California considers selling its own generic prescriptions

[Gormwood]

Calling me an opioid addict, classy.

not at all, maybe you have some sort of medical condition which makes you need to take in fentanyl to have pain relief -- which is what i assumed given your previous comments on kidney failure

Implying fentanyl impairs my thinking. Still classy. And no, I'm not on any opioids. Way to go for a cheap shot.

[Great Minarchistan]

not at all, maybe you have some sort of medical condition which makes you need to take in fentanyl to have pain relief -- which is what i assumed given your previous comments on kidney failure

Implying fentanyl impairs my thinking. Still classy. And no, I'm not on any opioids. Way to go for a cheap shot.

fentanyl -is- known to impair thinking, but regardless i want to say im fortunate for you not having to use opioids

[Nobel Hobos 2]

So is the state going to be selling their own drugs on the open market in pharmacies?

Because that sounds an awful lot like dumping to me...

It would be dumping if the state sold at cost price. Other distributers of the same drug would be unable to make any profit and would abandon that drug.

I presume the state pharma will mark it up a sensible amount (50 to 100% of cost) if for no other reason than they can. Make some money.

[Klorgia1]

This is a state-sponsored way to help save lives while keeping a free-market economy. I love it.

If they can keep this up while atleast breaking roughly even, then I think this could be the path forward for a state-wide way to cut healthcare costs until the Federal Government steps up (and in).

[Ifreann]

And that makes what difference to the government being able to dictate what products are manufactured?

Has Glock gone out of business because the US Government buys Beretta handguns instead?

Does it matter? Does the government get to control Beretta's spending if Glock does go out of business?

You said the GOP would be able to shut down the production of morning after pills. Explain to me how the government gets to make that kind of decision for a private company they buy from.

[Rojava Free State]

Has Glock gone out of business because the US Government buys Beretta handguns instead?

Does it matter? Does the government get to control Beretta's spending if Glock does go out of business?

You said the GOP would be able to shut down the production of morning after pills. Explain to me how the government gets to make that kind of decision for a private company they buy from.

How can the government stop the production of morning after pills? What weird authoritarian future is that?

[The Two Jerseys]

Has Glock gone out of business because the US Government buys Beretta handguns instead?

Does it matter? Does the government get to control Beretta's spending if Glock does go out of business?

You said the GOP would be able to shut down the production of morning after pills. Explain to me how the government gets to make that kind of decision for a private company they buy from.

Because the only generic drug manufacturer left is the one with the government contract, since you already shut down the competition with unfair trade practices.

Now guess how many morning after pills that company is going to make when the GOP-led government says "we're not buying any more morning after pills"?

[Nobel Hobos 2]

This is a state-sponsored way to help save lives while keeping a free-market economy. I love it.

Welcome to the Public Option … this is what Progressive Democrats wanted for the health-care exchanges of Obamacare.

If they can keep this up while atleast breaking roughly even, then I think this could be the path forward for a state-wide way to cut healthcare costs until the Federal Government steps up (and in).

They should easily break even. Unless the commercial generics have every pharma factory in their pockets (can't be, they're all around the world).

[Vetalia]

What I am wondering is why, if generic manufacturers are available, are health systems paying so much to buy these generic drugs? The only thing I can think of is corruption in purchasing that leads them to buy name-brand drugs at elevated prices...it's absurd to me that insulin, of all things, would increase in price 10X over the past few decades despite no significant increase in manufacturing costs. California contracting to produce these generic drugs at reasonable prices will be a powerful way to stop this kind of extortion, which it really is in the cruelest and most depraved sense.

I also applaud the efforts of the CivicaRx partnership; it's really a great idea for philanthropic organizations to get involved with supplying these drugs and I can see a major role for them in spearheading the development of new drugs as well. I would certainly contribute to a charitable organization designed to develop new antibiotics and other treatments neglected by for-profit pharmaceutical corporations with the sole purpose of releasing the patents to be used by generic drug manufacturers.

[Nobel Hobos 2]

Does it matter? Does the government get to control Beretta's spending if Glock does go out of business?

You said the GOP would be able to shut down the production of morning after pills. Explain to me how the government gets to make that kind of decision for a private company they buy from.

Because the only generic drug manufacturer left is the one with the government contract, since you already shut down the competition with unfair trade practices.

1. What's unfair about government doing exactly what commercial generic companies do already?
2. Why would the government generic price drugs so low the commercials are driven out?

Now guess how many morning after pills that company is going to make when the GOP-led government says "we're not buying any more morning after pills"?

More fearmongering. It's a state program, and even if it was nationwide there are still foreign manufacturers to get the morning after pills from.
Also, GOP government in Cali lol

[Salandriagado]

Yeah, that's not a thing. Once the development done, drug sales are essentially pure profit, so it's worthwhile at basically any price level. The actual manufacturing costs of most drugs are tiny: the cost is all in the R&D, which has already happened by the time the question comes up.

You're overlooking one important thing though: new drugs are patented years before they reach the market, and that reduces the amount of time they have to recoup those R&D costs before they lose their monopoly, so they have to charge more for it to make up for that lost time.

You say that as if monopolies are the only way to make a profit.

[Salandriagado]

Yeah, that's not a thing. Once the development done, drug sales are essentially pure profit, so it's worthwhile at basically any price level. The actual manufacturing costs of most drugs are tiny: the cost is all in the R&D, which has already happened by the time the question comes up.

Bullshit.

Drugs don't just happen, they're made. People need to be paid to make them. For any given dosage of any given drug, some amount of labor went into making them. If a company can sell a lot of doses, the cost per dose is small. But drugs to treat rare diseases are made in small batches, so the labor cost per dose is high. It's a persistent problem. Is there gouging in there as well? You're damn right there is! But it's not all gouging, it's the cost of what amounts to artisanal work.

Drugs are made of stuff. In the end, sure, it's all just oil, but in the end, your phone is just sand, a little oil, a trace of gold, and a few other metals. Pharma companies start with stuff equivalent to integrated circuits: sophisticated products in their own right. Many of them are cheap. Some are not; it's the same difference as between memory and CPUs. Drugs that are made from expensive starting materials cost more; it's why "biologics" are so expensive; making them does cost thousands of dollars a shot with current technology.

Finally, complying with FDA regs for purity and safety costs. Again, the more stuff a company can make, the less the cost per dose. But it's not free, not by a long shot.

This is also a problem for the generics industry: getting a drug factory approved for operation and keeping it that way is a huge cost, and it keeps people from making generic drugs. Which is what allows the gouging in the first place. Drug regs are always a tradeoff between costs and risks; changing the regs is probably desirable, but doing so without getting more people killed isn't easy.

Nope. Manufacturing cost for essentially all drugs is microscopic compared to the sale price.

[Salandriagado]

The obvious solution being to control said prices.

yes because price controls are very effective and will definitely not cause distortions since they aren't applied on a case by case basis, very good logic right there

Well, yes, they are. See, for example, the UK higher education system.

[Nobel Hobos 2]

Edit: made no sense out of context

[Nobel Hobos 2]

Nope. Manufacturing cost for essentially all drugs is microscopic compared to the sale price.

I thought that too, but apparently some niche drugs are still expensive to manufacture.

[Salandriagado]

Nope. Manufacturing cost for essentially all drugs is microscopic compared to the sale price.

I thought that too, but apparently some niche drugs are still expensive to manufacture.

That's why I said "essentially all".

[Vetalia]

2. Why would the government generic price drugs so low the commercials are driven out?

I can't think of a circumstance in which this would happen; generic drugs have no patent so pretty much anyone with the means to do so can make them. From what I can tell California is going to buy these drugs from the manufacturers at a reasonable rate which undoubtedly leaves profit for the manufacturers; unless California is going to subsidize the cost on its own after purchase there's no way generic drug manufacturers will go out of business.

[Vetalia]

Nope. Manufacturing cost for essentially all drugs is microscopic compared to the sale price.

Absolutely true, in general the price is set to recoup the cost of developing the drug to begin with under a reasonable timeframe and rate of return. Of course, there are then the parasitic types that jack up prices on existing drugs solely because they have the means to do so, which means pure profit.

[The Two Jerseys]

Because the only generic drug manufacturer left is the one with the government contract, since you already shut down the competition with unfair trade practices.

1. What's unfair about government doing exactly what commercial generic companies do already?
2. Why would the government generic price drugs so low the commercials are driven out?

1. Generic drug companies don't rack up massive budget deficits for years on end without fear of going bankrupt like the government does.
2. Because they can.

Now guess how many morning after pills that company is going to make when the GOP-led government says "we're not buying any more morning after pills"?

More fearmongering. It's a state program, and even if it was nationwide there are still foreign manufacturers to get the morning after pills from.
Also, GOP government in Cali lol

Look, another person who didn't actually read the post chain!

[Nobel Hobos 2]

1. What's unfair about government doing exactly what commercial generic companies do already?
2. Why would the government generic price drugs so low the commercials are driven out?

1. Generic drug companies don't rack up massive budget deficits for years on end without fear of going bankrupt like the government does.
2. Because they can.

1. The government in California doesn't rack up massive budget deficits.
2. Why would they, when it would cost money to sell below cost. Apart from being bad guy government that is?

[The Two Jerseys]

You're overlooking one important thing though: new drugs are patented years before they reach the market, and that reduces the amount of time they have to recoup those R&D costs before they lose their monopoly, so they have to charge more for it to make up for that lost time.

You say that as if monopolies are the only way to make a profit.

They are when you spend X dollars to develop a product, spend Y dollars to produce that product, and have Z years to make X+Y dollars before your competitors can start selling an identical product and only have to make Y dollars to generate a profit.

[Bear Stearns]

Under the plan, the state would contract with one or more generic drug companies

This is why this will not work.

[The New California Republic]

What I am wondering is why, if generic manufacturers are available, are health systems paying so much to buy these generic drugs? The only thing I can think of is corruption in purchasing that leads them to buy name-brand drugs at elevated prices...it's absurd to me that insulin, of all things, would increase in price 10X over the past few decades despite no significant increase in manufacturing costs. California contracting to produce these generic drugs at reasonable prices will be a powerful way to stop this kind of extortion, which it really is in the cruelest and most depraved sense.

I also applaud the efforts of the CivicaRx partnership; it's really a great idea for philanthropic organizations to get involved with supplying these drugs and I can see a major role for them in spearheading the development of new drugs as well. I would certainly contribute to a charitable organization designed to develop new antibiotics and other treatments neglected by for-profit pharmaceutical corporations with the sole purpose of releasing the patents to be used by generic drug manufacturers.

Here in the UK the pharmaceutical companies often add something that is low cost to the generic drug to make it seem different to the consumer, and to complete the illusion the company label it as something else and then jacks up the price. The most common example is the addition of caffeine to paracetamol, which then is put on sale for a much higher price, which is far above and beyond what the cost of the additional ingredient is.

[Nobel Hobos 2]

You say that as if monopolies are the only way to make a profit.

They are when you spend X dollars to develop a product, spend Y dollars to produce that product, and have Z years to make X+Y dollars before your competitors can start selling an identical product and only have to make Y dollars to generate a profit.

You want to ban generics outright. So the company that used to hold the patent can continue to get full profit as before.

Is that right?

Under the plan, the state would contract with one or more generic drug companies

This is why this will not work.

Government Bad. Therefore anything government tries to do Bad.

is that the gist of your objection ?

[Vetalia]

Here in the UK the pharmaceutical companies often add something that is low cost to the generic drug to make it seem different to the consumer, and to complete the illusion the company label it as something else and then jacks up the price. The most common example is the addition of caffeine to paracetamol, which then is put on sale for a much higher price, which is far above and beyond what the cost of the additional ingredient is.

This happens in the States too, but not to that degree, it typically involves pharmaceutical companies developing a new drug that is just slightly different from its predecessor and charging a fortune for it. Paracetemol is sold OTC here as Tylenol and a few dozen other brands, including house brands...if anyone is charging hospitals a premium over the cost of buying a bottle at the local CVS or Wal-Mart that is literally corruption in action.