nos-trum. pronunciation: \nos'-trum\. noun. Etymology: Latin, neuter of noster our, ours.
1. a medicine of secret composition recommended by its preparer but usually without scientific proof of its effectiveness.
2. a usually questionable remedy or scheme.
See here for more discussion.

Saturday, May 29, 2010

Greece Orders 25% Cut In All Drug Prices: Danish Company Says "Not Us"

Danish drug company that sells an insulin injector system tells Greek government to pound sand--they won't market the device in Greece.

According to Novo Nordisk, the 25% cut puts the price below what it costs to produce, so they will not offer the product in Greece.  Lots of outrage, etc....

But it's important to note that this device is just a convenience (why drive a Chevy if the government will pay for a Mercedes?).  There are many ways to administer insulin; from alternative injectors to just drawing up your own dose from a vial using sterile syringes.

People just want what they want when they want it.

And the company said they will provide another of their insulin products free of charge.  My guess is the alternative insulin is much cheaper, so the company doesn't take as much of a loss.

There is a lesson to be learned here.  On the one hand, we don't want drug companies gouging patients with exorbitant charges.  On the other hand, we don't want new products withdrawn from the market if price controls are too draconian.  Historically, price controls don't work; they didn't work back in the 70's in the US (you remember the 70's?  gas lines, double digit inflation, Desert One, Quaaludes, disco, one-night stands?)

 I don't think the answer is ANOTHER government oversight committee to tell drug companies how much they can charge.  If I was running a drug company, I would be less likely to fund new research if I knew that some agency could regulate the marketing of any new product I might find.

So, what do we do? 

As I've argued several times in this blog, the problem is not that the free market system doesn't work It just hasn't been tried.  When a company produces a new drug, and other countries put price controls on it, but not in the US, this leaves the door open for the manufacturer to increase prices in the US to cover the lower cost abroad.

Ironically, this means US patients pay more so that patients in other countries can have the drug.  If you're a philanthropist, the knowledge that when you pay for your medicine you are also paying for somebody else's, too, can make you feel virtuous.  But at the same time it's perpetuating the disparity in costs.

So the solution is to levy price controls worldwide, or actually let the market determine a fair price by prohibiting countries from trying to shift the cost to others.  The latter would work better.

Doc D

1 comment:

Doc D said...

I've been asked about shortages in the US.
There are a couple of special issues with drug availability. You may have heard about the Tylenol recall; but that was just from the original manufacturer. The generic suppliers are all OK. Forest is having some manufacturing problems with thyroid extract, and there have been some quality control issues with Septra.

Those are the only common medicine shortages I’m aware of. There’s a long list of very uncommon things; I don’t think most people will be using any of them.

And, the list is not any longer than it usually is. (Note: if you saw my post above, drug shortages could become a bigger problem in the future if more governments attempt to levy large price cuts)

One caveat: this doesn’t preclude a local or regional temporary shortage just from failure to anticipate re-supply needs.

If you want to check out the list that FDA maintains on drug shortages go here:

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