4 ms·

The costs of bringing new drugs to market are not simply artificial. Quite aside from the costs of developing the drugs in the first place (tweaking a couple a

The costs of bringing new drugs to market are not simply artificial. Quite aside from the costs of developing the drugs in the first place (tweaking a couple amino acids is cheap; knowing which amino acids to tweak is a bit harder) and the costs of production (significant in the case of insulin, considering the lengthy process for biosynthesis and then purification), demonstrating that a new drug is both effective and safe costs billions of dollars. Novel insulins are harder than most drugs too, since insulin is very closely related to some oncogenic hormones. A lot of novel insulins have died in trials when animals were found to have increased rates of cancer.

dekhn 12y ago
Sorry, I meant: pharma drug prices, not development costs. Prices are artifically created, rather than being purely based on supply and demand. I know plenty about pharma costs, having worked for one and studied the area of biophysics including protein engineering extensively. My point is that the prices of drugs are only weakly correlated with the costs of bringing a drug to market. More importantly (and kind of ignored by most) is that pharma R&D costs are shared between many drugs. For example, Genentech has a huge R&D division and there are people who work on general projects that benefit all their biologics. Also, there are ridiculous inefficiencies built into the process of bringing drugs to market, many of which are designed to avoid large-scale adverse outcomes, or to make it possible to track where the adverse outcome root cause is.
- lotsofmangos 12y ago
  Perceived value added and range pricing is one of those invasive diseases that have managed to take root across such a wide range of human culture that it will take decades to find a cure, especially since it is doubtful that industry is working particularly hard on the problem.
- cperciva 12y ago
  We're talking market forces here. Yes, the drug companies will try to squeeze as many dollars out of the market as they can; the counterbalancing force is that if they get too greedy, someone else will enter the market and undercut them. The fact that entering the market is so bloody expensive is why drug companies can set their prices so high without provoking a new competitor into existence.
- raverbashing 12y ago
  " My point is that the prices of drugs are only weakly correlated with the costs of bringing a drug to market." You can replace drugs in the above phrase with pretty much anything. Prices are what the market can bear (until of course someone else comes with a cheapest solution and ruins the competition)
  - dekhn 12y ago
    Pharma is a bit different from typical pricing, though. Note that pricing is done per-country, based on mean ability to pay- so there will always be some number of people below a percentile who can't (that's why pharma has compassionate care programs).
    - raverbashing 12y ago
      Well, yes, they're in a situation where it can be done per country. Also they usually can't price-segment (sometimes they can, I guess) But then again, MS, Apple, and several other products are priced per country as well.

dekhn 12y ago

Sorry, I meant: pharma drug prices, not development costs. Prices are artifically created, rather than being purely based on supply and demand. I know plenty about pharma costs, having worked for one and studied the area of biophysics including protein engineering extensively. My point is that the prices of drugs are only weakly correlated with the costs of bringing a drug to market. More importantly (and kind of ignored by most) is that pharma R&D costs are shared between many drugs. For example, Genentech has a huge R&D division and there are people who work on general projects that benefit all their biologics. Also, there are ridiculous inefficiencies built into the process of bringing drugs to market, many of which are designed to avoid large-scale adverse outcomes, or to make it possible to track where the adverse outcome root cause is.

lotsofmangos 12y ago
Perceived value added and range pricing is one of those invasive diseases that have managed to take root across such a wide range of human culture that it will take decades to find a cure, especially since it is doubtful that industry is working particularly hard on the problem.
cperciva 12y ago
We're talking market forces here. Yes, the drug companies will try to squeeze as many dollars out of the market as they can; the counterbalancing force is that if they get too greedy, someone else will enter the market and undercut them. The fact that entering the market is so bloody expensive is why drug companies can set their prices so high without provoking a new competitor into existence.
raverbashing 12y ago
" My point is that the prices of drugs are only weakly correlated with the costs of bringing a drug to market." You can replace drugs in the above phrase with pretty much anything. Prices are what the market can bear (until of course someone else comes with a cheapest solution and ruins the competition)
- dekhn 12y ago
  Pharma is a bit different from typical pricing, though. Note that pricing is done per-country, based on mean ability to pay- so there will always be some number of people below a percentile who can't (that's why pharma has compassionate care programs).
  - raverbashing 12y ago
    Well, yes, they're in a situation where it can be done per country. Also they usually can't price-segment (sometimes they can, I guess) But then again, MS, Apple, and several other products are priced per country as well.