"Rome said the companies seem to be maximizing prices while negotiating discounts behind the scenes with health and drug insurers and then setting yet another price for direct-to-consumer cash-pay sales."
This describes the biggest problem in US healthcare. No clear and consistent pricing. If we had a real market, you would get a prescription and then go to the seller with the lowest price. And everybody would get the same price. This whole business with PBMs that are owned by the insurance companies, discount cards and other shenanigans just invites corruption.
I just had some bloodwork done, myself. My provider accidentally billed insurance, which had lapsed due to being laid off. I got my "Explanation of benefits" and it was $1000 billed to them, but I was given a $500 "discount." So I only owed $500... Cash cost was $50. Makes no goddamn sense.
Also I went in for a colonoscopy and an endoscopy. Insurance was billed for $14000. I got statements from 4 different doctors, and the facility where it was performed. None of the statements matched the explanation of benefits from the insurance company. And when I called each doctor, to pay them, they all told me that I didn't actually have to pay them what it said I owed. So I just ended up paying $2500 to the insurance company. It again, makes zero sense.
It makes perfect sense. The prices are inflated with a few extra zeroes to try to force people to get any job with insurance. The big numbers are just to scare people. You can also turn negotiating with the hospital into a full time job and get the real numbers. If you're too unhealthy to do either of these then you can just die I guess.
Well, there is that. But there is also the fact that they charge you or your insurance company to smooth out other costs like $2,000,000.00 cancer treatment or for people who show up to the hospital, don’t have insurance, and the hospital has to treat them.
I’m reaching the point where I don’t really care if it’s private or public, but what we are doing today is the worst of both worlds. It either needs to be fully private, maybe with mandatory insurance purchase, or it needs to be fully public, though that has its own baggage.
>> I don't think the hospital expects to actually ever get paid what they bill out
OH YES THEY ABSOLUTELY DO!
When I was in-between jobs I had a medical emergency and I was on the ACA around the first year it was offered. I was billed above medicare rates so I was on the hook for ~40k after out of pocket max. They told me this limit is what insurance has to cover but hospitals can still bill above it. First they told me they could work on the prices and asked for my last 5 years tax returns. When they saw that I had dividend payments they said they couldn't help me and I owed them the $40k. I think that was the problem because even though I wasn't working in their mind if I had investments then technically I was not in need so they set up four-year payment plan and paid every penny with no cost reduction.
I probably did something wrong but to this day I didn't know what I would have done differently. The only people I could talk to were the hospital and they only cared about the hospital.
Huh. I have not paid hospital bills before. Because they were, in my estimation, fraudulent.
The hospital bothered me for a bit so then I blocked all their e-mail and phone numbers. Then they sold it to collections. I sent the collections a cease and desist and then never heard from them again. Every few years they sell it to another collections and then I send another cease and desist. Occasionally they bother me anyway and then I send the CFPB after them and then I don't hear from them again until they sell it after a few years. I've never paid a dime.
I don't know if this works if you use credit. I built my house buying one piece of wood at a time with cash and all my vehicles are cash clunkers so I've never tried to find out.
I really don't believe you, but according to HN, I am supposed to trust in good faith you aren't lying.
Maybe you just don't have any assets or make very little money. I have equity and cannot just toss it to a collection agency and hope they forget. I also play by the rules, silly, I know, but I don't want to risk getting fucked some other way later in life.
Collections agencies are legally obligated to cease and desist upon request and if they don't you win a massive lawsuit. It's almost awesome to have debt collectors after you because they have to follow a bunch of little rules and every time they make a mistake it's something like $1000 free money to you.
In practice, the whole system is set up in a way that discourages asking questions. Waste of time. It's truly the opposite of the transparent ideal market.
"And everybody would get the same price. This whole business with PBMs that are owned by the insurance companies, discount cards and other shenanigans just invites corruption."
It's hard to say that it isn't racketeering at this point.
"Specifically, a racket was defined by this coinage as being a service that calls forth its own demand, and would not have been needed otherwise."
There's demand for the meds, but the demand for discount cards, forcing people to use specific services/companies, and related programs is all invented by the companies themselves.
Here in Brazil, we have something called 'Genéricos.' These are essentially the same medications as the brand-name versions, produced with the same chemical ingredients, but they often cost half the price, sometimes even cheaper than that.
Interestingly, while on-patent medications in the US tend to be significantly more expensive than elsewhere, generics in the US tend to be less expensive than generics available elsewhere.
But prices are going up. Look at the statements your insurance company provides about the reimbursed "cost" of covered generics:
Some experts report that PBMs overcharge for generics; The Wall Street Journal estimated that Cigna and CVS Health, both of which own PBM services, are able to charge prices for specialty generic drugs that are 24 times higher than what manufacturers charge.
So this must be worldwide. It seems like the patents held by big pharma are the root of the corruption. What is the guarantee here? That the chemicals are pure, or just that the companies are getting their cut?
Generic is the English word for it. The brand name drugs have a limited time patent and they are supposed to help cover the initial research and development costs of bringing that drug to market.
Huge caveats. The drug manufacturer gets over a decade of market exclusivity which bars the selling of generic versions of the medication, which they can then extend again if they find another distinct use case for the medication (3 more years). This is why the Vyvanse generic took so long.
> "Rome said the companies seem to be maximizing prices while negotiating discounts behind the scenes with health and drug insurers and then setting yet another price for direct-to-consumer cash-pay sales."
This sounds like typical negotiating 101. You know you are going to be forced to lower from your starting position, so increase your starting position so when you do negotiate down you are closer to where you wanted to be.
Health insurance in general is the problem; PBMs/discount cards are just a cherry on top. Insurance is fundamentally incompatible with clear and consistent pricing.
Insurance companies do not force the sellers to use complex billing practices, they would benefit from more transparent pricing (since they are seeking to pay less).
The root cause is healthcare is inherently complicated and complex, it has a problem of supply being nowhere near demand, and since prices for things are so high (including liability), there is a lot of cover your ass and fraud prevention going on.
Insurance companies absolutely benefit from the higher and opaque prices, because they negotiate rebates with providers. This allows them to maximize patient copays and ensures they hit their deductible, i.e. paying as much as possible under their respective insurance plans. Contrast this with a no-rebate world with cheaper/more transparent pricing. Fewer patients would hit their out of pocket maximum.
They can use the rebates they get from the providers to subsidize the insured, allowing them to offer lower premiums and gain market share. This is what people mean when they say "In America, the sick people pay to subsidize the health care of the healthy people".
Of course, that above only applies if there is competitive pressure. If there is no competitive pressure (e.g. in states with only one or two insurers), they can keep premiums high and book as profit the difference between what the patient paid out and what the patient would have paid out in a lower-cost no-rebate world.
Don’t do pro bono PR for those companies. Healthcare isn’t so complicated that every other country in the world hasn’t been able to solve it for significantly less money and far less stress for users, not to mention better health outcomes in most cases.
Providing a chain of reasoning to support a logical conclusion is not “pro bono PR for those companies”. Claiming that someone doing that seems like an emotional kneejerk reaction to an idea that does not jive with the model of the world you would like to have.
I even provided an example of a healthcare provider choosing to be more transparent. It is always Eli Lilly’s choice to sell their medicine at a flat price to everyone. But it is also in Eli Lilly’s benefit to engage in price discrimination, so that they get paid more by people who can pay more:
Another example of this was when I was in college, US textbooks cost multiple times more than the international
version of the textbook I could buy on Abe books or whatever website. Or, coupons for grocery stores. The insurance company has no hand in this.
To be clear, insurance companies also cause waste, because the government does not audit them, and the insurance companies are not staffed appropriately to resolve disputes in a timely manner.
> it has a problem of supply being nowhere near demand,
Get rid of the patents and this will solve itself in no time.
> The insurance company has no hand in this.
False. Insurance companies in the US own stock in big pharma firms like Pfizer, Johnson & Johnson, Eli Lilly, etc. They maintain substantial investment portfolios and generate returns on premiums and reserves. They also have voting rights as institutional investors.
Yes, no one is stopping US (or other countries’) taxpayers from paying for all the drug trials so that the resulting medicines are in the public domain.
> False. Insurance companies in the US own stock in big pharma firms like Pfizer, Johnson & Johnson, Eli Lilly, etc. They maintain substantial investment portfolios and generate returns on premiums and reserves. They also have voting rights as institutional investors.
This is a wild assertion. The sum total of all 7 publicly listed insurance companies’ market caps is less than Eli Lilly, just one pharmaceutical company. I would need some evidence before believing that health insurance company leaders have any influence on pharmaceutical companies.
I would also be surprised to learn insurance companies hold specific stocks, seems like a risk insurance companies would not take, especially ones that have lots of routine cash expenses. They spend ~85% of their premiums on medical expenses, and probably at least 5% to 10% on their own staff, so they shouldn’t even have much extra cash left to invest for the long term.
Edit: hit posting limit, so to respond to comment below about net income, that Yale link does not seem relevant as it is for all healthcare companies. All 7 publicly listed insurers’ combined annual net income is $35B or less for the previous 20 years, at a profit margin of 3% or less, which is peanuts. The pharmaceutical companies earn much more money than them, which is why the pharmaceutical companies have higher market caps.
> Why are we using market cap as a metric ? Look at investment value.
Because a company that owns influential portions of another company would have that reflected in their market cap. Like Berkshire Hathaway does. with the exception of UNH (due to its healthcare provider business), the other insurance companies are relatively tiny businesses compared to pharmaceutical companies and so cannot be holding any influential amount of stock.
> This is a wild assertion. The sum total of all 7 publicly listed insurance companies’ market caps is less than Eli Lilly, just one pharmaceutical company
Why are we using market cap as a metric ? Look at investment value.
"Over the past 20 years, health care companies spent 95% of their net income on shareholder payouts, totaling up to $2.6 trillion, according to the research findings. Shareholder payouts also tripled over this period - a trend largely shaped by a few powerful pharmaceutical companies, the research team noted."
The U.S taxpayer already pays for this. ~40% of FDA-approved drugs have direct NIH funding behind them. Nearly all modern drugs rely on NIH-funded foundational science. Taxpayer money additionally also floats through BARDA, DOD and DARPA.
COVID mRNA vaccines (Pfizer-BioNTech, Moderna) got billions in public funding. Yet, patents usually belong to the private company and prices are not capped as a condition of public funding. It is gross corruption begging for heads to be put on pikes.
Correct, people should be asking their federal politician why the US federal government is not spending the few billion dollars on drug trials to avoid having to pay extra to pharmaceutical companies.
But instead, people rail at health insurance companies and pharmaceutical companies and others who can’t or won’t make a difference.
> But instead, people rail at health insurance companies and pharmaceutical companies and others who can’t or won’t make a difference.
Because this is the Corrupt Evil Nexus that continues to ensure that taxpayer funds and exclusive patents keep flowing to them, while keeping prices high. They buy political power via campaign financing by the bucketload and the congressman/woman changes their vote to kill/oppose bills that would make a difference. You can find dozens of examples. Do your own research. As an example, take a look at the voting for the bill to permit Medicare to negotiate drug prices. Look at who received bribes and from whom to vote "No".
I am talking about the "Medicare Prescription Drug Price Negotiation Act of 2021", then "Medicare Drug Price Negotiation Act", then "Elijah Cummings Lower Drug Costs Now Act". They all had MUCH stronger drug-pricing proposals, all got stalled shamefully, with a watered-down version in BBB, which was further diluted in IRA that big pharma laughed at and accepted.
More specifically, the stronger acts which were killed by Big Pharma bribes would have
- Tied U.S. prices to international reference pricing (e.g., prices paid in Europe)
- Broad Medicare negotiation for many high-cost drugs - including dozens of new drugs.
- Applied negotiated prices beyond Medicare in the commercial market. (Private Insurance too!)
- Imposed strong penalties on drug companies that refused to comply
- Generated large federal savings. Also would have had faster rollout. Remember IRA pricing is YET to come into effect.
PS: Look at the Senators who diluted drug-pricing in BBB even further to a bad joke. Look at whom they received bribes oops..donations from.
> US textbooks cost multiple times more than the international version of the textbook
I mean, I think a lot of the incentives behind textbook pricing in the US are honestly not that dissimilar to the ones in healthcare. I know Pearson is particularly egregious for price gouging students because they have exclusive deals with schools to provide the textbook for some specific class or subject. They raise prices because f*ck it why not, they won’t get pushback, which is not a valid reason to do so in most other countries.
As a european living in the US, the idea there is a market at all is laughable. I tried to get price quotes for treatments several time just to get a "well, it's hard to say" or "it's very complicated".
But of a paywall there, can't tell if raw materials and precursors are costing more, or R&D spend is up, or employee wages and salaries have risen. Those are usually the "pressures" on prices. I can't understand what or who might be applying "pressure" to lower prices on oligopolistic pharmaceutical makers.
Rueters doesn't show a paywall for me. The source of the pressure described is in the headline though. I'm not sure why OP editorialized it (as it is against hn guidelines): Exclusive: Drugmakers raise US prices on 350 medicines despite pressure from Trump.
The article is about drug pricing, which is the part I found interesting (and by extension thought we’d find interesting). I thought taking it out both saved space and made the comments less likely to veer into flamebait.
Thanks for filling that in. I, too, am interested in this topic, because the oligopolistic market in the US, and the multinational corporations in the oligopoly, cause unusual, counter-intuitive and counter-doctrinal economic results. We're not in a recession or depression, so I was curious about causes of downward pressure on prices.
There's a character limit on the titles you can submit, probably wasn't intentionally editorializing. I assumed from the HN title that the pressure was from the Trump admin just based on the current state of US politics.
I think its obvious: theres a LOT of love for Trump here in VC circles. So anything speaking ill of his laughable policies, EO's, and other garbage is -1'ed or flagged to oblivion.
big Pharma has properties unlike many other business. The R&D is very, very expensive and, income is not directly related to expenses each year. The natural "moat" is such that only a relatively few, giant and wealthy, companies exist over time.
Why does the US consumer of said medications subsidize many other countries who have access to the same medications for a fraction of the US sticker price?
Lots of reasons. One of them is that other countries negotiate deals country wide and can get bulk discounts. The US does this with the VA and Medicare, and people using those services generally pay less than the rest of Americans. In the end, it is largely a policy choice, as having a single payer could get better negotiated deals on drugs.
Bah! Begone with your socialist mumbo jumbo! Fox News Entertainent channel tells me about you communist and your “single payer” sham all the time! We have the best healthcare! Merica!
Do you believe that the deals they make are unprofitable given the discount? Do you think the other countries are keeping guns to their heads or what?
The discounts are there because they can be, not because other countries want to pay below the break-even price.
It is in the US where the drug companies can invest in the government just enough to recoup that with massive premiums in the convoluted medical system.
Nobody's forcing US pharama companies to sell to those countries at those prices, they choose to, because it makes them more money.
Foreigners aren't the reason American healthcare sucks. Stop looking for people to blame abroad, all the sources of your problems are in the presidency, congress, and in the boardroom that directs the former.
I'm assuming you're European and just want to make an "America bad" post because this is comically ignorant. There wouldn't be mountains of federal code to adhere to if that was the case.
This is a trope among populists: pass legislation around <thing>, observe consequences of doing so, blame the "free market", repeat.
Sure, but that article literally contradicts your original point about Americans wanting a "free market" as it lists the complicated nature of existing laws, Medicare, PBMs etc. and the incentives those create.
You could just say "Americans need to vote better and cleanup their laws around this" and yes, that would be ideal, but I don't see that happening anytime soon. It's part of why some want the government to not involve themselves at all: no matter how good the politicians you elect, others can come into office and fuck it all up while everyone is forced to deal with it because they have the monopoly on violence. Not to mention the glacial pace at which our legislative bodies move.
US voters have no principles. Even republicans started artistically screaming about nationalizing companies when they didn’t want to play ball with the president.
This is not like IT where the Americans are completely dominant and clearly superior.
The European pharma companies are doing more than fine, despite their main market being heavily regulated and price-controlled.
The less charitable explanation is that US companies want to charge outrageous prices, and the American system let them to, so they do it.
That's what the USA are: a machine to prioritize profits over people. Sometimes it turns out fine, like for the startup scene. Sometimes it's terrible, like when lives at stake.
There are a lot of bad health outcomes built into our society, yes, but by the time people are confronted with the health impacts of cars, agriculture subsidies, for-profit healthcare, etc. it is likely that drugs will be necessary to treat the very real, immediate problems which any given patient has. Reversing the subsidies for things like car-dependency would positively benefit millions of people but it’s a generational change, not something most individuals can do.
>Maybe drugs, or these drugs, aren't the most efficient solutions. Shouldn't we direct resources toward more efficient ones?
Turns out all the low hanging fruit have already been picked, so the only "more efficient ones" left are stuff like gene therapy, which are absurdly expensive, but still theoretically cheaper than a lifetime of care. Unsurprisingly the high sticker price draws much backlash from the public and politicians.
> all the low hanging fruit have already been picked
What is that based on?
Also, I'm not talking about 'low hanging fruit' necessarily; only solutons that become cost effective for vendors if drug prices aren't so extreme.
There's reason to think there is low-hanging fruit: Research is incentivized for the most profitable solutions for the vendors, not the most cost-effective solutions for patients.
> Drugmakers plan to raise U.S. prices on at least 350 branded medications including vaccines against COVID, RSV and shingles and blockbuster cancer treatment Ibrance, even as the Trump administration pressures them for cuts
Few days ago, Donald Trump pressured Emmanuel Macron to raise the prices of all medicines. The pressure was made with unspoken threats according to this article [1].
It's possible that Americans are all about free markets (I have severe doubts on this point, but let's accept it), but Trump and his MAGAts are far more concerned about fucking with people weaker than them.
If given two options, they will take the one that will hurt more people, every day of the week.
Why is the supreme-court slow-walking the tariff decision which is crystal clear as lower courts clearly demonstrate only Congress can set taxes/tariffs?
It would end inflation within 90 days
Even their silly 15% tariff fallback law abuse would be more sane than the 50-150% currently
It slowed down Americans because we aren't recently used to it. The rich did adapt relatively quickly by buying up all the housing they could at negative real interest, stocks, gold, and to a lesser extent crypto.
The lesson has been learned by this point though, even a day laborer is holding silver and crypto nowadays because we have in recent memory the COVID shenanigans of mass QE.
People in China and Russia have basically taken for granted so long that their currency is completely manipulated, they all already knew to not be hoodwinked.
Mate, this Supreme Court ruled that the President is immune to prosecution and de facto outside and above the law. I’m honestly not sure what to tell you if you’re still hoping for rule-of-law decisions to come out of it.
"Rome said the companies seem to be maximizing prices while negotiating discounts behind the scenes with health and drug insurers and then setting yet another price for direct-to-consumer cash-pay sales."
This describes the biggest problem in US healthcare. No clear and consistent pricing. If we had a real market, you would get a prescription and then go to the seller with the lowest price. And everybody would get the same price. This whole business with PBMs that are owned by the insurance companies, discount cards and other shenanigans just invites corruption.
Last year I needed to get blood work done, some of which may or may not be covered.
It took me two weeks, dozens of phone calls, and multiple "escalations" to learn what would be covered and what the price would be if it wasn't
Totally insane. The kicker is that after all that, the price I was billed wasn't even the price I was given (thankfully it was less though).
I just had some bloodwork done, myself. My provider accidentally billed insurance, which had lapsed due to being laid off. I got my "Explanation of benefits" and it was $1000 billed to them, but I was given a $500 "discount." So I only owed $500... Cash cost was $50. Makes no goddamn sense.
Also I went in for a colonoscopy and an endoscopy. Insurance was billed for $14000. I got statements from 4 different doctors, and the facility where it was performed. None of the statements matched the explanation of benefits from the insurance company. And when I called each doctor, to pay them, they all told me that I didn't actually have to pay them what it said I owed. So I just ended up paying $2500 to the insurance company. It again, makes zero sense.
It makes perfect sense. The prices are inflated with a few extra zeroes to try to force people to get any job with insurance. The big numbers are just to scare people. You can also turn negotiating with the hospital into a full time job and get the real numbers. If you're too unhealthy to do either of these then you can just die I guess.
Well, there is that. But there is also the fact that they charge you or your insurance company to smooth out other costs like $2,000,000.00 cancer treatment or for people who show up to the hospital, don’t have insurance, and the hospital has to treat them.
I’m reaching the point where I don’t really care if it’s private or public, but what we are doing today is the worst of both worlds. It either needs to be fully private, maybe with mandatory insurance purchase, or it needs to be fully public, though that has its own baggage.
I don't think the hospital expects to actually ever get paid what they bill out, or anything at all, if it's not paid onsite or by insurance.
>> I don't think the hospital expects to actually ever get paid what they bill out
OH YES THEY ABSOLUTELY DO!
When I was in-between jobs I had a medical emergency and I was on the ACA around the first year it was offered. I was billed above medicare rates so I was on the hook for ~40k after out of pocket max. They told me this limit is what insurance has to cover but hospitals can still bill above it. First they told me they could work on the prices and asked for my last 5 years tax returns. When they saw that I had dividend payments they said they couldn't help me and I owed them the $40k. I think that was the problem because even though I wasn't working in their mind if I had investments then technically I was not in need so they set up four-year payment plan and paid every penny with no cost reduction.
I probably did something wrong but to this day I didn't know what I would have done differently. The only people I could talk to were the hospital and they only cared about the hospital.
Huh. I have not paid hospital bills before. Because they were, in my estimation, fraudulent.
The hospital bothered me for a bit so then I blocked all their e-mail and phone numbers. Then they sold it to collections. I sent the collections a cease and desist and then never heard from them again. Every few years they sell it to another collections and then I send another cease and desist. Occasionally they bother me anyway and then I send the CFPB after them and then I don't hear from them again until they sell it after a few years. I've never paid a dime.
I don't know if this works if you use credit. I built my house buying one piece of wood at a time with cash and all my vehicles are cash clunkers so I've never tried to find out.
I really don't believe you, but according to HN, I am supposed to trust in good faith you aren't lying.
Maybe you just don't have any assets or make very little money. I have equity and cannot just toss it to a collection agency and hope they forget. I also play by the rules, silly, I know, but I don't want to risk getting fucked some other way later in life.
Collections agencies are legally obligated to cease and desist upon request and if they don't you win a massive lawsuit. It's almost awesome to have debt collectors after you because they have to follow a bunch of little rules and every time they make a mistake it's something like $1000 free money to you.
In practice, the whole system is set up in a way that discourages asking questions. Waste of time. It's truly the opposite of the transparent ideal market.
"And everybody would get the same price. This whole business with PBMs that are owned by the insurance companies, discount cards and other shenanigans just invites corruption."
It's hard to say that it isn't racketeering at this point.
"Specifically, a racket was defined by this coinage as being a service that calls forth its own demand, and would not have been needed otherwise."
There's demand for the meds, but the demand for discount cards, forcing people to use specific services/companies, and related programs is all invented by the companies themselves.
Here in Brazil, we have something called 'Genéricos.' These are essentially the same medications as the brand-name versions, produced with the same chemical ingredients, but they often cost half the price, sometimes even cheaper than that.
Insanely comical.
Interestingly, while on-patent medications in the US tend to be significantly more expensive than elsewhere, generics in the US tend to be less expensive than generics available elsewhere.
in the US, we call these 'generics'
Now look into the places that manufacture these generic versions. Not all factories are equal, and some are not of the best of reputations.
Those are available in America too
But prices are going up. Look at the statements your insurance company provides about the reimbursed "cost" of covered generics:
Some experts report that PBMs overcharge for generics; The Wall Street Journal estimated that Cigna and CVS Health, both of which own PBM services, are able to charge prices for specialty generic drugs that are 24 times higher than what manufacturers charge.
https://www.americanprogress.org/article/5-things-to-know-ab...
So this must be worldwide. It seems like the patents held by big pharma are the root of the corruption. What is the guarantee here? That the chemicals are pure, or just that the companies are getting their cut?
Generic is the English word for it. The brand name drugs have a limited time patent and they are supposed to help cover the initial research and development costs of bringing that drug to market.
Generics can only be made after the patent expires. And due to pressure from western countries, these are enforced worldwide.
Which takes over a decade and can be extended multiple times if they find more uses for the drug.
Huge caveats. The drug manufacturer gets over a decade of market exclusivity which bars the selling of generic versions of the medication, which they can then extend again if they find another distinct use case for the medication (3 more years). This is why the Vyvanse generic took so long.
That's what he said. Brazil is in (South) America.
> "Rome said the companies seem to be maximizing prices while negotiating discounts behind the scenes with health and drug insurers and then setting yet another price for direct-to-consumer cash-pay sales."
This sounds like typical negotiating 101. You know you are going to be forced to lower from your starting position, so increase your starting position so when you do negotiate down you are closer to where you wanted to be.
Health insurance in general is the problem; PBMs/discount cards are just a cherry on top. Insurance is fundamentally incompatible with clear and consistent pricing.
Pharmaceutical companies, hospitals, and doctors are free to charge by the medicine, by the night, and by the minute.
For example, this place does it:
https://surgerycenterok.com/surgery-prices/
Insurance companies do not force the sellers to use complex billing practices, they would benefit from more transparent pricing (since they are seeking to pay less).
The root cause is healthcare is inherently complicated and complex, it has a problem of supply being nowhere near demand, and since prices for things are so high (including liability), there is a lot of cover your ass and fraud prevention going on.
Insurance companies absolutely benefit from the higher and opaque prices, because they negotiate rebates with providers. This allows them to maximize patient copays and ensures they hit their deductible, i.e. paying as much as possible under their respective insurance plans. Contrast this with a no-rebate world with cheaper/more transparent pricing. Fewer patients would hit their out of pocket maximum.
They can use the rebates they get from the providers to subsidize the insured, allowing them to offer lower premiums and gain market share. This is what people mean when they say "In America, the sick people pay to subsidize the health care of the healthy people".
Of course, that above only applies if there is competitive pressure. If there is no competitive pressure (e.g. in states with only one or two insurers), they can keep premiums high and book as profit the difference between what the patient paid out and what the patient would have paid out in a lower-cost no-rebate world.
Don’t do pro bono PR for those companies. Healthcare isn’t so complicated that every other country in the world hasn’t been able to solve it for significantly less money and far less stress for users, not to mention better health outcomes in most cases.
Providing a chain of reasoning to support a logical conclusion is not “pro bono PR for those companies”. Claiming that someone doing that seems like an emotional kneejerk reaction to an idea that does not jive with the model of the world you would like to have.
I even provided an example of a healthcare provider choosing to be more transparent. It is always Eli Lilly’s choice to sell their medicine at a flat price to everyone. But it is also in Eli Lilly’s benefit to engage in price discrimination, so that they get paid more by people who can pay more:
https://en.wikipedia.org/wiki/Price_discrimination
Another example of this was when I was in college, US textbooks cost multiple times more than the international version of the textbook I could buy on Abe books or whatever website. Or, coupons for grocery stores. The insurance company has no hand in this.
To be clear, insurance companies also cause waste, because the government does not audit them, and the insurance companies are not staffed appropriately to resolve disputes in a timely manner.
> it has a problem of supply being nowhere near demand,
Get rid of the patents and this will solve itself in no time.
> The insurance company has no hand in this.
False. Insurance companies in the US own stock in big pharma firms like Pfizer, Johnson & Johnson, Eli Lilly, etc. They maintain substantial investment portfolios and generate returns on premiums and reserves. They also have voting rights as institutional investors.
Yes, no one is stopping US (or other countries’) taxpayers from paying for all the drug trials so that the resulting medicines are in the public domain.
> False. Insurance companies in the US own stock in big pharma firms like Pfizer, Johnson & Johnson, Eli Lilly, etc. They maintain substantial investment portfolios and generate returns on premiums and reserves. They also have voting rights as institutional investors.
This is a wild assertion. The sum total of all 7 publicly listed insurance companies’ market caps is less than Eli Lilly, just one pharmaceutical company. I would need some evidence before believing that health insurance company leaders have any influence on pharmaceutical companies.
I would also be surprised to learn insurance companies hold specific stocks, seems like a risk insurance companies would not take, especially ones that have lots of routine cash expenses. They spend ~85% of their premiums on medical expenses, and probably at least 5% to 10% on their own staff, so they shouldn’t even have much extra cash left to invest for the long term.
https://www.oliverwyman.com/our-expertise/insights/2023/mar/...
Edit: hit posting limit, so to respond to comment below about net income, that Yale link does not seem relevant as it is for all healthcare companies. All 7 publicly listed insurers’ combined annual net income is $35B or less for the previous 20 years, at a profit margin of 3% or less, which is peanuts. The pharmaceutical companies earn much more money than them, which is why the pharmaceutical companies have higher market caps.
> Why are we using market cap as a metric ? Look at investment value.
Because a company that owns influential portions of another company would have that reflected in their market cap. Like Berkshire Hathaway does. with the exception of UNH (due to its healthcare provider business), the other insurance companies are relatively tiny businesses compared to pharmaceutical companies and so cannot be holding any influential amount of stock.
> This is a wild assertion. The sum total of all 7 publicly listed insurance companies’ market caps is less than Eli Lilly, just one pharmaceutical company
Why are we using market cap as a metric ? Look at investment value.
From the NAIC report at https://content.naic.org/sites/default/files/capital-markets..., common stock holdings alone of U.S. insurance industry is roughly ~$1.2 trillion.
"Over the past 20 years, health care companies spent 95% of their net income on shareholder payouts, totaling up to $2.6 trillion, according to the research findings. Shareholder payouts also tripled over this period - a trend largely shaped by a few powerful pharmaceutical companies, the research team noted."
https://medicine.yale.edu/news-article/health-care-company-p...
The U.S taxpayer already pays for this. ~40% of FDA-approved drugs have direct NIH funding behind them. Nearly all modern drugs rely on NIH-funded foundational science. Taxpayer money additionally also floats through BARDA, DOD and DARPA.
COVID mRNA vaccines (Pfizer-BioNTech, Moderna) got billions in public funding. Yet, patents usually belong to the private company and prices are not capped as a condition of public funding. It is gross corruption begging for heads to be put on pikes.
Correct, people should be asking their federal politician why the US federal government is not spending the few billion dollars on drug trials to avoid having to pay extra to pharmaceutical companies.
But instead, people rail at health insurance companies and pharmaceutical companies and others who can’t or won’t make a difference.
> But instead, people rail at health insurance companies and pharmaceutical companies and others who can’t or won’t make a difference.
Because this is the Corrupt Evil Nexus that continues to ensure that taxpayer funds and exclusive patents keep flowing to them, while keeping prices high. They buy political power via campaign financing by the bucketload and the congressman/woman changes their vote to kill/oppose bills that would make a difference. You can find dozens of examples. Do your own research. As an example, take a look at the voting for the bill to permit Medicare to negotiate drug prices. Look at who received bribes and from whom to vote "No".
Which bill are you referring to? The 2022 Inflation Reduction Act passed with a provision allowing Medicare to negotiate drug prices.
(Although it is, of course, true that having special drug rates for Medicare trends against rather than towards "clear and consistent pricing".)
I am talking about the "Medicare Prescription Drug Price Negotiation Act of 2021", then "Medicare Drug Price Negotiation Act", then "Elijah Cummings Lower Drug Costs Now Act". They all had MUCH stronger drug-pricing proposals, all got stalled shamefully, with a watered-down version in BBB, which was further diluted in IRA that big pharma laughed at and accepted.
More specifically, the stronger acts which were killed by Big Pharma bribes would have
- Tied U.S. prices to international reference pricing (e.g., prices paid in Europe)
- Broad Medicare negotiation for many high-cost drugs - including dozens of new drugs.
- Applied negotiated prices beyond Medicare in the commercial market. (Private Insurance too!)
- Imposed strong penalties on drug companies that refused to comply
- Generated large federal savings. Also would have had faster rollout. Remember IRA pricing is YET to come into effect.
PS: Look at the Senators who diluted drug-pricing in BBB even further to a bad joke. Look at whom they received bribes oops..donations from.
> US textbooks cost multiple times more than the international version of the textbook
I mean, I think a lot of the incentives behind textbook pricing in the US are honestly not that dissimilar to the ones in healthcare. I know Pearson is particularly egregious for price gouging students because they have exclusive deals with schools to provide the textbook for some specific class or subject. They raise prices because f*ck it why not, they won’t get pushback, which is not a valid reason to do so in most other countries.
As a european living in the US, the idea there is a market at all is laughable. I tried to get price quotes for treatments several time just to get a "well, it's hard to say" or "it's very complicated".
Hmm, I heard they’re down 1500%.
But of a paywall there, can't tell if raw materials and precursors are costing more, or R&D spend is up, or employee wages and salaries have risen. Those are usually the "pressures" on prices. I can't understand what or who might be applying "pressure" to lower prices on oligopolistic pharmaceutical makers.
Rueters doesn't show a paywall for me. The source of the pressure described is in the headline though. I'm not sure why OP editorialized it (as it is against hn guidelines): Exclusive: Drugmakers raise US prices on 350 medicines despite pressure from Trump.
> not sure why OP editorialized it
The article is about drug pricing, which is the part I found interesting (and by extension thought we’d find interesting). I thought taking it out both saved space and made the comments less likely to veer into flamebait.
Thanks for filling that in. I, too, am interested in this topic, because the oligopolistic market in the US, and the multinational corporations in the oligopoly, cause unusual, counter-intuitive and counter-doctrinal economic results. We're not in a recession or depression, so I was curious about causes of downward pressure on prices.
There's a character limit on the titles you can submit, probably wasn't intentionally editorializing. I assumed from the HN title that the pressure was from the Trump admin just based on the current state of US politics.
Char limit is 80, the full title would fit, even with “Exclusive”.
I think its obvious: theres a LOT of love for Trump here in VC circles. So anything speaking ill of his laughable policies, EO's, and other garbage is -1'ed or flagged to oblivion.
If you choose to self censor a headline for fear of getting voted down on news.ycombinator.com, that says as much about you as the -1ers.
What does it say?
That you have no spine, no conviction, mostly.
big Pharma has properties unlike many other business. The R&D is very, very expensive and, income is not directly related to expenses each year. The natural "moat" is such that only a relatively few, giant and wealthy, companies exist over time.
ref- The Billion Dollar Molecule
> big Pharma has properties unlike many other business. The R&D is very, very expensive and, income is not directly related to expenses each year
Isn’t this any capital-intensive business with variable demand?
Why does the US consumer of said medications subsidize many other countries who have access to the same medications for a fraction of the US sticker price?
Lots of reasons. One of them is that other countries negotiate deals country wide and can get bulk discounts. The US does this with the VA and Medicare, and people using those services generally pay less than the rest of Americans. In the end, it is largely a policy choice, as having a single payer could get better negotiated deals on drugs.
https://www.healthsystemtracker.org/brief/how-medicare-negot...
Bah! Begone with your socialist mumbo jumbo! Fox News Entertainent channel tells me about you communist and your “single payer” sham all the time! We have the best healthcare! Merica!
This is satire btw.
"If Canada is getting a 30% discount we can make it up by baking it into the hundreds of smaller negotiations with American providers."
Drug maker thinking
Do you believe that the deals they make are unprofitable given the discount? Do you think the other countries are keeping guns to their heads or what? The discounts are there because they can be, not because other countries want to pay below the break-even price. It is in the US where the drug companies can invest in the government just enough to recoup that with massive premiums in the convoluted medical system.
If you pitched a pharma company with the thesis of "We'll charge US customers less and global customers more", what would stop that from working?
I can think of a number of things.
Nobody's forcing US pharama companies to sell to those countries at those prices, they choose to, because it makes them more money.
Foreigners aren't the reason American healthcare sucks. Stop looking for people to blame abroad, all the sources of your problems are in the presidency, congress, and in the boardroom that directs the former.
Because US voters prefer the free market as opposed to government regulation and nationalized healthcare.
It is certainly a market, but I wouldn’t call it a free market.
Healthcare, like real estate, is a dysfunctional marketplace lacking real competition
I'm assuming you're European and just want to make an "America bad" post because this is comically ignorant. There wouldn't be mountains of federal code to adhere to if that was the case.
This is a trope among populists: pass legislation around <thing>, observe consequences of doing so, blame the "free market", repeat.
What other countries could teach the U.S. about bringing down drug prices
A look at how European governments negotiate with pharma companies helps explain why Americans pay more for prescription drugs.
https://news.stanford.edu/stories/2024/11/what-other-countri...
Sure, but that article literally contradicts your original point about Americans wanting a "free market" as it lists the complicated nature of existing laws, Medicare, PBMs etc. and the incentives those create.
You could just say "Americans need to vote better and cleanup their laws around this" and yes, that would be ideal, but I don't see that happening anytime soon. It's part of why some want the government to not involve themselves at all: no matter how good the politicians you elect, others can come into office and fuck it all up while everyone is forced to deal with it because they have the monopoly on violence. Not to mention the glacial pace at which our legislative bodies move.
Can you provide evidence for the claim? Polling from pew and Gallup suggest this isn't the case.
I think surveys show voters prefer the opposite, but certain powers are able to overcome that.
US voters have no principles. Even republicans started artistically screaming about nationalizing companies when they didn’t want to play ball with the president.
Americans really love to tell themselves they are paying for others. You victimize yourselves, and then blame externalities. Fix you own issues.
This is not like IT where the Americans are completely dominant and clearly superior.
The European pharma companies are doing more than fine, despite their main market being heavily regulated and price-controlled.
The less charitable explanation is that US companies want to charge outrageous prices, and the American system let them to, so they do it.
That's what the USA are: a machine to prioritize profits over people. Sometimes it turns out fine, like for the startup scene. Sometimes it's terrible, like when lives at stake.
Other explanations sound like heavy copium to me.
Many of those European pharma companies do most of their work and make most of their money in the US.
While it's true that the exposure of top European firms can be often 50%+ of total revenue from U.S, that:
- Doesn't make them non viable without the American market, just less rich.
- Doesn't reflect the 5 to 10 times higher price Americans pay for the same drugs.
You can have a healthy industries with plenty of billions to be around and have decently priced drugs.
What you get in the US is uber profitable industries and people scrapping around.
Those European companies make most their profit in the US. They would be much smaller without access to the US market.
Maybe drugs, or these drugs, aren't the most efficient solutions. Shouldn't we direct resources toward more efficient ones?
There are a lot of bad health outcomes built into our society, yes, but by the time people are confronted with the health impacts of cars, agriculture subsidies, for-profit healthcare, etc. it is likely that drugs will be necessary to treat the very real, immediate problems which any given patient has. Reversing the subsidies for things like car-dependency would positively benefit millions of people but it’s a generational change, not something most individuals can do.
>Maybe drugs, or these drugs, aren't the most efficient solutions. Shouldn't we direct resources toward more efficient ones?
Turns out all the low hanging fruit have already been picked, so the only "more efficient ones" left are stuff like gene therapy, which are absurdly expensive, but still theoretically cheaper than a lifetime of care. Unsurprisingly the high sticker price draws much backlash from the public and politicians.
> all the low hanging fruit have already been picked
What is that based on?
Also, I'm not talking about 'low hanging fruit' necessarily; only solutons that become cost effective for vendors if drug prices aren't so extreme.
There's reason to think there is low-hanging fruit: Research is incentivized for the most profitable solutions for the vendors, not the most cost-effective solutions for patients.
Except many (most?) pharmas spend more on marketing and sales than R&D. Lobbying is another big expense for most of them.
> Drugmakers plan to raise U.S. prices on at least 350 branded medications including vaccines against COVID, RSV and shingles and blockbuster cancer treatment Ibrance, even as the Trump administration pressures them for cuts
Few days ago, Donald Trump pressured Emmanuel Macron to raise the prices of all medicines. The pressure was made with unspoken threats according to this article [1].
[1]: https://www.tf1info.fr/international/trump-se-vante-d-avoir-...
That's like pressuring a politician to commit seppuku. French would be rioting in the streets if he would even try that.
Furthermore how Macron can increase prices of drugs? I was thinking that Americans are all about free market.
It's possible that Americans are all about free markets (I have severe doubts on this point, but let's accept it), but Trump and his MAGAts are far more concerned about fucking with people weaker than them.
If given two options, they will take the one that will hurt more people, every day of the week.
Why is the supreme-court slow-walking the tariff decision which is crystal clear as lower courts clearly demonstrate only Congress can set taxes/tariffs?
It would end inflation within 90 days
Even their silly 15% tariff fallback law abuse would be more sane than the 50-150% currently
Next few years is going to be insanity
There was a lot of inflation before tariffs, and it didn't even have the effect of slowing China down economically or Russia militarily.
It slowed down Americans because we aren't recently used to it. The rich did adapt relatively quickly by buying up all the housing they could at negative real interest, stocks, gold, and to a lesser extent crypto.
The lesson has been learned by this point though, even a day laborer is holding silver and crypto nowadays because we have in recent memory the COVID shenanigans of mass QE.
People in China and Russia have basically taken for granted so long that their currency is completely manipulated, they all already knew to not be hoodwinked.
Inflation is low (relative to the last few years) and so far tariff related inflation hasn't manifested.
Mate, this Supreme Court ruled that the President is immune to prosecution and de facto outside and above the law. I’m honestly not sure what to tell you if you’re still hoping for rule-of-law decisions to come out of it.