6 ms·

> Everyone hates pharmaceutical firms, but their share of health-care rent-seeking is relatively trivial, especially once you include the many midsized and smal

> Everyone hates pharmaceutical firms, but their share of health-care rent-seeking is relatively trivial, especially once you include the many midsized and small firms that are investing heavily. This article misses the point. People hate pharmaceuticals because of ridiculously high drug costs, and that's about it. If they can't produce drugs at profit without gouging potential end users then it should be nationalized or subsidized.

saddlerustle 6y ago
Why do you think that'll make drugs significantly cheaper? Drug companies are only about as profitable as other science-heavy industries.
- DougWebb 6y ago
  Pharmaceutical companies have massive advertising/marketing budgets, which a nationalized drug R&D program would not need. That lowers overall costs. The R&D and manufacturing costs would also be spread across all Americans instead of only the patients who need the drugs, so the costs would be much lower for the patients as well.
  - satyrnein 6y ago
    At least some of those marketing costs would still be needed, they'd just be called "education" or "outreach" or "access" programs. Patients and doctors still need to be informed of new advancements to improve outcomes. For the second point, cost spreading helps particular people in particular circumstances, but doesn't lower overall cost. You're just running a wealth transfer or insurance program in addition at that point.
    - DougWebb 6y ago
      Patients do not need to be informed of new drugs, and never were until pharmaceutical companies lobbied Congress to remove the ban on direct advertising, which had been put in place as a consumer protection law due to 19th century "snake oil" salesmen/con-men. For doctors, a monthly publication of drugs currently in development, their status, and their uses would be adequate. It'd be much better for doctors to get their information from a published journal than the advertisements in some trade magazine or attractive reps handing out free samples. Regarding You're just running a wealth transfer or insurance program in addition at that point. Yes, that would be a major purpose of nationalizing drug R&D and manufacturing. You could say the same about every public service.
      - refurb 6y ago
        If you want to know why DTC is allowed in the US, you should read the FDA studies on it. https://www.fda.gov/drugs/drug-information-consumers/impact-direct-consumer-advertising https://www.fda.gov/drugs/drug-information-consumers/impact-... The FDA identified several benefits of DTC ads.
        DougWebb 6y ago
        That article provides pretty strong evidence that DTC ads, overall, are bad for patients: 58 percent [of physicians surveyed] agreed strongly that DTC ads make the drugs seem better than they really are. Physicians thought the ads did not convey information about risks and benefits equally well. Seventy-eight percent of physicians believe their patients understand the possible benefits of the drug very well or somewhat, compared to 40 percent who believe their patients understand the possible risks, and 65 percent believe DTC ads confuse patients about the relative risks and benefits of prescription drugs. In addition, about 75 percent of physicians surveyed believed that DTC ads cause patients to think that the drug works better than it does, and many physicians felt some pressure to prescribe something when patients mentioned DTC ads. Eight percent of physicians said they felt very pressured to prescribe the specific brand-name drug when asked. Doctors believe that patients understand that they need to consult a health care professional about appropriate treatment. Eighty-two percent responded either "very well" or "somewhat" when asked whether they believe that their patients understand that only a doctor can decide whether a drug is right for them. Note the last point means that 18% of the doctors believed that their patients thought they knew better than the doctor about whether or not a drug is right for them. The few positive aspects, about patients being better informed about drug therapies that might help them, could be solved by making the monthly journal info I described available online. People go to Google and type in their symptoms and/or the name of their disease if they know it, and end up on sites like drugs.com and webmd.com. If Google were indexing the journal I described, and those other sites pulled from it too (publishing license should allow that, as it would be publicly funded), then patients would see all of the good information about the drugs, without the advertising bias.
      - satyrnein 6y ago
        I'm not sure a monthly roundup is a drop-in replacement. Presumably that could exist now, but isn't as effective for whatever reason. On the other point, subsidizing drugs for those who need them is a perfectly reasonable goal. It just seemed to me (incorrectly, it appears) like you were suggesting this cost shifting lowers the total cost.
  - refurb 6y ago
    Why would a nationalized R&D program not need marketing? I can assure you that the doctors who are aware of new drugs in development is a very thin slice of all doctors. Even if run by the government, you’d still need to market (educate) about new drugs. And R&D in the big pharma firms is spread out across the entire population. That diabetes drug that sold $1B last year is paying for the cancer R&D this year.
- tluyben2 6y ago
  It wouldn't if they were subsidized? I think a lot more auditing should take place. We are told drug corps spend a lot on R&D and that's factored into the price. That doesn't 'rhyme' with Gilead CEO's open letter[0] which says they base drug prices on the 'value it provides', not on the costs absorbed. My feeling is that drugs would be far cheaper if they would actually base them on the costs absorbed. [0] https://www.gilead.com/news-and-press/press-room/press-releases/2020/6/an-open-letter-from-daniel-oday-chairman--ceo-gilead-sciences https://www.gilead.com/news-and-press/press-room/press-relea...
guerrilla 6y ago
Subsidizing doesn't stop the price gouging though, it only distributes the cost and in fact may increase the incentive for price gouging since payment would be nearly guaranteed. Why not free the intellectual property here instead?
- nazgulsenpai 6y ago
  Because without patents and exclusivity, the return on the massive R&D involved doesn't exist. Naturally that removes the incentive for R&D (in the market as it exists today.)
  - guerrilla 6y ago
    The incentive is that they get to market first as well as the inherent value of the medicine. They could also be paid the cost of R&D or a market price for the initial release of the information rather than a royalty (ransom model).
enaaem 6y ago
Developing new drugs takes over a decade and costs billions. European countries are free loading of US drug research. https://www.wsj.com/amp/articles/how-other-countries-freeload-on-u-s-drug-research-1487722580 https://www.wsj.com/amp/articles/how-other-countries-freeloa...
- Taek 6y ago
  Do we have good data on what happens if you change the IP laws around drugs to reduce the moat that the developers get? A common claim by big-pharma defenders is that if you take away the gouging aspect, drug development will stop. Is there some way we can test this experimentally on a subset of the drug market?
  - epistasis 6y ago
    One way to do that would be to publicly fund research for clinical trials in drugs that do not have that moat. It is totally possible to develop drugs without that moat, it just requires getting the money from somewhere. I have no idea which method would produce better outcomes. Back when there was more science leadership at large pharma, I thought they would be more likely to take crazy bets that work out, that wouldn't necessarily happen at an NIH grant review panel. But last I checked most upper management in pharma are people that tout a PhD on their name, but it's for a field outside of a relevant science.
    - lotsofpulp 6y ago
      > It is totally possible to develop drugs without that moat, it just requires getting the money from somewhere. US taxpayers seem to be able to find hundreds billions for R&D of fighter jets and aircraft carriers. Perhaps this is not as necessary as developing medicine. Or not invading and occupying random countries.
      - enaaem 6y ago
        The military is used to protect "The American Order". There are some non-trivial benefits of the American Order: 1. Secure maritime trade for all. Protection against piracy and gone are the days when countries would just steal each other's cargo. 2. Global trading currency that is backed by the biggest economy in the world. 3. Establishment of a global trade network. Industrialised countries have access to more natural resources than ever without needing colonies. Remember how the world was before the American Order. Colonies and hostility all over the world. Europe was in two world wars and would have probably been in another one with the Sovjets. Generally speaking, people trust the American rule of law and trust that the US will help her allies. This only made relevant by having an ultra beefy military. It's hard to put a price on these things, and which portion the US tax payers have to pay. Note that the current administration wants to cut back on these costs. European countries are benefitting a lot from the American Order, and should perhaps shoulder more of the costs.

saddlerustle 6y ago

Why do you think that'll make drugs significantly cheaper? Drug companies are only about as profitable as other science-heavy industries.

DougWebb 6y ago
Pharmaceutical companies have massive advertising/marketing budgets, which a nationalized drug R&D program would not need. That lowers overall costs. The R&D and manufacturing costs would also be spread across all Americans instead of only the patients who need the drugs, so the costs would be much lower for the patients as well.
- satyrnein 6y ago
  At least some of those marketing costs would still be needed, they'd just be called "education" or "outreach" or "access" programs. Patients and doctors still need to be informed of new advancements to improve outcomes. For the second point, cost spreading helps particular people in particular circumstances, but doesn't lower overall cost. You're just running a wealth transfer or insurance program in addition at that point.
  - DougWebb 6y ago
    Patients do not need to be informed of new drugs, and never were until pharmaceutical companies lobbied Congress to remove the ban on direct advertising, which had been put in place as a consumer protection law due to 19th century "snake oil" salesmen/con-men. For doctors, a monthly publication of drugs currently in development, their status, and their uses would be adequate. It'd be much better for doctors to get their information from a published journal than the advertisements in some trade magazine or attractive reps handing out free samples. Regarding You're just running a wealth transfer or insurance program in addition at that point. Yes, that would be a major purpose of nationalizing drug R&D and manufacturing. You could say the same about every public service.
    - refurb 6y ago
      If you want to know why DTC is allowed in the US, you should read the FDA studies on it. https://www.fda.gov/drugs/drug-information-consumers/impact-direct-consumer-advertising https://www.fda.gov/drugs/drug-information-consumers/impact-... The FDA identified several benefits of DTC ads.
      - DougWebb 6y ago
        That article provides pretty strong evidence that DTC ads, overall, are bad for patients: 58 percent [of physicians surveyed] agreed strongly that DTC ads make the drugs seem better than they really are. Physicians thought the ads did not convey information about risks and benefits equally well. Seventy-eight percent of physicians believe their patients understand the possible benefits of the drug very well or somewhat, compared to 40 percent who believe their patients understand the possible risks, and 65 percent believe DTC ads confuse patients about the relative risks and benefits of prescription drugs. In addition, about 75 percent of physicians surveyed believed that DTC ads cause patients to think that the drug works better than it does, and many physicians felt some pressure to prescribe something when patients mentioned DTC ads. Eight percent of physicians said they felt very pressured to prescribe the specific brand-name drug when asked. Doctors believe that patients understand that they need to consult a health care professional about appropriate treatment. Eighty-two percent responded either "very well" or "somewhat" when asked whether they believe that their patients understand that only a doctor can decide whether a drug is right for them. Note the last point means that 18% of the doctors believed that their patients thought they knew better than the doctor about whether or not a drug is right for them. The few positive aspects, about patients being better informed about drug therapies that might help them, could be solved by making the monthly journal info I described available online. People go to Google and type in their symptoms and/or the name of their disease if they know it, and end up on sites like drugs.com and webmd.com. If Google were indexing the journal I described, and those other sites pulled from it too (publishing license should allow that, as it would be publicly funded), then patients would see all of the good information about the drugs, without the advertising bias.
    - satyrnein 6y ago
      I'm not sure a monthly roundup is a drop-in replacement. Presumably that could exist now, but isn't as effective for whatever reason. On the other point, subsidizing drugs for those who need them is a perfectly reasonable goal. It just seemed to me (incorrectly, it appears) like you were suggesting this cost shifting lowers the total cost.
- refurb 6y ago
  Why would a nationalized R&D program not need marketing? I can assure you that the doctors who are aware of new drugs in development is a very thin slice of all doctors. Even if run by the government, you’d still need to market (educate) about new drugs. And R&D in the big pharma firms is spread out across the entire population. That diabetes drug that sold $1B last year is paying for the cancer R&D this year.
tluyben2 6y ago
It wouldn't if they were subsidized? I think a lot more auditing should take place. We are told drug corps spend a lot on R&D and that's factored into the price. That doesn't 'rhyme' with Gilead CEO's open letter[0] which says they base drug prices on the 'value it provides', not on the costs absorbed. My feeling is that drugs would be far cheaper if they would actually base them on the costs absorbed. [0] https://www.gilead.com/news-and-press/press-room/press-releases/2020/6/an-open-letter-from-daniel-oday-chairman--ceo-gilead-sciences https://www.gilead.com/news-and-press/press-room/press-relea...

guerrilla 6y ago

Subsidizing doesn't stop the price gouging though, it only distributes the cost and in fact may increase the incentive for price gouging since payment would be nearly guaranteed. Why not free the intellectual property here instead?

nazgulsenpai 6y ago
Because without patents and exclusivity, the return on the massive R&D involved doesn't exist. Naturally that removes the incentive for R&D (in the market as it exists today.)
- guerrilla 6y ago
  The incentive is that they get to market first as well as the inherent value of the medicine. They could also be paid the cost of R&D or a market price for the initial release of the information rather than a royalty (ransom model).

enaaem 6y ago

Developing new drugs takes over a decade and costs billions. European countries are free loading of US drug research. https://www.wsj.com/amp/articles/how-other-countries-freeload-on-u-s-drug-research-1487722580 https://www.wsj.com/amp/articles/how-other-countries-freeloa...

Taek 6y ago
Do we have good data on what happens if you change the IP laws around drugs to reduce the moat that the developers get? A common claim by big-pharma defenders is that if you take away the gouging aspect, drug development will stop. Is there some way we can test this experimentally on a subset of the drug market?
- epistasis 6y ago
  One way to do that would be to publicly fund research for clinical trials in drugs that do not have that moat. It is totally possible to develop drugs without that moat, it just requires getting the money from somewhere. I have no idea which method would produce better outcomes. Back when there was more science leadership at large pharma, I thought they would be more likely to take crazy bets that work out, that wouldn't necessarily happen at an NIH grant review panel. But last I checked most upper management in pharma are people that tout a PhD on their name, but it's for a field outside of a relevant science.
  - lotsofpulp 6y ago
    > It is totally possible to develop drugs without that moat, it just requires getting the money from somewhere. US taxpayers seem to be able to find hundreds billions for R&D of fighter jets and aircraft carriers. Perhaps this is not as necessary as developing medicine. Or not invading and occupying random countries.
    - enaaem 6y ago
      The military is used to protect "The American Order". There are some non-trivial benefits of the American Order: 1. Secure maritime trade for all. Protection against piracy and gone are the days when countries would just steal each other's cargo. 2. Global trading currency that is backed by the biggest economy in the world. 3. Establishment of a global trade network. Industrialised countries have access to more natural resources than ever without needing colonies. Remember how the world was before the American Order. Colonies and hostility all over the world. Europe was in two world wars and would have probably been in another one with the Sovjets. Generally speaking, people trust the American rule of law and trust that the US will help her allies. This only made relevant by having an ultra beefy military. It's hard to put a price on these things, and which portion the US tax payers have to pay. Note that the current administration wants to cut back on these costs. European countries are benefitting a lot from the American Order, and should perhaps shoulder more of the costs.