Drug Prices Canada-US

January 16, 2004

Responses to and .

In a message dated 1/16/04 1:28:24 AM Eastern Standard Time,

Idol@... writes:

> Let me understand this correctly. US companies sell drugs to US citizens

> at exorbitant prices because they've managed to prevent people from

> bargaining effectively with them, but they sell to Canada at much lower

> prices because Canada bargains better. How does this lead to the idea that

> Canada shouldn't be allowed to sell those drugs to the US at lower prices

> than those same drug companies sell their drugs to people in the US?

It doesn't; when did I ever say that?

The only point I was making was that it isn't a good example of the virtues

of socialism. I chose my wording because I wanted to see what my foot tastes

like. What I should have pointed out, rather, in order not to give the

impression I was a foolish anti-Canadian chauvanist, which I'm not, was that

both

Canadian and American drug companies operate for profit, and Canada only has

socialized health insurance, and in this case, buying power, not socialized

medicine or drug production, and that one can only operate with the

effectiveness it

does because of the other. When I used the word " mooching " I didn't mean

that Canadians themselves are mooches, I meant it as an impersonal reference to

the dynamic that were it not for the shoddy buying power of Americans,

Canadians couldn't get such low prices.

In other words, if Americans acted as group buyers like Canadians, the

overall price would be reduced, but it would settle and an equilibrium between

the

current prices of the US and Canada. To the extent profits would be reduced,

the change would probably reduce the available capital to the drug companies.

And I don't like taste of my foot. I'll choose my words less carelessly next

time.

Chris

_______

,

>In a capitalistic system, a patent is a

>legalized monopoly which shuts down free enterprise

===== Drug patents do not shut down free enterprise. They do not even shut

down competition-- they prevent its arising for the specific product.

Free enterprise is defined by Webster as " the economic doctrine or practice

of permitting private industry to operate with a minimum of control by the

government. "

Therefore, free enterprise remains, because the drug is produced by private

industry, and the only government involvement is the protection of the

intellectual property, and property is one of the two foundations of capitalism.

Furthermore, to say it " shuts down " free enterprise implies that free

enterprise for the product existed before the patent, and does not afterwards.

Assuming you were referring to " competition " when you said " free enterprise, "

there

is no competition for a given drug before it is invented, so the patent

actually prevents competition from arising; it does not s

hut it down.

>Drug companies sell to

>Canada at the reduced prices because the Canadian government does not allow

>the drug companies to exploit their people just because they are a monopoly.

>They still make good profits.

====== " Good " is subjective. If they make less profits than they currently

are, in all liklihood investors will sell their stock and invest in more

profitable stocks, which means less available capital to use, which means less

drug

development.

Obviously, being capitalistic, they wouldn't

>sell their products if they didn't. US consumers pay high prices because

>pharmacia in this country is one of the top spenders on lobbyists in

>Washington who see that their interests are protected at the public's

>expense.

=======Yes, but what I'm saying is that Canada's low prices are in part made

available by America's high prices. If America used the same group buying

power Canada did (and I fully support voluntary associations of group buyers),

then the price settled at, I would expect to fall at an equilibrium between the

two prices. So, what I'm saying is that

1)Canada's effective buying power is due not only to its " socialism " (more

accurately called " group bargaining power " or something), but in part due to the

high American prices

and

2) The for-profit industry in America (and Canada) makes that quasi-socialist

buying power possible by making the drugs in the first place

> As far as price controls, the US plays similar games on imports from other

>countries, they are usually tariffs to raise prices of foreign goods giving

>advantage to domestic corporations. Another example is states regulating

>energy fuels. There are a lot of states who pay less for heating fuels

>produced in Texas, than Texans pay.

=====I know this, and I condemn it, just as I commend Canada's legal gun

ownership. I realize I came off as " anti-Canada " but that's because I chose

poor

wording.

> So the result - " noble " US is going to give them 10 billion in " aid " and

>is pressing other countries to give their share. Which in other words

>means, the American taxpayer and whoever else buys into this mission of

>President Bush, will pay the drug companies exhorbitant prices to give their

>drugs to South Africa. South Africa will not get 10 billion+ dollars, they

>will get drugs probably not even worth 1 billion, that will have modest

>affect on their problem. The drug companies will laugh all the way to the

>bank and the American taxpayer will think South Africa should be internally

>grateful. It's called scam.

=======I'm against it as you are; I never said the US or its drug companies

was " noble " ; and, finally, I would point out that this is a gross distortion of

markets and has nothing to do with capitalism or liberal economics, and

everything to do with, oh, say, mercantilism.

>>You must be buying them from the government then, no?

> Not government buyers in Canada - just government representing the best

>interests of their people and not allowing American corporations to extort

>high prices. Those prices are so much lower than what Americans pay that

>Canadian pharmacies have been selling those drugs on line back to Americans

>at cheaper prices than they can buy them here, and making a profit doing it.

>The drugs companies are very mad about that and have threatened to not sell

>to Canada if that is not stopped. It's called " free enterprise " system.

======Price controls *isn't* part of free enterprise, but pooling resources

together voluntarily to affect group buying power *is*. It's something done in

the US as well as Canada for other products, though not enough.

>s nothing to do with the lower prices

>in Canada. That is BS public relations put out by drug companies. That is

>all it is. Again, drug companies only sell when they can make a profit and

>they get the highest prices they possibly can. Canada is regulating just as

>the US should be doing. It is capitalism at work - not socialism.

======Is Canada using price controls or is it using group buying power? If

it's using price controls, calling that capitalism is absurd. It isn't really

socialism either, but if you have to call it one or the other, it's socialism.

=======In anycase, drug companies need to maintain a certain profit margin

to maintain their level of investment. If their revenue declines in an area

where they have less bargaining power (Canada) they must increase it where they

can where they have more bargaining power (US) in order to compensate and

prevent profits from falling. Otherwise, they'd lose investment.

> I thought the high military spending that went on in the 80's was not to

>keep the USSR in check. Rather, Reagan intended to bankrupt them as they

>tried to keep up with us so to keep us in check. And it worked.

=====Agreed.

> > But everyone else blames Canada, why can't I!

>Everyone else does not blame Canada. There are a number of us who realise

>there's a lot more to the story.

======That was a joke. It referred to the earlier discussion we had about

irrationally blaming Canada ala South Park.

Chris

January 16, 2004

In a message dated 1/16/04 11:25:58 AM Eastern Standard Time,

mhysmith@... writes:

> so the need for collective bargaining to balance power and do that is

> necessary. It's really a counter balance to the bad aspects of capitalism.

,

I agree with collective bargaining, and there's nothing contradictory about

collective bargaining to capitalism.

> As far as this leading to Canada to not be allowed to sell those drugs,

> that

> is a point for good argument. In a free market system, they most certainly

> should be allowed to sell. But " free market " is really an ideal, not a

> reality of how the system works. The shoddy buying power of Americans

> doesn't make that much difference. In economics, supply and demand will

> meet at points relative to profit margins.

I'm not sure what you mean. Supply and demand meet at an equilibrium

dependent on the number of suppliers and amount supplied and the quantitative

demand

for a product. I'm not sure what that has to do with products, except in the

sense that a higher profit margin would induce greater supply-- but that would

have the effect of lowering the price.

What I am trying to say, is that

> a business will supply and sell at prices matching demand (Canada's

> individual prices or collective group prices) as long as there is profit in

> gross margins as those will contribute to reduction of overhead expenses

> which include the phenonomal salaries the officers make. So even if you

> begin regulating prices in the US, the drug companies will continue to do

> what they do as long as the net profits in total justify their investment

> rates of return.

I agree. However, if the profit margins fall, that will make other

industries more appealing to invest in, so you might witness a massive

withdrawal of

capital from drug companies. I wouldn't have much sympathy for them myself,

since I don't really value their presence a whole lot, but it would undermine

the

point of lowering the prices, since it would decrease the rate of production

of future drugs.

If you study those rates of return, they are exhorbitant

> which indicates that they have a long way to go in reduction before the

> corporations would cease to invest and supply products.

That's true, but since their stocks are sold publicly and subject to

speculation, you don't have a constant amount of invested capital.

What actually

> happens as profits drop, is that companies get more efficient. Drug

> companies spend tremendous dollars in Washington on lobbyists and tremendous

> dollars in marketing. Those most likely would the areas first cut to

> maintain profits if gross profit margins are reduced by price reductions, so

> to maintain as much available capital for reinvestment. Everyone would

> probably be better off for such a process to start occurring.

If you just established a system that respected markets, you wouldn't have

that problem either.

Chris

January 16, 2004

,

> That's not true, the drug companies just don't make such enormous profits

> in Canada as they do at home in the US. They're not giving them away! I'm

> sure they still make a healthy profit!

What *you* consider " healthy " might not be what a speculative investor

considers healthy. Just because you believe a price is " just " doesn't mean a

supplier is going to supply it at that price. I'm not expressing some sort of

sympathy for the " poverty " that drug companies are being forced into. I'm

recognizing their existence as self-interested corporations with incentives to

maximize profits, and predicting their behavior based on that. If US had the

same

bargaining power as Canada, doubtlessly Canada's price would increase. To the

extent profits drop, they're going to lose some capital. To the extent they

do, you might see a reduction in drug production.

> >You must be buying {drugs} from the government then, no?

>

> No. Pharmacists buy them from the drug companies.

So then there are price caps?

> Prices for anything are usually " what the market will bear " . Maybe there

> is some protectionism of US drugs to keep the price higher at home? Also

> there are trade agreements between countries, maybe these have an impact.

> We'll sell you cheap lumber if you sell us cheap drugs.......

I don't think so. NAFTA primarily functions to eliminate tarrifs and " trade

barriers " like environmental laws. Actually, it doesn't even do that, it just

provides an institutional framework in which to sue the violating country.

> No, we just have one medical card which covers us. You guys have to

> choose between a multidue of credit cards, cash, or a cheque (ha ha) Sorry,

I

> don't understand the question unless you mean that we usually have one GP, and

> he can refer us to specialists. We can get a second opinion if we like.

Actually, most of us have insurance and pay tiny fractions of what the

medical care cost is. What I'm referring to is choice of *doctor*. I can go

wherever I want to whoever I want. I can see a holistic doctor that practices

cranial osteopathy and prescribes raw meat, I can see some quack MD at a

hospital,

or I can see a chiropracter, all covered by my insurance. I can go to a

different doctor whenever I feel like it if I don't feel like she or he is

providing me with the best care, and can choose between dozens of doctors within

reasonable driving distance. Do you have that kind of choice?

> >Do you recall the Soviet Union? Cold War? Etc?

>

> No, I'm not old enough :-)

> I agree that the USSR had to be kept in check. They were a threat to the

> whole world, especially the US.

What I was saying is that a lot of folks who exalt the quasi-socialism of

Canada and Europe blame us for huge military expenditures and point to these

gov'ts as good examples. Now, I'm against big military expenditures, and I

oppose

nearly every military venture my country has ever made. However, this sort

of blame is fundamentally illogical, because the vast majority of the supposed

military expenditures we make are actually past military expenditures that are

part of the national debt that went into WWII and the Cold War. Well, yeah,

that's a lot of money. But what kind of condition would Europe have been in

had we not made those expenditures?

> >But everyone else blames Canada, why can't I! :-)

>

> According to the media Canada's responsible for:

>

> All the cold weather (but only in the winter)

> The power outage in the summer

> Mad Cow disease in the US

> Terrorists who get into the US (even though they also have to go through US

> borders)

>

> According to Canada is also responsible for:

>

> The high cost of drugs in the US

> The Cold War, ergo the high cost of US Military spending

>

> BUT it's a nice place to visit, you probably won't get shot, and our dollar

> is lower ;-)

Yeah, but I can't buy beer after 10 O'clock.

Chris

January 16, 2004

Judith,

I'm not conflicting with what you are saying. Rather, I am saying that the

development of drugs is actually more outside the capitalistic system and

most is not done by the drug companies, nor financed by them. It is rather

the federal government that pays for it through grants, and charitable

organizations, and endowments. In theory, federal money is public tax

dollars - this is course is a bit more complicated. This investment by the

government into research is a modification to the capitalistic system, not

pure capitalism wherein the government would be uninvolved in free markets,

and research and development of new products. The drug industry is not the

only industry wherein this occurs but it is one of the biggest reapers.

To say drug company's pay for the research and technological discoveries,

and pay for development is a gross distortion of the reality of how our

system works. This delusion is commonly used to justify the high prices

they charge and the exhorbitant profits they make. Reality could actually be

argued that since the public pays for the research, they have more right to

more reasonable prices being charged. In our system, academic universities

are the training grounds for the labor market. They were not intended to be

profit businesses themselves but rather support to our economic system and

corporations. They actually could not capitalize on the drugs and

discoveries they made until 1982 when the federal government passed laws

allowing them too. Thus joint ventures developed between universities and

drug companies.

Most all the academic institutions receive tremendous funding from federal

and state government just for operation. Professors - our intellectuals, top

scientists, ideally in our system, had what was known as academic freedom in

the universities. This is why the tenure system evolved which was to protect

them from capitalistic interests. With the cholesterol drugs, this funding

to unviersities and the drugs company's close involvement with politicians

in Washington was a significant factor in the lipid hypothesis being written

as law. Academic freedom to stop or challenge this was shut down by the

control of federal funding to any scientists who protested it. This is

contrary to free markets, it is contrary to freedom of speech and democracy.

It is contrary to the checks and balances that theoritically, our system

works on.

Not all of the anti supplement stuff comes from drug companies. Not all

that says they are great for us comes from independent scientists.

Supplement manufacturers do the same thing that drug companies do - strive

to make profits and in that process, distort info to promote their products.

Of course they are not as big and powerful as the drug companies but they

still, are capitalists. You have to weed through a tremendous amount of very

subjective information on all pills and health issues to try and find those

scientists out there that are trying to express intellectual freedom for its

sake and not the sake of profit.

RE: Drug Prices Canada-US

[snip]

Actually, it is very misleading to state the " for-profit " system creates

drugs. That implies research is done with private funding. Actually, the

technology and most drugs are created in academic universities, paid for

by

public tax money. Drug companies do the developing - a fraction of what

the

research costs.

_** The for profit system does create drugs. That is the only reason the

drug companies make drugs - for huge profit!

** Excellent case in point is the cholesterol lowering drugs. Before all

the hype started about high cholesterol a normal reading was about 300.

Then

they did their fear mongering and screamed from the rooftops that high

cholesterol caused heart attacks. " Take these drugs! " they screamed. Avoid

a

heart attack! " And people did. Seeing how successful their " wonder " drug

was

the drug companies got the Establishment to lower the numbers. Billions of

dollars in profit per year. " It's working! " they screamed. " Lower is

better. " And they lowered the numbers. More billions of dollars in profit

as

lower numbers meant that more people had to take their dastardly poisons

for

the rest of their lives.

** Never mind that the drugs cause all manner of other problems, suicide,

stroke, death from violence (includes accidents) and a general, overall

feeling of malaise. But the statins DID prevent heart attacks. Again, no

matter that in almost every test there was as much or more overall

mortality

than in the control groups.

** And we still hear it every day. " Take your cholesterol meds! Don't eat

any eggs, butter or red meat. " Now they want to give cholesterol lowering

drugs to children.

** Profit gouging at its worst!

** But good news is at hand. More and more eateries are advertising

" low-carb " meals. Fast foods joints, (at least in our area) yes. But it is

a

start. The down side is that we will end up with as much low-carb junk

food

as we now have low-fat junk food.

I expect that it won't be long and the Establishment, seeing they cannot

beat them will join them. Then they will try to pretend that the murderous

lipid hypothesis never existed.

In the 1970s the heart attack rate really went down. The Establishment

will

not acknowledge that have any inkling of why. My theory is that it was

early

1970s when Atkins wrote his first book. And it was the 1970s when Linus

ing with his comments on Vitamin C and the Schute Brothers of Canada

and

their comments on Vitamin E. People were eating low carb and maxing out on

Cs and Es. The hearts of the people said, " Hey! We love this! It's

working! "

It worked so well that we periodically see articles in the mainstream

press

about how dangerous it is to take more than the RDA of Cs and Es. The

drug

companies fighting back.

Then about 1981 the low-fat garbage hit the fan and out-shouted the good

stuff and the heart attack rate went right back up and beyond what it had

been. And it's still climbing, along with diabetes, cancer and a host of

other maladies caused by the malnutrition of the low-fat mantra.

Enough of my ranting.

Judith Alta

January 16, 2004

,

I do not disagree with you except in one area.

The drug companies do pour tremendous sums of money into development and

testing of drugs at universities. They do it because people believe that

studies from universities are accurate and reliable.

The drug companies also pay large sums to top scientists to sign articles

that paint glowing pictures of drugs. And the scientist may never have seen

the article or the studies it refers to.

I'll see if I can find some links.

Judith Alta

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