What leverage does the US government actually have?
Is "we just won't fund your drug, even though people will die and you're the only option on the market" actually something that could happen? Would that be politically palatable to anybody?
I guess there's patent invalidation and forced genericization, but that would kill innovation real quick.
I think a far better idea would be to impose very strict caps on admin / non-medical costs, potentially at the expense of paying a bit more to fraudsters, changing FDA regulations to minimize (death from side effects + death from no available drugs) instead of just the former, as well as becoming a lot more aggressive about expensive and unnecessary procedures that doctors perform to get rich quick.
The US pays much more for drugs than any other country. I guess one possibility is that no one has any leverage and big pharma is able to charge Americans more because they're richer. But the more popular theory is that countries can negotiate better prices than individuals can (yes, technically insurance companies can negotiate prices, but they seem unmotivated to drive any costs down). It seems the previous administration thought the government can negotiate lower prices: https://www.cms.gov/inflation-reduction-act-and-medicare/med....
Yup. Was working for a major European blood product distributor as my first real job and the prices US customers would pay were just obscene.
Most EU countrys payed $40-$60 (per unit, shipped by 3rd party courier, who do their own billing), SE Asia and Australia $60-$80 and the US $1500-$2000. Before I left we started also shipping to Canada, dunno about the prices anymore, but substantially less.
The head of our institute was apparently involved in the negotiations and although I didn't get a chance to talk to him directly, the popular story was that our guys showed up, were presented with a pretty much done deal and told that the price and payment terms were nonnegotiable. Also, during meetings, he would refer to the Amis often as "Die, die nicht mehr alle Tassen im Schrank haben", which roughly translates to "The crazy ones."
Also, the product they wanted specified a significantly less complex and cheaper pooling procedure than we were able to offer...
I don't think it's the case that there are many conditions with only single treatment option. "Lower the price or we let our people die" probably isn't right, but "Our cost benefit analysis shows, at this price point, therapy X is preferable. If you want us to use your drug your prices need to be lower."
Presumably the government also has the option to permit purchase of pharmaceuticals from other countries. "Oh, you've raised the cost of X? That's okay, we'll buy it from licensed suppliers in the EU for a tenth of the price."
> we'll buy it from licensed suppliers in the EU for a tenth of the price
Actually is that possible? Are the EU suppliers allowed to resell at the gov negotiated price? Or are the gov negotiated price only for internal market?
(I've been wondering since I don't understand why swiss drug price are so much higher given that EU suppliers are next door)
As WW2 was ramping up there was only 1 aluminum manufacturer - Alcoa (Aluminum Co of America). When they hemmed and hawed that they could not increase production to meet the US war demands, the FDR administration made an investment to start Reynolds, who would go on to supply all of the aluminum needed to create thousands of ships and airplanes. Today they make foil and plastic bags. Alcoa still exists too as a much smaller fish in a much larger pond.
The government has all the cards, negotiation is really just a matter of will.
That ignores the point of the story and what I was responding to.
If there is only 1 company to negotiate with, the government is really the only entity that can threaten to simply create a competitor and give them the IP rights (by legal fiat) to do so. If you tell the existing company that your alternative solution is to compete with them using taxpayer money, they might choose to take the lesson of history and accept the government's negotiating position.
Trump MO would be implement a 100% tax on pharma profits and unrealized capital gains next Monday, then reverse it once they agree. But only if Trump cares to die on that hill.
He can simply take all pharma manufacturer portfolio off the medicare schedule, for example. That's what I would do, and it would be the right lawful move.
On the side, he may open the door for generic substitutes as well from CAN etc.
A simple price directive would be set at the same time, without any negotiation:
The price US medicare will pay will only be the average price for each drug, in all OECD countries.
