> Does it increase the number, or does it just reallocate customers from one company to another?
The advertising is typically done by companies with a patent, where the competition is an existing generic with no real incentive to advertise, and a much smaller profit margin (leaving less for future R&D).
> And I'll repeat my question - how high do drug prices have to get, before further increases can no longer be justified because some scrap of the revenue goes towards R&D?
The premise of the patent system is that the customer decides this. You have a monopoly on the thing that wouldn't exist if you hadn't put in the money to research it, then the customer chooses whether that's worth your price over the alternatives. Without your research your option wouldn't exist, so the customer can't be worse off with it as a (temporarily) expensive alternative than the status quo which they still have the option to choose.
This is completely broken by low deductible insurance, because now the patient wants the insurance company to pay infinity dollars for only a small marginal benefit, and the drug company is happy to charge that much, and the insurance company gets flack for denying coverage.
But how does Medicare fix it, since it's still low/zero deductible insurance? There is no "negotiate prices" with single payer, it's just regulating prices. Which you could do regardless, but the whole point of the patent system is to let the market set prices so that the things most important to people get funded instead of the things most important to lobbyists.
If you're going to regulate prices you might as well get rid of the patent system and replace it with X prizes or something like that. And then you no longer have high drug prices even with private insurance, but you are also effectively having the government choosing what research gets done rather than the market, and suffer the consequences when they decide to divert the money to something else.
> You have a monopoly on the thing that wouldn't exist if you hadn't put in the money to research it,
My question was how expensive would drugs have to get before we could stop claiming they wouldn't exist otherwise. Is your answer infinity dollars?
> There is no "negotiate prices" with single payer, it's just regulating prices.
There's no "negotiate prices" with a single company having a patent/license to manufacture the drug either. Yet you were happy to count that under "market working as it should", but when people join together to bargain collectively (in the form of government), then the market is broken. How curious that the Market is only said to work when corporations have all the advantages and consumers have none.
> My question was how expensive would drugs have to get before we could stop claiming they wouldn't exist otherwise. Is your answer infinity dollars?
My answer is, the amount that it's worth over the status quo which you still have the option to choose instead.
> There's no "negotiate prices" with a single company having a patent/license to manufacture the drug either.
Sure there is, because there are other drugs. The fact that they're not as good is what makes the patented one worth more than them, but it's only worth as much as it's worth, which is not an infinite amount.
> Yet you were happy to count that under "market working as it should", but when people join together to bargain collectively (in the form of government), then the market is broken.
It's not collective bargaining in this case because the government is representing both sides of the table. On the one hand you have cancer patients who don't want to die even if it costs a million dollars, on the other hand you have taxpayers who don't want to pay a million dollars for someone else's treatment. It's an inherent conflict of interest.
You're not negotiating with drug companies to buy an existing drug here, you're negotiating with drug companies to decide what their incentive to research future drugs will be. "Pay less money" is what the taxpayer wants but not the cancer patient. The only way to make the conflict go away is to align who pays with who receives treatment, so that you decide yourself how much you're willing to pay, instead of someone whose incentive is to let you die so they don't have to pay as much.
> My answer is, the amount that it's worth over the status quo which you still have the option to choose instead.
You are justifying high drug prices by saying the drugs wouldn't exist otherwise, yet offer no proof or reasoning the drugs really wouldn't exist otherwise. No matter how high drug prices would get, or how little of that money would go back into R&D, you'd still say "the drugs wouldn't exist otherwise".
> It's not collective bargaining in this case because the government is representing both sides of the table.
Exactly like insurance companies represent both sides - the people who need the drugs, and the larger pool paying for insurance. If you don't like the government's version of health insurance, you can always get additional insurance, or buy the treatment individually - government-provided healthcare doesn't mean private options become illegal.
> You are justifying high drug prices by saying the drugs wouldn't exist otherwise, yet offer no proof or reasoning the drugs really wouldn't exist otherwise.
That is the basic premise behind the patent system.
The drug didn't exist before. Someone has to pay to come up with it, and also pay for the drug trials to establish that it works. So there needs to be some revenue stream to cover the high costs, above the one you get by waiting for someone else to do it and then going into competition with them and driving their margins down to yours.
Some drugs might have been discovered anyway, but it's hard to tell which ones. Disentangling preparation and skill and ingenuity from random chance is not an accounting we really know how to do. But the more expensive it is to develop something, the more likely a financial incentive is required in order to develop it.
Meanwhile the low hanging fruit in medicine is mostly gone now, so new discoveries are generally expensive, and the FDA approval process is crazy expensive to the point that that alone is enough to prevent known-beneficial public domain drugs from becoming available in the US when they can't be patented. So new drugs are the sort of thing you wouldn't expect to happen very often without a significant financial incentive.
> No matter how high drug prices would get, or how little of that money would go back into R&D, you'd still say "the drugs wouldn't exist otherwise".
The patent system is terrible. Monopolies are terrible, they're inefficient and expensive, everyone else hates them and they should be avoided whenever possible.
It sometimes leads to awful seeming inefficiencies like someone spending $10M to secure a patent which they then make $10B from. But the way that happens is that there is a drug worth $25B to patients which requires a $10M investment to make viable and no one will pay the $10M up front without receiving anything in return. So what the patent system is really allowing you to do is to pay $10B during the term of the patent in order to get a drug that creates $25B worth of better outcomes for patients over its lifetime, even though the underlying cost was really only $10M, because we had no other way to raise the $10M. That's terrible, but not as terrible as losing the $25B value entirely -- it's still net positive by $15B compared to the alternative.
This makes us want to put on our efficiency hats and figure out how to convert the $15B gain into the $24.990B gain we see should be possible. But then we need some other way to raise original the $10M. One obvious method is to pay for it with taxes. So let's do that -- we'll pay for it with taxes and not patent it and realize the whole gain. If we can get funding for that.
But there's the rub. If we got funding for it, all the way through to commercialization, then it shouldn't have been patented. (And if it was still patented despite 100% public funding then that was the problem.)
It's only when the government fumbles and fails to fund something worthwhile that it leaves the patent system the opportunity to profit like that. But in that case it's legitimately picking up the slack -- we're back to it producing $15B in net value compared to the alternative, because the alternative was that nobody else paid to fund it.
And more commonly it's companies making far smaller profit margins than that because their overall research costs are in the billions as well.
> Exactly like insurance companies represent both sides - the people who need the drugs, and the larger pool paying for insurance.
Yes, precisely, that is why all low-deductible insurance is problematic, whether it's public or private. The underlying problem is that healthcare is too expensive for most people to be able to afford to pay for out of pocket.
The idea that routine healthcare should be an expense so large that it requires filing an insurance claim is a tragedy. How is it worth paying thousands a year in additional insurance premiums (or taxes) to avoid paying what should be hundreds a year by paying for all ordinary healthcare entirely out of pocket?
> If you don't like the government's version of health insurance, you can always get additional insurance, or buy the treatment individually - government-provided healthcare doesn't mean private options become illegal.
Typically the result is effectively equivalent to being prohibited, especially when (as now) they disallow providers from charging Medicare the amount Medicare will pay and then charging the remainder to the patient. Because then the patient wants a treatment that costs 10% more than Medicare will pay, so the provider doesn't accept Medicare and you have to pay the full cost out of pocket, which you can no longer afford because you're required to pay $10,000+ in Medicare taxes every year despite them de facto covering 0% of your treatment cost.
> And before you claim that, because they must survive on the Market, insurance companies act ever so virtuously in defense of the insured, this is false
Nope, private health insurance companies are garbage. We should stop encouraging health insurance plans with <$10,000/year deductibles and then replace them with nothing. Then watch as healthcare costs fall to what people can actually afford, and the outcomes for people without any insurance improve dramatically.
The advertising is typically done by companies with a patent, where the competition is an existing generic with no real incentive to advertise, and a much smaller profit margin (leaving less for future R&D).
> And I'll repeat my question - how high do drug prices have to get, before further increases can no longer be justified because some scrap of the revenue goes towards R&D?
The premise of the patent system is that the customer decides this. You have a monopoly on the thing that wouldn't exist if you hadn't put in the money to research it, then the customer chooses whether that's worth your price over the alternatives. Without your research your option wouldn't exist, so the customer can't be worse off with it as a (temporarily) expensive alternative than the status quo which they still have the option to choose.
This is completely broken by low deductible insurance, because now the patient wants the insurance company to pay infinity dollars for only a small marginal benefit, and the drug company is happy to charge that much, and the insurance company gets flack for denying coverage.
But how does Medicare fix it, since it's still low/zero deductible insurance? There is no "negotiate prices" with single payer, it's just regulating prices. Which you could do regardless, but the whole point of the patent system is to let the market set prices so that the things most important to people get funded instead of the things most important to lobbyists.
If you're going to regulate prices you might as well get rid of the patent system and replace it with X prizes or something like that. And then you no longer have high drug prices even with private insurance, but you are also effectively having the government choosing what research gets done rather than the market, and suffer the consequences when they decide to divert the money to something else.