Health Care Passes in House 220-215

[De Selby]

A significant portion of drug and other medical research is already funded by the public - there's plenty of profit room to cut into with bargaining.

It's certainly worked out well here - the pharmaceutical and biotech industries are booming in this country.  In a lot of cases they profit by acquiring patents over drugs and other medical technology and shaking down companies all over the world, including in the US, for licensing fees. 

They still manage to do all this even though their government bargains for lower prices. 

And the reality is, if it's a public subsidy you want, it should be funded that way - not through insanely high prices for the same drugs that retail (at a profit) in places like Canada and Australia for a quarter of the price.

These companies are not losing money on sales to industrialised companies.  A quick review of balance sheets will show profits from such sales, not losses, which would necessarily be the case if American prices were a subsidy. 

No subsidies here - just cream because the Government in America prohibits itself from negotiating prices, something even illiterate people in third world markets are smart enough to do over a bag of rice.

[cassandra and sara's daddy]

http://www.cfses.com/documents/pharma/07-Aust_Pharma_Ind.PDF


hmmmm  figure 6 isn't good

table 5 is good for comparison

and table 6 really shows what the aussies do for research s opposed to the usa
seems like 270 to 1 ratio

[De Selby]

http://www.cfses.com/documents/pharma/07-Aust_Pharma_Ind.PDF


hmmmm  figure 6 isn't good

table 5 is good for comparison

and table 6 really shows what the aussies do for research s opposed to the usa
seems like 270 to 1 ratio

You have to remember that the whole country is only 20 million people - everything's got a smaller number on it here.

[PTK]

So, by your logic, you honestly believe that if pharmaceutical companies made significantly less profit (one quarter, as you stated) on drugs they'd still be able to do the same amount of research, development, and testing?

And this doesn't strike you as illogical? 

[De Selby]

So, by your logic, you honestly believe that if pharmaceutical companies made significantly less profit (one quarter, as you stated) on drugs they'd still be able to do the same amount of research, development, and testing?

And this doesn't strike you as illogical? 

No - it's entirely possible to eat into profits without reducing quality/production/R&D in a competitive market.

That's what competition does in many cases - eats profit, because your competitors are either more efficient or willing to provide the service at a lower profit margin.

[RevDisk]

So, by your logic, you honestly believe that if pharmaceutical companies made significantly less profit (one quarter, as you stated) on drugs they'd still be able to do the same amount of research, development, and testing?

And this doesn't strike you as illogical?  

No, because as SS said, the companies get public funds for their R&D.  Which feeds a bureaucracy, and makes the company dependent on keeping the govt happy and not their customers.  

No - it's entirely possible to eat into profits without reducing quality/production/R&D in a competitive market.

That's what competition does in many cases - eats profit, because your competitors are either more efficient or willing to provide the service at a lower profit margin.

Sucks for any employee working for said company or investing in biotech for retirement.  "Eating into profits" doesn't just hurt stereotypical "rich people" or hedge fund managers. 

As for trying to call it competition.  Free market competition is essentially near real time democracy.  Government "mandatory bargaining" isn't.  You can't make a better product that leaves the govt in the dirt.  The only product the govt makes are laws or regulations, a company generally can't compete in those areas.  You can't merge with the govt.  Trying to claim government intervention as "competition" is mind boggling.

No subsidies here - just cream because the Government in America prohibits itself from negotiating prices, something even illiterate people in third world markets are smart enough to do over a bag of rice.

Sigh.  You just admitted public money goes to your biotech industries, and foreign drugs are subject to mandatory price controls forcing the US to pick up the slack.

Nice imaginary.  Nice multicultural peasant, happily grinding out subsistence farming and bringing his crops to market, and haggling for the price.  Which the peasant always wins against the evil capitalist merchant, seemingly grudgingly loses to a poor homeless waif with abnormally large eyes and a sniffle, or an always honest exchange of goods between fellow workers showing good solidarity. 

Reality is more like a Somalian warlord or pirate.   "You want in, you ARE paying the toll and gimme half an hour with your women.  Don't worry, you don't know if I have HIV or not."   The Somali pirate or warlord, as well as your collectivist bargaining, both exist on the fact that the US has not done the right thing yet and put a round through its head.  We really don't WANT to be bothered by the matter.  But if we get annoyed enough, well, the SEAL's are apparently always itching for more target practice.

[cassandra and sara's daddy]

You have to remember that the whole country is only 20 million people - everything's got a smaller number on it here.

yea?  and we got 300 some million  even allowing for that whats the differencen  we have 15 times the pop   we still spend and order of magnitude more on research.  its ok  the usa is used to carrying other countries on our back  and we've learned to expect resentment and carping rather than gratitude.  its always amused and annoyed me that folks can't wait to send their kids here for school and then those same kids put the bad mouth on even while they are here suckling our tit

[grey54956]

The pharmatech industry should be incredibly profitable.  Consider what they do. 

They create magic potions.  They start with ordinary ingredients and create "Potion of healing +5".  These potions save people's lives every day. 

And the great thing about these drugs is that they create keep getting better.  So, what's the problem?

Well, they need to research new drugs that work even better still.  It takes a lot of time and effort to research.  And, once they finish a branch of research, they need to protect their knowledge from those who would steal it and use it haphazardly. 

This is the reason for patents and high prices.  The high prices are necessary to squeeze returns out of a drug before the knowledge of its composition and manufacture is gained through reverse engineering and chemistry by the competition.  Once this happens, and generic knockoffs hit the market, profits dry up.  If the patent expires, bam, profitiability almost instantly drops to near zero.  Foreign generic houses get the formulation right, bam, profitability on the global market drops to near zero.  SO, they do need to extract profits while they can.

Don't worry, though.  As a consumer, we all have a choice as to what drugs we want to use.  Next time your doctor prescibes the latest wonder drug (incredibly effective, but expensive) ask instead for older, cheaper pharmatechnology.  Don't get a Z-pack (3 pills, zithromax) for that respiratory infection, ask for amoxicillin instead.  Even though you'll have to take 30 pills, and your infection probably will last 3-4 times longer, and it may not clear it up at all, it is cheaper.

Removing profit incentive will destroy any pharmatech or biotech progress.  Generic producers don't research new treatment.  They don't have the resources, incentive, or brainpower to create new breakthroughs.  They copy someone else's work. 

To bad for profitability.  If we didn't have to worry about medical profits, we would still be using leeches and bloodletting to draw off the evil vapors that cause the pox.

[Headless Thompson Gunner]

As for trying to call it competition.  Free market competition is essentially near real time democracy.  Government "mandatory bargaining" isn't.  You can't make a better product that leaves the govt in the dirt.  The only product the govt makes are laws or regulations, a company generally can't compete in those areas.  You can't merge with the govt.  Trying to claim government intervention as "competition" is mind boggling.

This.  Anyone who says the government should (or even can) compete with private businesses doesn't have a clue what competition is or how it works.  

Well, so be it.  If it's a good idea to limit profits in health care, then let's not stop there.  Let's apply this reasoning to the legal field, too.  People need legal opinions, right?  Justice and legal advice is a fundamental human right.  And why should those eeeevil profiteering lawyers get to charge for the value of their ideas?  Why should I have to pay more for legal documents because of some misguided free-market principles when I can have government step in and force lawyers to give me what I want for less?  Clearly I shouldn't.  We can cut into those costs without reducing the quality of the legal documents.  Let's limit legal fees to no more than the raw-material costs of the documents.  

Hence forward, no lawyer shall be allowed to charge any more than it costs to buy the paper, ink, and toner needed to produce legal documents.

Makes sense, right?

[brimic]

should actually thank the socialist countries for price-fixing.  It killed the European pharmacology, and led to a significant boom in US pharmacology.  One of the few manufacturing industries were America is kicking tail and taking names.  I'm aware of two posters here that did/are working for such companies, they could probably explain better than I could.  

Ayup. Kill economic incentives (capitalism) here, and you will be getting your drugs from China or India, they already copy many if not most of our drugs, patent or not. It might be cheaper in the short run, but I've seen some of the foreign objects (no pun intended) in raw chemical materials shipped from China- trust me, you don't want their quality control reposnsible for your heart medication or your kid's flu shots.

Edit: every place I've worked for have been lured into buying chemicals from China due to the rediculously low prices- sometimes they pan out at least until you get a bad lot of material and have to stop production for a month to get a new shipment in, other times(I'd say at least 1/2 the time), countless hours are wasted trying to qualify inconsistant or contaminated junk. GIGO.

[De Selby]

This.  Anyone who says the government should (or even can) compete with private businesses doesn't have a clue what competition is or how it works.  

Well, so be it.  If it's a good idea to limit profits in health care, then let's not stop there.  Let's apply this reasoning to the legal field, too.  People need legal opinions, right?  Justice and legal advice is a fundamental human right.  And why should those eeeevil profiteering lawyers get to charge for the value of their ideas?  Why should I have to pay more for legal documents because of some misguided free-market principles when I can have government step in and force lawyers to give me what I want for less?  Clearly I shouldn't.  We can cut into those costs without reducing the quality of the legal documents.  Let's limit legal fees to no more than the raw-material costs of the documents.  

Hence forward, no lawyer shall be allowed to charge any more than it costs to buy the paper, ink, and toner needed to produce legal documents.

Makes sense, right?

Legal fees are already capped by law, and in many cases, you won't even know you exceeded the cap until after the fact.  You also, I might add, have a right to an attorney...so the government has to give you one whenever you need it [edit: for a criminal case only, that is].  

Last I checked, no one was crying for all those government-regulated lawyers, or blaming a decline in the quality of the profession on the price controls that exist across the country...

The deal is, these sales would show as a loss on corporate balance sheets (and probably be ended shortly thereafter) if it were a case of government price controls eating profits, but it's not.  There is actually a profit from selling to industrialised countries besides the US...which is why drug companies do it.  

[cassandra and sara's daddy]

what are the caps?  are they hourly? or totals?

[De Selby]

what are the caps?  are they hourly? or totals?

They are both - and the cap changes depending on the nature of the work you are doing and the applicable law.  The general rule is "no unreasonable fees", and reasonable fees get calculated based on a fairly complicated formula.  This amount will be calculated independent of your contract, and it's possible to be forced to repay a client even if he/she agreed to pay you that fee.

I think I see a distinction that should be made here:  price fixing is where you ban the sale of a product above some price; bargaining is where you negotiate to pay a certain price per unit, on the understanding that the company gets paid what it agreed to accept.  It is the latter that occurs here, with the government being the purchaser.

[cassandra and sara's daddy]

where could one look up those formula

[De Selby]

where could one look up those formula

This is the starting point, and every state has variations and its own cases that get closer to a number:  http://www.law.cornell.edu/ethics/aba/current/ABA_CODE.HTM#Rule_1.5

[cassandra and sara's daddy]

so who decide what is reasonable?  another lawyer?  we got the rats guarding the cheese again?  i am a might skeptical about lawyers self policing.  how often has a lawyers fees been successfully challenged?
i gotta admit i just paid a lawyer 7 k for representation i was greatly pleased pleased with. sometimes have seen cases that were less satisfactory. greatly so

[Monkeyleg]

shootinstudent, your whole response HTG's hypothetical about lawyer fees misses the point. You say nobody is calling for government regulated lawyers. Well, most people are not calling for government regulated health care. In fact, most oppose it. You also again refer to a decline in quality that doesn't exist.

I know you're going to say it exists, and you're going to use New Zealand or wherever as an example. The problem with using stats from other countries is that the stats aren't measuring the same things. For example, in the US infant mortality rates are determined by the deaths of children outside the womb. In some European countries, only the deaths of children over the age of nine months are considered in the statistics. The same differences in methodology make other comparisons more difficult.

Why reply directly HTG's notion of capping your future pay as an attorney?

There is actually a profit from selling to industrialised countries besides the US...which is why drug companies do it. 

I assume that you have the numbers to show this and that you're not just tossing out something you think rather than know. Even assuming they make a profit, is it as much as they make here in the US? Is it as much as they really need to make to offset R&D costs?

Also, why is profit bad? Do you get up in the morning and go to work for free? Would you go to work if you weren't getting paid?

[Headless Thompson Gunner]

Legal fees are already capped by law, and in many cases, you won't even know you exceeded the cap until after the fact.  You also, I might add, have a right to an attorney...so the government has to give you one whenever you need it [edit: for a criminal case only, that is].  

Last I checked, no one was crying for all those government-regulated lawyers, or blaming a decline in the quality of the profession on the price controls that exist across the country...

You.  Missed.  The.  Point.

I'm not talking about setting usual and customary billing limits.  I'm talking about not letting a lawyer charge for the intellectual work he performs.  

Let's say you spend months crafting a legal document, putting in countless hours of research and thought, producing the most beautiful and airtight legal treatise ever conceived, racking up hundreds of hours of billable time.  In the end it only amounts to a few pages of text.

I say you should only be able to charge for the cost of the paper.  All that sweat and labor doesn't mean anything.  Paper is paper, and you shouldn't get to charge such exorbitant rates for it just because your paper contains a valuable combination of words.

A ream of paper costs, what, $3?  You get to charge no more than $3 for your month of hard work.  Unless you needed an extra large stack of paper, in which case maybe you'd get to charge $6.

This is the same thing the socialized medicine countries do to the drug companies by forcing them to sell pills for no more than the cost of the scant few milligrams of chemicals they contain.  If they can't charge for the value of their intellectual work, for the very costly efforts to learn which combinations of chemicals are safe and effective, then neither can you charge for the value of your intellectual work.  

Fair is fair.  Or should that be "unfair is unfair"?

The deal is, these sales would show as a loss on corporate balance sheets (and probably be ended shortly thereafter) if it were a case of government price controls eating profits, but it's not.  There is actually a profit from selling to industrialised countries besides the US...which is why drug companies do it.

False.  The accounting doesn't work that way, and the businesses aren't run that way, and the laws often leave no other choice.

[makattak]

The deal is, these sales would show as a loss on corporate balance sheets (and probably be ended shortly thereafter) if it were a case of government price controls eating profits, but it's not.  There is actually a profit from selling to industrialised countries besides the US...which is why drug companies do it.  

You don't understand sunk costs.

The research is now a sunk cost. For accounting purposes, if they can now sell the drug at any price over the cost of the materials, it is a "profit."

However, if you do not allow the companies to recoup that sunk cost AS WELL AS make a profit large enough to encourage the risk necessary to create new drugs, you will get no new drugs.

But, hey, we've figured out how to cure enough things, right? Who needs progress?

[De Selby]

HTG, I'm struggling to see where I said there should be no charge for development. 

My point is very simple: companies do sell profitably at prices lower than what they charge in America.  They are not selling all over Europe, Canada, Australia, and the rest of the industrialised world as a charity, because they aren't charities and are prohibited by law from behaving as charities.  They turn a profit from those sales just like they do at home, it's just not as large.

Now, Monkeyleg, there is nothing wrong with profits.  It's just not my job or the job of the public to make them larger - it's actually the opposite.  If you can get the same service at a lower fee because the seller took a smaller profit, that's a plus for the consumer and it means your services are delivered more efficiently: per dollar, you get more service and less fee.

Increasing profits is the job of the seller, not the buyer.  But somehow a number of people seem to be convinced that as healthcare consumers, they're bound to help make medical profits bigger.

Sometimes a bigger profit margin is useful to spur more service development and improvement.  However, in this case, there are proven examples in other countries already that equal or superior outcomes can be obtained for less money (and at lower profits to corporations.) 

Like I said, I'm not so in love with the free market that I want to pay more for equal or inferior services to maintain it.  The whole selling point of the private medical system was supposed to be that it is more efficient, but this is now demonstrably untrue.

[dogmush]

Sometimes a bigger profit margin is useful to spur more service development and improvement.  However, in this case, there are proven examples in other countries already that equal or superior outcomes can be obtained for less money (and at lower profits to corporations.) 

That's the point. There aren't actually any examples of this.  The outcomes aren't equal. They aren't equal because the huge R&D costs are born by the US market.

[makattak]

Increasing profits is the job of the seller, not the buyer.  But somehow a number of people seem to be convinced that as healthcare consumers, they're bound to help make medical profits bigger.

Sometimes a bigger profit margin is useful to spur more service development and improvement.  However, in this case, there are proven examples in other countries already that equal or superior outcomes can be obtained for less money (and at lower profits to corporations.) 

Like I said, I'm not so in love with the free market that I want to pay more for equal or inferior services to maintain it.  The whole selling point of the private medical system was supposed to be that it is more efficient, but this is now demonstrably untrue.

Really?

Ok, which country produces more new drugs and medical techniques? Which country creates more than their share of medical progress?

HTG, I'm struggling to see where I said there should be no charge for development. 

My point is very simple: companies do sell profitably at prices lower than what they charge in America.  They are not selling all over Europe, Canada, Australia, and the rest of the industrialised world as a charity, because they aren't charities and are prohibited by law from behaving as charities.  They turn a profit from those sales just like they do at home, it's just not as large.

Allow me to reiterate:

You don't understand sunk costs.

The research is now a sunk cost. For accounting purposes, if they can now sell the drug at any price over the cost of the materials, it is a "profit."

However, if you do not allow the companies to recoup that sunk cost AS WELL AS make a profit large enough to encourage the risk necessary to create new drugs, you will get no new drugs.

But, hey, we've figured out how to cure enough things, right? Who needs progress?

I'll further explain: the money sunk into research is not counted in profit/loss columns as it is already spent. You can make a "profit" by selling some amount over the cost of the drugs. You don't get a reward for your research and intellectual labor (as illustrated by HTG), though.

So, after you've written a very good legal brief that I hired you to do, I use the government to force you to sell it to me for $10.

These are now your options, sell it to me for $10 or get nothing for the work.

It's more than the cost of the ink and infrastructure, so you're making a "profit".

However, how likely are you to write another legal brief after I've taken all the value of the intellectual labor out of it?

[De Selby]

Mak, who here is saying that there should be no payment for anything beyond the cost of making the drug!?  I don't see that anywhere in this thread.

What I do see is that drug companies are willing and able to provide drugs at lower costs than in America. The difference is that other countries negotiate the price before they buy in large quantities.  That is the same as a group buy, which is beneficial for the consumer and the corporation.  It just isn't always as profitable as charging individuals whatever the corporation likes.

If what you're really after is to subsidize the development of new drugs with consumer funds, then the avenue for doing that should be research grants or some other method that gives the public some measure of control over its money.   Stacking the deck so that drug companies make ten times the profit on a sale in America versus any other country is last on the list of methods to fund research - it takes no imagination to see what's wrong with that model.

We can have progress and development without paying rip-off rates for health care.  If anything, making the health care system more efficient reserves more dollars for research - instead of wasting the money on administration and insurance/corporate profit like we do now, those funds could actually be used to pay for research that generates new technology.


And, FYI, the Government does regulate my fees to the point of making it so that I can't charge much for being better than everyone else.  They do this by looking around at what everyone else is charging, and then telling me that I can't charge much more than that.  But I don't see anyone crying about the de-incentivization of good lawyering. 

The reality is, if you did to lawyers fees what has been done with medical fees, I'd probably be able to buy my own hospital by now, and everyone who had the misfortune of crossing the legal system would be facing bankruptcy for even the most mundane matters.  I really would hope that in that scenario, no one would take me seriously when I claimed I needed to bankrupt my clients to "ensure enough resources are devoted to improving my capabilities and delivering innovative legal services."

[makattak]

What I do see is that drug companies are willing and able to provide drugs at lower costs than in America. The difference is that other countries negotiate the price before they buy in large quantities.  That is the same as a group buy, which is beneficial for the consumer and the corporation.  It just isn't always as profitable as charging individuals whatever the corporation likes.

If what you're really after is to subsidize the development of new drugs with consumer funds, then the avenue for doing that should be research grants or some other method that gives the public some measure of control over its money.   Stacking the deck so that drug companies make ten times the profit on a sale in America versus any other country is last on the list of methods to fund research - it takes no imagination to see what's wrong with that model.

We can have progress and development without paying rip-off rates for health care.  If anything, making the health care system more efficient reserves more dollars for research - instead of wasting the money on administration and insurance/corporate profit like we do now, those funds could actually be used to pay for research that generates new technology.

Really? Alright, then answer my question. What country other than the United States drives more than its share of progress in medical techniques/technology?

I'm still waiting for that.

I see you engage in "fantasy thinking" rather than realities:

If anything, making the health care system more efficient reserves more dollars for research

In other words, you think if we remove the rewards for research, we will get more research.

Of course, your idea for more reasearch is to:

If what you're really after is to subsidize the development of new drugs with consumer funds, then the avenue for doing that should be research grants or some other method that gives the public some measure of control over its money.

PROFITING from your intellectual labor is not SUBSIDIZING research. Government paying people for research is subsidizing research.

So, instead of having the market demand determine what diseases get focused on, it would be far better to have the government direct the research so that those diseases and problems that the politicians think are important will get worked on.

I know everything gets more efficient when the government starts making the decisions.

The reality is, if you did to lawyers fees what has been done with medical fees, I'd probably be able to buy my own hospital by now, and everyone who had the misfortune of crossing the legal system would be facing bankruptcy for even the most mundane matters.  I really would hope that in that scenario, no one would take me seriously when I claimed I needed to bankrupt my clients to "ensure enough resources are devoted to improving my capabilities and delivering innovative legal services."

 

Funny, people who have minor medical problems without insurance don't go bankrupt.

People with minor legal problems without insurance don't go bankrupt.

Wonder if there is a similar relationship to those who have MAJOR medical problems without insurance and MAJOR legal problems without insurance...

WE HAVE A SERIOUS CRISIS HERE!!! NO ONE IN AMERICA SHOULD GO BANKRUPT JUST BECAUSE THEY GOT SUED! WE NEED TO MAKE THE LEGAL PROFESSION MORE EQUITABLE!!!!11111

[Monkeyleg]

Shootinstudent, you've been making some very sweeping statements about drug company profits, what countries pay drug companies, etc. It's difficult to accept your arguments when you could just be pulling the basis for them from thin air.