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TheCatt 
Top 2%
Group: Super Administrators
Posts: 22951
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Posted on: Jul. 20 2009,17:06 |
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People will always find ways around rules.
Let's say there are two drugs: G and P. P is an expensive, patent protected version of a drug, while G is the cheaper, generic form of the same.
P costs $150 per month. G costs $50 per month. The average copay for P is $50, and the average copay for G is $10. Since the manufacturing costs of the drugs is negligible, most of the costs are to cover R&D, marketing, and other costs. Thus, the most of the $150 is profit.
Since P costs 5x what G costs to the consumer (despite only costing 3x what it costs in reality), the manufacturer of P creates a rebate program where consumers can automatically have a portion of the copay rebated, instantly at the time of purchase.
Say P's make sets the rebate at $40. They charge $150 for the drug, the consumer pays $50, of which, $40 is instantly rebated. Thus, the consumer is paying $10. For the same price as the generic, which would people choose? The patenty one.
So instead of making $150 per prescription, they make $110, but they capture a much, much larger percentage of the market.
Insurance still pays $100 on P and $40 on G. If P's market share goes up, GUESS WHO PAYS? Everyone. Either through higher premiums, or higher prices for those without insurance.
While I applaud MA for being the only state to outlaw the practice, IT WOULDN'T EVEN BE NECESSARY TO TAKE ACTION IN A TRUE MARKET ENVIRONMENT.
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It's not me, it's someone else.
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GORDON
90%
Group: Super Administrators
Posts: 36125
Joined: Jun. 2004
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Posted on: Jul. 20 2009,17:34 |
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All this means is that if Obama gets his health care plan passed, the next private industry to get seized is the drug manufacturers.
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thibodeaux
RAG
Group: Privateers
Posts: 6494
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Posted on: Jul. 20 2009,19:03 |
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What kills me are the people claiming that government-run health care will reduce costs.
What planet are these people from?
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Mommy Dearest
Ask me about my TMD's.
Group: Privateers
Posts: 1396
Joined: May 2004
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Posted on: Jul. 20 2009,20:29 |
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(TheCatt @ Jul. 20 2009,20:06)
QUOTE People will always find ways around rules.Let's say there are two drugs: G and P. Â P is an expensive, patent protected version of a drug, while G is the cheaper, generic form of the same. P costs $150 per month. Â G costs $50 per month. Â The average copay for P is $50, and the average copay for G is $10. Â Since the manufacturing costs of the drugs is negligible, most of the costs are to cover R&D, marketing, and other costs. Â Thus, the most of the $150 is profit. Since P costs 5x what G costs to the consumer (despite only costing 3x what it costs in reality), the manufacturer of P creates a rebate program where consumers can automatically have a portion of the copay rebated, instantly at the time of purchase. Say P's make sets the rebate at $40. Â They charge $150 for the drug, the consumer pays $50, of which, $40 is instantly rebated. Â Thus, the consumer is paying $10. Â For the same price as the generic, which would people choose? Â The patenty one. So instead of making $150 per prescription, they make $110, but they capture a much, much larger percentage of the market. Insurance still pays $100 on P and $40 on G. If P's market share goes up, GUESS WHO PAYS? Â Everyone. Â Either through higher premiums, or higher prices for those without insurance. While I applaud MA for being the only state to outlaw the practice, IT WOULDN'T EVEN BE NECESSARY TO TAKE ACTION IN A TRUE MARKET ENVIRONMENT.
Not sure where you are coming from when you say r and d is negligible and the 150 is mostly profit. I feel it is the largest part of the cost of the drug. think of the r and d for all of the drugs that do not make it. imo
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TPRJones
I saw The Fault in our Stars opening night.
Group: Privateers
Posts: 12384
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Posted on: Jul. 20 2009,20:38 |
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Plus the costs of getting the FDA approval is not minor, either.
I wouldn't be surprised to find their final bottom-line profits are indeed hyper-inflated. But the costs are huge, too.
Edited by TPRJones on Jul. 20 2009,20:39
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Vidi Perfutui Veni
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TheCatt
Top 2%
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Posted on: Jul. 21 2009,05:56 |
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The R&D etc are sunk costs with respect to the cost of production. Thus, from the perspective of marginal cost, marginal revenue, and marginal profit; The $150 is mostly profit.
That's where I'm getting it from.
Also - I guess instead of P above, I meant B, meaning Brand-name drug, after patent expiration (since the generic drug is also being sold).
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It's not me, it's someone else.
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TheCatt
Top 2%
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Posted on: Jul. 21 2009,07:36 |
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I'm not advocating the regulation of prices. I'm advocating a complete market environment for prices.
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| Post Number: 9
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TPRJones
I saw The Fault in our Stars opening night.
Group: Privateers
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Posted on: Jul. 21 2009,07:50 |
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I know, but I don't see that happening anytime soon. You'd have to have a country based on liberty and freedom for that to happen, and there aren't any of those around anymroe.
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Vidi Perfutui Veni
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TheCatt
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Posted on: Jul. 21 2009,08:55 |
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Oh, and they had their years of patent protection to recoup costs.
And speaking of medication issues. Â Acid reducers cause more acid.
I can speak to that from experience. Â Twice I've let my prescription lapse, and each time, within about 3 days, I've had the most awful stomach pain (and other symptoms). Each time the doctor thought it was a stomach virus, or other issue. I thought it was new ulcers or something. Â Now I realize it's just my body have issues with the meds.
Edited by TheCatt on Jul. 21 2009,08:58
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Malcolm
I disagree.
Group: Privateers
Posts: 27168
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Posted on: Jul. 21 2009,09:58 |
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I get the distinct feeling the drug companies have just stopped trying.
To quote Chris Rock, "You know the last thing medicine cured? Polio. You know how fucking long ago that was?"
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Diogenes of Sinope:
"It is not that I am mad, it is only that my head is different from yours."
"Other dogs bite only their enemies, whereas I bite also my friends in order to save them."
Arnold Judas Rimmer, BSC, SSC:
"Better dead than smeg."
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GORDON
90%
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Posted on: Jul. 21 2009,11:01 |
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Know how else I know it would fail? Because so many democrats seem to be rabidly, angrily in favor of it.
I need to stop reading FARK threads.
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| Post Number: 13
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TPRJones
I saw The Fault in our Stars opening night.
Group: Privateers
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Posted on: Jul. 21 2009,11:58 |
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Maybe it'll fail so badly it'll take the rest of the bloated buracracy with it.
I know, not likely, but a guy can dream, can't he?
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Vidi Perfutui Veni
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GORDON
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Joined: Jun. 2004
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Posted on: Jul. 22 2009,16:43 |
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That's a good point. Vaccines keep paying off forever... the goal is to get a dose to every human in the world, and continue on with every human yet to be born. Good market segment: everyone.
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I don't give a fuck!
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| Post Number: 17
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TheCatt
Top 2%
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Posts: 22951
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Posted on: Jul. 22 2009,19:04 |
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(TPRJones @ Jul. 22 2009,21:45)
QUOTE
(GORDON @ Jul. 22 2009,18:43)
QUOTE That's a good point. Â Vaccines keep paying off forever... the goal is to get a dose to every human in the world, and continue on with every human yet to be born. Â Good market segment: everyone. Not exactly. Â The goal is to dose everyone that could possibly get it, and after a generation or two passes the disease is completely gone and you can stop dosing. Still plenty of sales there, though.
Well, that depends on how the disease originates. Polio has been mostly wiped out, and no longer needs vaccination. However, there's plenty of disease that require vaccination anyway cuz they're still contractible. Just ask any 0-3 year old.
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It's not me, it's someone else.
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| Post Number: 19
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Malcolm
I disagree.
Group: Privateers
Posts: 27168
Joined: May 2004
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Posted on: Jul. 22 2009,20:38 |
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The ideal situation would be the gov't-mandated medication like in "Equilibrium." Fucking gold mine.
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Diogenes of Sinope:
"It is not that I am mad, it is only that my head is different from yours."
"Other dogs bite only their enemies, whereas I bite also my friends in order to save them."
Arnold Judas Rimmer, BSC, SSC:
"Better dead than smeg."
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