6 ms·

I'm disappointed this article doesn't mention the effect this will have on future pharmaceutical investment. Companies spend billions researching and testing d

by norikki 12y ago

I'm disappointed this article doesn't mention the effect this will have on future pharmaceutical investment. Companies spend billions researching and testing drugs for safety and effectiveness. Companies capable of developing successful drugs need an adequate period in which to recoup their investment and earn enough to fund new drug research. If companies know they won't have meaningful ownership over medicines they develop, they won't spend the huge amounts of capital necessary to develop them. When countries like India let competitors produce generics of American drugs, they are stealing the fruits of other people's labor. That isn't to say this theft isn't justified; generics will save the lives of those who can't afford the original. But those lives would have been lost all the same if no such drug had been developed in the first place. Stealing drugs will certainly help India in the short run, but it will slow the advance of medicine in the long run, for Indians and everyone else.

meric 12y ago
Not like your average Indian who makes $6 a day can afford the patented medicines that costs $10 a tablet anyways.
anupshinde 12y ago
There is a difference between: 1. Getting justified fruits for people's labor (researchers). Say- getting a great ROI like 1000% or huge ROI of 100000% 2. Getting greedy and trying to multiply the the ROI at the cost of human lives. I have seen pretty stupid patents (that are logically obvious or near common sense) granted to American companies in tech sector (and have been astonished since I helped create some of those). I believe pharma is no different.
girishso 12y ago
I don't think companies spend as much as we believe in researching drugs. Companies spend most on advertising and incentivizing the doctors to prescribe their medicines. The book: Bad Pharma [1] is an eye opener. The drug "Sovaldi" is making them $2.8ish billion dollars per quarter, that is almost $12 billion a year. I don't believe they spent tens of billions in developing the drug. [2] 1: http://www.amazon.com/Bad-Pharma-Companies-Mislead-Patients-ebook/dp/B008RLTUUA/ref=cm_cr_pr_product_top http://www.amazon.com/Bad-Pharma-Companies-Mislead-Patients-... 2: http://www.bloomberg.com/news/2014-10-28/gilead-reports-lower-than-estimated-sales-of-sovaldi.html http://www.bloomberg.com/news/2014-10-28/gilead-reports-lowe...
- shoyer 12y ago
  It's not what they spent developing Sovaldi -- it's the fortune the industry as a whole spends developing drugs that never make it to market. That said, it's quite likely true that marketing is a bigger share of costs than R&D. Pharma companies are out there to maximize revenue, just like any other corporation. It's a reflection of the poor state of regulation in the US that we pay far more of than our share (compared to the rest of the world).
  - jsprogrammer 12y ago
    This would be easy to study, figure out, and possibly come to conclusive results over: examine the budgets and expenses of pharmaceutical R&D departments.
  - chime 12y ago
    Here's the piece of the picture that everyone's missing from this particular example - an $11b acquisition [1]. Gilead bought Pharmasset for $11b. It no longer matters what it cost Pharmasset to research/test/approve/produce the medicine anymore. Certainly all of that was factored into the acquisition price but since Gilead's total cost ended up being $11b, that is what they need to recoup at the least. There are 3.2 million hep C patients in the US [2] but most don't feel ill or even know they have hep C. If every single person buys the drug, Gilead must still sell it for at least $11b / 3.2m = $3500/person! But if only 5% buy the drug, they need to sell it for $69,000 just to break event on the acquisition without even taking any other costs into account. This is just rough calculation to highlight that a sky high acquisition price resulted in a company demanding an equally high price per dose. Gilead paid the high price to acquire Pharmasset because they thought they could sell the drug for at such a high price per dose. If Gilead is proven right (and their stock price from $18 in 2011 to $100 in 2015 seems to reflect that indeed), then this just encourages more and more drug companies to be bought at astronomical prices. And the worst part of this is that the very government that gave this company the right to operate a monopoly via a patent is now asking them why they're charging so much [3]. None of this happened because of some singular evil cabal. It happened due to misaligned incentives. Government grants pay researchers, who develop medicines at paid-for-by-public-funds university labs, which sell the patents back to the researchers at fire-sale prices, who then go on to create biotech startups, which productize the research, and then sell to Fortune 100 pharmas, who can then demand almost any amount of money, which CMS will have to pay because USPTO said nobody else can sell this drug, FDA agreed that the drug works, and ACA ensures that the patients cannot be denied any drugs that work at any cost. [1] http://en.wikipedia.org/wiki/Pharmasset http://en.wikipedia.org/wiki/Pharmasset [2] http://www.hhs.gov/opa/reproductive-health/stis/hepatitis-c/ http://www.hhs.gov/opa/reproductive-health/stis/hepatitis-c/ [3] http://www.finance.senate.gov/imo/media/doc/Wyden-Grassley%20Document%20Request%20to%20Gilead%207-11-141.pdf http://www.finance.senate.gov/imo/media/doc/Wyden-Grassley%2...
geofft 12y ago
I am also disappointed, but not because I have presupposed the answer. I am genuinely curious as to whether Gilead will say "All right, drugs were fun but we're gonna do mobile gaming now," or whether they are making enough revenue from other markets and perhaps other drugs that they'll continue to discover and develop drugs like Sovaldi. I don't think the answer is obvious to someone (like me) who hasn't been paying close attention to the profitability of drug development, so I would have appreciated In particular, while I can see grassroots protestors not thinking about the long term, I vaguely assume that Médecins Sans Frontières knows what they're doing, and wouldn't have been backing this strongly if they didn't think it was also a long-term good strategy. But I definitely would have appreciated more discussion of that point, since I don't put much stock in my own vague assumptions.
fizixer 12y ago
This is a textbook example of why some economic activities cannot be based on a profit motive. There should be an international drug research agency, to which every country should contribute, and that agency should be responsible for exploring cures for diseases, by funding academics, labs, etc.
- pradn 12y ago
  Here's an argument in the Jacobin that argues for nationalizing pharmaceuticals: https://www.jacobinmag.com/2013/06/socialize-big-pharma/ https://www.jacobinmag.com/2013/06/socialize-big-pharma/
- rasz_pl 12y ago
  There are national labs. Canadian one sold Ebola vaccine license for $200K to some no name US lab, that same lab turned around and resold it to Merck for $50mil. Merck bought it only because it is standing to make few billion off of it.
chdir 12y ago
> spend billions... adequate period to recoup... earn enough... huge amounts of capital All these words don't carry meaning without proper data. Unless we know how much they've spent, how much they need to recoup & grow, these claims are vague. > stealing the fruits of other people's labor Without studying the merits/demerits of the patent, this is a hyperbole. I'm saying, maybe your statements are true, maybe not. But without backing up with facts, they are merely sentimental. Here's an interesting case of drug pricing. Albendazole is a fairly common/old drug. It's a broad spectrum anthelmintic that retails for a few cents in most parts of the world. Recenty, U.S. price of albendazole has increased by >4000% to over US$100 per 200-mg tablet[1]. Another example: Novartis, the company that makes the leukemia drug Gleevec, keeps raising the drug’s price, even though the drug has already delivered billions in profit to the company. [...] Novartis is just keeping up with other companies as they charge more and more for their drugs. They know we can’t say no.[2] [1] http://en.wikipedia.org/wiki/Albendazole#Controversy http://en.wikipedia.org/wiki/Albendazole#Controversy [2] http://www.nytimes.com/2015/01/15/opinion/why-drugs-cost-so-much.html?_r=0 http://www.nytimes.com/2015/01/15/opinion/why-drugs-cost-so-...
- wheaties 12y ago
  Many generic drug manufacturers did not have the proper acilities to meet drug standards. The recent prow increases are a direct result of those direct manufacturers having to spend to bring their processes up to code.
okpatil 12y ago
You don't understand gravity of situation. India has third highest population of AIDS patients. Around 2.1 million people are infected[1]. That is twice the population of Cyprus. Around 170k children and adults lost their lives in 2009 [2]. India has 32.7 % of its population below poverty line [3]. That's an income below $1.25 per day. If they can't pay for the drugs doesn't make them less deserving. And as far as drug developments go, due to GPU computing and molecular dynamics and monte carlo simulation methods, the cost of developing drugs has gone significantly down [4][5]. For starters they take a molecular structure, add or replace a functional group, and run the simulation with a particular protein structure. Drug development costs are not that high now, compared to twenty years ago. Most of the money goes in marketing. If Government of India thinks more about it's 2.1 million than bunch of corporate companies trying to siphon money from wherever they can, then YES, they are in the right direction. 1. http://www.bmj.com/content/340/bmj.c621 http://www.bmj.com/content/340/bmj.c621 2. http://www.indexmundi.com/g/g.aspx?c=in&v=37 http://www.indexmundi.com/g/g.aspx?c=in&v=37 3. http://povertydata.worldbank.org/poverty/country/IND http://povertydata.worldbank.org/poverty/country/IND 4. http://www.ncbi.nlm.nih.gov/pubmed/16758486 http://www.ncbi.nlm.nih.gov/pubmed/16758486 5. http://www.biomedcentral.com/1741-7007/9/71 http://www.biomedcentral.com/1741-7007/9/71
- throwawaykf05 12y ago
  > And as far as drug developments go, due to GPU computing and molecular dynamics and monte carlo simulation methods, the cost of developing drugs has gone significantly down [4][5]. I don't see where they show that the cost of clinical trials etc. for getting drugs through the FDA is affected. From what I can tell, those are the largest costs involved. Especially considering that most of the drugs discovered, even using those advanced methods, fail in the trial phase after hundreds of millions invested. > If Government of India thinks more about it's 2.1 million than bunch of corporate companies trying to siphon money from wherever they can, then YES, they are in the right direction. "Siphon money" or "capture the rewards of the value they provide"? Undermining global incentives to invest billions in research that could save hundreds of millions around the world does not seem like the "right direction". Not the first time the Indian government has done something selfish but shortsighted. (Pokhran comes to mind.)

by norikki 12y ago

meric 12y ago

Not like your average Indian who makes $6 a day can afford the patented medicines that costs $10 a tablet anyways.

anupshinde 12y ago

There is a difference between: 1. Getting justified fruits for people's labor (researchers). Say- getting a great ROI like 1000% or huge ROI of 100000% 2. Getting greedy and trying to multiply the the ROI at the cost of human lives. I have seen pretty stupid patents (that are logically obvious or near common sense) granted to American companies in tech sector (and have been astonished since I helped create some of those). I believe pharma is no different.

girishso 12y ago

I don't think companies spend as much as we believe in researching drugs. Companies spend most on advertising and incentivizing the doctors to prescribe their medicines. The book: Bad Pharma [1] is an eye opener. The drug "Sovaldi" is making them $2.8ish billion dollars per quarter, that is almost $12 billion a year. I don't believe they spent tens of billions in developing the drug. [2] 1: http://www.amazon.com/Bad-Pharma-Companies-Mislead-Patients-ebook/dp/B008RLTUUA/ref=cm_cr_pr_product_top http://www.amazon.com/Bad-Pharma-Companies-Mislead-Patients-... 2: http://www.bloomberg.com/news/2014-10-28/gilead-reports-lower-than-estimated-sales-of-sovaldi.html http://www.bloomberg.com/news/2014-10-28/gilead-reports-lowe...

shoyer 12y ago
It's not what they spent developing Sovaldi -- it's the fortune the industry as a whole spends developing drugs that never make it to market. That said, it's quite likely true that marketing is a bigger share of costs than R&D. Pharma companies are out there to maximize revenue, just like any other corporation. It's a reflection of the poor state of regulation in the US that we pay far more of than our share (compared to the rest of the world).
- jsprogrammer 12y ago
  This would be easy to study, figure out, and possibly come to conclusive results over: examine the budgets and expenses of pharmaceutical R&D departments.
- chime 12y ago
  Here's the piece of the picture that everyone's missing from this particular example - an $11b acquisition [1]. Gilead bought Pharmasset for $11b. It no longer matters what it cost Pharmasset to research/test/approve/produce the medicine anymore. Certainly all of that was factored into the acquisition price but since Gilead's total cost ended up being $11b, that is what they need to recoup at the least. There are 3.2 million hep C patients in the US [2] but most don't feel ill or even know they have hep C. If every single person buys the drug, Gilead must still sell it for at least $11b / 3.2m = $3500/person! But if only 5% buy the drug, they need to sell it for $69,000 just to break event on the acquisition without even taking any other costs into account. This is just rough calculation to highlight that a sky high acquisition price resulted in a company demanding an equally high price per dose. Gilead paid the high price to acquire Pharmasset because they thought they could sell the drug for at such a high price per dose. If Gilead is proven right (and their stock price from $18 in 2011 to $100 in 2015 seems to reflect that indeed), then this just encourages more and more drug companies to be bought at astronomical prices. And the worst part of this is that the very government that gave this company the right to operate a monopoly via a patent is now asking them why they're charging so much [3]. None of this happened because of some singular evil cabal. It happened due to misaligned incentives. Government grants pay researchers, who develop medicines at paid-for-by-public-funds university labs, which sell the patents back to the researchers at fire-sale prices, who then go on to create biotech startups, which productize the research, and then sell to Fortune 100 pharmas, who can then demand almost any amount of money, which CMS will have to pay because USPTO said nobody else can sell this drug, FDA agreed that the drug works, and ACA ensures that the patients cannot be denied any drugs that work at any cost. [1] http://en.wikipedia.org/wiki/Pharmasset http://en.wikipedia.org/wiki/Pharmasset [2] http://www.hhs.gov/opa/reproductive-health/stis/hepatitis-c/ http://www.hhs.gov/opa/reproductive-health/stis/hepatitis-c/ [3] http://www.finance.senate.gov/imo/media/doc/Wyden-Grassley%20Document%20Request%20to%20Gilead%207-11-141.pdf http://www.finance.senate.gov/imo/media/doc/Wyden-Grassley%2...

geofft 12y ago

I am also disappointed, but not because I have presupposed the answer. I am genuinely curious as to whether Gilead will say "All right, drugs were fun but we're gonna do mobile gaming now," or whether they are making enough revenue from other markets and perhaps other drugs that they'll continue to discover and develop drugs like Sovaldi. I don't think the answer is obvious to someone (like me) who hasn't been paying close attention to the profitability of drug development, so I would have appreciated In particular, while I can see grassroots protestors not thinking about the long term, I vaguely assume that Médecins Sans Frontières knows what they're doing, and wouldn't have been backing this strongly if they didn't think it was also a long-term good strategy. But I definitely would have appreciated more discussion of that point, since I don't put much stock in my own vague assumptions.

fizixer 12y ago

This is a textbook example of why some economic activities cannot be based on a profit motive. There should be an international drug research agency, to which every country should contribute, and that agency should be responsible for exploring cures for diseases, by funding academics, labs, etc.

pradn 12y ago
Here's an argument in the Jacobin that argues for nationalizing pharmaceuticals: https://www.jacobinmag.com/2013/06/socialize-big-pharma/ https://www.jacobinmag.com/2013/06/socialize-big-pharma/
rasz_pl 12y ago
There are national labs. Canadian one sold Ebola vaccine license for $200K to some no name US lab, that same lab turned around and resold it to Merck for $50mil. Merck bought it only because it is standing to make few billion off of it.

chdir 12y ago

> spend billions... adequate period to recoup... earn enough... huge amounts of capital All these words don't carry meaning without proper data. Unless we know how much they've spent, how much they need to recoup & grow, these claims are vague. > stealing the fruits of other people's labor Without studying the merits/demerits of the patent, this is a hyperbole. I'm saying, maybe your statements are true, maybe not. But without backing up with facts, they are merely sentimental. Here's an interesting case of drug pricing. Albendazole is a fairly common/old drug. It's a broad spectrum anthelmintic that retails for a few cents in most parts of the world. Recenty, U.S. price of albendazole has increased by >4000% to over US$100 per 200-mg tablet[1]. Another example: Novartis, the company that makes the leukemia drug Gleevec, keeps raising the drug’s price, even though the drug has already delivered billions in profit to the company. [...] Novartis is just keeping up with other companies as they charge more and more for their drugs. They know we can’t say no.[2] [1] http://en.wikipedia.org/wiki/Albendazole#Controversy http://en.wikipedia.org/wiki/Albendazole#Controversy [2] http://www.nytimes.com/2015/01/15/opinion/why-drugs-cost-so-much.html?_r=0 http://www.nytimes.com/2015/01/15/opinion/why-drugs-cost-so-...

wheaties 12y ago
Many generic drug manufacturers did not have the proper acilities to meet drug standards. The recent prow increases are a direct result of those direct manufacturers having to spend to bring their processes up to code.

okpatil 12y ago

You don't understand gravity of situation. India has third highest population of AIDS patients. Around 2.1 million people are infected[1]. That is twice the population of Cyprus. Around 170k children and adults lost their lives in 2009 [2]. India has 32.7 % of its population below poverty line [3]. That's an income below $1.25 per day. If they can't pay for the drugs doesn't make them less deserving. And as far as drug developments go, due to GPU computing and molecular dynamics and monte carlo simulation methods, the cost of developing drugs has gone significantly down [4][5]. For starters they take a molecular structure, add or replace a functional group, and run the simulation with a particular protein structure. Drug development costs are not that high now, compared to twenty years ago. Most of the money goes in marketing. If Government of India thinks more about it's 2.1 million than bunch of corporate companies trying to siphon money from wherever they can, then YES, they are in the right direction. 1. http://www.bmj.com/content/340/bmj.c621 http://www.bmj.com/content/340/bmj.c621 2. http://www.indexmundi.com/g/g.aspx?c=in&v=37 http://www.indexmundi.com/g/g.aspx?c=in&v=37 3. http://povertydata.worldbank.org/poverty/country/IND http://povertydata.worldbank.org/poverty/country/IND 4. http://www.ncbi.nlm.nih.gov/pubmed/16758486 http://www.ncbi.nlm.nih.gov/pubmed/16758486 5. http://www.biomedcentral.com/1741-7007/9/71 http://www.biomedcentral.com/1741-7007/9/71

throwawaykf05 12y ago
> And as far as drug developments go, due to GPU computing and molecular dynamics and monte carlo simulation methods, the cost of developing drugs has gone significantly down [4][5]. I don't see where they show that the cost of clinical trials etc. for getting drugs through the FDA is affected. From what I can tell, those are the largest costs involved. Especially considering that most of the drugs discovered, even using those advanced methods, fail in the trial phase after hundreds of millions invested. > If Government of India thinks more about it's 2.1 million than bunch of corporate companies trying to siphon money from wherever they can, then YES, they are in the right direction. "Siphon money" or "capture the rewards of the value they provide"? Undermining global incentives to invest billions in research that could save hundreds of millions around the world does not seem like the "right direction". Not the first time the Indian government has done something selfish but shortsighted. (Pokhran comes to mind.)