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Let me start by saying that no one who has seen more than
one [tc] idea or annotation is likely to be confused about
where I stand on business versus regulation.
But pharma pricing is a truly intractable problem that
challenges typical market solutions for the following (well
known) reasons:
1.
It takes tons of money to develop a drug, for both
development and regulatory reasons.
2. It takes tons of money to market a drug, because
apparently
men need to be convinced that they want erections
3. It takes tons of money for the US consumer to subsidize
the
rest of the planet.
4. When I'm sick and I can extend my life, I'm willing to pay
what they ask.
No doubt there are many others.
Now, there is no good way to solve this (or anything)
through
price regulation. At best, you will slow down the pace of
innovation. At worst, you'll cause prices to go up -- which is
what keeps happening. Don't tell me about countries that
do it -- it's all
doable ONLY because the US is paying for all of it by paying
more.
An intractable problem. And yet, we need food even more
than we need medicine. The cost doesn't go through the
roof,
because there's competition.
The argument goes that you cannot have price competition
in
pharma because of patent protection. So unless multiple
companies come up with competing drugs at the same time,
there's no downward pressure at all until the generics come
on much later.
So what is really happening is that every drug, particularly a
life saving drug, is a natural vertical monopoly, at least until
the patent expires.
The answer then is actually relatively simple -- you can't
own
both the oil well and the gas station, exactly along the lines
of
the original anti-trust reform.
In this scenario, R&D companies can focus on solving the
problem. They would then license to multiple
manufacturers
under patent. These manufacturers do not need to be price
regulated beyond the usual "price-fixing" regulations. Let
them compete on a commodity basis.
[tc], isn't this price regulation under a different scheme?
Sure, all anti-trust regulation is meant to limit the leverage
the monopoly has over the consumer. But this uses a
proven
market driven approach that still lets price discovery occur,
as
opposed to a regulator that tries to figure out what a drug
should cost this year or next year.
I should end by saying that long term, the business plan of
manufacturing arms of these companies are challenged in
any
case -- a material analyzer & 3D printer that can reformulate
a
pill is something we're likely to see within 10 to 20 years.
Big Pharma R&D vs Marketing
https://www.washing...ting-than-research/
[bs0u0155, Feb 04 2016]
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Annotation:
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I wonder what Martin Shkreli would (decline to) say... |
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Assuming the Martin Shkreli case got you thinking
about this as it did with me. |
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My libertarian side is somewhat at odds with the side
that wants to lock that Sckreli brat in stocks in the
town square and raid his castle with pitchforks and
torches. Intellectual property needs to be protected
but I'd propose using laws against profiteering during
a natural disaster. People ending up dying because of
a massive jacking up of a price of a drug can't be
allowed to happen. Neither can the finances of the
public agencies that are called on to pay for these
drugs be raided by scumbags like this. |
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I think this is one of those ugly situations where a
little bit of common sense needs to reign rather than
dogmatic ideology. I'm a libertarian but this Sckreli
brat needs to be tarred and feathered. |
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Not sure about the solution but bun for looking into
possibilities. |
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It takes years and millions of dollars to R&D a drug. Why would company A do that if company B can just copy the drug the moment it hits market? There are a lot of fair reasons against patents, but drugs are not one of them. |
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[tc], I like this idea and I wonder how much it's already being done through universities. |
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[the porpoise] -- and biotech as well. In truth, much of R&D
is already done by venture backed companies whose only
plan to monetize is to sell to a big pharma company. |
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But the whole system is skewed by the the end-pricing. |
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[Ian] -- yes, generally speaking all that stuff is going to
change drastically within a generation. But a fair amount of
time to improve things before that. |
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[Ian] if* robots become creative enough to invent, they deserve personhood, be it limited, special, or even full. |
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My question about this idea is how do you keep the
licensing fees charged by the patent holder in check? |
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A lot of people point to this whole Shkreli thing as a
failure of Capitalism and say this is why we need more
regulation. They fail to see that this is CAUSED by people
taking advantage of the poorly thought out regulations
already in place. Daraprim was already out of patent,
but it was the only FDA-approved version. Because of the
expense of getting FDA approval and the small demand,
no one created a generic. It just wasn't cost effective.
So Daraprim was selling for $13 a pill. Now we find out
that Imprimis (a compounding pharmacy) can profitably
produce and sell these pills for $1 each once they found
the loophole that allowed them to get around the FDA
regulation. In some ways we're lucky that Shkreli jacked
the prices through the roof because it revealed that they
had already been overcharging for years. |
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I would say that patented drugs are NOT the problem.
There are non-patented treatments for most illnesses.
When someone creates a better treatment they deserve
to charge whatever anyone is willing to pay for the
improved outcome. If it is lifesaving compared to other
treatments then they deserve to get rich for a few years. |
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Now there may be some benefit in reforming the patent
system. It might make sense to decrease the length of
time that a patent is valid, since industry moves a lot
faster now than it did when the patent laws were
written. |
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But to combat issues like Daraprim (and I mean fix it so
they can't charge $13 for a $1 pill, let alone hundreds of
dollars), we need to revamp (gut) the FDA regulations.
When Daraprim was under patent, it should have gone
through the FDA approval process. Once out of patent,
that FDA approval should automatically get applied to
anyone who can produce the drug with a similar process,
significantly reducing the barrier to entry. The intention
of the patent system is to reward inventors by giving
them a monopoly for a fixed time in exchange for them
giving up all the information needed for anyone to
produce the invention once the patent has expired.
Therefore if someone claims that new producers need to
go through FDA certification again because they might
not be able to produce the drug correctly, that is a
failure to include enough information in the patent, so
maybe that needs to be fixed as well. Maybe in addition
to the patent, the FDA should catalog the exact recipe
and make that available once the patent expires. In that
case, they could not have sold Daraprim for $13 per pill
without some other company stepping in and
undercutting the prices. With a limited demand for that
product they might have still been able to "overcharge"
at $5 a pill or something without any competition
stepping in, but that would probably be a better deal for
society than the cost of running the bureaucracy needed
to regulate the price. |
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But we have the ability to think laterally and
recognize fortunate accidents. Post-it notes,
vulcanization, plastic, etc. |
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I rather like this. The NASA of drug invention. |
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//The process of invention isn’t anything magical or divine. |
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I wasn't arguing that inventing is divine. Rather, personhood should apply to any entity capable of creative thought (or something). It is entirely possible that machines will eventually become more intelligent and creative than humans. |
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Robot inventors are not an argument for "information should be free". At least I don't see how that follows. Rather, they're an argument for robot personhood, and therefore patent (and other property) ownership by robots. |
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It's often forgotten that patents primarily result in the public disclosure of technology. The side-effect, which happens about half the time, is the grant of a time-limited monopoly. Most granted patents are never commercially exploited, so the public reaps the larger benefit (knowledge++ vs. a small proportion of commercial limited monopoly). Modern patents were designed to break guild secrecy (a form of indefinite monopoly) which was rightfully thought to be an impediment to the progress of science and tech. Do you see many guilds around? |
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Imagine a robot guild where robots invent in secret and choose not to teach us stupid humans their inventions. |
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//R&D companies can focus on solving the problem. They
would then license to multiple manufacturers under
patent.// |
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Licensing deals tend to be exclusive - I'm not sure many
manufacturers would go for a non-exclusive licence. And in
any case, the R&D companies will just set the licence fee
high. |
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I think you're mistaken in assuming that current Pharma is
basically half R&D and half manufacturing/selling. Big
pharma is 98% R&D - manufacturing [most] drugs is very
cheap, and marketing isn't such a huge part of the budget
either. Big pharma doesn't really care who manufactures
their product, nor who advertises it, as long as they get
their money back and then some. Going through a
manufacturer/distributor is not going to change the
landscape. |
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People want cheaper drugs. They also want better drugs,
and they also want new drugs, and they want them faster.
The only way to get all of those things is to make it much,
much cheaper and easier to get new drugs approved. |
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The current regulatory process costs needless billions, and
kills truly vast numbers of people through delay, in order to
avoid the culpability of small numbers of deaths through
speedier clinical trials. |
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//decrease the length of time that a patent is valid, since
industry moves a lot faster now than it did when the patent
laws were written.// Actually, the opposite is true. It
takes longer now than ever to bring a drug to market,
leaving less and less time to earn money from it. Again,
much faster clinical trials would alleviate the problem, but
nobody is prepared to balance the lives saved by cheaper,
faster, better drugs against the risk of lives lost through
faster trials. |
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//Big pharma is 98% R&D// |
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Nope, hasn't been that way for a long time, if ever. It make
pretty depressing reading, <link> but it turns out that
putting a shiny box around a packet of old school painkiller
and some flavouring is way safer bet than trying to solve
real problems. |
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// Actually, the opposite is true. It takes longer now than
ever to bring a drug to market, leaving less and less time
to earn money from it. // |
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You're right. I guess what I meant to say was that if the
approval process wasn't so insane, it could be faster to
bring things to market. Another option might be to
somehow integrate the patent and regulatory approval
process so that the patent expiration starts when it is
approved, but then doesn't last as long. Well maybe
that's not exactly right either since that could lead to
abuse when a company fails to work hard enough at
getting the medicine approved. |
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//putting a shiny box around a packet of old school
painkiller // |
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Yes, but that is exactly the kind of thing we're not
discussing here - i.e. manufacture and selling of off-
patent drugs like aspirin. I was talking about
patented drugs. |
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The link says: "drug companies spent more than $3 billion
a year marketing to consumers in the U.S. in 2012, but an
estimated $24 billion marketing directly to health care
professionals". I wonder what percentage of the money
spent marketing to health care professionals is in the form
of free samples? If it's high (like 80% or more), then I'd say
the issue is not nearly as bad as the article makes it sound.
Even if that's true, it does seem like we should try to find
better ways to communicate advances in medicine more
efficiently. |
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Quite so, but how would separating R&D from
manufacture help? |
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/They would then license to multiple manufacturers under patent/ |
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I am drug R&D house. I strike out often. When I get a winner I need it to pay. I license my winner to multiple manufacturers. I require them to pay me my price per unit manufactured. My price is high. |
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Exactly this is done now except instead of multiple manufacturers there are multiple pharmacies: they pay the drug company what is required and then mark the drugs up as much more as they think the market will bear. Getting the companies out of the manufacturing business does not solve the problem. |
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// Quite so, but how would separating R&D from
manufacture help? // |
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Was that addressed to me? |
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I don't think it would, and I wasn't intentionally arguing in
favor of this idea. I was intending most of my statements
to be pointing out areas of the system that DO need to be
reformed, and I think I am in agreement with most of your
points [Max]. |
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Seeing it in perspective, all this sounds as if the drugs for healing ourselves come from an evil alien civilization that wants to ruin us. |
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//Was that addressed to me? // No, it was more
addressed to [their]. Perhaps I should have said "and"
rather than "but". |
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At the end of the day, bringing new drugs to market
is phenomenally (and unnecessarily) expensive, and
has to be paid for somehow. |
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"Spock me and buy one" ... ? |
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Isn't [tc] a recreational drug? |
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//all this sounds as if the drugs for healing ourselves come from an evil alien civilization that wants to ruin us.// |
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Might as well be.
Any corporate entity is completely alien to humanity and should be treated as such... and yet they flourish, and dominate.
When observed from an outside perspective they lack any conscience deemed unnecessary by their spin-doctors. |
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Up to, and including, creating their own markets would be my bet. |
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// Isn't [tc] a recreational drug? — blissmiss//
more of a lifetime addiction :) |
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[bungston], I take your points, but I do think that the
vertical monopoly analogy has merit, and breaking it up
would shift the dynamic. |
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[mb] -- as mentioned at the top of the idea, I'm very, very
reluctant to seek a govt. remedy to this kind of problem,
But even if costs stayed the same but shifted around such
that they were more transparent, we would be better off. |
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[2 fries]. It would be interesting in the age of AI, when
corporations can actually get real personas. Hard to see
what's so alien about them now -- they are simply a
convenient target, particularly for those on the left. |
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Well [tc] I guess what I'm saying is that a corporate entity has no soul unless the men and women who started it are still alive. Once a company becomes entirely beholden to shareholders then the almighty Bottom-Line becomes its God at the expense of everything else. In other words companies themselves become con-men. Incorporeal, unaccountable, self-serving con-men... |
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Ethics go out the window in favor of profits, and when it comes to pharmaceutical companies this means protecting their patents and research even at the cost of withholding any and all information from the medical community which might compete with their little monopolies. |
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The con, (again from an outside perspective), would seem to be suckering tax payers into funding their own poisoning so as to dispose of waste while boosting pharmaceutical industry profits treating the increased rates of chronic illnesses they cause. |
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Pretty slick really. Just a modern adaptation of the oldest con in the book.
The Snake-oil Slaesman.
Make someone sick... and they'll pay you anything for the cure. |
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/withholding any and all information from the medical community/ |
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There is a lot of bruiting about this, but for any drug that goes to the FDA for application all of the associated info goes with. The FDA could make this available in all or in part, stripped of identifiers or what have you. A lot is available but not in easily digested databases like the SEER. |
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Maybe the robots can get to work on the approval process.
I'm sure there's some bits of it that should be rather
standard operating procedure. |
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