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Indian Government uses special powers to slash cancer drug price by 97%

timesofindia.indiatimes.com

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Re: Indian Government uses special powers to slash cancer drug price by 97%

#51

Post by Tuna-Fish »

rmc wrote: post #13
jensnockert wrote: post #2

It would be interesting to see how much money was lost or gained by Bayer based on this. I assume that usage might go up by at least a factor 20 in India (and their production costs go down) so those 6% might actually be a fair deal in the long run.

remember that Bayer won't have to manufactor it, someone else does. They get a cut (6%) without having to do any work

As others put it, the manufacture of simple chemicals in the quantities involved in pharmaceuticals is effectively free. As in, give me 100k and I'll be able to make enough of the drug for the whole world for the next hundred years. The packaging of most pharmaceuticals is more expensive than the manufacture of their contents.

The cost is overwhelmingly in R&D -- finding the chemicals, proving it doesn't kill people, and proving it actually does something useful.

Re: Indian Government uses special powers to slash cancer drug price by 97%

#52

Post by Symmetry »

nickik wrote: post #37
ThomPete wrote: post #33

Earlier quoted context omitted.

I am not sure I follow? It would force the governments to develop better and cheaper systems themselves to make sure that they can test for cheap. Surely the current scenario isn't working is it?

What I was trying to say: When the goverments pays for testing how will you stop brute force testing? > It would force the governments to develop better and cheaper systems themselves to make sure that they can test for cheap. I doute they cool do that. > Surely the current scenario isn't working is it? Well like most things it kind of works but is not very effective. I agree its not very good right know but I don't…

>> It would force the governments to develop better and cheaper systems themselves to make sure that they can test for cheap.

>I doubt they could do that.

While I disagree with the OP's point in general, this is probably true in a way the OP didn't intend. When testing, each unit of thoroughness you add costs the same amount but catches fewer and fewer mistakes. You generally want to stop adding more tests when the cost of new tests (in drugs that are too expensive to develop) exceeds the cost of letting bad drugs through. The research I've seen shows that not only is the FDA well into the point of diminishing returns, its also probably into the realm of negative net returns on drug testing. Probably because there's a huge public outcry when a drug they approve ends up killing people, but no outcry when I drug that could save lives isn't developed due to too much testing. If anybody has more research on the topic, however, I'd be happy to see it.

Re: Indian Government uses special powers to slash cancer drug price by 97%

#53

Post by Retric »

JunkDNA wrote: post #36

I worked in the drug R&D business for over 8 years. I still follow the industry closely. Some things always get lost in these discussions. First, manufacturing an existing drug is absurdly cheap. Modern industrial chemistry ensures this for all small molecule drugs (note that this is not the same case for the "biologics" which are often fiendishly difficult to make). Almost all the cost in a drug is the manufacturer…

There are a finite number of useful small molecules you can use as drugs. If it's costing 3-12 billion to find new ones and even then we are failing we may be at a point where it's time to 'give up' on our existing approach. As an upside we can remove a significant slice of our spiraling healthcare costs. We can also remove a lot of drug related advertizing that has dubious healthcare benefits. Unfortunately, that also means antibiotics are going to become infective in the not to distance future.

On the net I don't think this is a good thing, but it should free up a lot of vary intelligent people to work on other lines of research. Hopefully, we may eventual start to develop the tools to build direct DNA specific medicines on the fly by using the fruits of those other lines of research.

Re: Indian Government uses special powers to slash cancer drug price by 97%

#54

Post by mseebach »

corin_ wrote: post #5

I think few people would argue that drug companies' prices are reasonable, and when it comes to life vs. death I no longer care much about the "they're a business, they're allowed to make a profit" line - of course it's still true, and of course they are, but there's a (subjective) line between "making a good profit" and killing people through greed. That said, what pricing would be fair? When people claim that these…

> I no longer care much about the "they're a business, they're allowed to make a profit" line

You have to consider both the seen and the unseen: consider the case where a drug is not developed in the first place because the return on investment is (expected to be) forcefully lowered below where it is profitable. Or even more abstract: research is slowed down due to more risk adverse behaviour, delaying a major breakthrough.

Investing in drug development is very expensive and very risky. Very risky investments command a large return on their success.

It's easy to focus on the large sums of money being made on specific drugs, but pharma as an industry isn't inherently more profitable that other industries as a result. The cost of lower prices on successful drugs is going to come from somewhere.

Re: Indian Government uses special powers to slash cancer drug price by 97%

#55

Post by x3c »

I propose the following solution.

R&D stays in private sector. All successful drugs are bought by the government at the cost of R&D and a sizable profit. The government, then, distributes it. Government can control the distribution and Pvt. markets can control the invention.

Government can then tie up with other govts. and allow sales of the said medicine in those countries.

It's not an ideal solution, but it has best of both capitalist and socialist ideologies.

Re: Indian Government uses special powers to slash cancer drug price by 97%

#56

Post by nknight »

JunkDNA wrote: post #36

I worked in the drug R&D business for over 8 years. I still follow the industry closely. Some things always get lost in these discussions. First, manufacturing an existing drug is absurdly cheap. Modern industrial chemistry ensures this for all small molecule drugs (note that this is not the same case for the "biologics" which are often fiendishly difficult to make). Almost all the cost in a drug is the manufacturer…

> You don't need to be an industry expert to grok that those numbers are wildly unsustainable.

Tell you what. When these companies stop being the most profitable in America, or even just when their EPS starts declining, I'll believe you.

Re: Indian Government uses special powers to slash cancer drug price by 97%

#57

Post by ekianjo »

JunkDNA wrote: post #36

I worked in the drug R&D business for over 8 years. I still follow the industry closely. Some things always get lost in these discussions. First, manufacturing an existing drug is absurdly cheap. Modern industrial chemistry ensures this for all small molecule drugs (note that this is not the same case for the "biologics" which are often fiendishly difficult to make). Almost all the cost in a drug is the manufacturer…

The reason why the cost of R&D is inflating so much is due to relentless addition of new regulations, new requirements, new safety-related trials demanded by the authorities. Add to that that almost every other country has specific requirements that do not fit with what was developed and proven before, and that's just another 2-3 years clinical trial you need to put up with. This is really getting insane and there is science to back all those regulatory differences, some driven by pure ideology.

As you mentioned the patent cliff is looming for a number of big pharma actors, and what this is going to result in is less innovation and more strategic moves to other "easier" markets such as generics or OTC drugs. This is just plain bad for everyone in the end.

Re: Indian Government uses special powers to slash cancer drug price by 97%

#58

Post by moonchrome »

true_religion wrote: post #48
moonchrome wrote: post #44

Earlier quoted context omitted.

I'm not saying cover bad R&D - I'm saying cover bad R&D costs for companies that did the good R&D you want to use - because that costs would usually be covered by the profits from good R&D - this is how you structure investing - you make several risky shots so that the one that succeeds pays for the failures - it's a good way to determine "the proper" amount of profit, if you just repay the investment in profitable R…

Then we get into the case of having to monitor companies to make sure their bad R&D budget isn't being inflated to give them additional profit. Better to just negotiate cleanly with the company for the drug you want, and sell it all on your own market like the NHS does.

>Better to just negotiate cleanly with the company for the drug you want, and sell it all on your own market like the NHS does.

Well that's what I meant negotiate a "fair" price that would encourage further investment but you don't overpay - the problem is that unless you have competition/substitutes you can't have market pricing so you need to have a good estimate of "fair" price, eg. say a company comes up with 100% effective HIV cure tomorrow - no competition, nothing comes close, a lot of people would pay gold for that but well over investment/production cost and profit is in many multiples of going rate. You would say "fine" obviously there's a high demand - but the reality is that the demand is inelastic and supply is artificially restricted by a government granted monopoly - reverse engineering costs + production cost would allow a lot lower prices, so you aren't benefiting the consumers (the discovery has already been made) or optimally allocating resources (you have recovered investment/production costs, earned standard profit rate and then some) the thing you earn on top of that is deadweight loss from rent seeking so you need to come up with some metrics to avoid that and also set expectations for investors.

Re: Indian Government uses special powers to slash cancer drug price by 97%

#59

Post by gaius »

moonchrome wrote: post #58
true_religion wrote: post #48

Earlier quoted context omitted.

Then we get into the case of having to monitor companies to make sure their bad R&D budget isn't being inflated to give them additional profit. Better to just negotiate cleanly with the company for the drug you want, and sell it all on your own market like the NHS does.

>Better to just negotiate cleanly with the company for the drug you want, and sell it all on your own market like the NHS does. Well that's what I meant negotiate a "fair" price that would encourage further investment but you don't overpay - the problem is that unless you have competition/substitutes you can't have market pricing so you need to have a good estimate of "fair" price, eg. say a company comes up with 100…

If a company takes on debt to finance development, then "the discovery has already been made" isn't the same as "the discovery has already been paid for".

Re: Indian Government uses special powers to slash cancer drug price by 97%

#60

Post by tripzilch »

JumpCrisscross wrote: post #7
corin_ wrote: post #5

I think few people would argue that drug companies' prices are reasonable, and when it comes to life vs. death I no longer care much about the "they're a business, they're allowed to make a profit" line - of course it's still true, and of course they are, but there's a (subjective) line between "making a good profit" and killing people through greed. That said, what pricing would be fair? When people claim that these…

This is a difficult decision to rule on, without resorting to petty emotions, without access to the underlying data. One must balance the incentive for drug companies to develop drugs (and get that development financed) with the price inelasticity of the healthcare market. There is marginal cost, the cost to produce one more product independent of development cost, and fully amortised cost, which amortises the develo…

While assuming that a life tomorrow is worth about a life today might be reasonable, we're talking about research costs for drugs, and the comparison does not hold to assume that a new drug tomorrow is worth about an already existing drug today.

New drugs are often about squeezing out those last few years of life-expectancy, and even if they're not, they're a marginal increase over today's drugs. Meanwhile today's drugs fail to save many many lives because they are unaffordable in order to pay for R&D on new drugs (which will also be unaffordable).

See, the system is very broken on both sides.

But the choice to me seems very clear:

- on the one hand you have +developing new future drugs. except those drugs will only be affordable to a tiny fraction of the world population. additionally this lines the pockets of big pharma and the bureaucracy that keeps the system broken as it currently is ("Bayer was disappointed")

- on the other hand developing new drugs will be slowed down for some time, but all people will be able to afford the many current ones that could be saving lives today, big pharma + your FDA bureaucracy will fail and maybe that opens room for a new and better system to emerge so that R&D on drugs may start once more but in a more efficient manner. All the while lives are being saved and quality of live is being improved because today's drugs are affordable to everyone.

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