7 ms·

The Public Shouldn’t Pay for Drugs Twice

63 points by samizdis 4y ago

deleted 4y ago
[deleted]
candiodari 4y ago
Well I've tried to set up a basic lab in an academic environment twice now. It took months every time and took ages to get tiny amounts of money, at big (European) universities. One out of the two times I did get money ... from a pharma company (and attention from several of their senior employees, which was even more useful than the money). So please, can the public ... well ... pay for drugs once?
- Am4TIfIsER0ppos 4y ago
  > pay for drugs once If only! Healthcare is somehow not a good or service one should pay for as a normal transaction.
madsbuch 4y ago
Maybe the public should take a stake in the company for their financing? This is the rational way to do it for all other investors.
jacknews 4y ago
Isn't this a deliberate model, and not only for pharma? Govt funds the risky research, and then hands the baton to competitive industry, which is good at 'finding markets', making it a product, and optimizing costs. Eg, google, amazon, etc, would not exist without the govt early (and continuing) funding of the tech their business is based on. What is then supposed to happen is that profits are taxed sufficiently, feeding back in to the system, but that part appears to have broken down lately.
- efficax 4y ago
  yes, it’s deliberate. it’s a deliberate way of using taxpayer dollars to enrich private citizens without providing taxpayer benefits.
  - Arnt 4y ago
    If that's right, shouldn't there be a flood of new companies looking to get the dollars? Is there such a flood, or at least a stream? I haven't noticed one, but I don't really try…
    - pessimizer 4y ago
      It's not a program to support small businesses, it's a structure to support massive companies who lobby and hire politicians and their friends and family.
      - Arnt 4y ago
        In that case, shouldn't there be a flood, or at least a stream, of existing big companies setting up new subsidiaries to take advantage of this? There are many big companies with existing lobbyist divisions, deep pockets and experience in broadly similar areas. Food, cosmetics, chemicals spring to mind.
- colinsane 4y ago
  > What is then supposed to happen is that profits are taxed sufficiently, feeding back in to the system, but that part appears to have broken down lately. right. with the right accounting processes, i could buy the rest. but when spending and tax collection are as decoupled or loosely balanced as they appear to be today, public investment into private industry is super risky.
- Throwawayaerlei 4y ago
  Only read the beginning of this screed, but its a unique and unlikely to be repeated situation until the next pandemic model. "Competitive industry" normally spends the big bucks to do Phase II and especially expensive Phase III trials. And as you note, manufacturing it. Which Pfizer did without Operation Warp Speed money until it started failing to deliver on its promises in December 2020. May have gotten some money from Germany through BioNTech which was the company that actually developed it. The claim "By one estimate, the National Institutes of Health spent $17 billion on vaccine technologies fundamental to the Covid-19 vaccine." goes back to the mid-20th Century, is so broad as to be useless and is obviously disqualifying propaganda: https://medicalxpress.com/news/2021-04-covid-vaccine-built-billion-nih.html https://medicalxpress.com/news/2021-04-covid-vaccine-built-b...
  - cdtwigg 4y ago
    Yeah it’s the trials that are really expensive, not the basic research. The government gets to spread its dollars around to lots of individual researchers but if they were instead using that money to fund phase III trials (1) we’d have a lot a lot less money for basic research (2) we’d fund a lot fewer phase III trials so (3) we’d see much less drug development overall. Also I’d worry about a potential conflict of interest if the same government is conducting and evaluating the results of drug trials.
  - s1artibartfast 4y ago
    Never mind the fact that 17 billion is on par with the annual R&D spend at one Pharma company. I think a more interesting comparison would be all national funding for drug R&D versus all corporate R&D funding. This could be done on an annual basis or historic. NIH budget was 43 billion in 2021 for all healthcare sectors Top 10 US Drug company[1] R&D budgets [2] were: 1: Johnson & Johnson $15 Billion 2: Pfizer $14 Billion 3: Merck $13 Billion 4: AbbVie $7 Billion 5: Bristol $11 Billion 6: Abbott $3 Billion 7: Amgen $5 Billion 8: Gilead $5 Billion 9: Eli Lilly $7 Billion 10: Biogen 2.5 Billion Total 91+ Billion Keep in mind that those are only US headquartered drug companies, and some of the biggest players like Roche and Novartis are in Europe[3] https://www.pharmapproach.com/top-10-pharmaceutical-companies-in-the-united-states/ https://www.pharmapproach.com/top-10-pharmaceutical-companie... https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnson/research-development-expensese https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnso... https://www.fiercebiotech.com/special-reports/top-10-pharma-rd-budgets-2021 https://www.fiercebiotech.com/special-reports/top-10-pharma-...
- rayiner 4y ago
  Economists broadly agree that taxing corporate profits is inefficient. From an NPR show surveying five economists across the political spectrum about what are consensus ideas in the field: https://www.npr.org/sections/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate https://www.npr.org/sections/money/2012/07/19/157047211/six-... (“Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people.”). The problem in the US isn’t that we don’t tax Google, Amazon, etc. Look at the corporate taxes in France or Sweden. They’re about the same. The problem is that we don’t sufficiently tax the billions in payroll at those companies.
  - sneak 4y ago
    > The problem is that we don’t sufficiently tax the billions in payroll at those companies. The government isn’t short on money. Are we sure that the problem isn’t that we are spending Elon Musk’s entire lifetime net worth on the military each and every 90 days while not even at war? We shovel twenty tons of hundred dollar bills (about $2bn) into the neverending pit of the war machine every day. I’m not convinced more government revenue is the solution to any problems, given what they are doing with their current insanely large levels of revenue at present.
    - rayiner 4y ago
      > The government isn’t short on money. It surely is. The federal government ran a $880 billion deficit in 2018. > Are we sure that the problem isn’t that we are spending Elon Musk’s entire lifetime net worth on the military each and every 90 days while not even at war? Yes, definitely. Total government spending at all levels (federal + state + local) is about $7 trillion. The military budget is only 1/10 of that. If we cut our defense spending to the NATO 2% of GDP target, we would save only about $300 billion. We need to cut twice that just to close the structural deficit, and raise taxes by about another trillion to pay for universal healthcare.
      - candiodari 4y ago
        > It surely is. The federal government ran a $880 billion deficit in 2018. You do realise the government is supposed to run a deficit, right? That's quite literally where money comes from. You can make the case that it's too big ... and it is, but it should run a deficit.
- s1artibartfast 4y ago
  >What is then supposed to happen is that profits are taxed sufficiently, feeding back in to the system, but that part appears to have broken down lately. How do you figure? Tax revenues are basically at all time high, and going up further. Consider that 40% of US GDP now is collected in some form of taxation.[1] 40 cents of every dollar earned is taxed and spent as the government chooses. This is more than between FDR and Regan, and much more than the 20s (~15% of GDP) Also consider that size of the pie has also increased! US real GDP per capita (accounting for inflation) has grown ~4x since the 1940s, and total GDP has grown ~20x! [2] https://upload.wikimedia.org/wikipedia/commons/3/37/Federal%2C_state%2C_and_local_tax_revenue_as_a_percent_of_GDP.pdf https://upload.wikimedia.org/wikipedia/commons/3/37/Federal%... https://fred.stlouisfed.org/series/A939RX0Q048SBEA https://fred.stlouisfed.org/series/A939RX0Q048SBEA
nshepperd 4y ago
> put a spotlight on the big pharmaceutical companies that had brought them to market — especially Pfizer and Moderna Moderna? The research startup that had only recently IPO'd and didn't have a single commercial product before covid? Seems weird to call it a "big pharmaceutical company". I'd rather a few founders become billionaires from a successful startup than have Moderna gone bankrupt and lose the vaccines they were developing forever.
- sanp 4y ago
  This assumes that only pharma companies can execute the steps required to bring the fruits of all that research to market. There is no reason a govt entity can’t do the same. It is a question of setting up the right incentives for the employees of that govt entity.
  - jleyank 4y ago
    I really doubt any western government could pull this off as either they or their population would balk at the cost if not the concept.
  - rayiner 4y ago
    Yes it’s a matter of the incentives, but a government entity has fundamentally different incentives than a private entity. Countries ranging from Canada to Sweden to India to China invested heavily into state-owned industries in the 20th century, and every single one reversed course. Because it just didn’t work.
    - swooni 4y ago
      Sweden's state-owned enterprises were sold purely because of politics. No one reversed course. It's just the right wing got majority and sold what they could when they had the chance including a large amount of public housing, schools and healthcare facilities.
      - rayiner 4y ago
colinsane 4y ago
> Universities should stipulate in their technology transfer agreements that they would not use patents to prevent generic competition in places where the list price of the drug was unattainable based on average income if a drug were to be profitably sold to someone else for 20% of the price i’m paying for it, then wouldn’t i feel taken advantage of (more than i already am) when i’m denied access to that better price? i’m not saying means tested benefits are (or aren’t) all bad: just that in most places we use them it’s to enable transactions that very directly could not be profitable. a person buying food with foodstamps isn’t themselves paying the producer a profitable sum: each stamp has a direct “cost” that gets socialized, so it’s reasonable to believe that somebody well-off shouldn’t be eligible for them. but when the transaction is profitable at both price X and price 5X, the case to be made for why everyone shouldn’t be permitted that price of X is just a lot harder to explain.
rayiner 4y ago
This line of argument overlooks the vast amounts of investment that goes into commercialization after the basic research phase. A lot of the fundamental work on self-driving cars was funded by DARPA and was done at CMU, Stanford, etc. The DARPA Grand Challenge demonstrated working self driving cars back in 2004. But private industry has invested over $100 billion in commercialization since then. And we still aren’t close to a market-ready product. Nobody is “paying twice.” Folks on HN should understand this intuitively. Nobody thinks that angel or series A investment entitles you to 100% of a company and right to get the products for free.

63 points by samizdis 4y ago

deleted 4y ago

[deleted]

Well I've tried to set up a basic lab in an academic environment twice now. It took months every time and took ages to get tiny amounts of money, at big (European) universities. One out of the two times I did get money ... from a pharma company (and attention from several of their senior employees, which was even more useful than the money). So please, can the public ... well ... pay for drugs once?

Am4TIfIsER0ppos 4y ago
> pay for drugs once If only! Healthcare is somehow not a good or service one should pay for as a normal transaction.

madsbuch 4y ago

Maybe the public should take a stake in the company for their financing? This is the rational way to do it for all other investors.

jacknews 4y ago

Isn't this a deliberate model, and not only for pharma? Govt funds the risky research, and then hands the baton to competitive industry, which is good at 'finding markets', making it a product, and optimizing costs. Eg, google, amazon, etc, would not exist without the govt early (and continuing) funding of the tech their business is based on. What is then supposed to happen is that profits are taxed sufficiently, feeding back in to the system, but that part appears to have broken down lately.

efficax 4y ago
yes, it’s deliberate. it’s a deliberate way of using taxpayer dollars to enrich private citizens without providing taxpayer benefits.
- Arnt 4y ago
  If that's right, shouldn't there be a flood of new companies looking to get the dollars? Is there such a flood, or at least a stream? I haven't noticed one, but I don't really try…
  - pessimizer 4y ago
    It's not a program to support small businesses, it's a structure to support massive companies who lobby and hire politicians and their friends and family.
    - Arnt 4y ago
      In that case, shouldn't there be a flood, or at least a stream, of existing big companies setting up new subsidiaries to take advantage of this? There are many big companies with existing lobbyist divisions, deep pockets and experience in broadly similar areas. Food, cosmetics, chemicals spring to mind.
colinsane 4y ago
> What is then supposed to happen is that profits are taxed sufficiently, feeding back in to the system, but that part appears to have broken down lately. right. with the right accounting processes, i could buy the rest. but when spending and tax collection are as decoupled or loosely balanced as they appear to be today, public investment into private industry is super risky.
Throwawayaerlei 4y ago
Only read the beginning of this screed, but its a unique and unlikely to be repeated situation until the next pandemic model. "Competitive industry" normally spends the big bucks to do Phase II and especially expensive Phase III trials. And as you note, manufacturing it. Which Pfizer did without Operation Warp Speed money until it started failing to deliver on its promises in December 2020. May have gotten some money from Germany through BioNTech which was the company that actually developed it. The claim "By one estimate, the National Institutes of Health spent $17 billion on vaccine technologies fundamental to the Covid-19 vaccine." goes back to the mid-20th Century, is so broad as to be useless and is obviously disqualifying propaganda: https://medicalxpress.com/news/2021-04-covid-vaccine-built-billion-nih.html https://medicalxpress.com/news/2021-04-covid-vaccine-built-b...
- cdtwigg 4y ago
  Yeah it’s the trials that are really expensive, not the basic research. The government gets to spread its dollars around to lots of individual researchers but if they were instead using that money to fund phase III trials (1) we’d have a lot a lot less money for basic research (2) we’d fund a lot fewer phase III trials so (3) we’d see much less drug development overall. Also I’d worry about a potential conflict of interest if the same government is conducting and evaluating the results of drug trials.
- s1artibartfast 4y ago
  Never mind the fact that 17 billion is on par with the annual R&D spend at one Pharma company. I think a more interesting comparison would be all national funding for drug R&D versus all corporate R&D funding. This could be done on an annual basis or historic. NIH budget was 43 billion in 2021 for all healthcare sectors Top 10 US Drug company[1] R&D budgets [2] were: 1: Johnson & Johnson $15 Billion 2: Pfizer $14 Billion 3: Merck $13 Billion 4: AbbVie $7 Billion 5: Bristol $11 Billion 6: Abbott $3 Billion 7: Amgen $5 Billion 8: Gilead $5 Billion 9: Eli Lilly $7 Billion 10: Biogen 2.5 Billion Total 91+ Billion Keep in mind that those are only US headquartered drug companies, and some of the biggest players like Roche and Novartis are in Europe[3] https://www.pharmapproach.com/top-10-pharmaceutical-companies-in-the-united-states/ https://www.pharmapproach.com/top-10-pharmaceutical-companie... https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnson/research-development-expensese https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnso... https://www.fiercebiotech.com/special-reports/top-10-pharma-rd-budgets-2021 https://www.fiercebiotech.com/special-reports/top-10-pharma-...
rayiner 4y ago
Economists broadly agree that taxing corporate profits is inefficient. From an NPR show surveying five economists across the political spectrum about what are consensus ideas in the field: https://www.npr.org/sections/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate https://www.npr.org/sections/money/2012/07/19/157047211/six-... (“Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people.”). The problem in the US isn’t that we don’t tax Google, Amazon, etc. Look at the corporate taxes in France or Sweden. They’re about the same. The problem is that we don’t sufficiently tax the billions in payroll at those companies.
- sneak 4y ago
  > The problem is that we don’t sufficiently tax the billions in payroll at those companies. The government isn’t short on money. Are we sure that the problem isn’t that we are spending Elon Musk’s entire lifetime net worth on the military each and every 90 days while not even at war? We shovel twenty tons of hundred dollar bills (about $2bn) into the neverending pit of the war machine every day. I’m not convinced more government revenue is the solution to any problems, given what they are doing with their current insanely large levels of revenue at present.
  - rayiner 4y ago
    > The government isn’t short on money. It surely is. The federal government ran a $880 billion deficit in 2018. > Are we sure that the problem isn’t that we are spending Elon Musk’s entire lifetime net worth on the military each and every 90 days while not even at war? Yes, definitely. Total government spending at all levels (federal + state + local) is about $7 trillion. The military budget is only 1/10 of that. If we cut our defense spending to the NATO 2% of GDP target, we would save only about $300 billion. We need to cut twice that just to close the structural deficit, and raise taxes by about another trillion to pay for universal healthcare.
    - candiodari 4y ago
      > It surely is. The federal government ran a $880 billion deficit in 2018. You do realise the government is supposed to run a deficit, right? That's quite literally where money comes from. You can make the case that it's too big ... and it is, but it should run a deficit.
s1artibartfast 4y ago
>What is then supposed to happen is that profits are taxed sufficiently, feeding back in to the system, but that part appears to have broken down lately. How do you figure? Tax revenues are basically at all time high, and going up further. Consider that 40% of US GDP now is collected in some form of taxation.[1] 40 cents of every dollar earned is taxed and spent as the government chooses. This is more than between FDR and Regan, and much more than the 20s (~15% of GDP) Also consider that size of the pie has also increased! US real GDP per capita (accounting for inflation) has grown ~4x since the 1940s, and total GDP has grown ~20x! [2] https://upload.wikimedia.org/wikipedia/commons/3/37/Federal%2C_state%2C_and_local_tax_revenue_as_a_percent_of_GDP.pdf https://upload.wikimedia.org/wikipedia/commons/3/37/Federal%... https://fred.stlouisfed.org/series/A939RX0Q048SBEA https://fred.stlouisfed.org/series/A939RX0Q048SBEA

nshepperd 4y ago

> put a spotlight on the big pharmaceutical companies that had brought them to market — especially Pfizer and Moderna Moderna? The research startup that had only recently IPO'd and didn't have a single commercial product before covid? Seems weird to call it a "big pharmaceutical company". I'd rather a few founders become billionaires from a successful startup than have Moderna gone bankrupt and lose the vaccines they were developing forever.

sanp 4y ago
This assumes that only pharma companies can execute the steps required to bring the fruits of all that research to market. There is no reason a govt entity can’t do the same. It is a question of setting up the right incentives for the employees of that govt entity.
- jleyank 4y ago
  I really doubt any western government could pull this off as either they or their population would balk at the cost if not the concept.
- rayiner 4y ago
  Yes it’s a matter of the incentives, but a government entity has fundamentally different incentives than a private entity. Countries ranging from Canada to Sweden to India to China invested heavily into state-owned industries in the 20th century, and every single one reversed course. Because it just didn’t work.
  - swooni 4y ago
    Sweden's state-owned enterprises were sold purely because of politics. No one reversed course. It's just the right wing got majority and sold what they could when they had the chance including a large amount of public housing, schools and healthcare facilities.
    - rayiner 4y ago

colinsane 4y ago

> Universities should stipulate in their technology transfer agreements that they would not use patents to prevent generic competition in places where the list price of the drug was unattainable based on average income if a drug were to be profitably sold to someone else for 20% of the price i’m paying for it, then wouldn’t i feel taken advantage of (more than i already am) when i’m denied access to that better price? i’m not saying means tested benefits are (or aren’t) all bad: just that in most places we use them it’s to enable transactions that very directly could not be profitable. a person buying food with foodstamps isn’t themselves paying the producer a profitable sum: each stamp has a direct “cost” that gets socialized, so it’s reasonable to believe that somebody well-off shouldn’t be eligible for them. but when the transaction is profitable at both price X and price 5X, the case to be made for why everyone shouldn’t be permitted that price of X is just a lot harder to explain.

rayiner 4y ago

This line of argument overlooks the vast amounts of investment that goes into commercialization after the basic research phase. A lot of the fundamental work on self-driving cars was funded by DARPA and was done at CMU, Stanford, etc. The DARPA Grand Challenge demonstrated working self driving cars back in 2004. But private industry has invested over $100 billion in commercialization since then. And we still aren’t close to a market-ready product. Nobody is “paying twice.” Folks on HN should understand this intuitively. Nobody thinks that angel or series A investment entitles you to 100% of a company and right to get the products for free.