How expensive do prescription drugs need to be to fund research? • Hacker News Board

Re: How expensive do prescription drugs need to be to fund research?

#41

Post by refurb » Wed, Mar 27, 2019, 3:46 AM UTC

djrobstep wrote: post #12

rossdavidh wrote: post #4

The answer will always be, "more expensive than they are now". It's not like there will ever be a point at which more money, if available, could not in any way be used for some kind of drug research that might be useful. It's like saying "how much money do you need in order to keep from ever dying?" There will always be health problems, and there will always be some at least semi-plausible way in which we could spend…

The hypothetical situation you're describing has no connection to the reality of how drug research money gets allocated. We're not even ready to talk about how: - drug companies spend more money on marketing drugs than researching them - drug companies waste much of their research on copycat drugs rather than new treatments - IP law needlessly denies millions access to existing treatments by artificially inflating pr…

drug companies waste much of their research on copycat drugs rather than new treatments

Innovations in pharmaceuticals is often incremental, not huge leaps forward. You have 4 different cancer drugs, each one adds 6 months of life for each launch and you end up with 2 extra years of life.

As well, copycats are needed, because not every drug reacts the same in everyone. If you need to lower your cholesterol, you have dozens of different statins to choose from. Some you won't be able to tolerate, others you can. Options are good, not bad.

Re: How expensive do prescription drugs need to be to fund research?

#42

Post by greeneggs » Wed, Mar 27, 2019, 3:48 AM UTC

astazangasta wrote: post #21

barry-cotter wrote: post #18

Earlier quoted context omitted.

The research part of R&D is publicly funded, the development part isn’t, and it’s very, very expensive. On average about a billion dollars.

The idea that development is not publicly funded is a myth. Regulators define every step, put in a good deal of the money, and do a lot of the organizing. A lot of the rest is done in coordination with researchers at hospitals and universities that are often publicly funded. As with most large industry involved research efforts, the government and academia are heavily involved in the effort. Only the profit is privat…

> Only the profit is privatized. It has always been thus.

This is false. Just the other day we had a discussion on another Alzheimer's drug failure [1]. From the linked article, "Biogen and Eisai will discontinue two late-stage trials designed to evaluate the efficacy and safety of the drug, aducanumab, which has cost the partners more than $830 million over the past three years." This comes after Eli Lilly spent $3 billion on another Alzheimer's drug, that failed in 2016, and other failures from Merck and Johnson & Johnson. There's a fortune being spent on the last steps of getting a drug to market, or not.

One might argue that there has been some regulatory capture, that the pharmaceutical giants have happily acquiesced with the FDA in making drug trials more and more expensive. Now only the giants can afford trials, and small companies have to go through them. But the trials are absolutely extremely expensive.

[1] https://news.ycombinator.com/item?id=19468987

Re: How expensive do prescription drugs need to be to fund research?

#43

Post by refurb » Wed, Mar 27, 2019, 3:48 AM UTC

ikeboy wrote: post #22

barry-cotter wrote: post #14

Earlier quoted context omitted.

> drug companies spend more money on marketing drugs than researching them Free samples to doctors are counted as a marketing expense at retail prices, not at marginal prices > drug companies waste much of their research on copycat drugs rather than new treatments Marginal improvements are actually a huge deal and make for a lot of improvement. Because of our astonishing ignorance doctors will often go through multip…

>Free samples to doctors are counted as a marketing expense at retail prices, not at marginal prices That doesn't sound like GAAP - is this proper accounting?

The other major cost with pharmaceutical marketing is just personnel. When you have 200,000 prescribers (for example) in the US, you're going to need thousands of sale reps. Otherwise how else do you communicate with your customers?

Re: How expensive do prescription drugs need to be to fund research?

#44

Post by refurb » Wed, Mar 27, 2019, 3:50 AM UTC

apo wrote: post #16

Patent expirations don't factor into this article very much, but there's this: The simple explanation for excessive drug prices is monopoly pricing. Through patent protection and FDA marketing exclusivity, the U.S. government grants pharmaceutical companies a monopoly on brand-name drugs. But monopolies are a recipe for excessive prices. A company will raise prices until its profits start to drop. That monopoly is ve…

Indeed. Companies have a limited time to recoup costs. Once the patent runs out, that $10,000 drug turns into a $500 drug. Forever. That benefit can't be ignored.

Re: How expensive do prescription drugs need to be to fund research?

#45

Post by refurb » Wed, Mar 27, 2019, 3:52 AM UTC

kingkawn wrote: post #38

barry-cotter wrote: post #37

Earlier quoted context omitted.

No matter if it is a white cat or a black cat; as long as it can catch mice, it is a good cat. Deng Xiaoping

This quote was in reference to trying to grow the Chinese economy after Mao. Given how many people go bankrupt for drugs, and how much high drug prices distort the economics of healthcare overall, id argue our current setup is not catching mice. A good alternative would be Public investment in healthcare to add fluidity to the labor market, and to prevent a single sectors profiteering from dragging down overall econo…

Drug costs are ~10% of all healthcare spending in the US. Even if the gov't created all the drugs and made them "free", we'd still be spending double the next closest developed country.

Drug spending might be very visible to the public, but it's not a major contributor to healthcare costs.

Re: How expensive do prescription drugs need to be to fund research?

#46

Post by refurb » Wed, Mar 27, 2019, 3:54 AM UTC

astazangasta wrote: post #21

barry-cotter wrote: post #18

Earlier quoted context omitted.

The research part of R&D is publicly funded, the development part isn’t, and it’s very, very expensive. On average about a billion dollars.

The idea that development is not publicly funded is a myth. Regulators define every step, put in a good deal of the money, and do a lot of the organizing. A lot of the rest is done in coordination with researchers at hospitals and universities that are often publicly funded. As with most large industry involved research efforts, the government and academia are heavily involved in the effort. Only the profit is privat…

Yeah, no.

Regulators put no money into it other than what it costs to fund it's own regulatory process. And, under PDUFA, drug manufactures pay >$1M to fund the review of their drug. It's paid for by industry.

Yes, clinical trials are often run by hospitals and universities, but manufacturers pay for everything. Drugs, people, etc.

And you forgot to mention that failures are privatized too. Spend $500M on a trial that fails? That's not the public's money, that's investors money.

Re: How expensive do prescription drugs need to be to fund research?

#47

Post by refurb » Wed, Mar 27, 2019, 3:57 AM UTC

Causality1 wrote: post #35

However expensive it is, it should cost the same in all markets globally, whether it's being purchased by a patient in cash, by an NGO, by a state Healthcare system, or by an insurance company. I'm tired of paying a five hundred percent markup to subsidize markets thousands of miles away.

Really? So a country with a per capita income of $5,000 should pay the same as what a country with a $50,000 per capita income?

That would be a terrible outcome.

Re: How expensive do prescription drugs need to be to fund research?

#48

Post by refurb » Wed, Mar 27, 2019, 4:00 AM UTC

shkkmo wrote: post #40

refurb wrote: post #39

Earlier quoted context omitted.

When people always ask "how come healthcare is so much more affordable in countries outside the US?", the correct answer is rationing. If you need joint replacement surgery in Canada, you can expect a wait of many months to years. Canada has made the call that they will put a certain dollar amount into joint replacement and if the demand is higher, then people will just have to wait. Same thing with the latest and gr…

I don't think that is true at all, it is very clear that identical procedures and materials cost less in other countries.

Price caps play a role, but rationing plays an even bigger role. Google search for the McKinsey paper on US healthcare costs. The volume of outpatient procedures in the US is quite shocking compared to other countries.

Yes, things cost more in the US, but the volume is also quite a lot higher.

Re: How expensive do prescription drugs need to be to fund research?

#49

Post by nine_k » Wed, Mar 27, 2019, 4:14 AM UTC

refurb wrote: post #39

supertrope wrote: post #25

Earlier quoted context omitted.

https://www.nytimes.com/2009/07/19/magazine/19healthcare-t.h... "Why We Must Ration Health Care" by Peter Singer. New York Times Opinion Section. Unfortunately this is a very difficult conversation to have between people and their physicians, between family members, and with ourselves. It ties into another very difficult discussion of facing death. In a democracy the lowest common denominator argument wins out with c…

When people always ask "how come healthcare is so much more affordable in countries outside the US?", the correct answer is rationing. If you need joint replacement surgery in Canada, you can expect a wait of many months to years. Canada has made the call that they will put a certain dollar amount into joint replacement and if the demand is higher, then people will just have to wait. Same thing with the latest and gr…

Rationing also makes some outcomes summarily worse.

If you have a relatively minor problem, you're put in a line. For months (or years) of waiting, your problem becomes worse, and when you finally get to be treated, the treatment is much costlier and less effective.

This is to say nothing about your actual suffering from the problem, and from knowing that it's deliberately not being treated.

Re: How expensive do prescription drugs need to be to fund research?

#50

Post by astazangasta » Wed, Mar 27, 2019, 4:16 AM UTC

refurb wrote: post #46

astazangasta wrote: post #21

Earlier quoted context omitted.

The idea that development is not publicly funded is a myth. Regulators define every step, put in a good deal of the money, and do a lot of the organizing. A lot of the rest is done in coordination with researchers at hospitals and universities that are often publicly funded. As with most large industry involved research efforts, the government and academia are heavily involved in the effort. Only the profit is privat…

Yeah, no. Regulators put no money into it other than what it costs to fund it's own regulatory process. And, under PDUFA, drug manufactures pay >$1M to fund the review of their drug. It's paid for by industry. Yes, clinical trials are often run by hospitals and universities, but manufacturers pay for everything. Drugs, people, etc. And you forgot to mention that failures are privatized too. Spend $500M on a trial tha…

It's the public's money, since the only reason that the investors have that money is they are given patent monopolies that allow them to take in 1.5% of GDP in rents every year.