Archive | October, 2013

Cost of Pharmaceutical Drugs in the US

4 Oct

As pointed out on this site before, a couple of the reasons drugs are so expensive in the US are:

  1. Advertising on television for pharmaceutical drugs is only allowed in the US and New Zealand. The success of the advertising campaigns can be represented by the simple fact that drug companies spend 19 times more money on advertising than they do on research.
  2. There is an arrangement that seems a bit complicated, where drug companies can pay generic manufacturers to delay the release of a generic version that would reduce the cost, so that all of the companies involved can share in the increased cost. This process can be challenged in court, but it must be done on a case by case basis per the Supreme Court.

Solvay Pharmaceutical agreed to pay them $31 million to $42 million annually through 2015 (to generic manufacturers), at which point they could enter the market with generic versions…”

U.S. Drug Prices 3- to 6-Fold Greater Than Other Countries

In addition to these costs, there is a push to prescribe “specialty drugs” to commercially insured patients. The costs of some of these drugs can be staggering if you look at Gattex or Soliris.

Marketing of drugs in the US during 2012 meant that, on average, each American filled an average of 12 prescriptions. Considering that only 60% of Americans take a prescription drug in any given year, it would mean that the people getting prescriptions are getting much more than 12 per year. These customers are the target market for drug advertising, and as you might think, close to 100% of the “seniors” are on prescription medicine.

Herbert Stein’s Law

3 Oct

The father of Ben Stein, Herbert Stein, wrote that “If something cannot go on forever, it will stop”.

If we look at the distribution of wealth in the US, Stein’s Law is at work. Stein’s law could be used as a way to describe why the “American’s Are Not Getting Fatter” as well, or why Detroit went bust.

And, as the Federal government begins to address raising the National Debt limit in the next couple of weeks, it is very much consistent with Stein’s Law that “it’s not really a ceiling if you continue to raise it.”

What is more important to the average Joe, is what’s going to happen to the stock market, and the economy. As the “U.S. Stock Market Moves Further Away From Reality“, below is a chart of the stock market (SPY) over the last 20 years. It looks like another top could be forming.

If Stein’s Law is working on the debt ceiling, it may be working on the stock market as well.