9 ms·

Big Pharma's profits are a result of taxpayer funded research via the NIH and others for drug discovery. https://www.ineteconomics.org/perspectives/blog/us-tax

Big Pharma's profits are a result of taxpayer funded research via the NIH and others for drug discovery. https://www.ineteconomics.org/perspectives/blog/us-tax-dollars-funded-every-new-pharmaceutical-in-the-last-decade https://www.ineteconomics.org/perspectives/blog/us-tax-dolla... Big Pharma has a very powerful lobbying arm that is against Medicare negotiating down prices.

suzzer99 3y ago
> Big Pharma has a very powerful lobbying arm that is against Medicare negotiating down prices. I particularly liked how all the Congresspeople involved in writing that the government couldn't negotiate drug prices into Medicare Part D immediately retired and went to work for the drug industry.
- consumer451 3y ago
  When faced with a regulatory issue in the USA, I often look at EU regs for reference. Here is their inquiry on the "revolving door" issue: https://www.ombudsman.europa.eu/en/decision/en/155953 https://www.ombudsman.europa.eu/en/decision/en/155953
  - LudwigNagasena 3y ago
    Weird how it’s framed as an issue of reputational damage. Ctrl+f “corruption”, 0 results.
    - SilverBirch 3y ago
      It’s much easier to tackle the “appearance” of corruption than actual corruption because it changes the burden of proof and doesn’t imply wrongdoing.
- refurb 3y ago
  What’s even funnier is this apparently powerful lobbying arm didn’t stop Congress from passing a law..that allows Medicare to negotiate drug prices. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation https://www.cms.gov/inflation-reduction-act-and-medicare/med...
  - silverquiet 3y ago
    If it took two decades from the creation of part D and a worldwide pandemic/financial disaster just to allow for price negotiation, I see that more as evidence of power rather than weakness. Good that it finally changed though. Democrats also put price caps on insulin which seems nice for diabetics.
    - refurb 3y ago
      Well the kicker is that Medicare never paid the list price anyways. There are a ton of mandatory discounts the government gets. With Part B, Medicare pays average selling price, which is the average price private insurers pays. Then add on top 340B discounts which many hospitals get, which knocks another 23.1% off plus penalties for price increases above inflation (Google "340B penny pricing", many hospitals only pay $0.01 per unit of drug). With Part D, the government doesn't pay for drug anyways. Private insurers do the negotiating on behalf of he government. Then look can look up VA pricing (24% off at a minimum). Medicaid gets "best price" which is the lowest price the drug sells for anywhere. So the government has "negotiated" (by fiat) plenty of discounts. But saying "Medicare doesn't negotiate drug prices" makes plenty of political hay, and while technically true, doesn't really explain the prices the government gets.
      - silverquiet 3y ago
        > Medicaid gets "best price" which is the lowest price the drug sells for anywhere. I'm guessing you mean anywhere in the US. Apparently Florida is currently pushing to import drugs from Canada. https://www.reuters.com/business/healthcare-pharmaceuticals/us-fda-allow-florida-import-cheaper-drugs-canada-2024-01-05/ https://www.reuters.com/business/healthcare-pharmaceuticals/...
        refurb 3y ago
        Yes anywhere in the US. Private insurers often get discounts of 50%+, which then Medicaid gets. And sure Florida can try to import Canadian drugs. They tried that 20 years ago. The companies capped sales to Canada at no more than 10% of last years sales. Canada then put export restrictions in place to put prevent shortages. The US government has talked about price referencing Europe. Which would actually be great. Companies would be forced to increase European prices and lower US prices.
- ossyrial 3y ago
  > I particularly liked how all the Congresspeople involved in writing that the government couldn't negotiate drug prices into Medicare Part D immediately retired and went to work for the drug industry. Wow that is wild. Could you share a source for this? I would love to look further into this.
  - ta988 3y ago
    That's a pretty standard practice in tobacco, banks, drug companies... Search for revolving doors <industry name> and you will find books and documentaries and articles ...
    - scruple 3y ago
      And let's not forget communication companies and the FTC.
      - mikestew 3y ago
        I’m sure you meant “FCC”.
        scruple 3y ago
        Yes, thanks!
blackbear_ 3y ago
It is true that pharma companies take advantage of publicly funded research, but from there to brining a new drug on the market it takes further 10/15 years and 100s million dollars of R&D. A large portion of the cost comes from the fact that most of these projects prove infeasible and are abandoned during development or later during trials. The vast majority of this effort remains unpublished, so I am not sure that the article you cite supports your argument. Most of the research mentioned in that article talks about possible associations between target and disease, which is just the earliest step of drug development.
- swores 3y ago
  The thing is, pharma industry is clearly hugely profitable, so why doesn't the government invest in a wide shotgun approach to fund half (or more) of the entire industry and in return take half (or more) of the profits to either keep as revenue or reinvest in pharma or in other healthcare? (Obviously theoretically ideal economically would be if the government could just have a socialised department discovering and developing all new drugs needed with no profit margins, but then you lose out on benefits of competition, profit motives etc. so a split model makes sense, where they're still private companies but the gov invests hugely in them - but in return for the fair share of profits, rather than so many current grants where the gov pays funding and it doesn't even get them a good discount on buying the overpriced final drug.
  - NavinF 3y ago
    You could say that about any industry. "The thing is, the S&P 500 is clearly hugely profitable, so why doesn't the government invest in a wide shotgun approach to fund half (or more) of the entire S&P 500 and in return take half (or more) of the profits to either keep as revenue or reinvest in the S&P 500 or in other stock indexes?" Gov't investment in any industry just because it's profitable is a bad idea for obvious reasons.
    - swores 3y ago
      Sure, except that investing in the S&P is just artificially inflating the economy as a whole, whereas my suggestion isn't intended to be "this is my advice for the most profitable use of a government $", it's a suggestion for boosting a small part of the economy to speed up the development / progress of new drugs as a societal benefit. People who defend the huge profit amounts of pharma companies (which ultimately come from consumers needing healthcare, paying either directly or through insurance) say it's fair because of the huge amount they invest to create the drugs, if the government does most of the investing then they can take most of the profits to subsidise free pills for their population. Seems to me like a more direct benefit (in addition to potential economic benefits of boosting investment levels in a high-exporting industry too) than just the government buying S&P500 index funds.
beloch 3y ago
It's a really odd system at first blush. People pay taxes. Taxes fund research. Research is then developed by private corporations into products that are sold back to the people. It does solve a few key problems though. If universities and other research institutions were encouraged to bring products to market, they'd change what they work on and how. Basic curiosity driven research would give way to commercially oriented research. Moon-shots that might take multiple decades to develop would be replaced with things that can be brought to trials in just a few years. Brilliant researchers that might have made multiple earth-shaking discoveries over the course of their careers might get bogged down bringing one product to market. There's a lot to be said for insulating academia from quarterly reports. However, things go awry when corporations that turn government funded research into private profits start lobbying too much and regulatory capture occurs. Even if it takes a decade to turn novel research into something you can buy at a pharmacy, the debt pharma companies owe to taxpayers should not be lost sight of. There should be stringent regulations on how drugs based on public research are priced. Yes, pharma company investments, market size, projected sales, and all that should be factored in, but drugs based on public research should be made available to the public at reasonable prices. That's not happening in the U.S.. Bottom line, public money must come with strings attached that serve the public interest. Pharmaceutical companies should be under heightened scrutiny and regulation because of where they get their IP.
- lyu07282 3y ago
  I love how circular neoliberals argue, lobbying and regulatory capture are a real problem with big pharma, to fix it the government really should put them under heightened scrutiny and regulation. These politicians are really corrupt, they should really stop being corrupt. Here is a wild idea: Perhaps the core of the problem just simply IS for-profit health care itself. Perhaps if someone has cancer, nobody should profit?
  - mlrtime 3y ago
    You use cancer as an example, but what about other meds? Is it ok to profit off ED meds or ADHD meds? Note, just cherry picking a few that are arguably not life saving for most.
mrtksn 3y ago
This is a problematic position, you can say that big tech profits are also funded by the taxpayers since they employ people trained through public resources(most people don't study %100 private).
- apwell23 3y ago
  Yes this is the classic Obama’s ‘You didn’t build that’ argument.
Ntrails 3y ago
Not just taxpayer, but also charity funded!
apwell23 3y ago
Yes this is the classic Obama’s ‘You didn’t build that’ argument.
amelius 3y ago
> Big Pharma's profits are a result of taxpayer funded research The same can be said about any BigTech company, actually.

suzzer99 3y ago

> Big Pharma has a very powerful lobbying arm that is against Medicare negotiating down prices. I particularly liked how all the Congresspeople involved in writing that the government couldn't negotiate drug prices into Medicare Part D immediately retired and went to work for the drug industry.

consumer451 3y ago
When faced with a regulatory issue in the USA, I often look at EU regs for reference. Here is their inquiry on the "revolving door" issue: https://www.ombudsman.europa.eu/en/decision/en/155953 https://www.ombudsman.europa.eu/en/decision/en/155953
- LudwigNagasena 3y ago
  Weird how it’s framed as an issue of reputational damage. Ctrl+f “corruption”, 0 results.
  - SilverBirch 3y ago
    It’s much easier to tackle the “appearance” of corruption than actual corruption because it changes the burden of proof and doesn’t imply wrongdoing.
refurb 3y ago
What’s even funnier is this apparently powerful lobbying arm didn’t stop Congress from passing a law..that allows Medicare to negotiate drug prices. https://www.cms.gov/inflation-reduction-act-and-medicare/medicare-drug-price-negotiation https://www.cms.gov/inflation-reduction-act-and-medicare/med...
- silverquiet 3y ago
  If it took two decades from the creation of part D and a worldwide pandemic/financial disaster just to allow for price negotiation, I see that more as evidence of power rather than weakness. Good that it finally changed though. Democrats also put price caps on insulin which seems nice for diabetics.
  - refurb 3y ago
    Well the kicker is that Medicare never paid the list price anyways. There are a ton of mandatory discounts the government gets. With Part B, Medicare pays average selling price, which is the average price private insurers pays. Then add on top 340B discounts which many hospitals get, which knocks another 23.1% off plus penalties for price increases above inflation (Google "340B penny pricing", many hospitals only pay $0.01 per unit of drug). With Part D, the government doesn't pay for drug anyways. Private insurers do the negotiating on behalf of he government. Then look can look up VA pricing (24% off at a minimum). Medicaid gets "best price" which is the lowest price the drug sells for anywhere. So the government has "negotiated" (by fiat) plenty of discounts. But saying "Medicare doesn't negotiate drug prices" makes plenty of political hay, and while technically true, doesn't really explain the prices the government gets.
    - silverquiet 3y ago
      > Medicaid gets "best price" which is the lowest price the drug sells for anywhere. I'm guessing you mean anywhere in the US. Apparently Florida is currently pushing to import drugs from Canada. https://www.reuters.com/business/healthcare-pharmaceuticals/us-fda-allow-florida-import-cheaper-drugs-canada-2024-01-05/ https://www.reuters.com/business/healthcare-pharmaceuticals/...
      - refurb 3y ago
        Yes anywhere in the US. Private insurers often get discounts of 50%+, which then Medicaid gets. And sure Florida can try to import Canadian drugs. They tried that 20 years ago. The companies capped sales to Canada at no more than 10% of last years sales. Canada then put export restrictions in place to put prevent shortages. The US government has talked about price referencing Europe. Which would actually be great. Companies would be forced to increase European prices and lower US prices.
ossyrial 3y ago
> I particularly liked how all the Congresspeople involved in writing that the government couldn't negotiate drug prices into Medicare Part D immediately retired and went to work for the drug industry. Wow that is wild. Could you share a source for this? I would love to look further into this.
- ta988 3y ago
  That's a pretty standard practice in tobacco, banks, drug companies... Search for revolving doors <industry name> and you will find books and documentaries and articles ...
  - scruple 3y ago
    And let's not forget communication companies and the FTC.
    - mikestew 3y ago
      I’m sure you meant “FCC”.
      - scruple 3y ago
        Yes, thanks!

blackbear_ 3y ago

It is true that pharma companies take advantage of publicly funded research, but from there to brining a new drug on the market it takes further 10/15 years and 100s million dollars of R&D. A large portion of the cost comes from the fact that most of these projects prove infeasible and are abandoned during development or later during trials. The vast majority of this effort remains unpublished, so I am not sure that the article you cite supports your argument. Most of the research mentioned in that article talks about possible associations between target and disease, which is just the earliest step of drug development.

swores 3y ago
The thing is, pharma industry is clearly hugely profitable, so why doesn't the government invest in a wide shotgun approach to fund half (or more) of the entire industry and in return take half (or more) of the profits to either keep as revenue or reinvest in pharma or in other healthcare? (Obviously theoretically ideal economically would be if the government could just have a socialised department discovering and developing all new drugs needed with no profit margins, but then you lose out on benefits of competition, profit motives etc. so a split model makes sense, where they're still private companies but the gov invests hugely in them - but in return for the fair share of profits, rather than so many current grants where the gov pays funding and it doesn't even get them a good discount on buying the overpriced final drug.
- NavinF 3y ago
  You could say that about any industry. "The thing is, the S&P 500 is clearly hugely profitable, so why doesn't the government invest in a wide shotgun approach to fund half (or more) of the entire S&P 500 and in return take half (or more) of the profits to either keep as revenue or reinvest in the S&P 500 or in other stock indexes?" Gov't investment in any industry just because it's profitable is a bad idea for obvious reasons.
  - swores 3y ago
    Sure, except that investing in the S&P is just artificially inflating the economy as a whole, whereas my suggestion isn't intended to be "this is my advice for the most profitable use of a government $", it's a suggestion for boosting a small part of the economy to speed up the development / progress of new drugs as a societal benefit. People who defend the huge profit amounts of pharma companies (which ultimately come from consumers needing healthcare, paying either directly or through insurance) say it's fair because of the huge amount they invest to create the drugs, if the government does most of the investing then they can take most of the profits to subsidise free pills for their population. Seems to me like a more direct benefit (in addition to potential economic benefits of boosting investment levels in a high-exporting industry too) than just the government buying S&P500 index funds.

beloch 3y ago

It's a really odd system at first blush. People pay taxes. Taxes fund research. Research is then developed by private corporations into products that are sold back to the people. It does solve a few key problems though. If universities and other research institutions were encouraged to bring products to market, they'd change what they work on and how. Basic curiosity driven research would give way to commercially oriented research. Moon-shots that might take multiple decades to develop would be replaced with things that can be brought to trials in just a few years. Brilliant researchers that might have made multiple earth-shaking discoveries over the course of their careers might get bogged down bringing one product to market. There's a lot to be said for insulating academia from quarterly reports. However, things go awry when corporations that turn government funded research into private profits start lobbying too much and regulatory capture occurs. Even if it takes a decade to turn novel research into something you can buy at a pharmacy, the debt pharma companies owe to taxpayers should not be lost sight of. There should be stringent regulations on how drugs based on public research are priced. Yes, pharma company investments, market size, projected sales, and all that should be factored in, but drugs based on public research should be made available to the public at reasonable prices. That's not happening in the U.S.. Bottom line, public money must come with strings attached that serve the public interest. Pharmaceutical companies should be under heightened scrutiny and regulation because of where they get their IP.

lyu07282 3y ago
I love how circular neoliberals argue, lobbying and regulatory capture are a real problem with big pharma, to fix it the government really should put them under heightened scrutiny and regulation. These politicians are really corrupt, they should really stop being corrupt. Here is a wild idea: Perhaps the core of the problem just simply IS for-profit health care itself. Perhaps if someone has cancer, nobody should profit?
- mlrtime 3y ago
  You use cancer as an example, but what about other meds? Is it ok to profit off ED meds or ADHD meds? Note, just cherry picking a few that are arguably not life saving for most.

mrtksn 3y ago

This is a problematic position, you can say that big tech profits are also funded by the taxpayers since they employ people trained through public resources(most people don't study %100 private).

apwell23 3y ago
Yes this is the classic Obama’s ‘You didn’t build that’ argument.

Ntrails 3y ago

Not just taxpayer, but also charity funded!

apwell23 3y ago

Yes this is the classic Obama’s ‘You didn’t build that’ argument.

amelius 3y ago

> Big Pharma's profits are a result of taxpayer funded research The same can be said about any BigTech company, actually.