Cost of developing new drugs may be lower than industry claims: trial
theguardian.com
theguardian.com
Worth noting as well that J&J have shut down their entire division in communicable diseases because it was so unprofitable for them.
(Source: I work in this industry)
If you can make more money by not doing X, than doing X, it doesnt matter.
You can donate time or money even if you are running a loss in real, nominal, or opportunity costs.
Seriously, the argument is that drug companies should only do the most profitable thing? If that's the case, they deserve to have all subsidies removed, and be regulated into oblivion, because they will serve no purpose, but profit.
Just see what happened with the opioid epidemic. If you're only looking at next quarters profits and destroy public trust, while skirting the legal boundaries you'll make bank until you're not.
You're the first one to make any kind of suggestion for what they should do, so I'm not sure why you're jumping to that conclusion
>If that's the case, they deserve to have all subsidies removed, and be regulated into oblivion, because they will serve no purpose, but profit.
The purpose that they serve is to save your life with drugs. If that doesn't mean anything to you and isn't worth any money then I don't think we will find much common ground.
In your analogy, drug companies are the doctors. They want to make money for saving your life. Why would you want to regulate them out of existence?
>Was it 'unprofitable' as in 'losing money', or 'unprofitable' as in 'not worth
the time'?
>If you can make more money by not doing X, than doing X, it doesnt matter.
>The purpose that they serve is to save your life with drugs. If that doesn't mean anything to you and isn't worth any money then I don't think we will find much common ground.
Frankly, most doctors, biochemists, and pharma-chemists I know have little difficulty seeing this. It is about helping people not just making money, and doing otherwise while selling it as the former, is unethical.
I thought I was clear, but I will try again. The financial calculus is the same between "losing money" and "not worth it". It doesnt matter if the J&J division of communicable disease is running a positive or negative balance if J&J (or its owners) can more doing something entirely different. The question is do we want to be losing money on this. That is not to say they can't or shouldnt keep doing it as a public service or out of altruism, but the question is the same.
>My point was that if their purpose is only to do the things that make marginally more money.
I dont think that is a valid assumption to make about the industry. 99.9% of the time, the way to make more money is to make a product that saves or cures more people. If your product saves fewer people, People would by the old thing instead of the new thing for 2x the price.
Now, everyone is free to say they dont like the price, which is fair. However, the price is high because rich American customers dont care about the price. IF they did, they could always buy the cheap old thing.
It is like someone who is angry at the butcher for the price of filet minion, but keeps paying ever higher prices, and refuses to buy the tri-tip.
Europeans prices are half the US simply because they stop buying filet minion and get tri-tip when the price gets too high. US prices are twice that because we pay it!
It is crazy to blame the butcher for raising the price when you willingly keep throwing more money at ever higher prices!
No industry anywhere in the world expects the seller to keep prices low when customers keep throwing money at them.
The fundamental problem with US healthcare costs is that not one party in the system is willing to control spending. Nobody will say no to a treatment 1% better for 200% the cost.
Patients will pay anything for the latest drug because they want it, and the costs get spread over everyone's premium. Insurance is happy to see medical costs balloon because their profit is capped as a % of healthcare costs. manufacturers are happy to see costs go up, because that's what they are selling.
That is laughably optimistic.
I do think that newer more expensive products provide worse patient outcomes at rates significantly higher than 1 / 1000 times.
However, the comment I objected is discussing "ways to make money" as a pharmacutical company. Which is a generalization that is laughably naive at best. We have plenty of examples of drug companies trying to make money in ways that harm patients from how they fostered the opiod epidemic.
Without superiority, it you will struggle with investors, trials, approval,and then convincing doctors to to switch to it.
Everyone can come up with an example, and point to per due, but the FDA processes 10s of thousands of device and drug submissions per year. Most are in cutthroat markets with competitors.
If we are talking about individual company actions or statements, and not products, then the numbers are even worse. There are literally millions of actions associated with a product, and I would again argue that >99.9 are made in the favor of patient interest.
Making a inferior product and scamming your way to profit is an exceedingly rare strategy because it is both extremely difficult execute successfully.
I think it is clear that new product development doesn't prioritize optimal patient benefit, but that is a different topic. It needs to be good enough to sell, then it becomes a question of how good vs how much money.
That isn't even true at non-profits, let alone for profit companies. You seem to have no idea how the world works.
I'm sure Americans that were rationing out their insulin would love to hear more about how they "don't care about the price" and you comparing their need for life-saving drugs to simply choosing to keep buying filet minion over cheaper beef cuts.
Everyone in America who makes <138% the poverty level qualifies for free insurance.
qualifies is kind of a weasel word though, "in theory they qualify, in practice ..."
I'm guessing this is the US Medicaid system that recently
dropped enrollment by more than 11 million people in the past year, including 4.8 million children, the vast majority of whom were kicked off their healthcare for surprise procedural issues.
Admittedly that's the UK Guardian reporting on John Oliver which is indeed an auto nope for some, but the issues highlighted here seem real.
Can you explain it?
As I understand it, Medicaid has waived all ongoing requirements for coverage due the pandemic, and people are now required to verify they still qualify. People who make too much will and do not qualify for Medicaid now need to purchase subsidized insurance on one of the markets.
Of course the article does noting to explain what "surprise procedural issues" means. IT seems that the word surprise is an entirely editorial insertion. Based on KFF reporting, it seems that it just means anyone who didnt complete the renewal processes. This includes those that no longer qualify and therefore did not complete complete the renewal process. Of course there is valid concern that some of these people may still qualify and did not complete the paperwork, but it completely unclear how many that is. It could be 0.1% of the 11 million or 99%.
https://www.kff.org/report-section/medicaid-enrollment-and-u...
My only point of reference is ~4 decades of usenet and web forums routinely having mention of people (in the USofA) being bankrupted by medical incidents (heart attacks, car accidents, sporting injuries, non elective surgeries, etc) that here and in the UK are relatively mundane affairs.
I struggle to fathom a country where there is a need to "renew" health coverage .. here we have 'adequate' and 'private' and essentially everybody has adequate as a fallback with no need to tie basic health coverage to an employment package that is lost when someone fires|quits.
Each to their own, here the ideals of good health and sufficient basic wage have been tied in to social contract since Federation.
It is high because of the system structure and the fact that most people are willing to tolerate.
I'm pushing back on the moronic idea that prices are high because drug companies are too “greedy“ in the US, but the same exact company is mysteriously less greedy in the EU or AUS. The difference is that insurance in those places negotiate a lower price, so they get one!
Insurance companies in the US operate on a cost plus basis, so they want prices as high as possible.
Medical bankruptcies do happen in the US, at a rate of about 1 per 1,000 people per year.
There was no checking for a while thus little need for resources needed for checking (there was still some because people still came into the system.) Now there's a big demand for renewal checking and it's working on a basis of dropping people if they don't complete it even if the problem is on the state's end. And, yes, it's completely unclear how many--because the red states want these failures, they're not keeping track.
It's the usual garbage of putting roadblocks in the way of benefits to keep down the amount paid out.
I'm new to the issue so I assume it is 99% individuals failing to respond
Look at the reports of huge backlogs with the IRS. What would happen if they automatically started prosecuting you for failure to file as of June 1st?
This is a naive statement.
Viagra made a ton of money, while only benefitting a slice of a slice of humanity. It doesn't save lives, it helps some people get erections.
Compare and contrast to real, widespread diseases that affect millions, and are risk factors for billions, but require public research dollars because the pharmaceutical industry doesn't see enough profit compared to a new erectile dysfunction or baldness treatment.
That's not an industry working to the public's benefit. That's an industry working to old white men's benefit. It's helping itself and to hell with anyone else.
With that said, Viagra was initially developed for high blood pressure and chest pain. Testing didn’t pan out but it worked wonders for erections so it was rebranded. It is also used in pulmonary hypertension.
Not to speak for the other poster, but because it's too damn expensive for the average person now. And when the average person can't do things like "eat", "pay rent", or "get live-saving or misery-ending medical treatment", that person bands together with their ilk and tears society apart.
Doctors, I'll let slide, because they do actual labor and spent decades in school (often going nearly-broke doing so) to get where they are. Most doctors are well-paid but they're not financier or c-suite level rich, and that's who today's drug prices serve. That and a bunch of ambiguous "shareholders" who more often than not had more ambition for their retirements than the economy they spent the last 50 years operating can support, despite decades of warnings.
The truth is, you absolutely can provide a life-sustaining level of care to most people without bankrupting them. In fact, we used to, and many countries do. We just don't want to do what's necessary (punish excessive executive compensation, reduce the importance of equities as a store of value, make unhealthy foods more expensive than healthy, etc.) in order to make that happen, because somehow, the laws of human behavior in western nations just don't apply in the United States.
But this is really all besides the point. The point is that prices are high because the system is fucked up.
Prices aren't twice as high as Europe because the companies more greedy here. It is the same companies! The difference is the system. Different laws and institutions
>But this is really all besides the point. The point is that prices are high because the system is fucked up. Prices aren't twice as high as Europe because the companies more greedy here. It is the same companies! The difference is the system. Different laws and institutions
And who, pray tell, lobbies against changing laws and institutions in the United States re: drug pricing? The industry itself: both drug manufacturers and the insurance companies that pay for them. Ultimately a switch to a system like that found in, say, Europe, reduces the pool of money that gets spent on medicines every year in the United States. That's bad for their bottom lines.
I do think that the US policy has pretty bogus incentive on both sides. If you think it is just the lobbying, I think you are fooling yourself. Most Americans hate the idea of a fully social system, and both parties reject common sense hybrid options like in the best European systems. They are too radical for the right, and not radical enough for the left. As a result, we get the worst of all worlds. We spend more public funds on healthcare than most european countries, but dont have universal coverage, and we pay extreme private costs on top of that.
There are lots of better options the US could pick, but wont .
I didn't say "free", I said not being exposed to medical bankruptcy.
Or if they do, they run out of money and have to stop.
There is no "should" here. Just a description of how the world works.
And without knowing the specifics, there can be a lot of value from continuing to produce those sorts of things, if it's within reason. I mean shit they probably spend more on ads saying how great they are than it would cost to actually be great (by saving lives with cheaper meds)
If a company can make X% return on capital (researchers, equipment, marketing, regulatory engagement, office space etc) working on communicable diseases, but Y% >> X% doing something else, a responsible steward of somebody else's pile of money is supposed to direct the capital towards Y.
If the company is spending $1B/yr for a 1% return in that division, but the return on bonds is 5%, the financial answer is to liquidate, and put the cash in bonds.
My claim was a bit too strong. But I think my general point stands.
https://www.ama-assn.org/medical-students/specialty-profiles...
Majority will have a micro, breast or hand practice and have a side hustle in aesthetics so the overall satisfaction stat you’re citing is not reflective.
There are different hassles in cosmetics like increased overhead, patient expectations (which are much higher in cosmetics) and advertising/patient recruitment. Call can be worse as the patient paying $50k for a rhinoplasty expects the surgeon to answer the phone for every whim.
This is the system we built, neoliberal capitalism, and this is the system we would have to modify to do the things you think we should be doing.
It's about time, frankly.
When a pharmaceutical leader says that developing new drugs "isn't profitable," it would be nice to know if that meant "clinical trials don't make as much money as cosmetic drugs" or "clinical trials actively lose us money."
A company where revenue is 90% of expenses is in big trouble.
Another company that could make 120%, but is only making 110%, is doing fine.
More directly: If every division is profitable, there's not a great need to cut the less-profitable divisions. And if that division was doing something useful, it can be negative for the public if it's shut down entirely, so it's worth wondering how we could save these still-profitable endeavors.
Opportunity cost.
That's why I specifically said "great need". Opportunity cost is not usually dire.
But in a global sense, shutting divisions down entirely also tends to be pretty bad in terms of opportunity cost.
what if every other company in your industry is making 135% and hiring all the best people away from you.
Not being in line with the rest of your industry also has negative consequences for the future of a company.
If so, that's the problem, not the amount of profit.
Increase pay to match, making the profit 105% of expenses, is there still an issue? If there are other negative consequences I need you to explain them.
(Side note, if you say everyone else is making 135%, but our company could only make 120% if we switched focus, are you sure it's not us that's paying higher salaries?)
you imagined a scenario in which a company was not maximizing profitability of their drug production and development and asked what would be the problem with that, I provided an example problem that might exist if that were the case and your response is ok let's make a different starting assumption?
My assumption though is if we switched focus we could make 135%.
>Increase pay to match, making the profit 105% of expenses,
at some point in this imagined scenario it ends up profit of 99% of expenses, which it seems from your previous example is not ok. The company with higher profit margins has more room to maneuver, can offer better perks to employees, can offer higher salaries, assuming only some of the employee pool is self-interested that still means you have less ability to get them one way or another.
Assuming also at the top level that wages are not a percentage but rather negotiated, oh well rich pig pharmaceuticals said they would pay 195 per year, that's 40 more than you're offering - can you match? At some point not being as rich as the other players starts to affect your game.
Oh, I didn't realize your example was supposed to be different from my example. I thought you were adding on to it. If your example is different, then you left out several important numbers.
> at some point in this imagined scenario it ends up profit of 99% of expenses, which it seems from your previous example is not ok. The company with higher profit margins has more room to maneuver, can offer better perks to employees, can offer higher salaries
It can, but will it? How many industries do you see dumping all their revenue into extreme wages?
If that happens, fuck it, that's basically a utopia, maybe I should join those businesses.
But most of the time extra profit goes to the shareholders, not the employees. The money doesn't end up improving the company's hiring game.
Part of the costs are labor and materials, the majority is regulatory burden. It is a well established financial de-risking activity before spending the hundreds of millions more for a US/EU trial.
Edit for visibility:
The drugs in this trial are all previously developed and approved by other companies, some as early as the 1950s. They ran the trials in Kazakhstan, India, and similar developing countries. They have no manufacturing and supply chain, because they buy commercially available generics off the shelf for pennies.
There is a lot to say about pricing, but the guardian is shamelessly engaging in disinformation.
Thanks for putting the disclaimer. But your argument is still not convincing that pharma industry has no fundamental moral backbone (a reason I left it after my PhD).
If people are not willing to pay at least as much as research costs, the drug certainly won't get created.
The researchers cited in this article seem to be promulgating the fallacy that we need only look at the cost of a successful drug trial, and that's the cost. The drugs magically appeared out of nowhere, for free, and equally magically, they are working drugs, so we already know our trial will succeed. It's just a charade we have to go pay for to get the government's rubber stamp, and then it's all good!
It sounds like there’s simply not enough information to gauge if pharmaceutical companies are being honest about their claims of R&D costs.
Pharma R&D companies that are publicly listed should have some information about their balance sheets.
Private equity ones are going to be the most opaque. That's kind of their prerogative.
And the goal of academia (publishing) are very different than the industry (identifying a new drug).
[edit] I'm going to add something here. The grandparent refers to "stupidly misleading pre-clinical data." Pre-clinical data informs very inexpensive (relatively) Phase I studies. And there is a ton of it. You might have potentially misleading pre-clinical data that suggests the possibility of an entirely new therapeutic mechanism of action for a huge unmet need coupled with massive amounts of pre-clinical data that demonstrates a near certainty that the intervention will be safe. That's the entire point of moving forward to a Phase I or Ib (or maybe even II) study. The 1000x-10,000x more expensive phase 3's are not relying on pre-clinical studies.
I’m from the academic side in the sense have talked to many folks who quit industry to start jobs and come from a lab that did get a drug into the market eventually. I might not know this “secret data” you speak of but given the results are crap, I think they speak for themselves anyway.
I'm wondering how much you're actually involved in research to make a statement like that.
Scientists at these companies are likely out of a job if the trials aren't successful (especially for start-ups that have one shot).
The answer is - when you're developing a brand new molecule, often for a recently discovered pathway, in a biological organism that is so complex we barely understand it, failure shouldn't be surprising.
The large drug companies don't develop many new drugs anymore, and they don't fire their scientists when a trial fails. The people that make the decision on whether or not to move to clinical trials from preclinical data are not necessarily scientists either and they certainly will not be fired. Their decision on whether or not to proceed with trials is far more complicated than for an academic or an early startup such that it can make sense for a large pharma company to attempt a trial even if it is unlikely to work if the expected payoff is sufficient. They will definitely still get paid.
Yes, scientists still get paid but the draw of start ups (like tech) is lower pay, and potential upside through equity.
So if the drug fails, they just lost a significant amount of money versus staying in big pharma, and they lost their job.
And for big pharma, if you don’t create new drugs, the company revenue falls and lay offs occur (like what is happening right now at several big pharma).
The risk is much higher at a start up that it’s “do or die”, than big pharma, but it’s still there.
Go and look at the massive layoffs that Pfizer, BMS, and other big pharma have done over the years.
> So if the drug fails, they just lost a significant amount of money versus staying in big pharma, and they lost their job.
This is true of the scientists that aren't making the decisions. The ones that do make decisions are going to be able to retire if the startup was funded enough for clinical trials.
> And for big pharma, if you don’t create new drugs, the company revenue falls and lay offs occur (like what is happening right now at several big pharma).
Do you have data according to which the current layoffs in big pharmas are significantly affecting decision-makers? Because that's the matter at hand.
As far as revenue decline, sure, for a given definition of "new drugs". The actual argument I've put forwards is that for a big pharma, it can make sense to run trials which are unlikely to succeed and with limited clinical utility if the financial upside is sufficient, which is not true for uni labs or biotech startups.
> Go and look at the massive layoffs that Pfizer, BMS, and other big pharma have done over the years.
Pfizer does "massive" layoffs every year, and just like BMS, every time a lot of the affected employees aren't executives fired due to unsuccesful trials, but employees of companies they bought.
As far as researchers getting laid off, big pharmas are infamous nowadays for firing researchers when R&D pipelines are sucessful just as much as when they fail. Researchers are made redundant either way, unless for some reason further research in the same domain is needed (which often isn't the case). It also happens pretty often in startups that end up selling IP.
1. Produce a molecule that does what you want it to in the body
2. Figure out how to get that molecule where it needs to be in the body
3. Prevent it from doing all sorts of other gnarly things
4. Convince people you’ve succeeded in doing 1, 2, and 3 to the degree they’re willing to volunteer themselves to put this new molecule inside their bodies — without incentivizing them in any way
5. Convince enough people to do that and collect enough data about them to know for a fact that your drug does X and does not do Y
6. Convince regulators that not only have you done 1, 2, 3, 4, and 5, but that it’s also better on some dimension than the currently available treatment
In short: because it’s ridiculously hard. If it’s easy you should go give it a shot, help millions or billions of suffering people, and make billions of dollars in the process. Why wouldn’t you?
Could you elaborate on this? Are you saying that some groups/people in those companies "ignore" the honest interpretation of their preclinical data and run phase I studies just so that they have something to run?
There's also the time factor. Suppose you spend $100M to develop and sell a drug that brings in a total of $150M over it's on-patent lifetime. You *lost* money.
Perhaps worth noting that development cost account for more than the phase 2-3 studies and that cost are lower for combinations of known drugs. But yes, 34 million is a lot less than 3 billion.
[1] https://msfaccess.org/precedent-setting-move-towards-drug-de...
> *Total costs were €33.9 million. While the topline results were presented at the WHO PPRI conference, the full detailed costs of the clinical trial have been submitted for a peer-review publication to a journal. In the full publication, the costs are broken down into 27 cost categories, by year, and by trial site, in order to offer a high level of transparency.
[2] https://msfaccess.org/transparency-core-clinical-trial-cost-...
Who would write a research paper instead of founding drug companies if they had the secret sauce to cutting expenses that drastically.
Shameless propaganda from the guardian to put this in contrast with new biologic molecules.
https://endtb.org/endtb-clinical-trial-results
https://en.wikipedia.org/wiki/Bedaquiline
https://en.wikipedia.org/wiki/Delamanid
https://en.wikipedia.org/wiki/Clofazimine
https://en.wikipedia.org/wiki/Linezolid
It is a fundamentally bogus apples to oranges comparison, never mind the fact that the trial was run in Kazakhstan opposed the the USA.
Okay, how does that compare to what pharma companies spend? The article cites some unrelated numbers, doesn't actually compare.
A quick Google search says:
The average cost of phase 1, 2, and 3 clinical trials across therapeutic areas is around $4, 13, and 20 million respectively.
So... not really that different? What's the big deal here?
https://www.washingtonpost.com/business/2024/03/08/eli-lilly...
So yes, it's safe to assume that part of the accounting around those published costs in the billions are all of the failed candidates that never even made it to trials (the failure rate varies depending on the area of biology and the type of drug, but it's generally around 9 out of every 10 candidates [1]. By the time you get to trials, that ratio gets even more abysmal).
Disclaimer -- I work for Recursion, a company built around this very problem.
- [1]: https://www.sciencedirect.com/science/article/pii/S221138352...
- [2]: https://www.recursion.com
https://www.nbcnews.com/investigations/lobbyists-spent-recor...
“Its own bill for landmark trialS of a four-drug combination treatment for drug-resistant tuberculosis came to €34m (£29m)”
You’re also looking at the cost from from 2015 to 2016 where a single phase 3 trial was already 20m and $41,117 per patient. https://www.linkedin.com/pulse/clinical-trial-budget-example...
Some trials have been controversially going for a surrogate endpoint, which makes the stats easier since you can get a continuous variable instead of a binary one, but that's also how you get aducanumab, which reduces amyloid plaque, but it's unclear if it actually helps in alzheimers. Despite this they charge $56k a year.
It used to be that all of the profits went to the drug companies, but more recently Universities have started to claim a portion of the patent royalties, and thus the profits. I believe the first big example of this is the University of Wisconsin's royalties on Warfarin (blood thinner used as medicine in humans, and in large doses as a rat killer).
Average cost of a phase 3 trial is a terrible representation of costs.
Not all phase 3 trials are equal. For something like TB, the trial can be relatively small (huundreds of patients), and short (months). For something like heart disease drugs, the trials might be massive (tends of thousands of patients) and very long (years).
Anyone can call a CRO (contract research organization) up and ask what they charged for phase 3 trials. Last I talked to them it was ~$15,000/patient/year.
It's pretty easy to do the math based on that. A heart disease drug with 10,000 patients lasting 3 years will cost $450M.
EDIT
I should clarify - since investors know they have to pay for 100% of restaurants, of which 90% will fail, they price this in when they decide to invest in a restaurant.
Drug companies have to pay for all ten trials, not just the one that works out.
Restaurants are a bad example because people invest in it on an emotional basis. Drug trials are probably decided on more the same basis as bond issues or insurance.
If the risk of failure is high, investors have to demand a high premium or go broke.
They run at some % loss for a while until money or investor patience runs out.
A drug trial that fails can be a 10 year process of shoveling money in a pit, none of it to be ever seen again.
It's a businesses famous for its low succes rates, which can be from start to end less than 1 in 100.
Drug companies need to offer those who provide the capital to run these experimental projects at huge losses for years a way to recoup their losses - otherwise nobody would be willing to fund the effort.
The way to do that is patent and charge absurdly high prices for those few succesfull drugs that are developed for as long as you can.
Why not pool costs and split profits. Everyone gets less.. less risk, less losses, less profits.
Unless you're asking why there is not a single state-run drug company doing everything, in which the case the answer is scale has disadvantages, having some diverse set of companies in a space like this has advantages, and state run centralism has been debunked so many times I can't be arsed.
Many countries basically dictate to the drug companies what they can charge. So long as what they dictate is above the *marginal* cost of selling the drug in that country. The drug companies have to recoup their development from the places that don't dictate prices.
If the US were to also dictate prices (and I think they should, but indirectly: require them to sell to the US at the lowest price they sell to any other developed nation) you would see drug prices in the US drop--but drug prices in other countries would rise.
We see the same problem in the US with government-dictated doctor rates. More and more doctors are saying "NO" to Medicare and Medicaid because the rates are often below the marginal cost. The doctors have to make their money on private insurance patients. (Which is also why simply doing Medicare-for-all would be an abysmal failure.)
There is probably some bloat in drug development. But then again, maybe not. I'm not an expert.
What I do know is that drugs have gotten dramatically better in the short amount of time I've been alive.
The other thing we all know is that the source of this article, The Guardian and their friends, have a shitlist of industries and institutions it loves to hate.
Ask yourself: will they ever write a positive article about a defense contractor, a bank, big pharma, a US billionaire, or a landlord, even if said entity walks on water and then saves a million babies and the penguins and the world?
They want to have the benefits of the existence of drugs without paying the cost of discovering the drugs and bringing them to market. It's pernicious entitlement, made more outrageous by complaining about the greed of those actually providing the new drugs.
[1] https://www.rand.org/pubs/articles/2021/the-astronomical-pri...
[2] https://www.vox.com/policy/23658275/epipen-cost-price-how-mu...
That doesn't mean there aren't shitheads taking advantage of things like insulin etc.
But just because they're also being assholes with regards to insulin et al, doesn't mean that developing new drugs isn't genuinely very expensive, and that those drugs aren't genuinely very good.
The older type of insulin is $35 a month. There are exciting newer types and delivery methods of insulin that are more expensive. The drug companies developed better versions because they expected it to be profitable to do so. They will develop even better versions in the future if they expect it to be profitable to do so.
People going into anaphylaxis aren't buying epi pens. You buy them in advance.
I recall in economics class, life saving/altering medicine being one of the genuinely few products that had a perfectly inelastic demand. Not all drugs are life saving or essential but then you do have Martin Shkreli's in the world.
But society create rules for companies to exist within, many of which are broken, but without which the never ending search for profits would do more harm than good. Society even provides these companies with their intellectual labor, training them in high schools and universities, which is not paid back by them in full (maybe partly if that) either in grants or in compensation for these workers.
Maybe this is an offshoot of the anarcho-capitalism mindset that is popular these days where companies can do absolutely no wrong and we should all be thankful they exist to judge whether we're worthy enough to not die of diabetes.
They want to eay without paying the cost of bringing food to market. It's pernicious entitlement, made more outrageous by complaining about the greed of those actually providing the food.
An old coworker of mine dropped dead on her lunch break because her insulin was unusable when it got too warm during shipment. Her insurance said they would not pay for another month's doses until the next month and she'd have to pay $2,000 out of pocket. Which isn't the kind of money a poor girl from the middle of nowhere South Carolina has.
And now she's dead...because she was $800 short of raising that money from a GoFundMe...
But I sure am happy that her insurance company beat their quarterly earnings estimates!
Clearly things could be much better.
But that doesn't mean the system as a whole isn't a huge net positive.
The right approach is tweaking, not destroying.
Nothing in this world is above a life. Not money, not profit, not a quarterly bonus. Zilch, nada, zero.
I'm biased, obviously, but by principle, I refuse to accept a system that accepts avoidable deaths as a "necessary" consequence of their business model.
If drug companies are made to sell drug x cheaper, maybe they end up charging more for drug y, or now they can no longer afford to invent drug z.
So we can look at someone dying for lack of $800 and say that's clearly a big mistake, but it's not clear what trade-offs and adjustments would make the system solve this problem without also making even worse mistakes elsewhere.
To measure our system, the best you can probably do is population-wide stats, like life expectancy, infant mortality, maybe average height (healthier populations being taller). On those metrics, we're making tremendous progress.
Assuming you meant avoidable, I don't think there is ANY system of business that avoids EVERY avoidable death. Often saving each life may be 100% possible, but it may not be possible to save every life. As a real example, I would guess most civilians in Gaza that will die in the next month could have their death avoided if their singular life were the #1 priority of every around them. However, I do not think the humanitarian crisis in Gaza can be entirely solved within the next month so that no civilian will die (even assuming cooperation from both sides and massive external aid).
The absolutism in your comments is not conducive to productive conversation. I would guess there are many people on HN that are too pro capitalism and don't recognize how it fails many people, but being absolutist to the point of impossibilities does not make you convincing.
I'm aiming this in terms of businesses and corporations, not international conflicts and wars.
Ultimately, when it comes to businesses and corporations that are in direct connection with life and death (e.g., drug companies, architecture firms, power companies, water companies, etc), then everything must be done within their power to ensure that the risk of death is minimized as much as humanly possible. Either by de-prioritizing profits, ensuring equitable access, or any other measures that are necessary.
I understand that a company has to make a profit somewhere. But a drug company that manufactures a drug for $4/pill and then selling it for $10,000/month to treat a disease that will kill without it - all while using taxpayer funds/grants/federal money to fund the research is heinous, greedy, and antithetical to what it means to be a human in a society.
Private power companies (like my local one, Georgia Power) making $2bn/year charging $180/month for a 1 bedroom, 660sqft apartment is criminal. Especially as I understand and knew many families growing up that would spend half their month with no power until their next paycheck.
It's on me that my original comment was absolutist, but it's my principles.
Your first line doesn't just exclude systems that "accept" such things, it sounds like it excludes every system that isn't perfect.
In other words, it excludes all big systems. Your world would collapse immediately.
Though whether the line I quoted means the same thing depends on what you mean by "accepts". Is always striving for better enough? Or do you demand unrealistic expectations? Mistakes are inevitable; is "inevitable" different from "necessary"?
How do you know this? How do you measure “better”? Something like QOL improvement per dollar? Have you done (or read) some large study on this or something?
HIV, in my life time was a death sentence. Now people are living almost full lives.
Less dead people is a pretty good metric for drug development.
Oh, and as a nice little bonus they also curb substance use disorder!
Similarly, companies that patent HIV drugs purposely hold off on bringing new, better drugs to market until the patents for their old drugs expire. For example, Gilead held on to Descovy and timed its launch to conveniently match up with the patent expiration of their drug Truvada. It's planned obsolescence in drug form.
Truvada had common complications like kidney damage and failure, and bone density loss, that Descovy mitigated. Had Gilead brought Descovy to market sooner, instead of holding on to it until Truvada's patent expiration, people could have had the option to choose between the two drugs, and those at risk of complications wouldn't have received needless kidney damage/failure and bone deterioration from their only option on the market.
During Truvada's patent period, Gilead raised prices practically every year, and a drug that already cost $2k a month suddenly cost over $4,500 a month towards the end of its patent protection period. In other countries, it cost $40.
Gilead is now doing the same thing with Descovy, charging $2,600 a month with rising prices for a drug that costs far less in sane countries.
Just because things might be "better", doesn't mean they're perfect, and doesn't mean they don't need to improve.
As an aside, these are drugs that prevent the acquisition of HIV in the first place. AIDS could virtually be eradicated in the US if HIV prophylaxis was widespread and affordable.
Here in the real world, that manufacturing cost is largely irrelevant.
Thats the government funded universities.
There would need to be consistent support for such a drug development program even though most attempts will fail and "breakthrough" drugs will arrive irregularly, separated by many years. It is politically difficult to maintain that sort of long term support in a system where voters and representatives are swayed by short-term arguments to cut programs that don't show results.
I think this comment perfectly proves that this is relevant.
Manufacturing is quite relevant. If the actual cost of "discovered and proved effective" is far lower than claimed, then manufacturability becomes a concern. If the cost of discovery and proven effectiveness is borne by governments and universities, then the manufacturing is the only cost borne by the pharmaceutical companies.
Put it another way: if making new drugs was so cheap and easy, drug companies would be doing that in competition with each other, and prices would be low as a result of that competition.
They are. There is intense competition and lots of venture capital and research grants to fund research.
> prices would be low as a result of that competition.
Why? Patents end competition as soon as the research is successful. They have to compete to research the drug - and we see a vibrant competitive market for research - but they don't have to compete to sell the drug. We see this even when there are multiple brands competing to sell generic versions of drugs they didn't discover or spend R&D on.
There is simply no market forces to lower medically necessary drug prices. The market is captive (people will die without certain medication), and thanks to patents, there is often no competition for years to allow people to price shop.
I can buy ibuprofen or acetaminophen or aspirin for cheap at any drug store, because there is a competitive market for OTC pain meds. There is no OTC market for insulin, and people will die without it. Unsurprisingly, insulin is much more expensive, despite being discovered by a university and being over 100 years old.
PreP (prevents HIV) research was entirely funded by US taxes, and the pills costs $2000/mo - despite being available from multiple companies including available as a generic. Why are companies that didn't pay to research the drug (and didn't take US Gov money to research it) charging $2000/mo? The only cost they incurred was manufacturing.
One can get a patent on a drug, but not on other drugs treating the same condition. We see many similar drugs developed that don't infringe each others' patents. If they are all effective, then the drug makers will be competing with each other, even if the drugs are under patent protection.
https://investor.lilly.com/news-releases/news-release-detail...
It depends on exactly what you mean by "insulin".
It was a learning experience: always look in the place where the thing is. It saves a lot of time. Her problem was that she first checked all the places it wasn't.
This is true even if you find it the first place you look.
A big part of the issue is too readily discounting or assuming where it isn’t too early. It’s often better to methodically search sections and areas at a time in a thorough process of elimination even of places you know it isn’t, just as a matter of practicality, and so the process of elimination is actually fully eliminating possibilities, and not just confirming biases.
I assume this is all an analogy for the cost of research, and how not every research opportunity pans out?
I think it's a cute analogy, but we have plenty of drugs that are decades old, research costs long paid off, and people die because they can't afford them. This isn't an economics 101 essay prompt, the costs of medicine have life-or-death implications.
As the go-to example, insulin was discovered in a university more than 100 years ago. The patent was famously sold for $1, so the research "cost" to the drug companies is negligible. The price didn't decrease in the US until 2023, when the government capped the price at $35/mo - an 70+% reduction. The cost in other countries is still less than 30% of the US price. This is basically the equivalent to someone telling your wife where the doodad was, and her pretending it takes 10 minutes to find.
PreP, which prevents HIV, was entirely funded by the US Government - both research and manufacturing costs - and its manufactured by several companies who weren't involved in the research. The average prescription cost was >2000/mo from every source until the government stepped in. That's more than some people's monthly salary. This is basically like someone handing the doodad to your wife, and her pretending it is a full-time job to find.
But I'd love for you to tell me the truth about insulin, because I'm sure that the law(s) that attempted to cap prices had nothing to do with the prices being lowered to that exact amount at the exact same time?
Perhaps a quick self test would be to hypothesize the cost of Novolog before this law and then look up the price in old archives.
I usually do these self-tests to check whether my belief systems are accurate. But if you don’t want to, I’m not one to chastise. I just wouldn’t want to converse.
Novolog in 2024 is cheaper than almost any point in the history of (that version of) the drug. "Strangely", Novolog and competition (eg. Humalog) increase prices almost in perfect lockstep, for decades, dramatically outpacing inflation, which is not typically how prices look in a competitive market. Decades after the "cost of research" should be priced in. The obvious reason for this, is that the drug is a medical necessity and consumers can't shop around, so typical market dynamics don't work, allowing companies to raise prices without repercussions. Furthermore, drug companies voluntarily stopping production of cheaper, older, off-patent insulin products - not a single one has been stopped for safety reasons, and clinic benefits of new products since the 1921 patent are minimal.
In the 2020s, US politicians started publicly criticizing drug companies for their prices of insulin. Then they introduced a slew of bills intending to cap the price at $35/mo - a 70% reduction. Several bills failed to be passed, but one managed to pass. In that time, all major insulin manufacturers announced they were "voluntarily" reducing their prices to $35/mo (or lower) - set to take affect the same time as the above mentioned law.
Not sure how you think the history of insulin technology really relates to this, other than the 1982 recombinant DNA insulin was promised to be cheaper? It doesn't work meaningfully better for most patients. When recombinant DNA insulin ("human insulin") was first sold in the US in 1982, it was priced at $0.5/day (1.5 in 2024), while traditional "animal" insulin was closer to $0.3/day (0.95 in 2024). It was special because it promised unlimited supply, with minimal risk of shortages. Eli Lilly said, in 1982, that they expect the price to drop over time. The first time that it was cheaper (inflation adjusted) was 2024 when the new US law went into affect. Oh, this only applies to the US, elsewhere the prices have been low and dropping consistently, even from Eli Lilly.
What's truly damning, is that the clinical benefits of the insulin invented since that first University of Toronto $1 patent version is pretty minimal compared to the UT version from 1921. You can make snide comments of "wading in the shallows" discussing new technology, but the original patent would still have provided comparable medical outcomes to the millions of people who need insulin in 2024.
Is it possible you're defending the actions of a giant corporation that raised the prices of a medically necessary drug out of greed, and now you're re-writing history for them to justify your defense? Maybe you need to devise a new self-test to check your belief systems.
Citations:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10718803/
Inflation Calculator: https://www.minneapolisfed.org/about-us/monetary-policy/infl...
Archival News from 1982 and
https://www.washingtonpost.com/archive/politics/1982/10/30/f...
https://www.nytimes.com/1982/10/30/us/a-new-insulin-given-ap...
Which from the perspective of generic manufacturers, the drugs are discovered and proved effective by the Magic Drug Fairy.
There are times where the government, can, and should drop in and buy the entire IP associated with a medication. This price should be set with a council of various representatives, and it should not be something that the drug manufacturing company can reject.
Most of the research here is already partially funded by the tax payer through Government funds of colleges, etc etc anyway.
This isn't even something unheard of. The US has the power to unilaterally cancel patents.
For what price?
This is part of the cost of doing business. If a drug company is going to close shop and want to go operate in Europe or China, that's a risk we should be fine taking.
Drug X was funded for development for $XXX million because it was perceived to have a strong positive expected ROI dependent on selling the drug for $Y leading to an expected value of $ZZZ million.
If you're offering $ZZZ million for it then the drug companies won't complain but you're just having the public pay the total cost up front. If you're offering substantially less than $ZZZ million, then the drug company will not invest $XXX million because you've just slashed he potential ROI.
Private R&D can still fund development and set prices how they want. But they’ll have to compete with publicly funded alternatives.
The shame is that NIH already provides an incredible quantity of funding, but it certainly doesn’t result in the US getting any better drug prices…
More likely they are two different treatments that maybe take the same general approach. If the publicly funded one is available at cost, the private one would have to be significantly better to make any money.
It would be great if the public developed useful, novel drugs. But if you're proposing a system where the private side can still develop them, patent them, and sell them at a high price; then it's not really different from today. You shouldn't assume that both parties would solve problems independently and redundantly. It doesn't even really make sense to pursue alternative development. If there's a cure for X; are you REALLY going to encourage public researchers to find a different cure for the same thing to try and lower the cost of the drug? That sounds like a very ineffective approach.
Solving obesity is free. For the vast majority of people, Ozempic or Wigovy is solving a motivation/discipline problem, not an obesity problem.
> This price should be set with a council of various representatives, and it should not be something that the drug manufacturing company can reject.
Any other authoritarian ideas? What a great way to destroy innovation.
I'd invert that: on the scale of a population, motivation and discipline are empirically not the cure for obesity. The statistics and the studies are on my side here. I agree that it would be convenient if that strategy, which we've been trying for about 80 years now, suddenly turned out to work. But my guess is doubling down on it wouldn't be any more effective than it has been, so let's take this new approach, which appears to work much better, seriously.
Obviously not, silly. A product is a product. It doesn't matter if it saves millions of lives, ends them, or nothing in between - companies should be free to charge whatever they want, and if you judge them negatively for that, you're clearly in the wrong.
I can't believe I have to explain this!
In which case, shouldn't I be asking you what optimal profit looks like? Why would that be a question to me, when I was listing it as a problem with profit models?
If that wasn't your argument, then I have no idea what you're arguing.
(But I will go ahead and answer, which is that individual affordability should not be a factor in buying medicine, which implies that normal patent-and-profit models are not the way to go.)
Why not take the extra step then? Government funds the research, result is free-to-use for all.
Or: drug developed through research mostly at public institutions like universities etc? -> sorry, no patent 'protection' then.
Pharmaceutical companies could then produce whatever they consider worthwhile. But... squeezing buyers too hard? Competitor will step in with a cheaper offer.
And the research is not paid for by the taxpayer. The NIH budget is $20B per year. Pharma R&D is $200B per year.
And you have to be very careful about what counts as R&D, for example Merck reported $30B in R&D, but one half of that was actual for mergers and acquisitions (of research related companies). I have yet to find anyone who has good numbers on this, which is why the study in this article is interesting: it sounds like the article is going to be very transparent about what it means.
And for absolute candor here, you have to remember that once the NIH grants arrive at a university somewhere between 15% and 60% (really, it varies wildly) is taken off the top for University expenses, some of which are related to the research (e.g.: building costs), and some of which are not (arguably: university administration).
Acquired companies in drug development are essentially spending investor money on R&D until: a) they get to market standalone (unlikely, risky, too expensive), b) the clinical trials fail hopelessly early on, or c) they get acquired by a drug company with a large balance sheet and expertise to finish trials and commercialize the drug.
Because M&A includes likely profits for the sellers?
As a simple example using unrealistically low figures: if I spend $100 developing a drug, and the drug is so good that you decide it's worth buying the patent from me for $1M, you surely wouldn't argue that $1M has been spent on R&D?
But before you complain about that, R&D paid to universities also include overhead for the universities, and it is quite significant. In US it is over 50%. The universities partly act like investors in this way, the administration invest money (e.g. start-up grants, some professor salary) into research groups and expect them to bring external grants, and the overhead partially pays for that.
Depending on what you want to measure, you need to include the cost of people and resources involved in the production of the thing you want, and not just the marginal unit cost of the thing. It may not be easy to draw the line, but you have roughly two choices:
1. Deduct a reasonable percentage from both university grants and M&A
2. Accept that without profit, people would not have funded certain research (which carries risks and requires selection), so you include those as costs of doing business in your assessment
Another way to think about it is that the money you spend on research itself containts other people's profits too. If you buy equipment, the equipment company makes a profit. Staff has savings. The govt always takes a cut. It's profit all the way down.
This sounds like the government just seizing assets once they realize they are valuable.
What do you feel might be the consequences of this?
PS: I can't currently afford semaglutide but require it to offset the side-effects of mirtazapine. Resting HR: 110(!), BP: 175/95, BMI: 32.0. Perhaps I should find a cheap way to visit France or maybe someone in France would send me a year's worth if I paid them.
What side-effects? I take the same medication.
PSA: If some is prone to major depression - exercise, going outside regularly, and avoiding alcohol aren't vague suggestions doctors make casually, they're pretty close to life-saving.
One of the "good" things about it is that it lends well to combinations with other drugs if it's not working on its own.
> PSA: If some is prone to major depression - exercise, going outside regularly, and avoiding alcohol aren't vague suggestions doctors make casually, they're pretty close to life-saving.
Agreed, exercise has very much saved my life.
A drug comes before the FDA for approval, and it is opened up for comment. Shkreli lodges an objection to approval of this drug.
Why? Because it's unsafe? No - trials thus far have shown it to be safer than existing drugs.
Why? Because it's less effective? No - it's also been shown to be more effective than existing drugs.
Perhaps it's more expensive? No - cost of R&D and production, and estimated retail costs are expected to be lower than existing drugs.
Huh, odd. So why did Shkreli oppose this drug getting to the market?
Because he and his company had just bought the patent to one of those 'existing drugs' recently, and this drug coming to market would torpedo demand for his drug, and torpedo the profitability of his investment in buying the patent.
Fuck Martin Shkreli.
"Let's reimport drugs then"
"No! The poor drug companies! How could they survive!"
However, this must be based on their actual cost and not an arbitrary figure, which in the article was revealed to be roughly $34M real cost compared to $3B as it was advertised for lobbying purposes.
What is the best way to protect private ventures but also prevent them from sucking the public funds and the entire population dry? Transparency. Let's see where the money is being spent and compare it with other companies to see what's really happening here. The society doesn't allow vital resources like water, and recently internet be priced at extraordinary numbers, and control how much profit you can make. Maybe there should be even a cap at 100% profit, or 300%, or let's say 500%. But once a company starts selling a life saving drug at 17 thousand times the cost of developing AND manufacturing it, then there's something definitely wrong in that industry and the market must be investigated.
The world runs on value. Coat is simply a limiting factor in the floor that something can be made for.
(Making a limited point separate from my general opinions of Big Drug, etc.)
It was also NIH research and money that lead to discovery of the drugs in the first place.
It's about 1/10th that in the UK (not even counting the NHS's "confidential discount"); https://www.spglobal.com/marketintelligence/en/news-insights....
I have research that shows that the costs of journalism is a lot lower than the Guardian claims. I was able to type up a bunch of words (at my typing speed of 50 words per minute it took me around 1 hour to type 3000 words) into an article, and put them up on a website hosted on a $5/month VPS. Anyone can come read my article for free.
Covid ought to have been the final straw that brought all sides together to do something about drug companies.
we could have done covid style vaccines for a litany of other incredibly dangerous yet common causes of death in the US like flu shots and HPV, but we dont. we charge real moneys for these things as though the cost of the development of the drug itself isnt borne almost exclusively by the taxpayer.
That is a long ways from free, there is just the bit of abstraction that allows corporations to rob us blind. If we had to go get $500 out of an ATM and hand it to the pharmacy everyone would have been throwing a fit. Bundle it in with the taxes that get silently pulled from your paycheck before you even get it though? No biggie.
https://www.kff.org/coronavirus-covid-19/issue-brief/how-muc... says as of a year ago the total across all manufacturers for multiple years was $30B, at a per-dose cost of $20.69. Given how dismal booster uptake has been and the cessation of free vaccination in the fall, I severely doubt the last year has seen the extra $70B you assert.
Effective? My whole family was vaxxed, yet everyone got COVID. We have friends who are on their 5+ jab, and they still get it. Of course, after this became painfully clear to everyone, big pharma quickly started to erase history and move the goalpost, and they still disappoint somehow.
Free? Maybe free as in you don't need to take your cash and pay for it, but I can assure you, it cost a ton of tax payer money, benefits are unclear, it's based on government funded research, and somehow big pharma made enormous profits which will make sure they will never be held to account.
I'm also surprised that we finally transitioned away from this farce, because for 2-3 years, it felt like they will do everything to force it onto you and vilify anyone who asks questions.
https://www.nbcnews.com/business/business-news/drug-firms-st...
> Known as "reverse settlement payments," or "pay-to-delay" deals, the financial arrangements are a unique but common practice in the pharmaceutical industry. Essentially, they allow drug manufacturers in some instances to pay competitors not to manufacture generic versions of their products, thereby ensuring that they maintain patent protection for as long as possible.
FTC is trying, but it's one of many places in society where money speaks loudly. https://www.ftc.gov/news-events/topics/competition-enforceme...
For a particularly sad example, certain kinds of testicular cancer are considered curable with off-patent drugs like cisplatin and etoposide. But those drugs are often unavailable simply because nobody wants to manufacture such low-margin drugs. See, for example,https://www.fiercepharma.com/pharma/oncology-drug-shortage-c....
There's no magic hand or market forces working in the public favor, it's competing factions exercising power.
We will continue taking a bath on everything until we organize and exercise power. It's not about "voting" with your wallet because that doesn't set the rules. The terms of engagement need to change.
Things don't have to be this way, there is no "natural law" and things won't change due to prudence. That's all just classic hustling tactics - other countries don't operate this way.
If anything, Covid demonstrated the value of drug companies. What was the economic cost of Covid, just from the shutdowns, not including the deaths and disability? I am sure it ran into the trillions.
So the drug companies made $100 billion dollars while producing an economic surplus of trillions? Sounds like a great deal to me.
I want developing new drugs to be insanely profitable. I want the smartest people to go into finding new cures for diseases instead of into thinking about how to drive "engagement" to maximize ad revenue, or playing financial games on Wall Street.
What were the revenues of Apple, Facebook, Google, Microsoft during Covid?
Where did they run the trials? Across how many sites? Do they plan to apply for marketing approval in the US or EU? Are they the manufacturer? Did they beat the cost of setting up the supply chain and manufacturing facilities prior to the phase 2/3 trials?
The answers to those first three questions will have a huge impact on the price tag.
I'm a bystander, but the gist I got from the official lists and trials is that each EU country needs it's own approval with the gov agency. It may be that "being EU" has equalized requirements to an extent, but each wants their own. (bureaucracy kills?)
One example I read about was a yet experimental drug made by a Swiss company, but the trials only run in and for the US for financial and market reasons.
While regulatory agencies may consider data generated from trials in other jurisdictions, they may ask questions about whether those data and conclusions and relevant and generalizable to their patient populations and health care systems.
There are also ethics to consider. Sure it may be cheaper to run trials in developing countries. But at what point does it become exploitative? Keep in mind that we are talking about human experiments, which is very serious business.
They have no manufacturing and supply chain, because they buy commercially available generics off the shelf for pennies.
There is a lot to say about pricing, but the guardian is shamelessly spreading disinformation.
https://endtb.org/sites/default/files/2023-11/Leaflet%20endT...
But truly greed was the real primary motivator of technological progress for the past centuries. Not the desire to benefit humanity.
They say greed kills the greedy person.
Or they could take "just enough", hire 10 research scientists, and potentially not make the next breakthrough. Or the company just dies.
This says nothing about whether this is done to cover the costs of development or not. Only an altruistic company wouldn't vary the prices.
In other words, they will sometimes make a unseemly profit on a monopoly position, but at least the existence of that possibility creates the incentive for development of drugs.
The alternative is to kill the whole industry.
Sorry - the world is not ideal.
Because there are infinite hypotheses for drug improvement, disease management, and cure.
And for the company to pursue that research, they need to capitalize on current successes.
The company needs to be able to survive in downturns.
Just like any company.