5 ms·

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 woul

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
  - drjohnkasanders 11y ago
    I am interested to learn about the case with the knockoff having harmful effects. Could you guide me in the right direction?
    - robbiep 11y ago
      Off the top of my head it was a VEGF antagonist, so avastin knockoff. I'll try dig up the paper when I'm off mobile
      - robbiep 11y ago
        So I have just spent about half an hour looking. I honestly can't remember where this knowledge comes from. My feeling is i learned it on my oncology term 12 months ago. It may have even been a ipilimumab biosimilar. Unfortunately google is mostly saturated with success stories and papers relating to monoclonal antibodies and wherever I heard about the writeup of the failure has vanished into the nether-regions of google. Apologies. If anything comes up, put a contact email in your details and i'll reach out to you.
- greenpresident 11y ago
  There are proposed models that would reward a company for developing a drug for a specific purpose. It would allow them to recoup a part of their R&D up front. Rewards could be offered by the government, NGOs or insurance companies. Would also help with the development of drugs for rare conditions that are currently not worth the research costs.
- ZeroGravitas 11y ago
  And why spend billions developing a new drug when you can just tweak an existing one that's about to fall out of patent and then bribe doctors, or fund dubious studies, to encourage them to use the "new" patent-protected one? If patents = billions then people will optimise for patents, not cures.
- belorn 11y ago
  Why should $30.9bn of tax money be infused to an industry if the public don't gain any benefits from it? I am all for a fair market where those who spend money on development can recoup costs, but the current system is a bit silly. First they get to use tax funded research for free, then get extra funds from NiH, then they demand 20 years monopoly with some extra years of exclusivity added from doing test trials. And when that is done, try some Evergreening schemes to extend exclusivity into infinity. The people who are hurt by all this also just happens to be sick people, people who die because they can only afford a inferior treatment. It things like this that calls for patent reforms so the public can get what it pays for, and where investing into medical research could become a low risk/low reward instead of high risk/high reward system.
- bayesianhorse 11y ago
  I'm not against drug patents, I am only stating that they prevent the drug market from being a free market by a considerable margin.
Neil44 11y ago
To take a random example, AstraZeneca has 50,000 employees and R&D centres around the globe. They produce a sucessful blockbuster drug every, say 5 years roughly? So you could say that development costs are on the high side of high. Also, if you had those mouths to feed and you had no cast iron plan of when your next blockbuster was coming you would seek to maximize short term profit also. I don't want to defend profiteering but I don't see the issue being all that black and white.
- Loque 11y ago
  I don't think anyone can genuinely make that call without the actual numbers. And I wouldn't trust those that are not truly independent. I agree that it is not completely black & white, but I would be surprised if someone is not profiting from it heavily - and possibly the wrong people paying for this (ethically / morally).
  - moe 11y ago
    without the actual numbers. Profit margins in the pharmaceutical industry are the highest[1] of all industries, only rivaled by the banking sector. The top 3 pharma companies spend twice as much money on marketing as on R&D. [1] http://www.bbc.com/news/business-28212223 http://www.bbc.com/news/business-28212223
    - _Wintermute 11y ago
      You do realise how marketing works? The idea is that the money spent on marketing is more than recuperated. You could argue that without the money spent on marketing, that R&D budges would be significantly lower.
      - bayesianhorse 11y ago
        Marketing has next to nothing to do with R&D because most R&D is accomplished before market entry of a drug. It looks as if revenues of one drug fuel investment into new drugs, and that may be true but it is misleading. There are a lot more sources of capital than just one particular companies own revenues. Margins and marketing budget allow us to assume significant market power in favor of the pharma companies.
fasteo 11y ago
[emphasis mine] >>> 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 That's a bold statement. Honest question: Do you have any data to back this up ?
srean 11y ago
Agreed in part, I differ in how much blame I put on the insurance mechanism. What I see as the main structural problem is the offer of pretty much blanket protection from the market that the people/govt give to the pharma companies. Many shills continue to argue that this is necessary for pharma to make progress. The problem is that this entirely quantitative question: how much protection should pharma companies receive that would still not get in the way of real progress?) is given a blanket answer by fiat. No one knows the answer to this quantitative question, and neither is that dollar amount a constant of nature. Any mechanism addressing this problem should have a fast feedback loop. Rather than subverting the market, one should actively create an efficient one where the people/govt and the pharma companies negotiate the level of protection that they can both agree on. Patents are a mechanism that largely nukes this negotiation in completely favor of the pharma companies. A parting thought borrowed from Upton Sinclair : if the justification for patent protection are high dev costs, it only ensures that the dev costs will be kept high to enjoy the (dis-proportionate) protection.
- taki1 11y ago
  no patents, but also no regulation. Now, this is what gave us antibiotics and aspirin. The current over-regulated system can give us only stagnation.
  - HarryHirsch 11y ago
    It is not clear that the FDA has anything to do with the pharma crisis. In fact, since the pharmco crisis began in the late 1990s and the FDA was founded in 1963, the two are completely unrelated. Since closely held pharmaceutical companies are doing better than public ones I'd point the finger at Wall Street, but that would be oversimplifying a complicated problem.
    - bayesianhorse 11y ago
      I think that "big pharma" companies act a lot like banks, and small companies act a lot like venture-capital backed startups. Incidentally, both mechanisms allow spending a couple of hundred millions (or even billions) of Dollars for a potentially even bigger profit. A third way is government financed research, which may be a competitive option in some cases.

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
- drjohnkasanders 11y ago
  I am interested to learn about the case with the knockoff having harmful effects. Could you guide me in the right direction?
  - robbiep 11y ago
    Off the top of my head it was a VEGF antagonist, so avastin knockoff. I'll try dig up the paper when I'm off mobile
    - robbiep 11y ago
      So I have just spent about half an hour looking. I honestly can't remember where this knowledge comes from. My feeling is i learned it on my oncology term 12 months ago. It may have even been a ipilimumab biosimilar. Unfortunately google is mostly saturated with success stories and papers relating to monoclonal antibodies and wherever I heard about the writeup of the failure has vanished into the nether-regions of google. Apologies. If anything comes up, put a contact email in your details and i'll reach out to you.
greenpresident 11y ago
There are proposed models that would reward a company for developing a drug for a specific purpose. It would allow them to recoup a part of their R&D up front. Rewards could be offered by the government, NGOs or insurance companies. Would also help with the development of drugs for rare conditions that are currently not worth the research costs.
ZeroGravitas 11y ago
And why spend billions developing a new drug when you can just tweak an existing one that's about to fall out of patent and then bribe doctors, or fund dubious studies, to encourage them to use the "new" patent-protected one? If patents = billions then people will optimise for patents, not cures.
belorn 11y ago
Why should $30.9bn of tax money be infused to an industry if the public don't gain any benefits from it? I am all for a fair market where those who spend money on development can recoup costs, but the current system is a bit silly. First they get to use tax funded research for free, then get extra funds from NiH, then they demand 20 years monopoly with some extra years of exclusivity added from doing test trials. And when that is done, try some Evergreening schemes to extend exclusivity into infinity. The people who are hurt by all this also just happens to be sick people, people who die because they can only afford a inferior treatment. It things like this that calls for patent reforms so the public can get what it pays for, and where investing into medical research could become a low risk/low reward instead of high risk/high reward system.
bayesianhorse 11y ago
I'm not against drug patents, I am only stating that they prevent the drug market from being a free market by a considerable margin.

Neil44 11y ago

To take a random example, AstraZeneca has 50,000 employees and R&D centres around the globe. They produce a sucessful blockbuster drug every, say 5 years roughly? So you could say that development costs are on the high side of high. Also, if you had those mouths to feed and you had no cast iron plan of when your next blockbuster was coming you would seek to maximize short term profit also. I don't want to defend profiteering but I don't see the issue being all that black and white.

Loque 11y ago
I don't think anyone can genuinely make that call without the actual numbers. And I wouldn't trust those that are not truly independent. I agree that it is not completely black & white, but I would be surprised if someone is not profiting from it heavily - and possibly the wrong people paying for this (ethically / morally).
- moe 11y ago
  without the actual numbers. Profit margins in the pharmaceutical industry are the highest[1] of all industries, only rivaled by the banking sector. The top 3 pharma companies spend twice as much money on marketing as on R&D. [1] http://www.bbc.com/news/business-28212223 http://www.bbc.com/news/business-28212223
  - _Wintermute 11y ago
    You do realise how marketing works? The idea is that the money spent on marketing is more than recuperated. You could argue that without the money spent on marketing, that R&D budges would be significantly lower.
    - bayesianhorse 11y ago
      Marketing has next to nothing to do with R&D because most R&D is accomplished before market entry of a drug. It looks as if revenues of one drug fuel investment into new drugs, and that may be true but it is misleading. There are a lot more sources of capital than just one particular companies own revenues. Margins and marketing budget allow us to assume significant market power in favor of the pharma companies.

fasteo 11y ago

[emphasis mine] >>> 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 That's a bold statement. Honest question: Do you have any data to back this up ?

srean 11y ago

Agreed in part, I differ in how much blame I put on the insurance mechanism. What I see as the main structural problem is the offer of pretty much blanket protection from the market that the people/govt give to the pharma companies. Many shills continue to argue that this is necessary for pharma to make progress. The problem is that this entirely quantitative question: how much protection should pharma companies receive that would still not get in the way of real progress?) is given a blanket answer by fiat. No one knows the answer to this quantitative question, and neither is that dollar amount a constant of nature. Any mechanism addressing this problem should have a fast feedback loop. Rather than subverting the market, one should actively create an efficient one where the people/govt and the pharma companies negotiate the level of protection that they can both agree on. Patents are a mechanism that largely nukes this negotiation in completely favor of the pharma companies. A parting thought borrowed from Upton Sinclair : if the justification for patent protection are high dev costs, it only ensures that the dev costs will be kept high to enjoy the (dis-proportionate) protection.

taki1 11y ago
no patents, but also no regulation. Now, this is what gave us antibiotics and aspirin. The current over-regulated system can give us only stagnation.
- HarryHirsch 11y ago
  It is not clear that the FDA has anything to do with the pharma crisis. In fact, since the pharmco crisis began in the late 1990s and the FDA was founded in 1963, the two are completely unrelated. Since closely held pharmaceutical companies are doing better than public ones I'd point the finger at Wall Street, but that would be oversimplifying a complicated problem.
  - bayesianhorse 11y ago
    I think that "big pharma" companies act a lot like banks, and small companies act a lot like venture-capital backed startups. Incidentally, both mechanisms allow spending a couple of hundred millions (or even billions) of Dollars for a potentially even bigger profit. A third way is government financed research, which may be a competitive option in some cases.