# How to fix the pharmaceutical market? **URL:** \ **Category:** Political Topics\ **Created:** [October 25, 2022, 3:27pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708 "2022-10-25T15:27:18Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![John.S.Mill](https://community.goactuary.com/user_avatar/community.goactuary.com/john.s.mill/32/9771_2.png) [@John.S.Mill](https://community.goactuary.com/u/John.S.Mill)\ **Post date:** [November 28, 2022, 2:36pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/62 "2022-11-28T14:36:19Z")
great, then you can afford it. ---
**Author:** ![SredniVashtar](https://community.goactuary.com/user_avatar/community.goactuary.com/srednivashtar/32/2894_2.png) [@SredniVashtar](https://community.goactuary.com/u/SredniVashtar)\ **Post date:** [November 28, 2022, 2:38pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/63 "2022-11-28T14:38:26Z")
An individual can, society may not be able. ---
**Author:** ![John.S.Mill](https://community.goactuary.com/user_avatar/community.goactuary.com/john.s.mill/32/9771_2.png) [@John.S.Mill](https://community.goactuary.com/u/John.S.Mill)\ **Post date:** [November 28, 2022, 2:42pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/64 "2022-11-28T14:42:55Z")
is that a requirement ---
**Author:** ![twig93](https://community.goactuary.com/user_avatar/community.goactuary.com/twig93/32/527_2.png) [@twig93](https://community.goactuary.com/u/twig93)\ **Post date:** [November 28, 2022, 2:44pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/65 "2022-11-28T14:44:39Z")
Well it’s an interesting hypothetical though. If I did the math right I think it works out to, on average, an extra $380,000 per hemophiliac per year\*. Insurance / government can probably cover $380,000 a year for all or most hemophiliacs (maybe some will be contraindicated) without a huge decrease to the standard of living for the rest of us. There’s not that many hemophiliacs. But we can’t cover that for every American with heart disease. What happens when there’s a treatment for heart disease that adds another $380,000 or more per year year above & beyond what we’re currently paying? What are the ethics there? Is it ethical to cover the hemophilia treatment but not the heart disease treatment? Do we reintroduce lifetime caps? How do we not break when that happens? \* $400,000 \* 5 = $2,000,000 without the treatment $3,500,000 + $100,000 \* 4 = $3,900,000 with the treatment Difference of $1,900,000 in a five year span averages out to $380,000 ---
**Author:** ![twig93](https://community.goactuary.com/user_avatar/community.goactuary.com/twig93/32/527_2.png) [@twig93](https://community.goactuary.com/u/twig93)\ **Post date:** [November 28, 2022, 2:50pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/66 "2022-11-28T14:50:48Z")
Yes, exactly. ---
**Author:** ![SredniVashtar](https://community.goactuary.com/user_avatar/community.goactuary.com/srednivashtar/32/2894_2.png) [@SredniVashtar](https://community.goactuary.com/u/SredniVashtar)\ **Post date:** [November 28, 2022, 3:00pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/67 "2022-11-28T15:00:24Z")
Well, it’s what we are actually talking about. And Twig has the right idea. It’s not “will you be rich if you discover a cure for cancer?” It’s: will you charge more money than the entire world has? My guess is you realize you can only charge the world -so- much, and so instead you optimize your price point for what the world has. But then does your cure for cancer cost less than these hemophilia cures? ---
**Author:** ![Mathman](https://community.goactuary.com/user_avatar/community.goactuary.com/mathman/32/14042_2.png) [@Mathman](https://community.goactuary.com/u/Mathman)\ **Post date:** [November 28, 2022, 3:03pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/68 "2022-11-28T15:03:32Z")
> [@twig93](#): > > What happens when there’s a treatment for heart disease that adds another $380,000 or more per year year above & beyond what we’re currently paying? That’s a good question. We don’t have anything like that yet. We have really expensive insulin, and while most (citation needed) people manage, there are definitely folks who self-ration insulin with terrible outcomes. We also survived the Hep C drugs (Sovaldi, Harvoni) that cost about $100k, although many state Medicaid programs ration it. Commercial payers have gotten really heavy-handed with prior auth and restricted formularies, perhaps they will simply not cover these new drugs. Which might actually put some pressure on the prices. Which doesn’t help patients in the short run. What would happen if all commercial payers banded together and boycotted a drug? ---
**Author:** ![John.S.Mill](https://community.goactuary.com/user_avatar/community.goactuary.com/john.s.mill/32/9771_2.png) [@John.S.Mill](https://community.goactuary.com/u/John.S.Mill)\ **Post date:** [November 28, 2022, 3:06pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/69 "2022-11-28T15:06:05Z")
Yeah I’m talking about the extreme case (and maybe the common case, for most of us commoners). But most of the world probably won’t be able to afford a cure if it’s rare and expensive. Instead of feeling unhappy, realize that the cure was never yours to begin with. No one is owed a cure that they themselves didn’t part take in developing. ---
**Author:** ![twig93](https://community.goactuary.com/user_avatar/community.goactuary.com/twig93/32/527_2.png) [@twig93](https://community.goactuary.com/u/twig93)\ **Post date:** [November 28, 2022, 3:08pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/70 "2022-11-28T15:08:49Z")
> [@Mathman](#): > > Commercial payers have gotten really heavy-handed with prior auth and restricted formularies, perhaps they will simply not cover these new drugs. Which might actually put some pressure on the prices. Which doesn’t help patients in the short run. > > What would happen if all commercial payers banded together and boycotted a drug? Well there’s different reasons that the treatment might be that expensive. Is it really that expensive to produce and the manufacturer is simply charging their production costs plus a 5% margin? There’s not much insurers can do if that’s the case other than choose to cover / not cover it. Or is the manufacturer engaging in predatory pricing because they can? In this case I think the government needs to regulate prices. They already should be doing this with prescription drugs… that’s not a free market and free market principles do NOT apply. ---
**Author:** ![Mathman](https://community.goactuary.com/user_avatar/community.goactuary.com/mathman/32/14042_2.png) [@Mathman](https://community.goactuary.com/u/Mathman)\ **Post date:** [November 28, 2022, 3:14pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/71 "2022-11-28T15:14:11Z")
> [@twig93](#): > > Is it really that expensive to produce and the manufacturer is simply charging their production costs plus a 5% margin? There’s not much providers can do if that’s the case. Totally. There are some drugs that are expensive to produce. In some cases they harvest some of your cells, then do ‘something’ to them in a lab and then inject them back into you. That feels like it’s probably pretty expensive. > [@twig93](#): > > Or is the manufacturer engaging in predatory pricing because they can? In this case I think the government needs to regulate prices. They already should be doing this with prescription drugs… that’s not a free market and free market principles do NOT apply. For a while, the manufacturers were all ‘this is a risky business and R&D costs a fortune.’ Then they started spending more on marketing than they spend on R&D, and now they’re just like ‘it costs what it costs because f\*\*\* you, that’s why.’ This is a very not free market, 100%. Patented drugs, lots of bribing going on (legal), patients are insulated from the cost so it’s hard for them to behave rationally per your usual econ 101 thing. ![image](https://community.goactuary.com/uploads/default/original/3X/2/3/233d6b4b5ee0ba18cac341194132b7eb4a2cf783.png) ---
**Author:** ![twig93](https://community.goactuary.com/user_avatar/community.goactuary.com/twig93/32/527_2.png) [@twig93](https://community.goactuary.com/u/twig93)\ **Post date:** [November 28, 2022, 3:21pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/72 "2022-11-28T15:21:25Z")
Completely agree. In my opinion: 1. Make bribery illegal 2. Forbid mentioning a specific drug in advertising -Acceptable: Talk to your doctor about [new] once daily treatment options for erectile disfunction -Unacceptable: Talk to your doctor about whether once daily Cialis might be right for you 3. Regulate prices - regulating monopolies is one of the few proper functions of government and they are completely derelict in their responsibility at present ---
**Author:** ![Mathman](https://community.goactuary.com/user_avatar/community.goactuary.com/mathman/32/14042_2.png) [@Mathman](https://community.goactuary.com/u/Mathman)\ **Post date:** [November 28, 2022, 3:22pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/73 "2022-11-28T15:22:38Z")
> [@John.S.Mill](#): > > But most of the world probably won’t be able to afford a cure if it’s rare and expensive. Instead of feeling unhappy, realize that the cure was never yours to begin with. No one is owed a cure that they themselves didn’t part take in developing. Medicine isn’t a right, and neither is Social Security or airbags. I know some people consider it a right, and I’m not sure I want to relitigate that one on a Monday morning. I feel like, as a society, we can come up with something better than ‘f\*\*\* poor people,’ though I’m not super optimistic just based on the priors. ---
**Author:** ![Nick\_Papagiorgio](https://community.goactuary.com/user_avatar/community.goactuary.com/nick_papagiorgio/32/451_2.png) [@Nick\_Papagiorgio](https://community.goactuary.com/u/Nick_Papagiorgio)\ **Post date:** [November 28, 2022, 3:28pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/74 "2022-11-28T15:28:46Z")
> [@Mathman](#): > > When I left oncology, there were a few manufacturers doing ‘value-based pricing,’ where they set certain goals related to time to reoccurrence or overall survival or whatever, and got paid according to those outcomes. I’d like to see more of that, it won’t be perfect but I think it’s largely progress. We have a lot of those types of deals now. My good friend works on them so he tells me about them over time. We have one for a liver drug where if the patient still has to have a liver replacement or they die within 3 years we get our money back. We have not paid for that drug very often because it barely works. Some of this stuff is really expensive for the gain in QOL it gives. Often the drug companies have a difficult time really expressing the benefit of these drugs with numbers. ---
**Author:** ![Mathman](https://community.goactuary.com/user_avatar/community.goactuary.com/mathman/32/14042_2.png) [@Mathman](https://community.goactuary.com/u/Mathman)\ **Post date:** [November 28, 2022, 3:35pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/75 "2022-11-28T15:35:22Z")
Happy to hear that these deals haven’t died on the vine. I think it’s a workable solution. Imperfect to the extent payers are also maximizing profit, but workable. I hope the providers also have a seat at the table to help quantify the benefits. I think payers and providers are becoming less adversarial with the rise of VBC (for the most part, check out my Medicare Advantage rant in the health section for the obverse side of the coin). Payers, manufacturers, and providers working together on value feels like a good path forward. Plus the stuff @twig93 mentioned, do that too. ---
**Author:** ![John.S.Mill](https://community.goactuary.com/user_avatar/community.goactuary.com/john.s.mill/32/9771_2.png) [@John.S.Mill](https://community.goactuary.com/u/John.S.Mill)\ **Post date:** [November 28, 2022, 3:44pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/76 "2022-11-28T15:44:07Z")
> [@Mathman](#): > > I feel like, as a society, we can come up with something better than ‘f\*\*\* poor people,’ though I’m not super optimistic just based on the priors. I agree. Can’t rely on others for your own happiness imo. Too much depravity out there. ---
**Author:** ![Nick\_Papagiorgio](https://community.goactuary.com/user_avatar/community.goactuary.com/nick_papagiorgio/32/451_2.png) [@Nick\_Papagiorgio](https://community.goactuary.com/u/Nick_Papagiorgio)\ **Post date:** [November 28, 2022, 3:47pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/77 "2022-11-28T15:47:33Z")
> [@twig93](#): > > Is it really that expensive to produce and the manufacturer is simply charging their production costs plus a 5% margin? There’s not much insurers can do if that’s the case other than choose to cover / not cover it. Based on what we hear from our partners in Trade (Pharmacy Manufacturer Relations) they do not price based on cost. Most of their determination is based on stupid rationale designed to get as much money as possible. Example: They come up with a drug that stops hemophilia, they don’t charge to make a profit they charge for all the treatment the patient may be able to avoid and/or QOL they pick up from the treatment. So if a hemophiliac can avoid $2 million in treatment you can bet the new drug will cost about $1.9 million. To me that makes no sense and any competition whatsoever would wipe out all pricing strategies like this. ---
**Author:** ![Nick\_Papagiorgio](https://community.goactuary.com/user_avatar/community.goactuary.com/nick_papagiorgio/32/451_2.png) [@Nick\_Papagiorgio](https://community.goactuary.com/u/Nick_Papagiorgio)\ **Post date:** [November 28, 2022, 3:50pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/78 "2022-11-28T15:50:16Z")
> [@Mathman](#): > > I feel like, as a society, we can come up with something better than ‘f\*\*\* poor people,’ Medically speaking we are way far from this. Medical costs only screw the middle class now. Rich can afford it and the federal government pays all the costs for the poor. It’s people like us that will end up losing our home for nursing home stays or be poor on a thin budget due to an expensive medication. ---
**Author:** ![SredniVashtar](https://community.goactuary.com/user_avatar/community.goactuary.com/srednivashtar/32/2894_2.png) [@SredniVashtar](https://community.goactuary.com/u/SredniVashtar)\ **Post date:** [November 28, 2022, 3:58pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/79 "2022-11-28T15:58:46Z")
I’d say it hits us all. Poor because they go without meds and care. Middle class because they become poor. Rich because it hits their businesses. I agree that the US is quite generous. We give poor people a _lot_ more money for healthcare than they pay in. But it’s problematic in one way because we could be providing them other forms of charity. And problematic in the other way because they underutilize some things that _should_ be affordable. ---
**Author:** ![redprinceton](https://community.goactuary.com/letter_avatar_proxy/v4/letter/r/9fc29f/32.png) [@redprinceton](https://community.goactuary.com/u/redprinceton)\ **Post date:** [November 28, 2022, 4:03pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/80 "2022-11-28T16:03:14Z")
Continue to give the government more latitude to negotiate drug pricing. Further subsidize the really expensive stuff. I’m reticent to overhaul the entire system because that system delivered such phenomenal results with COVID vaccines and therapeutics. Something about it works and I don’t want to break that. ---
**Author:** ![Mathman](https://community.goactuary.com/user_avatar/community.goactuary.com/mathman/32/14042_2.png) [@Mathman](https://community.goactuary.com/u/Mathman)\ **Post date:** [November 28, 2022, 4:09pm UTC](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708/81 "2022-11-28T16:09:47Z")
> [@Nick\_Papagiorgio](#): > > To me that makes no sense and any competition whatsoever would wipe out all pricing strategies like this. You’d think so. My most relevant experience was with CDK 4/6 inhibitors for breast cancer, there were three drugs on the market, reasonably close in terms of safety and efficacy. They hit the market around $10k per month (see article below on how one of these drugs was priced). And then all three drugs increased in price, when I left the space the ASP hovered around $12k/month for all three drugs. Rather than competing simply on price, they were trying to basically get doctors to prescribe it by offering large margins/rebates, while keeping prices low enough that payers didn’t balk too much. [https://www.wsj.com/articles/the-art-of-setting-a-drug-price-1449628081](https://www.wsj.com/articles/the-art-of-setting-a-drug-price-1449628081) [Previous page](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708.md?page=3) [Next page](https://community.goactuary.com/t/how-to-fix-the-pharmaceutical-market/6708.md?page=5)