6 ms·

The price is rarely ever about the manufacturing cost. "A new study in 2020 estimated that the median cost of getting a new drug into the market was $985 milli

The price is rarely ever about the manufacturing cost. "A new study in 2020 estimated that the median cost of getting a new drug into the market was $985 million, and the average cost was $1.3 billion, which was much lower compared to previous studies, which have placed the average cost of drug development as $2.8 billion.[4]" https://en.wikipedia.org/wiki/Cost_of_drug_development https://en.wikipedia.org/wiki/Cost_of_drug_development

chimeracoder 2y ago
> "A new study in 2020 estimated that the median cost of getting a new drug into the market was $985 million, and the average cost was $1.3 billion, which was much lower compared to previous studies, which have placed the average cost of drug development as $2.8 billion.[4]" PrEP repurposed Truvada, an existing blockbuster drug that had already reaped immense profit for Gilead for use in HIV treatment by the time the trials for PrEP began. The trials for PrEP were funded by the government, not Gilead. Gilead, however, got to retain all profits earned from PrEP.
- HideousKojima 2y ago
  Did Gilead fund the R&D? There's a lot more to developing a new drug than just trials (though I think Gilead should have foot the bill for the trials too).
  - roughly 2y ago
    I don’t know if it’s the case here, but very, very, very often in biotech you’ve got the primary foundational research happening at university labs funded by grants, and it’s the productionization of the research (and then clinical trials, etc) that are what the biotech companies are doing. I’m not sure where that shifts the “who deserves what” conversation, but without university research labs, there’s no pharma industry.
    - pfdietz 2y ago
      If the university owned the IP, then its value should have been reflected in what was bid for it. If the knowledge was not restricted by IP law, then any drug company could use it, and compete for new drugs based on it. As such, it would not provide any of them with a competitive advantage, and so would not be reflected in what they could charge. What universities typically produce is not a chemical that can serve as an actual drug, but is only a starting point for a long and expensive process of producing such a chemical. And then, it's often found that the target of the class of potential drugs isn't actually a good one. One can't determine that until drug candidates are available to test on real patients.
      - Jensson 2y ago
        > What universities typically produce is not a chemical that can serve as an actual drug, but is only a starting point for a long and expensive process of producing such a chemical Remember you need to include all the failed attempts at finding useful things at university labs to see how much governments spend on research (just like you did failed pharma attempts), and if you add that up you see governments actually contribute a massive part of the cost to bring medicines to market. What they produce is necessary to even begin the work pharma does, currently it is basically a gift from the people to the pharma industry.
    - Nifty3929 2y ago
      "without university research labs, there’s no pharma industry." - I think you have it exactly backwards: Without the pharma industry, there's no medicine. Good research goes nowhere if you can't bring it to market. The pharma industry COULD do their own foundational research, but the university system cannot bring a drug to market.
      - Jensson 2y ago
        > The pharma industry COULD do their own foundational research, but the university system cannot bring a drug to market. You can't use an "in theory" argument for one side but not the other. In theory governments could bring medicine to market, in practice they don't/can't. In theory pharma industry could do foundational research, but in practice they don't/can't.
  - Symmetry 2y ago
    The usual story is that academia finds an interesting mechanism to produce the desired effect. Though occasionally this is done by industry instead. Then industry turns that into a specific molecule that can enter the human body in a standard way and doesn't produce too many side effects. Then industry figures out how to produce that molecule at scale reliably in a sufficiently pure form. And at the same time industry is shepherding the drug through clinical trials.
- ortusdux 2y ago
  A significant portion of the cost is the drug trials. Excedrin Extra Strength and Excedrin Migraine have identical formulations, but IIRC Bayer spent $300m on FDA approval for migraine treatment, which is why the migraine variant continues to be more expensive.
  - chimeracoder 2y ago
    > A significant portion of the cost is the drug trials. Excedrin Extra Strength and Excedrin Migraine have identical formulations, but IIRC Bayer spent $300m on FDA approval for migraine treatment, which is why the migraine variant continues to be more expensive. Your analogy would only be relevant if the US government paid $300M for the FDA approval and Bayer got to pocket 100% of the markup.
pfdietz 2y ago
It should be pointed out that looking at the average cost of developing a drug is misleading, since one has to include the cost of all the drugs that failed to make it to market. One also has to include the money spent by small companies that failed and were not bought out, not just the money the big companies spend buying the successful ones.
- Nifty3929 2y ago
  This is critical, and exactly the sort of thing someone will gloss over, intentionally or not. The numerator is the total cost of developing ALL the drugs, even (especially) the failed ones, but the denominator is only those drugs that are successful.
  - FireBeyond 2y ago
    On the contrary, often pharma proponents will gloss over the fact that most “failures” are discovered and canned at a small fraction of the investment of getting a drug to market (when it’s obvious it won’t do what you need or has other challenges). Actually not in the contrary - you are right. It’s just that the failures often cost a small fraction. They don’t get to 95% testing and approval before “nope, not even close”.
    - pfdietz 2y ago
      I understand 60% of drug candidates fail in phase 3, the last and most expensive phase of testing. There are of course lots of chemicals ruled out early, but that's before you have something you'd call a drug.
      - FireBeyond 2y ago
        No, that's not quite accurate - the phases are effectively additive. 37% fail in Phase 1. Of those that make it through, 69% of those fail in Phase 2, and of those, 42% fail in Phase 3. So, of 1,000 possibles, you have 630 make it through Phase 1, and 195 that make it through phase 2, i.e. 80.5% of your drug candidates didn't even make it to Phase 3, that "most expensive phase". A more accurate phrasing would be that 42% of the drugs that made it through Phase 2 fail to make it through Phase 3.
hanniabu 2y ago
Also the government, aka the public, subsidizes a lot of those costs
rishav_sharan 2y ago
Talking of studies, from the same wiki A 2022 study invalidated the common argument as is for high medication costs that research and development investments are reflected in and necessitate the treatment costs, finding no correlation for investments in drugs (for cases where transparency was sufficient) and their costs.[20][21]
- mortehu 2y ago
  The Wikipedia editor was a bit naive to think such a basic study could invalidate that whole claim. They measured the correlation between the list price, adjusted for use amount, and development cost. As far as I can tell they didn't take into account number of customers each drug would have, how long the drug would stay on the market before profits are cannibalized by competitors (see e.g. Wegovy), and definitely not the cost of failed drug development.
gomox 2y ago
These original $3B numbers are highly misleading, to the extent that I deem them to be bordering on a straight up lie. See: https://news.ycombinator.com/item?id=18693177 https://news.ycombinator.com/item?id=18693177

chimeracoder 2y ago

> "A new study in 2020 estimated that the median cost of getting a new drug into the market was $985 million, and the average cost was $1.3 billion, which was much lower compared to previous studies, which have placed the average cost of drug development as $2.8 billion.[4]" PrEP repurposed Truvada, an existing blockbuster drug that had already reaped immense profit for Gilead for use in HIV treatment by the time the trials for PrEP began. The trials for PrEP were funded by the government, not Gilead. Gilead, however, got to retain all profits earned from PrEP.

HideousKojima 2y ago
Did Gilead fund the R&D? There's a lot more to developing a new drug than just trials (though I think Gilead should have foot the bill for the trials too).
- roughly 2y ago
  I don’t know if it’s the case here, but very, very, very often in biotech you’ve got the primary foundational research happening at university labs funded by grants, and it’s the productionization of the research (and then clinical trials, etc) that are what the biotech companies are doing. I’m not sure where that shifts the “who deserves what” conversation, but without university research labs, there’s no pharma industry.
  - pfdietz 2y ago
    If the university owned the IP, then its value should have been reflected in what was bid for it. If the knowledge was not restricted by IP law, then any drug company could use it, and compete for new drugs based on it. As such, it would not provide any of them with a competitive advantage, and so would not be reflected in what they could charge. What universities typically produce is not a chemical that can serve as an actual drug, but is only a starting point for a long and expensive process of producing such a chemical. And then, it's often found that the target of the class of potential drugs isn't actually a good one. One can't determine that until drug candidates are available to test on real patients.
    - Jensson 2y ago
      > What universities typically produce is not a chemical that can serve as an actual drug, but is only a starting point for a long and expensive process of producing such a chemical Remember you need to include all the failed attempts at finding useful things at university labs to see how much governments spend on research (just like you did failed pharma attempts), and if you add that up you see governments actually contribute a massive part of the cost to bring medicines to market. What they produce is necessary to even begin the work pharma does, currently it is basically a gift from the people to the pharma industry.
  - Nifty3929 2y ago
    "without university research labs, there’s no pharma industry." - I think you have it exactly backwards: Without the pharma industry, there's no medicine. Good research goes nowhere if you can't bring it to market. The pharma industry COULD do their own foundational research, but the university system cannot bring a drug to market.
    - Jensson 2y ago
      > The pharma industry COULD do their own foundational research, but the university system cannot bring a drug to market. You can't use an "in theory" argument for one side but not the other. In theory governments could bring medicine to market, in practice they don't/can't. In theory pharma industry could do foundational research, but in practice they don't/can't.
- Symmetry 2y ago
  The usual story is that academia finds an interesting mechanism to produce the desired effect. Though occasionally this is done by industry instead. Then industry turns that into a specific molecule that can enter the human body in a standard way and doesn't produce too many side effects. Then industry figures out how to produce that molecule at scale reliably in a sufficiently pure form. And at the same time industry is shepherding the drug through clinical trials.
ortusdux 2y ago
A significant portion of the cost is the drug trials. Excedrin Extra Strength and Excedrin Migraine have identical formulations, but IIRC Bayer spent $300m on FDA approval for migraine treatment, which is why the migraine variant continues to be more expensive.
- chimeracoder 2y ago
  > A significant portion of the cost is the drug trials. Excedrin Extra Strength and Excedrin Migraine have identical formulations, but IIRC Bayer spent $300m on FDA approval for migraine treatment, which is why the migraine variant continues to be more expensive. Your analogy would only be relevant if the US government paid $300M for the FDA approval and Bayer got to pocket 100% of the markup.

pfdietz 2y ago

It should be pointed out that looking at the average cost of developing a drug is misleading, since one has to include the cost of all the drugs that failed to make it to market. One also has to include the money spent by small companies that failed and were not bought out, not just the money the big companies spend buying the successful ones.

Nifty3929 2y ago
This is critical, and exactly the sort of thing someone will gloss over, intentionally or not. The numerator is the total cost of developing ALL the drugs, even (especially) the failed ones, but the denominator is only those drugs that are successful.
- FireBeyond 2y ago
  On the contrary, often pharma proponents will gloss over the fact that most “failures” are discovered and canned at a small fraction of the investment of getting a drug to market (when it’s obvious it won’t do what you need or has other challenges). Actually not in the contrary - you are right. It’s just that the failures often cost a small fraction. They don’t get to 95% testing and approval before “nope, not even close”.
  - pfdietz 2y ago
    I understand 60% of drug candidates fail in phase 3, the last and most expensive phase of testing. There are of course lots of chemicals ruled out early, but that's before you have something you'd call a drug.
    - FireBeyond 2y ago
      No, that's not quite accurate - the phases are effectively additive. 37% fail in Phase 1. Of those that make it through, 69% of those fail in Phase 2, and of those, 42% fail in Phase 3. So, of 1,000 possibles, you have 630 make it through Phase 1, and 195 that make it through phase 2, i.e. 80.5% of your drug candidates didn't even make it to Phase 3, that "most expensive phase". A more accurate phrasing would be that 42% of the drugs that made it through Phase 2 fail to make it through Phase 3.

hanniabu 2y ago

Also the government, aka the public, subsidizes a lot of those costs

rishav_sharan 2y ago

Talking of studies, from the same wiki A 2022 study invalidated the common argument as is for high medication costs that research and development investments are reflected in and necessitate the treatment costs, finding no correlation for investments in drugs (for cases where transparency was sufficient) and their costs.[20][21]

mortehu 2y ago
The Wikipedia editor was a bit naive to think such a basic study could invalidate that whole claim. They measured the correlation between the list price, adjusted for use amount, and development cost. As far as I can tell they didn't take into account number of customers each drug would have, how long the drug would stay on the market before profits are cannibalized by competitors (see e.g. Wegovy), and definitely not the cost of failed drug development.

gomox 2y ago

These original $3B numbers are highly misleading, to the extent that I deem them to be bordering on a straight up lie. See: https://news.ycombinator.com/item?id=18693177 https://news.ycombinator.com/item?id=18693177