If the US market didn't pay for these drugs, they wouldn't still be cheaper in India. They likely wouldn't exist at all.
Trying to think of other straightforward instances where a tremendous cost is spent on researching and testing, and directly affect human well being.
One example would be meat farming. As far as I know raising pigs or chicken evolved a lot in our lifetimes, extensive research was done on how to produce mor meat, there's oversight by a public agency and it is consumed by human so there is a decent amount of safety check and oversight.
Yet meat is cheap.
The more research that went into it, the cheaper it got. Provided meat as a product is more stable and less dangerous than drugs, I still think that it doesn't explain why meat would become cheaper while drug price should stay high and pharmatical firms should have extra protection to keep their prices high.
We're not paying for research, we're paying for monopolies.
Also, drugs do get super cheap once the patents expire. In fact, there are massive companies that do nothing but wait for patents to expire so they can make generics—take a look at Teva and Perrigo if you're curious about the model.
Thus, I don't think we can analogize meat to pharmaceuticals.
The exact same is true in agriculture. You can patent a gene or a variety that you bred. But the only way to sell it to farmers is if it gives them higher yields than the previous stuff.
Agriculture did benefit a lot from research done by public universities. As did medicine. I'm hugely in favor of increasing public research in both areas. This is not not mutually exclusive with private research. It's not like there are a finite number of things that can be researched or invented.
If as you say the majority of drugs are cheap, varied and didn't need patents, I'd say it's as good sign as any that we don't need patents for drugs.
I also think we need more research, both public and private. I understand that the current system relies on patent money to sustain itself, but I just don't buy that it has to be this way, or that it wouldn't work otherwise.
For the record I am not comparing industries, just saying that different models exists.
I think you are confused. Patents only last 15-20 years, not forever. The majority of drugs were developed by companies looking to own the patents. However they are now free to the public.
Without the patent system, they wouldn't exist at all.
i recommend u go through this with an open mind and no bias on the source. the research might not be on what u think it is.
I am mostly aware of how bad farming is in regards of how animals are treated or what effect it can have on the surrounding environment. My entry to this rabbit hole was the huge pig shit lakes near some of the most industrialized pig farms. From there there is no illusion that most research would go into more 'humane' treatments, but at the same time there is a strong enough incentive to have balanced medication to keep the animals alive while leaving as few substances in the meat as possible.
I'm not sure that research is moral or goes in the right direction, but I just suppose there is a decent amount of it given the scale of the market.
The modern world of lifesaving pharmaceuticals exists despite the American market's attempts to subvert it, not due to its largesse
But if you really believe that, hen why are so many of these drugs developed in America? Why aren't other countries inventing way better drugs?
So, let's go through a quick run-down of the 'major' pharmaceutical companies of the world, and where they are headquartered.
Company Revenue (USD) Headquarters
Novartis 53.6 Bn Switzerland
Roche 47.8 Bn Switzerland
Sanofi 36.9 Bn France
GSK 34.9 Bn UK
AstraZeneca 26 Bn UK/Sweden
Bayer 43.4 bn Germany
Baxter 15.3bn US
Pfizer 49 Bn US
Merck 42.23 Bn US
BMS 18.8 bn US
So, 4 of the top 10 pharmaceutical companies by revenue are headquartered in the US. By Revenue, those 4 account for 125.3 Bn out of a pie of 367.9 Bn; or 34%.
It is not easy to get a list of the number of drugs under clinical trial, or the number of drugs that were recently brought to market by various manufacturers; and, as a side matter, a number of the more innovative drugs brought to market recently were all developed by small pharmaceutical companies (Boceprevir, Telaprevir, Imatinib, Ipilumimab) that were later acquired by the big boys. So a small pharma company did the innovating, usually funded by a university or the product of particuarly profound insights by PhD students; turned into successful drugs; run through to the stage 3 trial stage and then, once all the development costs are done and dusted, acquired for a discount price of the predicted future revenue stream
So tell me, where are all the drugs being developed by america? I would say the rest of the world is more than pulling it's weight. In fact, given rough population parity between the European first world and the United states, it could in fact be argued that the United states is not pulling it's weight.
I await your reasoned response
It's certainly interesting that Europe has more drug companies headquartered there. Though that doesn't necessarily mean all their operations and revenue are in those countries, but whatever.
It's irrelevant because Europe still has a patent system and still sells drugs to the US under our system. It's not like India where any company can manufacture the drug and patents are rarely enforced.
As for university funded research being sold privately, I agree that is sad and should be illegal.
More accurately, you are paying higher because pharma can hire congressmen and senators
> If the US market didn't pay for these drugs, they wouldn't still be cheaper in India. They likely wouldn't exist at all.
Doubt that much, its quite a strong claim and requires strong evidence. My beef is that we have never even come close to testing this hypothesis
One of the oft repeated justification for the absurd levels of IP protection and patent extensions that pharma enjoys is the huge cost of trials. But if huge development costs are the reason for these protections to exist, guess what, these costs will continue to remain huge. Its just self perpetuating.
Patents are primarily a preemptive measure against a hypothetical scenario. The hypothesis is that unless market pressures are cordoned off, innovation will stop. It is a believable hypothesis but not a quantitative one, and this exactly where we need a quantitative one. How many years exactly does one need to subvert the market so that a satisfactory level of innovation is maintained ? Nobody knows an authoritative answer.
In these scenario what we need is a feedback system, and pretty much the only scalable and fair apparatus that we have for such feedback on economic affairs is the market.
So rather than subverting the market, market should be explicitly and actively involved to work out this trade-off. How exactly this is to be done needs to be worked out.
There could be a futures market on patents on drugs undergoing testing: competitors can promise to buy the patent to the (drug,usecase) pair at a particular price (even if its a dud) and if the owner decides not to sell the owner pay a particular compensation. Such measures will spread the risk. There should be mechanisms for a company to raise money for testing in lieu of rights over the product.
The initial period of validity of a patent should be short, like 3~6 years, following which the patent is on the market. Entities can bid to bring the patent to public domain. The owner(s) bids to retain it. Whoever wins gets the balance. Of course the "bring it to public domain" bidders will bid less because profitability is less when its in the public domain, but market decides who gets to own it. If the owner(s) think they can still extract lots of profit from the drug, bid high. We should stop handing out blank checks without a feedback loop, that is just bad design.
[p.s. fun to watch the votes go up and down :)]
Corruption might exist, and I agree it should be eliminated. But the patent system is far, far older than this industry. And I doubt it would go away if you eliminated corruption.
>>If the US market didn't pay for these drugs, they wouldn't still be cheaper in India. They likely wouldn't exist at all.
>Doubt that much, its quite a strong claim and requires strong evidence. My beef is that we have never even come close to testing this hypothesis
I don't think this is that controversial a claim. No one is preventing other countries from developing their own drugs, and some do. It's not like there is a finite number of chemicals or diseases that need treatment. In what way is the existence of US drug companies preventing anyone else from developing drugs?
>But if huge development costs are the reason for these protections to exist, guess what, these costs will continue to remain huge. Its just self perpetuating.
They have every incentive to decrease the costs wherever possible. It's just fundamentally a very expensive process. Especially if you want the very high levels of guaranteed drug safety and effectiveness that the FDA requires.
Nor has the opposite been tested. Personally, I would rather err on the side of having plentiful drugs. Also, I think the original argument makes sense, but that's an opinion as is yours.
The flaw in your reasoning is seeing the presence or absence of IP protection as an independent variable, and level of R&D as a function of that. I think both are dependent on the amount of cash pharma companies have to spend.
Indeed, and that is precisely why I want acceptable mechanisms to test the hypothesis and correct for it, adapt the estimates etc (all mentioned in the comment that you are responding to). The fix seems far from arbitrary blanket protection from market pressures. Just like so many other things the market needs to be actively co-opted into the mix to set the prices right, rather than being cordoned off.
> Nor has the opposite been tested
BTW I did not imply any direction in the test, so "opposite" does not quite apply as an adjective to the tests I have in mind. Perhaps "estimation" would have been a better word
(i) Futures market and (ii) bid to bring to public domain are the two market apparatus I could think of. Individuals with better knowledge in economics and finances would likely be able to come up with other mechanisms.
However, as in semis, the developer manufacturer will also look at what the market will bear. And things are complicated in pharma by copy-cats and gov'ts who understandably look the other way when a manufacturer undercuts the original manufacturer/license holder... So they, the orig drugmakers, kind of make up this shortfall in economies where the market will bear higher prices, so, in essence, developed countries subsidize the pharma costs of developing economies. And perhaps that's not so bad, given the comparative resources.
http://slatestarcodex.com/2014/08/16/an-iron-curtain-has-des...
Another example: The French developed Tianeptine[1] and it's as effective as SSRIs as an anti-depressant, with fewer side effects, but it's largely unknown in the U.S.
Point being, even if they did develop great drugs, you'd never hear about them.
http://www.wakingtimes.com/2015/09/29/cuba-developed-a-1-lun...
http://www.cnn.com/2009/HEALTH/02/19/cuba.cancer.vaccine/ind...
> A Phase II trial from 2008 showed lung cancer patients who received the vaccine lived an average of four to six months longer than those who didn’t.
> CimaVax EGF does not prevent or cure lung cancer. It is a therapeutic vaccine which stimulates the patient's body to make an antibody against the epidermal growth factor (EGF), which is a key driver causing lung cancer cells to grow.
Thanks for sharing, I had never heard of this, but to call it a "$1 cure for lung cancer" is a bit misleading.
BTW I see that you got downvoted. Lest you think so, it wasn't me.
I was pretty skeptical of this claim being true so I had to do a quick internet search.
I'm surprised to find there was some truth to the first half of the comment but the second claim appears to be wrong. [1]
[1] http://skeptics.stackexchange.com/questions/16472/do-typical...
Regardless, I don't see how this disproves my point for drugs in general. If investing in advertisement increases their profit, then logically they should do it. It's not like the advertisements are taking away money that would otherwise go to research. They are increasing the total amount of revenue, some of which will go to even more research.
Spend resources on cancer "treatments" that give two more months of survival compared to placebo (with insane side effects though), have marketing budgets twice bigger than their R&D, try to push statins into baby milk (I hope this is sarcastic, for now) and totally abandoned antibiotics.
We also have patent extensions and other nasty tricks.
While the current model is somewhat effective, I think that direct NIH grants to develop drugs with the IP left in the public domain is a better approach. Also that way we can funnel more money into the pockets of the scientists.
Marketing budgets aren't really relevant. They wouldn't spend money on marketing if it didn't bring them even more money in return. It's not like that money is being taken from money that would otherwise go to research. If anything it increases the amount of money which can go to research.
> I think that direct NIH grants to develop drugs with the IP left in the public domain is a better approach
I don't think these models are mutually exclusive. You can have government research and private research at the same time. It's not like there is limited amount of research that can be done, and private companies are hogging it all. And there are things like antibiotic research, which you mentioned, that aren't profitable but are necessary.
I think it's easy to see where that price difference is going.
Regardless, that has nothing to do with anything. I don't understand why HN views someone making a profit as proof that they are committing some evil. It's possible they can make a profit and be a net benefit to the world.
From their accounts and their behavior they look far from a group that is worthy of the protection they receive.
It's really easy to see why Americans pay so much for Health care/insurance, medicine, education, etc. etc.
Plus, there are quality issues with third world drugs (which may or may not be valid) which rear their head when buying sight unseen
Arbitrage is attempted, but the FDA is pretty good about stopping imports at port. Also, the primary distribution channels are fastidious about not taking goods from other locales so the market is grey/black and not worth the effort in most cases. The people who would buy drugs from India are probably using means-tested assistance programs and can't pay the huge sums insurers can.
Why are student movie tickets cheaper than general admission? The term for this is 'price discrimination'.
The short answer is because many Indians can't afford to pay $500, and many Americans can afford to pay more than $500.