never under estimate the power of the "bully pulpit". If he gets people talking in the press about then it can bubble back up to Congress if not board rooms of companies looking to garner good will of the public
In case one is blinded by partisan bias, remember than Hillary Clinton made a similar statement[0] against the pharmaceutical industry during her campaign, and likewise sent stocks temporarily falling.
Harder to imagine that you can do it with his appointments. Billionaires, cronies, prejurers, and people with conflicts of interest a mile long. People who have not the foggiest understanding of the departments they are running.
What exactly qualifies someone to be a 'drain the swamp' candidate? Because at first glance, they sure aren't it.
A few examples from what this site defines as a "kept promise":
"I'm going to issue our notification of intent to withdraw from the Trans-Pacific Partnership."
I am sure this was an incredible difficult problem to solve. The renegotiation will be a walk in the park.
“I am looking to appoint judges very much in the mold of Justice Scalia. I'm looking for judges — and I've actually picked 20 of them so that people would see.”
Again, another masterpiece, he managed to write 20 people on a list. Unbevlievable this creativity. And because everybody is so impressed by this the rest will be another walk in the park.
"Place lifetime ban on White House officials lobbying for foreign government."
Lobbyist aren't needed anymore anyway. The administration is now run directly by corporations. Again, genius idea, will save a lot of money.
Many pundits were calling the TPP dead before the election. All the candidates had come out against it by summer. Congress wasn't gonna take it up, Republicans to piss on Obama some more, but also why bother with all the Presidential options are dissing the idea.
His immigration stuff remains to be seen. The first attempt was shut down. Second is pending.
He nominated a judge. WOW! All that power and staff, and ability. A nomination appears! And it was basically from a dossier already vetted candidates handed to him. May as well just put their pictures on a dart board.
The lifetime ban is an executive order, which can be immediately revoked by him or the next President, or the courts. So, you know. "Lifetime."
Among the rest of the Trump stories, like the rest of the political powers in the world thinking he's a joke, a cruel tyrant, flaunting his win, functionally illiterate, tearing apart families. And he's got 4 mediocre actions accomplished.
Ending the ban on importing (often the same) drugs from abroad would go a long way to achieving this goal - no fancy system needed.
Also: "Johnson & Johnson and Merck & Co. have taken steps to increase transparency about their prices." - let me know when they disclose how much they spend on development of non-generic drugs to treat serious medical conditions, vs. their other expenses (such as advertising). According to [1], the numbers aren't pretty. And that's lumping all of 'research' together - subtract generics and cures for baldness and similar, and how much money is being wasted in medicine becomes even more apparent.
Do you really think reimportation would work? It hasn't worked in the past.
A decade or so ago there was a big push to import cheaper drugs from Canada. What did drug companies do? Put a cap on how much drug would be sold in Canada. Canadians ended up restricting exports so that they had enough drug for their own citizens.
It costs a quarter to manufacture each pill but the manufacturers charge several dollars for that pill.
But they don't just price gouge. Drug companies need to file patents on their drug almost as soon as they sketch they come up with drug. From there they need at least 8 years to get through the FDAs approval process, so the manufacturers don't get nearly as much exclusive time with their IP as other industries. (They started getting around that by slightly tweaking the formula to last longer and calling it XL.) Plus they have to recoup the money they sank into other drugs that never made it to market. Sure, they can write down those losses, but a write-down ain't a refund.
If the government wants to start lowering drug prices, they can start by creating a special patent for the drug industry—call it a research patent—that can get converted to a regular patent when it gets FDA approval, and then give the drug companies the patent for the standard 20 years plus a renewal if they work the patent.
The next step: they can shorten time to market. We have evidence that the FDA errs too conservatively and doesn't approve (or delays) drugs that would have turned out totally safe and helped people. I remember they granted special approval to bring in a meningitis vaccine that Europe had for a while when an east coast school saw an outbreak. The vaccine still hadn't cleared the FDA, but I guess FDA special clearance is better than doing nothing. If it's safe enough for Western Europe, it's probably safe enough for Americans.
The regulatory process overwhelms those incentives anyway. If you can cut down on the 8 to 10 years to market you might see more drug companies pop up chasing a long shot
If the US government forbid any federal or state agency from even negotiating software prices with volumes in the tens of millions (ala Medicare/Medicaid), the vast majority of pure research feeding the industry was publicly funded, and the market was as economically opaque and uncompetitive as healthcare then yes the two industries would be comparable.
Pricing based on value provided to the customer makes a lot of sense for phones and web apps and cheetos.
But how much do you value being alive? The "value" of a lifesaving drug is essentially unbounded, most people will pay anything to stay alive. That's one of the reasons healthcare is an edge case where the typical rules of capitalism don't work.
So yes, it is unfair to have some industries price their products based on "value".
> Pricing based on value provided to the customer makes a lot of sense for phones and web apps and cheetos.
> But how much do you value being alive? The "value" of a lifesaving drug is essentially unbounded, most people will pay anything to stay alive. That's one of the reasons healthcare is an edge case where the typical rules of capitalism don't work.
> So yes, it is unfair to have some industries price their products based on "value".
The problem with that logic is that taken to the extreme it means that everyone is entitled to every possible treatment, regardless of cost, and the rest of society must be the one that bears it.
If a treatment exists to extend the life of a terminally ill person for 1 more day at a cost of $100K should the rest of us pay for it? How about $1M? The numbers are purposely ridiculous but it's not that far out of reality.
At some point you need to draw the line and make the (not fun) decision of what's in and what's out.
I'm convinced the bulk of this could be solved with some common sense planning:
- Create an opt-in single payer plan at the federal level
- Use the existing Medicare booking codes for identification and list prices for covered treatments (prices to be paid to service providers)
- Service providers could opt in or out of the plans but couldn't do so on a per patient basis (i.e. similar to Medicare)
- Only include medication and treatments that are out of patent protection
- Only include medication that has at least N providers (was going to put three but may not exist for all generics)
Anything else would be purely out of pocket and not covered by the plan. Fyi, that last one means that if we started today, you'd have access to everything up to approximately 1997. I'm not a doctor and honestly don't know much about the medical field, but I'm pretty sure that pre-1997 medications should cover the vast majority of healthcare use cases.
Everyone knows single-payer would be great, but practically speaking we don't have the votes :(
I'd also propose a ban on drug marketing, which would reduce about half the costs.[1]
I don't think that excluding monopoly drugs will work. First, the industry has made significant progress in the past two decades, so for most major diseases, the leading treatment was patented within the last 20 years. Second, drug companies have little incentive to make direct competitors, and R&D effort is better allocated in areas with unmet medical need. Third, unpatented cures are already cheap, so by market size, almost all drugs are monopolies.
Over a third of the $333B pharmaceutical market[2] can be attributed to:
- Antibody drugs, $100B revenue and growing, almost all after 1997. E.g. Herceptin for HER2+ breast cancer, Humira for arthritis, Avastin for many cancers.[3,4]
- The cure for Hepatitis C is patented until 2028, and currently has $20B revenue.[5,6]
I'm not saying there aren't any great advances. I'm saying it's an easy line to draw. That's vs picking and choosing what modern treatments are included.
The HepC treatment, while remarkably effective, would bankrupt most healthcare programs if they were forced to pay the retail price.
Every society rations medical care, it's a finite resource. Sure, bureaucrats in some countries do a cost benefit analysis with human lives. That's unfortunate, but I believe it's better than what we do in the US. Here we ration medical care by patient wealth, which strikes me as dystopian.
NICE (National Institute for Health and Care Excellence) sets the guidance on the QALY (Quality Adjusted Life Year) at between 20000-50000GBP for a year's worth of a single drug treatment.
Of the drugs that they approve for coverage the annual regimen has to be under a threshold of 50000GBP or it may not be covered by the NHS.
But that 20000-50000GBP is per drug per person, someone could be on multiple drugs and treatments simultaneously for much more than that and they'll be covered.
The point of the parent comment was that this was not just an issue of manufacturing costs. Cutting off the quote before the "but" changes the whole meaning.
This is great, we're trying everything except what the real problem is! Look at the Martin shkreli situation, there was another one like that before too. How did patents play a role there?
High profit margins are not a bad thing, as long as people can still afford them. What we need is the proper type of regulations, I agree we need to streamline the fda process, but that alone is not going to solve things.
There are a few options I've heard, such as a special Patent for drugs which after ten years becomes a fair terms license Patent. Another one is that he government could exercise March in rights.
I'm not saying we can fix all the problems with drug prices by fixing the patent system. Shitheads (am I allowed to say that?) like Shkreli will always do shitty things. But those cases don't drive most drug prices
Yes, most patients likely retained their access to the drug. The issue is more that we all wind up paying higher premiums so Shkreli can line his pockets with inflated proceeds and no alternatives.
I doubt much money is spent on Daraprim overall. $75k is apparently the overall cost of a course of treatment to insurers, in addition to the two or three other drugs prescribed to reduce the side effects of the drug.
It is apparently not in common use, Health Canada says that hospitals simply don't buy it anymore as of 2013, well before the price increase.
I suspect that if there's an entire first-world nation which no longer purchases the drug in hospitals or pharmacies, sales volume is probably pretty low in the U.S. I don't see what kind of premium increase you could attribute to that.
Wikipedia says it's on the WHO Model List of Essential Medicines, and while the number in the US on it may be low, it's not like this can't be done with other medications.
Its pretty standard for most life saving drugs to be subsidized. Watch the end of many pharma ads in the us. Not saying he is a saint, but in this case you are ascribing malice where there is none.
I know the guy jacked up the prices for these drugs enormously, and the stuff I found about people getting it for free if their insurance doesn't cover it is after the controversy got rolling, so I don't think I'm ascribing malice so much as describing it.
The issue is the reverse. Shkreli used existing FDA regulations to carve out a monopoly -- from what I understand from the Wiki (https://en.wikipedia.org/wiki/Pyrimethamine#cite_note-45), he largely leaned on current FDA bioequivalency standards to put a barrier to entry for the business that was higher than many generics would want to risk (given the low volume of the compound).
Once the virtual monopoly was obtained, he subsequently jacked up prices. In this he probably made a mistake by being way too greedy. With "ordinary" medication pricing, patients may not notice the very high prices, largely because American medical pricing is not terribly transparent. Instead, the higher costs tend to translate to higher insurance premiums and higher medical bills to the taxpayer.
Pyrimethamine is an old 1950s drug and as I understand it the synthesis is relatively easy. If the current American regulatory system wasn't so broken and we had a truly free market, Shkreli wouldn't even have a business plan with that sort of price increase, low volume notwithstanding.
The good news out of this is what Shkreli did was so egregious, the flaws in the system ended up being headline news.
I like the march-in rights idea. It sounds similar to eminent domain. If eminent domain can be used to expropriate private property for public use, it seems like there could be something similar for intellectual property.
Eminent domain in real estate means the property owner gets reimbursed for the fair value of the property taken. If the gov't is willing to fork over a few billion dollars to drug manufacturers, then yeah , no impact to VC investment.
Martin Shkreli gouged on off-patent medicine. Pretending patents are the problem is short sighted.
>It costs a quarter to manufacture each pill but the manufacturers charge several dollars for that pill.
Is Trump writing checks to pay for R&D, salaries, etc? Of course they cost more than are to manufacture, that's the basics of business.
Unless we move to a heavily regulated single-payer system then these problems will continue. SP will negotiate with drug companies from a powerful position and be able to push down costs via policy. We keep seeing success with SP and socialized healthcare in Europe and elsewhere and somehow keep pretending the problem is too much regulation (?) or patents. Yet somehow Europe manages to thrive with those very same issues!
>We have evidence that the FDA errs too conservatively
The FDA has had public whistleblowers to stop dangerous drugs from getting approved. Its extremely arguable whether the FDA is either too conservative or too liberal or easily gamed by political pressure.
Martin Shkreli gouged to drive down the company's stock price. The problem with Shkreli had everything to do with market manipulation and almost nothing to do with drugs in particular.
I'm honestly quite confused here. What solution, exactly, are you talking about? I don't remember proposing a solution.
In the Shkreli case, the drug price was raised in September 2015, and a cheap replacement was available on the market in October 2015 from a different company.
Many insurers didn't cover the competing product, so the real life lag time for healthcare consumers was either much longer or they simply had to pay the full cash price out of pocket.
At an absolute fraction of the cost of a new drug. All they need to do is prove their drug formulation has the same bioavailability as the branded drug. The cost of doing that is measured in a few millions of dollars.
Do you have data to back this up? Cancer treatments cost a lot per dose because they usually have relatively tiny markets (in any given year), are some of the most complex to develop, and treat an acute disease without the potential for long term customers. Also, much of the cost of cancer treatment is the cost of complications, clinical face time, and end-of-life care, not the drugs.
If I remember correctly, the average number of prescriptions for someone aged 65-79 is about four times the national average and since they treat chronic conditions due to aging, people take them until the day they die. Since Medicare isn't allowed to negotiate bulk prices for the prescriptions, the pharmaceutical companies pretty much get to charge whatever they want for critical drugs.
Just one of my 80 year old neighbors heart medications costs >$3000 per month and she's been taking it for almost 20 years, along with half a dozen other drugs. Cancer pills may cost a lot but the sheer scale of our aging population is much more relevant to overall healthcare costs.
As far as Medicare, they don't pay "whatever", they pay what everyone else pays or less.
I shouldn't have just said cancer drugs. Lots of specialty and small market drugs have enormous prices. Meanwhile, statins cost $0.30 a day: https://www.goodrx.com/lipitor
Do you mean the ideal number of prescriptions is zero?
Medicare does pay less than other insurers but only because of a general law blacklisting companies that charge the government more than other customers (on the assumption that the govt will always be the single biggest customer but more susceptible to political influence). Drug companies keep this in mind when negotiating with insurers so it's nowhere near as effective as the NHS, which can't pass its costs onto consumers except through new legislation and negotiates for the entire UK population at the same time.
We already have a system for "research patents." It's called the Patent Term Restoration Program [1] and it allows the FDA to grant 5 year extensions for patents on approved drugs, up to 14 years of exclusivity from the date the marketing application is approved.
Giving pharmaceutical companies the full 20 years after approval, regardless of how long it took, would create a perverse incentive to patent early just to protect existing patent marketshare. It would also be extremely unfair to everyone else like the aviation/aerospace, semiconductor, and energy industries where it can easily take 5-10 years to get from patent to product and cost just as much. It's much better to subsidize research (which the public does on a massive scale already) and drive down the regulatory burden of approval, which we can do without decreasing safety by some targeted reforms of the FDA (mostly by giving it more power to organize clinical trial infrastructure and enforce transparency and trial integrity). Giving pharma more power is not the answer.
Peter Thiel associate Jim O'Neill is under consideration to run the FDA. He wants to go to a progressive approval scheme that could significantly shorten the time to market for new treatments:
We have evidence that the FDA errs too conservatively and doesn't approve (or delays) drugs that would have turned out totally safe and helped people.
I'd like to see evidence for that. My impression, from all that I've read on the subject, the truth is quite the opposite. The FDA's funding has steadily been cut over the years and the restrictions on drug trials have been more lax over time. For example, drug trials have famously small sample sizes and are completely run by the companies themselves.
It seems like you're knowledgeable on this subject. Could you explain the '8 year' approval process and what that means? I was recently reading some information that suggested that the FDA approval process is more like 8-10 months. I couldn't find the source that I read, but here is one similar:
Having lived in both the UK and US I find the cost of medicines very hard to understand here. For example in the UK I can buy a ventolin inhaler for £10 over the counter (if I went to the Doctor it would be free). But in the US, an inhaler costs me $60 (with insurance).
Single payer systems negotiate as one. US insurers negotiate as separate entities, so you'll get a better rate with single-payer as its a more powerful negotiator, have less waste, and better outcomes.
Why Trump supporters think they can have the benefits of single-payer while attacking it and proposing a ridiculous healthcare bill is beyond me.
I don't know why you think the home country of the drug maker contradicts the claim that Americans are effectively subsidizing drugs. The fact that the company is "Swiss" doesn't change the fact that it's getting disproportionate revenue from ("subsidized by") the US.
>4 of the top 5 for Sales and Marketing Spend (both on raw dollars and as a percentage of revenue) are US.
>3 of the bottom 5 for R&D spend (as a percentage of revenue) are US.
Say that $1 of marketing increases profits (exclusive of that $1) by $1.01. And you can do it 5 billion times before the effects cancel. In that case, it looks like virtually all of your money went to marketing, and yet there's no fat that can be trimmed.
I have believed this "nonsense" for a while so I went looking for evidence that supports the claim. I'd always assumed it was just regional market segmentation that allowed them to change a lot more here in the US.
One of the Quora answers [1] to this question has lots of evidence and ultimately boils down to mostly marketing budgets (drugs are advertised directly to consumers here in the US and not elsewhere).
The US pays an unfair burden to cover the cost of developing new drugs. That said, many drug companies seem more concerned with selling drugs that are barely better than a placebo and have cut back on research efforts.
(I don't think the 'the US bears the burden' argument is especially compelling, I'm just saying that the country where a business is located doesn't reveal where it gets revenue)
Right, and that's really what I'm getting at. The only country in the world (except maybe NZ, who was in the process of phasing it out, and only allowed it as part of a trade deal with the US) where Rx meds are advertised to consumers.
Even with marketing spends of 20-25% of revenue, and R&D spends of 10% (and profit margins of typically 20%+), pharma has still managed to convince many Americans that they are struggling, and Americans are feeling the burden, of the US subsidizing the world's drug research (even though the two largest researching firms in the world aren't the US).
By "market", I meant selling them, not just advertising.
A Swiss company can get revenue from the US just as well as a US company. The location of their research lab won't reveal where they make their profits.
Yeah but those companies sell their drugs for a lot more in the US than elsewhere.
Basically, because the US is wealthy and much less regulated, drug companies from around the world make up a lot of their costs by selling things for more here, especially since private insurers have to pick up the tab in most cases.
When a quarter of their revenue goes on sales and marketing that is pretty subjectively "unnecessary" I don't they can claim with a straight face that it's "subsidizing the world". Especially when they're already making $14B a year in profit, in J&J's case.
Also if the risk is so high why are drug companies so profitable over the long term? Pharma firms are head and shoulders the most profitable firms in the S&P 500 every single year.
High risk, high reward. Why would anyone take a higher risk for a lower reward?
Pharmaceutical companies in the S&P500 are so profitable because of barriers to entry, massive capital requirements, and a whole biotechnology industry feeding them acquisitions. Biotech startups going under with zero revenue after raising hundreds of millions of dollars from VCs and institutional investors is a regular occurrence. Since the brunt of the pure research is publicly funded and other investors chasing ROI take care of much of the R&D risk, big pharma companies benefit a lot from other people's money just for providing exit opportunities for smaller companies.
Europe has 8 different competing companies that make epipens, but the US only has only approved 2. And the second one has to be specifically prescribed or you get the more expensive name brand. And the company that makes it apparently gives bribes to generic manufacturers to keep them from competing. And spends lots lobbying congress to let them keep doing this.
This is what scares me the most. Anyone of his family or friends could do the shorting. No one will ever catch them as the President will ensure the SEC is kept in the dark or suppressed. He might not even know they are doing it. Imagine knowing we are about to drop a nuke somewhere (like NK), you could make a fortune.
It's probably just a smokescreen to divide the attention of people concerned about healthcare between this distraction and the bill repealing the ACA, Medicaid, etc.
If the government really wanted to lower the price of drugs it would pay for the FDA clinical trials[1] and lengthen the amount of time a drug company can collect royalties. I remember when I was at a place that did clinical trials the cost of one protocol was $50,000 a day because of all the test kits that needed to have lab work done each day and the drug company only really had 3 years to get back its investment (plus pay for new research and have some profit) before the generics could happen. Cost of manufacture and distribution (just like software) is not the problem.
With the extends royalty period have a required pricing structure that has a set price to prevent gouging.
I understand the idea of the government paying for clinical trials, but then doesn't that incentivize pharma companies throwing stuff on the wall and seeing what sticks, and basically wasting money on trials that they know are long shots? I think the trial costs belonging to the company is right.
Anyway, regardless, what if pharma was only slightly or moderately profitable instead of insanely profitable? I don't want to be snarky, but the "we're not doing it unless it makes us a very big bag of cash" model of business just seems counter to the idea that having access to good healthcare is a basic human right. This is what makes me want to just create a whole DARPA + universities + national labs sort of system that takes on a lot of that responsibility of developing and testing drugs that is driven by more than just profit.
Well, frankly, having a big bag of cash is what got us a lot of the specialist doctors in tough areas requiring a lot of years of work. There is nothing wrong with making money if you provide a service worth it. We get nowhere when we deamonize money.
Don't pay for failure if you care about that, but maybe we need a whole heck of a lot more throwing it at the wall than we have now. I can see some startups wanting to play where they cannot now.
Yeah, I'm absolutely not against researchers and specialists and people who /work on/ this stuff being well paid, it just seems like the bulk of the profits goes to shareholders (I'm guessing mostly large institutional investors) rather than getting reinvested back into other efforts for the greater good. I'm questioning whether we really need that component of it all.
So do the bulk of the risks. Those profits power retirement accounts among other investors. Given on what forum we are discussing this, investors are important too.
Pharma stock prices should go down. That is a good thing. Drugs should be first a service and second a source of profit and that should always be the order of it, or we will continue to have drugs that bankrupt people till they cannot afford it.
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[ 3.4 ms ] story [ 309 ms ] thread[0]: https://www.thestreet.com/story/13684503/1/hillary-blasts-dr...
What exactly qualifies someone to be a 'drain the swamp' candidate? Because at first glance, they sure aren't it.
It's especially hard to imagine when the person claiming to be draining the swamp starts a new biz named "Swamp Filling and Expansion, LLC".
http://www.politifact.com/truth-o-meter/promises/trumpometer...
Promise kept - 5
Compromise - 1
Stalled - 1
In the works - 14
Promise broken - 0
"I'm going to issue our notification of intent to withdraw from the Trans-Pacific Partnership."
I am sure this was an incredible difficult problem to solve. The renegotiation will be a walk in the park.
“I am looking to appoint judges very much in the mold of Justice Scalia. I'm looking for judges — and I've actually picked 20 of them so that people would see.”
Again, another masterpiece, he managed to write 20 people on a list. Unbevlievable this creativity. And because everybody is so impressed by this the rest will be another walk in the park.
"Place lifetime ban on White House officials lobbying for foreign government."
Lobbyist aren't needed anymore anyway. The administration is now run directly by corporations. Again, genius idea, will save a lot of money.
His immigration stuff remains to be seen. The first attempt was shut down. Second is pending.
He nominated a judge. WOW! All that power and staff, and ability. A nomination appears! And it was basically from a dossier already vetted candidates handed to him. May as well just put their pictures on a dart board.
The lifetime ban is an executive order, which can be immediately revoked by him or the next President, or the courts. So, you know. "Lifetime."
Among the rest of the Trump stories, like the rest of the political powers in the world thinking he's a joke, a cruel tyrant, flaunting his win, functionally illiterate, tearing apart families. And he's got 4 mediocre actions accomplished.
Woo, really breaking a sweat, Donnie.
Also: "Johnson & Johnson and Merck & Co. have taken steps to increase transparency about their prices." - let me know when they disclose how much they spend on development of non-generic drugs to treat serious medical conditions, vs. their other expenses (such as advertising). According to [1], the numbers aren't pretty. And that's lumping all of 'research' together - subtract generics and cures for baldness and similar, and how much money is being wasted in medicine becomes even more apparent.
[1]: https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...
A decade or so ago there was a big push to import cheaper drugs from Canada. What did drug companies do? Put a cap on how much drug would be sold in Canada. Canadians ended up restricting exports so that they had enough drug for their own citizens.
But they don't just price gouge. Drug companies need to file patents on their drug almost as soon as they sketch they come up with drug. From there they need at least 8 years to get through the FDAs approval process, so the manufacturers don't get nearly as much exclusive time with their IP as other industries. (They started getting around that by slightly tweaking the formula to last longer and calling it XL.) Plus they have to recoup the money they sank into other drugs that never made it to market. Sure, they can write down those losses, but a write-down ain't a refund.
If the government wants to start lowering drug prices, they can start by creating a special patent for the drug industry—call it a research patent—that can get converted to a regular patent when it gets FDA approval, and then give the drug companies the patent for the standard 20 years plus a renewal if they work the patent.
The next step: they can shorten time to market. We have evidence that the FDA errs too conservatively and doesn't approve (or delays) drugs that would have turned out totally safe and helped people. I remember they granted special approval to bring in a meningitis vaccine that Europe had for a while when an east coast school saw an outbreak. The vaccine still hadn't cleared the FDA, but I guess FDA special clearance is better than doing nothing. If it's safe enough for Western Europe, it's probably safe enough for Americans.
What are the manufacturing costs for software?
Our whole racket is based on pricing our services on value while pricing our cost of goods on production inputs.
It's not "fair" to let other industries do that right?
But how much do you value being alive? The "value" of a lifesaving drug is essentially unbounded, most people will pay anything to stay alive. That's one of the reasons healthcare is an edge case where the typical rules of capitalism don't work.
So yes, it is unfair to have some industries price their products based on "value".
> But how much do you value being alive? The "value" of a lifesaving drug is essentially unbounded, most people will pay anything to stay alive. That's one of the reasons healthcare is an edge case where the typical rules of capitalism don't work.
> So yes, it is unfair to have some industries price their products based on "value".
The problem with that logic is that taken to the extreme it means that everyone is entitled to every possible treatment, regardless of cost, and the rest of society must be the one that bears it.
If a treatment exists to extend the life of a terminally ill person for 1 more day at a cost of $100K should the rest of us pay for it? How about $1M? The numbers are purposely ridiculous but it's not that far out of reality.
At some point you need to draw the line and make the (not fun) decision of what's in and what's out.
I'm convinced the bulk of this could be solved with some common sense planning:
- Create an opt-in single payer plan at the federal level
- Use the existing Medicare booking codes for identification and list prices for covered treatments (prices to be paid to service providers)
- Service providers could opt in or out of the plans but couldn't do so on a per patient basis (i.e. similar to Medicare)
- Only include medication and treatments that are out of patent protection
- Only include medication that has at least N providers (was going to put three but may not exist for all generics)
Anything else would be purely out of pocket and not covered by the plan. Fyi, that last one means that if we started today, you'd have access to everything up to approximately 1997. I'm not a doctor and honestly don't know much about the medical field, but I'm pretty sure that pre-1997 medications should cover the vast majority of healthcare use cases.
I'd also propose a ban on drug marketing, which would reduce about half the costs.[1]
I don't think that excluding monopoly drugs will work. First, the industry has made significant progress in the past two decades, so for most major diseases, the leading treatment was patented within the last 20 years. Second, drug companies have little incentive to make direct competitors, and R&D effort is better allocated in areas with unmet medical need. Third, unpatented cures are already cheap, so by market size, almost all drugs are monopolies.
Over a third of the $333B pharmaceutical market[2] can be attributed to:
- Antibody drugs, $100B revenue and growing, almost all after 1997. E.g. Herceptin for HER2+ breast cancer, Humira for arthritis, Avastin for many cancers.[3,4]
- The cure for Hepatitis C is patented until 2028, and currently has $20B revenue.[5,6]
Disclaimer: I've worked in the industry.
[1] http://blogs.sciencemag.org/pipeline/archives/2013/05/23/ano...
[2] http://trade.gov/topmarkets/pdf/Pharmaceuticals_Executive_Su...
[3] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4622599/
[4] http://www.prnewswire.com/news-releases/antibodies-market-no...
[5] http://www.pharmacompass.com/patent-expiry-expiration/sofosb...
[6] http://www.pharmacompass.com/radio-compass-blog/top-drugs-by...
The HepC treatment, while remarkably effective, would bankrupt most healthcare programs if they were forced to pay the retail price.
And if you take your idea to the extreme, then every person should have access to every type of medical care regardless of the value offered?
https://www.channel4.com/news/drugs-life-breast-cancer-nice-...
https://www.nice.org.uk/news/article/kadcyla-too-expensive-f...
NICE (National Institute for Health and Care Excellence) sets the guidance on the QALY (Quality Adjusted Life Year) at between 20000-50000GBP for a year's worth of a single drug treatment.
Of the drugs that they approve for coverage the annual regimen has to be under a threshold of 50000GBP or it may not be covered by the NHS.
But that 20000-50000GBP is per drug per person, someone could be on multiple drugs and treatments simultaneously for much more than that and they'll be covered.
"the U.S. Office of Management and Budget puts the value of a human life in the range of $7 million to $9 million" [1]
[1] https://www.theglobalist.com/the-cost-of-a-human-life-statis...
One data point from my experience:
- developer time to prepare, document a build, release notes
- build engineer to submit, check build, co-ordinate
- build machine hardware
- build machine OS license
- cryptographic signing hardware
- QA engineer time to test
- QA automation engineer's time to set up tests and maintain them
- QA test suite of machines for compatibility matrix
- technical writer for documentation
- distribution infrastructure / CDN
- support calls for new version
Another data point from my experience:
- about 2 minutes of developer time
- gratis open source build infrastructure
Its really not like they arrive one morning to the office, mix a few chemicals in a test tube, file a patent and then start selling them.
it's not- it doesn't matter- they're all the costs of getting a product to market and sustaining it.
High profit margins are not a bad thing, as long as people can still afford them. What we need is the proper type of regulations, I agree we need to streamline the fda process, but that alone is not going to solve things.
There are a few options I've heard, such as a special Patent for drugs which after ten years becomes a fair terms license Patent. Another one is that he government could exercise March in rights.
Are you sure about that? Shkreli himself disagrees with you, see his website:
http://www.pharmaskeletons.com/
Yes, most patients likely retained their access to the drug. The issue is more that we all wind up paying higher premiums so Shkreli can line his pockets with inflated proceeds and no alternatives.
It is apparently not in common use, Health Canada says that hospitals simply don't buy it anymore as of 2013, well before the price increase.
I suspect that if there's an entire first-world nation which no longer purchases the drug in hospitals or pharmacies, sales volume is probably pretty low in the U.S. I don't see what kind of premium increase you could attribute to that.
Once the virtual monopoly was obtained, he subsequently jacked up prices. In this he probably made a mistake by being way too greedy. With "ordinary" medication pricing, patients may not notice the very high prices, largely because American medical pricing is not terribly transparent. Instead, the higher costs tend to translate to higher insurance premiums and higher medical bills to the taxpayer.
Pyrimethamine is an old 1950s drug and as I understand it the synthesis is relatively easy. If the current American regulatory system wasn't so broken and we had a truly free market, Shkreli wouldn't even have a business plan with that sort of price increase, low volume notwithstanding.
The good news out of this is what Shkreli did was so egregious, the flaws in the system ended up being headline news.
What do you think the impact of withholding drugs from those that can't afford them could be?
>It costs a quarter to manufacture each pill but the manufacturers charge several dollars for that pill.
Is Trump writing checks to pay for R&D, salaries, etc? Of course they cost more than are to manufacture, that's the basics of business.
Unless we move to a heavily regulated single-payer system then these problems will continue. SP will negotiate with drug companies from a powerful position and be able to push down costs via policy. We keep seeing success with SP and socialized healthcare in Europe and elsewhere and somehow keep pretending the problem is too much regulation (?) or patents. Yet somehow Europe manages to thrive with those very same issues!
>We have evidence that the FDA errs too conservatively
The FDA has had public whistleblowers to stop dangerous drugs from getting approved. Its extremely arguable whether the FDA is either too conservative or too liberal or easily gamed by political pressure.
I'm honestly quite confused here. What solution, exactly, are you talking about? I don't remember proposing a solution.
In the Shkreli case, the drug price was raised in September 2015, and a cheap replacement was available on the market in October 2015 from a different company.
I don't believe Western Europe is any better in quality of drug vetting.
That's where the spending is concentrated, not in daily maintenance meds that cost a buck or two.
If I remember correctly, the average number of prescriptions for someone aged 65-79 is about four times the national average and since they treat chronic conditions due to aging, people take them until the day they die. Since Medicare isn't allowed to negotiate bulk prices for the prescriptions, the pharmaceutical companies pretty much get to charge whatever they want for critical drugs.
Just one of my 80 year old neighbors heart medications costs >$3000 per month and she's been taking it for almost 20 years, along with half a dozen other drugs. Cancer pills may cost a lot but the sheer scale of our aging population is much more relevant to overall healthcare costs.
As far as Medicare, they don't pay "whatever", they pay what everyone else pays or less.
I shouldn't have just said cancer drugs. Lots of specialty and small market drugs have enormous prices. Meanwhile, statins cost $0.30 a day: https://www.goodrx.com/lipitor
Medicare does pay less than other insurers but only because of a general law blacklisting companies that charge the government more than other customers (on the assumption that the govt will always be the single biggest customer but more susceptible to political influence). Drug companies keep this in mind when negotiating with insurers so it's nowhere near as effective as the NHS, which can't pass its costs onto consumers except through new legislation and negotiates for the entire UK population at the same time.
Giving pharmaceutical companies the full 20 years after approval, regardless of how long it took, would create a perverse incentive to patent early just to protect existing patent marketshare. It would also be extremely unfair to everyone else like the aviation/aerospace, semiconductor, and energy industries where it can easily take 5-10 years to get from patent to product and cost just as much. It's much better to subsidize research (which the public does on a massive scale already) and drive down the regulatory burden of approval, which we can do without decreasing safety by some targeted reforms of the FDA (mostly by giving it more power to organize clinical trial infrastructure and enforce transparency and trial integrity). Giving pharma more power is not the answer.
[1] https://www.fda.gov/Drugs/DevelopmentApprovalProcess/SmallBu...
> If it's safe enough for Western Europe, it's probably safe enough for Americans.
Tell that to all the thalidomide kids in Europe. That's probably the best example of where the FDA saved a lot of lives.
https://www.forbes.com/sites/patrickcox/2016/12/14/trumps-fd...
https://www.bloomberg.com/politics/articles/2016-12-07/trump...
I'd like to see evidence for that. My impression, from all that I've read on the subject, the truth is quite the opposite. The FDA's funding has steadily been cut over the years and the restrictions on drug trials have been more lax over time. For example, drug trials have famously small sample sizes and are completely run by the companies themselves.
That's an odd criticism. Who would run the trial if not for the sponsor?
https://news.ycombinator.com/item?id=13874668
https://www.pharmacist.com/article/trump-calls-fda-slow-and-...
Why is it that much more expensive here?
Why Trump supporters think they can have the benefits of single-payer while attacking it and proposing a ridiculous healthcare bill is beyond me.
Americans subsidize drugs for the rest of the world.
Ventolin inhalers are apparently available over the counter in pharmacies in the UK - where does the government enter into that?
> if I went to the Doctor it would be free
probably reduces what people are willing to pay.
[NB Prescription charges aren't the same throughout the UK and where you do pay there is a long list of people who are exempt from paying]
Top 10 pharma companies, 5/10 are US (2 UK, 2 Swiss, 1 French).
4 of the top 6 for profit margins (from 43%(!) to 19%) are US (Merck is the only outlier, 9th, at 10%).
4 of the top 5 for Sales and Marketing Spend (both on raw dollars and as a percentage of revenue) are US.
3 of the bottom 5 for R&D spend (as a percentage of revenue) are US.
I think I see a little fat that can be trimmed in the name of our so-called subsidization...
Source: http://www.bbc.com/news/business-28212223
http://www.eucope.org/lib/downloads/basic_facts_about_the_eu...
>4 of the top 5 for Sales and Marketing Spend (both on raw dollars and as a percentage of revenue) are US.
>3 of the bottom 5 for R&D spend (as a percentage of revenue) are US.
Say that $1 of marketing increases profits (exclusive of that $1) by $1.01. And you can do it 5 billion times before the effects cancel. In that case, it looks like virtually all of your money went to marketing, and yet there's no fat that can be trimmed.
Complete nonsense. I see this regurgitated again and again with nothing to back it up and it falls apart under the slightest inspection.
One of the Quora answers [1] to this question has lots of evidence and ultimately boils down to mostly marketing budgets (drugs are advertised directly to consumers here in the US and not elsewhere).
[1] https://www.quora.com/Does-the-US-subsidize-health-care-in-t...
Don't believe this one second. It's just self-serving nonsense to justify overcharging Americans.
This keeps being said, but I've never seen any support for it.
It's probably true to say that Americans subsidise the massive advertising budgets.
J&J, despite having 40% higher revenues ($70B vs $50B) spent nearly $2B less ($8.2B versus $9.9B) on R&D.
(I don't think the 'the US bears the burden' argument is especially compelling, I'm just saying that the country where a business is located doesn't reveal where it gets revenue)
Even with marketing spends of 20-25% of revenue, and R&D spends of 10% (and profit margins of typically 20%+), pharma has still managed to convince many Americans that they are struggling, and Americans are feeling the burden, of the US subsidizing the world's drug research (even though the two largest researching firms in the world aren't the US).
A Swiss company can get revenue from the US just as well as a US company. The location of their research lab won't reveal where they make their profits.
Basically, because the US is wealthy and much less regulated, drug companies from around the world make up a lot of their costs by selling things for more here, especially since private insurers have to pick up the tab in most cases.
Pharmaceutical companies in the S&P500 are so profitable because of barriers to entry, massive capital requirements, and a whole biotechnology industry feeding them acquisitions. Biotech startups going under with zero revenue after raising hundreds of millions of dollars from VCs and institutional investors is a regular occurrence. Since the brunt of the pure research is publicly funded and other investors chasing ROI take care of much of the R&D risk, big pharma companies benefit a lot from other people's money just for providing exit opportunities for smaller companies.
Why would a drug company spend money on DTC advertising if it "wasted" money? Your comment suggests they'd be better off not doing it at all.
The nation would be better off without the ads. They create an artificially inflated demand.
Doctors are the one's the write scripts, not drug companies. Are you saying doctors can't tell when a patient really needs a drug?
Europe has 8 different competing companies that make epipens, but the US only has only approved 2. And the second one has to be specifically prescribed or you get the more expensive name brand. And the company that makes it apparently gives bribes to generic manufacturers to keep them from competing. And spends lots lobbying congress to let them keep doing this.
Step 2: Tweet up a storm
Step 3: Profit
With the extends royalty period have a required pricing structure that has a set price to prevent gouging.
Anyway, regardless, what if pharma was only slightly or moderately profitable instead of insanely profitable? I don't want to be snarky, but the "we're not doing it unless it makes us a very big bag of cash" model of business just seems counter to the idea that having access to good healthcare is a basic human right. This is what makes me want to just create a whole DARPA + universities + national labs sort of system that takes on a lot of that responsibility of developing and testing drugs that is driven by more than just profit.
Don't pay for failure if you care about that, but maybe we need a whole heck of a lot more throwing it at the wall than we have now. I can see some startups wanting to play where they cannot now.