"I have a common but chronic ailment so all I had to do was re-route the phase-converter to the deflector shield and invert the chromaton particles in Shelk-Einstein space and we're done!"

:/

In this case, the patient (A) may be getting the drug from a pharmacy (B), and the pharmacy bought the drug from the manufacturer (C), but the patient's insurance (D) is paying part of the cost of the drug, but so is the manufacturer, and insurance is paid for partially by the patient, and partially by the employer (E). There may also be direct government subsidies, and there are certainly indirect subsidies as well. Of course none of the 5 parties can really know how much anything costs, or how to reduce costs. Not to mention all the extra labor involved in administration of this complex system.

This sounds like a nice, generous thing to do, but basically it means that the drug company is bribing the customer to force their insurance company to spend more money on their behalf.

So, imagine that a drug costs $1000 and the customer's copay is $200. The drug company can give the customer a $200 coupon to recover their copay and then raise the price of the drug to $1200. They've basically shifted the price from the customer (who decides whether or not to get the drug and is probably very sensitive to price) to the insurer. They make the same profit, but can probably sell to a lot more customers because it's "free". While they're at it, they could raise the price to $1500 or $2000, and it's still free to the customer.

I think this is a corrupt practice and it's crazy that it's even legal, but it's just one small part of the complexity and perverse incentives of our health care system.

It doesn't work like that unless you're the only drug in class. If there are alternatives, then you'll get kicked off the formulary for a 20% price increase.

I don't hear a lot of complaints about medicare not covering important things (but I only have limited exposure to that), and I assume a US single payer system would essentially be Medicare for all. I do hear complaints about Medicare not paying providers enough, and a lack of available providers.

A rational method of rationing care seems preferable to the current byzantine methods. My (likely naive) hope would be that spending the same amount of money on healthcare, but with fewer parties involved would provide more and better healthcare. At least we haven't reached the point where the government encourages smoking to decrease long term healthcare costs.

Fun fact: A lot of the original Star Trek screenplays were written with [tech] everywhere and the science writers came in and tried to right some jargon that was believable.

In regards to health care, it's a mess. I spent years working in the industry and it's truly a little frightening. I've been in other country's systems before and recently put together a writeup on it:

http://fightthefuture.org/article/returning-to-america-and-t...

For reference, I pay about ~$200 Australian to my personal insurance, which is a pretty generous plan with lots of extras, basic health care such has visiting a doctor for prescriptions, etc... I haven't paid a dollar for in 3 years, before that I used to pay $20 for convenience of a clinic that was open late and they didn't bill the government for the entire cost, which is common, but almost always a reasonably small fee in the multiples of $20 depending on how long you spend with the doctor. I paid this when I was a government employee, a private employee contracted to the government, and I continued to pay it when I quit to become a freelance developer, my cover has nothing to do with my job and I cannot even fathom why in the most awful circles of hell I would want my health care tied to my job. Hence my trepidation at ever subjecting myself to the American health care system.

I know I might have good options for my therapy in US, but the risks are just too big and depending where you are the monthly expenses only for the insulin analogs might be just way too much in the worst case.

*I'm South African, antiretrovirals are free.

I'm South African, antiretrovirals are free.*

Almost got it right: Drugs elsewhere are cheaper and largely subsidized by USA citizens.

Those drugs cost a fortune to make and the companies make their money in USA https://www.reuters.com/article/us-pharmaceuticals-usa-compa...

https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...

https://www.sciencedaily.com/releases/2008/01/080105140107.h...

First off, that's not sales and marketing expense. It's what accountants called "sales and general administration" which yes, marketing falls into, but so do a number of other items. It's not 100% marketing.

Second, the only reason why a company would spend money on promotion is if the return is >100%. So, if drug companies were to stop all promotion, their profit would actually fall, not go up. So it's not going to reduce the cost of drugs.

Third, I've talked to a number of physicians would appreciate the marketing that drug companies do. They don't have time to keep up on the latest, so a 15 minute chat with a drug rep might save them a lot of time. Of course, they know the marketing is biased, but it at least gives them a sense as to what's out there.

Not necessarily. Advertising is often a negative-sum game. To give a simplified, quasi-hypothetical example, if neither Coke nor Pepsi advertised, they would still have very similar market shares and revenues. But then Pepsi realizes they can spend $1MM advertising to swing $1.25MM of revenue from Coke, and Coke spends $1MM to swing $1.25MM revenue back, and now both companies are $1MM in the hole for no gain. In this case, everyone—Coke, Pepsi, and the consumer—is better off if the government just banned soda advertising. Well, maybe not the ad agencies, TV networks, and celebrity sponsors, but there’s still a net economic loss to society.

Lots of drug advertising is of this useless, competitive type. If no one advertised erection drugs, people would just go to the doctor and take whatever was prescribed to them. But if Cialis blankets the airwaves, they can swing market share from Viagra.

* Correction, by U.S. government (through law).

> Those drugs cost a fortune to make and the companies make their money in USA.

Yes R&D is expensive, but pharma is extremely profitable. Here in the U.S. and abroad.

The blockbuster hepatitis C drug will cost about $900 (around Rs 54,000) in India for a 12-week course of treatment. That would be a fraction of the $84,000 (over Rs 50 lakh) price tag for the same treatment in US.

I'm sure that they wouldn't be that profitable if USA paid $900 for that drug, especially the first few years.

https://www.nytimes.com/2015/02/04/business/sales-of-sovaldi... 140,000 patients in USA and going to 250,000

But the answer is still, yes, there is profitability. Just not as much as with the hyper inflated prices in the US.

In short: Does the extreme cost for drugs in the US cause groundbreaking research to benefit the whole world?

No, same results could be had with way less profit. Money to fund moonshot research is still important though.

Reagents are getting cheaper and better as well.

Yesteryears low hanging fruit costs the same as today's low hanging fruit. They are harder to solve though.

And no, I'm not saying everyone single biotech startup is like this or every single researcher does this. And yes many fail, but that's the cost of doing business and it's something that makes things progress.

That's survivorship bias. Yes, the successful pharma companies are quite profitable, but there are 10 failed companies for every successful one.

I remember reading a paper that said the overall returns for the industry are either single digit or negative.

The big ones buy up the small generic producers and single new drug companies and get slightly bigger.

The ones who can't pass trials fail. That's business, especially in R&D.