7 ms·

Will you then also pay those who put huge effort and expense in to research that was perhaps necessary but didn't lead anywhere?

Laakeri 6y ago
Most research is government funded
- vixen99 6y ago
  I.e., tax payer funded either directly or via debt servicing.
- mensetmanusman 6y ago
  Research broadly fits into two categories, basic research and research with near to midterm industrial viability. Most basic research is government funded.
- refurb 6y ago
  No, it's not. Private R&D spending is at least doouble that of the gov't. Look up the budget of the NIH and compare it with the R&D budget of big pharma.
aquadrop 6y ago
Is there somewhere any numbers on how much exactly does it cost? What portion is really "research" and what portion is marketing budget? How much trial phase 1/2/3 cost etc?
- Scandiravian 6y ago
  When I studied pharmaceutical sciences ten years ago, the rule-of-thumb was that it cost around 1 billion dollars from idea to the product being launched. That's only r&d costs and regulations have become stricter over the years, so I imagine the cost has risen since then
  - beagle3 6y ago
    I’ve seen this number with some justification being the amortized cost of a successful product, which covers r&d and marketing but also the failed attempts that lead nowhere in between. There are plenty of 50-100M pharma startups; they wouldn’t exist if your number was right.
    - yomly 6y ago
      >There are plenty of 50-100M pharma startups; they wouldn’t exist if your number was right. Isn't there a selection bias in that the startups that got to 50-100M survived because they were lucky with a candidate treatment. The ones that failed were the ones that never found a candidate in time? The difference being that large pharmaceutical companies have to swallow ALL the failures, whereas startups can "just" die. Not to say that pharma companies don't have some fat that can be trimmed...
    - Scandiravian 6y ago
      "Pharma start-up" is a broad definition which might not only be drug development and there might already be work done on their product before they look for funding A company that is spun out from a PhD project in a research group, that has done a lot of the groundwork on grants will need less funding Same goes for a start-up that for instance make non-invasive assays for diagnosis, since the documentation requirements are lower for such products Producing something that has to be injected into humans is an entirely different league, since the amount of documentation required for such products is staggering The cost for marketing will vary significantly depending on your definition of the word, and I suspect that it might be misconstrued as only being "commercials and paid holidays for doctors"
    - yodelshady 6y ago
      >which covers r&d and marketing but also the failed attempts that lead nowhere in between. How do you account for the failed attempts? As yomly alludes to, pharma startups exist because they don't own the risk - their investors bought it when they were funded. Big pharma does own the risk.
- refurb 6y ago
  I talked to a bunch of CROs about the cost of Phase 3 trials. It varies, but is roughly $10,000 to $15,000 per patient year. Pfizer’s trial will run for 2 years, so ~$900M for the trial alone. That’s excluding all the work to scale up the production, regulatory filing, distribution, etc. Edit: my math sucks. $900M, not $90M
  - aquadrop 6y ago
    Is it really $10-15k each additional patient year requires or it's more of "total cost was this much, we divide it by number of patients". Where do this money go to? Fx, with these covid trials, 40000 people in pfizer trial, half a year cost would be $200-300 mln. People presumably weren't paid for this. Of course there's some work by doctors that needs to be paid for, but that can't be this large amount. Also, does this all assume USA standards of pricing? Because in rest of the world healthcare is much cheaper. I just think big pharma are fundamentally ok with huge cost for trials and are not motivated to decrease it/make it more efficient, since they're ok with their pie being larger. They will just shift costs to healthcare system and will be happy with larger profit.
    - refurb 6y ago
      Ha! You think big pharma likes spending that kind of money on trials? I’ve been a part of those negotiations with the FDA. It costs that much because the company says “we believe a 6 month trial is sufficient to prove both safety and efficacy” and the FDA says “if you want it approved, you need to collect 2 years of data”. Now, $10-15k per patient-year is for a typical therapeutic. And that is an average across global trial sites, not just the US. It’s not much money. You go a 15 min doctors appointment and your insurance is billed $150. Now imagine going 1 per week and having multiple tests run each time. Or having to stay in the hospital for a day when the drug is administered. You can burn through $1,000 per month pretty damn quickly.
      - aquadrop 6y ago
        I don't see a reason they would be really against it. FDA says it to everyone, so all companies in same condition. And they can shift cost to healthcare system and have larger revenue. They probably don't mind their pie as a whole being larger, because having revenue of 50 billions and profit of 10 billions is better than revenue of 5 and profit of 1, even though proportionally it's the same. All big pharma companies are massively profitable, fx Novartis net income in 2017 $17.8bln on $50.4bln revenue. Pfizer's $14bln operating income on $53.6bln revenue in 2018. And it's year after year. They really don't seem to suffer from those high costs trials. Also, Pfizer reports only $8bln on R&D in same 2018. I'm sure there' a lot of inefficiencies in those trials, same as it turned out vaccine could be created in year instead of a decade. (btw, previous large scale epidemic of swine flu was largely profitable for pharma companies). They just don't have incentive to reduce the inefficiencies. You're telling it's not just US but then you cite high healthcare costs (retail vs large scale trial, definitely can be cheaper at scale), which is much cheaper outside of US. I would be very interested in reading numbers of detailed case study of creation of some real world vaccine/drug.
oblio 6y ago
Have these companies provide a detailed list of expenses for researching and developing this vaccine, review that, pay it as a one time cost and THEN vacate the patent. They then get to recover their R&D expenses and make a smaller but probably decent profit from its production.
- refurb 6y ago
  Of course. And if they spent $100M on R&D and it failed? What then? Would the gov’t pay those costs? And maybe a small profit? It’s easy to complain about Pharma profits when you ignore all the money spent that goes “poof”.
  - oblio 6y ago
    When was the last time one of there big pharma companies went bankrupt, barring massive fraud? I'd be glad to be shown some examples, otherwise it's "privatize profits, socialize losses".
    - factsaresacred 6y ago
      Survivorship bias. The bankrupt businesses never get the chance to become big and so you don't hear about them. However I'm certain that the category "bankrupt pharma company" is littered with examples.
      - oblio 6y ago
        How many of these small companies are a) researching Covid-19 vaccines? b) will they actually get to produce millions and millions of doses? Almost every case I know of, it's a huge company or even a state owned one. Who are we actually arguing for/against? The hypothetical "small pharma"? Keep in mind that just like for banking, due to the amount of (necessary) regulation, there aren't many small pharma companies out there.
        andi999 6y ago
tcptomato 6y ago
the expenses paid by governments you mean?
hkt 6y ago
That seems fair. Still won't be a fraction of the profit that stands to be made from these vaccines.
mioelnir 6y ago
BioNTech developed the vaccine now mass-produced by Pfizer. For that, they received $445m from the German government. So, as a tax-paying German citizen I can say, not only will I do that, but even better, I already did. It also feels deeply wrong to pull the "but all the research efforts that did not lead anywhere" argument, when Pfizer did not do the research in the first place. They should get compensation for organizing the huge trial, of course; that expertise was why they were on-boarded in the first place. And nobody expects them to manufacture that stuff at loss or cost. But we should not accept public money buying them goose laying golden eggs either.
- Tinyyy 6y ago
  Nobody’s getting a goose laying golden eggs from a covid vaccine. It’s a one time, relatively low-cost vaccine that is going to go out of demand once the population is immunized. Oh, and now there are multiple competitors in the market.
  - Scandiravian 6y ago
    Only if the vaccine gives permanent immunity, which I haven't found any research suggesting that it will. In all likelihood, it will be necessary to give yearly booster shots, so the companies developing the vaccines will be able to sell vaccines every year The quantity of vaccines needed will make even a $0.50 markup worth billions of dollars every year
    - ghaff 6y ago
      Vaccines are not a great business in general. (Which is not the same as saying they're unprofitable.) But one reason vaccine makers are generally indemnified against lawsuits in the US, it that at least some companies would probably pull out of making vaccines if they weren't.
    - Exmoor 6y ago
      You can't measure long-term immunity on a virus that's only been in the wild for ~11 months. That said, all the recent studies I've seen show no signs that immunity is going to drop significantly after a year. I hate to link to a Youtube video, but this doctor walking through the research in the first part of the video is honestly better than any news article I've seen: https://www.youtube.com/watch?v=gFeJ2BqCFY0 https://www.youtube.com/watch?v=gFeJ2BqCFY0
eternalban 6y ago
These nickle and dime arguments are for "old normal". The society at large is making huge sacrifices and making painful changes to address this collective problem. Are these companies part of "Human society" or not? If they are party of Humanity, then they can make 'adjustments' as much as we are asked to make adjustments.

Laakeri 6y ago

Most research is government funded

vixen99 6y ago
I.e., tax payer funded either directly or via debt servicing.
mensetmanusman 6y ago
Research broadly fits into two categories, basic research and research with near to midterm industrial viability. Most basic research is government funded.
refurb 6y ago
No, it's not. Private R&D spending is at least doouble that of the gov't. Look up the budget of the NIH and compare it with the R&D budget of big pharma.

aquadrop 6y ago

Is there somewhere any numbers on how much exactly does it cost? What portion is really "research" and what portion is marketing budget? How much trial phase 1/2/3 cost etc?

Scandiravian 6y ago
When I studied pharmaceutical sciences ten years ago, the rule-of-thumb was that it cost around 1 billion dollars from idea to the product being launched. That's only r&d costs and regulations have become stricter over the years, so I imagine the cost has risen since then
- beagle3 6y ago
  I’ve seen this number with some justification being the amortized cost of a successful product, which covers r&d and marketing but also the failed attempts that lead nowhere in between. There are plenty of 50-100M pharma startups; they wouldn’t exist if your number was right.
  - yomly 6y ago
    >There are plenty of 50-100M pharma startups; they wouldn’t exist if your number was right. Isn't there a selection bias in that the startups that got to 50-100M survived because they were lucky with a candidate treatment. The ones that failed were the ones that never found a candidate in time? The difference being that large pharmaceutical companies have to swallow ALL the failures, whereas startups can "just" die. Not to say that pharma companies don't have some fat that can be trimmed...
  - Scandiravian 6y ago
    "Pharma start-up" is a broad definition which might not only be drug development and there might already be work done on their product before they look for funding A company that is spun out from a PhD project in a research group, that has done a lot of the groundwork on grants will need less funding Same goes for a start-up that for instance make non-invasive assays for diagnosis, since the documentation requirements are lower for such products Producing something that has to be injected into humans is an entirely different league, since the amount of documentation required for such products is staggering The cost for marketing will vary significantly depending on your definition of the word, and I suspect that it might be misconstrued as only being "commercials and paid holidays for doctors"
  - yodelshady 6y ago
    >which covers r&d and marketing but also the failed attempts that lead nowhere in between. How do you account for the failed attempts? As yomly alludes to, pharma startups exist because they don't own the risk - their investors bought it when they were funded. Big pharma does own the risk.
refurb 6y ago
I talked to a bunch of CROs about the cost of Phase 3 trials. It varies, but is roughly $10,000 to $15,000 per patient year. Pfizer’s trial will run for 2 years, so ~$900M for the trial alone. That’s excluding all the work to scale up the production, regulatory filing, distribution, etc. Edit: my math sucks. $900M, not $90M
- aquadrop 6y ago
  Is it really $10-15k each additional patient year requires or it's more of "total cost was this much, we divide it by number of patients". Where do this money go to? Fx, with these covid trials, 40000 people in pfizer trial, half a year cost would be $200-300 mln. People presumably weren't paid for this. Of course there's some work by doctors that needs to be paid for, but that can't be this large amount. Also, does this all assume USA standards of pricing? Because in rest of the world healthcare is much cheaper. I just think big pharma are fundamentally ok with huge cost for trials and are not motivated to decrease it/make it more efficient, since they're ok with their pie being larger. They will just shift costs to healthcare system and will be happy with larger profit.
  - refurb 6y ago
    Ha! You think big pharma likes spending that kind of money on trials? I’ve been a part of those negotiations with the FDA. It costs that much because the company says “we believe a 6 month trial is sufficient to prove both safety and efficacy” and the FDA says “if you want it approved, you need to collect 2 years of data”. Now, $10-15k per patient-year is for a typical therapeutic. And that is an average across global trial sites, not just the US. It’s not much money. You go a 15 min doctors appointment and your insurance is billed $150. Now imagine going 1 per week and having multiple tests run each time. Or having to stay in the hospital for a day when the drug is administered. You can burn through $1,000 per month pretty damn quickly.
    - aquadrop 6y ago
      I don't see a reason they would be really against it. FDA says it to everyone, so all companies in same condition. And they can shift cost to healthcare system and have larger revenue. They probably don't mind their pie as a whole being larger, because having revenue of 50 billions and profit of 10 billions is better than revenue of 5 and profit of 1, even though proportionally it's the same. All big pharma companies are massively profitable, fx Novartis net income in 2017 $17.8bln on $50.4bln revenue. Pfizer's $14bln operating income on $53.6bln revenue in 2018. And it's year after year. They really don't seem to suffer from those high costs trials. Also, Pfizer reports only $8bln on R&D in same 2018. I'm sure there' a lot of inefficiencies in those trials, same as it turned out vaccine could be created in year instead of a decade. (btw, previous large scale epidemic of swine flu was largely profitable for pharma companies). They just don't have incentive to reduce the inefficiencies. You're telling it's not just US but then you cite high healthcare costs (retail vs large scale trial, definitely can be cheaper at scale), which is much cheaper outside of US. I would be very interested in reading numbers of detailed case study of creation of some real world vaccine/drug.

oblio 6y ago

Have these companies provide a detailed list of expenses for researching and developing this vaccine, review that, pay it as a one time cost and THEN vacate the patent. They then get to recover their R&D expenses and make a smaller but probably decent profit from its production.

refurb 6y ago
Of course. And if they spent $100M on R&D and it failed? What then? Would the gov’t pay those costs? And maybe a small profit? It’s easy to complain about Pharma profits when you ignore all the money spent that goes “poof”.
- oblio 6y ago
  When was the last time one of there big pharma companies went bankrupt, barring massive fraud? I'd be glad to be shown some examples, otherwise it's "privatize profits, socialize losses".
  - factsaresacred 6y ago
    Survivorship bias. The bankrupt businesses never get the chance to become big and so you don't hear about them. However I'm certain that the category "bankrupt pharma company" is littered with examples.
    - oblio 6y ago
      How many of these small companies are a) researching Covid-19 vaccines? b) will they actually get to produce millions and millions of doses? Almost every case I know of, it's a huge company or even a state owned one. Who are we actually arguing for/against? The hypothetical "small pharma"? Keep in mind that just like for banking, due to the amount of (necessary) regulation, there aren't many small pharma companies out there.
      - andi999 6y ago

tcptomato 6y ago

the expenses paid by governments you mean?

hkt 6y ago

That seems fair. Still won't be a fraction of the profit that stands to be made from these vaccines.

mioelnir 6y ago

BioNTech developed the vaccine now mass-produced by Pfizer. For that, they received $445m from the German government. So, as a tax-paying German citizen I can say, not only will I do that, but even better, I already did. It also feels deeply wrong to pull the "but all the research efforts that did not lead anywhere" argument, when Pfizer did not do the research in the first place. They should get compensation for organizing the huge trial, of course; that expertise was why they were on-boarded in the first place. And nobody expects them to manufacture that stuff at loss or cost. But we should not accept public money buying them goose laying golden eggs either.

Tinyyy 6y ago
Nobody’s getting a goose laying golden eggs from a covid vaccine. It’s a one time, relatively low-cost vaccine that is going to go out of demand once the population is immunized. Oh, and now there are multiple competitors in the market.
- Scandiravian 6y ago
  Only if the vaccine gives permanent immunity, which I haven't found any research suggesting that it will. In all likelihood, it will be necessary to give yearly booster shots, so the companies developing the vaccines will be able to sell vaccines every year The quantity of vaccines needed will make even a $0.50 markup worth billions of dollars every year
  - ghaff 6y ago
    Vaccines are not a great business in general. (Which is not the same as saying they're unprofitable.) But one reason vaccine makers are generally indemnified against lawsuits in the US, it that at least some companies would probably pull out of making vaccines if they weren't.
  - Exmoor 6y ago
    You can't measure long-term immunity on a virus that's only been in the wild for ~11 months. That said, all the recent studies I've seen show no signs that immunity is going to drop significantly after a year. I hate to link to a Youtube video, but this doctor walking through the research in the first part of the video is honestly better than any news article I've seen: https://www.youtube.com/watch?v=gFeJ2BqCFY0 https://www.youtube.com/watch?v=gFeJ2BqCFY0

eternalban 6y ago

These nickle and dime arguments are for "old normal". The society at large is making huge sacrifices and making painful changes to address this collective problem. Are these companies part of "Human society" or not? If they are party of Humanity, then they can make 'adjustments' as much as we are asked to make adjustments.