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Well governments do subsidise research quite a lot (NIH et al). Putting caps on prices without doing something about research costs is just going to kill resea

Well governments do subsidise research quite a lot (NIH et al). Putting caps on prices without doing something about research costs is just going to kill research. All the big pharma companies are laying off scientist every week because even with uncapped prices the returns are so low that it is not worth spending the money to develop new drugs. A more productive approach might be to look into why drug development has become so expensive. It is certainly not because pharma companies have suddenly become greedier.

Clubber 9y ago
>All the big pharma companies are laying off scientist every week because even with uncapped prices the returns are so low that it is not worth spending the money to develop new drugs. You paint such a sad, desperate picture, but based on their numbers, it sounds like they are doing it to save a buck. Look at those profit margins. 10-43 percent on billions of investment. I should be so lucky. http://www.bbc.com/news/business-28212223 http://www.bbc.com/news/business-28212223 Did you know the US government isn't allowed to negotiate drug prices for medicare and medicaid? They (we) just pay whatever the companies want to charge.
- danieltillett 9y ago
  Yes they are making lots of money by killing their research pipeline and laying off their scientists. The reason they are doing this is they can't justify spending the money given the returns on offer. I am no defender of pharma companies, but they are doing exactly what the economic incentives encourage them to do. We need to change the incentives, not just rant about high prices and greed. Edit. Yes I know that the US government is not allowed to negotiate with drug companies over pricing (it is a little more complex than this in practice), but even with pricing uncapped the profit margins don't justify them spending more on R&D. We agree on the problem, just disagree on the solution. You should also read the part two of the article you quoted [0]. Unfortunately all the solutions provided are little more than a sugar pill for the real problem - R&D costs. 0. http://www.bbc.com/news/business-29659537 http://www.bbc.com/news/business-29659537
- maxerickson 9y ago
  Medicare drug prices are negotiated by the private companies that administer most of the drug coverage. There is a clause in the law establishing Part D that says the government can't interfere with those negotiations, but this is different than the prices not being negotiated at all. http://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2017/12/policy-proposal-allow-medicare-to-negotiate-drug-prices-in-part-d http://www.pewtrusts.org/en/research-and-analysis/fact-sheet... Medicaid prices aren't negotiated, but the government dictates that they get near the lowest prices the manufacturer sells the drug for.
  - refurb 9y ago
    This is all correct, and, research has found that sometimes the Part D plans actually negotiate a lower price for their Medicare patients than commercial. Also, Medicaid does not only get the lowest price ("best price"), they also get another 23% knocked off. So to be entirely accurate, the US gov't doesn't negotiate drug prices for Medicaid, it creates it's own discounts and tell the company to screw off if they won't accept them.
mft_ 9y ago
> Putting caps on prices without doing something about research costs is just going to kill research. All the big pharma companies are laying off scientist every week because even with uncapped prices the returns are so low that it is not worth spending the money to develop new drugs. European countries pay much lower prices (although still relatively high vs. an average salary) vs. the US. The dirty secret is that the US is generally milked by pharma, because it can be. Until the US gets its act together and fixes this --and how likely is that, with the essentially broken system of government?-- it will continue. > A more productive approach might be to look into why drug development has become so expensive. It is certainly not because pharma companies have suddenly become greedier. It's expensive because a) it's a long and hard slog, and b) the regulators set very high standards. You can't affect a), and there is a strong disincentive for regulators to change b): in essence, regulators exist to prevent bad things happening, so are only incentivised to ever-tighten regulations.
- adventured 9y ago
  > European countries pay much lower prices To be fair, European big pharma also lives off the US market to plump their margins. That subsidizes their ability to charge lower prices in Europe and elsewhere. They also constantly poach cutting edge biotech & pharma companies out of the US to keep their stables full, such as AveXis, Genzyme, Genentech, etc. Without constantly buying up elite US biotech, Europe would have practically no biotech industry at all. The US is by far the world's largest drug market. It's heaven for Sanofi, GlaxoSmithKline, Novartis, Roche, AstraZeneca, et al. The US drug market is twice the size of the EU drug market, with ~37% fewer people.
  - mft_ 9y ago
    > To be fair, European big pharma also lives off the US market to plump their margins. ...as I said in my very next sentence? :) > They also constantly poach cutting edge biotech & pharma companies out of the US to keep their stables full, such as AveXis, Genzyme, Genentech, etc. Without constantly buying up elite US biotech, Europe would have practically no biotech industry at all. Can I ask, what's the problem with this? All of the companies you refer to are pretty-much global - they have a presence in many countries, including the US, and by being publicly traded, ownership isn't especially linked to their country of origin. AZ (for example) being based in the UK means little for the UK, apart from that being where it pays some tax, and employs some people in its head office. To take one of your examples, Roche (Swiss) bought Genentech (US), and still maintains the same huge presence in SF, still employs people in SF, still pays taxes there. And presumably the previous owners of Genentech stock did nicely out of this?

Clubber 9y ago

>All the big pharma companies are laying off scientist every week because even with uncapped prices the returns are so low that it is not worth spending the money to develop new drugs. You paint such a sad, desperate picture, but based on their numbers, it sounds like they are doing it to save a buck. Look at those profit margins. 10-43 percent on billions of investment. I should be so lucky. http://www.bbc.com/news/business-28212223 http://www.bbc.com/news/business-28212223 Did you know the US government isn't allowed to negotiate drug prices for medicare and medicaid? They (we) just pay whatever the companies want to charge.

danieltillett 9y ago
Yes they are making lots of money by killing their research pipeline and laying off their scientists. The reason they are doing this is they can't justify spending the money given the returns on offer. I am no defender of pharma companies, but they are doing exactly what the economic incentives encourage them to do. We need to change the incentives, not just rant about high prices and greed. Edit. Yes I know that the US government is not allowed to negotiate with drug companies over pricing (it is a little more complex than this in practice), but even with pricing uncapped the profit margins don't justify them spending more on R&D. We agree on the problem, just disagree on the solution. You should also read the part two of the article you quoted [0]. Unfortunately all the solutions provided are little more than a sugar pill for the real problem - R&D costs. 0. http://www.bbc.com/news/business-29659537 http://www.bbc.com/news/business-29659537
maxerickson 9y ago
Medicare drug prices are negotiated by the private companies that administer most of the drug coverage. There is a clause in the law establishing Part D that says the government can't interfere with those negotiations, but this is different than the prices not being negotiated at all. http://www.pewtrusts.org/en/research-and-analysis/fact-sheets/2017/12/policy-proposal-allow-medicare-to-negotiate-drug-prices-in-part-d http://www.pewtrusts.org/en/research-and-analysis/fact-sheet... Medicaid prices aren't negotiated, but the government dictates that they get near the lowest prices the manufacturer sells the drug for.
- refurb 9y ago
  This is all correct, and, research has found that sometimes the Part D plans actually negotiate a lower price for their Medicare patients than commercial. Also, Medicaid does not only get the lowest price ("best price"), they also get another 23% knocked off. So to be entirely accurate, the US gov't doesn't negotiate drug prices for Medicaid, it creates it's own discounts and tell the company to screw off if they won't accept them.

mft_ 9y ago

> Putting caps on prices without doing something about research costs is just going to kill research. All the big pharma companies are laying off scientist every week because even with uncapped prices the returns are so low that it is not worth spending the money to develop new drugs. European countries pay much lower prices (although still relatively high vs. an average salary) vs. the US. The dirty secret is that the US is generally milked by pharma, because it can be. Until the US gets its act together and fixes this --and how likely is that, with the essentially broken system of government?-- it will continue. > A more productive approach might be to look into why drug development has become so expensive. It is certainly not because pharma companies have suddenly become greedier. It's expensive because a) it's a long and hard slog, and b) the regulators set very high standards. You can't affect a), and there is a strong disincentive for regulators to change b): in essence, regulators exist to prevent bad things happening, so are only incentivised to ever-tighten regulations.

adventured 9y ago
> European countries pay much lower prices To be fair, European big pharma also lives off the US market to plump their margins. That subsidizes their ability to charge lower prices in Europe and elsewhere. They also constantly poach cutting edge biotech & pharma companies out of the US to keep their stables full, such as AveXis, Genzyme, Genentech, etc. Without constantly buying up elite US biotech, Europe would have practically no biotech industry at all. The US is by far the world's largest drug market. It's heaven for Sanofi, GlaxoSmithKline, Novartis, Roche, AstraZeneca, et al. The US drug market is twice the size of the EU drug market, with ~37% fewer people.
- mft_ 9y ago
  > To be fair, European big pharma also lives off the US market to plump their margins. ...as I said in my very next sentence? :) > They also constantly poach cutting edge biotech & pharma companies out of the US to keep their stables full, such as AveXis, Genzyme, Genentech, etc. Without constantly buying up elite US biotech, Europe would have practically no biotech industry at all. Can I ask, what's the problem with this? All of the companies you refer to are pretty-much global - they have a presence in many countries, including the US, and by being publicly traded, ownership isn't especially linked to their country of origin. AZ (for example) being based in the UK means little for the UK, apart from that being where it pays some tax, and employs some people in its head office. To take one of your examples, Roche (Swiss) bought Genentech (US), and still maintains the same huge presence in SF, still employs people in SF, still pays taxes there. And presumably the previous owners of Genentech stock did nicely out of this?