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The Danger of Managing Drug Prices
- wiz21 11y agoStopped reading when I stumbled on this cliché : "There's the rub: Those high profits provide strong incentive for pharmaceutical innovation." Oh, BTW, the first how writes : "hey, you might not like it but that's how the world go round", he'll get personnaly stabbed by yours truly.
- refurb 11y agoYou don't agree that profits incentivize R&D spend? How else do you explain the ~$60B invested in R&D each year when only 5% of the drugs that hit the clinic ever get approved? If you remove the profit incentive, you'll need to find a way to come up with all that money. People may not like the price of drugs but 20% of those high prices are immediately funnelled back into R&D. That's the highest of any industry i know of.
- toomuchtodo 11y agoThe NIH spends far more on R&D every year, and they don't waste any funds on a marketing budget.
- refurb 11y agoNIH budget is a little over $30B, so half of what private companies spend. Also, the NIH budget is not purely spent on drug development, a lot of the money goes to basic science. While important, it's not going to get a drug to market all by itself.
- hapless 11y agoI don't have to find a way to come up with all that money. New drug development is entirely optional. The world will not stop turning if we never have another pill to make your dick hard, or add four weeks to a terminal cancer prognosis.
- refurb 11y agoDo you feel the same way about a cure for hepatitis C? Nearly a cure for some blood cancers? Even in the last decade we've made incredible strides in improving human health through drugs. I kinda like the direction we're going.
- hapless 11y agoSome of those strides would still have been made in a world with less private money in R&D research. If the entire private side of the industry dried up and blew away, we would still have great improvements in human health in our future.
- iolothebard 11y agoThey spend more on marketing than R&D.
- refurb 11y agoFirst off, it depends on how you count marketing. Most of the studies i see lump all SG&A together which covers a lot more than just conventional marketing. Pharmaceutical marketing is expensive since much of it is face to face interactions. Second, who cares? If you spend $1M on marketing the expectation is that it will produce $1M+X in revenue or you wouldn't do it. If they stopped spending on marketing, they'd have even less money to invest in R&D!
- wiz21 11y agoI don't agree that people think that incentivisation is the only way to make the world go round. That's a very poor vision of what humans are. By the same kind of logic, governments are not efficient; water supplies should be privatized because they'd better managed; refugees landing in your country eat your job. Sorry for conflating things a tad, but, damn, that's just all the same simplistic logic. Upgrade your social brain and you'll see. I don't care if 20% of money goes back to research. I care that pharmaceutical companies use various means to "protect their assets". I once worked for Johnson&Johnson. Guess what was wirtten on every single desk there ? "We work for the good of our patients and investors". That is, patien on the same level as investor. For me, this doesn't sound like a sucess for humanity. That looks like the best of the worst solutions.
- success_hawk 11y agoI tend to always want the free market to find the balance as well, however medical care price markets for everything are not a free market. Between patent regulations allowing for extension and monopoly combine, liability on producers, pressure from investors for profit and returns, with those prescribing and taking the drugs having no connection to the price and value the forces that drive pricing are a maelstrom. I have worked in pharma research both internal to the companies and as an external independent data reviewer. I am also aware of a both subtle and overt collusion to fix data and pricing. While I think government does nothing well this is area is a dark cave that could use some light.
- fredkbloggs 11y agoWhile I agree with you and the author, I don't see either of you proposing any solutions, and I don't really have one either. About the closest I can get to is to abolish or at least very radically reform the third-party payer system. But since it's fashionable these days to push for a single-payer system (which is even farther in the wrong direction), that seems at least as politically impossible as anything else that might be proposed. There are a number of modest improvements to e.g. the approval process that would lower risks and costs, but not enough to make any real difference, and even those are politically daunting. Ultimately, the only way to get new research is to be willing to pay for it. And the only way to get low prices is to be willing to walk away. It might be helpful for people to take a big-picture approach here, and I suspect that if they did, many would decide that maybe having all these expensive drugs and even more expensive medical plans isn't really worth it. You can probably get a lot more enjoyment out of a 60-year life than a 70-year life if every year comes with an extra 10 grand to spend, especially if your last five years would have been spent suffering side effects in a hospital bed. I suppose I'm questioning the author's assertion that (rational) people are willing to pay any price for drugs.
- beagle3 11y ago> push for a single-payer system (which is even farther in the wrong direction), Why do you think it's in the wrong direction? Many countries have socialized medicine, some of which have single payer, and I've never met a person who experienced a single payer system who didn't think it was the right way to go.
- alistairSH 11y agoAll this is good and fine, except darn near every other nation already fixes drug prices in one way or another, forcing the US to bear the costs of drug R&D. Couple that with market forces in the US that prevent a text-book "fair"/"functioning" free market, and we (American consumers) get stuck with prices that are not just mind-bogglingly high, but also much higher than consumers in other 1st world nations pay.
- DanBC 11y agoDo you have a reliable source for your claim that the US bears the cost for R&D? (And this question is aimed only at alistairSH)
- melling 11y agoWhy only for alistairSH? We're a hive with collective intelligence that just wants the truth. :-) Search for the words "Much of the development cost of a new drug is paid by the US market" http://www.forbes.com/sites/timworstall/2012/03/15/drug-dealing-free-markets-and-price-fixing-just-dont-work-together/ http://www.forbes.com/sites/timworstall/2012/03/15/drug-deal...
- DanBC 11y ago> Why only for alistairSH? Because I'm interested to know if alistairSH knows what they're talking about or are merely parroting the same bullshit everyone else does. The op-ed you link to again parrots this, but does nothing to source it. Alternative explanations (US insurance companies keep the money) aren't explored.
- melling 11y agoProving that would be difficult because you can't track the money. The U.S. does pay more for whatever reason. Personally, I'd like to see countries like India and China, with a combined 2.5 billion people, invest in more drug research. A lot more competition can only help with prices, and more drug research.
- hapless 11y agoAny time someone dares to suggest that U.S. pharmaceutical pricing is out of control, pundits (often paid pundits) work themselves into a froth about new drug development. I'm tired of subsidizing drug development for the rest of the world. Let's manufacture and sell drugs in the United States at a rate that maximizes social welfare. Industry profits and R&D costs can rest on someone else's back. If no new pharmaceutical was ever funded by private research money ever again, but we could control pharmaceutical costs, that would be just fine with me.
- danbruc 11y agoHave an international agreement that every country pays an amount based on the GDP into a fund and distribute that money based on prior research success. Make the results available to everyone at no costs and let them produce and sell drugs at self cost prices. No profits for investors, no patents, more or less fair research cost distributions, drugs as cheap as they can get. A global solution for a global problem.
- arkem 11y agoHow do you determine what the correct level of funding is for the project? We can solve problems beyond pharmaceuticals with a command economy style approach if we can come up with a good methodology for resource allocation.
- danbruc 11y agoUse current global spendings as a baseline and adjust from time to time. If you have more money available than researchers to pay you can decrease spendings, if you desire faster progress throw more money at it. Besides the added complexity of a global scale undertaking I see no reasons that it is fundamentally harder to do then say planning the budget for road construction and maintenance or other national infrastructure spendings. EDIT: In the case of drugs we also have a somewhat exceptional situation, we have a pretty good idea of what the demand is and what the benefits of satisfying a specific demand will be.
- brohoolio 11y agoMakena or Compounded 17P? $30,000 vs $800 That's what we get to decide for our next pregnancy. Someone bought a drug, reformulated it a bit and replaced a generic. Do we use the generic that's regarded as safe and effective? Do we use the new drug? I don't want to hold another stillborn child. How can I make an informed decision? There aren't great stats for me to make an easy choice and the marketing makes makena seem like it's a much better choice.
- refurb 11y agoCompounded drugs are generally regarded as safe with a few exceptions. There was a compounding pharmacy in MA that gave hundreds of patient fungal meningitis due to unsterile conditions. I would first see if your insurance will pay for Makena. The company that makes it has reduced the price substantially due to public lashback.
- zem 11y agosurely the optimal end goal would be publicly funded drug research labs, with budget allocations comparable to what the pharmaceutical firms spend. surprising that the article never even touched upon that.