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.
Another reason health care "reform" won't work
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thibodeaux
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Mommy Dearest
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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. imoTheCatt wrote: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.
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 1248147568
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 1248147568
"ATTENTION: Customers browsing porn must hold magazines with both hands at all times!"
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).
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).
It's not me, it's someone else.
Well, yes, from a financial standpoint that is correct. But it's misleading in that if they don't charge high prices to recoupe their R&D costs, they won't be able to do more R&D and make more drugs.TheCatt wrote:The $150 is mostly profit.
New medicine is expensive because it is expensive to discover, not expensive to produce. If people lose sight of that and start harshly regulating those prices we won't have more new medicines.
"ATTENTION: Customers browsing porn must hold magazines with both hands at all times!"
Oh, and they had their years of patent protection to recoup costs.
And speaking of medication issues. Acid reducers cause more acid.
I can speak to that from experience. 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. Now I realize it's just my body have issues with the meds.
Edited By TheCatt on 1248191921
And speaking of medication issues. Acid reducers cause more acid.
I can speak to that from experience. 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. Now I realize it's just my body have issues with the meds.
Edited By TheCatt on 1248191921
It's not me, it's someone else.
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?"
To quote Chris Rock, "You know the last thing medicine cured? Polio. You know how fucking long ago that was?"
Diogenes of Sinope: "It is not that I am mad, it is only that my head is different from yours."
Arnold Judas Rimmer, BSC, SSC: "Better dead than smeg."
Arnold Judas Rimmer, BSC, SSC: "Better dead than smeg."
Chris Rock is a product of modern education. They didn't cure polio, they mad a vaccine for it.Malcolm wrote: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?"
And mumps and even chiken pox now.
Really, all the major viral killers have a vaccine now except HIV which is such a moving target I don't know if we'll ever have a vaccine for it.
Hell they have the vaccine for the virus that can cause ovarian cancer recently.
So Chris Rock's a moron (I know that's a shock)
"... and then I was forced to walk the Trail of Tears." - Elizabeth Warren
Not exactly. 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.GORDON wrote: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.
Still plenty of sales there, though.
"ATTENTION: Customers browsing porn must hold magazines with both hands at all times!"
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.TPRJones wrote:Not exactly. 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.GORDON wrote: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.
Still plenty of sales there, though.
It's not me, it's someone else.