This will slow down the speed of pharmaceutical development. So I think it needs to be paired with reforms to the FDA to reduce the go to market costs for drugs.
“A study has placed the amount spent on drug marketing at 2-19 times that on drug research”
Maybe this should be reduced first?
That's a non-sequitur. Companies have no incentive to spend any more on marketing than they have to. Tech companies also spend more on marketing than R&D--would innovation increase if the government forced that number downward?
We’ve tried the free market way, let’s try it the “rest of the developed world way” next.
Marketing does not only include direct-to-consumer advertising.
> Does the rest of the world not innovate?
Pharmaceuticals are a global market. As it turns out, European pharmaceutical companies make a disproportionate share of their revenues from pharmaceutical sales in the US.
But to answer your question: statistically, no, the rest of the world doesn't innovate. Half of all pharmaceutical R&D costs in the entire world are funded by the US. That share has dropped slightly in recent years, but not because the "rest of the developed world" has been increasing their funding: it's because India and China have been rapidly expanding their R&D.
The other flavor bribes doctors to overprescribe - it is much worse.
If marketing has a return on investment (and it does) then marketing spend also increases money available for R&D.
Marketing and R&D are not pieces of a fixed pie. Marketing spend grows the entire pie and provides additional dollars for the company to spend on R&D.
You're talking like marketing extracts money from the ground as if it's a raw resource. If 10x as much is spent on marketing as RD then the money spent on pharmaceuticals is <10% going to RD. That's not good for the consumer. It would be good if marketing was regulated and that pharmaceuticals were forced to compete by spending money on RD and making better drugs.
Marketing increases revenue. A portion of revenue goes to R&D. Ergo, more marketing means more revenue available for R&D.
If I have a cure for X. And if you have X but don't know about my cure -- perhaps you don't even know a cure is possible -- it's a net good for me to tell you about my cure for X. And how do I tell you if there are millions of yous I'm trying to reach? Via marketing.
Consumers are not good at making informed pharmaceutical choices on their own, and the idea that magazine advertisements showing smiling old people does anything to inform them is laughable.
Also, pharma doesn't market cures, they prefer to market long-term treatments that are recurring funding streams.
If drug companies are willing to sell the exact same drug in Canada or the UK or Germany or France for less than a percent (in some cases) of what they sell it here for then why can't US insurance companies, hospitals and consumers buy it for that price? There's no reason other than an artificial monopoly.
You'll note that I didn't say "anywhere" and that was deliberate. India, for example, has decided that drug companies largely (it's complicated) don't get monopolies from patents and thus you can buy a lot of low-cost high-quality generics in India because no drug company is getting paid.
Obviously this is untenable at the global scale.
And before anyone lambasts India for not respecting patents here, countries do this sort of thing all the time. In the US, for example, you can't patent nuclear technology as a matter of national security.
Because who cares if you've made a breakthrough product and no one knows about it?
>why can't US insurance companies, hospitals and consumers buy it for that price
Because profits for future R&D has to come from somewhere? And if everyone is lined up for a discount, future R&D will suffer.
They're willing to do that because the US is a much larger market than any of those countries. Most pharmaceutical companies - including European companies - make the lion's share of their profits from the US market. If they couldn't, you'd certainly see the costs for essential medicines increase in European countries.
> You'll note that I didn't say "anywhere" and that was deliberate. India, for example, has decided that drug companies largely (it's complicated) don't get monopolies from patents and thus you can buy a lot of low-cost high-quality generics in India because no drug company is getting paid.
India has pretty solid reasons for not honoring drug patents that don't apply to the US or Europe.
"Willing" is a broken way to look at it. The drug prices are negotiated by the government in the single-payer systems.
Most countries don't have single-payer systems, and even where that's the case, "negotiated" is the broken term. For essential medications, the supplier always has greater leverage than the purchaser.
The main incentive for the US to enforce patents is that it is at the forefront of technology development, so many patents are held by US companies.
As the lead the US has in technology lessens, as it has been predicted (and has already started) to do so for quite some time due to its poor education system and decreased funding and prioritization of science, other countries will catch up and overtake the US on the technology front, and they'll be the ones getting patents. Then it's quite possible that the US won't care quite as much about patents, and may even start "stealing" technology from other countries.
Couple this with the fact that there is a large focus on designer drugs, and dependency rather than curative drugs, and there’s snake oil being sold by drug companies that they absolutely need a regional monopoly to bring us new and life changing drugs.
Big Pharma already abuses the patent system so much, like inventing something and then when the 20 year monopoly has passed they create a new patent that says "this same drug can be used for Y purpose, too" - and bam, another 20 year monopoly on the exact same or very slightly tweaked recipe.
Tens of thousands are already dying every year in the US because they can't afford healthcare. If the argument is that "if we reduce the Big Pharma profits then it would be even worse!", I'm sorry, I just don't buy it. If drugs were cheaper, a large portion of those people could be saved (yes, I realize there are problems with the healthcare system, too, but those would also be fixed by Medicare for all).
Imagine the government decides to tax 80% of all revenue from all technology companies forever. Do you think funding for startups would increase, stay the same, or drop?
The obvious answer is drop, but what type of evidence would you expect to support this statement. A study of people taxing technology companies @ 80%? Or are you arguing with the premise that investment rates are correlated with profitability?
PS: >The obvious answer is drop
No. You "feel" it is "right" and "obvious" even, and it might as well be if we really did that experiment, but humans are pretty bad at predictions.
The idea that competition leads to innovation is not exactly new.
I'm not saying they should be excluded, but I don't think they would be willing to participate if it meant giving up a cash cow. I could be wrong though.
So do public universities.