4 ms·

I'm not Pharma industry expert but ... I'm pretty sure it's much the same as venture capital. That is to say that's it's not that expensive to R&D it, certainl

I'm not Pharma industry expert but ... I'm pretty sure it's much the same as venture capital. That is to say that's it's not that expensive to R&D it, certainly compared to the eventual sale price, but it's carrying the cost of the hundred potential drugs that never made it to market that's the killer.

max_ 3y ago
It takes $300m to $2B to get a drug approved. And the approval rate is less than 12%. The crazy pricing is to compensate for the failed projects. Also, it's not like you can bootstrap yourself or grow organically like Startups. You have to wait for like 10 - 15 years. To actually start selling it. [1]: https://www.google.com/amp/s/www.policymed.com/amp/2014/12/a-tough-road-cost-to-develop-one-new-drug-is-26-billion-approval-rate-for-drugs-entering-clinical-de.html https://www.google.com/amp/s/www.policymed.com/amp/2014/12/a...
- lostlogin 3y ago
  > Also, it's not like you can bootstrap yourself or grow organically like Startups. So if they have a effectively built monopoly, chopping down the maximum they can charge via regulation would seem sensible wouldn’t it?
  - bryanrasmussen 3y ago
    there is also a lot of problems with pharma not wanting to invest in cures for smaller diseases because the payback seems unlikely to happen or not be great enough to warrant the risk, so this seems like a pretty good vote getting maneuver that might have unintended consequences.
  - Scandiravian 3y ago
    I think that's difficult to implement. There's a risk that companies might end up not launching new products on the US market There's several factors that impact US drug prices. For instance FDA approvals are significantly more costly than EMA ones and the bargaining power of healthcare providers is worse compared to a single payer system I have no knowledge of US laws, but I wouldn't be surprised if there's some kind of law preventing government interference with "the free market"
    - joatmon-snoo 3y ago
      No such law here in the states, just a political atmosphere where some people adore the idea of socialism and others see it as the coming of the end of times. Combine that with a highly complex industry structure that’s been entrenched for decades, and you end up in a situation where it’s near impossible to pass laws that actually structurally change our system. (It’s almost the opposite, in fact, where our courts have expanded the Commerce Clause over time to allow the federal government the ability to regulate close to any economic activity.)
      - Scandiravian 3y ago
        Thanks for the clarification! :)
    - lostlogin 3y ago
      Regulation has hit insulin pricing. https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/02/fact-sheet-president-bidens-cap-on-the-cost-of-insulin-could-benefit-millions-of-americans-in-all-50-states/ https://www.whitehouse.gov/briefing-room/statements-releases...
ethanbond 3y ago
No it’s also ludicrously expensive to R&D a drug, even if you just count the costs of the successful program. You’d be looking at easily $50-$150MM just in clinical trial costs, not to mention the years or decades of preclinical work. Factor in the failed programs and you’re looking at about $2B of spend in order to bring a drug to market.
- Scandiravian 3y ago
  If I remember correctly that cost is also only the price of developing a successful drug Several drug developments are halted before they reach market. Novo for instance lost a lot of money on their bet to develop inhalable insulin 15 years ago That cost also has to be recouped when finally hitting the jackpot
- FireBeyond 3y ago
  Of the top 10 pharma companies, 5 are American, and three of them rank 8th, 9th and 10th for R&D investment. So the whole "American big pharma needs to make a billion dollars a week in profit to recoup their R&D" is nothing but marketing fluff.
  - tacticalturtle 3y ago
    Does it matter that only some of them are headquartered in the US? Presumably those other companies also sell drugs in the US? I would think any company - regardless of where it’s headquartered - would seek to recoup R&D costs in a huge market like the US where prices aren’t capped by the government.
  - ethanbond 3y ago
    I… am not following this. Novo Nordisk for example is a Danish company. I haven’t seen anyone say American pharma companies in particular need to make a ton of money. The American-specific topic is that American consumers pay a ton more for drugs. That can be chalked up to lack of single-payer making American consumers incredibly easy to bully/negotiate against + all the rent-seekers who sit at various points along the care delivery system.
joatmon-snoo 3y ago
It’s even riskier than VC, because the capital requirements in pharma per venture are _significantly_ higher.

max_ 3y ago

It takes $300m to $2B to get a drug approved. And the approval rate is less than 12%. The crazy pricing is to compensate for the failed projects. Also, it's not like you can bootstrap yourself or grow organically like Startups. You have to wait for like 10 - 15 years. To actually start selling it. [1]: https://www.google.com/amp/s/www.policymed.com/amp/2014/12/a-tough-road-cost-to-develop-one-new-drug-is-26-billion-approval-rate-for-drugs-entering-clinical-de.html https://www.google.com/amp/s/www.policymed.com/amp/2014/12/a...

lostlogin 3y ago
> Also, it's not like you can bootstrap yourself or grow organically like Startups. So if they have a effectively built monopoly, chopping down the maximum they can charge via regulation would seem sensible wouldn’t it?
- bryanrasmussen 3y ago
  there is also a lot of problems with pharma not wanting to invest in cures for smaller diseases because the payback seems unlikely to happen or not be great enough to warrant the risk, so this seems like a pretty good vote getting maneuver that might have unintended consequences.
- Scandiravian 3y ago
  I think that's difficult to implement. There's a risk that companies might end up not launching new products on the US market There's several factors that impact US drug prices. For instance FDA approvals are significantly more costly than EMA ones and the bargaining power of healthcare providers is worse compared to a single payer system I have no knowledge of US laws, but I wouldn't be surprised if there's some kind of law preventing government interference with "the free market"
  - joatmon-snoo 3y ago
    No such law here in the states, just a political atmosphere where some people adore the idea of socialism and others see it as the coming of the end of times. Combine that with a highly complex industry structure that’s been entrenched for decades, and you end up in a situation where it’s near impossible to pass laws that actually structurally change our system. (It’s almost the opposite, in fact, where our courts have expanded the Commerce Clause over time to allow the federal government the ability to regulate close to any economic activity.)
    - Scandiravian 3y ago
      Thanks for the clarification! :)
  - lostlogin 3y ago
    Regulation has hit insulin pricing. https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/02/fact-sheet-president-bidens-cap-on-the-cost-of-insulin-could-benefit-millions-of-americans-in-all-50-states/ https://www.whitehouse.gov/briefing-room/statements-releases...

ethanbond 3y ago

No it’s also ludicrously expensive to R&D a drug, even if you just count the costs of the successful program. You’d be looking at easily $50-$150MM just in clinical trial costs, not to mention the years or decades of preclinical work. Factor in the failed programs and you’re looking at about $2B of spend in order to bring a drug to market.

Scandiravian 3y ago
If I remember correctly that cost is also only the price of developing a successful drug Several drug developments are halted before they reach market. Novo for instance lost a lot of money on their bet to develop inhalable insulin 15 years ago That cost also has to be recouped when finally hitting the jackpot
FireBeyond 3y ago
Of the top 10 pharma companies, 5 are American, and three of them rank 8th, 9th and 10th for R&D investment. So the whole "American big pharma needs to make a billion dollars a week in profit to recoup their R&D" is nothing but marketing fluff.
- tacticalturtle 3y ago
  Does it matter that only some of them are headquartered in the US? Presumably those other companies also sell drugs in the US? I would think any company - regardless of where it’s headquartered - would seek to recoup R&D costs in a huge market like the US where prices aren’t capped by the government.
- ethanbond 3y ago
  I… am not following this. Novo Nordisk for example is a Danish company. I haven’t seen anyone say American pharma companies in particular need to make a ton of money. The American-specific topic is that American consumers pay a ton more for drugs. That can be chalked up to lack of single-payer making American consumers incredibly easy to bully/negotiate against + all the rent-seekers who sit at various points along the care delivery system.

joatmon-snoo 3y ago

It’s even riskier than VC, because the capital requirements in pharma per venture are _significantly_ higher.