The Glade 4.0

Lifetime payouts were common, yes. Hitting it was not likely, unless your insurance was not good and/or you were young.



Because it also undermines the R&D for their patent drugs.

They essentially either have to do all the drug testing twice (which is prohibitively expensive) or do all the drug testing in the US (which thanks to our tax code and various other expenses is also extremely expensive). Get rid of this rule, and I can do drug testing in China if I want, where people would line up around the block for paid clinical trials.



We assume that because of your statements and behavior. You routinely (and usually incorrectly) denounce elements of the US healthcare provider system while supporting elements of the PPACA.

What other conclusion should be drawn?

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

Which doesn't change the fact that you're trying to build a generalized case about the the healthcare system around one drug for one disease.

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"Hysterical children shrieking about right-wing anything need to go sit in the corner and be quiet while the adults are talking."

I understand all of this. You seem to have missed my point. This trial failed because the FDA tried to dodge the existing patent by using a different process. My point is they shouldn't have had to try to dodge the patent in this way. The system that allows Amgen such a monopoly IS the problem. Amgen should not have been/be allowed to hold a 30+ year monopoly on Epogen, other companies should have been allowed to copy their process and release a cheap generic a long time ago. Amgen revenue from Epogen is several orders of magnitude more than what they paid to develop it.



Yes, this is exactly the corruption I'm talking about. Do you think Amgen had nothing to do with this extension? Do you think they didn't lobby or outright bribe legislators/regulators to get this extension?

That's not corruption. It's the way the system works.

The only way it's corruption is if they literally bribed or gave quid pro quo to the regulators. Lobbying is not illegal nor, technically, corrupt.

We may both disagree with how lobbying functions, but it is not "corrupt." Furthermore, if you don't like the abuse of power, the problem is not the people.... it's the power.

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

Of the 12 approved biologics in Amgen's stable, Epogen is the only positive revenue mechanic they have. They lost nearly 4 billion last year. You seriously need to rethink your position on this. Incidentally, Amgen is the 4th highest R&D spender on the planet by ratio of outlays to revenues. They redirect nearly 50% of their revenues into R&D on the back of a SINGLE profitable product. And, last I checked, Epogen cost about $25 billion dollars to develop, making it one of the most expensive drugs in history to get to market (if not the most). Anything more expensive, Amgen likely owns.Amgen had nothing to do with Novartis's extension on Gleevec.

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what are you suggesting as a fix Khross?

TheRiov:

The same thing I've always suggested -- start removing asymmetric supply pressures from the healthcare market by eliminating (first) the bureaucratic intrusions of our government into the market. I don't oppose necessary regulation, contrary to whatever nonsense Diamondeye thinks. I don't even oppose certain national initiatives; rather, I suppose continuing to break something with the tool that broke it -- government.

The problems with American healthcare are almost entirely overhead induced.

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How are they going to make any money from patent drugs if cheap importation of generics is legal? Some foreign company is going to reverse engineer their formula within weeks and start selling a copy for slightly above the manufacturing cost.



I'm not aware of supporting specific parts of Obamacare other than the health insurance purchase mandate. I don't even think the mandate is optimal, I just think it's the best possible solution because people are NOT going to allow the health care profession to completely abandon those who can't pay. It's true that I don't post much against Obamacare, but that's mostly because I hate "me, too" posts in general and whenever I have something against Obamacare to post, several people here have already covered the point much better than I could have.

I actually agree with this, but my question is: How do you do that? With the amount of money in health care, even small advantages are worth spending billions of dollars on. How do you prevent the power players from spending billions to buy legislators to pass laws favorable to them, and then spend billions more to buy the media to tell everyone the new laws are good for them? People aren't going to magically stop being corrupt. This is why I don't think the problem is "the government." Even when the laws themselves are the problem, it was the profit motive that got those laws passed in the first place.

Do they do this in foreign countries now? Is the US special somehow?


No. Patents are still patents. I'm really not sure how else to explain it. If your development cost is halved, and your risks are therefore also significantly reduced, does your price point have to be as high? Is your ROI as much of a skewed curve?

It's relatively fundamental economics here.

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

Horseshit.

EMTALA, the FDA, HIPAA, etc. were all passed to "protect" people. They were passed as backlash to overzealous profit motives, but that's the extent any "power player's profit motive" had to do with it.

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

Yes, the US is special, it's basically the only country where the drug companies are allowed to ask whatever price they want AND where the people have enough money to afford high prices. The rest of the first world mostly consists of single-payer systems where the single payer (the government) decides how much the drug companies are allowed to charge, and this is usually a very low price that has no chance of recouping R&D costs. They don't need to do it in foreign countries because their governments are already doing it for them.



You still have R&D costs. How can you possibly come out ahead when foreign companies are allowed to sell what is essentially a copy of your product without incurring any of those costs?

Xequecal:

You do realize that you basically explained why US Health Pharmaceutical interests are responsible for the majority of drug patents?

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I think it's debatable whether he "owes" anyone anything from a moral perspective, but I certainly agree that whatever moral duty one might think he has, there should be no legal obligation involved. I also agree that no one has a right to the fruit of his labor, but that's not really the issue here; the issue is whether he has a right to a government-created and enforced monopoly over the use of the chemical formula he discovers. Intellectual property rights aren't as cut-and-dry as tangible property rights (which is why the Constitution treats patents and copyrights as contingent, government-created, legal rights rather than natural rights like free speech and tangible property ownership). How and when to create and enforce intellectual property rights has always been very much dependent on a balancing of interests rather than an inherent/natural rights analysis.

I think our current system, at least when it comes to drugs that treat serious/deadly conditions, is likely sub-optimal in a number of ways, including overly stringent FDA requirements with regard to treatments for terminal illnesses and over-reliance on market profits (as opposed to, say, subsidized research, prize-based or government-contracted payouts, etc.). That said, the pharmacological advances we've seen in recent years and that we're on the verge of seeing in the coming years are really impressive, and I would take a very cautious and incremental approach to changing the incentive structures.

Now you guys are starting to approach reasonable points for STARTING the discussion that the ACA ended.

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So, in other words, you've just explained two things:

1) Why US drug prices are so high (i.e. the regulatory schemes of governments, and in particular the price fixing of foreign governments)

2) Why price fixing drugs in the US would essentially kill all future treatment R&D




Again, then, explain to me why:

a) Government isn't the problem

b) Why you think price controls are good




Hmm, maybe if I type slowly....

Because. It. Is. Still. Patented.


Jesus.

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

RD I'm glad to see that you advocate a reasoned approach to change, however I am saddened that you see the solution to a Gov't created and perpetuated problem as being more Gov't.

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"Dress cops up as soldiers, give them military equipment, train them in military tactics, tell them they’re fighting a ‘war,’ and the consequences are predictable." —Radley Balko

Allow me tone down my cynicism and ask a question in earnest critical to helping you understand the economics at hand.

Do you understand the pharmaceutical development, R&D cycle, and patent process?

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

I just don't see an alternative to significant government involvement. Developing new drugs involves huge amounts of time, money and risk, so pharma companies need substantial financial rewards on the back-end for their successful drugs in order to fund it all. The only way they can get that in the market is if the government grants and then enforces a monopoly, which results in the moral and PR issues we've been talking about. Alternatively, if we want to preserve pharma's financial incentives but keep the drug prices low, the money has to come from somewhere, and the only entity with deep enough pockets and a public-interest mandate is the government, so we'd be looking at things like subsidized research, prize-based payouts, government contracting, etc. If I'm overlooking an alternative that doesn't involve the government (or involves it to a lesser degree), I would gladly consider it. At this point, though, I just don't see what it might be.

I'm pretty sure I do. A drug company does research and develops a drug. After some initial trials, if the drug is approved, the FDA grants then a 20-year license to be the exclusive vendor of that drug. They don't get to sell the drug immediately, it still has to go through first/second/third phase clinical trials to prove it's safe and effective. These take ~10 years and this time counts against their exclusivity. For whatever time is left after the completion of the trials, they get an effective monopoly on the sale of that drug. It's also not as simple as just patenting the "drug," they can get patents on the manufacturing process, chemical composition, and other stuff like that.

When the 20-year period expires, any other company that wants to manufacture the drug can now sell it as a generic. They can sell it very cheap because they didn't have to pay for any research costs, and the manufacturing costs are a very small percentage of the total cost to market a drug.

Pharma companies often manage to extend the life of their drugs by developing things like time release or extended availability versions of previously developed drugs, which they can get new 20-year patents on with much less documentation and trials, and then trying to get doctors to write "dispense as written" prescriptions that don't allow generic substitutions.

This is where I don't get where you're coming from on the patent angle. All the drug company's profit is derived from their exclusivity period. As soon as that ends, anyone else can sell the drug basically for cost. If you universally allow cheap generic imports, how do they make money? If importing is not allowed during the period of exclusivity, then it's essentially the same system we have now. If it is allowed, then they have no way of recouping their costs as companies will import copies of the drug and sell them for very low prices almost immediately.

No government involvement.

There is your alternative.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

Do you not think that will cripple pharma research, since anyone will be able to just copy a drug once it's been developed?

Everything prior to this is correct, so I've removed it.

This paragraph is where the problem arises.

Once the patent exclusivity period ends, other companies can legally produce "generic"copies of the drug. Doing so beforehand requires violation of US Patent law. So for the rest of this post, assume only everything has to do with the next scenario:


Now, if you want to talk parallel engineering of a drug, you could conceivably do that without running afoul of the patent. This is because, as you said, the patent is usually on the process not the compound (although this is, of course, never universally true).

So in the former case, there is no risk to the pharma company. In the latter case, the risk is that somebody comes along and creates, through some cheaper metholodogy, a drug that does the same thing. This could be a risk to the primary pharma company.

However, since the cheaper methods usually are not done within the United States, the FDA will not approve them for import. Thus, places like India and Germany and so forth have cheap generics available to them and we do not.

If, on the other hand, you were to remove the requirement for FDA screening of these drugs, the primary pharma company could reduce their research time and cost. In so doing, all other factors remaining constant, they could lower the price of their drugs. This would then make knock-off generic development much less enticing, because the price undercuts then become far less significant. This is a basic, fundamental risk-return factor in economics (and thus why I was getting frustrated).

It is important, therefore, to note at this juncture that FDA approval requirements came into place against the wishes of pharmaceutical companies.



None of this addresses the price shifting that results from governmental price controls in other countries, but that's a bigger, harder, and more complicated issue.

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

So when a pharma company (a) discovers that a compound with the chemical formula XYZ is effective at treating something and (b) develops a manufacturing process to produce that compound, their patent will usually end up being for the process rather than the compound itself, and some other company could legally produce and sell XYZ as long as they use a different process to produce it?


Why are the cheaper methods not usually done in the US?


Do you mean FDA screening for the original drug or for the copycats? If the former, that's true, but while some meaningful easing of restrictions is probably possible without undue risk, I really doubt that we could significantly lower drug prices without crossing the line into unacceptable risk levels.

Slow down, certainly. Cripple - I don't think so. The huge costs of meeting FDA regulatory standards will vanish which will save quite a bit, including getting things to market much faster. Reliance on brand trust will be a major driver to not go to generics or competitors. Then you have the people who honestly want to work on cures and not just treatments who aren't involved in major pharma operations.

The market would adapt and there would be found some way to profitably deliver new drugs to those who demanded it.

Still the fact is it is an option. You did not say you could think of no option with out other possible downsides - you said you couldn't think of another option. I gave you one.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville