Hacker News Reader

Comment by wheaties | Hacker News Reader

Medical treatments, vaccines, and drugs cost enormous amounts of money to bring to market due to all the regulations and requirements we've created ensuring a pill is not fatal. Why would any company in their right mind develop any sort of drug if it cost $100m and anyone after them could take the idea free of cost?

Patents are good/needed to promote the quality of medicine. There they're good.

View on HN

That is exactly what the drug companies say. That's funny at is as if you are just reciting back their propaganda.

It turns out a lot more money is spent on marketing and lobbying that is spent on research. Also a lot of cutting edge research is actually performed by public universities by professors on that state's (or NIH's) dime.

> Patents are good/needed to promote the quality of medicine. There they're good.

Well that really is the crux of the argument. I would argue that patents make the medicine worse. Medicine I also consider to be the health and well-being of citizens not profitability of drug companies. I can be convinced that the current patent system help the profitability of drug companies I am not sure if it help the sick people.

That is exactly what the drug companies say

Yeah, there's a reason for that.

It turns out a lot more money is spent on marketing and lobbying that is spent on research.

Don't confuse pharmaceutical companies with biotech companies.

Also a lot of cutting edge research is actually performed by public universities by professors on that state's (or NIH's) dime.

Often, the same researcher then spins out the company that tries to commercialize the research.

I can be convinced that the current patent system help the profitability of drug companies I am not sure if it help the sick people.

Without them you wouldn't have the medicine. Then that won't help the sick people. As it stands, there is a difference between the medicine that rich people can afford and that poor people can afford. That may be morally objectionable- and maybe we should fix it. But at least the medicine exists, and eventually it gets cheaper on average for everybody.

I am very much for patent reform, but we have to do it intelligently. Where patents help- keep them. Modify them maybe. Where they are despicable destroy them.

At least in some cases in medicine-- as in other high barrier-to-entry endeavors-- I am convinced they are useful. In other cases they are infuriating.

Without them you wouldn't have the medicine.

How do you prove that? I disagree. Here my statement: Without patents you would have cheaper medicine (but I cannot prove that either)

Not only would you not have the medicine, but you wouldn't have delivery vehicles (devices, forms) either. It's because USA and Europe require such substantial testing, at various stages, to prove (1) efficacy, and (2) safety. These are not binary-outcome experiments. They are expensive (gotta pay people to take your dope and you gotta pay - and train - docs to keep an eye on them. Remember- the outcomes are not binary).

Some percentage of your population aren't going to feel well while in the trial. Is is the fault of your medicine? You better be absolutely sure. Oh wait, you can't. Can you find anybody who might be able to help you decide?

So before VCs will give you $5M, they are going to be sure that Walmart can't knock off a copy once you have the proof. That's where the money goes, and why you won't get any unless you can arrange some exclusive sales.

And, like everything else, you have to make sure that there is a paying market (meaning docs will use it and insurers will pay for it).

>Often, the same researcher then spins out the company that tries to commercialize the research.

It seems to me that you imply that there is some added value from the commercialization. But commercialization does not cause added value in itself. Sometimes, commercialization just mean marketing and profit center.

However the real question is, what does commercialization of an already founded and paid invention has to do with patents. Why should research which is paid with tax money (through NIH) be patentable, and how does that benefit society?

There is often substantial risk turning a research result (molecule X inhibits virus Y) into a safe medicine. You have to do significant, expensive testing. That is where the money is spent because that is where commercialization fails.

Also, pharmaceutical drugs don't just pop out of Wonka-like machines in a manner similar to the Everlasting Gobstopper. The production process has to be efficient. Efficiency is a function of the cost to research, design, construct and operate the production facilities and QA, and the expected returns.

Well, if you want efficiency, thats were all the factories with generics lives. They use capitalism, that is competition to produce the best product for the lowest price.

As for testing (the above comment), thats where FDA approved monopolies comes in. FDA want to incentivize testing and producing of products, even once they fall out of patent protection, so FDA themselves gives out limited timed monopolies after a drug gone through all the testing. Thats a monopoly on top of regular patents for most drugs. FDA don't assume patents to cover the cost beyond the initial research. They consider that more incentives are needed, targeted for testing and producing of products.

I wasn't disagreeing with the poster above, I was adding additional insight into what it takes to initially commercialize a product (assuming the initial research was publicly funded).

Before a decision to produce can begin, there is additional R&D into: - scale production design and cost analysis - analysis of potential market size - risks and boundaries of treatment identified via clinical trials

If the potential market size and production costs work out to be marginally profitable (to be an attractive investment): - initial outlay of prototype production facilities - scale production and distribution processes (some drugs have limited shelf life or require special handling) - market building (disseminating information about the treatment to health providers, and tracking market penetration) to make sure the market potential is fully used

Production of generics is "efficient" because by the time generic production gets underway (at patent expiration), they can sell as an alternative to a pre-built market with processes already proven by years of practice.

What prevents generics to do cost analysis, market research, prototype production facilities, scale production and distribution processes, and market building? Isn't those step normal procedures for any commercial venture. To make the car an analogy, when producing a new car, a company need to do cost analysis to weighing materials, product facilities, prototype building. They also need to do market building to push their product in a market already buzzing with competition. They need to care about the distribution processes. They can't patent this, and even if they could, I doubt the car industry would be helped by it.

Generics, like any other form of commercial entities do prefer a pre-built market. This is same for everyone else too, as everyone is currently making the same pads, laptops, phones and mp3 players as last "hit product". This however doesn't mean that there aren't any new companies trying new things. Same goes for generics. The "putting a product into the market" is't someting patents are needed or even suggested to cover. Its the cost of the invention that is covered by the patents.

Patents cover the cost of inventing. The FDA granted monopoly covers the testing. Everything else rest onto the commercial entity to resolve. This is the order of things, through patents are so far not covering the cost of the invention, as that is taken care by tax dollars distributed to research by NIH.

Thus the logical thing to do is to either cut the budget of NIH and let "patents" take care of the inventing (as intended), or reconsider patents as funding for inventions.

Yes, in any normal commercial venture, those are the normal procedures for commercializing something, which are the investment. Re-reading back to the top of this thread, I see this spun out specifically from a one-liner about research by professors at public universities. The funding sources for professors at public universities is varied (depends on what funding they have managed to gather and what strings were attached, and what they were intended for), and the degree that the results of their research is clinically applicable also varies. A researcher may discover that a certain receptor on a cell's surface responds to a specific molecular structure, but this is far from being a treatment. Depending on who funded a particular research study, the results may be pre-assigned to a private entity, or may become public information. It all depends on how the research was commissioned. In any case, university researchers don't usually create new drugs, they discover relationships; they just don't typically have that mandate (as far as I am aware, which admittedly isn't that much).

Incidentally, patents are not to cover "invention" costs, they are so that inventors can get the rewards of invention while at the same time exposing their invention, rewards and costs are not the same thing. For drugs, public exposure is a necessity of the way we require FDA approval; since without such regulation, drug related litigation would ultimately end up in open court anyway to prove liability or negligence, it has been deemed a public good to do this public exposure prior to market introduction, and require a degree of pre-approval (that we assign directly to a government agency).

In the US of A, the FDA grants neither a monopoly, nor a patent. The FDA's purpose in new drug development is the declaratory judgment regarding the safety or applicability of a drug. It is perfectly possible to get a patent, but fail FDA approval. It is also possible that the process to produce a drug at scale is itself a novel application or invention and itself patentable (though that may also need FDA approval separately from the drug treatment).

It is perfectly possible to get a patent, but fail FDA approval.

I believe this happened to Eli Lilly yesterday. EDIT: Not sure it was Lilly- I heard the news on the radio this morning and I can't find the source on the news sites. Annoying.

and eventually it gets cheaper on average for everybody.

Sometimes cheap drugs get more expensive, so that's at least not a universal truth.

http://www.nytimes.com/2012/12/30/business/questcor-finds-pr...

> It turns out a lot more money is spent on marketing ...

The cost structure of marketing has diminishing returns with a very long tail. The first $100M might give $1B in revenue, the next $100M might give $400M, then $100M/$150M, then $100M/$105M, then $100M/$101M, and so forth.

The last $100M of the markeing budget only has a miniscule percentage profit, but a miniscule percentage is $1M. So it gets spent. So marketing budgets appear to be gigantic, but is is because most of the customers are marginal and barely need the product, not because R&D is being short-changed. In fact, this approach maximizes absolute R&D funding. Yes, R&D becomes a smaller slice of the pie, but this only matters to people who cannot do math.

I think you explain why it is smart to spend money on marketing. But really for medical use, I find that marketing can be dangerous. I mean creating a need for a drug? really?

Marketing + lobbying expenses are not mutually exclusive with research expenses. Companies maximize revenue, and to do that you need both marketing and research expenses. As it happens, throwing more money at research doesn't work (see Pfizer), and throwing more money at market often does.

Most of the money is spent on passing FDA approval and testing. Research is a small portion of the cost, you are correct there.

The real problem with patents is that they don't protect the idea, they put it in public and try to give a monopoly to a certain person or 'legal person'(corporation). The medical patents are designed to encourage disclosure so that the medicine can become widely available later. That is the real reason medical patents are beneficial to society. It's a deal that has to be made where both sides give a little and both sides gain a little. I know we haven't seen a lot of this in America lately, but it's compromise.

If you really want to keep something a secret, you don't patent it. I think the law should allow non-profits and things like universities and hospitals to violate patents and copyright for the public good. That would get rid of the "they aren't helping sick people" problem and still keep the profits for the drug companies.

You're just reciting the standard line which I already acknowledged in my comment. My point was that some of the most promising avenues of research are ignored because of the lack of patentability. How do you address that point?

Would they be addressed if patents didn't exist? I doubt it.

That's exactly GP's point: If you can't patent it, it won't get made.

Or we could take the money those pills cost, give it directly to researchers, and open source the results. Lower costs, same results, money left over for plenty of other things. I mean you do know the US has the worst cost/lifespan ratio of the western world, right?

I mean you do know the US has the worst cost/lifespan ratio of the western world, right?

Yup. It also invents the medicine.

I take it by your flippancy that you disagree. Am I correct in assuming that you mean to insinuate that removing the profit incentive for Big Pharma executives (cancel patents) without reducing the salaries of researchers (use the saved cost on research) would render the US incapable of inventing any medicine at all? Because I disagree with that.

Yes. Here's a quick reason why: http://news.ycombinator.com/item?id=5001897

You don't seem to understand where the money goes.

You wrote that because research costs money, nobody will fund it without patents, completely disregarding the argument that there are other ways to fund research.

I'm writing about what happens, not what I think should happen. I'm not going to try to defend the status quo. I'm for patent reform also. But I can see where some form of patents may be advantageous. But I'm trying to stay out of that discussion. There are people who know far more sides of the story than I do who are in a better position to suggest models of patent reform.

Are you saying that the US invents the medecine ? If yes, do you have any sources ? If no what are you saying ?

Yes, that's what I'm saying. I don't have time right now to compile the sources- but there have been exposèes on the subject of medicine invented in US sold to Canadian and European markets at gov't negotiated prices (and then black-market sold back to customers in the US at lower prices than available in the US).

As far as where the bulk of the research is done? Well, you can look that up yourself.

I would love to have your sources then because it sounds silly to me. But may may be you should define medecine first.

By going through all the regulations and requirements, drug companies already receive by the FDA a limited monopoly on top of patents.

It should also be said that, around 95% of all medical research around life threatening conditions, and base theory, is already being payed by the government (a total of 1/3 of all medical research across all areas (human and pets)). If patents are so good and needed for the promotion of quality of medicine, why is then the US government today paying for most of it in direct funding, some 26.4 billions?

I think what you're really saying, in so many words, is that research in important medical treatments, vaccines and drugs shouldn't be left in the hands of drug companies at all. Maybe all basic research should be funded by the public and made freely available to all companies that want to utilize it. Sure, companies won't be able monopolize the cure for cancer, but who thinks that's a good outcome anyway? Let them compete on price and marketing the way they already do with aspirin.

Actually many of these requirements were created so the cost of creating new drugs is sufficiently high to keep out new companies. The FDA is big pharmas moat.

Reply on news.ycombinator.com