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The Best Fix for American Drug Prices Is Already on the Books

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Re: The Best Fix for American Drug Prices Is Already on the Books

#51

Post by jandrewrogers »

khazhoux wrote: post #19

Crazy idea: all pharmaceutical research should be publicly funded and publicly-owned. No private ownership of drug patents, period. "But this will disincentive research!" Maybe. Or, tax people more in order to fund the research. The tax revenue would go directly to researcher salary, equipment, expenses. Even a large tax increase can't be worse than today, where people have to pay huge $$$ anyway, of which a large cu…

The reality is that governments have demonstrated limited interest in effective biomedical R&D. Europe does not invest proportional to their population or economy, their governments are happy to outsource it to the US (and Asian) private sector. And there is the longstanding issue that what governments do fund is biased by political fashion and not the areas of research that will maximize benefit. There has been a huge growth in private foundations that fund biomedical research that governments should fund but do not.

Also, pharma researchers will accept massive pay cuts "for the science and the cause" as soon as Silicon Valley software engineers take massive pay cuts "to make the world a better place". I have many friends in biotech and they are as interested in maximizing their paycheck as software engineers, it would be naive to expect anything different.

Re: The Best Fix for American Drug Prices Is Already on the Books

#52

Post by disordinary »

AnthonyMouse wrote: post #17
jerrysievert wrote: post #9

Earlier quoted context omitted.

are you sure that the cost of development is the real issue? the last numbers I saw, 2015, showed marketing budgets for medicine to be often times twice what was being spent on R&D in the US. currently, only four countries allow this time of marketing: New Zealand, Brazil, Hong Kong, and United States. it sounds like the US isn't necessarily subsidizing drug R&D, and instead is subsidizing marketing.

> the last numbers I saw, 2015, showed marketing budgets for medicine to be often times twice what was being spent on R&D in the US. The marketing expense isn't necessarily avoidable. Suppose it costs $50M to research a drug and patients will pay $1000 for a course of treatment. If you do no marketing then you get forty thousand customers and can't recover your R&D. If you spend $100M on marketing then you get two hu…

Surely though the best marketing is the effectiveness of the product, if it's a good product then doctors will prescribe it.

I don't know if it's true or not, but looking at US movies/tv shows it seems like everyones taking medication which I doubt they actually need. Here I don't know very many people who actively take regular medication, I know that people who move here complain at how doctors are stingy with prescriptions, yet life expectancy is longer than the US.

Re: The Best Fix for American Drug Prices Is Already on the Books

#53

Post by danShumway »

thereisnospork wrote: post #40
danShumway wrote: post #15

Earlier quoted context omitted.

> Nobody wants to spend money on marketing. If drug companies could recoup their investment faster by spending less on marketing, they would. This doesn't pass my sniff test. The original article's point isn't that companies are marketing just so they can flush money down the toilet. Of course it's profitable. The article's point is that we as a society want them to spend more money on R&D; and our current strategy s…

If we take the somewhat liberal assumption that pharma's marketing budget is ecomically optimal at present - eg marginal costs equal marginal revenue, how is making marketing more expensive helping anyone? All it will do is decrease revenue/drug which will have a knock-on effect on marginal revenue of R&D: reducing gross R&D expenditure and thus approved drugs. In the end, you can have more new drugs (new antibiotics…

> If we take the somewhat liberal assumption that pharma's marketing budget is ecomically optimal at present - eg marginal costs equal marginal revenue

Do we take that assumption?

Sure, if we take the assumption that we're operating at perfect efficiency already, then I suppose there's no need to mess up an already good system. And maybe we are; I've even seen a few articles suggesting that we're suboptimal, that pharma is bleeding money at the moment. In which case, maybe the takeaway is the opposite, that we should extend exclusivity to 25 years or something.

But that's a very different claim to make. I suspect that the author of the linked article would claim that pharma is not at all optimal, and I suspect that any entrenched industry in a large market being optimal is the exception rather than the rule.

I think it's generally a mistake to assume that things cost a lot because they have to. Often in a free market it is because of large (solvable) inefficiencies or bad business practices, which is exactly what enables newer industries and businesses to out-compete and displace older ones.

Re: The Best Fix for American Drug Prices Is Already on the Books

#54

Post by disordinary »

peterashford wrote: post #44
tomohawk wrote: post #4

One of the biggest reasons is that the US essentially subsidizes drugs for many other countries, such as Canada, that impose price controls, and threaten to allow other manufacturers to provide the drugs in their countries if the companies don't accept the imposed price. This enables these countries to get access to new medicine without paying the cost of developing the new medicine. Its time to end the trade war on…

How do you propose to force other countries to pay more for medicines than they do currently? What I find odd is that no-one is forcing these companies to sell their products at a lower price - if they weren't profiting, they wouldn't sell their product.

Somehow forcing others to pay more rather than forcing the companies to charge less for everyone is the free market at work...

Re: The Best Fix for American Drug Prices Is Already on the Books

#55

Post by HarryHirsch »

RcouF1uZ4gsC wrote: post #41
khazhoux wrote: post #19

Crazy idea: all pharmaceutical research should be publicly funded and publicly-owned. No private ownership of drug patents, period. "But this will disincentive research!" Maybe. Or, tax people more in order to fund the research. The tax revenue would go directly to researcher salary, equipment, expenses. Even a large tax increase can't be worse than today, where people have to pay huge $$$ anyway, of which a large cu…

You do that and in in a few decades, after a few rounds of negotiations, most of your research money will go to funding ex-researchers pensions. For an example, take a look at where California's tax revenues go. In addition, public funding tends to more risk averse. Private industry generously rewards innovation. Public funding tends to reward not rocking the boat.

Private industry generously rewards innovation

The drug industry is generally happier to develop new drugs against targets that are well established and for conditions that physicians are trained to prescribe for. That's why we are now at fifth-generation statins, and also why "first-in-class" compounds are so rare.

For something really new you need to find the target, devise an assay and make a case for use. It's a billion-dollar gamble. Statins on the other hand, they are well established.

Re: The Best Fix for American Drug Prices Is Already on the Books

#56

Post by peterashford »

disordinary wrote: post #54
peterashford wrote: post #44

Earlier quoted context omitted.

How do you propose to force other countries to pay more for medicines than they do currently? What I find odd is that no-one is forcing these companies to sell their products at a lower price - if they weren't profiting, they wouldn't sell their product.

Somehow forcing others to pay more rather than forcing the companies to charge less for everyone is the free market at work...

sorry, not sure what point you're trying to make?

Re: The Best Fix for American Drug Prices Is Already on the Books

#57

Post by peterashford »

disordinary wrote: post #49
peterashford wrote: post #42

Earlier quoted context omitted.

...except, at least in NZ where they do some of that marketing, the drugs are purchased via the state body Pharmac, which will not pay the inflated prices that the drug companies charge in the US.

The reason for the advertising in NZ is that Pharmac will often fully fund generics, if you want to buy the brand name drug you have to pay extra on top. For instance, I just got a new prescription for inhalers, the pharmacy told me if I wanted ventolin it would be $5 but the generic was fully subsidised.

sure, my point (which I probably was not very clear about) was more that the cost of marketing in NZ still isn't going to ratchet up profitability to the level of the US with their higher prices

Re: The Best Fix for American Drug Prices Is Already on the Books

#59

Post by disordinary »

peterashford wrote: post #56
disordinary wrote: post #54

Earlier quoted context omitted.

Somehow forcing others to pay more rather than forcing the companies to charge less for everyone is the free market at work...

sorry, not sure what point you're trying to make?

I was agreeing with you.

Trump want's the rest of the world to pay more for US pharmacuticals by stopping the free market (which is how those countries get good deals, by going out to tender), but he doesn't want to do anything to make things better in the US because of the free market.

Re: The Best Fix for American Drug Prices Is Already on the Books

#60

Post by KKKKkkkk1 »

khazhoux wrote: post #19

Crazy idea: all pharmaceutical research should be publicly funded and publicly-owned. No private ownership of drug patents, period. "But this will disincentive research!" Maybe. Or, tax people more in order to fund the research. The tax revenue would go directly to researcher salary, equipment, expenses. Even a large tax increase can't be worse than today, where people have to pay huge $$$ anyway, of which a large cu…

Back when the HIV epidemic started, President Reagan and his administration took the view that HIV is a deserved punishment from god for homosexuality and promiscuity. Now what are the chances that that administration would have invested even $1 in developing drugs for AIDS? Do we want to live in that kind of world?
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