This is one of those areas where I'm a subject matter expert, and I find the commentary in this space dismal.
First, most of the things that bother people in the drug space don't relate to life saving meds or Pharma profit margins. They focus on me-too drugs and absurd pricing regimes like manufacturer rebates. By far the biggest pain point in Pharma was insulin, which is an old drug with many equal alternatives (who the fuck cares if your on Humalog or Novolog) that was priced 10x higher then net in the worlds biggest gross to net bubble ever. None of that 1,000% nominal price markup was funding drug R&D.
Second, its an extreme irony that the IRAs drug price negotiations INCREASED drug prices. CMS and the CBO, being incompetent and corrupt sycophants, don't acknowledge this. But it's true, and anyone that's looked into it with even cursory math knows that the IRA dramatically increased the cost of Part D. Again, it's not "life saving drugs" that are the subject of price negotiations, but the garden variety brand drugs that are part of the rebate game gross to net bubble.
I do in fact hope that Trump negotiates lower prices on many of these drugs. If he doesn't nobody is going to cover them and none of the money is going to go to R&D.
Third, not all drugs are actually useful. A lot of them are of marginal or even negative benefit. When you reduce cost to the patient a lot of them will start utilizing drugs they don't really need. Take for instance the recent $2,000 out of pocket max from the IRA. It turns out that a lot of people that didn't think they needed Dupixent or a bunch of other garbage specialty drugs all of a sudden decided they would give it a try now that the cost is $2,000 (or if they take a brand drug already which most do, $0 additional). Dupixent is BTW the #1 advertised pharma drug in the world. You don't need to advertise that much if your product speaks for itself. It was a blast watching the company pay prescribers to mass enroll people in the drug on 1/1/2025.
Thanks for that. I have no real knowledge or expertise, but the money incentive in big Pharma is exactly what bothers me. It's all about the money. So first stop all drug ads. They're obscene. Next, as you say, negotiate. We should pay no more than the rest of the industrialized world. And then get pharma money out of funding the government drug research/ safety . and then....
Regarding your first point, aren't most generics cheaper in the US than they are in other countries? I figured those would constitute most of the "me-too" drugs, since they account for around 90% of prescription drug volume.
As for insulin -- I thought the part that made it expensive was the delivery method, not the drug itself. The EpiPen enjoys certain patent protections that prescription chemicals do not, so while a load of insulin is fairly cheap, nobody is able to manufacture a generic alternative because the FDA won't approve any alternatives.
No, I've seen no evidence that generics are cheaper. Though I can't speak to every single OECD country, I haven't noticed that in the ones I've researched. Like all MR talking points on pharma, this is paid for.
It's possible there may be some apples to oranges stuff going on. In the USA generic drugs are used as a loss leader to get people into the stores to buy other things with higher margins. The same way Costco uses its $5 fully cooked chicken. This is especially true at the big box stores. Pharmacies that can't loss lead have to charge a lot more, but this isn't because they are paying more wholesale. Everyones getting these things from India/China for the same wholesale price, it's just how much markup they need to charge above that.
The delivery method for insulin has no impact. When you pay $500 for insulin pens, the manufacturer is only getting $50. The other $450 gets split between the insurer and the government, though the insurer usually passes it on to policy holders in the form of lower premium.
Rebates are a kind of "reverse insurance" where people that need drugs are vastly OVERCHARGED and the cost shares extracted from them reduce premiums for the healthy.
Trump tried to outlaw this stuff at the end of his first term, but Pelosi blocked it partly to refuse Trump a win but also because arcane CBO scoring laws regarded this action as "saving the government money" and as such Pelosi could then spend this money that never actually got saved on her own pork barrel bullshit.
I can’t speak to your “first” point at all, though I’m sympathetic. Nor to your “second”.
But your “Third, not all drugs are actually useful” claim is an entirely different kettle of fish. And it has much more to do with our way way suboptimal healthcare system overall than anything specific to drug pricing.
It’s not that I’m saying your claims there are without merit. Besides being overbroad (a “marginally” useful drug IS actually useful!), you are mixing way to many critiques of the healthcare system in with your claim about drug prices imo.
Insurers have access to a lot of data that helps them to determine which drugs are effective and which are not. The government in its approval process relies on black box studies focusing on safety more than effectiveness. The pharma manufacturers seek to get through the approval process and then make the most money possible during the patent window that permits them to protect their profits.
Tort law only provides a partial brake on pharma misconduct that evades FDA oversight because proving causation is often very hard among other things.
I don’t want the FDA to focus on effectiveness! I want them to focus on safety, but with an emphasis on a more streamlined (faster) process to get to a decision.
If you want another group that focuses on effectiveness, in order, say, to determine how much Medicare is willing to pay for said new drug, I’d be ok with that. But as a separate process that has no impact on drug availability.
Testing for safety and effectiveness are related. Finding out that people have no problem with 1 mg dose and have their hair falls out and they throw up twice a week with a 100 mg does doesn't mean much if the expected effective dose is 10-40mg. And in some cases the effectiveness is tied to safety, like when a drug kills cancer cells and generates toxic by process that causes difficulty for the kidneys so the dose has to be carefully calibrated not to work to fast.
So essentially the safety and effectiveness profile should be generated together and it would be hard to speed up safety evaluation without affecting effectiveness evaluation.
Dosing can be based on manufacturer recommendation.
“ So essentially the safety and effectiveness profile should be generated together and it would be hard to speed up safety evaluation without affecting effectiveness evaluation.”
Testing for effectiveness takes much longer than testing for safety.
You wanna have two or 3 testing levels (the 2nd and 3rd of which take longer), fine with me, so long as approval for purchase not contingent on the longer ones. But the goal is still to have drugs on the market as quickly as possible, with disclosure of all relevant information.
FDA testing does not prevent manufacturers from being sued. They still have plenty of financial incentive not to put out drugs that kill people.
In a pre-Internet age when information was hard to come by, the nanny state, “go-slow, let so-called experts decide” approach made some amount of sense, I grant. In the current era, it really doesn’t, and is ever harder to justify on any rational basis.
Of course, bureaucrats like their power, and admittedly politicians face asymmetric risk/reward here: they will only get a little bit of credit for enabling life saving and QOL drugs to be available sooner, but both they and the bureaucrats face massive backlash when one drug DOES have adverse affects.
So I get why the current system is likely to continue.
But it doesn’t make it “right” or optimal in any sense.
I hope that someday, sooner rather than later, a pharmaceutical company makes a lot of money by exploiting my need for a medication for the disease that killed my mother.
Economists used to argue that no one would build lighthouses if it were not done by government, because of the free rider problem that attaches to what is called a "public good. Knowledgable economists no longer make that argument because private parties did in fact build light houses, even though they knew they could not charge a fee for them to all who benefited from them. Why did they do so? Because of the private benefits the builders of lighthouses received, never mind the free riders who also benefited.
I ask this: what evidence does anyone have that pharmaceutical companies will not develop life saving drugs without patent protection? If you know of some such evidence, please post reference to it so that I may investigate it. I am unaware of any such evidence.
But I am aware of real examples of real private parties building lighthouses, and of Jonas Salk who invested a polio vaccine for which he neither wanted nor sought a patent. I am aware of people voluntarily subscribing to pay for paving roads in Philadelphia, which were paved without mandatory taxation.
I am also aware of studies that show how patent law serves only to enrich a very small set of people by restricting the rights of other people to use their property to compete with the patent holder. I am also aware of studies that show how being first-to-market is far more important than holding a patent, in the case of many goods and services. Why not drugs? What evidence do we have?
How are we so sure that without patents pharmaceutical companies will not have incentives to innovate? I offer up that we are not sure and should not be, because we have no evidence, and because we have evidence of the contrary.
To be fair to the profession, I think the claim of economics is that there will be underinvestment in public goods, not zero investment. So, pointing to occasional private investment in public goods does not really address the issue. Of course, in the case of innovative drugs we are mostly not talking about public goods. I think we are talking about private goods and the identification and enforcement of property rights. So, extrapolating away from pharma, would we generalize the argument to property rights of all types? That is, if the government were to announce that they would no longer be in the business of recognizing or enforcing property rights at all, would we expect investment patterns to continue unaltered?
I accept your opening sentence (even though many economists have indeed said zero), but I reject the "so" sentence entirely. My claim is that just as much innovation will occur and has occurred without patents as with patents. Do you have evidence that falsifies my claim? We have evidence that confirms that "much" (not just occasional) if not all innovation will occur without patents.
As for your second "so" question, why would anyone have property rights in information and the state of nature? The notion that innovation creates property rights is not to be assumed; it is to be argued on the basis of logic. Evidence shows that people innovate because of their desire to do so, not because they are granted a patent by government operatives who say they have an insuperable property right to an idea or information.
Why should we not be equally concerned with the property rights of individuals who do not hold a patent, but who are barred by government operatives from using property in which they have rights to use information and. Understanding to compete with patent holders? What is the basis for such superior claims of "rights" for innovators?
Patents create artificial scarcity. Natural scarcity that cannot be avoided is challenge enough. Why would we want to shoot ourselves in the foot by creating artificial scarcity? In my book, Morality and Capitalism: A Dialogue on Freedom, ( https://www.amazon.com/Morality-Capitalism-Dialogue-David-Kendall/dp/1503233243 )I argue that we humans have but one right, and we have it because of our ontological equality. That right is this: we all have the right to be free of unjust compulsion from others. Unjust compulsion is force, threat of force, and intentional fraud. And yes, I do address in the book the question of how we humans are to know what is "just."
Any other rights that humans claim they have derive from this one right that all humans can and do have simultaneously. It is the only right that ALL humans can have simultaneously. Of course, my argument in support of this claim requires more space and time than is appropriate for this comment.
To be more accurate, the defensible claim of economics is that there will be less investment in public goods than is optimal. The reason most economists will say "zero" or "underinvestment", beyond just sloppy talk, is that optimality adds another constraint: not spending more to reach the optimal state than the benefits gained by getting there. In other words, if there are $10 million in benefits lost from underinvestment keeping society from the optimal state, but it costs $20 million in public funding to get there, it is optimal to just ignore the underinvestment.
People hate having to argue that point, however, as it makes it really difficult to get their money. It opens up questions like "Well, what is 'optimal' anyway, and what's the rate of return as we spend to get closer to it?" It leaves you open to critiques such as Caplan's regarding education spending, that we are actually way over spending relative to social benefits. If one claims that an activity would simply stop if it wasn't publicly funded, then at least it is hard for those being persuaded to see through the scare tactic.
One of the major original purposes of patent law is to encourage publication of useful inventions. In return for publication, the government provides the consideration of guaranteed profits for the statutory period. In the pre-enlightenment period, people who invented useful things tended to rely on secrecy, obscurity, and reputation. Inventions still spread throughout society but then again inventions could and were sometimes lost because the art was restricted to initiates into various mysteries. A similar rationale applies to copyright registration although the more recent iterations of the Copyright Act have diverged from the older contours of the policy that were more similar to how patent works.
So the idea is really to encourage the drug manufacturers to add to the public store of knowledge of useful medicines in exchange for the limited monopolies. The incentive to innovate is present even without the Patent Act. It's really the incentive to innovate and to also publish the necessary details that the law provides.
Publication of information is not particularly useful if an effective patent prohibits others to use the information. Due to reverse engineering and in a world of advanced technology, the potential value of publication of information is probably not high.
How would anyone know if anything was lost, if it was in fact lost?
It doesn't prohibit them from using it in the long run; just during the statutory period. Afterwards anyone can use the design. So there is a massive store of free designs for products and devices of varying levels of viability that anyone can work from. That is at least the policy behind it.
Yes, I understand the claims of the benefits of patents. What I'm saying is that those claims are not supported by evidence. People innovate just fine without patents, and designs cannot be kept secret for long, and the costs of patents outweigh the claimed benefits. Forcing artificial scarcity on ourselves strikes me as undesirable.
While not disagreeing with Arnold's point, I learned during the pandemic that much medical research was corruptly motivated junk. The mRNA vaccines' Early Use Authorization depended legally on there being no alternative treatment, hence it was of great importance to the hugely profitable launch to show that other potential anti-virals were ineffective or harmful. Thus we got the demonization campaigns against hydroxycholoroquine and ivermectin supported by absurdly rigged "research" studies carried out by academics and others who depend on pharmaceutical industry funding, and which were published in the corrupt medical journal cartel that is now being held to account by Kennedy and Battacharaya.
Calling something a "conspiracy theory" is just name calling, so much abused by bad actors in recent years that it is best avoided. As for questionable studies, just ask Grok this query: Were there questionable studies regarding effectiveness of hydroxychloroquine and ivermectin?
It is literally a theory about conspiracy. Is "the big bang theory" also name calling?
Grok- That is the wrong question. Much better is to ask if there are reliable studies regarding effectiveness of hydroxychloroquine and ivermectin. Or ineffectiveness.
Grok's answer:
Conclusion
Reliable, high-quality studies, including RCTs and systematic reviews, indicate that neither hydroxychloroquine nor ivermectin is effective for treating or preventing COVID-19. Their use is not supported by current evidence, and risks associated with misuse outweigh potential benefits. For accurate information, cons
The May 2020 Lancet study that persuaded the WHO to halt hydroxychloroquine trials may have been fraudulent. It purported to be based on covid patient data from hospitals, but some of the numbers appeared to be doubtful or simply false. The data was collected by Surgisphere, a firm founded by the lead author. Surgisphere refused to release the dataset.
I doubt we will ever get a full understanding of what happened with the mRNAs but every so often a new study comes out on the iatrogenic damage done and the uncertainty grows:
In fairness the Cato Institute has quite openly demanded that after legalization taxpayers should bear the burden of “harm reduction” where drugs are concerned, including the provision of drugs naming for instance heroin, and “facilities” for needle exchange and “safe injection”.
He managed to say a true thing beyond which one needn’t bother to read:
“ Some may reasonably question why libertarians might take an interest in harm reduction, especially in light of the fact that many harm reduction programs are likely to be run by the government.”
Thanks. In fact, Singer primarily supports private efforts at harm reduction. He does suggest that government provision might be justified by reducing the costs of harm from the state's own policy of illegalizing drugs.
"First, many of these efforts are privately funded and receive no taxpayer subsidies.
Similarly, in my state of Arizona, seven needle-exchange groups have operated for several years on completely private funding, giving out fentanyl test strips (illegal in Arizona), handing out naloxone, offering free HIV and hepatitis blood tests, and exchanging dirty needles for clean ones.
Harm reduction doesn’t necessarily require government funding of needle-exchange and safe injection facilities. It does require removing legal obstacles to the existence of such programs so they can openly fundraise and operate.
Many other harm reduction efforts can be undertaken through regulatory reform that does not involve spending taxpayer dollars.
Also, personally, as a libertarian, I can see government-provided harm reduction as analogous to the government providing aid to refugees from a country with which our government has entered into war. In this case, it’s the government’s War on Drugs that is responsible for so many people dying of overdoses and infections and spreading infectious diseases."
He managed to say a true thing beyond which one needn’t bother to read:
“ Some may reasonably question why libertarians might take an interest in harm reduction, especially in light of the fact that many harm reduction programs are likely to be run by the government.”
If you will not support any organization that doesn't 100% pass your ideological purity test, then you can say goodbye to liberty. From what I've seen, Cato remains very libertarian.
Yes, everyone is deeply grateful for medical advances.
Or maybe not.
In a piece today entitled “What is American Conservatism?” at American Greatness, Roger Kimball quotes Australian philosopher David Stove:
“A primitive society is being devastated by a disease, so you bring modern medicine to bear, and wipe out the disease, only to find that by doing so you have brought on a population explosion. You introduce contraception to control population, and find that you have dismantled a whole culture. At home you legislate to relieve the distress of unmarried mothers, and find you have given a cash incentive to the production of illegitimate children. You guarantee a minimum wage, and find that you have extinguished, not only specific industries, but industry itself as a personal trait. . . .
This is the oldest and the best argument for conservatism: the argument from the fact that our actions almost always have unforeseen and unwelcome consequences. “
Which sounds a lot more like the Arnold Kling who discussed returning to a 1970’s medical status quo (“I conduct a thought experiment in which America is offered only the medical procedures available in 1975. In that experiment, health care becomes much more affordable than it was in 2006, or than it is today. But health care outcomes are not much worse.” https://arnoldkling.substack.com/p/my-books-essay-5 ).
Indeed going back to Burke mooning over Marie Antoinette while advocating charity as a solution to the famines that killed 2 million in ancien regime France, conservatism seems to have a baked in gleeful callousness to the welfare of the little people.
Be that as it may, Goodman’s piece might be misunderstood to suggest that all was perfectly laissez- faire sweetness and light before Orange Man Bad introduced the absurd notion that federal revenues are limited and maybe we ought consider trimming the outflow on drug spending especially considering the pharmaceutical companies are doing well enough to apparently buy all available television advertising space.
Thus, we ought to keep in mind that as a matter of history, it would be incorrect to lay at Trump’s feet the consequences of Subtitle B “Prescription Drug Pricing Reform” of the Inflation Reduction Act signed by Biden without any apparent controversy.
And moreover, we should keep in mind that federal drug price negotiation goes way further back than that. The VA has used a prime vendor contract to operate its mail order drug program that dispenses 80% of VA prescriptions in order to negotiate discounts for decades. And those discounts have been substantial, with the GAO reporting that VA pays prices about half that as paid by Medicare (https://www.gao.gov/products/gao-21-111 ). If the federal government tightening its drug spend is going to obliterate all pharmaceutical research and development, why haven’t we heard calls for VA to pay the prices that Medicare pays?
Indeed, there appears to be something of an inconsistency in Goodman’s argument. On one hand, it is great that the US pays so much more for branded drugs than everywhere else in the world. On the other hand, it is great that the US relies upon cheap generic drugs much more than any other country, paying less for them and generics making up a much higher percent of medication consumed. If we are going to argue that pharmaceutical innovation is utterly dependent upon the US paying the highest prices the market will bear, then wouldn’t we want less cheap generic consumption? Why not extend the patent period to 50 years? Wouldn’t that really incentivize innovation? On the other hand, the allegedly cheaper generic prices might not totally account for the death toll from generics imported from uninspected foreign manufacturies. (https://blog.kelley.iu.edu/2025/02/19/all-generic-drugs-are-not-equal-study-finds-generics-made-in-india-have-more-severe-adverse-events/ )
Goodman also undercuts his laissez faire utopianism by claiming that 25,000 Brits die each year because they lack access to drugs available elsewhere. But isn’t the economy globalized? If supply and demand will perfect everything, won’t sellers prices use price discrimination to maximize their revenue from Brits traveling abroad to purchase their drugs? But the article that Goodman links to is apparently only about NHS cancer treatment. The UK does have private health care operating in tandem with the NHS and perhaps such treatments were available privately it was just that they were priced such that patients couldn’t afford them.
I have no idea about how to determine the appropriate balance in public spending for pharmaceuticals. I just think “we must pay whatever the drug companies want to charge” is not pragmatic given the national debt. And Chatty Cathy pull-string economics is always irritating.
“I put drug price controls and cuts in medical research funding on the negative side of the ledger.”
I love the piece until a portion of this last line.
I agree with you 100% on the drug price controls.
Cutting medical research grant money going to overtly leftist, overtly anti-capitalist and openly racist universities, however, you should not be criticizing the Trump Administration for. And at least some of that research you know full well was if not wholly wasted on leftist ideology, largely wasted compared to where it could have and should have gone.
You also know with near certainty that the medical research dollars in toto (well, aside from the fractions going to leftist universities’ bloated and largely unrelated to research “overhead costs”) will be restored.
We applaud when tech companies move quickly and break things. You’ve said so the same quite well recently (Brokenists vs. Institutionalists). So some “good” research gets delayed as the cost of reforming a terribly sick system? So be it.
At minimum, you should not be lumping together what they are doing with drug price controls with what they are doing on medical research. As Trump would say: “Very unfair.”
If there is negativity toward "Big Pharma," I think it's just a COVID side effect. People are grateful for pharmaceutical research, development, distribution, etc. To a lesser extent, "big pharma" talk may also be coming from some pressure groups lobbying for different insurance arrangements or formularies.
Political speech is like marketing speech. People who are actually upset about cronyism complain about "corporate greed" or "the man." In my humble opinion, when the laity complain about "big pharma," it's likely they are complaining about a whole complex of issues like the COVID school closures, the lampooning of the lab leak theory, etc. It's not credible to me that such complainers are opposed to R&D.
I'm a post-menopausal woman, and I don't take any of the drugs for osteoporosis. To paraphrase AK, you decide what to believe by deciding whom to believe, and I don't believe Big Pharma or the medical establishment when they claim these drugs strengthen bones so that women don't suffer crippling fractures, or even if they do, the drugs have adverse side effects that aren't worth the potential benefits of the drugs. The big tell is the TV ads run by Big Pharma to push these drugs. They typically feature some washed-up old actress -- Blythe Danner, Sally Field -- to peddle the drugs to women on daytime TV. Frankly, I think these drugs are poison, and I've had conversations with other women who think the same thing. And I don't think it's an accident that these drugs came on the market after Dubya pushed his Medicare Part D so that 'seniors can get their meds' and he could win the votes of gullible old folks. Obviously, given the growing number of post-menopausal women and the potential size of the market, Medicare Part D helped create a large lucrative market for Big Pharma. The justification I got for these drugs from my former endocrinologist was that if I fall and break my hip when I am in my 80s, there is a high risk that I will die. My reaction is that, having seen my parents' quality of life deteriorate in their 80s, you have to die sometime and your 80s is as good a time as any. Sorry, but there is no cure for old age, yet. And I believe one of the potential side-effects is an elevated risk of certain types of blood cancer, which run in my family (notice that after trumpeting the wonderful benefits of these wonder drugs, the TV ads always end with a quick listing in a less compelling voiceover of all the possible adverse side effects of these drugs). Would I rather die of a bone fracture, or a blood cancer that requires chemotherapy? Hmmm. The same thing goes for menopausal treatments, i.e. HRT. First the studies tell us that HRT prevents all kinds of maladies (eg. heart attacks and strokes), then they tell you that HRT actually increases the risks of these problems. As far as I can tell, the only sure thing is that HRT prevents hot flashes, but while hot flashes are uncomfortable, you don't die from them, and from personal experience I can testify that they eventually stop on their own (and they last much longer than the 5 years or so recommended for HRT treatment). And one of my parents also died from esophageal cancer, but they were also a smoker for 20+ years, so I can't draw the conclusion that I have a predisposition to get the same disease.
May I ask what pill prevents cancer of esophagus and what daily pill cured Crohn's? These occur in my family and I'd like to advice these family members to discuss this with their doctors.
the proton pump inhibitors don't absolutely prevent cancer, but they reduce its likelihood for people who have certain symptoms that otherwise indicate high risk. Crohn's now has many possible treatments, and different ones seem to work for different people. The one that helped my daughter is not a pill. It's a biologic called Stelara.
Tremfya (anti-body against one of the IL-23s) or Entyvio (integrin binder if memory serves) could be the treatments for Crohn's or even possibly Humira (which is less selective for the intestines since it is an anti-body against TNF-alpha).
I'd appreciate knowing what other cancers the HPV shot prevents, and whether that is because these other cancers are possibly caused by the HP virus, or alternatively, because the HPV shot also targets other types of non-HP cancer-causing viruses. Also, nine types of what? I don't understand that reference. Thanks.
It is good that drugs have been developed to treat various conditions. However, but pharma has created an environment that incentivizes drug-based treatment rather than a more holistic diet- and lifestyle based treatment.
This is in addition to a lot of medical conditions that have been created and magnified by ill-founded scares such as against saturated fats by the physicians themselves. This is again in addition to the side-effects of drugs and in particular of polypharmacy.
This is one of those areas where I'm a subject matter expert, and I find the commentary in this space dismal.
First, most of the things that bother people in the drug space don't relate to life saving meds or Pharma profit margins. They focus on me-too drugs and absurd pricing regimes like manufacturer rebates. By far the biggest pain point in Pharma was insulin, which is an old drug with many equal alternatives (who the fuck cares if your on Humalog or Novolog) that was priced 10x higher then net in the worlds biggest gross to net bubble ever. None of that 1,000% nominal price markup was funding drug R&D.
Second, its an extreme irony that the IRAs drug price negotiations INCREASED drug prices. CMS and the CBO, being incompetent and corrupt sycophants, don't acknowledge this. But it's true, and anyone that's looked into it with even cursory math knows that the IRA dramatically increased the cost of Part D. Again, it's not "life saving drugs" that are the subject of price negotiations, but the garden variety brand drugs that are part of the rebate game gross to net bubble.
I do in fact hope that Trump negotiates lower prices on many of these drugs. If he doesn't nobody is going to cover them and none of the money is going to go to R&D.
Third, not all drugs are actually useful. A lot of them are of marginal or even negative benefit. When you reduce cost to the patient a lot of them will start utilizing drugs they don't really need. Take for instance the recent $2,000 out of pocket max from the IRA. It turns out that a lot of people that didn't think they needed Dupixent or a bunch of other garbage specialty drugs all of a sudden decided they would give it a try now that the cost is $2,000 (or if they take a brand drug already which most do, $0 additional). Dupixent is BTW the #1 advertised pharma drug in the world. You don't need to advertise that much if your product speaks for itself. It was a blast watching the company pay prescribers to mass enroll people in the drug on 1/1/2025.
Thanks for that. I have no real knowledge or expertise, but the money incentive in big Pharma is exactly what bothers me. It's all about the money. So first stop all drug ads. They're obscene. Next, as you say, negotiate. We should pay no more than the rest of the industrialized world. And then get pharma money out of funding the government drug research/ safety . and then....
Why does everyone ignore the incentives?
The best thing RFK is proposing is to end drug advertising. Its a fucking plague.
Regarding your first point, aren't most generics cheaper in the US than they are in other countries? I figured those would constitute most of the "me-too" drugs, since they account for around 90% of prescription drug volume.
As for insulin -- I thought the part that made it expensive was the delivery method, not the drug itself. The EpiPen enjoys certain patent protections that prescription chemicals do not, so while a load of insulin is fairly cheap, nobody is able to manufacture a generic alternative because the FDA won't approve any alternatives.
No, I've seen no evidence that generics are cheaper. Though I can't speak to every single OECD country, I haven't noticed that in the ones I've researched. Like all MR talking points on pharma, this is paid for.
It's possible there may be some apples to oranges stuff going on. In the USA generic drugs are used as a loss leader to get people into the stores to buy other things with higher margins. The same way Costco uses its $5 fully cooked chicken. This is especially true at the big box stores. Pharmacies that can't loss lead have to charge a lot more, but this isn't because they are paying more wholesale. Everyones getting these things from India/China for the same wholesale price, it's just how much markup they need to charge above that.
The delivery method for insulin has no impact. When you pay $500 for insulin pens, the manufacturer is only getting $50. The other $450 gets split between the insurer and the government, though the insurer usually passes it on to policy holders in the form of lower premium.
Rebates are a kind of "reverse insurance" where people that need drugs are vastly OVERCHARGED and the cost shares extracted from them reduce premiums for the healthy.
Trump tried to outlaw this stuff at the end of his first term, but Pelosi blocked it partly to refuse Trump a win but also because arcane CBO scoring laws regarded this action as "saving the government money" and as such Pelosi could then spend this money that never actually got saved on her own pork barrel bullshit.
I can’t speak to your “first” point at all, though I’m sympathetic. Nor to your “second”.
But your “Third, not all drugs are actually useful” claim is an entirely different kettle of fish. And it has much more to do with our way way suboptimal healthcare system overall than anything specific to drug pricing.
It’s not that I’m saying your claims there are without merit. Besides being overbroad (a “marginally” useful drug IS actually useful!), you are mixing way to many critiques of the healthcare system in with your claim about drug prices imo.
Insurers have access to a lot of data that helps them to determine which drugs are effective and which are not. The government in its approval process relies on black box studies focusing on safety more than effectiveness. The pharma manufacturers seek to get through the approval process and then make the most money possible during the patent window that permits them to protect their profits.
Tort law only provides a partial brake on pharma misconduct that evades FDA oversight because proving causation is often very hard among other things.
I don’t want the FDA to focus on effectiveness! I want them to focus on safety, but with an emphasis on a more streamlined (faster) process to get to a decision.
If you want another group that focuses on effectiveness, in order, say, to determine how much Medicare is willing to pay for said new drug, I’d be ok with that. But as a separate process that has no impact on drug availability.
Testing for safety and effectiveness are related. Finding out that people have no problem with 1 mg dose and have their hair falls out and they throw up twice a week with a 100 mg does doesn't mean much if the expected effective dose is 10-40mg. And in some cases the effectiveness is tied to safety, like when a drug kills cancer cells and generates toxic by process that causes difficulty for the kidneys so the dose has to be carefully calibrated not to work to fast.
So essentially the safety and effectiveness profile should be generated together and it would be hard to speed up safety evaluation without affecting effectiveness evaluation.
Sorry, I mostly disagree.
Dosing can be based on manufacturer recommendation.
“ So essentially the safety and effectiveness profile should be generated together and it would be hard to speed up safety evaluation without affecting effectiveness evaluation.”
Testing for effectiveness takes much longer than testing for safety.
You wanna have two or 3 testing levels (the 2nd and 3rd of which take longer), fine with me, so long as approval for purchase not contingent on the longer ones. But the goal is still to have drugs on the market as quickly as possible, with disclosure of all relevant information.
FDA testing does not prevent manufacturers from being sued. They still have plenty of financial incentive not to put out drugs that kill people.
In a pre-Internet age when information was hard to come by, the nanny state, “go-slow, let so-called experts decide” approach made some amount of sense, I grant. In the current era, it really doesn’t, and is ever harder to justify on any rational basis.
Of course, bureaucrats like their power, and admittedly politicians face asymmetric risk/reward here: they will only get a little bit of credit for enabling life saving and QOL drugs to be available sooner, but both they and the bureaucrats face massive backlash when one drug DOES have adverse affects.
So I get why the current system is likely to continue.
But it doesn’t make it “right” or optimal in any sense.
I hope that someday, sooner rather than later, a pharmaceutical company makes a lot of money by exploiting my need for a medication for the disease that killed my mother.
Precisely. The world is full of people who'd gladly be fleeced to have their life saved. And I mean this in a positive way.
Economists used to argue that no one would build lighthouses if it were not done by government, because of the free rider problem that attaches to what is called a "public good. Knowledgable economists no longer make that argument because private parties did in fact build light houses, even though they knew they could not charge a fee for them to all who benefited from them. Why did they do so? Because of the private benefits the builders of lighthouses received, never mind the free riders who also benefited.
I ask this: what evidence does anyone have that pharmaceutical companies will not develop life saving drugs without patent protection? If you know of some such evidence, please post reference to it so that I may investigate it. I am unaware of any such evidence.
But I am aware of real examples of real private parties building lighthouses, and of Jonas Salk who invested a polio vaccine for which he neither wanted nor sought a patent. I am aware of people voluntarily subscribing to pay for paving roads in Philadelphia, which were paved without mandatory taxation.
I am also aware of studies that show how patent law serves only to enrich a very small set of people by restricting the rights of other people to use their property to compete with the patent holder. I am also aware of studies that show how being first-to-market is far more important than holding a patent, in the case of many goods and services. Why not drugs? What evidence do we have?
How are we so sure that without patents pharmaceutical companies will not have incentives to innovate? I offer up that we are not sure and should not be, because we have no evidence, and because we have evidence of the contrary.
To be fair to the profession, I think the claim of economics is that there will be underinvestment in public goods, not zero investment. So, pointing to occasional private investment in public goods does not really address the issue. Of course, in the case of innovative drugs we are mostly not talking about public goods. I think we are talking about private goods and the identification and enforcement of property rights. So, extrapolating away from pharma, would we generalize the argument to property rights of all types? That is, if the government were to announce that they would no longer be in the business of recognizing or enforcing property rights at all, would we expect investment patterns to continue unaltered?
I accept your opening sentence (even though many economists have indeed said zero), but I reject the "so" sentence entirely. My claim is that just as much innovation will occur and has occurred without patents as with patents. Do you have evidence that falsifies my claim? We have evidence that confirms that "much" (not just occasional) if not all innovation will occur without patents.
As for your second "so" question, why would anyone have property rights in information and the state of nature? The notion that innovation creates property rights is not to be assumed; it is to be argued on the basis of logic. Evidence shows that people innovate because of their desire to do so, not because they are granted a patent by government operatives who say they have an insuperable property right to an idea or information.
Why should we not be equally concerned with the property rights of individuals who do not hold a patent, but who are barred by government operatives from using property in which they have rights to use information and. Understanding to compete with patent holders? What is the basis for such superior claims of "rights" for innovators?
Patents create artificial scarcity. Natural scarcity that cannot be avoided is challenge enough. Why would we want to shoot ourselves in the foot by creating artificial scarcity? In my book, Morality and Capitalism: A Dialogue on Freedom, ( https://www.amazon.com/Morality-Capitalism-Dialogue-David-Kendall/dp/1503233243 )I argue that we humans have but one right, and we have it because of our ontological equality. That right is this: we all have the right to be free of unjust compulsion from others. Unjust compulsion is force, threat of force, and intentional fraud. And yes, I do address in the book the question of how we humans are to know what is "just."
Any other rights that humans claim they have derive from this one right that all humans can and do have simultaneously. It is the only right that ALL humans can have simultaneously. Of course, my argument in support of this claim requires more space and time than is appropriate for this comment.
To be more accurate, the defensible claim of economics is that there will be less investment in public goods than is optimal. The reason most economists will say "zero" or "underinvestment", beyond just sloppy talk, is that optimality adds another constraint: not spending more to reach the optimal state than the benefits gained by getting there. In other words, if there are $10 million in benefits lost from underinvestment keeping society from the optimal state, but it costs $20 million in public funding to get there, it is optimal to just ignore the underinvestment.
People hate having to argue that point, however, as it makes it really difficult to get their money. It opens up questions like "Well, what is 'optimal' anyway, and what's the rate of return as we spend to get closer to it?" It leaves you open to critiques such as Caplan's regarding education spending, that we are actually way over spending relative to social benefits. If one claims that an activity would simply stop if it wasn't publicly funded, then at least it is hard for those being persuaded to see through the scare tactic.
One of the major original purposes of patent law is to encourage publication of useful inventions. In return for publication, the government provides the consideration of guaranteed profits for the statutory period. In the pre-enlightenment period, people who invented useful things tended to rely on secrecy, obscurity, and reputation. Inventions still spread throughout society but then again inventions could and were sometimes lost because the art was restricted to initiates into various mysteries. A similar rationale applies to copyright registration although the more recent iterations of the Copyright Act have diverged from the older contours of the policy that were more similar to how patent works.
So the idea is really to encourage the drug manufacturers to add to the public store of knowledge of useful medicines in exchange for the limited monopolies. The incentive to innovate is present even without the Patent Act. It's really the incentive to innovate and to also publish the necessary details that the law provides.
Publication of information is not particularly useful if an effective patent prohibits others to use the information. Due to reverse engineering and in a world of advanced technology, the potential value of publication of information is probably not high.
How would anyone know if anything was lost, if it was in fact lost?
It doesn't prohibit them from using it in the long run; just during the statutory period. Afterwards anyone can use the design. So there is a massive store of free designs for products and devices of varying levels of viability that anyone can work from. That is at least the policy behind it.
Yes, I understand the claims of the benefits of patents. What I'm saying is that those claims are not supported by evidence. People innovate just fine without patents, and designs cannot be kept secret for long, and the costs of patents outweigh the claimed benefits. Forcing artificial scarcity on ourselves strikes me as undesirable.
While not disagreeing with Arnold's point, I learned during the pandemic that much medical research was corruptly motivated junk. The mRNA vaccines' Early Use Authorization depended legally on there being no alternative treatment, hence it was of great importance to the hugely profitable launch to show that other potential anti-virals were ineffective or harmful. Thus we got the demonization campaigns against hydroxycholoroquine and ivermectin supported by absurdly rigged "research" studies carried out by academics and others who depend on pharmaceutical industry funding, and which were published in the corrupt medical journal cartel that is now being held to account by Kennedy and Battacharaya.
I doubt your conspiracy theory but show me the evidence they work. Or the evidence the negative studies were rigged.
Do your own research.
I have. That's why I doubt your conspiracy theory. The fact you won't share anything suggests you don't have anything.
But there's always the possibility you have compelling info I haven't seen.
Calling something a "conspiracy theory" is just name calling, so much abused by bad actors in recent years that it is best avoided. As for questionable studies, just ask Grok this query: Were there questionable studies regarding effectiveness of hydroxychloroquine and ivermectin?
Ask grok if there are conspiracy theories regarding ivermectin for COVID. Lol.
Did you read grok's answer to your question? The only flawed studies it mentions are ones showing they were effective against COVID.
It is literally a theory about conspiracy. Is "the big bang theory" also name calling?
Grok- That is the wrong question. Much better is to ask if there are reliable studies regarding effectiveness of hydroxychloroquine and ivermectin. Or ineffectiveness.
Grok's answer:
Conclusion
Reliable, high-quality studies, including RCTs and systematic reviews, indicate that neither hydroxychloroquine nor ivermectin is effective for treating or preventing COVID-19. Their use is not supported by current evidence, and risks associated with misuse outweigh potential benefits. For accurate information, cons
Regarding effectiveness of Ivermectin, see this meta-analysis of studies:
https://c19ivm.org/meta.html
The May 2020 Lancet study that persuaded the WHO to halt hydroxychloroquine trials may have been fraudulent. It purported to be based on covid patient data from hospitals, but some of the numbers appeared to be doubtful or simply false. The data was collected by Surgisphere, a firm founded by the lead author. Surgisphere refused to release the dataset.
https://www.theguardian.com/science/2020/may/28/questions-raised-over-hydroxychloroquine-study-which-caused-who-to-halt-trials-for-covid-19
Study retracted a month later.
https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)31324-6/fulltext
I doubt we will ever get a full understanding of what happened with the mRNAs but every so often a new study comes out on the iatrogenic damage done and the uncertainty grows:
https://cardiovascular-research-and-innovation.reseaprojournals.com/Articles/myocarditis-after-sars-cov-2-infection-and-covid-19-vaccination-epidemiology-outcomes-and-new-perspectives
Libertarians have discovered the one industry they want subsidized by industrial policy.
In fairness the Cato Institute has quite openly demanded that after legalization taxpayers should bear the burden of “harm reduction” where drugs are concerned, including the provision of drugs naming for instance heroin, and “facilities” for needle exchange and “safe injection”.
All very amusing.
Who at Cato? Pointer?
March 26, 2019 Jeffrey Singer
“Libertarians and Harm Reduction”
Though “Libertarians and Euphemisms” would have been an equally good title.
He managed to say a true thing beyond which one needn’t bother to read:
“ Some may reasonably question why libertarians might take an interest in harm reduction, especially in light of the fact that many harm reduction programs are likely to be run by the government.”
Thanks. In fact, Singer primarily supports private efforts at harm reduction. He does suggest that government provision might be justified by reducing the costs of harm from the state's own policy of illegalizing drugs.
"First, many of these efforts are privately funded and receive no taxpayer subsidies.
Similarly, in my state of Arizona, seven needle-exchange groups have operated for several years on completely private funding, giving out fentanyl test strips (illegal in Arizona), handing out naloxone, offering free HIV and hepatitis blood tests, and exchanging dirty needles for clean ones.
Harm reduction doesn’t necessarily require government funding of needle-exchange and safe injection facilities. It does require removing legal obstacles to the existence of such programs so they can openly fundraise and operate.
Many other harm reduction efforts can be undertaken through regulatory reform that does not involve spending taxpayer dollars.
Also, personally, as a libertarian, I can see government-provided harm reduction as analogous to the government providing aid to refugees from a country with which our government has entered into war. In this case, it’s the government’s War on Drugs that is responsible for so many people dying of overdoses and infections and spreading infectious diseases."
Sorry, comment nesting fail on my decoder ring:
He managed to say a true thing beyond which one needn’t bother to read:
“ Some may reasonably question why libertarians might take an interest in harm reduction, especially in light of the fact that many harm reduction programs are likely to be run by the government.”
If you will not support any organization that doesn't 100% pass your ideological purity test, then you can say goodbye to liberty. From what I've seen, Cato remains very libertarian.
Which libertarians? Certainly not me.
Cowen, Tabarrok, and possibly Kling.
Yes, everyone is deeply grateful for medical advances.
Or maybe not.
In a piece today entitled “What is American Conservatism?” at American Greatness, Roger Kimball quotes Australian philosopher David Stove:
“A primitive society is being devastated by a disease, so you bring modern medicine to bear, and wipe out the disease, only to find that by doing so you have brought on a population explosion. You introduce contraception to control population, and find that you have dismantled a whole culture. At home you legislate to relieve the distress of unmarried mothers, and find you have given a cash incentive to the production of illegitimate children. You guarantee a minimum wage, and find that you have extinguished, not only specific industries, but industry itself as a personal trait. . . .
This is the oldest and the best argument for conservatism: the argument from the fact that our actions almost always have unforeseen and unwelcome consequences. “
(https://amgreatness.com/2025/06/01/what-is-american-conservatism/ )
Which sounds a lot more like the Arnold Kling who discussed returning to a 1970’s medical status quo (“I conduct a thought experiment in which America is offered only the medical procedures available in 1975. In that experiment, health care becomes much more affordable than it was in 2006, or than it is today. But health care outcomes are not much worse.” https://arnoldkling.substack.com/p/my-books-essay-5 ).
Indeed going back to Burke mooning over Marie Antoinette while advocating charity as a solution to the famines that killed 2 million in ancien regime France, conservatism seems to have a baked in gleeful callousness to the welfare of the little people.
Be that as it may, Goodman’s piece might be misunderstood to suggest that all was perfectly laissez- faire sweetness and light before Orange Man Bad introduced the absurd notion that federal revenues are limited and maybe we ought consider trimming the outflow on drug spending especially considering the pharmaceutical companies are doing well enough to apparently buy all available television advertising space.
Thus, we ought to keep in mind that as a matter of history, it would be incorrect to lay at Trump’s feet the consequences of Subtitle B “Prescription Drug Pricing Reform” of the Inflation Reduction Act signed by Biden without any apparent controversy.
And moreover, we should keep in mind that federal drug price negotiation goes way further back than that. The VA has used a prime vendor contract to operate its mail order drug program that dispenses 80% of VA prescriptions in order to negotiate discounts for decades. And those discounts have been substantial, with the GAO reporting that VA pays prices about half that as paid by Medicare (https://www.gao.gov/products/gao-21-111 ). If the federal government tightening its drug spend is going to obliterate all pharmaceutical research and development, why haven’t we heard calls for VA to pay the prices that Medicare pays?
Indeed, there appears to be something of an inconsistency in Goodman’s argument. On one hand, it is great that the US pays so much more for branded drugs than everywhere else in the world. On the other hand, it is great that the US relies upon cheap generic drugs much more than any other country, paying less for them and generics making up a much higher percent of medication consumed. If we are going to argue that pharmaceutical innovation is utterly dependent upon the US paying the highest prices the market will bear, then wouldn’t we want less cheap generic consumption? Why not extend the patent period to 50 years? Wouldn’t that really incentivize innovation? On the other hand, the allegedly cheaper generic prices might not totally account for the death toll from generics imported from uninspected foreign manufacturies. (https://blog.kelley.iu.edu/2025/02/19/all-generic-drugs-are-not-equal-study-finds-generics-made-in-india-have-more-severe-adverse-events/ )
Goodman also undercuts his laissez faire utopianism by claiming that 25,000 Brits die each year because they lack access to drugs available elsewhere. But isn’t the economy globalized? If supply and demand will perfect everything, won’t sellers prices use price discrimination to maximize their revenue from Brits traveling abroad to purchase their drugs? But the article that Goodman links to is apparently only about NHS cancer treatment. The UK does have private health care operating in tandem with the NHS and perhaps such treatments were available privately it was just that they were priced such that patients couldn’t afford them.
I have no idea about how to determine the appropriate balance in public spending for pharmaceuticals. I just think “we must pay whatever the drug companies want to charge” is not pragmatic given the national debt. And Chatty Cathy pull-string economics is always irritating.
If you want to increase incentives for new drugs, reduce the cost to the developer of drug approval.
i wonder how you could structure prizes. like, do you say something like, $X per QALY if you forfeit US patent rights?
Everyone wants the benefits, but very few want to pay enough for them.
“I put drug price controls and cuts in medical research funding on the negative side of the ledger.”
I love the piece until a portion of this last line.
I agree with you 100% on the drug price controls.
Cutting medical research grant money going to overtly leftist, overtly anti-capitalist and openly racist universities, however, you should not be criticizing the Trump Administration for. And at least some of that research you know full well was if not wholly wasted on leftist ideology, largely wasted compared to where it could have and should have gone.
You also know with near certainty that the medical research dollars in toto (well, aside from the fractions going to leftist universities’ bloated and largely unrelated to research “overhead costs”) will be restored.
We applaud when tech companies move quickly and break things. You’ve said so the same quite well recently (Brokenists vs. Institutionalists). So some “good” research gets delayed as the cost of reforming a terribly sick system? So be it.
At minimum, you should not be lumping together what they are doing with drug price controls with what they are doing on medical research. As Trump would say: “Very unfair.”
If there is negativity toward "Big Pharma," I think it's just a COVID side effect. People are grateful for pharmaceutical research, development, distribution, etc. To a lesser extent, "big pharma" talk may also be coming from some pressure groups lobbying for different insurance arrangements or formularies.
Political speech is like marketing speech. People who are actually upset about cronyism complain about "corporate greed" or "the man." In my humble opinion, when the laity complain about "big pharma," it's likely they are complaining about a whole complex of issues like the COVID school closures, the lampooning of the lab leak theory, etc. It's not credible to me that such complainers are opposed to R&D.
I'm a post-menopausal woman, and I don't take any of the drugs for osteoporosis. To paraphrase AK, you decide what to believe by deciding whom to believe, and I don't believe Big Pharma or the medical establishment when they claim these drugs strengthen bones so that women don't suffer crippling fractures, or even if they do, the drugs have adverse side effects that aren't worth the potential benefits of the drugs. The big tell is the TV ads run by Big Pharma to push these drugs. They typically feature some washed-up old actress -- Blythe Danner, Sally Field -- to peddle the drugs to women on daytime TV. Frankly, I think these drugs are poison, and I've had conversations with other women who think the same thing. And I don't think it's an accident that these drugs came on the market after Dubya pushed his Medicare Part D so that 'seniors can get their meds' and he could win the votes of gullible old folks. Obviously, given the growing number of post-menopausal women and the potential size of the market, Medicare Part D helped create a large lucrative market for Big Pharma. The justification I got for these drugs from my former endocrinologist was that if I fall and break my hip when I am in my 80s, there is a high risk that I will die. My reaction is that, having seen my parents' quality of life deteriorate in their 80s, you have to die sometime and your 80s is as good a time as any. Sorry, but there is no cure for old age, yet. And I believe one of the potential side-effects is an elevated risk of certain types of blood cancer, which run in my family (notice that after trumpeting the wonderful benefits of these wonder drugs, the TV ads always end with a quick listing in a less compelling voiceover of all the possible adverse side effects of these drugs). Would I rather die of a bone fracture, or a blood cancer that requires chemotherapy? Hmmm. The same thing goes for menopausal treatments, i.e. HRT. First the studies tell us that HRT prevents all kinds of maladies (eg. heart attacks and strokes), then they tell you that HRT actually increases the risks of these problems. As far as I can tell, the only sure thing is that HRT prevents hot flashes, but while hot flashes are uncomfortable, you don't die from them, and from personal experience I can testify that they eventually stop on their own (and they last much longer than the 5 years or so recommended for HRT treatment). And one of my parents also died from esophageal cancer, but they were also a smoker for 20+ years, so I can't draw the conclusion that I have a predisposition to get the same disease.
They might raise prices somewhat to other countries to enable a reduction in US prices.
Why should we subsidize foreign costs?
In your opinion, in what areas has the Trump administration been good?
And these are good things?!
May I ask what pill prevents cancer of esophagus and what daily pill cured Crohn's? These occur in my family and I'd like to advice these family members to discuss this with their doctors.
the proton pump inhibitors don't absolutely prevent cancer, but they reduce its likelihood for people who have certain symptoms that otherwise indicate high risk. Crohn's now has many possible treatments, and different ones seem to work for different people. The one that helped my daughter is not a pill. It's a biologic called Stelara.
For the esophagus it must be a PPI like Prilosec or nexium. Not sure about Crohn's.
Tremfya (anti-body against one of the IL-23s) or Entyvio (integrin binder if memory serves) could be the treatments for Crohn's or even possibly Humira (which is less selective for the intestines since it is an anti-body against TNF-alpha).
I'd appreciate knowing what other cancers the HPV shot prevents, and whether that is because these other cancers are possibly caused by the HP virus, or alternatively, because the HPV shot also targets other types of non-HP cancer-causing viruses. Also, nine types of what? I don't understand that reference. Thanks.
It is good that drugs have been developed to treat various conditions. However, but pharma has created an environment that incentivizes drug-based treatment rather than a more holistic diet- and lifestyle based treatment.
This is in addition to a lot of medical conditions that have been created and magnified by ill-founded scares such as against saturated fats by the physicians themselves. This is again in addition to the side-effects of drugs and in particular of polypharmacy.