91–100 of 131 posts
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…
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Health insurance, despite the name, isn’t insurance. Insurance is paying small sums, at EV negative cost, to mitigate the risk from a rare but very expensive cost. Health insurance isn’t underwritten and pays out for routine expenses. It isn’t insurance.
I think you are trying to say it is more than an insurance, because it also pays out for routine expenses?
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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.
Well, except for Daraprim which has been off patent for 62 years. It went from $13.50 to $750 overnight because it only has one producer that decided to raise the price 5500%. https://www.vox.com/2015/9/22/9373557/daraprim-competitor-tu... And there's no generic insulin sold in the US, even though it was discovered 90+ years ago. https://www.npr.org/2015/03/22/394634923/90-years-after-its-...
For the vast,vast majority of drugs they are dirt cheap once the patent runs out.
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I don't buy that argument. It's like saying I should sell something I bought at the store for free, because I didn't pay the cost to make it directly (someone else did, and I paid them). The research had to be done, and JNJ bought the company that did it. The price they had to pay was impacted by the cost of the research.
But if the product you're selling in your store was made using charity? Or gifted you by the government? then high prices couldn't be justified by R&D costs.
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I don't buy that argument. It's like saying I should sell something I bought at the store for free, because I didn't pay the cost to make it directly (someone else did, and I paid them). The research had to be done, and JNJ bought the company that did it. The price they had to pay was impacted by the cost of the research.
But if the product you're selling in your store was made using charity? Or gifted you by the government? then high prices couldn't be justified by R&D costs.
It's the ultimate prediction problem. And short term, computational bio methods are driving R&D costs up, not down. But arguably, techniques like DeepFold constitute current best hope https://moalquraishi.wordpress.com/2018/12/09/alphafold-casp...
Interestingly in the case of the the Abiraterone example used in the article, none of the R&D was even done by JNJ. The original work was done at The Institute of Cancer Research, an academic/charity drug discovery institute. JNJ actually only market this drug because of acquisitions rather than R&D efforts. Which is the way that a lot of pharma is going these days, letting smaller biotechs take the high risk of deve…
As to government funding, mentioned below, the 90/10 rule applies in pharma as much as anything. The last 10% is 90% of the work.
How much do governments care about health outcomes?
Not that much. we could cut healthcare spending in half with very few noticeable effects on outcomes. https://en.wikipedia.org/wiki/RAND_Health_Insurance_Experime... . An early paper with interim results from the RAND HIE concluded that health insurance without coinsurance "leads to more people using services and to more services per user," referring to both outpatient and inpatient services.[5] Subsequent RAND HIE p…
It’s about how you value your population and the type of society you are trying to develop.
When the question is stated like that it becomes really questionable whether cost of drugs should have anything to do with drug research cost. Those two things look like they should be completely separate, done by separate entities with separate funding.
I think the reason you want them connected is the ability to channel private capital towards achieving medical progress. If there is a disease which costs the general population tens of billions of dollars a year, either in providing healthcare or in an inability to carry on a normal life, work, look after yourself and so on, then there is an inherent and huge pot of money which can go to solving the problem. If you…
And yet, despite having that connections, not only in the medicine but in all branches of technology, most impactful discoveries of last century come from tax funded university research not business.
Business is best at researching how to reduce the cost of manufacturing and distribution of a thing. Which is very important by itself. But when it comes to finding new stuff business usually falls short because it's too risky.
> inherent and huge pot of money
Size of this pot of money is direct result of how much the company will be allowed to charge for the drug once it's discovered.
Comapnies are so risk averse that you have to make this pot of gold disproportionately huge by allowing them to charge whatever they will manage to squeeze out of the market.
Interestingly in the case of the the Abiraterone example used in the article, none of the R&D was even done by JNJ. The original work was done at The Institute of Cancer Research, an academic/charity drug discovery institute. JNJ actually only market this drug because of acquisitions rather than R&D efforts. Which is the way that a lot of pharma is going these days, letting smaller biotechs take the high risk of deve…
...that said, it makes a good point about how the incentives work. If the govt did Xprize-like rewards for medical goals, it would work similarly: you stop paying for failed research and only pay for success, just like the examples you cite.
All told, I think too many electrons are spilled arguing over the need to pay for R&D (direct or indirect) and not enough answering the title here: "how much?" I would not be surprised to discover a dramatic reduction in prices could occur with minimal impact on results - which doesnt deny the need to pay for R&D. I'd rather people with expertise focus on how much,as well as figuring out how to shift incentives towards completeness over the current incentive for lockdown.