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Comment by trentlott | Hacker News Reader

They also spend a lot of time looking for University researchers that have found something they like, then buy esclusive rights to the compound

This recently happened to a prof in my department. He's an organic chemist, d evisde a way to prevent plaque buildup, and had the rights to the compound contracted out by an unknown pharmaceutical company

My boss also had a meeting with Pfizer about a thing

In this case the research would have been publicly funded and been obtained by a private company who bypassed the need to spend money on development

That's a shady technique, IMHO, because it's our tax money directly enriching a corporation

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There is a lot of work that needs to be done to take a drug from "this works in a Petri dish" to "this is something that you can be prescribed for treatment." Empirically, about 90% of the compounds that start at that first level fail to make it to the last level. It also seems that academia is not any better than pharmaceuticals at either developing the first step or pushing something to the end.

> Empirically, about 90% of the compounds that start at that first level fail to make it to the last level

That would be an incredible rate of success, depending on what 'first level' means. If you mean "reached human clinical trials", maybe, but dunno.

> It also seems that academia is not any better than pharmaceuticals at either developing the first step or pushing something to the end.

"it also seems" lacks rigour, but let that pass for now.

If academia develops 85% of the drugs that are released (I'll try to find a source for that, it's from memory) then the vast majority of failure costs (85% of them) are soaked up by the taxpayer. The few that are bought up by the drugs companies, are then sold privately. Very profitable.

"According to BBC News, in 2013 pharmaceutical companies enjoyed higher average profit margins than carmakers, oil and gas companies and media companies. Only banks had a profit margin comparable to Big Pharma, but Pfizer’s 42% profit margin blew every other company out of the water, prompting even a member of its own industry to say, “I wouldn’t be able to justify [those types of margins].”

In 2013, five pharmaceutical companies exceeded 20% profit margins: Pfizer, Hoffman-LaRoche, AbbVie, GSK and Eli Lilly."

from https://www.andruswagstaff.com/blog/big-pharma-has-higher-pr...

Nearly 100% of new FDA approved drugs are developed by for profit companies. I don't know of a single case where a drug came directly from academia without another entity spending tens of millions on high risk r&d [0]

It is misleading to say that the pharma industry is hugely profitable because 5 companies have high profit margins. There are thousands of pharma companies. Most will never make a profit -- they just do research. Most of these fail, the ones that succeed sell their drugs to those big pharma companies bc they can't commercialize them on their own.

[0] https://troutaccess.com/index.php/snippets/details/hash/1720...

Are you surprised that the biggest (i.e. most successful drug companies) have the highest profit margins?

What about all the companies that no longer exist because their drug failed and they went bankrupt?

It's disingenuous to limit your analysis of profit to the most successful companies.

> Are you surprised that the biggest (i.e. most successful drug companies) have the highest profit margins?

Not remotely surprised, because you're misrepresenting my quote. That's not what it said. Read it again.

Both projects progressed to the point of running successful animal trials (n ~ 250), all of which were paid for by government grants

Obviously rats aren't people, but a company obvious be edits when a molecule is discovered, synthesis optimized, and method of action/LD50 is paid for by the public before every cent of profits are privatized

Even if they don't market it, they own something tthat the public paid for

Were the results published or suppressed from publication? I'm sure the University has some sort of IP department and the patent for the compound(s) would belong to the university. That patent should also be public information.

If the study/compound structure has been made public in some form, I think the public has gotten its fair share. The process that will take the compound from works-in-mice to works-in-people is quite difficult and risky. Pharma companies are very good at administering those things and (usually but unfortunately not always, hello Novartis) run those programs in a manner that ensures safety as much as possible down the line.

The Pharma company will spend its billion (roughly the cost per approved drug these days) and will recover many more times that if successful, but eventually the compound will become generic, and all of us will be able to get it for cheap.

I think there are many many problems with pharma, and I say this as someone who is trying to start a biotech. But the fundamental process above doesn't strike me as grossly out of line, it's playing to each players strengths. The reforms I would make would be around some of the pricing excesses, some of the patent/generics loophole abuses, and to find ways to address areas that are hard to make work financially in a private setting (antibiotics for example) through some sort of public/private partnership/prize system.

Is your prof’s drug ready for sale? If not, I don’t understand what you mean by “bypass development”.

The most expensive and most risky part of drug development is getting a promising drug candidate all the way to market. 99% of those fail, yet can cost hundreds of millions.

And not sure what country you’re in, but if it’s the US, your prof would likely stand to make a ton of money if the drug is successful. The company doesn’t get it for free, they buy it from the patent owners.

Both projects progressed to the point of running successful animal trials (n ~ 250)

Finding a prospective molecule is a huge part of the process - this is why computer binding models are such a hot topic

The fact that we paid for discovery, synthetic development, and PoC is a pretty big deal whether or not it ends up being a marketed drug

I know the guy who sold the patent was paid very well (aftet the university cut, of course) ... but who paid the bills to make it possible?

Most of the costs of bringing a new drug to market are in the human trials. Sure pre-clinical is expensive, but it's still super cheap compared to clinical development.

So if this drug you discovered does make it to market, the drug company itself is paying for the vast majority of the costs and all the risk that goes along with spending hundreds of millions and having nothing to show for it. In return, we dangle the carrot of profit in front of them.

You are correct that the public paid for that initial discovery, but the ownership is given to the lab that found it. The other alternative is for the gov't to keep ownership of the patent.

Lemme get this straight...taxes paid for the basic research; that is, paid for something for which there was zero obligation to come up with a new drug. No shareholders to make happy, no board to placate. Go do research and write some papers.

He found something, and a drug company willing to put up the other 99.99% of the money required to try to take the drug to market (even though the odds of that happening are miniscule) paid both the university and the researcher for the rights to use that discovery (and, as I understand it, usually to get a share of the profits should the drug be successful).

So for a nominal tax-based fee (funding research, not bringing drugs to market), private companies get access to research results that a private company may not have even tried and the institutions involved get a funding bump. And maybe some malady cured as a result. Unless you're a serious "screw you I got mine" libertarian, that seems like how tax supported basic research should to work.

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