8 ms·

Americans then pay out their asshole for those drugs. Other countries then get to make those drugs for "free". Not free free. But they get to ignore the R

Americans then pay out their asshole for those drugs. Other countries then get to make those drugs for "free". Not free free. But they get to ignore the R&D costs. Eventually the camel's back will break. Research costs will become too high for 300m out of 7b to pay for. This "Drug industry scare card" is easily refuted [0] (check the table). But as the table below shows, drug companies spend far more on marketing drugs - in some cases twice as much - than on developing them. And besides, profit margins take into account R&D costs. [0] http://www.bbc.com/news/business-28212223 http://www.bbc.com/news/business-28212223

forrestthewoods 11y ago
Few people dispute that it costs a billion dollars or so to bring a new drug to market. That's a heavy cost foreign manufacturers don't have to pay. The fact that marketing is a higher spend is irrelevant. It's like free2play on mobile. You spend a bunch of money developing something. If you can spend $.90 in user acquisition to earn back $1.00 then you throw every single dollar you can muster so long as the benefit is higher than the cost. It's a diminishing returns equation so you do as long as you can. The highest grossing games have marketing campaigns on the order of $100,000,000. Basically the same thing here. Take out as many loans as you can so long as it works.
- pavedwalden 11y ago
  I'm not saying you're wrong, but it struck me as funny to see a much-criticised practice in the pharmaceutical industry being defended by comparing it to F2P mobile games, which are also widely reviled.
  - forrestthewoods 11y ago
    Hah. I'm no fan of the f2p mobile gaming industry myself. But the math is very straight forward there. It exists for non-f2p games as well but it's less obvious and clear.
- duaneb 11y ago
  I don't think they're questioning the business efficacy, I think they're questioning the need for protections for the industry.
  - tsotha 11y ago
    I don't see how Pharmaceutical companies can exist without IP protections, unless you're willing to publicly fund the entire development cycle. For the vast majority of drugs the cost of producing the tablet you take is just a few cents, which is dwarfed by the amortized cost of the R&D. Nobody is going to spend on R&D if competitors can skip that part and go right to production.
    - duaneb 11y ago
      Drug research strikes me as exactly the type of industry that would benefit from optimizing for characteristic other than profits.
      - tsotha 11y ago
        Which makes it no different from any other industry. But the profit motive is the best we've come up with to get people to produce.
srean 11y ago
Absolutely. The main structural problem is the blanket protection from the market that the people/govt offer to the pharma companies. Many shills continue to argue that this is necessary for pharma to make progress. The problem is that this a quantitative question -- how much protection in $$ should pharma companies receive that would still not get in the way of real progress? -- is given a blanket non-quantitative answer by fiat. The answer is neither known for certain nor a constant of nature, it changes with time and situation. Any mechanism addressing this problem should have a fast feedback loop and pretty much the only scalable mechanism that we have for such feedback on economic affairs is the market. Rather than subverting the market, one should actively involve it to create an efficient market where the people/govt and the pharma companies negotiate the level of protection that they can both agree on. Patents are a mechanism that largely nukes this negotiation completely in favor of the pharma companies. A parting thought borrowed from Upton Sinclair : if the justification for patent protection is high dev costs, it only ensures that the dev costs will be kept high to enjoy the (dis-proportionate) protection.

forrestthewoods 11y ago

Few people dispute that it costs a billion dollars or so to bring a new drug to market. That's a heavy cost foreign manufacturers don't have to pay. The fact that marketing is a higher spend is irrelevant. It's like free2play on mobile. You spend a bunch of money developing something. If you can spend $.90 in user acquisition to earn back $1.00 then you throw every single dollar you can muster so long as the benefit is higher than the cost. It's a diminishing returns equation so you do as long as you can. The highest grossing games have marketing campaigns on the order of $100,000,000. Basically the same thing here. Take out as many loans as you can so long as it works.

pavedwalden 11y ago
I'm not saying you're wrong, but it struck me as funny to see a much-criticised practice in the pharmaceutical industry being defended by comparing it to F2P mobile games, which are also widely reviled.
- forrestthewoods 11y ago
  Hah. I'm no fan of the f2p mobile gaming industry myself. But the math is very straight forward there. It exists for non-f2p games as well but it's less obvious and clear.
duaneb 11y ago
I don't think they're questioning the business efficacy, I think they're questioning the need for protections for the industry.
- tsotha 11y ago
  I don't see how Pharmaceutical companies can exist without IP protections, unless you're willing to publicly fund the entire development cycle. For the vast majority of drugs the cost of producing the tablet you take is just a few cents, which is dwarfed by the amortized cost of the R&D. Nobody is going to spend on R&D if competitors can skip that part and go right to production.
  - duaneb 11y ago
    Drug research strikes me as exactly the type of industry that would benefit from optimizing for characteristic other than profits.
    - tsotha 11y ago
      Which makes it no different from any other industry. But the profit motive is the best we've come up with to get people to produce.

srean 11y ago

Absolutely. The main structural problem is the blanket protection from the market that the people/govt offer to the pharma companies. Many shills continue to argue that this is necessary for pharma to make progress. The problem is that this a quantitative question -- how much protection in $$ should pharma companies receive that would still not get in the way of real progress? -- is given a blanket non-quantitative answer by fiat. The answer is neither known for certain nor a constant of nature, it changes with time and situation. Any mechanism addressing this problem should have a fast feedback loop and pretty much the only scalable mechanism that we have for such feedback on economic affairs is the market. Rather than subverting the market, one should actively involve it to create an efficient market where the people/govt and the pharma companies negotiate the level of protection that they can both agree on. Patents are a mechanism that largely nukes this negotiation completely in favor of the pharma companies. A parting thought borrowed from Upton Sinclair : if the justification for patent protection is high dev costs, it only ensures that the dev costs will be kept high to enjoy the (dis-proportionate) protection.