« The Weeds

Drugs! (But not the fun kind)


Sarah, Dara and Matt discuss the the exorbitant cost of prescription drugs and a white paper that looks at the correlation between counties that vote Republican and the number of low and high-skilled immigrants living in those communities. References and further reading: Dylan Scott's piece on the price of prescription drugs mentioned by Sarah The white paper on 'The Political Impact of Immigration: Evidence from the United States'

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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
However, it is just somehow make other countries pay more for checks, ones that silly welcome to another sort of the waves on the box. Tat network to replace it with a fairyland circle appear today. One about prescription, drugs, pricing, The Trump administration rolled out some new proposals on that we're gonna talk about later, but I know it's. This is like a big topic of concern. I mean, I know my friends who work just in politics. They tell me that you know when they look at surveys like what are people worried about? What's bothering people about America today as the economy improves the high costs for prescription drugs is a big issue.
For a lot of people. It's been a concern for a while, but it seems to be getting worse on the business and there's a lot of weird mergers happening that seem to have something to do with prescription drugs and and Sarah Sir, there's a lot about this and some things how hopefully get how was explained like what's the goods what's going, here by wire people like breaking the barbaric yeah. So so, let's just start with kind of like a few basic facts. The United States route keenly as the highest prices for prescription drugs in the world. and you Know- were often talking about literally the exact same pillow- the executive, inject of all the exact same type of chemotherapy- it just costs three four ten times more to purchase it in the United States and a purchase et abroad, so that it is an that's like, though, the list price charged by the pharmaceutical maker, which does come down
and in a very murky way, through different negotiations with insurance companies in these rebates that are there. So it is hard to get great data on what is actually being paid for a drug and what is actually being paid very drug likely varies depending on which health insurance company that you have. That being said, I did hear this kind of leads into the other thing: that's unique about american Healthcare and becoming more unique about american Healthcare is that patients bear a lotta the brunt of those high prices, so one of the things I think that's actually. change, the most, why you, your singing survey data, a lot of it from Keyser Family Foundation that the biggest concern and healthcare it now the price of prescription drugs. Is that
doktor goals, have been rising, really really quickly. Right now, most americans- and this is outside of a bomb care like most people, get in transit work David, deductible above a thousand dollars at this point, which means that they are spending a decent amounts of money that their being confronted with the costs in that wasn't true. Even a decade ago, Adele ago thousand deductibles, were pretty rare. Now they are the most common type of deductible and the employer sponsored market, so you see, you know the prices have been steadily rising and there wasn't really like a big policy Jane. I would say that drug makers, like Martin a rally. A farmer Brophy like figured out some like interesting things. They could do to really jack up prices in the american system, but I think the larger thing happening is that- Caesar deductibles rise. So all of a sudden, we were on the hook for the price of our drugs
and you saw some of these like blockbuster drugs, come on the market that some of them did. They really great things that this drugs Vivaldi cures, Hepatitis C, which is a fantastic innovation and the company that makes it Gilad either they Now I ve got the name of sorrows logically Henry, to tell us there's like did I confused those by big? It is actually the name. It is just even going to make things and the does Toby in future and had made anyways Juliet realize they had an innovative part on their hand in the charter just a lot for that innovation. Unity their thing you see happening because there are no constraints in the american system is high charges for things that are not necessarily that innovative that urges because they may be a little bit better than the last drug, but not you know, curing a disease those previously incurable, so those are kind of like the things that are going on the things that are stressing out
Americans is that we are on the hook for a greater share of our procedures drug costs and, at the same time, you are seeing a rise in these really really expensive blockbuster. Rugs and unlike every other kind, We will have some kind of government unit come in negotiate on behalf of all citizens, sometimes say no to things sometimes say you know what that drug that only a little bit better than last drug we're, not gonna pay whatever price the drug maker is wants to charge for it, we're just not going to cover that drug in United States. You don't have the downward pressure. So you just see drug makers charging what they once and us generally being willing to pay for it, we have insurance, although get pretty stressed out about this costs, bearing in mind that I would say that I'm the audience surrogate for this episode, because I know very little of it, the fact of the matter is that the average weeds was no probably knows more about prescription drugs. Pricing that I do, but it seems like
after the debate around the affordable care act in two thousand and nine two thousand and ten. This was something that people knew was coming right that, like this, was part of the argument for why Healthcare for me to that happened then, was that it was going to like bend the cost curve and improve purchasing power, and all of that jazz. Why hasn't that happened here. So it's worse than I mean. Do you wanna? Do you wanna get into this? Well sure about is no one. Long standing democratic Party proposal has been too in one form or another, impose some kind of price controls on prescription drugs, which is standard practice. in foreign countries, and there's a lot of different views, genes of that kicking around, but one obvious thing of Democrats will pass a big healthcare bell would have been to address right to address the price of prescription drugs because that would have been some That sort of helps all kinds of normal middle class people, but also helps the poor things like that. The Obama
Ministration opted not to do that in the affordable care act. Negotiations and they truck, I would say a shady backroom deal with the bishop and drug industry in which the prescription drugs industry agreed to back legislation on the grounds that more insurance will create more customers for farmer in exchange for a bomb at keeping prescription drugs price controls out of the bill and to the administrations. Credit Obama did a lot of things over the years that sort of had the form of what It was like an immigration. It was like will depart everyone and then we'll get a path to citizenship, or you know well like have racking everywhere and magically a cap and trade bill will emerge. This bar actually stock. Like farmer put a lot of money into advocacy for the affordable CARE act and they they really like pushed for it and then at some future point like the terms of the deal expired and Obama like went back to the well and was like,
should do something that control prescription drugs prices so was, I got it was like a hard nosed political bargaining not like it to be political bargain, but yeah I like this is like a specific thing that happened was likely decided in this comprehensive health reform. Legislation do not address prescription again exit context around that is like if you ask people why that deal was made. They go back to this. the ninety nine days, the names of the people, it's like Harry and the ways of its add that farmer put out during the Clinton CARE debate that was seen as very influential in turning public opinion against the contents, healthcare proposals, and these two seniors talking about me too. it couldn't get their medicine and how terrible things were under Clinton? Care farmer is an incredibly powerful lobby. Did you times at an article about how far more Eu India has been really revving up there
lobbying machine. To prepare for this. The exact jam speech that we're talking about the trump has been preparing on drug prices, and it sometimes of your congressional aid. It would not be a surprise to have a meeting with congressional aids and ten farmer lobbyists that they show up on me, They have a lot of money. If you ve heard- I hear these adds all the time on the radio here. This go boldly campaign that is focused. I you know noting the work that America's biopharmaceutical industry does. They are a very formidable foe and it was basically scene in the eyes of the Obama administration that you couldn't Sue, a health care bell without getting farmer on your side that you would just get hammered too hard and you had to do something to make sure that they didn't produce Mary Louise at this time around. So that's kind of like the context to the deal. Victor. I, the Republican, repeal effort like raise some questions in
mind whether they are actually as powerful. As Democrats thought. Regional Republicans pass their bill through the house with the others. Basically every major health care player so maybe the rules have changed a little bit, but that's kind of what was going on in that context and like how the Obama administration made that strict Jack decision, but how it leaves us in a place. You know eight years later, where you have prescription drugs us as the biggest concern that Americans have with the health care system, and I think that the like economics of this way are that the marginal cost of manufacturing a pill.
is super I'll wait and some of these other things the unit costs, is a little bit higher. You know for cancer treatments things like that, but it's so pretty cheap bride. The manufacture of medicine is not expensive, but the research and development of medicine is very expensive. So when you have like high fixed costs and variable marginal costs, whether that's like hotel rooms, airlines seats or prescription drugs. You tend to see a lot of pricing complexity right, like comes to like, if you want to buy you- know a truck there's like a limited range of prices, which that is for sale to any body, because its closely related to how much it costs to make the truck, but with a pill it's not like that right is, is all over the map and becomes purely a technical bargaining question between the buyer and seller and with drugs
because I can save your life. Willingness to pay is generally quite land because you have Andrew vying with their insurance, usually way, we'll get anybody general ready mean even was single handedly right. It's a if you have the money sure I understand you have that gets you to throw out of. You have the money, because you have an insurance plan in I would like as well. If you have hepatitis c, you will pay a lot of money for Hepatitis c cure. If, if they can make you do it, but then, conversely, if the buyers can make the company sell for cheap, it's like is in their interests to self cheap, so we'd all becomes this like game of like Bluff, essentially where it where it's like foreign countries will say like nobody in England- is gonna, buy this drug. Unless you give us a price break and if you can like sell the pharmaceutical company on the idea that, like you're, going to carry out that threat like they might give you some really
cheap drugs trade, but then, on the other hand like they might walk away and say, like no, your people are going to suffer and die, and this can be a political outcry. Radio it become, it becomes about the the bar dynamic rather than about the actual costs, so I think there is also a behavioral economics. Pro you're right like when you are choosing whether to consumer health care good you are ensured. You rarely know exactly how much it is that you're going to pay. That's rarely information your given in advance. You know very few people when they are being told you can get a prescription for this drug the information in front of them of exactly how much will be reimbursed what their co pay will be, whether they have had their deductible for the year. Not so in. That brings us to the question of wide easy drug. Price anyway for saying that prices are too high. It seems like a lot of the problem. Here is that people can agree on what you name as the price of any particular drug, both because it varies.
obviously from insurance, ensure but also their seems too, this ongoing argument about is it even fair to talk about the list price of drugs in any circumstance, and what is the label like that? seems like a kind of definitional problem that can shape the entire debate. Regs, it's impossible to have perfect information, if you don't even The price is yeah. This is, I mean true, all across healthcare, where you have his big disparity between charges and prices, and I see this I've been here a lot in emergency room billing and the price of the hospital charges in the price of the insurance ends up paying Sometimes the same, sometimes their hugely different someday those less prices do matter to someone who is uninsured and doesn't have an insurance company negotiating for them we have some good like claims databases that can tell us what people are actually- but you're right, you know to your point, is a huge variation and I think the other thing that comes,
I don't see a lot of people who are angry, like my insurance, is paying a lot of money for this drug there's a lot of anger that I the consumer or have to pay a lot of money for this drug. So I think, actually the most important point- in this debate- is the cost sharing that the individual is pay, I guess most important in terms of like a political debate and like why this is happening at a bigger macro level for like how much are spending on drugs, the prices that insurers are paying also matters, but I think Peter Jones died. He made a good point and a pc wrote about this. Everything trickles down from the list price of the list price is where you start list price is what you make rebates on the list price as what you negotiate. From the list prices. How medicated Medicare Medicare determine like what they are going to pay for drugs? The list pray say I wouldn't throw it out complete Let's still, matters is kind of a benchmark, even if it does lead
you some confusion around what is actually being paid. It's not a toward all fake number. It actually does matter, and some significant way is right I mean you know in political terms right, it's like if we had said kind of policy that, like had prevented deductibles from getting so high, then probably people would not be talking about oh, I'm so upset about the principal shrimps and drugs- would be bored battalion instead. Is there so upset at any rate only rise health insurance premiums right. So it's like there's this, political balloon right which like compared to twenty years ago, the insurance companies have done a good job of like tossing the hot potato the opt out of her happens, and so like now, the insurance companies are much more like shore will cover whatever. But oh there's, be a high deductible unviable grumble about it, but then there like jeez, these prescription drugs, cost a lot and I
That's what the insurance companies were hoping to achieve with the hybrid equable policies right is to make people I feel that these things insurance is buying are too expensive. Fraid, so like in a soup, idealized view you just like some have magically become more prudent in your health care consumption? and I think a more real world view. You become more grumpy about prescription drugs costs, but either way right like this? Is the insurance companies plan essentially working like premiums are growing but like a reasonable s, love all people are complaining at pharmaceutical companies rather than its company is, and now have the question of. Why can you do anything about it, but, like the other function that insurers are serving here is that there are the ones with the negotiating leverage visa. The farmer company is rightly
Sera, an analogy that you made in your work on road pricing that I found super super useful is that lake compared to european countries which are negotiating price this collectively and are like you know, like cost co in the pharmacy market, where the? U S, because it doesn't do collected, country level. Price negotiation is like the quarter pharmacy that doesn't have the leverage to like force a price down for something, insurance, though it like. If they're not cost go, they could at least be Lake Walgreens super, absolutely some smaller pharmacy ino that they, it seems like they do, have a certain amount of collective negotiating power here right did they do definitely, but I think the other dynamic going on is that there- and I think this is one of things like Iphone confusing it points like I'm pretty sure the largest insurance companies in the United States members and the entire population of England's. Like why can't they get the deal that England does? I think that one of the things-
that's going on. Is you also have the insurance companies competing with each other? So if you think of the drug stores, if we green doesn't carry the thing you want. You can go to CBS and start buying your products there, like, if they don't carry, you know that type of sour wretch. Kids that madam I enjoy eating. I can go down the street to Sylvia S and purchase them. There So there is a strong incentive to cover more because when you go, to your ego, employers, who are covering lots of people. The age department and does not want to deal with some employers who, like is prescribed some. You know expensive, chemotherapy, drug and told Oh by the insurance company. They'd rather have an insurance company that covers that expensive chemotherapy caused the prices. Get spread out across All the members, like all of our premiums go up, but we don't even notice it cause. It's kind of tiny saving that dynamic of having it
turn system where there is competition for the business of like large companies, creates an incentive to go very broad and coverage engine there. The disincentive would be well people might give my insurance plan because my premiums are going to hive than is met, says like you raise the deductibles, and it is much less it is about to have your premiums go up. A few bucks than to have a colleague who can't get access to this drug that they feel really strongly about access to one topic I want to get into this is actually a this'll, be a bit of a preview of our air. Someone asked us to discuss kind of how we felt about the relationship between spending on prescription, drugs and innovation and this argument- and you know, ask maybe mad to start concise and thoughts on this too. There's an argument that gets made that because spend more on drugs. We more innovation in return and There is like how you think about that argument
yeah I mean I don't know right Emily we'll do it makes sense in principle right that like. If we want people to invest in developing new drugs, you should make it profitable to develop new drugs, it's very profitable, to develop a new drug indian. It states that in most cases at least, if it's a if it's a drug, that would help a large number of people, because the prices are high and you may not like paying a high price for prescription drugs. But you would really hate like drug not being the eligible and you're, really really excited that, like scientists are employed by pharmaceutical companies to to do this kind of stuff, you know what an idea that comes up here? I mean Trump sort of mention this. What will get her later budget that, like The rest of the world is like, arguably not pulling its way with all these these price controls and that
and thinking of America's high prices, the problem, you think it's the Europeans low prices, the problem. If they all paid american prices, then developing new prescription drugs would be much more lucrative, maybe with it there are tons of stuff. I think that sort of make sense to me the big problem with it is that there is such a poor alignment between what's the market for medication and, what's the like social me for medication right so, like a drug that you know cured baldness with no problem excited. Facts would make you a type of money, because so many of us are bald and its
or ITALY. Annoying and like I would enjoy having a remedy for that, but at the same time, is not a big deal. You know like leg. Life goes on re, whereas, like a disease that kills modest number of people, but that, like most people, don't get is like not necessarily that lucrative- and this is where you have a lot of right. It's like people are really SEC. They need medicine. The medicine is very expensive for them, but is not clear that this is really creating like important commercial incentives. To develop these kinds of drugs, so much research wines that being publicly funded or funded through charities like exactly. For that reason, I think oh, the pharmaceutical companies there like getting a free ride on the taxpayers. It's like it's Really a commercial enterprise like we started decide like these are important public health priorities. We want to put money in
HU it, but then it seems like. Maybe you should really lenient that right and say like there should be a big global fund like jointly administered by representatives from a bunch of different countries, and you know maybe like bill gates, could be on their board and they would like hand out money to people and then all the research would be free. When I am elegant, an expert in this body in oyster either the there's like a real tug of war between, like the economic logic of innovation and pharmaceuticals and the public health logic of like water actual medical needs, and we don't really depend on this market mechanism to address our medical needs like exactly four reason. And then this endless questions about how useful some of the new medicines, because you can point to one- that's like soup. are useful, but then there's also a million like
Oh we have a new drug to and like maybe it's better, maybe it isn't, but it passes a safe and effective standard it's under patent I don't know- I mean I only know more about anything to understand so I've seen either. I see a lot of people, especially like on the left blow off the argument saying no to know they do, spend all that money on profits and on advertising and like it's not leading to more and I knew it is certainly true farmer, has the highest profit margins of the entire healthcare industry. I think your loot usually looking like fifteen to twenty percent. Industry why'd? They spend a lot of money on advertising, because the United States is one of two countries in the world that lets them advertise their drugs, but I think it is a little bit foolish to dismiss the argument that these economic incentives don't matter one of my favorite studies on this. It's a super simple study, but I think it makes the point pretty clearly was firm.
An economist at MIT Amy, Finkel Stein, of probably of Oregon Health Study fame to our listeners. She did agree study looking at what happened to drug trade, starts for a certain vaccine when Medicare started, saying: ok, we're going to cover this class of vaccine. and lo and behold, when Medicare a major player in the United States decides to? covering a drugs drug companies. Listen to that they're, like oh, a giant new purchaser and you see more starts. trials. Are you you see the market really clearly responding to a signal but we can get more money for doing a specific thing. So I think, there's a compelling argument that look. It's not that a blockbuster, is made, and in company says we're going to reinvest this profits. We aid and more research, it's more like if you are an investor, looking at all sorts of things you can invest in, and this is an argument. Craig Garth waiter
an economist northwestern, is made to me before that. I found very clarifying it's more vigour and investors sitting down. Thinking like what's gonna make me a lot of money. Where should I put my money and if I'm gonna reward. You really well more than light investing in an Iphone app or investing in like Tesla, like some, we know blue origin or whatever other things you could be investing in. Then Europe, which is farmer, and that will be more money flow into research. I think the place where this all breaks down is that our health system. The american healthcare system, in particular a doesn't, do a good job of asked rewarding innovative drugs. It rewards a lot of drugs that are expensive and the same as the last drug, or just barely different from the last drug so we are paying, innovation, but were also paying for a lot of drugs that aren't innovative like a prime example of this. Is someone like Marty.
check, rarely buying up a patent on a drug that used to cost a few bucks and just jacking up the price hugely because He can do that so that is rewarded. There there's nothing innovative, Martin check really did with his drug. He just raise the price allied and that something better system allows one of the really tough questions to deal with I don't have a firm answer on this- is how we want to value this trade off of innovation and access. If you accept that spending more money, leads to some more amount of innovation. Are we may be over investing in innovation, and do we actually maybe just wants more access, to reward less but there'll be with lower prices. There are probably a little bit less investment and innovation, but more people could access those drugs, and I think that's a pretty tough question answer, but I think you can make an argument, like maybe we're over investing innovation in our system and we want to invest more in
access and we're. Ok, what that trade off of like a few fewer drug trial starts, for example, to have praises, be a little bit lower but I think there is also a question to me of whether our investment in innovation is structure. Well, restructured terror so lets you know what I mean like what your big example there was. The Medicare was gonna start covering something went, so that's a public programmes, and this is very like it, like a similar lack rum of a market, but it's like the government decides what it will buy on behalf of consumers and then that drives private sector research priorities, that's different from consumers. cases driving private sector research priorities. You lose the like freedom, meanness of a market mechanism, because the decision is actually being made by a government bore
but if the decisions can be made by government entity like you could do it a different way. I read a few years ago: Dove assembles buck Longitude and it's about how they developed of reliable method for sailboats to calculate the wonder where they are and the way that happened was the british Parliament said like we would They like someone to invent a tool that does this too. We will create a large prize for anybody who who does it, so that was a financial incentive and infrastructure than was paid out, but once the prizes war did that They just like published it, and it was an initial idea of patents. Was it a valuable innovation should be registered with the patent office to explain how it works so that other people could know right and it that's all gotten turned around now. So it's like a monopoly and nobody else is allowed.
Use it. But you know we could say. Drugs are going to be really really cheap, but we're going to create like huge prizes, for if you could have an HIV vaccine like we will just write you a check for a billion dollars, but then the vaccines going to be free, You know because, like you, if what you want is the innovation, you can pay for the innovation. There is also at it gets to a question of what government decides Aids is enough of a social health problem to be worth manner. our subsidizing. I think it's not a coincidence that we're talking about the flu vaccine, which is a good example of something that has come much more aggressively pushed us. people have become aware of well, even if your young unhealthy and probably won't die of the flu you should get vaccinated, as somebody is more vulnerable. You know you want to make sure heard. Immunity is in place, that's not just the case with vaccines right leg, there, Definitely examples of treatment being man
needed or de facto mandated, because it's in infectious thing like if your kid has ring worm your school officials are pro we gonna say, do now. I'd. Send your kid back to school until their asymptomatic, which means you have to get that treat at bay. Not every diseases infectious, but that doesn't mean that not every disease has social costs and especially when we are talking about a health care industry that is literally about cost pulling. Its is really hard to me to draw a distinction between something like the flu where, like you, the reason we don't want you to get sick is because you will get people around. You sit with the same thing and something like well you're on kids. So if you, get sick and have to be treated more expensively later, that's more of a drain on taxpayer dollars or there are social costs Some of you know, having a less healthy Mauro, he's less athletic population generally or if your incapacitated, that's going to reduce your total earning potential, that's going to make it harder for your kids, yet the education they need, like.
does seem like there is. A bright line health policy making between infectious and not infectious health conditions that necessarily match the idea that public health is a social problem. More generally are its. Let's take a break and don't come After what your cousin, Charles he's, gonna fix us fix. All that if you like the weeds, you probably like being able to dig in all kinds of annex I felt I do, and the great courses plus is greatly gives you unlimited access for anything that, at first reading, professors and experts at all times over ten thousand lectures, despite all kinds academic subjects, history. Psychology in economics help you practice mindful of course,
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just start every month today he sat up at the great horses plots coms reads: remember the great horses plus that calm, slash, ok, so on Friday. Donald Trump gave this speech on drug prices that has been in the works are few weeks are kept gang delay if I might happen Friday and it was a bit of an unknown. What was going to happen there? One of the things that's been notable that president, then it's in a lot of ways he's been an unorthodox republican making these references, to allowing Medicare to bid or negotiate praises for drugs, which has generally been a priority of Democrats. You don't giving Medicare the possibility to haggle with insurance companies to maybe even say no for drugs. They don't feel are worth it, that's a much bigger role for government and something I remember, Donald Trump right before he took office. He gave this speech
from New York, where he made a comment about how we're gonna let Medicare bed for drugs in the prices are going to fall. We have the lower the two approaches, the competition the key to lower drug prices. We have competition, but a lot of times the competition dissipates alibis, anything that makes it harder. The smaller younger companies to take the risk of bringing a product I personally competitive market. Then it goes stretching by the biggest dog in the market Medicare, which is what's happening, but we can increase competition and bidding wars big time. So there was kind of this question. I will they go there and the answer was no. They won't
so we did not see any sort of proposal. You know that would take him out of step with his party about letting Medicare negotiate drug prices. Instead, we got this forty four page blueprint on drug pricing and I think one of the things that tells you a lot about this blueprint is that an expert I follow and Twitter Larry loved from the Kaiser Family foundation. He did a control F for question marks and found that in this forty four page document there are a hundred and thirty six question mark So a lot of this is just pose questions. What have we do acts? Why is this like? This is light on the policy and very heavy on the like wild cures, something we could maybe we do that. A lot of questions I think things that generally jumped out me and others are some interesting proposals. I hadn't seen before one about persuading other countries. Just to pay more for their drugs or the theories
the United States, nor paying eight nine times what other countries are. What if we use, are different trade negotiations to ask other countries to kick in war? Would that lower the price is here in the United States? That's one thing that is there in the proposal, there's not really a clear path towards getting there. Another one is requiring drug companies to put their prices on their advertisements. So when you see and add four, I don't know Viagra like whenever using elsewhere in tv, you tells us you like a little sticker of how much that drug costs, which again, is not something I've heard before in the space of dirt pricing. Those are too The ones are kind of jumped out at me that last on release, Turkey is kind of just like a political act of shaming drug companies, which we have noise in work, and it gets kind of some doors point that what are you even put on is the
price. So those are two that jumped out at me and then there were some kind of nods to fixing the patent system, one the things that I think causes a lot of frustration, as we do actually see a big movement to generics right now about. Ninety percent of the drugs prescribed in the United States are generic drugs, but there are small fraction of what we actually spanned. It's a ten percent that remain patented, and you see drug companies doing things like not giving the FDA a simple of their drugs or that they compared the generic to make sure that the two are the same. So there was some nod towards trying to tighten up some of that patent gaming. That's going on that, I think, is a pretty by partisan priority, but those are the two of this euro. Forty We're page report that kind of jumped out at me as the three new contributions to Americans and pricing policy. I mean beginning foreigners to pay more idea? I mean you, I guess you could make a case for a bit. It
it's a story of magisterium example of how everything gets turned around in the trump ringer. Unlike what was initially on the campaign trail? He was like a different kind of republican, who would be, like you know like as racist as your most waste on goal, but was gonna like take on the prescription. Drug companies like now it he's gonna do is he's gonna take on foreigners so that prescription drug company. can make more money and to be fair, I guess I mean America is a net exporter of prescription drugs to the world traditionally helping american prescription drug companies has been a priority in? U S, trade negotiations now quite on this level, but like add, on the other hand, like. The transpacific partnership would have gotten foreign companies to pay higher prices for american made pharmaceuticals.
I don't know whether there is a big deal or not. Personally, I always said there was a kind of weird thing for the: U S: government we going about four, but Donald Trump said that was like the worse deal in history and a rape of american public and now he's coming round his. I really we should find some way to get. You know like that was the way read like you is. It was in the deal. This adds thing just seems like, like a total Look like the already make them put the weird voice over I'm adds where they live by the way, the spill, what made you vomit and die right like to say also like a hot money like workers. I have a question bout. This whole negotiating other countries up thing that, but I do want to point out that, if you think about that I'm a suitable industry. It is more than most other industries, maybe even more so than any other industries and industry that relies on America having a large share of the people who have the talent and edge
asian to be research, scientists either working during for the pharmaceutical industry or working for american Research universities that our partner with the pharmaceutical industry and it is not tireless clear to me that a world in which fewer peep are allowed to stay for eighteen months after they have completed their agree courses, so that they can work in the technical industry, which is a regulatory change on immigration, that the Trump Administration is moving toward or like fewer people are coming to the. U S. On high skilled visas, because their spouses can't work and their spouses want dont want to just be housewives, which is another regulatory change, their making very vague. For your and legislative agenda on Grecian seems like the sorts of things that might affect the ability of the american pharmaceutical industry to innovate in future, which is just. Flag that I would raise for any Trump administration officials who are listening to this podcast. But I do think that the question
with this whole negotiate. Other countries upward thing is it's not just that the difference between the american pricing system and other countries is the price negotiate There is also a difference in whether other another country will consider it worth it to bring the drug to market in that country. There are different standards for like whether it contributes anything which is another thing that I have learned from areas reporting and it seems is questionable to me whether you could actually get other countries to pay more for a drugs that they currently think our work The cost benefit analysis if you're, not necessarily promising that those drugs are also going to be more bust on adding more innovation that kind if they like it, it seems like its mission, part of the reason that this process is different, that late Jim ITALY. More drugs are brought to market in the U S, because in other countries
and it's not that much of an improvement or also even if you could achieve valid. Let's say you work out, let you get back to tee. Bp raise the drug praises, let's face it, that all is assumed away. If I'm a farmer, But why do I lower my protein? Rightly this Cynthia you paid, and it does not address the store. I don't I don't make more money with higher prices everywhere and I will say one of things. I think that was a bit telling is. You saw some of the farmers stocks. I kind of like teetering, leading up to this speech all of them were up after this speech like this was not perceived as something that's going to him the industry. Even universe is weird part of the health care system called them. Proscription benefit managers p that essentially Negotiate there, like kind of middle man, function where they are the main. And between insurance companies and prescription drug companies they buy for multiple insurers This idea they should be buying Kafka. But there also accepting these
we that we don't know a lot about and they may be saving some of those rebates for themselves and June Trump talked about we're going the middle man where we're going, you know cut down on that. You know inefficiency and you saw the p B AMS. There's three major PM's in United States, although, stocks went up afterwards. They were all releasing statements. That said, we agree The president, like the problem, is that drug prices are too high in the United States, This was not a speech that you know that the drug industry felt like read about. If anything, there, investors felt like pretty good coming out of Friday.
Knowing that way, I really do think this site gets to the core of like who Donald Trump is, and what he's all bout, which is that, like candidate tromp, was this kind of full spectrum populist? But president tribe is like a very narrowly cynical. You should blame foreigners for your problems. I am going to not do anything to harm by wealthy business interests right and so like. That's exactly. What's here right, it's like oh you're, mad about the pressure prescription, drugs, blame foreigners for not paying enough right and then its well, how does that even relate to you? None at all rather get eight. Might be good for America. If Italians pay higher prices for prescription drugs, because then there would be more drug research and development without us doing anything. but there's no way companies that can be like a wow. We just got there's a windfall from ITALY, stand to give a discount to Americans like this. I how
Anything works against its total red herring. It's it's very much at the core of Bessie and then there's doorways, saying I mean you know if Tom style policies persist for a long time. You have to think that America will lose its leadership in this field to Switzerland, which has a lot of big pharmaceutical companies and his like very consciously open to foreign talent and, like once, everybody who is like smart enough. I am to go, moved to Geneva and and work for these companies, but in a narrow sense, like is just like a very pro business agenda, with a lot of like mouth noises from from the dont relate to the policies, something I was struck by is like some of these kind of smaller bore proposals. Syria mentioned the kind of patent gaming. There is also something in there that you know would float a ban on gag clauses which literally fairly prevent pharmacists from telling you
it would be cheaper if you just paid in cash for this drug, rather than going through your ensure, like some of them. tinkering around the edges. Sort of things easy to waive offers like? There is a big problem here and there addressing the big problem, but it also. seems leg because the big problem here, really a trade off or like it could be a trade off with innovation and affordability. Vit. Working around some of this stuff. It's really about price opacity, not about price highness, like the gag clause. Is they not have not knowing what the price of the drug isn't an advertisement that possibly The work around the innovation problem leg. It doesn't, it seem like if you're, if you're going to be doing this kind of small boy stuff, it requires drug companies to be more straightforward about it, but it doesn't necessarily forced them to be less innovative, shooting another area of trust, Nevertheless, let me cite the bank first back to aid to research paper,
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it delivers some evidence. For that I mean it's. It's not conclusive, but bet it's it's Emily suggestive, and so what they do is they lie. at county love or effects of immigration in flows and which counties have gotten more republican and which have gotten less republican between ninety ninety and twenty ten, and they show the counties that have had large inflows of low skilled immigrants. Have become more republican, whereas counties that have had high skilled immigrants have become more democratic. So that's like a thing. A lot of people have said would be the case, but I had never really seem like studied. Well,
Looks like a pretty good, pretty good study of it to think that our interests agnor, but this one is that, like we know that the sort of like trompe as places in America, the places that have had like the hard core tilt against immigration are places with very few immigrants ride, like as a sort of broad generic, a fact that there is not a lot of immigration of any kind to westwards
yeah Kentucky, but those voices are are super conservative so that had led some people. I would say myself included, just completely dismiss the idea that, like the nature of the immigrants, was having any impact on people do this evidence here that that is wrong and that even if the absolute numbers of immigrants coming in a low- and there is a relationship between voting behaviour and who those immigrants are. But the other thing that that I think, Derek and maybe say more about- is that often when we talk about this in an american policy context, a high skilled immigrant is like you have a masters degree or your computer programmer like a very like
lacked view and the low skilled immigrants is like everybody else, like normal people right in this framework, the low skilled immigrants dont have high school degree, so they're like John Kelly's world peasants from Central America and everybody else, is high skilled. So, like a guy with a twelve great education is not you know, the same doktor it. It seems to me- and I got a labour market context- yeah immigration contacts right leg. The reason that this raised, my eyebrows when I was reading through this- is that American, immigration policy does draw distinctions between low skilled and high skilled immigrants in terms of work, Visa not necessarily in terms of permanent immigration works differently, but on workers the definition of high skilled the each one be visa is you have to have a for your college degree and that's kind of the minimum. You know if you have, for your college degree better, also have other things that prove your skill level, so previous
work on this has been more about. You know, defining high skilled in the same way be policy system, defines high skilled, whereas this is something that is taking a group of immigrants aren't getting into the? U s because of their skills, and designating them high skilled immigrants way. this raises the question of why why exactly this would be? I mean they. They say that this is consistent with political preferences. Shifting where low skilled immigrants are more likely to perceived as competition in the labour market and for public resources, maybe on public resources I would sort. I really doubt that interpretation on the labour market, like that would hold if they were using the really elite definition right leg. If you're talking about you know doctors and
physics, professors and computer. Programmers like a normal person is gonna, say: ok, those guys aren't driving down my wages like I can't do those jobs. They were not that many native born high school drop out. In the United States, its that's your own people, but that's not a mainstream political constituency whose, like labour market needs, the political system is incredibly responsive to a high school graduate is like very much competing with the typical american worker. So I dont quite see why that would be exactly now in terms of public resources. You could imagine or a big difference I write it could be that high school graduates versus non graduates are just much more able to get non poverty.
jobs, and therefore much less likely to have families that are receiving public assistance, and I'm really happy to believe that, like that's, a big driver like people were hustle. Immigration seem to me to overstate the amount of public assistance and immigrant families are receiving, but also be very hung up on the idea that immigrant families even public assistance. So the notion that, like whether or not you encounter people in your community who are foreign born and who are qualifying for benefits, makes a difference to politics like that makes little sense to me, but I I I don't understand why this should be about labour market competition, and I think that There is an indication that it in the paper some of the more interesting work they do is looking at how this very he's given the type of immigrants given the type of of county, and one of them things they find. Is that the shift in general well there's a shift towards voting for Democrats in places where Greece has primarily been high skilled shift towards voting for Republicans
for the increase has primarily been low skilled, the shift towards voting for Republicans they say is partition, early pronounced in areas with one more unskilled populations to lower urban density and three larger public expenditure per unit of GDP is like the places. We're already spending a lot on residence if immigrant, start moving into those areas. People start getting stingier, which is consistent with a lot of prior research. That shows that you know, as that was saying, the idea Immigrants are going to take your stuff results in peace getting a lot stingier with what they want the government to be buying anyway, but the other dynamic that I think is really interesting here? Is that while some of the they didn't really address the idea of different kinds. Immigrants being like more a similar level than others, culturally, they try to do. This would like a linguistic measure which isn't it. all because spanish speaking countries, some of them are Spain, and some of them are Guatemala that they do
look at what happens when there's a change in immigrants somewhere in your state, but not in your county, and in that case they find even when there are more high skilled immigrants moving into the state if you're the kind of county that is going to be sceptical. You are going to shift toward Republicans, even even though high stool, this moving into your county shifted toward Democrats. They suggest that this is kind of a media exposure proxy variable that you may not interact personally with those immigrants if they're not in your county, but you will see about them on the news. There is also something to be said for like the urban rural politics within states. Often meaning that set the rural parts of the state feel that the urban parts of the state aren't lake. real America or like Real Virginia or whatever its Interesting, though, because it does suggest that there is a cultural dynamic here, it's just cultural, dynamic. That's less about the kind of immigrant, then it is about how
People perceive themselves within their states are within their country. Comes to mind. For me to think about. This paper is, if I knew they talked a lot about this idea. Maybe it's the labor market, competition or public benefits competition, but it feels like one other option on the table is just seeing people get something that you don't think they should get I with like this, but even with that public benefits are jobs. Even if it's not your job- and it's not like you know programme that has a limited number of slots and because someone else gets when you don't get a sly I think one of the other dynamics that could be. Going on here is just when we ve talked about this before and like I've looked at that is in some of my reporting is a sense of, like who deserves to be doing? Ok, maybe you're not competing with this particular person for a job. But you have the sense that there were king and you can find a job or that they are getting free health, carrots?
clinic in here you know not eligible because you earn a little bit too much for that, so wet I kind of wonder about like that other dynamic. That's it that more abstract doesn't suggest that people have to be in competition for the same job. But this perception and that someone else who I dont think really deserves. A thing is getting things and I feel stressed because I can't get the things I feel like. I need you like keep it together for for my for myself and for my family. I also think that an important driver here, it's something that early hawks child calls a deep store the kind of motivates a lot of of policy preferences. I think the other deep stories specifically, immigration is a question of. Is this the kind of immigrant going to become american, or are they going to make my country more like their country and that's where Eric can become supercilious. We ve seen experimental research where Organs are more likely to select hypothetical immigrants to cover the? U S, if they're more educate,
but also if they speak, fluent English. If they come from christian countries, there are lots of factors there that if bleed into a single ability- and that's where I think education level is super relevant for this study, because it's not necessarily measuring where immigrants are sliding into the labour market. its measuring, whether their educated enough that, like maybe they're, more likely to be fluent in English, may be there. More likely to you know be able participate in like middle class communities and that might led to a sense that this is the good kind of immigrant and therefore its not that their competing with us for things, because they're one of us, whereas immigrants, who might be perceived as less a similar level, it's all is going to be the zero sum competition of either we get. Things are detail. I would you say, You know in terms of my thinking about this, though something that's important. Is that knowing that at least according to this paper, a relatively
low bar of like skills, puts people over the bar as high skilled means that lie you really sort of could imagine reshaping american immigration policy to use significantly increase the weight of court. Unquote, police skilled people in this context, without all that dramatically undermining some of the other kinds values that, like there are a lot of people who you know have some level of indication they would like to move to the United States. Many many more that are allowed to under the current paradigm of those like relatively few, are like going to found the next Google, but, alas, have gone to high school right like. That is something that, like we can do, we can find a million people a year who meet that kind of standard from all different kinds of countries. Quite probably, while giving a large preference to people who have family
actions to the United States, and there are no specific industries. There are countries that a lot of people come from that are very low levels of of educational attainment on average it does it that you could maybe make this work without having a sort of like super Ellida store. Incredibly exclusionary, immigration policy. If that's what it takes for people to feel better about it, but there it is become interesting to two questions like what is it really that makes people feel better about these more educated immigrants? I mean you study this sort of as well as he can, but I just don't. I don't exactly know right like if we had huge influx of central american Highschool graduates, which I think we don't but like if we were getting lots of high school graduates rather than non graduates from those space
the countries would would that impact people very differently. I mean it's. This is suggestive, but I don't know I don't know if I would how much I would banker yet. The other green is all that I just want to throw in here is this is measured presidential Senate and the House elections and its measuring them from nineteen nineteen to twenty ten. Twenty ten there are definitely are. There definitely are late divisions in a trends toward less pro immigrant policymaking, from Republicans toward more preliminary policymaking from Democrats during that period, but even in NE ten. You did have a lot of house Democrats and more conservative districts running on immigration law, and you did have some republicans. A lot of Republicans who were saying the relevant distinction is between legal and illegal immigration, not between good image, in that immigrants. That is not the case so much anymore. A lot of Republicans our eyes. Kind of going
Full on immigrants are bad shut. It all down or saying we need to have more of the good immigrants and fewer of the bad ones, and so, while I am not saying that this should be dismissed based on that that kind of time horizons. I would be interested to see what this study looks like extended. A few cycles into the current trumpeted integration of Europe. Yeah me good. I would say, welcome if you look at the ninety nine you twenty ten period. Would you seeing here is that Dozens of low skilled immigrants is making people more sceptical of the welfare state rather than of immigrants per se. Wait I mean that its its post, twenty ten, that you would say there was a big, systematic difference between Democrats and Republicans like half this period would have been in the nineties when politicians disagreed, wet immigration, but there was, I dont, think,
I like meaningful partisan gap in the nineties now so it's it's definitely I mean the twenty one to twenty time period. You have some meaner, you have posed nine eleven politics, but you Also, you know, literally no presidential election during this period was run on the democratic pro immigration. The Republican is not whereas both of the presidential elections, since the end of that period were riding on a certain level on that being so it's something to be cognizant of given how much we know about how messages. The top, or going to affect voters assessments of what's important in their communities maybe this was just a happier time half the time So you happy times thanks to everybody who submitted a question for the upcoming asked anything representatives. once there I'm looking forward to that absurd coming together, the future,
I think our engineer, Griffin, Tanner producer, Pritchett Armstrong, you out there listening and we'll be back.
Transcript generated on 2021-09-12.