Foreigners turn to India in search of cut-price, life-saving cures | Hacker News Reader

Foreigners turn to India in search of cut-price, life-saving cures

japantimes.co.jp

147 pointsdenzil_correa127 comments

I know the article and the discussion is about access to drugs, but I must call out that part of the success of medical tourism in India is the lack of stranglehold control over medical care by insurance companies. In India, I can:

- Get an estimate for service before it happens, and plan for it therefore.

- Pay for the service at the time of discharge with/without insurance

- decide by myself if i want to get a specific procedure done or not - no fuss of "does the insurance cover it?". Of course, this is one area where the costs of service being inherently low helps.

- get all my medical records in my hand

These are basic patient freedoms, IMO, that the insurance industry in the US has taken away.

I dont know the history of how it came to be this way in the US, but as it stands, the situation is very geared towards getting mystery service - you dont know what you're allowed until you're refused, you dont know how much the service cost you until months later and even then in multiple bills from various hosiptals, doctors practices and specialists, and you have to ask for your records because you cannot keep them safe!

I have all my records from every treatment in India, but not one coherent,collated record of my last physical checkup in the US. There's something broken there.

This is why we need to completely get rid of health insurance in the US. If Hospitals could only charge the actual value for their services, and not the inflated insurance prices, the prices would be much lower.

One of my friends is a Doctor. He told me that they need to over-charge for services because of the insurance companies. If they charge $20 (the actual cost of the service), they might get $4 back from the insurance company. If they charge $100, they might get the $20 from the insurance company for the service. We need to cut out the middle man. It's basic economics.

The drug issue in the US is mostly the fault of the government. It takes hundreds of millions of dollars and 10+ years to get FDA approval. This stifles innovation and creates an environment where there are only a few players (IE: a monopoly). The result is ridiculous prices due to no competition.

If they charge $100, they might get the $20 from the insurance company - the remaining 80 goes to the insurance company?

> If they charge $100, they might get the $20 from the insurance company - the remaining 80 goes to the insurance company?

He's saying they bill for $100, and the insurance company decides to pay $20.

So where does the 80 go?

Mandating identical pricing for all customers [0], published price lists, and all-inclusive standardized line items based on services rendered (not costs incurred) could accomplish the similar thing. Unpaid bills for emergency (non-deniable) services would come from a general state fund, which would then recover from the debtor (or not).

Whatever the solution is, it's got to be stealthy enough to get past the "insurance" cartel. The grass roots demand for national Romneycare obviously came from legitimate problems, but the political machine twisted it into just further empowering the accounting-protection racketeers.

[0] Providers would still be free to set whatever prices they wanted, they just could not have different rates "negotiated" for different customers. And obviously accounting-skirting kickbacks would be illegal.

> Providers would still be free to set whatever price they wanted, they just could not have different rates "negotiated" for different customers

In theory, this could work in a totally free insurer market. Unfortunately, the current system relies on public insurers (Medicare/Medicaid) being able to set prices for their patients by fiat. Unless we required Medicare and Medicaid to accept providers' billing rates (which I could actually support, but would be a political non-starter), providers' prices can't be standardized.

However, even if that happened, there's the other problem of actually enforcing this. Prices are set by billing codes and collections of codes that are billed simultaneously, and they may not be linear[0]. There are 70,000 billing codes, which are far more insanely detailed than you could imagine[1]. Mathematically, it would always be easier to play tricks with the particular codes submitted for billing than it would be to prove any misconduct.

[0] So, billing for the sets {A, B} and {C} would not cost the same as {A, B, C}. Which is totally reasonable, because providing anesthesia (A) for a bronchotomy (B) is less complicated than providing anesthesia for a bronchotomy in which some complication (C) occurs during the surgery.

[1] e.g, G44.82: "headache associated with sexual activity"

But Medicare cannot dictate that a provider must provide services to Medicare, so the providers are obviously finding it beneficial to do so, right? If Medicare is paying only the variable costs and not the amortized fixed costs, this is a fundamental economic problem which must be fixed to have any hope of sanity.

I've heard of how complex the condition codes are, but an individual should not need to understand that system to make financial decisions. The entire problem here is essentially one of complexity, much of it necessary but much of it unnecessarily generated as time goes on. A person has a procedure done for straightforward reasons, possible complications are enumerable, and anything more complex can be billed on prepublished hourly rates and cost-plus for materials.

Individuals can only function as economic actors when they have understanding, with the current system being an abject failure of "nobody knows" as the end result of computers fighting computers.

> But Medicare cannot dictate that a provider must provide services to Medicare, so the providers are obviously finding it beneficial to do so, right?

That's not quite true. There are a lot of intersecting laws that, in their cumulative effect, all-but-require most inpatient providers to accept public insurance.

That said, the situation has gotten bad enough in recent years that some hospitals are openly trying to figure out a way to terminate service for Medicare patients. (The fact that this has been a discussion point for so long should give you an idea of how complicated it is to do so legally).

> If Medicare is paying only the variable costs and not the amortized fixed costs, this is a fundamental economic problem which must be fixed to have any hope of sanity.

I agree. But so far, there's little sign of hope.

> I've heard of how complex the condition codes are, but people should not need to understand that system to make financial decisions.

I'm not saying that patients would need to understand ICD-10 billing codes in order to make their own financial decisions; I'm saying that this would be a serious logistical challenge to enforce any sort of law mandating uniform pricing.

It's the same reason that every PC laptop you purchase has a thousand different model names and numbers, even though they're all 99% identical. They do that so that they can each get a different SKU (they are technically different products). So retailers can provide price-match guarantees with low risk of actually having to make good on that promise (you're unlikely to find the exact same SKU at a different retailer).

I can imagine hospitals being so large (and coupled with mandatory-service emergency rooms), that there would be a lot of hoops to extricate themselves. But smaller private providers surely make the choice more voluntarily. Tangentially, I'd venture that if billing and other deadweight overhead were actually reformed, current Medicare reimbursement rates would actually be quite profitable.

But regardless, either of the archetypical sane systems requires correct reimbursement rates. If not corrected in a functioning market, Medicare doesn't get services. If not corrected in a single-payer government system, then the hospitals go out of business. Healthcare cannot be reformed without solving this problem!

> It's the same reason that every PC laptop you purchase has a thousand different model names and numbers, even though they're all 99% identical

I too see this as another instance of the same general phenomenon (although obviously not as harmful). Computation is being wielded to generate unbounded complexity, to destroy individuals' ability to understand situations for making rational self-interested choices. If you want an even worse one, try buying toilet paper!

I'm not one to reactively say "there needs to be a law", but it seems if there is any economic function of government, it's to facilitate the understandability of transactions. Saner states already have "unit pricing" laws, and they're badly in need of updating to restore their usefulness.

I don't hold out hope given the dysfunctional state of government, so my only real hope is that we can build bottom-up technology to fight back by cutting through the artificial complexity, restoring individuals' economic ability. But that's clearly a long slog away.

>If Hospitals could only charge the actual value for their services, and not the inflated insurance prices, the prices would be much lower.

I don't quite understand how you're arguing using the term "basic economics" that Hospitals en-mass will leave money on the table in a capitalist economy.

> The drug issue in the US is mostly the fault of the government. It takes hundreds of millions of dollars and 10+ years to get FDA approval

Can you point to some jurisdictions where it does not take hundreds of millions to bring a drug to market.

> part of the success of medical tourism in India is the lack of stranglehold control over medical care by insurance companies. In India, I can: Get an estimate for service before it happens, and plan for it therefore, Pay for the service at the time of discharge with/without insurance

There are a lot of problems with the insurance industry in the US. The first two that you call out, though, are a bit more subtle, and have to do with the way medical billing has evolved in the US. (Medical billing is related to, but distinct from, insurance).

The reason that you can't get quotes beforehand is because the providers literally do not know what it will end up costing you. As I mentioned in another comment, Medicare effectively leans on private insurers (and uninsured patients[0]) to subsidize the costs of care delivery.

A simplified version: a certain lab test costs $100 from the manufacturers. Medicare decides to pay $80, and providers have no room to negotiate this. Let's say that, for a given hospital, Medicare patients comprise 50% of the patients (not unusual in certain areas). On average, the hospital has to make $120 on each of the other 50% of the patients just to cover the per-unit costs, before paying for the overhead of actually running and staffing a hospital.

So, they bill private insurers $400. They don't expect private insurers to pay $400/test, but they use this as a starting point. In the end, the private insurer (say, Aetna) will come back and say, "okay, we'll pay 200% of what Medicare reimburses, for all Aetna patients you administer this test to for the next year, if you stop sending us these bills"[1]. So, they strike a deal to pay $160/test[2]. That leaves $160-120 = $40 of revenue on 50% of the patients to pay for all the overhead, so hopefully the overhead can be limited to $20/unit, or the practice will go under[3].

Unfortunately, most hospitals can't present patients with different bills depending on their insurance status[4]. So, they present that bill for $400 to uninsured patients, not actually expecting that they'll pay the full amount. If you know this, you can tell them, "if you reduce the bill to $40, I'll pay in cash today." Unfortunately, most people don't know this.

So, the reason you can't get a quote in advance is that the doctor literally has no idea how much it will actually cost you. Because, even if they know your insurer, they don't know the details of your plan well enough to give you a precise quote. And the actual resulting price is only very indirectly related to how much it costs the provider.

[0] this second part - uninsured patients - is more an unintended consequence rather than the intended effect

[1] In reality, it's a bit more complicated, because it's not always set at the level of the insurer (ie, it's not always "all Aetna patients", but more likely "all ____ Aetna patients", which makes it more complicated.

[2] If you're really unlucky, the provider might even enter a capitated agreement with your insurer, in which case they receive a lump sum up-front without actually knowing how many tests they'll administer.

[3] Unsurprisingly, a lot of practices have gone under and been bought out by hospital networks in recent years (and hospitals have similarly gone under and been bought out by insurance companies).

[4] this is a combination of federal and state laws, as well as the infrastructure it would require

> If you know this, you can tell them, "if you reduce the bill to $40, I'll pay in cash today." Unfortunately, most people don't know this.

I've often heard this, but have recently been asking for cash prices for some routine services, and the responses I've gotten have been either "um, we don't do that", or just simply referencing their fake inflated prices.

It's probably different if you've already got an unpaid bill in front of you, especially for a larger procedure, and you're dealing with the billing skinjob rather than the receptionist. But that's still quite far from how sane transactions work.

> It's probably different if you've already got an unpaid bill in front of you, especially for a larger procedure, and you're dealing with the billing skinjob rather than the receptionist. But that's still quite far from how sane transactions work.

Yes, that's what I'm referring to - negotiating down a bill, as opposed to negotiating the price up front. This also is far more likely to work for inpatient services than outpatient services, and for large bills (4 or 5 figures) than small ones. I just chose $100 as the base to keep the numbers simple.

The reason is that hospitals would rather have you pay a small bill than risk having you default on the bill. Accounting-wise, the former is preferable, especially since they don't actually expect uninsured patients to pay the massive sticker price anyway. (That's not meant for patients; it's meant for negotiating with insurers, and it's only an unintended side-effect that uninsured patients end up having to see it).

The reason that you can't get quotes beforehand is because the providers literally do not know what it will end up costing you.

Because the system was design that way. Time and materials vs. fixed price. Most of the rest of the world is on fixed price. We seem to think that's a socialist (or communist, depending on who you talk with) idea.

The problem with T&M is there is no incentive to save money, when it wouldn't affect the outcome. That extra test? Sure! Want your "friend" to stand in with you in the operating theater, even though it adds $50k to the bill, no problem! (This last thing I read about... just mind blowing.)

> Most of the rest of the world is on fixed price

No, "most" of the rest of the world is very much not, either by number of countries or by population. The original post is specifically about cheap, high-quality care in India, where medical care is completely self-pay.

There are both advantages and disadvantages to capitation, though that's a digression from the main discussion.

You can't really call the US system "time and materials" either, as that would still imply some ahead-of-time insight into the pricing structure.

Thanks for this well thought out response. [4] is the killer clearly. My naive response as I read yours was: "Well, just have two rates, the medicare one and the regular one". But if laws prevent that...well then that's played straight into the insurance companies hand.

I find the concept of intellectual property and patents ridiculous.

What would be the benefit of granting IP over an invention or innovation to a corporation or a group of individuals versus releasing the knowledge under the public domain? Except the corporation or inventor(s) making money off of it, I can't think of anything significant. Instead, if the knowledge is made freely available under the public domain, the limitation becomes how well the innovation is used for the benefit of humanity instead of the limitation being access to the invention itself and IP.

Maybe the existence of IP and patents was important to get to the present as a way of rewarding innovation, but it's high time to look for a better model.

I know this is a very complex issue for which there are no simple answers or solutions, but a good starting point might be to think about a society where the motivation for innovation is not financial reward.

Taking the example of patented drugs, how is it justified to keep access to life saving drugs beyond the reach of most people(including people in developed nations)?

> how is it justified to keep access to life saving drugs beyond the reach of most people

Trivially. By asserting that without intellectual property protection those drugs wouldn't have been invented. I'm not arguing if that's true or not. But it's certainly how people justify it.

I'm going to copy and paste one of my favorite comments on copyright. From Judge Richard Posner. It's bit a of a wall of text; sorry. It's worth reading in it's entirety.

"A distinguishing characteristic of intellectual property is its "public good" aspect. While the cost of creating a work subject to copyright protection—for example, a book, movie, song, ballet, lithograph, map, business directory, or computer software program—is often high, the cost of reproducing the work, whether by the creator or by those to whom he has made it available, is often low. And once copies are available to others, it is often inexpensive for these users to make additional copies. If the copies made by the creator of the work are priced at or close to marginal cost, others may be discouraged from making copies, but the creator’s total revenues may not be sufficient to cover the cost of creating the work. Copyright protection—the right of the copyright’s owner to prevent others from making copies—trades off the costs of limiting access to a work against the benefits of providing incentives to create the work in the first place.

STRIKING THE CORRECT BALANCE BETWEEN ACCESS AND INCENTIVES IS THE CENTRAL PROBLEM IN COPYRIGHT LAW. [empaphsis added]

For copyright law to promote economic efficiency, its principal legal doctrines must, at least approximately, maximize the benefits from creating additional works minus both the losses from limiting access and the costs of administering copyright protection."

http://cyber.law.harvard.edu/IPCoop/89land1.html

One may argue that balance is way off right now. I would prefer to see a system in which there are lump sums by the government for a treatment development with certain performance characteristics.

And the government owns the rights afterwards. We should make pharma companies do work for hire.

>Trivially. By asserting that without intellectual property protection those drugs wouldn't have been invented

That isn't trivial. It's stupid. It's a completely non-disprovable argument.

Plenty of innovations are created where creators voluntarily yields their rights and plenty of others are probably not created because the creator of it (under employment) isn't hugely keen on creating yet more property for his or her employer to exploit.

hahahaha this place is going downhill. In fairness, maybe it's always been like this during the too-early/way-too-late timeframes.

Sorry, but the world ain't full of copyleft warriors. People put their name on patents, in no small part because they immediately subsequently put that patent on their resumes. Nobody is denying themselves earning power - cash money - in order to protect the public interest from their big bad provider of paychecks. Especially since the public interest, here, means "the companies competing with my provider of paychecks".

>Sorry, but the world ain't full of copyleft warriors

Linux is the most popular operating system. A legal ideology that presumes that could never happen is simply wrong.

Does it cost a billion dollars to bring a new flavor of Linux to market?

http://www.scientificamerican.com/article/cost-to-develop-ne...

The issue is that with medicine, it cost vast amounts of money to develop and test a medicine. If there was nothing making sure the investment would pay of, there would be much less money spent developing medicine.

I am not saying the system is perfect, and some companies push the prices to the ridiculous to exploit people in need, but removing medical patents altogether would require some other equally strong economic incentive to keep development rolling.

The prices pharma companies ask for is ridiculous and makes the drug unavailable to 90% of the people that need it.

if they priced their drug to make it more accessible they could easily make the development cost back by making money off the 90% they left to die or hunt for drugs on the Indian market.

There needs to be a balance between getting drugs to the people that need it and making a profit. Currently that balance is non existent and pharma companies charge ridiculous amounts knowing full well that us insurance companies will pay it.

You know how the rest of the planet feels when your insurance company refuses to pay for your drugs and you have to pay for it yourself.

Would you invest your money in a pharma company that returned below-the-market risk-adjusted returns?

No because the market is part of the problem. I would however invest (read as donate) in a non profit pharma with the sole goal of developing drugs and covering their development cost.

You can do that already, just donate to universities and public research institutions doing drug research.

Now, do you think that investors should be forced to invest in pharma companies offering lower-than-market returns?

I wouldn't be so sure about it. 8 years ago my dad was diagnosed with GIST, for which there was only one drug at the time - Glivec made by Novartis. He had to take 2 boxes a month, each one costing 5x the average national montly salary. Fortunately, the national health insurance in Poland covered the cost of the drug fully, so he never paid anything for it.

The point I am trying to make is that when he was diagnosed, there was 6 other people in Poland who have been diagnosed with the exact same type of cancer. By the time he died last year(thanks to Glivec he lived much longer than the original predicted 6-12 months with traditional chemotherapy) the total number of people with GIST in Poland taking Glivec was 30-40. That's in a country with 40 million citizens.

So sure, the drug is not affordable to pretty much anyone in Poland, if the national insurance wasn't paying for it. But even if it wasn't ultra-expensive, there still a very limited number of people who need it, so I can see why Novartis charges what they do to make at least some money back.

I doubt the insurance was actually paying the sticker price on that medicine anyway. It's all part of the illusion.

It's nationalised insurance. They don't need to mislead you to convince you there is a value in the service they provide. Since it's government the information is public. For example, when I buy medicine in France (also nationalised) it shows how much I pay and how much the government pays. So yes, they are paying whatever the receipt says.

If this is true, that is awful. That means nations are lining drug companies coffers for profit rather than just doing the research themselves and selling the fruits of research at the cost of manufacturing rather than arbitrarily insane prices due to state guaranteed monopolies.

No, the state negotiates as low price as possible because the national health service is given a certain budget that they have to fit in. The difference here is that in US your insurance company might say that they will pay 50% and you have to pay the remaining 50%. In Poland the national health service would never offer you such a deal. Either it's fully covered or it's not offered at all. Therefore companies are willing to lower their prices so that the government accepts their medicine at all, rather than having it rejected and not offered at any of the hospitals.

And the last time I checked the treatment with Glivec is a lot more expensive in US than it is here, so this system must be working at least partially.

We already have publicly funded research, which is an altogether more effective way of developing new medicines anyway.

Nonsense, disregarding the pink elephant in the room (reproducibility in academia) once a method has shown potential it is often spun off into some sort startup (often SBR recipients). If they keep gaining clout, a bigger pharmaceutical will buy them out. New medicines are developed 10% by a university and 90% by industry.

Not 90%. 58%. According to JAMA.

https://jama.jamanetwork.com/article.aspx?articleid=185198

When the public funds drug research it also doesn't "magically" discover that its drugs are really effective when they aren't:

http://articles.mercola.com/sites/articles/archive/2006/06/1...

You're seriously going to post Mercola on HN?

Yes, go ahead and down vote me for flagging links to a quack's website.

Please don't post comments about getting downvoted: https://news.ycombinator.com/newsguidelines.html

The comment was unsubstantive and dismissive. If there's something wrong with a source, it would be better to explain what that is instead of just snarking, which (a) undermines civility and (b) teaches us nothing.

Very well. Joseph Mercola[1] to put it politely, is not burdened by objective reproduction of claimed results when hawking his alternative remedies.

[1] https://en.wikipedia.org/wiki/Joseph_Mercola

If you're going to disagree with the source, disagree with the source, not the website that cited the source:

"Researchers from the Beth Israel Medical Center in New York City examined four journals: American Journal of Psychiatry, Archives of General Psychiatry, Journal of Clinical Psychiatry and Journal of Clinical Psychopharmacology. They found drugs were favored in roughly:"

Is Beth Israel full of quacks?

I doubt it, but since Mercola didn't link me to their meta-study I can't find the reference directly. It's not the JAMA link that was in the OP.

Actually when the public funds drug research it's often not reproducible 1. From personal experience the number of times when the work isn't a fabrication is less than the number of fingers on my right hand.

1 http://blog.scienceexchange.com/2012/04/the-need-for-reprodu...

And the university likely pockets a nice little "non-profit"

> which is an altogether more effective way of developing new medicines anyway

I would like to believe that, but have you got any data to back this point? How many new medicines are developed by public research?

See the downvoted answer below for citations.

Developing the actual therapeutic is a very different endeavor, not one that academic institutions are well set up for. You need to do pre-clinical studies on efficacy and toxicity, modify your drug to make sure your animal models work, then scale that to humans including engineering the right delivery format, dosage, etc. that process for the most part is inefficient, expensive, and has a high rate of failure.

I think you're missing the point on both the money and the patent laws in India. According to the article "Successive governments have taken a view that patents should be granted only for major innovations, not updates to existing compounds — allowing domestic manufacturers to make generic versions of drugs at vastly lower cost." - which basically means you get a patent for real innovation, not minor cosmetic changes to keep your cash flow going.

The second - "Pharmaceutical firms say India’s disregard for patents will stifle innovation or make drugs commercially unfeasible — Gilead paid $11 billion to buy the developer of Sovaldi in 2012."

Note that it didn't cost $11B to research the drug but what it cost to buy the company. It is disingenuous to claim that their R&D cost is that high.

Not sure how much it cost to develop Sovaldi, but in general it costs $1-2Bn and ~10-12 years to develop a drug and only 1% of drugs in pipeline actually reach the market. So $11b seems a reasonable cost to assume.

That $1-2 billion figure pharmaceutical companies like to throw out is the risk adjusted cost, which includes all of the failed drugs and clinical trials for each successful product. The acquisition price for Pharmasset included Sovaldi and several other drugs.

> The issue is that with medicine, it cost vast amounts of money to develop and test a medicine.

If that is the real issue, then subsidize the costs of clinical research, instead of accepting that everyone pays the price of drugs 10 times what they should cost.

There's an international co-ordination problem there. National governments don't want to foot the bill for research that the whole world needs.

You can make an international body (or use the WHO) to fund such clinical trials then. It's not like we lack global organizations either.

UN budget around 5.5bn$ for two years, WHO around 4bn$. Not enough by a long way if drugs are costing 1-2bn$ to develop.

So instead nations still foot the bill for research. The draconian US patent system proportedly produces more drug R&D than elsewhere, but where are those patents applicable?

The US, and anyone agreeing to honor its patents.

Everyone else gets free drug R&D without anything close to international discourse on funding drug research, because its privatized and thus in the scope of trade law.

Even better, the drug patent system means novel treatments are being developed for life threatening conditions that the suffers are disproportionately unlikely to be able to afford ("The Sick", as a demographic, are much poorer than average for obvious reasons). So not only are you subsidizing global drug research, you are doing it on the backs of the poor.

That kind of command and control economy was tried in many countries (the whole Soviet block) and pretty much failed spectacularly every single time.

> Except the corporation or inventor(s) making money off of it, I can't think of anything significant.

But, that alone is significant enough to justify most intellectual property: patents, copyright, etc. But, it's not nearly enough to justify a patent system that allows you to patent absolutely obvious bullshit then turn around and sue everyone. And, it doesn't justify our copyright system either, with insane terms which span centuries.

So I would agree that it's an open question whether the way we do intellectual property now is better than absolutely nothing i.e. everything publicly known is automatically public domain. I suspect we'd be better off with no patents and no copyright, than with what we have now. But intellectual property in theory and properly implemented, is unquestionably a fine idea, and obviously far superior both to the shit show we have now, and also to a Wild West approach.

Anyway, it's not like you need patents to gouge patients cf epipen, insulin, where patents ran out decades ago and yet, strangely, stuff that costs a few dollars to actually make, is priced in the hundreds of dollars.

> But, that alone is significant enough to justify most intellectual property: patents, copyright, etc.

No, certainly not. Guaranteeing corporate profits are never a justifiable reason to restrict freedom of information so severely.

You do not need a patent on plastic forks to make money selling them. If there is demand, the floating price will be above the price of manufacture, and the economy is incentivized to meet that demand. If drug recipes were not patented, and there was demand for a drug, once the profit overcomes opportunity cost everyone in industry has incentive to start meeting the demand.

Plenty of arguments exist in this thread why you do not need private for-profit research to discover medicine - and why in many ways having such a system is counter-productive in the first place (the industry consistently refuses to consider anything as a product they cannot patent - and will actively harm people by not selling products they know work but that they cannot guarantee long-term monopoly on).

Yes, certainly. And OP said corporation or inventor.

As long as we're doing capitalism, we ought to have a way for people to make a living off of knowledge work and the arts. Not selling physical artifacts of knowledge work, or making some sort of other derivative income off of it, but profiting directly from the generation and POC of good ideas. It is a system that served us well for one hundred years or more before being hijacked by a pack of ruthless jackals - I probably agree that if we can't fix it it's better to tear it down, but we should still try to fix it.

This should be a HN FAQ because every time the topic comes up, someone makes your invalid argument. Well, it's not really an argument but more of the sympathy card.

It cost billions to develop a drug and pennies to make it. Can you explain the business model where companies don't go out of business and research dries up? India is creating drug resistant bacteria because antibiotics are so overused.

http://www.nytimes.com/2014/12/04/world/asia/superbugs-kill-...

Who's going to pay for the research needed to prevent a pandemic?

I'm going to write a blog so this question doesn't need to be answered every couple of months.

How about India with a million people turning 18 every month (https://news.ycombinator.com/item?id=11232383), develop a drug industry to create better and cheaper new drugs, while creating great jobs for people who need them?

Of course, if you simply give away everyone's work, no company is going to stay in business.

My point was that innovation and financial reward need to be decoupled to ensure valuable knowledge is not locked behind IP.

> Of course, if you simply give away everyone's work, no company is going to stay in business.

To think about a future without ridiculous restrictions on access to knowledge(which IP law promotes implicitly), it is important to stop accepting the status quo in which innovation and financial reward are directly linked.

You seem to accept the reality that innovation has to be linked to financial reward by gaining exclusive rights over the invention using IP laws,which,respectfully,is preposterous.

Can you provide some concrete examples of the business model, and how it works? Perhaps some new agile startups could disrupt big pharma.

You can't realistically expect people to accept that you have a better plan without offering real evidence that it works.

I don't claim to have a magical solution for the problems but what I can do is get people talking about the current system and potential solutions. Isn't that the first step towards solving any problem?

I plan to share some of my thoughts and potential solutions in a blog post, and I will be sure to share it here.

> Who's going to pay for the research needed to prevent a pandemic?

Actually given that this is a real threat, someone will. Even if only to save themselves.

And because they'd have extreme problems if they saved only themselves, rather than the entire civilization supporting them, they'll make it available to others too.

Yes this is hardball negotiating 101 : if doing something solves a strategic risk for someone, don't pay them a dime to do it. You may even consider making it more expensive for them to do, if that provides you with an advantage.

Might be unrelated to the topic but I don't understand how you came up with the summation "India is creating a drug resistant bacteria because antibiotics are overused" from that nytimes article. The same article also mentions that the overuse of antibiotics in US factory farms has also lead to outbreaks of drug-resistant diseases in recent years. Yes it mentions that there's been a clampdown from 2000 to 2010, but I am skeptical of accepting this fact without numbers. Can I go ahead and say that US will be responsible for creating drug resistant bacteria?

You may not know this, but one of the major outbreaks of drug-resistant superbugs is because of Indian drug manufacturers exploiting lax environmental laws to dump anti-bacterial refuse into village waterways. A large number of these manufacturers are contracted by US big pharma because it is much cheaper to produce (even patent-protected) drugs in India. If you're interested, here's the bad medicine report on it https://s3.amazonaws.com/s3.sumofus.org/images/BAD_MEDICINE_....

My point is no one country or entity can be blamed for the rise of superbugs. The problem is systemic and it needs us to step out of our reductionist paradigm to solve it.

> I find the concept of intellectual property and patents ridiculous.

I think what's more ridiculous is that the patent system was not made, in the first place, to lock competition out of the market. It was supposed to be a starting point to create licenses for other companies to produce the same item, by providing royalty fees to the original patent owner.

But the system has quickly become a way to create rents and lock competitors out of the market. Short of fixing patents by making them shorter and all, we should find a way to market licenses at reasonable costs so that alternatives exist even during patent protection.

The problem is not in patents or capitalism, but in perpetual extension of intellectual property in a Disney-like fashion. The point of "Cyclical" is that there is a cycle - a life-cycle of development, then intellectual monopoly and finally general availability. Sovaldi's patent should have expired in 2012, and Martin Shreli's Daraprim's patent should have expired in 1973. Perpetual extension simply abuses the system, and the stories like in the original article are just a reflection of system's abuse, not the flaw of the idea of protecting intellectual property in the first place.

Not to mention the FDA holding back generic drug approvals. They've got a backlog of generics awaiting approval that is over 4,000 now (they like to white lie and say they've "acted" on many of those, which of course isn't the same thing as an approval).

Wow. How hasn't AARP raised hell about this? Maybe they aren't the most powerful lobbying organization in America after all.

There's no patent keeping other companies from producing Daraprim equivalents for sale in the US, it's just that no generic maker had bothered to setup an FDA approved production process.

There's a few thousand people using it in the US, so there isn't a huge market for it.

Medicare is a big enough consumer that it should probably be running a program where it shares risk with generic makers that are willing to produce drugs that don't cost a lot, as long as the company maintains quality. Basically, make sure that line start up and regulatory costs aren't preventing $1 pills for rare conditions coming to market.

> Medicare is a big enough consumer that it should probably be running a program where it shares risk with generic makers

Perhaps, but Medicare has literally no incentive to do this.

It's one thing to posit that a monopsony or oligopsony could result in driving prices down. And in a closed system, that might be what happens[0].

But at the end of the day, Medicare has no mandate to ensure sustainability of reimbursement and payment rates. Since they can't raise revenues (taxes) without Congress, they balance the budget by driving reimbursements (for service providers) down below cost. Pharmaceutical companies are actually affected by this too, but because the big-ticket items are under monopoly protection (via drug patents), unlike care delivery, Medicare still has to pay sticker price for those.

The people who end up being hurt by this, by the way, are not Medicare patients, but uninsured patients and privately-insured patients.

[0] But not always - like a monopoly, a monopsony can choose price or quantity, but not both.

Medicare the-thing-run-by-Congress has incentive to do it. At least, in theory, as Congress should be looking to create regulations that are beneficial to taxpayers (Medicare isn't going away, therefore cost controls benefit taxpayers).

To the extent that I understand it, I agree that Medicare the-thing-run-by-statute doesn't currently have much incentive to do it.

I guess I could have said something about federal programs that run huge public health providers being structured to use market based policies to reduce costs, but I'm prone to colloquialisms (i.e., the pretense that Medicare isn't limited to existing statute, it can be amended to act differently).

> At least, in theory, as Congress should be looking to create regulations that are beneficial to taxpayers

In theory, theory and practice are the same. In practice, they aren't.

It's one thing to talk about structuring government programs so that they are obligated to serve the public interest no matter what. But actually implementing that, in a manner ensured to be robust against creeping scope, capture, and corruption, is damn-near impossible.

In theory, theory and practice are the same. In practice, they aren't.

If I was naive to that, why would I start the sentence with that caveat?

> If I was naive to that, why would I start the sentence with that caveat?

I didn't say you were. I was expanding on the point, naming the specific challenges to the process.

Patents are not perpetually extended, Disney-style. Only copyrights are. Daraprim is not under patent.

The issue with Shkreli is purely exploitation of bad FDA rules, not patents. The FDA is the problem here.

The issue with Shkreli is that he broke the gentlemen's agreement arount low-volume drugs. Derek Lowe talks about it from time to time.

The FDA insisting that drugs conform to standards of purity and activity isn't the problem here. When you talk to someone who is working in pill manufacturing you'll learn that it is a complex process. The thing must reliably disintegrate in the digestive tract, the active substance must be distributed evenly, excipients do influence bioavailability - just as with Theranos the standards exist for a reason.

The ecosystem around low-volume drugs is strange. Perhaps it would be best for the NIH to open up their own facility, just because of the bad press that Pharma Bro caused for the whole industry.

I'm not disputing the existence of safety/efficacy standards. I'm disputing the implementation.

A "gentlemen's agreement" is bound to disintegrate - it's just begging for someone to defect. If regulatory mechanisms allow exploits like this they are clearly broken.

Of course it's unlikely the FDA will fix this since their incentives are just as broken. If they prevent millions of people from getting potentially lifesaving drugs they keep their jobs. But if a few photogenic babies die due to a drug that they approved, congressional inquiry incoming!

Since we are talking orphan drugs that are no longer under patent, they do look like a natural monopoly to me, and there are tools in the economic toolbox to handle these. Regulated utilities show how it's done.

There is no need for FDA dissing here. What "photogenic babies" are you even talking about? And who are the "millions of people"? We are talking orphan drugs! Do you have any examples or nothing beyond rhetoric?

The biggest problem facing R & D in the phrmaceutical industry is that incentives for investment that the market provides are completely at odds to what is needed on the ground.

Since you claim these drugs are a natural monopoly, what prevents a competitor from producing them?

I'm discussing the fact that the FDA has incentives misaligned with the public good. If they approve X and something bad happens, they get heat from Congress and the media. If they reject something unnecessarily no one cares.

The biggest problem facing R & D in the phrmaceutical industry is that incentives for investment that the market provides are completely at odds to what is needed on the ground.

Could you explain this claim?

It's well-known in the trade that there is an upcoming public health crisis because of antibiotic resistance, yet the biggest research efforts go to cancer drugs because that's what provides the highest return on investment. Hell, I am on cancer money, but what we really need is new antibiotics! Also, no one wants to introduce any new class of drug to the market because the research effort is too expensive and the market does not exist. The market in current statins is so much bigger than it was when Merck introduced the first one, and they had to go and verify the target, the mechanism, everything. Merck did all that for every other competitor that wants to bring another statin to market.

It really is the financing model that is opposed to the public good. People will admit it freely. And the heat that the FDA gets when something slips past them is incomparably smaller than the heat the pharmco gets. Anyone remember Vioxx and the cardiac side effects?

The FDA's incentives are aligned with the public good. There are already drugs for most conditions, and if there is anything that performs outstandingly well in clinical trials there is the fast track.

As for the natural monopoly, it's a fact that the number of manufacturers for any given drug is surprisingly small. For orphan drug the market is so small that it's inevitably just one manufacturer. The upfront costs to qualify equivalence are just a contributor.

Anecdata, size 2, from India:

My uncle (who had a device implanted 4 years ago to regulate his heartbeat) went into the ER one of the premium hospitals in our city (Fortis). He was having some weird symptoms, and his blood sugar was off. They strongly recommended that they upgrade his device to a pacemaker! (A highly expensive procedure). When my cousins refused, the hospital pumped him full of insulin and discharged him. He came home and relapsed again. This time he was taken to another hospital, and the problem was some infection in his kidney.

Another cousin: had a severe pain in his stomach area. Went to a hospital, they injected him with a painkiller and let him go. Pain continued: he went to another, same deal. Finally he got to a third hospital, and they diagnosed the problem: kidney stone.

There's caveat emptor for Indian hospitals. Be careful.

This is true. The big "chain" hospitals do have pushy tactics, doctors with lab prescription quotas etc. Similarly, but at the other end of the spectrum, there are hospitals in smaller towns that mistreat you or send you off with painkillers.

Clearly, your mileage will vary, so you have to do research, ie, talk to people you trust, much like everything else in India :)

I've had good experience with big "chain" hospitals, be it Apollo, Columbia Asia, Wockhardt, or whatever else. I never found them pushy. One of the docs from there quit and opened his own clinic. He doesn't even charge me for consultation. Don't know why.

Of course, doing your own research is critically important. Many doctors are dangerously ignorant of anything that doesn't come under their specialty.

>>There's caveat emptor for Indian hospitals. Be careful.

Yes, as an Indian I can confirm this. Medical Malpractice is a big think in India. What makes it possible is doctors can get away from it. Any kind of criticism is not tolerated by the medical fraternity. Remember that program by Aamir Khan in Satyamev Jayate. There was a tremendous backlash from doctors as though it was their birth right to cheat.

A few things that ordinary Indians have to undergo everyday.

1. Doctors running polyclinics in areas they have no specialization in.

2. Polyclinics running mini-labs. To sustain which, doctors order pointless tests(especially blood work) which might not even be needed.

3. Commission deals with local pharmacy stores, so that they prescribe brands only available at that pharmacy in exchange for a commission.

4. Prolonging treatment to maximize net consultation fees. Prescribing drugs/tests to boost their commission.

5. Tests claimed to be done, which aren't. Also known as the 'basin test'. Collect the patients blood and throw it in the basic, cook up artificial numbers to make it look normal.

6. A while back I visited a hospital with my mom for arthritis. To my surprise they ordered an X-ray. Nurse tells us X-ray is the regular routine no matter what patient walks into the department. The Orthopedic apparently thinks its the best way for him to recover his money invested on a X-ray machine. Same goes for colonoscopy/MRI/CAT scan and other complicated tests.

7. In government hospitals nurses routinely ask for bribes from poor patients. Administering euthanasia for burn victims especially from poor families who can't afford long term health care in return for a bribe is common.

The list can go on and on...

I know a colleague who was verbally abused by a doctor for being 'a little intelligent', it was almost like he was furious the patient was resisting being cheated.

Foreign nationals may not face all this as they go to top line hospitals. But the ordinary Indian continues to suffer at these people's hand.

Im curious what is stopping some other countries (even micro-nations) from instituting a policy that forfeits all patents on medication.

Lets say you take the country of Saint Lucia- Could they not spur the economy (among the lowest in the world by GDP) by saying any company can manufacture any existing drug and sell it? I feel like the medical tourism for that could be extreme, especially since there is still many treatments india still does respect the patent for.

If the country put it in their constitution that all drugs should be a human right, could a legal action be taken against the country itself? I imagine the only recourse would be the pharma companies trying to force legislation in other countries to bring sanctions, but I think that would be a hard sell.

Such a country wouldn't get admission to the WTO and would have a very hard time trading with the other countries in it.

It would also amount to state endorsed IP theft.

Theft is such a strong word. If you control the language, you control the world.

to nitpick, that is exactly what you are doing.

rhetoric goes both ways. or to put it another way, fighting fire with fire.

> Such a country wouldn't get admission to the WTO

As opposed to what we do when we invade and bomb/drone other countries? As opposed to what we did when we engineer coups in resource rich countries? Come on. Let me guess, you're buying into the idea that generics hurt RnD. Let me assure you, having worked briefly in a pharma RnD lab, the bulk of big pharmas expenditures are on marketing and bribes, NOT RnD. Here's a recent headline: http://www.statnews.com/pharmalot/2016/02/22/novartis-south-...

You'll find similar bribery cases with GSK, Pfizer, etc.

>> Such a country wouldn't get admission to the WTO

> As opposed to what we do when we invade and bomb/drone other countries?

I don't think the parent supports the action, but merely stating the likely outcome, realpolitik and all. S/he is answering gp's question: "What is stopping some other countries (even micro-nations) from instituting a policy that forfeits all patents on medication"

The answer, in short, is leverage: smaller countries can be pressured into not even considering it - because of the consequences. India can do this because it is better able to withstand the hypothetical political pressure.

Trade treaties. Saint Lucia wants to trade with bigger countries. Those countries may not want to trade back if Saint Lucia goes out of their way to reproduce intellectual property.

Could legal action be taken? If Saint Lucia signed a treaty that defined rules for such an action.

Also, selling a drug for any price smells an awful lot like capitalism. Some folks would rather the government set prices. Hey, I wonder what happens if a company sells bad drugs that hurts people? The government should impose regulations. Hrm I bet that would drive costs up. Maybe drug companies need some financial incentives to help cover those costs? .... Wait a second!

I dunno about legal action but I could sure imagine individual pharma companies (and other primarily IP-related industries with heavy R&D costs) deciding not to sell products there ever again.

WTO, American sanctions, American coups, CIA, to name a few. Also India actually manufacturers these drugs, and most of them should be generic because they have been around for a long time. Small nations would not be able to manufacture them the same way India does.

Seconded.

Also Saint Lucia doesn't have the clout as India when it comes to global trade.

Is India that clouted?

In some cases, yes. You've to realize that each country in the WTO picks which battles to fight and which one's to let go.

For example, when Novartis lost the case, in Indian supreme courts, to ban the production of Gleevec (a Cancer drug) by Indian generic makers, they could've taken the arbitration to the WTO. However, this would mean terrible PR for both Novartis and US. Instead, PhRMA (a trade group for big pharma) and Novartis decided to let this one lie.

However, the US did recently challenge India's decision to force LCR (local content requirement) in it's push to use more solar energy in the country. USA, which is one of the biggest exporters of solar panels to India, successfully fought this decision.

I feel, in the end, the WTO is like any other court where two big conglomerates go head-to-head. Each one does not want to piss off the other to a great extent. And settlements are preferred over outright fights.

This only works for countries that create no drugs, so they can benefit from companies in other countries spending the billions required to create new drugs, without any spending.

Not to mention that every single Pharma company would stop all R&D investment in about 5 seconds.

Would you invest your own money in a Pharma company if there were no drug patents?

Maybe we shouldn't let Pharma companies do the R&D and then pay for it via expensive heathcare. Maybe we should take the money and directly fund research and make the results free for everyone.

"Take the money directly"

Whose money? The investor's?

"Maybe we should take the money and directly fund research and make the results free for everyone."

And that would be more efficient than letting companies compete for funding from investors?

This sort of logic does not really work for drugs or even for science. Business processes like management, cost cutting, harassment, implicit and explicit threats, don't really produce better or more accurate results. Or lead to cures or drugs faster. Usually you have a single star scientist with his team working his ass off to get to an understanding or cure, and he or she is not usually doing it for money. Business does not really work with science, it corrupts science and forces an unnatural order on it which we pay for as a society.

Which sort of logic? I'm not defending that only pharma companies should do R&D, I'm defending that we shouldn't restrict R&D to government.

And on your point, do governments distort science less than business?

Well in the name of freedom anyone can and should be able to do science. And anyone may legitimately come up with a cure. But seldom do we see that happen. Instead we usually see incremental progress on existing knowledge, which is then used to do regulatory capture of some given drug. Do governments distort science less, well they don't partake in this sort of scientific charade as profit motivated corporations do. They also don't have any incentive to push drugs for massive profit that they know don't work that well or cause certain side-effects.

But politicians have massive other incentives: supporting their ideology, religious beliefs, power structures, etc.

Between someone motivated purely by profit, and a politician, I trust the profit-driven person far more. Their intentions are completely clear unlike a politician's.

When it comes to supporting science they have only two choices, to fund it or not to fund it. So distortions would only come from them not funding something. The other stuff, I don't know how it applies to science funding. In case of not funding, I think there is enough spectrum of thought between liberals and conservatives to cover funding most causes if possible.

No, there's the decision of what to fund, and who to fund in each field. You could easily fund a group with anti-GMO views, or fund a group with pro-GMO views.

It gets even trickier when you add global warming, abortion, mental health, etc. into the options.

You're going to have to prove that dramatic claim.

I say that business works extraordinarily well with science and is superior to eg government research by a great margin. As proven by Bell Labs, IBM research, Xerox PARC, Microsoft research, Google, Lockheed, Apple, Shockley, Intel, Fairchild, Samsung, Cisco, Texas Instruments, Boeing, Pfizer, Merck, Amgen, Gilead, Genentech, Standard Oil (one of the first highly successful commercial research labs), and thousands of other corporations. Even if those companies didn't always capitalize on their research, they produced tremendous science. The technology lead the US has enjoyed for most of a century proves this fact, as it is heavily (not solely) derived from the scientific output of its corporations.

The US became by far the world leader on pharma and biotech specifically because a business, profit-seeking approach to those industries produces a dramatically greater outcome in terms of innovation.

If that weren't the case, the US would be dead last in pharma and biotech over the last 50 years, given its market approach.

It works well to commercialize existing knowledge, or take some existing knowledge that is 80% complete and then do the other 20%. Business is good as capturing value, not at creating it. In terms of technology it's much the same, the people who created the knowledge often did not benefit from it... someone else did. The ones who did benefit were scientists first in usually a university environment who then sought to commercialize their inventions and formed corporations to do that. Businesses often do not discover these things they commercialized, and maybe it's right to say that some things may not have been as profitable if not for business. And maybe some things would not have been properly commercialized.

Again, you'll need some very good sources to back that up. There are far too many bold and controversial claims, until then, that's just like, your opinion man.

The money health insurance currently pays to pharma companies. It might not be more efficient than the current model (but maybe it is, I'm not very knowledgeable about the current process), but I think it would be fairer.

It might also have the side effect that we'd get more drugs that are currently not produced because it wouldn't profitable (eg antibiotics) and fewer drugs with dubious efficacy that are very profitable (eg anti-depressants).

That's a good point, more relevant to the US than RoW, but still a good point. The main issue is that you run into a chicken/egg problem: to lower the cost the government needs to develop alternative drugs, but won't have the money to do so unless you lower the cost.

"It [is] fallacious to assume that only the cost of R&D is reflected in the price of a drug. The hidden cost of marketing is a great contributor to figures quoted."

https://www.kent.ac.uk/law/ip/resources/ip_dissertations/200...

I never assumed that, but someone has to pay for the cost of R&D, please explain who would pay the 200 billion dollars in annual pharma R&D that companies invest when all countries outlaw patents.

Taxpayers?

> Would you invest your own money in a Pharma company if there were no drug patents?

India does not disagree with drug patents, from the article: "Successive governments have taken a view that patents should be granted only for major innovations, not updates to existing compounds."

Pharma companies are notorious for extending patents (in perpetuity) by adding small 'updates' to existing compounds when the patent nears expiry. This is rather similar to Disney's strategy: get copyright period extended right before Mickey Mouse is about to enter the public domain.

Sure, I'm all for patent and copyright reform, but that's not what OP is suggesting.

And in one way or another someone has to pay for R&D.

because you need leverage to pull it off - just like refusing to sign the Paris Climate Treaty or the Nuclear Non-Proliferation Treaty.

India has a long history of Non Alignment and trade blockades going back 50 years.... but most importantly has huge economic leverage right now, only second to China (in Asia).

In fact, my personal bet is on Iran to be able to do something like this - they have a sizeable youth and good education systems... as well as a long history of leverage against the west . If only they get rid of their religious constitution.

> If only they get rid of their religious constitution

Apply that to any situation in any country in the middle east.

"Im curious what is stopping some other countries (even micro-nations) from instituting a policy that forfeits all patents on medication."

Simple answer: The US will invade that country in no time, or give millions or billions of dollars to support those against the Government in the country to instability the country.

They do it with Syria(they gave hundreds of millions of dollars in weapons to "moderate rebels" to start a war against Assad, Saudi Arabia gave billions or Ukraine(they gave 6 billion dollars to opposition), that are reasonable big countries. They can wipe out any small country that dare to go against US national interest.

With India, South Africa there was death threats, and killings,lots of money under the table and blackmailing of people in Government and finally economic sanctions.

If someone puts something on a paper it does not matter unless that someone has the means to protect what is in the paper.

Native Indians had the right to own the American land because it was the land of their fathers and grandfathers but the white man had repetition rifles and railroads.

The economist Dean Baker has been vocal for years about the benefits of free trade on medicine. [0] (of many)

But while the powers-that-be are fine with free trade for cars, cheap clothing, electronics, etc. or exporting American manufacturing jobs overseas, it's a different tune all the sudden when you try to do the same thing to powerful industries, like doctors or lawyers.

[0]http://www.cato.org/publications/cato-online-forum/doctors-d...

Are you claiming that the American car lobby is not powerful? You might need a history refresher on how (for example) "voluntary export restraints" came to be a thing:

https://en.wikipedia.org/wiki/Voluntary_export_restraints#19...

But they've been fighting that battle for close to 50 years and losing.

Feels like there should be some kind of website or service that tracks these drug price arbitrage / differences.

Don't have to go all the way to India if you live in the US. Mexico is close by. And soon, Cuba will be even closer for some.

People wer exporting them from Canada, but big pharma lobbied for bans (http://news.healingwell.com/index.php?p=news1&id=526618). Anywhere close to US mainland, especially Mexico, I am afraid, will meet with the same fate.

Cuba's a different story as they just tell US lawmakers to fuck off.

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