6 ms·

Prices are high because of long and expensive development times, massive amounts of regulation, very high risk and relatively short patents to recoup these cost

by Neil44 11y ago

Prices are high because of long and expensive development times, massive amounts of regulation, very high risk and relatively short patents to recoup these costs. Not to mention the costs of the other 5 drugs that failed final trials. Demand is also understandably very high. I do think there should be harder discussion of cost/benefit though to bring some sanity into the system. What else could be done with that money, rather than a marginal outcome for one person? It's a hard conversation. This is especially relevant in something like the NHS where direct tradeoffs must be made.

sdoering 11y ago
R&D are surely contributing to the high price. But as can be seen in the yearly financial statements of these companies, they are not that high, as they want us to believe. Take Europe for example. As far, as I know in Germany the producers can pretty much dictate the price (ok, the have to discuss with the insurance companies, but they just can raise their fees so they have no real interest in saving money). After the German price is decided neighboring countries (Belgium for example) take these, cut of about half of that and dictate this as the maximum price for the drug. Looking at the financial statements, the regarding companies still make a lot of money in Belgium of these drugs. But way more in Germany. So I really do not believe the story being told, that the R&D costs and the risk are the reasons for these astronomically high prices. And - when your life is at stake, your are more then willing to pay every price necessary - so your bargaining position is not quite great and your market power is drastically lowered.
- bayesianhorse 11y ago
  Actually no, in Germany the drug companies can't take any price, because the insurers are negotiating as one party with the drug companies. But yes, drug prices in Germany are relatively high. Why would private companies leave money on the table unless forced by regulation? They have to squeeze every profit they can out of the health care system. The situation in Germany is way better than in the US, where these negotiations are a lot more favorable to the companies, because they can "negotiate" with individual insurance companies and even patients. But especially in the latter case, there's not a lot of "negotiation"...
  - sdoering 11y ago
    Had also mentioned the negotiating part - but the history shows, that there isnÄt that much interest from the insurance companies to really keep prices low, as they are able to always get more money from their "clients" via our regulators. So even here, where the system is probably better then in the US, it could be improved massively via regulation, without killing all profits or even the investments on R&D by the companies. But the political will seems to be missing.
  - taki1 11y ago
    this is because of over-regulation. Destroy regulation, i.e. patents, and then then tell me drugs aren't cheap.
    - bayesianhorse 11y ago
      I think the argument for patents, as incentive for development, is quite strong. There is no alternative system in place yet. Also you probably underestimate the value and purpose of pharmaceutical regulation. Most rules revolve around production quality, scientific soundness, safety monitoring and so on. Come to think of it, the degree of safety in pretty much any drug on the legal market is quite astounding, despite exceptions and accidents.
    - sdoering 11y ago
      Sorry, but there is imho to little regulation going on here. The market seems rigged against patients - esp. patients with terminal (or at least grave) illnesses that are pretty wide spread. These people are hey are prone to be exploited and there are enough of them. Mostly pharma does not dev drugs for wide spread illnesses that mostly occur in poor countries for example. Or grave illnesses, that only affect very, very few people. But dev a "new" cancer drug and you got your license to print money (lot of people get cancer, a lot is payed by insurance, and people and their loved ones want healing).
      - JoeAltmaier 11y ago
        I'm missing your point. Most diseases is characterized that way - lots of people get them, healthcare paid by insurance, people want healing. Cancer is not special.
bayesianhorse 11y ago
That's simply not true. Yes, development costs are high, but not that high. The real reason the drugs are priced so high is that people/insurers pay it. I wouldn't even call it a free market, since the patent protection is involved. Essentially it is extortion. Eventually we might get a situation where drug companies raise costs for patented drugs, not only cancer ones, slowly to the breaking point where even less people can afford insurance anymore. Why wouldn't they? The insurers are very disinclined to refuse life saving treatments to their patients. With biologicals the cost of actually producing the drugs can be high. The only way to bring that down is to drive forward the necessary technology.
- m_mueller 11y ago
  > Eventually we might get a situation where drug companies raise costs for patented drugs, not only cancer ones, slowly to the breaking point where even less people can afford insurance anymore. Aren't American drug prices already optimized around that breaking point?
  - bayesianhorse 11y ago
    considering that the cost of healthcare in the US is increasing rapidly, but also the ratio of insured citizens, no, I wouldn't say a breaking point has been reached.
- NeutronBoy 11y ago
  > since the patent protection is involved While I'm no fan of software patents, why would I spend billions developing a new drug when I can wait for somebody else to do it, then just copy it?
  - robbiep 11y ago
    Because these drugs are mostly monoclonal antibodies, you have to actually develop your own. You can work out what the target is, but because the antibody has extremely high specificity for a specific target, and is high molecular weight, you can't just synthesise it, you need to grow it (An absolutely fascinating process in and of itself) There have been examples of other drug companies targeting the same target as an existing high value monoclonal antibody drug, however I am aware of at least one example where the 'knockoff' monoclonal antibody actually had harmful effects compared with the original. The only way you can actually copy the drug is to steal a cell from their lineage and produce your own
peteretep 11y ago
> This is especially relevant in something like the NHS > where direct tradeoffs must be made You say this like you're unaware of NICE and the guidelines they publish.
- Neil44 11y ago
  That's a whole extra discussion - the pressure they get put under by families and groups to approve very expensive and relatively ineffective drugs is immense. Meanwhile people are having to take charity collections to pay for MRI machines.

by Neil44 11y ago

sdoering 11y ago

R&D are surely contributing to the high price. But as can be seen in the yearly financial statements of these companies, they are not that high, as they want us to believe. Take Europe for example. As far, as I know in Germany the producers can pretty much dictate the price (ok, the have to discuss with the insurance companies, but they just can raise their fees so they have no real interest in saving money). After the German price is decided neighboring countries (Belgium for example) take these, cut of about half of that and dictate this as the maximum price for the drug. Looking at the financial statements, the regarding companies still make a lot of money in Belgium of these drugs. But way more in Germany. So I really do not believe the story being told, that the R&D costs and the risk are the reasons for these astronomically high prices. And - when your life is at stake, your are more then willing to pay every price necessary - so your bargaining position is not quite great and your market power is drastically lowered.

bayesianhorse 11y ago
Actually no, in Germany the drug companies can't take any price, because the insurers are negotiating as one party with the drug companies. But yes, drug prices in Germany are relatively high. Why would private companies leave money on the table unless forced by regulation? They have to squeeze every profit they can out of the health care system. The situation in Germany is way better than in the US, where these negotiations are a lot more favorable to the companies, because they can "negotiate" with individual insurance companies and even patients. But especially in the latter case, there's not a lot of "negotiation"...
- sdoering 11y ago
  Had also mentioned the negotiating part - but the history shows, that there isnÄt that much interest from the insurance companies to really keep prices low, as they are able to always get more money from their "clients" via our regulators. So even here, where the system is probably better then in the US, it could be improved massively via regulation, without killing all profits or even the investments on R&D by the companies. But the political will seems to be missing.
- taki1 11y ago
  this is because of over-regulation. Destroy regulation, i.e. patents, and then then tell me drugs aren't cheap.
  - bayesianhorse 11y ago
    I think the argument for patents, as incentive for development, is quite strong. There is no alternative system in place yet. Also you probably underestimate the value and purpose of pharmaceutical regulation. Most rules revolve around production quality, scientific soundness, safety monitoring and so on. Come to think of it, the degree of safety in pretty much any drug on the legal market is quite astounding, despite exceptions and accidents.
  - sdoering 11y ago
    Sorry, but there is imho to little regulation going on here. The market seems rigged against patients - esp. patients with terminal (or at least grave) illnesses that are pretty wide spread. These people are hey are prone to be exploited and there are enough of them. Mostly pharma does not dev drugs for wide spread illnesses that mostly occur in poor countries for example. Or grave illnesses, that only affect very, very few people. But dev a "new" cancer drug and you got your license to print money (lot of people get cancer, a lot is payed by insurance, and people and their loved ones want healing).
    - JoeAltmaier 11y ago
      I'm missing your point. Most diseases is characterized that way - lots of people get them, healthcare paid by insurance, people want healing. Cancer is not special.

bayesianhorse 11y ago

That's simply not true. Yes, development costs are high, but not that high. The real reason the drugs are priced so high is that people/insurers pay it. I wouldn't even call it a free market, since the patent protection is involved. Essentially it is extortion. Eventually we might get a situation where drug companies raise costs for patented drugs, not only cancer ones, slowly to the breaking point where even less people can afford insurance anymore. Why wouldn't they? The insurers are very disinclined to refuse life saving treatments to their patients. With biologicals the cost of actually producing the drugs can be high. The only way to bring that down is to drive forward the necessary technology.

m_mueller 11y ago
> Eventually we might get a situation where drug companies raise costs for patented drugs, not only cancer ones, slowly to the breaking point where even less people can afford insurance anymore. Aren't American drug prices already optimized around that breaking point?
- bayesianhorse 11y ago
  considering that the cost of healthcare in the US is increasing rapidly, but also the ratio of insured citizens, no, I wouldn't say a breaking point has been reached.
NeutronBoy 11y ago
> since the patent protection is involved While I'm no fan of software patents, why would I spend billions developing a new drug when I can wait for somebody else to do it, then just copy it?
- robbiep 11y ago
  Because these drugs are mostly monoclonal antibodies, you have to actually develop your own. You can work out what the target is, but because the antibody has extremely high specificity for a specific target, and is high molecular weight, you can't just synthesise it, you need to grow it (An absolutely fascinating process in and of itself) There have been examples of other drug companies targeting the same target as an existing high value monoclonal antibody drug, however I am aware of at least one example where the 'knockoff' monoclonal antibody actually had harmful effects compared with the original. The only way you can actually copy the drug is to steal a cell from their lineage and produce your own

peteretep 11y ago

> This is especially relevant in something like the NHS > where direct tradeoffs must be made You say this like you're unaware of NICE and the guidelines they publish.

Neil44 11y ago
That's a whole extra discussion - the pressure they get put under by families and groups to approve very expensive and relatively ineffective drugs is immense. Meanwhile people are having to take charity collections to pay for MRI machines.