Back in 2000, when I first moved here, I had some sinus trouble and went to the pharmacy to buy some Claritin. Sure enough they had the same pill I knew from home, but the price was completely different. I don’t remember how much it was exactly, but I do recall that my jaw dropped significantly. How was it possible that the exact same medicine cost so much less here? I wrote it off to some sort of subsidies from the French health care system and let it go at that. Since then, I have noticed that almost any medicine you buy here costs startlingly less than it does in the States. And from what I've gathered, drugs are not subsidized here, though I think there may be price caps. It would be one thing if these were French versions made by different companies, but often they are not. They are the same medicines with the same names made by the same company. So how is it that the same pharmaceutical companies who insist that they are obliged to charge outrageous sums for their products in order to keep on top of research, etc. still find it profitable to sell their products overseas for a fraction of the price? I mean, Schering Plough does not sell Claritin in France for charity. If it were not profitable to sell Claritin here, they wouldn’t do it.
What kind of price difference are we talking here? Today I went to the pharmacy to see what Claritin sells for these days. A package of 15 pills containing 10 mg of the active ingredient, Loratadine, costs 5.54 euros here in the suburbs of Paris, or 36 euro cents per tablet. A package of 20 of the same pills costs $18.99 at Walgreens online, or $.95 per tablet. That’s almost three times as much (OK, if you want to take the exchange rate into account, it’s about two times as much, but that’s still quite a mark-up and besides, if you live in euros they have the same impact on your wallet as dollars). Interestingly, when I looked around the Internet I stumbled on an article in the New York Times Magazine (“The Claritin Effect, Prescription for Profit,” March 11, 2001), that mentions this international price difference on the first page of an 11-page investigation into the machinations of Schering Plough in its quest to get this expensive, and not particularly effective, pill to market. What’s more, it seems that the price of Claritin has actually dropped in recent years; another NYT article shows that when it went over the counter in 2003 the price fell from $3 to $1 per pill (“Nothing to Sneeze At,” May 7, 2003). The author of the article seemed to think this was a great savings to consumers, which it was, but when you realize that overseas consumers are paying a third of that “low” price, the savings doesn’t seem that great.
So here’s my question: what’s the deal, Schering Plough? How do you justify your prices? Why is it OK to gouge American consumers, when you know you can make a good profit selling at lower prices in Europe? Is it because Americans are so used to sky-high pharmaceutical prices that they just don’t question them?
Let’s hope that new health care bill makes it through the Senate in one piece. It’s time to start questioning.
14 comments:
Free market, greed and health don't mix well usually.
Example: The US.
I've heard the following explanation: because of the prevalence of health insurance companies in the US and their ability to pay, drug companies charge research and development costs to US comsumers only, whereas other countries only pay manufacturing costs.
Now that's interesting...sort of like the argument that we pay huge taxes for the military to keep a huge army because Europe has a small one...I still don't see why Americans should be the one's picking up the tab. The insurance companies might be willing to pay, but they simply pass their costs on to the consumer, so in the end we pay.
Re: David,
You are right - I think that's a major issue, taking health out of the free market. It shouldn't be about money.
Yeah, the whole "the insurance companies pay" is the smoke and mirrors excuse to convince people to pay.
Same thing for the military. But seriously, if the reason they give is "because Europe has a small one" it's pathetic.
-First, Europe doesn't have a small army and could defend itself from pretty much any country (except the US...)
-The real reason is that the military-industrial complex is a major part of the US economy and the monster needs to be fed constantly, hence the fact that the US has been constantly at war (or involved in military operations) one way or another since WW2. It's not to keep anybody safe (neither Americans nor the rest of the world), it's to keep the industry powerful.
My understand is the process goes something like this.
If you have a prescription you get reimbursed by the state. The state doesn't want to pay to much so it negociate something like "lower your price or it will not be reimbursed" The state seems to have some negociating power there. Medication that are no longer reimbursed have their prise rising.
That make sense. The state has some sort of say in keeping prices reasonable. So Schering Plough is obliged to keep prices down in France. But even with regulation, they are making a profit, or they just wouldn't bother.
Medication that is not reimbursed is most of the time the cheap over the counter one, expensive medication is always reimbursed.
If it's cheaper in France and crazy expensive in the US, because in France the state decides the price as well as good all competition between companies (and as Margie said, the pharmaceutical company still make profit fine), whereas in the US, the companies decide on the prices with the complicity of insurance companies.
I don't think that the government actually sets the price. I think it negotiates to keep it lower. I've got to do some research on this...
Schering Plough is not the only pharmaceutical firm that sells cheaper in Europe (and other places around the world). It used be explained by indicating that extra monies were needed for research, but none of the major companies have done any significant research in at least 15 to 20 years. It's all about greed and knowing they can get away with it in the US.
I had exactly the same experience when I moved to Paris in 2000. The pharmacist was very apologetic--he'd overlook the fact that I didn't have a French prescription, since I had the box with my American one, but without the Sécu, I'd have to pay full price. Student that I was, I was terrified. Full price turned out to be 49 francs. Less than the $10 co-pay under my American insurance.
I've always been baffled by the price of Claritin here in the States. It wasn't until I began college that I found out that I could buy the generic (Lotradine) at a rate of 60 pills for $9.00. I think that David was spot on when it comes down to it: Greed.
The French State subsidizes the cost of drugs that are sold to the public. Americans pay whatever the big corporations want to charge them, with the governemnt cheering them (the corporations) all the way.
OK, I've finally done some research, something I should have done more of before publishing this post. According to Eco-Santé France, a product of the Institute de Recherche et Documentation en Economie de la Santé, a government based institute (http://www.ecosante.fr/FRANFRA/620.html), the price of any medicine that is reimbursed by the national health insurance is regulated, and prices are fixed by a "convention" which I take to mean an agreement between the company and the government, according to a formula set by the government. So there sounds like could be a negotiation there, but the government does not subsidize. Drugs that are not reimbursed, i.e., over the counter drugs (in France you still have to buy these in a pharmacy) are not controlled, so they can charge whatever they want.
Interestingly, even the non-regulated drugs are still way cheaper than they are in the States, probably because customers are used to the low regulated prices for their prescription medications.
According to an article in Eurohealth (Vol 12, No. 3 2006, "Pharmaceutical Policy in France, A Mosaic of Reforms"), France has the highest level of per-capital spending on pharmaceuticals in Europe (hence the oft-heard comment that France is a nation of hypocondriacs). So clearly, this market is important to pharma companies.
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