Comment by belorn | Hacker News Reader

Comment by belorn | Hacker News Reader

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There is a other point of view, if one looks at who is paying the cost of the medical research: The public.

How is medical research founding supported? In order of prominence: Tax money from NIH. State granted and enforced monopoly in the form of patents. State granted extended monopoly (after the patent is expired) which is granted by the FDA, including exclusivity to the data from testing. There is also affects from insurance and the health care system, but that one is much more complex to evaluate in this context.

A completely unregulated industry could had produced faster results, but in that case its business model should not be in an depended relationship with the government. It should not get the majority of its founding from tax money. It should not depend on state granted monopolies.

As it is now, FDA is the regulation that enforces the public right to get what it payed for. Its their money after all. If one would like that to change, one should start by removing tax money and government monopolies to be the sole critical part of medical research.

Lot of important points to engage there, and generally agree with the spirit of the comments. I think many biotech startups would instantly take a deal that gave them and their patients the ability to opt-out of FDA, in exchange for some demonstration that they aren't using public funds (e.g. committing to not use some fraction of the research literature, ineligibility for all govt grants, etc.).

Regarding patents, they are a form of artificial scarcity on the sales end. Regulation is a form of artificial scarcity on the R&D end. That's why regulatory affairs and IP are the two most important departments in any pharma company.

It's useful to think about what the pharma industry would look like with no FDA and no IP protection. It'd look a lot like food, energy drinks, or supplement manufacturers, making commodity products with marketing as the primary source of margin. Generic drug manufacturers are a good first step towards this; we'll see more of this in the near future with the pharma cliff and end of many major drug patents.

Incidentally, the intersection between regulation and IP produces some extremely bizarre behavior:

http://www.fda.gov/downloads/Drugs/.../Guidances/ucm079342.p...

  This guidance is intended to provide industry with 
  information on how the Food and Drug Administration (FDA) 
  is applying the 180-day generic drug exclusivity provisions 
  of the Federal Food, Drug, and Cosmetic Act (the Act) in 
  light of recent court decisions. The guidance
  addresses the issue of the elimination of the "successful 
  defense" requirement, which required an abbreviated new 
  application (ANDA) applicant to be sued for patent 
  infringement and to prevail in the litigation to receive 
  the 180-day period of marketing exclusivity.

How crazy is that? For many years official FDA policy was that a generic maker had to actually be sued for patent infringement - and win in the lawsuit - as the condition for receiving a 180-day monopoly!

I can get into the duct-tape upon duct-tape that led to this bizarre state of affairs, but think about how perverse it is that the FDA was telling companies to break patent law (or at least risk a civil lawsuit) as a matter of policy. That's the kind of thing you uncover when you actually look at how regulations are implemented.

Finally, regarding funding, yes, NIH spends about $31B per year, which is a lot. However, drug companies spend $4B per drug approved[1], which is an incredible amount of money when multiplied across all drugs. I'm not sure exactly how one could stop drug companies from profiting from public domain research as you propose. Are you saying that NIH should get into the business of drug development and/or not allow its funded academics to publish papers or start drug companies?

If you are saying the former, I actually happen to agree that NIH would be reasonably good at drug development, as Francis Collins has proposed, because as a fellow .gov it would be able to play hardball with the FDA in a way that no normal company could. Among other things, it wouldn't fear going out of business, and would be able to appeal to the HHS secretary if FDA retaliated against it. On the other hand, this new NIH-to-FDA pipeline would lose a lot of checks and balances; it'd sort of be like HHS as the large drug co with NIH as the scientists and FDA as the regulatory affairs, without any real check by the market other than the nationalized drug companies of other countries.

Think about how the FDA fast tracked [2] things like TSA body scanners and you'll get a sense for what its actual commitment to safety is when it's a fellow .gov that is sponsoring a drug/device.

As a final point, if you meant instead that NIH should be abolished and academics should stop publishing papers, I think we will actually see the implosion of the US higher ed research establishment over the next 5-10 years due to MOOCs and budget cuts, so that may come to pass as well.

[1] http://www.forbes.com/sites/matthewherper/2012/02/10/the-tru...

[2] http://arstechnica.com/science/2010/11/fda-sidesteps-safety-...

> Finally, regarding funding, yes, NIH spends about $31B per year, which is a lot. However, drug companies spend $4B per drug approved[1], which is an incredible amount of money when multiplied across all drugs.

I think this $4B number is the Research & Development line off a financial report. I am not an accountant but I believe this number can include tons of things that people don't normally think of as R&D but just regular cost of doing business, and what we do think of as research is often a very small percent of it. Perhaps tax laws incentivize companies to put as many expenses in this category (of like 3 categories) as possible.

On a related point, people used to quote a number like it cost $500 million to bring a new drug to market, often as a justification for patents. I remember reading an academic article that showed how the real cost was almost always 1/20 of that, but drug companies were including the construction of optional new plants that were used for existing drugs too, 20 year leases on specialty tree farms and other supplies, and huge "present value" calculations that would take $2 million spent by a university 20 years ago, use the companies cost of capital (maybe 14%), and even though the company only paid $500k for the rights a few years ago they would calcuate some number in the tens or hundreds of millions that was never paid by anyone.

  I remember reading an academic article that showed how the 
  real cost was almost always 1/20 of that

This is the Light and Warburton study. The short answer is that it's kind of like a freshman saying "I could build Facebook overnight" by wgetting Facebook's CSS/JS. But for anyone in engineering who knows what FB's backend infrastructure is like, they know it would be nontrivial to clone FB.

The best response to Light and Warburton is that if it really took only $43 million to ship a drug, then they should raise the capital and start a drug company. It would be by far the most capital-efficient and successful drug company of the last 50 years. If they have really figured out how to cut all the fat, they would be hailed throughout the industry.

But I hope to persuade you that when someone outside the industry is off by two orders of magnitude ($43M vs. $4B), it is likely that they are the ones who have missed something important. I encourage you to read Derek Lowe's more detailed critique here:

http://pipeline.corante.com/archives/2011/03/07/the_costs_of...

http://pipeline.corante.com/archives/2011/03/08/that_43_mill...

I prefer a more clean structure in which one pick one scheme and go with it. If tax money is supposed to be the major way to fund medical research, then the goal (effective treatement) and the cost (tax dollars) should be combined to get the most treatments for least amount of dollars. The current system is not cost effective, and no attempt at even trying to bring it into some form of cost effective control has even been made. Current system is to first pump tax dollar at research, then throw state monopolies and exclusive right to medical companies so they will take the tax produced research and produce products, which in effect means that the products with the most earning under least effort gets made. Treatment effectiveness just happens to get lost in the transition, and get traded for profit vs production costs. That can not be the best use of tax money, or the power of granting state monopolies.

The $31B is considered to be 1/3 of all funding for all medical research (including humans and pets/animals). In the area of core research, including those illnesses that are life threatening, then NiH stands for around 95% of the funding.

Having the government do the research, including the testing, and then let generics do the production of the devices/drugs (under somewhat high taxes) could be one way to do it. It would likely be considerable cheaper than the current system, as it would have a hard time doing worse than the current system. The ("we are not worse than the other guy") slogan might not the best, but it would be a start to get somewhere better than now.

Or, they could do the opposite, pulling out from funding medical research. The government do not fund the research for most things. Maybe those 31B$ could be better spent elsewhere and thus force pharma to be self-dependent.

In regard to academics... If Academia fund some research, then same rule again apply. Follow the money. Is it tax money, private researchers money, or institution money that funded the research. If its tax money, then the research belongs in public domain. If its the researchers private money, then its the researchers that decide of the research. If its the institution and the research is funded by private inventors, then its the institutions decision. I might not like it when research is not published to the public domain (will considered it a bit immoral), but primarily one should honor the investor with the result of the funding. If that investor is the public, it should be illegal to prevent the public access to to the result. That include universities that is state funded.

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