Rationing Health Care - it's a lie!

[GreyICE]

Rate of return does not equal revenue over profit, for crying out loud.

Rate of return is based on the initial investment. Look, it's not hard, if I start a company with 100 dollars, make a revenue of 50 dollars and a net profit of 20 dollars, then turn around and reinvest 10 of those 10 into R&D then I've made a rate of return of 10% on my initial investment. You might even argue that I've made a 20% rate of return, but you're completely missing the point about paying for research I've been making all along.

I even already spelled this out with Pfizer's financials, ffs: http://www.internationalskeptics.com/forums/showpost.php?p=4999191&postcount=288.

You're serious? Your rate of return was done by dividing profit over assets? Why not divide it by net market value or some other amazing number?

For every $1 they take in, $0.15-$0.30 of that is profit. I thought you were honestly misinformed, but the lengths you've gone to spin this is just pathetic. And they're taking that profit from the American consumer. Imagine what it would be if they could do this everywhere. $0.50? Higher? Face it, they're screwing America, and you're complaining that the rest of the places have the nerve to demand lubricant.

 

[Newtons Bit]

You're serious? Your rate of return was done by dividing profit over assets?

Well you give a monkey a calculator, and you might even get something like that.

Profits / Investments.

You could have at least googled "rate of return" before shooting your mouth off. It would have saved you some embarrassment.

In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return, is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment. ROI is usually expressed as a percentage rather than a fraction.

 

[Newtons Bit]

Well you give a monkey a calculator, and you might even get something like that.

...

I thought you were honestly misinformed, but the lengths you've gone to spin this is just pathetic.

You should apologize for that.

 

[GreyICE]

Profits / Investments.

You could have at least googled "rate of return" before shooting your mouth off. It would have saved you some embarrassment.

You could have taken a look at what I posted. It would have saved you spouting off. Again. But you didn't, here we are.

P.S. Monkey. Calculator. Apology? No. Wait, cry about that, it'll distract from the obscene profits PFizer is making off the American people. I haven't seen a good whiplashian outrage in a while,

 

[Newtons Bit]

You could have taken a look at what I posted. It would have saved you spouting off. Again. But you didn't, here we are.

P.S. Monkey. Calculator. Apology? No.

So you're saying that rate of return is not profit / assets?

 

[GreyICE]

You just want them to be a good guy, don't you? Dumping all that money on each dollar into their coffers? You know what they spent on that much vaunted research that you say saves lives? About the same as their profits. That's right. If R&D is such a huge ****ing expense, why is it that they are taking in $50 B, and spending $8B on research? Oh right, because it's an article of faith to you people that big pharma spends soooo much on research. ****, they don't even spend as much as they profit. That's their great life-saving research. They're giving as much money tho their 'shareholders' as they are saving people's lives. That's your vaunted free market. That's your 'crippling costs of research.' $8B.

What the hell is wrong with you that you find arguments like you're spouting the least bit convincing? Seriously, what the ****? Why would anyone look at a company like this and think your pile of misrepresentations was true?

 

[Newtons Bit]

You just want them to be a good guy, don't you? Dumping all that money on each dollar into their coffers? You know what they spent on that much vaunted research that you say saves lives? About the same as their profits. That's right. If R&D is such a huge ****ing expense, why is it that they are taking in $50 B, and spending $8B on research? Oh right, because it's an article of faith to you people that big pharma spends soooo much on research. ****, they don't even spend as much as they profit.

What the hell is wrong with you that you find arguments like you're spouting the least bit convincing?

Pfizer shrunk by it's own reports. It lost 4B in assets, gained 4B in debt. It paid 8.5B in cash dividends and bought back 0.5B of its own stock. So it would have stagnated without paying anything back to its investors.

http://media.pfizer.com/files/annualreport/2008/annual/review2008.pdf

Scroll down to page 5, look for yourself.

Pfizer's not the bad guy. They're not making obscene profits. They're paying a very reasonable rate of return to their investors. They're quite literally liquidating part of their company to do that this year.

Edit: Have you abandoned the rate of return debacle? It's spelled out in black and white in many places on the interwebs (and in my engineering textbook that I just checked).

 

[GreyICE]

Oh right, because it's a tenant of the libertarian philosophy that the best way to save lives is the free market.

I have a pill here. If you don't take it, you will die within the week. How much is it worth? $100? $200? $1,000? How much money do you have?

Oh wait, you say. The free market will create competitors that offer it cheaper. Except that we give them a 20 year monopoly on that pill. So for 20 years, they get to set the price. $5,000 for your life? $10,000? How much is your life worth to you?

No. In exchange for that 20 year monopoly, they have to abide by certain regulations. You have already cried a river in this thread about how horrible it is when people cheat the poor wittle pharmaceutical companies out of their hard-earned (heh) cash. But only Americans seem convinced that it's a good idea to let the free market work one-directionally.

$20,000? If you don't buy the pill, you die. One time offer, you only have one life.

 

[GreyICE]

Pfizer shrunk by it's own reports. It lost 4B in assets, gained 4B in debt. It paid 8.5B in cash dividends and bought back 0.5B of its own stock. So it would have stagnated without paying anything back to its investors.

http://media.pfizer.com/files/annualreport/2008/annual/review2008.pdf

Scroll down to page 5, look for yourself.

Pfizer's not the bad guy. They're not making obscene profits. They're paying a very reasonable rate of return to their investors. They're quite literally liquidating part of their company to do that this year.

They just made the biggest merger in pharmaceutical history, they're now the biggest pharma company in the world. What the hell are they liquidating, the pieces of the two companies that duplicated eachother? And what will this do? Oh right, push CEO profits even higher. They're liquidating part of the combined company... after the largest merger in history? Yes, to preserve investor relations. Err... that's it.

I shed a tear for those poor, little investors in their million dollar yachts.

 

[Newtons Bit]

Oh right, because it's a tenant of the libertarian philosophy that the best way to save lives is the free market.

I have a pill here. If you don't take it, you will die within the week. How much is it worth? $100? $200? $1,000? How much money do you have?

Oh wait, you say. The free market will create competitors that offer it cheaper. Except that we give them a 20 year monopoly on that pill. So for 20 years, they get to set the price. $5,000 for your life? $10,000? How much is your life worth to you?

No. In exchange for that 20 year monopoly, they have to abide by certain regulations. You have already cried a river in this thread about how horrible it is when people cheat the poor wittle pharmaceutical companies out of their hard-earned (heh) cash. But only Americans seem convinced that it's a good idea to let the free market work one-directionally.

$20,000? If you don't buy the pill, you die. One time offer, you only have one life.

No, I've been arguing that countries that set price controls screw over the USA (and other countries who don't have socialized medicine) who don't have price controls. That's what I've been arguing the whole time. It's not fair to the people who live in the USA.

I like it when new medications come online. I don't mind a company making an 8% rate of return for developing their new and awesome innovations. I would definitely be willing to pay a bit more. I don't mind paying someone to develop and create awesome new things. Why? Because new and awesome things improve our lives. Their ability to make a rate of return is the reason why they innovate things that improve our lives.

I do something similar for a living. I create designs that enable other people to construct homes and hospitals and schools. My particular profession owns the right to those designs for quite literally forever (life + 99 years or whatever obscene amount it is now) But why should I charge at all for these designs? The things my profession creates are life-saving (they protect people in earthquakes and hurricanes), they're absolutely necessary for our current society to function the way it does. Should I not get paid for my work?

The argument that I think you're trying to make is that I shouldn't be able to charge what I feel is a reasonable amount for the new and awesome innovations I create solely because they protect peoples lives. If the real-world really worked that way I would quit my job (since I wouldn't be making anything doing it) and spend my days laughing at those who took away my ability to earn a living as they tried to construct new buildings in seismic regions.

In the end, new innovation depends upon people getting something for their work. Some people are okay with the acclaim from their peers. The rest of us prefer cold hard cash.

The entire sub-argument of an argument I made much earlier is: The USA ends up paying more than its fair share of the profit and R&D of new drugs. And I think that this is wrong. I also think price fixing by countries with socialized medicine is wrong and is one of the reasons why Americans pay more for healthcare. No one has disagreed with this point. But I've been bombarded by people exclaiming that, "if only the USA price fixed too, then everyone would be happy!". I think that would stifle innovation.

Call me whatever you like. I at least know what the definition of "Rate of Return" is.

 

[Newtons Bit]

They just made the biggest merger in pharmaceutical history, they're now the biggest pharma company in the world. What the hell are they liquidating, the pieces of the two companies that duplicated eachother? And what will this do? Oh right, push CEO profits even higher. They're liquidating part of the combined company... after the largest merger in history? Yes, to preserve investor relations. Err... that's it.

I shed a tear for those poor, little investors in their million dollar yachts.

Excuse me, I was using the 2008 numbers. If you would actually open up the link I provided you could see for yourself how the company actually shrunk from 2007 to 2008.

 

[Corsair 115]

Canada has a government agency called the Patented Medicines Prices Review Board(PMPRB). This agency regulates the price of all medicine that is still covered under patent (thus there being no competition).

At this point it may be useful to point thread readers to the home page of the PMRB web site. From there one can find pages with more information.

From the site's FAQ page, items that may be of relevance to the discussion:


What is the Patented Medicine Prices Review Board (PMPRB)?

Created in 1987 under the Patent Act as an independent quasi-judicial tribunal, the PMPRB limits the prices set by manufacturers for all patented medicines, new and existing, sold in Canada, under prescription or over the counter, to ensure they are not excessive.


What type of medicine does the PMPRB regulate?

The PMPRB regulates the manufacturers' prices of patented medicines sold in Canada to ensure that they are not excessive. The regulation of the medicine for safety and efficacy is the responsibility of the Department of Health under the Food and Drugs Act and Regulations.

The PMPRB reviews the "factory-gate" price, i.e. the price at which the manufacturer sells the patented medicine to wholesalers, hospitals and pharmacies. The PMPRB does not have jurisdiction over prices charged by wholesalers or retailers nor over pharmacists' professional fees.

The PMPRB regulates the price of each patented drug product, including each strength of each dosage form of a patented medicine. This is normally the level at which Health Canada assigns a Drug Identification Number (DIN).

The PMPRB's jurisdiction includes patented medicines marketed or distributed under voluntary licenses.


What controls exist to ensure that the prices Canadians pay for drugs are reasonable?

In Canada, the prices of patented medicines only are subject to direct price controls through the PMPRB.

To determine if the price of a patented drug sold in Canada is excessive, the PMPRB applies factors set out in the Patent Act and in its price guidelines.

In summary:

• Most new patented drug prices are limited so that the cost of therapy is in the range of the cost of therapy for existing drugs sold in Canada used to treat the same disease;
• Breakthrough drug prices are limited to the median of the prices for the same drugs charged in other specified industrialized countries that are set out in the Patented Medicines Regulations (France, Germany, Italy, Sweden, Switzerland, U.K. and the U.S.).
• Existing patented drug prices cannot increase by more than the Consumer Price Index (CPI);
• In addition, the Canadian prices of patented medicines can never be the highest in the world.

Public drug plans also play a role in drug pricing through the listing of drugs on their respective formularies for purposes of reimbursement.

 

[DC]

we have universal healt coverage and still big Pharma investing alot in research and also still alot lot tax money beeing spend on research.

swiss pharma is doing well and so do the people as they are have acces to healthcare.

 

[ddt]

I originally wasn't going to dignify this was a response, but I think your assumption here is a major part of the problem.

I fully understand that the US health insurance (and government plans) do not force drug companies to lower their prices. Why? Because price controls do not work. If the USA forces price controls then the drug companies will just stop making new drugs because it will cease to be profitable to do so. I do not understand why this concept is so hard to understand. No profits, no incentives.

There is actually an example within the USA. The Vet's administration does negotiate about the drug prices. They pay about half of what Medicare pays.

And let's have a look at those Canadian price controls the Corsair posted:

To determine if the price of a patented drug sold in Canada is excessive, the PMPRB applies factors set out in the Patent Act and in its price guidelines.

In summary:
[*]Most new patented drug prices are limited so that the cost of therapy is in the range of the cost of therapy for existing drugs sold in Canada used to treat the same disease;

This one is meant for "me-too" drugs. There are half a dozen statines on the market, and now a pharma company comes with a seventh one. Then its price must also be the same. Sounds perfectly reasonable to me.

[*]Existing patented drug prices cannot increase by more than the Consumer Price Index (CPI);

I can't for the life see what's unreasonable about this one.

[*]Breakthrough drug prices are limited to the median of the prices for the same drugs charged in other specified industrialized countries that are set out in the Patented Medicines Regulations (France, Germany, Italy, Sweden, Switzerland, U.K. and the U.S.).
[*]In addition, the Canadian prices of patented medicines can never be the highest in the world.

A comparison with other countries. The "median" one implies that there are at least three rich, industrialized countries in the world where the price is lower than in Canada! Apparently, the pharma company is willing to pay even lower prices elsewhere.

If the pharma company is so screwed over, why does it even sell its drugs then at those prices? Let's say Sweden is the lowest on that list. If Sweden is so callous that they force a very low price, why does the pharma company even sell its drugs there? They wouldn't do that if they wouldn't turn a profit, would they? They know it influences their price in Canada, don't they? So they could simply stop selling in Sweden, it's just a market of 8 million people.

Reality is that the pharma companies also knows which country drives the hardest bargain, and which country doesn't bargain. So they adjust their prices accordingly.

It's simply a consequence how the various markets operate. The UHC markets around the world are single-buyer markets, and that single buyer is the government (*), accountable to the people. And the people want fair prices for their drugs. The US market is apparently fragmented. Imagine what the various insurers (private as well as Medicare, Medicaid and Vet) could bargain if they pooled together to negotiate on drug prices!

(*) not all UHC systems work as a single payer system. But I guess all UHC systems have a government agency overlooking the prices of drugs.

 

[Rolfe]

Can I go back to the car purchase analogy?

You know a discount of $4,000 is achieveble, first because that's what's listed in What Car? and second because internet forum chat reveals a number of people who have achieved that or better for the same model. You even know that the car dealer you are going to buy from has offered other people a similar deal.

You go to the dealer and ask the price, and he quotes you the list price. You say fine, here's the cheque. You have exactly the same opportunity to negotiate a deal as the other people, but you choose not to.

Why might that be?

You're telling us that you know that Ford wouldn't be able to afford the development costs of its next new model of you didn't do that.

That is simply ridiculous. In the absence of mugs like you, it may well be that the other people negotiating would find they got a slightly poorer bargain than before, that's all. So that's bad like how? If the USA refuses to stick up for its own sick people the way other countries stick up for theirs, why is that everybody else's fault?

Is Ford really going to do no development work and just keep selling us all 2007-model Focuses for the next 50 years if you don't pay that list price? Ford's viability depends on innovating new designs, and it's naive in the extreme to think a business like that can't cope with this under perfectly normal free-market conditions. Ditto the drug companies.

But are your stated reasons really the true ones? Maybe it's not quite like that.

I ask a few questions, and find out that the boss of the car dealership has been taking your boss to lunch. They're best buddies. And the car dealer has indicated to your boss that all these nice lunches aren't quite free, and actually, what he wants in return is for your boss to tell you not to haggle on the price of your new car. If he does that, then the car dealer will be quids in, and there'll be plenty in the pot for lots of lunches together in the future.

Are you quite sure that isn't closer to what's happening in the US?

Rolfe.

 

[ddt]

No, I've been arguing that countries that set price controls screw over the USA (and other countries who don't have socialized medicine) who don't have price controls. That's what I've been arguing the whole time. It's not fair to the people who live in the USA.

Tell that to your insurance company, that he should bargain harder about the price. Tell it to your Rep. that he should take out the bit out of Medicare plan D about not negotiating on the price.

In the meantime, don't tell us that we're screwing over poor Americans. Our insurers are doing their best to pay a fair price for their drugs. And the fact that those drugs are still sold in the rest of the world is proof that the pharma companies are willing to sell it for that price.

If the US health care sector is willing to drive the prices of drugs down; and if it then turns out that the prices in the rest of the world go up a bit as a consequence of that, you won't hear me complaining.

But stop whining that our governments are doing their bit, when your health care insurer is just plain incompetent at one of the basic rules of capitalism.

I like it when new medications come online. I don't mind a company making an 8% rate of return for developing their new and awesome innovations. I would definitely be willing to pay a bit more. I don't mind paying someone to develop and create awesome new things. Why? Because new and awesome things improve our lives. Their ability to make a rate of return is the reason why they innovate things that improve our lives.

Well, I find 8% RoR quite high. I'm not an economist, but that means that the shareholder expects his investment back in 12, 13 years? I'm much more interested in the revenue over profit. And those 16% in 2008 (a poor year for Pfizer) means that for every 100 dollars of drugs sold, it made 16 dollars profit. Ka-ching. I think both numbers are big.

You haven't given any reaction on the comparison with cars. So I assume you bargain over the price of a car, too. Don't you feel for poor GM? Don't they need your money to develop and create awesome new cars?

Cheap shot to mention GM? Hell, show me one single car company that has those rates of return, or those revenue over profit rates.

I do something similar for a living. I create designs that enable other people to construct homes and hospitals and schools. My particular profession owns the right to those designs for quite literally forever (life + 99 years or whatever obscene amount it is now) But why should I charge at all for these designs? The things my profession creates are life-saving (they protect people in earthquakes and hurricanes), they're absolutely necessary for our current society to function the way it does. Should I not get paid for my work?

Sure you should get paid. But when a school wants such a design, they'll request quotes from you and a couple of your competitors. And maybe then they'll call you and say: we like your proposal better, but your quote is 10,000 higher than one of your competitors. Doesn't ring a bell?

 

[Rolfe]

Taking the car analogy a bit further, you've bought your full-price car, and you then berate others for bargaining for theirs. "Look," you say, "I've subsidised the new model all on my very own, you selfish bastards!"

The others take a closer look at what is going on. They point out that you are allowing, indeed encouraging Ford to advertise and market its cars directly to your children. Who are of course not allowed to drive and will not be the ones making the final purchase decision. But Ford knows all about pester power, and so it's spending a lot of money on TV commercials and free gifts for your children.

The rest of the car buyers don't allow that. Ford is not allowed to aim any marketing strategy at their children. So it actually spends a lot less on advertising to these people.

The others recognise your problem, and although they suspect very strongly that this behaviour on your part has a lot more to do with these not-so-free lunches, they have a suggestion. Just stop Ford spending all that money on kiddie car ads. Is it not possible that simply preventing that spend by the company could save them easily as much as the discount you're not getting?

When you don't even seem to want to consider that, our suspicions about the lunches become a lot stronger.

Rolfe.

 

[Newtons Bit]

Tell that to your insurance company, that he should bargain harder about the price. Tell it to your Rep. that he should take out the bit out of Medicare plan D about not negotiating on the price.

If the insurance companies get together and all decide together that they won't pay their supplier more than X dollars than two things will happen.

1. The CEOs will all go to jail. Collusion is illegal for private companies to do.
2. The price will go back to what it was before hand.

In the meantime, don't tell us that we're screwing over poor Americans. Our insurers are doing their best to pay a fair price for their drugs. And the fact that those drugs are still sold in the rest of the world is proof that the pharma companies are willing to sell it for that price.

If the US health care sector is willing to drive the prices of drugs down; and if it then turns out that the prices in the rest of the world go up a bit as a consequence of that, you won't hear me complaining.

But stop whining that our governments are doing their bit, when your health care insurer is just plain incompetent at one of the basic rules of capitalism.

As I've said a number of times, price fixing is wrong. Just because socialist countries have the ability to do it does not mean that the USA does. We don't. Private insurance companies can't do it (it's illegal) and the federal government won't do it (half of congress believes in free-markets, and most of congress is in the pockets of the drug companies).

Well, I find 8% RoR quite high. I'm not an economist, but that means that the shareholder expects his investment back in 12, 13 years? I'm much more interested in the revenue over profit. And those 16% in 2008 (a poor year for Pfizer) means that for every 100 dollars of drugs sold, it made 16 dollars profit. Ka-ching. I think both numbers are big.

My parents house is giving them a Rate of Return of about 6% from when they bought it in 1993 to now (including the drop in real-estate). You've got to give companies a reason to innovate.

]You haven't given any reaction on the comparison with cars. So I assume you bargain over the price of a car, too. Don't you feel for poor GM? Don't they need your money to develop and create awesome new cars?

Asked and answered. I've already gone over the car analogy.

Cheap shot to mention GM? Hell, show me one single car company that has those rates of return, or those revenue over profit rates.

Take a look at Toyota's Financials.

They had total investment (asset - debt) of 125B in 2008 and a net income of 15.2B. That's a rate of return of 12.2%. They did that that in a world-wide recession. They're not doing nearly as well this year, but they're also not asking for a bail-out because they don't need one.

Please don't assume that just because US car companies are complete crap that every other car company is crap.

And also, before you ask a question like that, do me a favor and google your question. It would save me the trouble of doing your work for you.

Sure you should get paid. But when a school wants such a design, they'll request quotes from you and a couple of your competitors. And maybe then they'll call you and say: we like your proposal better, but your quote is 10,000 higher than one of your competitors. Doesn't ring a bell?

There's a number of companies that currently have patented seismic force resisting systems. They have a product that is vastly superior to public systems, they perform better in earthquakes and are much more likely to survive with minimal damage (thus less money to repair after the earthquake) They're even cheaper (in certain applications) than the systems developed by public researchers.

They still charge a premium above labor and materials of the system.

They took the risk of doing the research. They paid for the research, and I honestly think a little compensation is fair for their risk.

 

[Francesca R]

What the US needs to do is start penalizing Western Europe for fixing prices of drugs. Call it a fair market adjustment if you will. We could start adding tariffs on European goods in the US to even the gap. They screw with our prices, we screw with them financially.

The US is getting legged over by market prices, so lets load up more protectionism. Jesus.

 

[Francesca R]

I didn't say they were legally accountable. They are financially accountable. If they don't provide what their customers want, the customers stop giving them money. That's a rather important accountability for anyone whose goal is to make money.

Rather important yes, but not good enough. I don't want to be confined to the sweetspot where profit-seeking motivation might happen to be aligned with my health requirement. I'll take it, but it's not somewhere to live permanently.