4 ms·
A lot of pharmaceuticals do however end up coming from what's essentially a non-profit system. It doesn't need to be a pure command economy. The price signals
by sudosysgen 3y ago
A lot of pharmaceuticals do however end up coming from what's essentially a non-profit system. It doesn't need to be a pure command economy.
The price signals are already broken. The people doing the research that is fundamental to pharmaceuticals are paid by grants which aren't connected to the price signals. There is a market failure here.
- s1artibartfast 3y agoFundamental research, like what a grant would pay for, is a fairly tiny part of what pharma companies do. The vast majority is the development. Modern drugs take ~$1.5 billion dollars to bring to market. In my experience, 99% of that cost comes after what looks like academic research.
- sudosysgen 3y agoThe fact that it's a tiny part of what pharma companies do is why there is a disconnect. There is something like 70 billion in grants alone (so not even including salaries and stipends a lot of the time) going towards biomedical fundamental research, and it's disconnected from the price signals because pharma companies will never be the ones doing it. It's still a necessary part of the process. So for the market it looks like 99% of the cost comes after academic research but in reality that's only 40-60% of it. At the end of the day the price signal doesn't even reach most of the ressources and it is itself a poor proxy for the metric we actually want to optimize, which would be something like QALY.