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Dark Clouds On The Horizon For Big Pharma

Michael Chandler profile picture
Michael Chandler


  • According to the most recent healthcare report from the OECD, prescribed medicines here in the United States cost $1025.60 per capita, where the average per capita spending in the developed countries of the OECD is only $567.70.
  • According to the same source, we spend $10,966 per capita on healthcare here in the United States versus a comparable country average of $5697 per capita elsewhere.
  • 19 million adults importing medications from Canada or other countries. 8% of the population.
  • The US spends 514 billion per year on Pharmaceuticals. With over $174 billion of that coming from Medicare, Pharmaceutical Companies' margins would be crushed.
  • Pres. Biden stated in January that within 12 months, Medicare, and Medicaid through HSS would be negotiating pharmaceutical pricing.

Small Family Being Served By Chemist At Local Pharmacy
Tom Werner/DigitalVision via Getty Images

For many years the pharmaceutical industry has spent nearly $300 million a year on lobbyists to protect their interest in Washington. They are finding their efforts may very well become problematic in the next

This article was written by

Michael Chandler profile picture
I have been a Investment Advisor Represented since 1989, Currently owner and founder of Dogwood Capital Management. Investment advisory services offered through World Equity Group, Inc., member FINRA and SIPC, a Registered Investment Adviser Dogwood Capital Management is not owned or controlled by World Equity Group, Inc.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (18)

Doc 224899 profile picture
I don't think Biden is capable of addressing the need of TORT REFORM. The trial attorney's lobby won't allow that discussion, and his poor befuddled brain can't handle the complexities. Poor guy, connecting the dots are beyond his grasp.
Doc 224899 profile picture
Other countries spend less for American made drugs because greedy trial attorneys make huge fees with massed torts at drug companies that can't be defended against. So, drug companies settle, lawyers get huge fees, and a few bucks might get sent out to alleged plaintiffs.

Greedy American trial attorneys in the USA don't sue drug companies in foreign countries, so it costs less to do business there.

Democrats are OWNED by the trial attorney's lobby. They KNOW drug costs in the US are hiked up because drug companies have to dole out money to parasitic trial attorneys here. And, that's why they don't allow anyone to mention the term TORT REFORM. They don't even allow discussion of the concept of reigning in the multi-billion dollar cash flow from drug companies to trial attorneys. It's verboten.
Michael Chandler profile picture
@Doc 224899 I'm sure that is part of it, The real scam was when Part D Medicare was introduced and Congress agreed with the Pharmaceuticals not to ever negotiate prices and made it the law. We will see how long that last.
PaFromFL profile picture
Greedy power-hungry opportunists took advantage of WWII to create the military/industrial complex. Greedy power-hungry opportunists took advantage of 9/11 to create the TSA, Patriot Act, and other security theater. Greedy power-hungry opportunists are currently setting up a health-bureaucracy/pharmaceutical-industrial complex. They won’t stop until they can control our travel with a Green Pass system and force everyone to take overly-profitable annual vaccines that are free from liability. Listen carefully to their narratives, but also listen carefully to those who challenge their narratives. For example, news reports from Israel are currently painting a dismal picture. Remember that Israel is sort of a big test laboratory for the Pfizer vaccine.
j. hughes profile picture
To quote Will Rogers: "America has the best politicians that money can buy."
The lobbyist you refer to give him credence.
Michael Chandler profile picture
@j. hughes Well said my friend.
"The [pharma] industry says significant cuts in R&D will reduce the number of new drugs coming to market by at least 10% if this legislation was passed."
The vast majority of pharma spending is on marketing, not R&D. They probably spend far more on TV commercials than anything else. The COVID campaign is a marketing strategy for the vaccine industry, notable for its extreme aggressiveness.
Michael Chandler profile picture
@susan58 Good point but if they would spread the R&D around the globe it wouldn't be on the backs of the American people. MRNA Digitizing Biotech has proven drugs can be developed a lot faster. That should help cost too. Thanks for your comments.
PaFromFL profile picture
Big pharma will continue to thrive under the best government money can buy. The pandemic clearly demonstrates that the “authorities” have no real interest in public health because they

1. mainly focus on vaccines rather than treatments and promote new expensive anti-virals while discouraging the use of generic drugs,

2. let SARS-2 stream across our southern border and bus infected migrants throughout the heartland,

3. and promote vaccine passports rather than immunity passports even though natural immunity is much stronger than vaccine immunity (passports should be based on antibody testing now that we know that breakthrough cases are common).
@PaFromFL , I think you are mistaken on all three points. Vaccine immunity is greater in most cases than acquired immunity, without the danger of hospitalization or long-Covid disease. It is unlikely that immigration is the major source of new cases in this era of jet travel and interstate travel, and our spotty response to the epidemic. I would ask, what border does Florida butt up against? The delta variant originated in India and spread to the UK and the US first, then Latin America, not the other way around.
Pompano Frog profile picture
Dear Reader...

A $500 difference in expenditure is not going to solve the problem of health care costs. The problem is other countries are stealing our intellectual property. If they paid more, we could pay less.

As in every industry, there is a function between R&D/long term capital expenditures and potential profits. If you damage profits to this industry you will reduce long term R&D. This is an especially unusual industry in that if the government takes over some of the R&D function they will not achieve the same results.

Did you notice that the U.S. has an enormously higher rate of intensive care rooms per hundred thousand people than the "developed" countries you compared us to. They are achieving the lower health care costs by just avoiding paying for sophisticated health care for the seriously ill. Basically, they let seniors and the seriously ill die. And, that decision is their political right to decide.

But, I would suggest that the general population doesn't really understand. If you digitized health care information you could lower costs dramatically. Oh I forgot, we can't even get the population to vaccinate. If you doubled the number of doctors being turned out required 8 years of public service in exchange for tuition and other costs you could lower the incomes of the medical establishment with only some damage to quality.

The United States has failed to solve any major problem it has faced, healthcare, education, military or economic development.
Michael Chandler profile picture
@Pompano Frog Interesting! I encourage you to read the study on quality of care rankings by Peterson and the OECD as well as Kaiser Foundation. They rank US 11th in the world. Falling Life expectancy and Dr's per capita ECT. and yet twice the cost per capita of the average developed country.
Pompano Frog profile picture
@Michael Chandler

Truly thank you for your comment. Falling life expectancy is not a good measure for the available..available quality of medical care. Anyone who travels knows that Americans have the worst life style choices of any of the developed countries. The obesity epidemic alone is incredible.

I don't know where you go for your medical care, but I live an hour from a Cleveland Clinic in Westin, Florida. The equipment alone is just not available in Europe. During the recent covid articles in the Wall Street Journal gave the numbers for the number of intensive care beds per hundred thousand. My first cousin is a retired surgeon. His advise when I travel is if I get sick, crawl to the airport to get back here.

You are right, that quality of medical care is not available in rural America and in many poor communities. We could do better. But, the public needs to realize that the medical care being provided unskilled immigrants is going to come out of the quality of care for the existing population. That means mainly the elderly. If the elderly knew that all of these schemes to provide more is going to be on their backs maybe they would vote differently.

All of these U.N. type scoring systems have been specifically designed to show socialist medicine as the preferred choice. For poor countries it is the only logical choice.

It boils down to a political choice. But, at least inform those effected about what the choice is rather than feed them propaganda that they will all have better care.
Shaduc profile picture
@Pompano Frog
I was in the hospital for a week in Shanghai under observation.
$5000 for the entire package.
Clinic checkups are 10-25RMB.
SA-NJ52 profile picture
@Michael Chandler

You are right about the costs of drugs in the USA. It never ceases to amaze me on the costs of drugs.

Bernie Sanders had busloads of people going to Canada to buy drugs.

There was an internet pharmacy in Canada started by a couple of pharmacy grads that made millions filling US prescriptions before it was shut down.

The problem is that it is highly unlikely that drug prices will fall in the USA anytime soon.

Even they do fall, ultimately you need to pick winners with strong pipelines.

I own a basket of Big and Tiny Pharma stocks. I also own IBB. I am adequately diversified to weather any drug price storm that will soon pass.

Michael Chandler profile picture
@gandc Thanks for your comments and I agree totally regarding strong pipelines.
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