9 ms·

Yea it’s important to note these guys are risking breaking the industry. If for some reason pharma companies were unable to at least recoup the cost of their (e

by sp527 8y ago

Yea it’s important to note these guys are risking breaking the industry. If for some reason pharma companies were unable to at least recoup the cost of their (expensive) R&D efforts, it would disincentive new drug development.

drieddust 8y ago
Book Bad Pharma thoroughly debunks this idea. These companies spend more time and money in lobbying, marketing, and rehashing the old research.
- anovikov 8y ago
  This is how is it in every industry. Almost every startup spends more money on boosting traffic and sales than on coding the product itself, too.
  - aaronbrethorst 8y ago
    There are some differences between a company charging $270,000/year for a medication you need to survive [1] and a company trying to sell you on 'Uber for dry cleaning,' or whatever. [1] https://99percentinvisible.org/episode/orphan-drugs/ https://99percentinvisible.org/episode/orphan-drugs/
    - anovikov 8y ago
      But wait, these drugs won't even exist if they didn't charge as much. They are needed by very few people (so if the price was $1000 they won't boost the number of patients so much, as the diseases are very rare), and drug research and regulatory process of approval is very expensive.
      - geofft 8y ago
        I'm not convinced drug research is expensive. I've met grad students. I've seen how much they do and how much they get paid. That leaves the regulatory process, and if the problem is government intervention in the free market with overtones of regulatory capture (drug regulation being too excessive), the solution is certainly not more government intervention in the free market with overtones of regulatory capture (patents).
        aaronbrethorst 8y ago
        That leaves the regulatory process Well, that and rampant price gouging. the solution is certainly not more government intervention in the free market You should really listen to the podcast I linked to above.
        geofft 8y ago
        Not sure I understand - are you agreeing or disagreeing with me? The podcast describes how a well-intended government intervention in the free market and how it led to rampant price gouging. I would be more than thrilled if we got rid of the free market entirely. But that seems unrealistic, and if we're going to have it, the government needs to be very much on guard against saying "We can fix these market inefficiencies by letting these people make more profit." I maintain that if the government had instead caused pharmaceutical companies to make less profit from their regular drugs, orphan drugs wouldn't have looked so unappealing in comparison.
        drieddust 8y ago
        > I would be more than thrilled if we got rid of the free market entirely. It is a market controlled by various lobbies focused on increased the shareholder value. How is it a free Market? In a free market, there shouldn't be monopolies. Goverments first sitting idle and allowing the companies to grow like cancer and then rushing in to save them when they crash in the name of saving the economy is anything but free market.
        geofft 8y ago
        Fine, I'll rephrase that as "I would be more than thrilled if we got rid of the allegedly-free market entirely." Let's admit that truly free markets are an unstable equilibrium and that government regulation can actually do some good, and let's stop being afraid of government-run markets.
      - drieddust 8y ago
        > But wait, these drugs won't even exist if they didn't charge as much. Why they should not charge fairly? How much is as much? On the issue of innovation, profit seekers does not have enough courage to do this. Board of big companies live quarter to quarter because their compensation is directy linked to stock value. It doesn't matter how much money they already have. Here is quote from the ted talk[1] linked below. > In the drug industry, for example, 75% of the “radically innovative drugs” in the United States are researched in nationally funded laboratories. Whereas drug companies focus their efforts on “me-too” drugs — varieties of proven, profitable drugs — governments will take on potentially game-changing “new molecular priorities,” despite the risks involved. [1] https://blog.ted.com/government-investor-risk-taker-innovator-mariana-mazzucato-at-tedglobal-2013/ https://blog.ted.com/government-investor-risk-taker-innovato... Edit: Point about charging.
    - drieddust 8y ago
      Fascinating read. I am amazed how they have allowed to create monopoly on the back of goverment subsidies.
  - geofft 8y ago
    Sure, but startups also tend not to patent their work. When one startup dies, another can make another attempt at the same thing. (I'm not saying patents in the tech industry don't happen ever - at the last startup I worked for, I got three patents - just that they don't meaningfully limit the ability of other people to replicate the work or compete directly, the way pharma patents seem to.)
- jfoutz 8y ago
  Well, and now they're going to spend a lot of computer time finding parallel constructions for the same molecule they want to patent, so they can patent those as well.
beautifulfreak 8y ago
Pharma companies don't do their own R&D anymore, for the most part. The documentary, Drug$ (2018) does a tough takedown of the industry. Pharma companies acquire drugs from indie or academic researchers. What pharma companies do is get the drugs FDA approved then market them, and at the highest price the market will bear (meaning that some people can't afford them). In other words, there are no R&D expenses. https://www.imdb.com/title/tt7394770/ https://www.imdb.com/title/tt7394770/
- ThrustVectoring 8y ago
  >at the highest price the market will bear (meaning that some people can't afford them) If anyone can't afford your drugs, this is an issue of insufficiently optimized price discrimination (as long as what they can afford is above the marginal cost of manufacture). There's often manufacturer's coupons for exactly this reason - make a compelling case about what you can afford, and the manufacturer will drop prices until you can give them some money instead of none.
  - perl4ever 8y ago
    I'm no economist, but I strongly feel perfect price discrimination would be a rather terrible thing. You seem to be implying that it would be "sufficient". Imagine if the water you drink was priced at the maximum amount you would be willing to pay not to die of thirst. This would palpably be a terrible thing. All of us go around every day buying things that we think are worth substantially more to us than the money we pay. It seems to me like this is the whole value proposition of capitalism for human beings. I have always thought that free markets are useful, but I think that is only the case if they tend to drive producer surplus to zero and consumer surplus to the maximum. If there were no consumer surplus, as with perfect discrimination, then I don't see the point of economic activity. I sort of thought (because I read it somewhere) that orthodox economic theory implied that perfect free markets should drive economic profits of businesses to zero. And profits should be roughly equivalent to producer surplus. So we shouldn't be balancing consumer and producer surplus, let alone allocating the surplus all to producers.
geofft 8y ago
> If for some reason pharma companies were unable to at least recoup the cost of their (expensive) R&D efforts, it would disincentive new drug development. I'd like to see any evidence at all for this. The closest thing we have to a controlled experiment is the software industry, where patents are a) difficult to obtain, at least in a way analogous to patenting a molecule and b) not culturally common among large portions of the R&D community. There is a huge amount of R&D into better databases, better operating systems, better distributed systems, better UIs, better programming languages, better compilers, etc. etc. that happens with no patent protection, and often with no license fees or other direct monetary compensation at all. Microsoft being willing to keep their source code secret and patent their techniques didn't help NT defeat Linux one bit, and certainly has caused no loss of people willing to work on Linux.

by sp527 8y ago

drieddust 8y ago

Book Bad Pharma thoroughly debunks this idea. These companies spend more time and money in lobbying, marketing, and rehashing the old research.

anovikov 8y ago
This is how is it in every industry. Almost every startup spends more money on boosting traffic and sales than on coding the product itself, too.
- aaronbrethorst 8y ago
  There are some differences between a company charging $270,000/year for a medication you need to survive [1] and a company trying to sell you on 'Uber for dry cleaning,' or whatever. [1] https://99percentinvisible.org/episode/orphan-drugs/ https://99percentinvisible.org/episode/orphan-drugs/
  - anovikov 8y ago
    But wait, these drugs won't even exist if they didn't charge as much. They are needed by very few people (so if the price was $1000 they won't boost the number of patients so much, as the diseases are very rare), and drug research and regulatory process of approval is very expensive.
    - geofft 8y ago
      I'm not convinced drug research is expensive. I've met grad students. I've seen how much they do and how much they get paid. That leaves the regulatory process, and if the problem is government intervention in the free market with overtones of regulatory capture (drug regulation being too excessive), the solution is certainly not more government intervention in the free market with overtones of regulatory capture (patents).
      - aaronbrethorst 8y ago
        That leaves the regulatory process Well, that and rampant price gouging. the solution is certainly not more government intervention in the free market You should really listen to the podcast I linked to above.
        geofft 8y ago
        Not sure I understand - are you agreeing or disagreeing with me? The podcast describes how a well-intended government intervention in the free market and how it led to rampant price gouging. I would be more than thrilled if we got rid of the free market entirely. But that seems unrealistic, and if we're going to have it, the government needs to be very much on guard against saying "We can fix these market inefficiencies by letting these people make more profit." I maintain that if the government had instead caused pharmaceutical companies to make less profit from their regular drugs, orphan drugs wouldn't have looked so unappealing in comparison.
        drieddust 8y ago
        > I would be more than thrilled if we got rid of the free market entirely. It is a market controlled by various lobbies focused on increased the shareholder value. How is it a free Market? In a free market, there shouldn't be monopolies. Goverments first sitting idle and allowing the companies to grow like cancer and then rushing in to save them when they crash in the name of saving the economy is anything but free market.
        geofft 8y ago
        Fine, I'll rephrase that as "I would be more than thrilled if we got rid of the allegedly-free market entirely." Let's admit that truly free markets are an unstable equilibrium and that government regulation can actually do some good, and let's stop being afraid of government-run markets.
    - drieddust 8y ago
      > But wait, these drugs won't even exist if they didn't charge as much. Why they should not charge fairly? How much is as much? On the issue of innovation, profit seekers does not have enough courage to do this. Board of big companies live quarter to quarter because their compensation is directy linked to stock value. It doesn't matter how much money they already have. Here is quote from the ted talk[1] linked below. > In the drug industry, for example, 75% of the “radically innovative drugs” in the United States are researched in nationally funded laboratories. Whereas drug companies focus their efforts on “me-too” drugs — varieties of proven, profitable drugs — governments will take on potentially game-changing “new molecular priorities,” despite the risks involved. [1] https://blog.ted.com/government-investor-risk-taker-innovator-mariana-mazzucato-at-tedglobal-2013/ https://blog.ted.com/government-investor-risk-taker-innovato... Edit: Point about charging.
  - drieddust 8y ago
    Fascinating read. I am amazed how they have allowed to create monopoly on the back of goverment subsidies.
- geofft 8y ago
  Sure, but startups also tend not to patent their work. When one startup dies, another can make another attempt at the same thing. (I'm not saying patents in the tech industry don't happen ever - at the last startup I worked for, I got three patents - just that they don't meaningfully limit the ability of other people to replicate the work or compete directly, the way pharma patents seem to.)
jfoutz 8y ago
Well, and now they're going to spend a lot of computer time finding parallel constructions for the same molecule they want to patent, so they can patent those as well.

beautifulfreak 8y ago

Pharma companies don't do their own R&D anymore, for the most part. The documentary, Drug$ (2018) does a tough takedown of the industry. Pharma companies acquire drugs from indie or academic researchers. What pharma companies do is get the drugs FDA approved then market them, and at the highest price the market will bear (meaning that some people can't afford them). In other words, there are no R&D expenses. https://www.imdb.com/title/tt7394770/ https://www.imdb.com/title/tt7394770/

ThrustVectoring 8y ago
>at the highest price the market will bear (meaning that some people can't afford them) If anyone can't afford your drugs, this is an issue of insufficiently optimized price discrimination (as long as what they can afford is above the marginal cost of manufacture). There's often manufacturer's coupons for exactly this reason - make a compelling case about what you can afford, and the manufacturer will drop prices until you can give them some money instead of none.
- perl4ever 8y ago
  I'm no economist, but I strongly feel perfect price discrimination would be a rather terrible thing. You seem to be implying that it would be "sufficient". Imagine if the water you drink was priced at the maximum amount you would be willing to pay not to die of thirst. This would palpably be a terrible thing. All of us go around every day buying things that we think are worth substantially more to us than the money we pay. It seems to me like this is the whole value proposition of capitalism for human beings. I have always thought that free markets are useful, but I think that is only the case if they tend to drive producer surplus to zero and consumer surplus to the maximum. If there were no consumer surplus, as with perfect discrimination, then I don't see the point of economic activity. I sort of thought (because I read it somewhere) that orthodox economic theory implied that perfect free markets should drive economic profits of businesses to zero. And profits should be roughly equivalent to producer surplus. So we shouldn't be balancing consumer and producer surplus, let alone allocating the surplus all to producers.

geofft 8y ago

> If for some reason pharma companies were unable to at least recoup the cost of their (expensive) R&D efforts, it would disincentive new drug development. I'd like to see any evidence at all for this. The closest thing we have to a controlled experiment is the software industry, where patents are a) difficult to obtain, at least in a way analogous to patenting a molecule and b) not culturally common among large portions of the R&D community. There is a huge amount of R&D into better databases, better operating systems, better distributed systems, better UIs, better programming languages, better compilers, etc. etc. that happens with no patent protection, and often with no license fees or other direct monetary compensation at all. Microsoft being willing to keep their source code secret and patent their techniques didn't help NT defeat Linux one bit, and certainly has caused no loss of people willing to work on Linux.