How pharmaceutical industry financial modelers think about rare diseases • Hacker News Board

Re: How pharmaceutical industry financial modelers think about rare diseases

#21

Post by ekianjo » Tue, Apr 30, 2019, 2:13 PM UTC

tzs wrote: post #13

hammock wrote: post #6

Shorten or remove the patent benefits awarded to new drugs, and the calculus changes dramatically.

How about go the other way? Make the patent term much longer, but add a compulsory licensing system that allows anyone to make and sell the drug if they pay a royalty at a rate set by regulation.

> How about go the other way? Make the patent term much longer, but add a compulsory licensing system that allows anyone to make and sell the drug if they pay a royalty at a rate set by regulation.

Who sets the rate then? Regulation means government, which will be massively lobbied for increasing licensing fees in the favor of the industry. If you want to shake things a little better to massively decrease the patent period instead, since it makes everything way too slow.

Re: How pharmaceutical industry financial modelers think about rare diseases

#22

Post by loceng » Tue, Apr 30, 2019, 2:14 PM UTC

caublestone wrote: post #2

I met a PHD chemist who spent 30 years developing drugs. Over that period he developed 20,000 APIs. 4 were approved. 1 made it to the market.

I wonder how many times over tests were done by competing companies, duplication, and how much waste/inefficiency there was because of data not being shared - and how much further duplication may continue to happen.

Re: How pharmaceutical industry financial modelers think about rare diseases

#23

Post by lotsofpulp » Tue, Apr 30, 2019, 2:18 PM UTC

ekianjo wrote: post #20

lotsofpulp wrote: post #8

Earlier quoted context omitted.

The only change I can see is needing to increase the cost of the medicine to make up for the reduced exclusivity period, or a reduced incentive to research medicine.

You can't just reduce the patent period without reducing the regulatory process that is required to get stuff approved. It would not work otherwise.

I hope we're not on the path to reducing rigorous testing and vetting of medicines in exchange for cheaper prices. Medical science is extremely hard, and verifying cause and effect in a system as complex as the human body takes significant resources.

People want cheap, people want safe, people want well qualified individuals pursuing these advances. What people don't want is higher taxes to enable government funding for this research, and would rather have private investors pick up the tab. And then they scoff at high medicine prices. I'm sure there's some corruption and paper pushing waste going on, but fixing that is not going to remove the need for costly triple blind studies that span years, only to result in failure the vast majority of the time.

That's the cost of good science, and if society wants the fruits, they need to pay for it.

Re: How pharmaceutical industry financial modelers think about rare diseases

#24

Post by golergka » Tue, Apr 30, 2019, 2:20 PM UTC

btown wrote: post #4

This article does a good job showing how big an impact the concept of "time value of money" can have on a multi-year investment of any kind - pharmaceutical or not. (Particularly since many of us in software are effectively investing nontrivial amounts of our salary in illiquid investments.) I'd imagine that many tend to think of a $X investment as a $X investment... but if that investor could get effectively compoun…

The more I learn about finance, and the better I grok money, the more I start to think of money as a substance that represents time-travel, in a sense. Current amount of money you have on your account is always tied up to your past decisions or to a space of your possible decisions about it, and so well-quantified, that the worth of basically anything is always tied up to a dynamic process which is always, in the end, measured in time.

(OK, I just understood that what I wrote reads as a horrible unintelligible mess, but I didn't yet grok this idea well enough to put it down elegantly.)

Re: How pharmaceutical industry financial modelers think about rare diseases

#25

Post by pault » Tue, Apr 30, 2019, 2:20 PM UTC

csunbird wrote: post #11

btown wrote: post #4

This article does a good job showing how big an impact the concept of "time value of money" can have on a multi-year investment of any kind - pharmaceutical or not. (Particularly since many of us in software are effectively investing nontrivial amounts of our salary in illiquid investments.) I'd imagine that many tend to think of a $X investment as a $X investment... but if that investor could get effectively compoun…

I agree completely, most people overlook the "opportunity cost" of investments. If an investment makes %3 per year but you could invest in something else that makes %4 per year, while you did make profit, you actually lost money, because you missed an opportunity to make an extra revenue equals to %1 of your money (or %33 more profit).

Or more common, knowing how to balance a smaller payout now vs. a larger payout in the future. If you are investing, the smaller payout might be the more valuable option. Of course most people don't invest, which is why future discount isn't widely understood.

Re: How pharmaceutical industry financial modelers think about rare diseases

#26

Post by modzu » Tue, Apr 30, 2019, 2:26 PM UTC

Pharmaceutical companies typically claim that the reason for high drugs prices is because of the amount that they spend on research and development (R&D). According to the industry, it costs USD $2.6 billion to bring a drug to market [1]. Critics counter that companies are more focused on and spend more on promotion than on R&D. Gagnon and Lexchin produced figures that showed that in the United States in 2004 the industry spent USD $57.5 billion on promotion versus USD $31.5 billion on R&D [2]. A report from the California-based Institute for Health and Socio-Economic Policy stated that in 2015 out of the top 100 pharmaceutical companies by sales, 64 spent twice as much on marketing and sales than on R&D, 58 spent three times, 43 spent five times as much and 27 spent 10 times the amount [3].

[1] https://www.ncbi.nlm.nih.gov/pubmed/26928437 [2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2174966/ [3] https://nurses.3cdn.net/e74ab9a3e937fe5646_afm6bh0u9.pdf

Re: How pharmaceutical industry financial modelers think about rare diseases

#27

Post by cknoxrun » Tue, Apr 30, 2019, 2:38 PM UTC

loceng wrote: post #22

caublestone wrote: post #2

I met a PHD chemist who spent 30 years developing drugs. Over that period he developed 20,000 APIs. 4 were approved. 1 made it to the market.

I wonder how many times over tests were done by competing companies, duplication, and how much waste/inefficiency there was because of data not being shared - and how much further duplication may continue to happen.

My project in University (and now my company) annoyed a lot of companies when we first published DrugBank in 2006. We basically opened up the data on potential APIs and their targets into a downloadable and useable data set. I remember going to conferences and being both lauded by academics and maligned by pharma folks. This was before Wikipedia or things like Pubchem and ChEMBL were really a thing.

Re: How pharmaceutical industry financial modelers think about rare diseases

#28

Post by prolikewhoa » Tue, Apr 30, 2019, 2:39 PM UTC

chadash wrote: post #10

I was surprised that this article didn't mention the Orphan Drug Act of 1983, which was passed by congress to facilitate the development of drugs for rare diseases (many other countries have similar legislation). This act gives tax incentives, subsidies, lowers clinical trial requirements and increases exclusivity for the development of "orphan drugs", which otherwise might not be economically viable to develop. That…

>This act gives tax incentives, subsidies, lowers clinical trial requirements and increases exclusivity for the development of "orphan drugs", which otherwise might not be economically viable to develop. That said, if a condition is rare enough, there's probably no amount of tax incentives that's going to induce a for-profit company to go through the significant costs and hassle of bringing a drug to market

Some people like to claim that the free market works though.

Re: How pharmaceutical industry financial modelers think about rare diseases

#29

Post by umvi » Tue, Apr 30, 2019, 2:39 PM UTC

schemathings wrote: post #18

swarnie_ wrote: post #17

Earlier quoted context omitted.

I also followed his saga and watched both this series and his general stock picking analysis videos. If you can separate yourself from the persona he tried to cultivate and enjoy having your excel skills emasculated there both great watches

If your goal is to have your ego deflated in Excel, this is always a good place to start .. "You Suck at Excel with Joel Spolsky" .. https://www.youtube.com/watch?v=0nbkaYsR94c but I agree, Shkreli definitely had the whole speed run thing down with Excel.

Is that a parody of "You Suck at Photoshop" tutorials?

Re: How pharmaceutical industry financial modelers think about rare diseases

#30

Post by prolikewhoa » Tue, Apr 30, 2019, 2:43 PM UTC

lotsofpulp wrote: post #23

ekianjo wrote: post #20

Earlier quoted context omitted.

You can't just reduce the patent period without reducing the regulatory process that is required to get stuff approved. It would not work otherwise.

I hope we're not on the path to reducing rigorous testing and vetting of medicines in exchange for cheaper prices. Medical science is extremely hard, and verifying cause and effect in a system as complex as the human body takes significant resources. People want cheap, people want safe, people want well qualified individuals pursuing these advances. What people don't want is higher taxes to enable government funding…

It's so weird to me that people won't pay taxes for the government research, but then complain when the drugs are out of their price range because the corporation needs extensive profits to make up their costs so the consumer likely end up paying more than they'd pay in taxes for the research and public benefit.