fixed until there is real courage by our leaders on both sides of the aisle. If you think that the Democrats are any better than the GOP on this issue then you are deluded. Funny how tort reform is a non-starter, and the ABA is one of the biggest backers of the Democratic party.
There are many industries that rely on patent protection. The current battles being waged by Google, Apple, Samsung, and Microsoft over display and UI patents are a great example.
Do you think that cancer drug would have been developed, and most importantly brought to market without an opportunity for profit?
The Canadian government subsidizes the cost of the medication which is funded by higher tax rates required of their citizens. Why should you benefit from taxes paid to a foreign government by their citizens?
I can't argue that the ethical dilemma is quite difficult, but you are not comparing apples to apples.
Do you think that cancer drug would have been developed, and most importantly brought to market without an opportunity for profit?
The Canadian government subsidizes the cost of the medication which is funded by higher tax rates required of their citizens. Why should you benefit from taxes paid to a foreign government by their citizens?
I can't argue that the ethical dilemma is quite difficult, but you are not comparing apples to apples.
I think we find some somewhat common ground here. There are a number of studies that try to peg the "real" cost and while based on the few articles I've read I think you're a bit low I don't think the delta is enough (especially with the more efficient companies) to be relevant.
Agreed on the trade agreements, good and bad there...
Concerning foreign producers; they have the same regulatory barriers (which I generally believe to be for the common good) as the US producers, thus a level playing field. I guess the answer would be to lower the regulatory requirements thus impacting cost. However, the first time someone dies from an adverse reaction you can bet that Uncle Sam will get the blame (F'ing lawyers again!!!).
Agreed on the trade agreements, good and bad there...
Concerning foreign producers; they have the same regulatory barriers (which I generally believe to be for the common good) as the US producers, thus a level playing field. I guess the answer would be to lower the regulatory requirements thus impacting cost. However, the first time someone dies from an adverse reaction you can bet that Uncle Sam will get the blame (F'ing lawyers again!!!).
If you define "legal" as med mal, it's rounding error on why we do so much. But, as you note, that legal pressure is a factor in why we spend so much. In any reasonable study of why American helath care costs so much, it comes down to two things:
- Overuse of extremely expensive care
- Higher prices for the same care (e.g. look at the cost of a knee replacement here vs overseas)
Some of this is legal; but a fair amount of it is cultural - the idea that we need the most "updated" service for everything when simpler, older treatments work as well, or the idea that health care is paid for by my employer so it doesn't really matter what I spend.
If we want to bend the cost curve, we have to cut back on overtreatment and push people to lower cost providers for the same quality of services. That means forcing people to generic drugs, being willing to say no to unnecessary treatments, forcing people to have outpatient surgery at cheaper centers instead of at hospitals, etc.
There's also the issue of bending the cost curve for treatments - we pay a lot more for Rx and to our specialist doctors than other countries do. On the Dr side, we have to address med mal and med school costs as part of that, I know.
You seem pretty well educated about the medical field - I'm sure you can think of countless examples that would add to this.
This post was edited on 2/13 12:51 PM by Neutron Monster
This gets at the issues better than I possibly could.
http://www.thedoctorwillseeyounow.com/content/healthcare/art2809.html
http://www.thedoctorwillseeyounow.com/content/healthcare/art2809.html
Look at Vioxx--it doesn't matter what it cost to make it. Fen-Phen, too, I remember the billions there.
By and large, our pharma industry produces an extraordinarily safe product mix, and we should acknowledge that in this discussion.
Funny - in reality we probably aren't too far apart. The problem is so large and complex that it really can't be boiled down to talking points and easily digestible bites which are sadly just the things that get our leaders elected.
I appreciate the reasoned discussion. Yes, I lean conservative on many issues but I appreciate a good discussion and am willing to be enlightened. Thanks.
I appreciate the reasoned discussion. Yes, I lean conservative on many issues but I appreciate a good discussion and am willing to be enlightened. Thanks.
Why shouldn't we benefit? Why should we pay the most for health care in the world and get subpar service
Actually I am quite happy with my healthcare. However I am concerned as my long time (and relatively young) primary care physician left his practice, and I know of two others as well. Why? New regulation required by ACA, intrusion into the patient doctor relationship by the insurance providers, having to meet patient "quota's," etc. Contrary to popular belief many doctor's see their work as a vocation, and not a means to get wealthy. Unfortunately they are put in a position that they can't do their jobs effectively and care decisions are left to the actuaries (insurance industry in an evil partnership with the feds).
As I explained earlier in this thread; someone has to pay for the development of new drug treatments. It either has to be done via government subsidy, or directly to the patient. The cost of delivering a drug in the US is greater due to higher regulatory costs. You are going to pay one way or another. However you have no more right to benefit from a Canadian supported system than they might have to US Social Security.
If you are looking for better service I might suggest finding a doctor that has moved to the concierge model.
This post was edited on 2/13 4:15 PM by MORock
As I explained earlier in this thread; someone has to pay for the development of new drug treatments. It either has to be done via government subsidy, or directly to the patient. The cost of delivering a drug in the US is greater due to higher regulatory costs. You are going to pay one way or another. However you have no more right to benefit from a Canadian supported system than they might have to US Social Security.
If you are looking for better service I might suggest finding a doctor that has moved to the concierge model.
This post was edited on 2/13 4:15 PM by MORock
You're tossing out anecdotal evidence when the numbers show that our system isn't very effective. When you factor in the higher (much) cost then our system is broken. Why is it that way? Most GOPers point to lawsuits. I point to every hospital adding on or new. No doctor is going broke.
That still doesn't mean I shouldnt be able to go to Canada (or Mexico) and get prescriptions for pennies on the dollar legally. Lobbyists keep this from happening. Period.
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Stevedangos
Guest
That is exactly why Obamacare is such a joke. It does absolutily nothing at all to drive down the terribly high cost of health care in our country. It just shifts the burden of who has to pay for it.
Insurance companies were telling us and our doctors what treatment or drugs we could have WAAAAY before the ACA came along. Oh we can have any treatment or drug we want, as long as we don't care to pay the bill because the insurers tell us exactly want we can have under their coverage and they ain't budging on it.
Bush had the chance to allow Medicare to negotiate with drug companies on the price they would pay for medicine they provide Medicare recipients. He declined. Why would it be a bad thing for Medicare to be able to negotiate their prices since they buy a LOT of their products?
Bush had the chance to allow Medicare to negotiate with drug companies on the price they would pay for medicine they provide Medicare recipients. He declined. Why would it be a bad thing for Medicare to be able to negotiate their prices since they buy a LOT of their products?
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Stevedangos
Guest
I have a very unrepublican solution. IF the inept federal govt could build, staff, and manage local health centers that were non profit and any American citizen could walk in, get all the healthcare they needed and walk out without seeing a bill I would be all for it. The billions of dollars the govt pays out for Medicare and Medicaid could all be diverted to a public healthcare system.
It just blows my mind that people walk into their doctor's office and demand him to prescribe them something, like they know the medicine better.
Posted from Rivals Mobile
Posted from Rivals Mobile
No one is saying the ACA caused this! The ACA was supposed to solve these problems (as advertised) but does nothing but add more people to the roll of free medical care paid for by others.
The complaint by many on here was the ACA was some government panel taking over of decisions between doctor and patient. That was and is not true. We all know that role has been handled by insurance companies for a LONG time. I didn't hear anything about the ACA fixing that part of insurance. It did make them cover people and things that were not covered before, but they still get to say what you can have done or what drugs you can get unless you want to pay more than a little copay. I don't have insurance under the ACA but the insurance company will only pay about 25% of what the doctor charges for an office visit after my $25 copay. No wonder the price of an office visit keeps going up. They have to charge a $100 to get 30 or 40 bucks for it. Just take a look at your EOB and see what the charges are for services and what the insurance company actually pays the doctor and clinic.
3R that's not really how it works. Insurers pay a prevailing negotiated rate for a given service. They don't just pay 25 percent of the fee charged over your copay.
Not what I said. I said when I look at MY EOB's they end up paying about that much of the total and sometimes that AFTER my copay. Many times they will pay $8 for something that was billed at $80. I find no rhyme or reason as to how much they pay for what service. I'm sure they have a method they and doctors understand but it's all over the place as far covering the asking price I see on the EOB. I don't end up paying all the difference but it just looks plain silly to see the bill then what gets paid. I would guess if doctors and clinics lowered the price they ask for office visits and labs the insurance company would also lower the amount they will cover anyway.
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