Well I've tried to set up a basic lab in an academic environment twice now. It took months every time and took ages to get tiny amounts of money, at big (European) universities. One out of the two times I did get money ... from a pharma company (and attention from several of their senior employees, which was even more useful than the money).
So please, can the public ... well ... pay for drugs once?
Isn't this a deliberate model, and not only for pharma?
Govt funds the risky research, and then hands the baton to competitive industry, which is good at 'finding markets', making it a product, and optimizing costs.
Eg, google, amazon, etc, would not exist without the govt early (and continuing) funding of the tech their business is based on.
What is then supposed to happen is that profits are taxed sufficiently, feeding back in to the system, but that part appears to have broken down lately.
If that's right, shouldn't there be a flood of new companies looking to get the dollars? Is there such a flood, or at least a stream? I haven't noticed one, but I don't really try…
It's not a program to support small businesses, it's a structure to support massive companies who lobby and hire politicians and their friends and family.
In that case, shouldn't there be a flood, or at least a stream, of existing big companies setting up new subsidiaries to take advantage of this? There are many big companies with existing lobbyist divisions, deep pockets and experience in broadly similar areas. Food, cosmetics, chemicals spring to mind.
> What is then supposed to happen is that profits are taxed sufficiently, feeding back in to the system, but that part appears to have broken down lately.
right. with the right accounting processes, i could buy the rest. but when spending and tax collection are as decoupled or loosely balanced as they appear to be today, public investment into private industry is super risky.
Only read the beginning of this screed, but its a unique and unlikely to be repeated situation until the next pandemic model. "Competitive industry" normally spends the big bucks to do Phase II and especially expensive Phase III trials. And as you note, manufacturing it. Which Pfizer did without Operation Warp Speed money until it started failing to deliver on its promises in December 2020. May have gotten some money from Germany through BioNTech which was the company that actually developed it.
The claim "By one estimate, the National Institutes of Health spent $17 billion on vaccine technologies fundamental to the Covid-19 vaccine." goes back to the mid-20th Century, is so broad as to be useless and is obviously disqualifying propaganda: https://medicalxpress.com/news/2021-04-covid-vaccine-built-b...
Yeah it’s the trials that are really expensive, not the basic research. The government gets to spread its dollars around to lots of individual researchers but if they were instead using that money to fund phase III trials (1) we’d have a lot a lot less money for basic research (2) we’d fund a lot fewer phase III trials so (3) we’d see much less drug development overall. Also I’d worry about a potential conflict of interest if the same government is conducting and evaluating the results of drug trials.
Never mind the fact that 17 billion is on par with the annual R&D spend at one Pharma company.
I think a more interesting comparison would be all national funding for drug R&D versus all corporate R&D funding. This could be done on an annual basis or historic.
NIH budget was 43 billion in 2021 for all healthcare sectors
Top 10 US Drug company[1] R&D budgets [2] were:
1: Johnson & Johnson $15 Billion
2: Pfizer $14 Billion
3: Merck $13 Billion
4: AbbVie $7 Billion
5: Bristol $11 Billion
6: Abbott $3 Billion
7: Amgen $5 Billion
8: Gilead $5 Billion
9: Eli Lilly $7 Billion
10: Biogen 2.5 Billion
Total 91+ Billion
Keep in mind that those are only US headquartered drug companies, and some of the biggest players like Roche and Novartis are in Europe[3]
Economists broadly agree that taxing corporate profits is inefficient. From an NPR show surveying five economists across the political spectrum about what are consensus ideas in the field: https://www.npr.org/sections/money/2012/07/19/157047211/six-... (“Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people.”).
The problem in the US isn’t that we don’t tax Google, Amazon, etc. Look at the corporate taxes in France or Sweden. They’re about the same. The problem is that we don’t sufficiently tax the billions in payroll at those companies.
> The problem is that we don’t sufficiently tax the billions in payroll at those companies.
The government isn’t short on money.
Are we sure that the problem isn’t that we are spending Elon Musk’s entire lifetime net worth on the military each and every 90 days while not even at war? We shovel twenty tons of hundred dollar bills (about $2bn) into the neverending pit of the war machine every day.
I’m not convinced more government revenue is the solution to any problems, given what they are doing with their current insanely large levels of revenue at present.
It surely is. The federal government ran a $880 billion deficit in 2018.
> Are we sure that the problem isn’t that we are spending Elon Musk’s entire lifetime net worth on the military each and every 90 days while not even at war?
Yes, definitely. Total government spending at all levels (federal + state + local) is about $7 trillion. The military budget is only 1/10 of that. If we cut our defense spending to the NATO 2% of GDP target, we would save only about $300 billion. We need to cut twice that just to close the structural deficit, and raise taxes by about another trillion to pay for universal healthcare.
The M0 money supply increased from $350 billion to $900 billion from 1990 to 2008. During that time the federal debt increased from $3 trillion to $9 trillion. So the debt (due to the structural budget deficit) increased vastly faster than the portion of the money supply attributable to printing currency.
Moreover, most money is not created by the government printing money, it's created by federal reserve purchases of debt or bank lending. Neither of those are reflected in the deficit. The prior poster is thus incorrect to say that the government "needs" to run a budget deficit "because that's where money comes form."
I guess I look at the CEOs who take a symbolic $1 salary-- they're reliant on either selling their plumped securities and other assets (at a low capital-gains tax rate) or borrowing against them (at zero tax rate) to actually cash out living expenses.
The right answer is to just nationalize profitable industries and use them as direct revenue streams. This eliminates much of the need for a formal tax-assessment (return processing, auditing, etc.) system, creating an immediate user-experience improvement and streamlining, and cuts out a lot of the opportunities to cheat. It's not like you can use creative accounting to boost your gas mileage (and reduce your spend at a state-run oil company). Not to mention the huge opportunities to manage for social/political aims (i. e. a state-run telecom will probably honour build-out commitments better than Verizon, because their jobs are all directly accountable to angry legislators)
Dividends and capital gains are taxed. Why would corporate debt be taxed?
Yes the problem is the payroll. Silicon Valley people engineers making $500k/year are the most under-taxed people in the country compared to European nations. Our corporate or capital gains taxes are unexceptional. It’s our taxes on the upper middle class—which haven’t been raised since Reagan-that are unusual. These people are the backbone of the tax base funding the welfare state in other countries.
>What is then supposed to happen is that profits are taxed sufficiently, feeding back in to the system, but that part appears to have broken down lately.
How do you figure? Tax revenues are basically at all time high, and going up further.
Consider that 40% of US GDP now is collected in some form of taxation.[1] 40 cents of every dollar earned is taxed and spent as the government chooses. This is more than between FDR and Regan, and much more than the 20s (~15% of GDP)
Also consider that size of the pie has also increased! US real GDP per capita (accounting for inflation) has grown ~4x since the 1940s, and total GDP has grown ~20x! [2]
> put a spotlight on the big pharmaceutical companies that had brought them to market — especially Pfizer and Moderna
Moderna? The research startup that had only recently IPO'd and didn't have a single commercial product before covid? Seems weird to call it a "big pharmaceutical company".
I'd rather a few founders become billionaires from a successful startup than have Moderna gone bankrupt and lose the vaccines they were developing forever.
This assumes that only pharma companies can execute the steps required to bring the fruits of all that research to market. There is no reason a govt entity can’t do the same. It is a question of setting up the right incentives for the employees of that govt entity.
Yes it’s a matter of the incentives, but a government entity has fundamentally different incentives than a private entity. Countries ranging from Canada to Sweden to India to China invested heavily into state-owned industries in the 20th century, and every single one reversed course. Because it just didn’t work.
Sweden's state-owned enterprises were sold purely because of politics. No one reversed course. It's just the right wing got majority and sold what they could when they had the chance including a large amount of public housing, schools and healthcare facilities.
No, it wasn’t some accident of Swedish politics. The same thing happened all over the world at the same time. It happened in India, it happened in China. It happened in Germany. The movement toward state owned enterprises in the 1960s and 1970s was reversed in myriad countries with myriad political systems because it didn’t work.
I didn't say anything about the rest of the world. You made a statement about Sweden, even highlighting that it was "every single country" which, unless you want to qualify that statement, simply wasn't accurate. State-owned enterprises in Sweden weren't sold off because they didn't provide service or even didn't make profits but because of shifting politics in Sweden and the EU. Politicians who never wanted state-owned enterprises came into power and the EU made many ventures outright illegal as unlawful state aid. The same politicians who privatized everything else and ended conscription so Sweden had no choice but to join Nato. You can of course argue that "it didn't work because it wasn't wanted" but then the same thing goes for anything else that was changed like government owned nuclear power plants. Which these days of course also requires approval from the EU.
> Politicians who never wanted state-owned enterprises came into power
And pray tell, how did that happen? How do people come into power in Sweden? I thought that it has a system where people propose what they will do, and the population votes on whose ideas and proposals they like the most, doesn't it?
What happened in other countries is relevant because it shows that it wasn’t just something you can explain away as specific to Swedish politics and who got elected when.
> every single one reversed course. Because it just didn’t work.
Didn't work for whom?
To suggest that political changes happen due to "it didn't work" seems like a pretty shallow conclusion. There are a lot that can be said about the last decades of free-market privatization & reforms in Europe, and in Sweden in particular, but that it was done out of necessity rather than a general political shift after the collapse of the Soviet Union is simply a biased take.
Everyone from voting public in liberal democracies (Sweden, Canada, Germany), to the voting public in less liberal democracies (India), the Islamic world (Egypt), to communist regimes (China, Vietnam).
So "heavy investment in state-owned industries just doesn't work" is actually just you drawing far-reaching conclusions over shifting economic policies and/or voting patterns. That line of reasoning doesn't even pass the most basic correlation is not causation test.
When many different societies with different political systems all try something around the same time, and all retreat from that approach a few decades later, that’s really significant real-world data. The country I’m from has socialism written into its constitution, but now is strongly neoliberal. Maybe that’s just correlation, but otherwise it has little in common with Sweden, reducing the possibility that some common third factor is in play.
I mean, discussions about this free-market/neoliberal political shift have been going on for a long time. To just assume state-owned industry "just doesn't work" because of that post-Soviet shift is confirmation bias on an already weak correlation.
In Sweden it's glaringly obvious that the privatizations have provided worse outcomes than before - even the free-market think-tanks are smart to avoid that subject. Unfortunately for us, they instead tend to focus on supporting voices that blame immigration for the consequences of sky-rocketing inequality. I guess they'll have to wait another decade or so before the myth building of the inherently incompetent state is on more fertile ground.
The shift towards SOEs and back away is close to the largest scale economic experiment we have ever done on the planet. Many of these countries, particularly India and China, invested heavily in terms of political and reputational capital into the approach of a government-run economy. They had tremendous incentives to stick with a system they had assured the public was the way of the future. When the same approach is tried in everything from Scandinavian social democracies to Islamic socialist societies to Asian communist regimes, and then all of them change course after a few decades, that’s not just “confirmation bias. That’s data.
Maybe voters in Sweden and voters in India and party functionaries in China all just got some “right wing”virus at the same time. Or maybe they were reaction to the unworkability of an economic system they had tried. You know what they say: those who don’t understand history are doomed to repeat it.
It's hard for me to take doubling down on "correlation is causation" seriously, especially on such an obviously multi-faceted subject, it's simply too unnuanced. Just the assertion in passing that China has supposedly moved away from SOEs could be a debate on its own.
You talk about incentives? The amount of money that has been concentrated to the wealthiest portions of society is simply staggering, even in superficially equal countries like Sweden. The privatization of state-owned industry, properties, and the welfare system has been an unprecedented goldmine for private interests. Essentially a smaller Scandinavian version of a post-USSR wealth transfer. The incentives for people in power in less democratic and/or corrupt countries is even more obvious.
The virus was the global shock-wave due to the collapse of soviet-Union? Come on. It was not like the shift to third-way social-democracy was a grassroots movement. Party politics is more fluid than voting patterns. A sentiment of "It's new times now, we need to go along with the flow" (not that dissimilar to today's politicians accepting the gig-economy, but that's another topic), rather than "we can clearly see that state-owned industry just isn't working, we have no choice but to try something new". If it actually was the latter, it would've be repeated by right-wing representatives on every political debate since the 1990, but that hasn't happened.
I'll leave it there, I think I've gotten my point across.
> Universities should stipulate in their technology transfer agreements that they would not use patents to prevent generic competition in places where the list price of the drug was unattainable based on average income
if a drug were to be profitably sold to someone else for 20% of the price i’m paying for it, then wouldn’t i feel taken advantage of (more than i already am) when i’m denied access to that better price?
i’m not saying means tested benefits are (or aren’t) all bad: just that in most places we use them it’s to enable transactions that very directly could not be profitable. a person buying food with foodstamps isn’t themselves paying the producer a profitable sum: each stamp has a direct “cost” that gets socialized, so it’s reasonable to believe that somebody well-off shouldn’t be eligible for them. but when the transaction is profitable at both price X and price 5X, the case to be made for why everyone shouldn’t be permitted that price of X is just a lot harder to explain.
This line of argument overlooks the vast amounts of investment that goes into commercialization after the basic research phase. A lot of the fundamental work on self-driving cars was funded by DARPA and was done at CMU, Stanford, etc. The DARPA Grand Challenge demonstrated working self driving cars back in 2004. But private industry has invested over $100 billion in commercialization since then. And we still aren’t close to a market-ready product.
Nobody is “paying twice.” Folks on HN should understand this intuitively. Nobody thinks that angel or series A investment entitles you to 100% of a company and right to get the products for free.
46 comments
[ 4.7 ms ] story [ 105 ms ] threadSo please, can the public ... well ... pay for drugs once?
If only! Healthcare is somehow not a good or service one should pay for as a normal transaction.
Govt funds the risky research, and then hands the baton to competitive industry, which is good at 'finding markets', making it a product, and optimizing costs.
Eg, google, amazon, etc, would not exist without the govt early (and continuing) funding of the tech their business is based on.
What is then supposed to happen is that profits are taxed sufficiently, feeding back in to the system, but that part appears to have broken down lately.
right. with the right accounting processes, i could buy the rest. but when spending and tax collection are as decoupled or loosely balanced as they appear to be today, public investment into private industry is super risky.
The claim "By one estimate, the National Institutes of Health spent $17 billion on vaccine technologies fundamental to the Covid-19 vaccine." goes back to the mid-20th Century, is so broad as to be useless and is obviously disqualifying propaganda: https://medicalxpress.com/news/2021-04-covid-vaccine-built-b...
I think a more interesting comparison would be all national funding for drug R&D versus all corporate R&D funding. This could be done on an annual basis or historic.
NIH budget was 43 billion in 2021 for all healthcare sectors
Top 10 US Drug company[1] R&D budgets [2] were:
1: Johnson & Johnson $15 Billion
2: Pfizer $14 Billion
3: Merck $13 Billion
4: AbbVie $7 Billion
5: Bristol $11 Billion
6: Abbott $3 Billion
7: Amgen $5 Billion
8: Gilead $5 Billion
9: Eli Lilly $7 Billion
10: Biogen 2.5 Billion
Total 91+ Billion
Keep in mind that those are only US headquartered drug companies, and some of the biggest players like Roche and Novartis are in Europe[3]
https://www.pharmapproach.com/top-10-pharmaceutical-companie...
https://www.macrotrends.net/stocks/charts/JNJ/johnson-johnso...
https://www.fiercebiotech.com/special-reports/top-10-pharma-...
The problem in the US isn’t that we don’t tax Google, Amazon, etc. Look at the corporate taxes in France or Sweden. They’re about the same. The problem is that we don’t sufficiently tax the billions in payroll at those companies.
The government isn’t short on money.
Are we sure that the problem isn’t that we are spending Elon Musk’s entire lifetime net worth on the military each and every 90 days while not even at war? We shovel twenty tons of hundred dollar bills (about $2bn) into the neverending pit of the war machine every day.
I’m not convinced more government revenue is the solution to any problems, given what they are doing with their current insanely large levels of revenue at present.
It surely is. The federal government ran a $880 billion deficit in 2018.
> Are we sure that the problem isn’t that we are spending Elon Musk’s entire lifetime net worth on the military each and every 90 days while not even at war?
Yes, definitely. Total government spending at all levels (federal + state + local) is about $7 trillion. The military budget is only 1/10 of that. If we cut our defense spending to the NATO 2% of GDP target, we would save only about $300 billion. We need to cut twice that just to close the structural deficit, and raise taxes by about another trillion to pay for universal healthcare.
You do realise the government is supposed to run a deficit, right? That's quite literally where money comes from.
You can make the case that it's too big ... and it is, but it should run a deficit.
Moreover, most money is not created by the government printing money, it's created by federal reserve purchases of debt or bank lending. Neither of those are reflected in the deficit. The prior poster is thus incorrect to say that the government "needs" to run a budget deficit "because that's where money comes form."
I guess I look at the CEOs who take a symbolic $1 salary-- they're reliant on either selling their plumped securities and other assets (at a low capital-gains tax rate) or borrowing against them (at zero tax rate) to actually cash out living expenses.
The right answer is to just nationalize profitable industries and use them as direct revenue streams. This eliminates much of the need for a formal tax-assessment (return processing, auditing, etc.) system, creating an immediate user-experience improvement and streamlining, and cuts out a lot of the opportunities to cheat. It's not like you can use creative accounting to boost your gas mileage (and reduce your spend at a state-run oil company). Not to mention the huge opportunities to manage for social/political aims (i. e. a state-run telecom will probably honour build-out commitments better than Verizon, because their jobs are all directly accountable to angry legislators)
Yes the problem is the payroll. Silicon Valley people engineers making $500k/year are the most under-taxed people in the country compared to European nations. Our corporate or capital gains taxes are unexceptional. It’s our taxes on the upper middle class—which haven’t been raised since Reagan-that are unusual. These people are the backbone of the tax base funding the welfare state in other countries.
How do you figure? Tax revenues are basically at all time high, and going up further.
Consider that 40% of US GDP now is collected in some form of taxation.[1] 40 cents of every dollar earned is taxed and spent as the government chooses. This is more than between FDR and Regan, and much more than the 20s (~15% of GDP)
Also consider that size of the pie has also increased! US real GDP per capita (accounting for inflation) has grown ~4x since the 1940s, and total GDP has grown ~20x! [2]
https://upload.wikimedia.org/wikipedia/commons/3/37/Federal%...
https://fred.stlouisfed.org/series/A939RX0Q048SBEA
Moderna? The research startup that had only recently IPO'd and didn't have a single commercial product before covid? Seems weird to call it a "big pharmaceutical company".
I'd rather a few founders become billionaires from a successful startup than have Moderna gone bankrupt and lose the vaccines they were developing forever.
And pray tell, how did that happen? How do people come into power in Sweden? I thought that it has a system where people propose what they will do, and the population votes on whose ideas and proposals they like the most, doesn't it?
Didn't work for whom?
To suggest that political changes happen due to "it didn't work" seems like a pretty shallow conclusion. There are a lot that can be said about the last decades of free-market privatization & reforms in Europe, and in Sweden in particular, but that it was done out of necessity rather than a general political shift after the collapse of the Soviet Union is simply a biased take.
Everyone from voting public in liberal democracies (Sweden, Canada, Germany), to the voting public in less liberal democracies (India), the Islamic world (Egypt), to communist regimes (China, Vietnam).
In Sweden it's glaringly obvious that the privatizations have provided worse outcomes than before - even the free-market think-tanks are smart to avoid that subject. Unfortunately for us, they instead tend to focus on supporting voices that blame immigration for the consequences of sky-rocketing inequality. I guess they'll have to wait another decade or so before the myth building of the inherently incompetent state is on more fertile ground.
Maybe voters in Sweden and voters in India and party functionaries in China all just got some “right wing”virus at the same time. Or maybe they were reaction to the unworkability of an economic system they had tried. You know what they say: those who don’t understand history are doomed to repeat it.
You talk about incentives? The amount of money that has been concentrated to the wealthiest portions of society is simply staggering, even in superficially equal countries like Sweden. The privatization of state-owned industry, properties, and the welfare system has been an unprecedented goldmine for private interests. Essentially a smaller Scandinavian version of a post-USSR wealth transfer. The incentives for people in power in less democratic and/or corrupt countries is even more obvious.
The virus was the global shock-wave due to the collapse of soviet-Union? Come on. It was not like the shift to third-way social-democracy was a grassroots movement. Party politics is more fluid than voting patterns. A sentiment of "It's new times now, we need to go along with the flow" (not that dissimilar to today's politicians accepting the gig-economy, but that's another topic), rather than "we can clearly see that state-owned industry just isn't working, we have no choice but to try something new". If it actually was the latter, it would've be repeated by right-wing representatives on every political debate since the 1990, but that hasn't happened.
I'll leave it there, I think I've gotten my point across.
if a drug were to be profitably sold to someone else for 20% of the price i’m paying for it, then wouldn’t i feel taken advantage of (more than i already am) when i’m denied access to that better price?
i’m not saying means tested benefits are (or aren’t) all bad: just that in most places we use them it’s to enable transactions that very directly could not be profitable. a person buying food with foodstamps isn’t themselves paying the producer a profitable sum: each stamp has a direct “cost” that gets socialized, so it’s reasonable to believe that somebody well-off shouldn’t be eligible for them. but when the transaction is profitable at both price X and price 5X, the case to be made for why everyone shouldn’t be permitted that price of X is just a lot harder to explain.
Nobody is “paying twice.” Folks on HN should understand this intuitively. Nobody thinks that angel or series A investment entitles you to 100% of a company and right to get the products for free.