Pharmaceutical industry investigated
@ 2:53 pm 
Not so long ago, we talked about how Finland has some of the highest prices for medicine in the EU. Now, apparently some anti-trust action is being taken…
The newspaper Helsingin Sanomat reports that the Competition Authority suspects the drug firms of paying excessive amounts for advertisements in pharmacies. In return, the pharmacies offer customers primarily products of the company paying for the advertisements.
Generally, there are two ’schools of thought’ regarding anti-trust:
One describes anti-trust laws as a public service aimed at protecting consumers from monopolies. Without anti-trust laws, companies would either charge the highest prices possible (because they’d secure a position of power that’d enable them) or they might even charge the lowest prices and thereby create a barrier for new market entrants. In either case, the consumer is denied choice. And let’s face it, we know all about being denied choice here in Finland.
The other side contends that in a truly free marketplace, sans over-taxation and over-regulation, no such anti-trust laws are needed. Whereas monopolies might exist temporarily, they will eventually become unseated by new market entrants. Anti-trust only serves as a tool for selective enforcement, doing exactly the opposite of what it intends by granting advantage to those who currently hold political power.
So, do you think Finland’s high-priced pharmaceutical products result from an economy that is over-taxed and over-regulated, or is there simply not enough enforcement of laws to prevent cartels and collusion? Or is it a combination of both? And since Finland’s low-purchasing power has been reported lately, can we make any inferences concerning high-prices in other industries—or the economy, in general?
Industries like biomedical and telecommunications have too high of an entry barrier threshold to allow for sufficient competition, which is why we need anti-cartel legislation that is tightly enforced.
Take telecommunications, for instance. The amount of investment needed for a company to compete against Elisa or Sonera is phenomenal: radio equipment licenses, licenses for using a reserved bandwidth and frequency, etc. Few companies have the resources to enter that market, so we end up with a duopoly that can pretty much set the prices regardless of what the market can bear.
For biomedical industries, there’s tons of environmental, health and safety regulations to follow, expensive licenses to cover all that and a tightly meshed network of patents preventing the competition from manufacturing competing products using a similar recipe. Thus, again, a very high entry barrier that very few can meet, so a triopoly (if I counted the number of Finnish brand medicine manufacturers correctly). The customer doesn’t really have a say in balancing the demand there either, same as in telecommunications.
Comment by Martin-Éric — Fri, Jul 20th, 2007 @ 3:46 pm
“The other side contends that in a truly free marketplace, sans over-taxation and over-regulation, no such anti-trust laws are needed.”
The commies also contended lots of things about their perfect system.
Comment by m — Fri, Jul 20th, 2007 @ 3:47 pm
And this is unique to Finland or do you think the costs may be equally as high in other countries too? Hmmmm
Comment by Punter — Fri, Jul 20th, 2007 @ 3:48 pm
Martin-Éric, incidentally, Finland has the lowest prices for mobile phone calls in Western Europe. I don’t recall there being any cartel allegations against Finnish mobile phone service providers. Not everything is expensive in Finland, even if Kristian prefers to think so.
Comment by Turjake — Fri, Jul 20th, 2007 @ 4:10 pm
Turjake,
I agree with that. Mobile phone service is indeed inexpensive. I save at least 150-euros/year. It helps to offset transportation expenses which cost thousands-of-euros extra in Finland.
I suspect there’s a conspiracy between the Ministry of Health and the mobile phone industry: If both, transportation AND mobile phone service were to be ultra-expensive, then the social isolation would be too great to bear.
Suicide rates would skyrocket even more. Bad for international statistics. Not to mention lowered birth rates.
The Ministry of Health went straight for the newer and cheaper technologies to connect people. That way the transportation ripoff could be kept intact. It’s possible, right?
Comment by Kristian — Fri, Jul 20th, 2007 @ 4:31 pm
Yes, Kristian, everything’s a big conspiracy against you.
Comment by Turjake — Fri, Jul 20th, 2007 @ 4:56 pm
Kristian et al do present with illusions of entitlement.
We are fortunate that not everyone concentrates their focus on their own self importance, economics of greed and love of repeating their piss weak ravings ad infinitum.
Comment by mog — Fri, Jul 20th, 2007 @ 6:18 pm
Can’t you just buy on-line? We do that, they ship from another state for almost nothing?
Comment by winter “Yea, Proton Power, now in remission†— Fri, Jul 20th, 2007 @ 8:50 pm
At least we have competition authority to investigate these things.
In more liberal markets, say USA, the corporations (who own the congress) can price their drugs to anything of their desire limited only by the greed of the insurance companies who are in the other scale.
Here’s some actual statistics about the actual prices of drugs (without calculating in gov compensation):
http://www.stat.fi/til/kvhv/2005/kvhv_2005_2007-06-08_tie_003.html
Now 11% is real money especially considering swedes are getting theirs on 16% discount.
Ultimately this can’t be a sustained situtation and the drug prices in EU will level down(or up).
Comment by philtard — Sat, Jul 21st, 2007 @ 4:15 am
Can’t you just buy on-line? We do that, they ship from another state for almost nothing?
No. That would be illegal.
Comment by mh — Sat, Jul 21st, 2007 @ 4:43 am
“the corporations (who own the congress) can price their drugs to anything of their desire limited only by the greed of the insurance companies who are in the other scale.”
nice to see you understand checks and ballances that a market based system provides.
Anyone else getting rich here with a stock market over 14K?
I do see a Hummer in every driveway here in the USA. Heck with the scrawney chicken in every pot.
Comment by winter “Yea, Proton Power, now in remission†— Sat, Jul 21st, 2007 @ 5:39 am
“Thus, again, a very high entry barrier that very few can meet, so a triopoly (if I counted the number of Finnish brand medicine manufacturers correctly).”
Martin-Éric, I agree with your comment. A Competition Authority is indeed needed in these big industries…or so it seems.
But you mention a triopoly of Finnish companies. What about foreign ones?
It’s no longer a secret: People know they are paying too much for medicine. So the government is compelled to act. That’s fine.
But do you think they are using national anti-trust laws to pacify the population and justify keeping-out real competition from foreign sources?
I don’t know the answer for sure, but I could see this tactic being applied in other industries, as well. Does anyone know c-r’s relationship to the drug industry? Friendly, unfriendly?
Comment by Kristian — Sat, Jul 21st, 2007 @ 3:56 pm
philtard: “In more liberal markets, say USA, the corporations (who own the congress) can price their drugs to anything”
Good point, but you might be taken-in by a myth. If I’m not mistaken, in terms of regulation, the US is stricter than Europe; not more liberal. It takes forever to get drugs approved through the Federal Drug Administration. Big drug companies can afford the R&D/testing hurdles whereas smaller ones can’t.
Generally, big drug companies lobby for regulations that keep smaller competitors out of the marketplace. Hence, over-regulation creates an entry barrier that enables existing companies to charge high prices. It’s a perfect way for big drug companies to commit anti-competitive practices without legal conflict—after all, how can anyone file an anti-trust claim based on ‘official regulations?’
Eventually Americans will figure it out. But we have to realize that the US has nearly twice the population of Russia, so it’s like moving an elephant.
In Europe, the over-regulation might not be keeping competitors out of product development (distribution and retail is a different strory though); however, getting financing is more difficult due to the tax model. For the most part, one needs to get American and Swiss financiers to start a company and develop a product. Hmmm, what percentage of the Finnish pharmaceutical industry do you think is owned by American and Swiss investors?
Comment by Kristian — Sat, Jul 21st, 2007 @ 4:34 pm
winter - “I do see a Hummer in every driveway here in the USA. Heck with the scrawney chicken in every pot.”
Yeah, maybe in a gated community for defense contractors. You really should get out more.
Comment by dhen — Sat, Jul 21st, 2007 @ 5:43 pm
Despite all the silly theorizing the fact is that medicines are inexpensive in Finland - before the VAT (12%). And the prices have been going down fast for about ten years now.
Comment by Anon — Sat, Jul 21st, 2007 @ 6:17 pm
Prescription meds may be reasonable, but everything OTC is not. I mean, you have to go to a governmentally franchised aptekki to get something as simple as aspirin. Burana ain’t cheap, either. If Walgreens in the US was the only place you could buy aspirin, antibacterial ointment and band-aids, they could charge twice what they do now…and I’m sure that’s exactly what the aptekkis do. Why not, nobody seems to complain.
And Winter, the other half of “I do see a Hummer in every driveway here in the USA” is “and a tiny little woman behind the wheel, driving it and not being able to see over the hood well enough to pick a single lane to drive it in.”
Comment by hfb — Sat, Jul 21st, 2007 @ 6:50 pm
Medicines are ridiculously expensive in the USA. But when that kind of a fact has ever stopped ignorant Americans from telling how things should be run. Of course the system must be far better in the greatest nation in the world than in these little socialist shitholes over here.
By the way, the reason why the health-care costs are so much lower in most of Europe is precisely because the system is more socialized than in the USA. The government has a strong incentive to bring the expenditure down - and the means to do so, as well.
And the fact that you have to have a license in order to run an apteekki doesn’t mean that all apteekkis are owned by a single firm as you seem to think (without understanding it). One has to have a license to sell alcohol, too, and according to your logic it means that there is no competition between pubs. Hah!
And anyway, only ignorant people buy Burana. It’s exactly the same stuff as those meds that cost half the price.
Nevertheless, the Finnish pharmacy system could be far better. I wonder how many people have died in the rural areas, in particular, just because they can’t get something like medicine for heart burns at the local grocery.
Comment by Anon — Sun, Jul 22nd, 2007 @ 11:23 am
“and a tiny little woman behind the wheel, driving it and not being able to see over the hood well enough to pick a single lane to drive it in.â€Â
if she has a Hummer??? Why would she worry what lane she was in.
I call it the “law of gross tonnage”
Comment by winter “Yea, Proton Power, now in remission†— Sun, Jul 22nd, 2007 @ 3:14 pm
BBC caught lying to influence outcome of the Scottish elections
THE BBC has suffered another credibility blow
Comment by winter “Yea, Proton Power, now in remission†— Sun, Jul 22nd, 2007 @ 3:35 pm
I’d like to know why the US doesn’t eliminate that horrible FDA, and let private consumer advocacy firms test drugs. Aren’t other products tested that way?
Also, apparently the FDA restricts the importing of foreign drugs, so prices are kept artificially high.
Seems like a political tool for corporations to exploit. So why not get rid of it?
http://en.wikipedia.org/wiki/Criticism_of_the_FDA
Comment by Kristian — Sun, Jul 22nd, 2007 @ 6:30 pm
Anon - The licenses come from the government which more or less makes the aptekkis a government franchise. As far as I’ve seen in Finland, no, there are no price wars between pubs save maybe on the pints of Lapin Kulta…but only idiots drink that.
Also…I’m not so sure that the medical systems are any cheaper to run in the EU than in the US. Again, the US and the Finnish system have a lot of similar elements, namely if you have the money/coverage you’ll go to a private facility rather than a public one which creates a system of haves and have nots. I paid 300 euro for a quack dentist to put some crap on my teeth to supposedly fix them and I paid nothing here to have a good dentist look on in wonder at my mouth and wonder wtf the Finnish dentist was thinking. I paid more for my healthcare in Finland via the hefty KELA extraction from my paycheck and the services I paid for privately since the public system had 6+ months waiting time than I ever paid here in the US. The cheapness of the Finnish system is more of an illusion than a statistical fact.
Comment by hfb — Sun, Jul 22nd, 2007 @ 6:30 pm
I notinate j00 as the Bill O’reilly of madöphakin Finland. U got some good points and some bad ones. but we all got our blind spots. Finland has never (well i dunno ever ever) a free market country. we’re half fascists and half communistic right now, the best of both worlds. In other words, we always been f00ked.
Comment by Bill O'Reilly — Sun, Jul 22nd, 2007 @ 6:31 pm
hfb, I agree… Saying that medicine is cheap in Finland/Europe might be true from an American’s perspective, but salaries are comparatively tiny in Europe. So it’s not really cheaper for us ‘peans.
Competition between pubs—Ha! One sells Lapin Kulta for 5.00-euro, the other for 4.75-euro. Real competition. The biggest drinker-country in the world can’t even produce economies of scale with alcohol
Comment by Kristian — Sun, Jul 22nd, 2007 @ 6:37 pm
Well put (as normally) hfb. It is an illusion that medical services are cheaper here than elsewhere. What with the typical Finnish salary, tax, purchasing power, lines, red tape=wait etc etc against the system of private choice and insurance in a well paid economy looking after your health, heck give me choice any day. Flash your private insurance card and those high prices come a tumbling down
Comment by Punter — Sun, Jul 22nd, 2007 @ 9:42 pm
The health-care system is about three times more expensive in the USA than in Finland. But as we all know the salaries are ten thousand times bigger so it doesn’t matter.
And Kristian, have you ever actually been in Finland? You seem to know nothing about the country.
Comment by Anon — Sun, Jul 22nd, 2007 @ 10:05 pm
Yeah, I know more about Finland than you realize
By the way, I’m not criticizing the government’s crackdown. It’s an expedient, short-term solution that might force prices down a bit. Good. I just hope they apply pressure evenly across all industries; not just pharmaceuticals.
I only posted about this topic to stir debate about how anti-trust laws are used and why they are needed. Or whether they are just used as a crutch to hide an economy’s other shortcomings.
As most people in Finland know by now, things aren’t quite optimal. At some point we might want to question ourselves whether earning half-a-salary is worth all the ‘cheap socialized healthcare’—and whether the healthcare system even offers good value in the first place. For example, will we always have to wait 5-years for new cures to make their way from across the Atlantic?
It took almost 10-years for laser dentistry. Want a laser parathyroid operation? Can’t get it here; going to the US is still necessary. We’ll get it eventually.
I think I’ve been critical in a balanced way against Amereica’s faux-freemarket system. I wouldn’t suggest that route for any country—at least, not in its entirety. I could only support a real freemarket system. Nevertheless, good parts of the US system should be analyzed more carefully.
Comment by Kristian — Sun, Jul 22nd, 2007 @ 11:50 pm
if she has a Hummer??? Why would she worry what lane she was in.
I call it the “law of gross tonnageâ€Â
Comment by F — Sun, Jul 22nd, 2007 @ 11:52 pm
if she has a Hummer??? Why would she worry what lane she was in.
I call it the “law of gross tonnageâ€Â
Not a big fan of the rule of law, winnie?
Comment by Freeridin' Franklin — Sun, Jul 22nd, 2007 @ 11:53 pm
hfb:
Prescription meds may be reasonable, but everything OTC is not. I mean, you have to go to a governmentally franchised aptekki to get something as simple as aspirin. Burana ain’t cheap, either.
The cost-conscious consumer can always opt for copy medicines. Ratiopharm (or similar) ibuprofen is pretty reasonable, IMHO. I don’t know, maybe you can get a bottle of 1000 for a quarter in the States. But if you really want to get fleeced in a Finnish pharmacy, try vitamin supplements.
I’ve learned about different sides of different systems through my recurring swimmer’s ear (infection of the outer ear) problem, which often seems to be induced by flying. So I get it a lot while traveling. Now, in Finland I need a prescription for simple eardrops containing alcohol and boric acid. Even the doc was pretty apologetic about it and said he didn’t understand why they aren’t OTC.
When the condition struck in London, I had to go through three different pharmacies to find someone who’d even understand what I needed. The clerks’ knowledge of pharmacy was roughly at the same level as your average Valintatalo cashier. At Harrods I finally struck gold: a small bottle of isopropanol (rubbing alchohol) for 7 quid. Becoming acquainted with the superior US system would’ve been fun, but alas, my ears stayed uninfected.
Comment by Freeridin' Franklin — Mon, Jul 23rd, 2007 @ 1:21 am
rule of law/ becomes rule of the bigger boy item.
Comment by winter “Yea, Proton Power, now in remission†— Mon, Jul 23rd, 2007 @ 5:11 am
Freeridin’ - Just drop by any drug store in the US, eg CVS or Walgreens, and you can choose from two or three different brands off the shelf. I used to get that rather often, too…when I was a swimmer.
Comment by hfb — Mon, Jul 23rd, 2007 @ 7:04 am
Winter - So if I buy a giant strap-on, does that mean I rule?
Comment by hfb — Mon, Jul 23rd, 2007 @ 7:05 am
“I know more about Finland than you realize”
Had you really been living in Finland you would know that the Finns don’t just drink more than anybody else in the world but more than the Klingons, too. Perhaps you just forgot that. And a Lapin Kulta actually costs zillion euros even in the Jaskan Baari in Jakomäki. And the salaries then! I know for a fact that an American worker uses the amount of money I get in a month just to do his daily ass wiping.
Comment by Anon — Mon, Jul 23rd, 2007 @ 10:17 am
“giant strap-on, does that mean I rule?”
only if your whips are bigger
Comment by winter “Yea, Proton Power, now in remission†— Mon, Jul 23rd, 2007 @ 2:38 pm
hfb—I thought you already have one
Comment by Kristian — Mon, Jul 23rd, 2007 @ 6:28 pm
Just watch your bend over exercises around hfb
Its just like the Government in charge of anything, bend over, and smile.
Comment by winter, "Yea, Proton Power, now in remission" — Mon, Jul 23rd, 2007 @ 8:16 pm
winnie:
rule of law/ becomes rule of the bigger boy item.
This becomes a bit problematic when there is, as you say, a Hummer on every driveway. Even though spelling or abstract reasoning aren’t your stronger points, you do have a grasp of basic classicle fizzicks, don’t you?
Comment by Freeridin' Franklin — Tue, Jul 24th, 2007 @ 1:50 am
O bee nise to hem. Itz naht hiz falt hee cant spel, lots uv peepel hav trubel with that.
Comment by dhen — Tue, Jul 24th, 2007 @ 4:32 am
Commenting on privatising FDA: In short, it is not a good idea. One should not gamble health with profit/cost-cutting on a national scale.
Let’s entertain the idea and let a private organisation do all the examination. We further catagorise a private organisation into one of the two types - commercial, and non-profit (NPO). Finally, let’s conservatively assume there are 10,000 new drugs (and another 10,000 domestic and imported food) to be tested per year.
The first question - How would a NPO get the funding to test all of them? For food, there are tests for toxicity, nutrition claims, parasites… etc. For medicine, there are even more long tests to ensure its safety. If people want to fund it by collectively footing the bill, or getting a grant from the government, then isn’t that exactly what FDA is? If we want to drop / delay some drugs, how should we make the selection criteria? Test only the ‘popular’ food/medicine? (According to Wikipedia, “The FDA’s federal budget request for 2008 totalled $2.1 billion, a $105.8 million increase over 2007″.)
On the other hand, for a for-profit organisation, can we be sure the result is aligned with our health concerns, or merely aligned with its bottom line?
We are all consumers of food and medicine, so we are all at the receving end of any benefit & damage. One should remember that a damaged body cannot always be compensated by money. (Mad-cow in UK caused several deaths; also in UK, a test of new drug TGN1412 drug rendered 6 men hospitalised and caused them having early symptoms of cancer.)
Comment by David — Tue, Jul 24th, 2007 @ 3:08 pm
Its a Hummer in every driveway. Forget the chicken.
At least in the USA were are now setting new goals. Just what is the goal you all in the EU are setting? One new Billionare per year?
Comment by winter, "Yea, Proton Power, now in remission" — Tue, Jul 24th, 2007 @ 5:17 pm
Would you give it up with the Hummer in every driveway thing? It’s not even true. I live in San Antonio, which should be paradise for you Fox news types, and I’ve seen less than 10 Hummers in the last three years.
Even in Texas most people have better taste than to buy one of those boxy, ugly, impractical, gas-guzzling things.
Comment by dhen — Tue, Jul 24th, 2007 @ 6:24 pm
Yuk, Texas, they only know trucks, and then only the F150.
Comment by winter, "Yea, Proton Power, now in remission" — Tue, Jul 24th, 2007 @ 8:56 pm
winnie:
Yuk, Texas, they only know trucks, and then only the F150.
Somehow I would have thought that it would be your type of car. You know, with the good ole boys with their locked’n'loaded shotguns in the back.
Comment by Freeridin' Franklin — Tue, Jul 24th, 2007 @ 10:50 pm
my wedding picture:What in-Breeding can do
Comment by winter, "Yea, Proton Power, now in remission" — Wed, Jul 25th, 2007 @ 12:59 am
Where I learned to fly Aircraft in the air
Comment by winter, "Yea, Proton Power, now in remission" — Wed, Jul 25th, 2007 @ 1:02 am
I would have thought Texas was your wet dream - huge disparity between rich and poor, low taxes, a church on every corner, liberal laws on shooting people if they’re on your property. Hell, the best the Republicans could offer in 2000, George Bush, claims this place. You should be proud…
By the way, you can haul something in the back of a truck. Try doing that in a Hummer. You’d probably scratch the leather seats.
Comment by dhen — Wed, Jul 25th, 2007 @ 4:30 am
All those in favor of relaxing drug regulation, visit the site:
http://www.adrugrecall.com/
Funny side-effects on those drugs: malformed fetuses, blindness, heart-attack, stroke, skin literally falling off etc.
I actually was on both Vioxx and then Bextra because of my severe back pains. After I read about the recalls, I have decided to avoid any pain medication as much as possible, therefore living every day of my life in pain. When it gets really bad, I take either ibuprofen or paracetamol. They dull the pain just enough for me to get out of bed in the morning.
Comment by Fat Bastard — Wed, Jul 25th, 2007 @ 4:38 am
“All those in favor of relaxing drug regulation”
Do you realize that all those drugs in your link were approved by America’s FDA? Why not put the money into some REAL testing by more than one source?
“They dull the pain just enough for me to get out of bed in the morning.”
No wonder some of your posts are so cheery. Try 300- to 500-micrograms (not milligrams!) of Melatonin before bed. You’ll get more REM sleep than you’ve ever had in your life, so your aching parts will recuperate better at night. It’s cheap—about 20-euros/year.
You can thank me later.
Comment by Kristian — Thu, Jul 26th, 2007 @ 1:47 pm
“Texas was your wet dream”
Have to say, Texas is one nice place to be. Folks are friendly. Just no mountains for skiing.
Comment by winter “Yea, Proton Power, now in remission†— Thu, Jul 26th, 2007 @ 2:09 pm
The lack of mountains does suck, that’s true. You can go to NM, but that’s 14 hours by car. The cost of living is great, though.
Comment by dhen — Thu, Jul 26th, 2007 @ 6:23 pm
48: As I understand it, Melatonin is not officially approved in Finland. Of course, I could be wrong. However, I don’t actually have much trouble sleeping, although I sometimes awaken if I happen to twist my back too suddenly in my sleep. Then I get the comforting needle stuck in my back twinge.
Comment by Fat Bastard — Thu, Jul 26th, 2007 @ 10:41 pm
With enhanced REM sleep, I believe you’re more likely to stay motionless—although eyes and fingers are said to twitch. It’s what athletes need for muscle and injury recovery.
You can get Melatonin in Finland, but you need a prescription. Otherwise, according to my doctor, it’s available over-the-counter at pharmacies in Estonia.
It probably wouldn’t hurt, even if you don’t have sleep problems. Deeper REM is probably always good.
Comment by Kristian — Fri, Jul 27th, 2007 @ 1:16 am
An integrated, segregated society is better
Comment by sdpahsrqudbsxfsrw — Sat, Oct 27th, 2007 @ 12:23 am