Well the fact that drugs are twice as expensive (or more) in the US* and the fact that the US accounts for a huge chunk of government funding into the relevant sciences are part of the reason why drugs are so cheap overseas. British taxpayers buying drugs in Britain are effectively getting a subsidy from US taxpayers even though they don't pay into the pot, so this all seems like a stroke of cosmic justice where I'm standing. Of course, I doubt the British tax authorities care much about what I think.
* Why? Remember how bargaining works: the biggest customer gets the best deal. First imagine Kaiser, Wellpoint, and Aetna sitting down at the bargaining table. Now imagine Canada sitting down at the table. Now imagine the European Union sitting down at the table. But at least our insurance companies are more efficient due to competition, right? Spoiler: not even close, and that's before you take into account the costs they offload onto the rest of the system in the form of incompatible claims policies, paperwork, and exploitation of information asymmetry against consumers.
The European Union is not bargaining as a single buyer.
There are considerable differences between the health insurance systems of EU member countries, and each of them buys their medication differently. In fact, it looks to me that the US is closer to being a one buyer than the European Union, which would first need to do a lot of harmonizing and more or less set up a United States of Europe.
Kaiser, Wellpoint and Aetna each have as many health plan members as a medium-sized European country. That's not the problem.
As far as I understand, the problem is the unavailability of generic replacement medicines in the US, clearly for IPR reasons.
> Well the fact that drugs are twice as expensive (or more) in the US
You have to compare like for like though - looking at the cost to the end user is not relevant, you'd have to look at the cost to the NHS versus the cost to US health insurance companies.
For the NHS, this is publicly available data[1] and we can see that a course of once-daily apiprazole (the drug described in the article) costs the equivalent of $150-300 per patient per month, depending on formulation. Is such data (of actual cost) available for the US?
Also, regarding biomedical research - the British taxpayer funds this as well. Anyway, apiprazole was developed in Japan. It's not all US-centric.
I don't know figures, but I imagine Kaiser represents more than 35 million people (the approx population of Canada). Shouldn't they be able to negotiate the same price?
Bingo! The largest US private insurer (United) cover 40M lives in the US. They pay higher prices than nearly all European countries (even the ones with smaller populations).
Drugs aren't cheaper in places like the UK because the gov't negotiates lower prices. Drugs are cheaper because the gov't mandates lower prices. People shouldn't confuse the two.
Drug companies spend more on marketing drugs to doctors and consumers than they do on R&D.
In the UK, marketing drugs is illegal and therefore they don't need to go to that expense. All they have to do is convince an NHS board and then it's on the list of approved prescribed drugs.
Some similar claims I have looked at have used the "Selling, General, Administrative" off of an income statement as the marketing expense, but that category includes salaries and buildings and lots of other things, not just marketing expenses.
Reading the BBC article reminded me of all the fines also. People are paying extra because drug companies push off-label uses on consumers and then get fined for it. It's not like the company really pays, they just up their prices a bit and push it onto the consumer. That sort of off-label usage doesn't happen in the UK so much, because doctors don't have any incentive to prescribe anything other than the NHS approved drug for a condition.
Costs associated with advertising are expensed in the year incurred and are included in selling, marketing and
administrative expenses. Advertising expenses worldwide, which comprised television, radio, print media and Internet
advertising, were $2.5 billion, $2.3 billion and $2.6 billion in 2013, 2012 and 2011, respectively.
That advertising number most likely does not include money they spend directly marketing to doctors and so on. So the Global Data report referenced by the BBC implies they are spending $15 billion directly marketing to doctors and other medical people/organizations.
The next step would be to figure out what they are spending paying employees (with 120,000 of them, quite a lot), but I can't find good numbers on that.
"Marketing drugs to doctors" is not exactly the same as "total sales and marketing budget". I don't even know if "cost of sales" includes the cost of regulatory approvals in various countries.
Also note that there is not necessarily anything bad about off-label use of medicines.
Medicines could be off-label simply for the reason that the regulator - out of pressure from the public health insurer, or more bluntly just the Department of Treasury in the country - does not approve using a medicine for some purpose, even though it is known to be efficient and without bad side effects.
In fact, in some cases patients are complaining bitterly because they cannot get the medicine that their doctor knows would help them, because their regulators do not approve off-label use.
A medicine can also be off-label simply because of its price - there is evidence base, but the regulator says that the health care system shouldn't pay this much for ailing this medical condition.
Of course that keeps the prices lower. That's the purpose. It also keeps some medication unavailable for some patients. I don't think it's a huge problem, but it's there.
Whoa there. Says who? The largest part of marketing drugs is paying sales reps to visit doctors. Are you saying that's banned in the UK? From what I've seen that's not true.
If you're saying DTC (direct to consumer) marketing is banned, then I agree (for prescription drugs). DTC is not all there is to drug marketing.
Also, you're fooling yourself if you think doctors have the time to research new drugs. That's why there are reps. They provide educational information, data from new trials, etc, etc.
Individual doctors do not make purchasing decisions. They don't have pharma reps turn up at GP clinics handing out free lunches in exchange for prescriptions. The NHS decides what drugs are allowed to be prescribed and doctors are limited to that list. It puts a huge crimp in any marketing.
Individual doctors don't make purchasing decisions, but they do make prescribing decisions which drive sales. They are the key stakeholder when it comes to pharmaceutical marketing. They may not be buying lunches in the UK, but sale reps are getting time with doctors and talking up their products.
BTW, is there a law in UK (or US) about using generic products? Over here, a doctor prescribes something, but pharmacies have the responsibility to offer cheapest product, typically a generic replacement when available, unless the doctor justifies a specific brand with specific medical reasons (which are rather hard to come by).
* Why? Remember how bargaining works: the biggest customer gets the best deal. First imagine Kaiser, Wellpoint, and Aetna sitting down at the bargaining table. Now imagine Canada sitting down at the table. Now imagine the European Union sitting down at the table. But at least our insurance companies are more efficient due to competition, right? Spoiler: not even close, and that's before you take into account the costs they offload onto the rest of the system in the form of incompatible claims policies, paperwork, and exploitation of information asymmetry against consumers.