http://online.wsj.com/article/SB124224500014216399.html

good point- probably true

Someone will pay for medical care. If you think the care under a governmental system will be anywhere close to private care that you now enjoy, you are more than wrong. Some have said that the main reason we haven’t had socialized medicine up to now is that until recently people realized they’d have to take a step-down in care, at least those who could afford it, if medicine were socialized. They are right.

Please don’t couch the discussion in terms of uninsured. I understand that. I am just saying, expect less in the future. Then you won’t be disappointed. If you think you’ll have anything like what you have now, rethink it.

We have often procured one drug strength at a better contract rate, then 1/2 tab it if needed, since many are flat priced for all the strengths (i.e. his statin..Zocor 10, 20, 40, and 80mg all the same $$).
so 1/2 a 40mg tab for a 20mg dose, saves 50% drug cost and gives you the same therapy…

As for recouping the cost of research and testing, that’s a hard one. On the one hand, it seems fair that the drug companies should be making enough profit to cover the development cost of new drugs. On the other hand, the American people are the one’s paying for the research and development of drugs for the entire world as every other country strictly limits the price of drugs. Then there’s the whole idea of advertising, how much money is being spent to advertise Abien CR versus the cost it took to reformulate the original version so that they could side-step the patent expiring? Abien is just one example of the dozens of drugs the pharmaceutical companies do this for . . .

I was aghast, and was concerned that I would be getting an imprecise dosage, and didn’t understand how this altered ANYTHING in the overall cost of the drug, until my local pharmacist told me that ALL dosages of many(/most/all?) medications cost EXACTLY THE SAME on a per-pill basis regardless of the dosage, and that by cutting larger dosages manually, the cost to the insurer was halved.

The cost of the active ingredient in the pill was a small portion of the overall cost of manufacturing the pill, and the profit margins were HUGE on the drugs that were sold, with immense development expenses bringing the profitability back down to earth from the drug company’s perspective.

There is an analogous situation in the pricing of military hardware, and this is where those tales of the $30,000 hammers come in. There will be some critical components that will be grossly under-priced in order to secure the bid, as nobody could compete with the unit price so long as the (let’s say “turbine blades”) are priced at only a dollar apiece. But in order for the vendor to make money on the deal, they throw in assorted items of “support equipment” (hammers, toilet seats) that are hugely overpriced to allow themselves to make a profit on the deal (this is an overly simplified picture of what goes on, but not terribly far off the mark).

In the case of drugs, there is a huge investment in R&D, with a lot of blind alleys that are expensive and have to be paid for some way. That way is via an unjustifiable pricing model that bears no relation to the cost of developing and manufacturing that particular drug, and more toward the overall needs of the business. Hence drug prices vary all over the map, getting whatever the market will bear, with each customer being treated as a separate market. The widespread use of patent protection to build walls of profitability around individual products only contributes to the disconnect between demand and price, by removing competition as a price-regulating mechanism.

The problem in both instances is a badly-designed system of allocating costs from an extensive and expensive R&D system into the few results from that system, with competition being rendered ineffective as a means of capping prices by the firewalls of patent protection and proprietary designs.

I have no solutions to this, certainly wiser and brighter folk than I have grappled with this and failed, and the messy ad-hoc pricing system we have in the pharmaceutical world is the result of this. However, that does not mean that experiments in better accounting methodologies and opening up of the markets to competition should not be pursued.