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Comment by jan_g | Hacker News Reader

I may be completely off the mark, but I think that the cost of research may be hidden somewhere in all those huge numbers . US is making breakthroughs all the time in drugs, medical machinery/equipment, IT in medicine, disease discovery & prevention, etc. For example, HPV vaccine came from the US (I know about this, because my daughter will be vaccinated when she reaches teenage period).

Much of the rest of the world is piggybacking on US. That's my opinion. I am from Europe.

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I don't think it's hidden at all. He says in the Drugs section...

"The problem is that our drugs, on the whole, cost about 50% more. For name brand pharmaceuticals, we pay about 77% more. Why? Some will say that it’s because we’re wealthier and need to subsidize for the rest of the world. But even if we paid more based on our relative wealth, it would come to about a 30% premium, not the 77% we do pay."

So the problem is obvious. The issue is how to fix it. We in the U.S. can either enforce our own price controls which will break the system or we can force U.S. companies to charge more to other countries and take the chance of denying medicine to sick people because foreign governments won't accept the higher prices.

Not an attractive choice no matter how you slice it.

Okay, I understand how it would be possible (not agreeing) to "enforce our own price controls", but how can the U.S force it's companies to charge more to other countries?

If we placed an export tariff on these pharmaceuticals, I fail to see how that could decrease pharmaceutical prices in the US.

Japanese car companies moved production here, why couldn't big pharma do the same?

I don't see two options.

Or we can tell companies to charge amicably across the board else they risk losing patents on drugs sold to Americans at grossly inflated rates. A drug patent should give a company the right to sell/license the drug, not the right to gouge people with it.

Clearly this lacks details, but the concept would work after the first few nullified patents.

> Clearly this lacks details, but the concept would work after the first few nullified patents.

Of course it will "work", but are you sure that you'll be happy with the result?

Some other countries have said exactly that, the result being that folks in those countries are paying production costs but not R&D costs. If the drug companies can't recover R&D costs in the US, how do you think that the R&D costs will be paid?

If they don't think that they'll be able to recover R&D costs, what do you think that they'll do?

If you think that they can charge less and recover their costs, why don't you do so and drive them out of biz?

It's interesting that you mention the HPV vaccine. It's extremely expensive, although that's not entirely based on the research costs.

"Gardasil took more than 20 years to develop, is complex to manufacture, and must be constantly refrigerated, but that’s not why it’s so expensive. Instead, Merck calculated the price based on the money the vaccine will save the entire health-care system—and the CDC approved the price, as it does with other vaccines."

http://discovermagazine.com/2007/jun/hpv

The private-sector research costs in that case were also mainly the commercialization/manufacturing research, not the basic R&D. Still significant, but Merck didn't discover the vaccine or do the basic science; that was done by a group of several universities working with the National Cancer Center.

So the price is based on the value more than the cost. As the patent expires or competitors develop their HPV vaccines the price will fall.

About 60% of new drugs come from the US. And there are only a couple of new molecules discovered every year, mostly it's just about repurposing existing drugs because this much cheaper. More money goes to marketing. So, that's not it.

More money goes to marketing only in the accounting sense. Drug companies give away lots of free samples which they list on their balance sheet sheet at retail price (for tax purposes).

Incidentally, a "drug" isn't the same thing as a "molecule". A drug is a molecule, together with efficacy tests, manufacturing process, delivery system, safety tests, distribution protocols and educational ("marketing") material. A molecule is barely more than a drug idea.

[edit: just a thought, this is probably a form of price discrimination as well. According to a few uninsured people I know, doctors tend to give the free samples to people who can't afford the medicine. ]

Concerning drugs. I was thinking in broader terms, not just the cost of scientists' salaries and laboratiry equipment, but also cost of clinical trials, approval process under various countries' regulators, marketing.

This is true, but it only accounts for a very small slice of the over-spending pie. This is outlined throughout the series of blog posts. I recommended reading all of the posts in the series, it is well worth it.

I think there may be some truth to this. Even when the developing company is European, they often rely on the American market to fund much of the research.

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