4 ms·

I'll have to check my data. You are right re late stage studies being most expensive component of drug dev cost in terms of direct costs, but when you account f

I'll have to check my data. You are right re late stage studies being most expensive component of drug dev cost in terms of direct costs, but when you account for cost of failure, early stage dev is actually more expensive. Phase 2 failure (drugs that work in the lab and animals not working in people) is the single biggest cost driver. That cost is linked highly to the difficulty of biology and biochemistry (the stuff Derek Lowe often talks about :) and it isn't clear to me how more public funding would address this Your proposal of having govt fund later stage r&d makes more sense to me that replacing IP altogether but i still think the current situation would be better at getting new drugs approved more cheaply Reason being is that early stage innovation is tightly linked to what assets pharma companies want. Allocation of venture capital by therapeutic area is very close to allocation of approved drugs by therapeutic area and to big pharma acquisitions of small biotechs by therapeutic area If government chose which drugs to fund at later stages, that would probably resemble the current NIH grant approval procedures which are fraught with politics and bureaucracy. There are some NIH / govt initiatives now to fund clinical studies (companies I've worked with have applied to two, CIRM and an NIH funded diabetes research group) and the application processes were brutal and took years. And I don't think those initiatives have yielded much in the way of approved drugs

philipkglass 8y ago
I don’t think that government taking drugs through clinical trials would significantly reduce development costs. I think it could reduce all-in costs for drug buyers if some new drugs were “born generic” in terms of IP restrictions. Everybody’s revenue is somebody else’s cost. The idea is to shrink the cost/revenue for new drugs that government takes over the finish line, whereas private investment toward the same goal needs to recover R&D costs plus make a profit. I don’t think that lower drug prices is a panacea for health care costs in the US! Drug spending is a small slice of an oversized pie. But that pie is so big that even small improvements at the margin could save patients billions - mostly unnoticeable at the individual level, but worthwhile considered at the macro scale.
- aaavl2821 8y ago
  I think that having the government take drugs through clinical studies would increase development costs, and the increase in development costs (funded by taxpayer dollars) plus the fact that you have to replace the entire commercial infrastructure (since no private company will take part in this) would be larger than any savings you'd get from eliminating IP. People would end up paying way way more in new taxes than they save in insurance premiums and copays (people spend roughly $30 a month on rx drugs today, govt run drug dev and distribution would probably cost $60-hundreds+ extra a month, unless you're ok getting 10% of the life saving new drugs our society gets today) The profits in pharma accrue to the top 15 or so companies by revenue, because they have invested in this commercial infrastructure over decades. You could argue that having large scale clin reg and commercial infrastructure is actually more valuable than IP. Especially in the new era of large molecules and cell / gene therapy, where IP doesn't matter nearly as much as in small molecules. Regualtory and manufacturing issues are a bigger barrier to competition in those areas than IP is. Look at biosimilar development as an example -- patents gone, no new competing drugs in most areas. An exec at a top antibody developer told me they know competitors can work around patents, they just need a 6 month head start and then their best in industry antibody dev capabilities will get them the edge they need. Avexis, Kite and Juno were acquired for ~$10B each not because of their products, but because they had the largest scale manufacturing and clinical logistics set up in gene and cell therapy I differ from most people on this forum as I fundamentally attribute the high price of drugs to the high cost of developing drugs, not to IP granting monopolies. IP does not exist to grant rent-seeking powers, it exists to incentive publicly useful research that otherwise would not get done. I think that if you look critically at the cost of drug development and the economics of the industry, that's the only conclusion you reach There's a lot of emotional and biased information about drug pricing out there. It is one of the top political issues of the day, one of the few with bipartisan supprt, it has become an emotional punching bag for a lot of people who have been really poorly treated by an opaque and impersonal healthcare system, and i can understand the frustration people feel. But if you look at the facts and take an objective standpoint, and invest the time into understanding the industry, the public dialogue becomes quite concerning edit: apologies if this comes off as aggressive, i just feel strongly about this :)

philipkglass 8y ago

I don’t think that government taking drugs through clinical trials would significantly reduce development costs. I think it could reduce all-in costs for drug buyers if some new drugs were “born generic” in terms of IP restrictions. Everybody’s revenue is somebody else’s cost. The idea is to shrink the cost/revenue for new drugs that government takes over the finish line, whereas private investment toward the same goal needs to recover R&D costs plus make a profit. I don’t think that lower drug prices is a panacea for health care costs in the US! Drug spending is a small slice of an oversized pie. But that pie is so big that even small improvements at the margin could save patients billions - mostly unnoticeable at the individual level, but worthwhile considered at the macro scale.

aaavl2821 8y ago
I think that having the government take drugs through clinical studies would increase development costs, and the increase in development costs (funded by taxpayer dollars) plus the fact that you have to replace the entire commercial infrastructure (since no private company will take part in this) would be larger than any savings you'd get from eliminating IP. People would end up paying way way more in new taxes than they save in insurance premiums and copays (people spend roughly $30 a month on rx drugs today, govt run drug dev and distribution would probably cost $60-hundreds+ extra a month, unless you're ok getting 10% of the life saving new drugs our society gets today) The profits in pharma accrue to the top 15 or so companies by revenue, because they have invested in this commercial infrastructure over decades. You could argue that having large scale clin reg and commercial infrastructure is actually more valuable than IP. Especially in the new era of large molecules and cell / gene therapy, where IP doesn't matter nearly as much as in small molecules. Regualtory and manufacturing issues are a bigger barrier to competition in those areas than IP is. Look at biosimilar development as an example -- patents gone, no new competing drugs in most areas. An exec at a top antibody developer told me they know competitors can work around patents, they just need a 6 month head start and then their best in industry antibody dev capabilities will get them the edge they need. Avexis, Kite and Juno were acquired for ~$10B each not because of their products, but because they had the largest scale manufacturing and clinical logistics set up in gene and cell therapy I differ from most people on this forum as I fundamentally attribute the high price of drugs to the high cost of developing drugs, not to IP granting monopolies. IP does not exist to grant rent-seeking powers, it exists to incentive publicly useful research that otherwise would not get done. I think that if you look critically at the cost of drug development and the economics of the industry, that's the only conclusion you reach There's a lot of emotional and biased information about drug pricing out there. It is one of the top political issues of the day, one of the few with bipartisan supprt, it has become an emotional punching bag for a lot of people who have been really poorly treated by an opaque and impersonal healthcare system, and i can understand the frustration people feel. But if you look at the facts and take an objective standpoint, and invest the time into understanding the industry, the public dialogue becomes quite concerning edit: apologies if this comes off as aggressive, i just feel strongly about this :)