[TheIntercept.com] Responding to tough talk by presidential candidates about price gouging by drug companies, pharmaceutical executives have told investors that they are working actively to influence the political debate. And in a move that reveals how much leeway drug firms actually have over pricing decisions, some are even saying that they have minimized price hikes in recent months to avoid attracting attention.
Democratic contenders Bernie Sanders and Hillary Clinton have both called for the government to do much more to bring down the price of medications. And last week, Republican candidate Donald Trump came out in support of allowing Medicare to negotiate for cheaper drug prices, a move that places him even to the left of some leaders in the Democratic Party. Drug prices are jacked up in the USA. The same drugs are far cheaper in Canada. This could be easily fixed by passing a US law requiring that all drugs sold in the USA must have a price no more than the lowest price offered anywhere in the world.
We could easily have Canadian prescription drug prices in the U.S. In fact, we already do at the VA. The VA accomplishes it the exact same way Canada does: by negotiating with the manufacturers the price they are willing to pay for medications, and by strongly restricting which medications their patients may get. The VA,and Canada, only allow prescribing older, cheaper medicines, most of which have come off patent and are made by generic producers... and don't work nearly as well as the newer meds, as well as having nastier side effects.
It is very expensive to develop a new medication, only partially because the FDA has become more risk averse over the years. As of a few years ago, it cost $2.87 billion -- with a B -- to turn a scientific discovery into that prescription your doctor writes, a process that takes on average ten to twelve years. And that's for the discoveries that are successfully turned into medications.
Venture capitalists expect that only 25% of the ideas they invest in will go on to turn a profit, ie. they have a 75% failure rate. New drug research has a 98% failure rate, which means that the overhead each successful drug carries is a great deal more than the mere $2.87 billion mentioned above -- there is no guarantee that out of any fifty projects, one of them will work. So pharmaceutical companies have to have hundreds of projects going at once, hoping that at least one of them will pan out.
But where pharmaceutical companies are not allowed to "jack up" their prices to cover research costs, they simply stop doing research. To do otherwise would bankrupt them within months. (This is why we haven't had a significant new antibiotic in decades -- at a time when more diseases are becoming resistant to the current antibiotics. I really, really don't want to go back to the old days of hygiene and hope, but that's where we're headed.) Generic drug companies in the US don't do original research. They just have to show that their products contain the same amount of active ingredient as the name brand that spent $2.87 billion and twelve years to develop the thing.
Which brings up another issue: patents. Drug patents, as I recall (it's been a while since I worked in a lab), are good for twenty years, after which anyone can make them. Drug companies take out a patent as soon as they think they have something viable -- because what's the point of spending all that time and money if someone else can claim prior discovery, and therefore sole right to manufacture the result? Out of a twenty year patent, the company therefore has on average eight years to make enough money to pay off the cost of development plus the overhead to keep the company going before they will have to drop the price to near that of the generic companies if they want to keep selling the medication at all.
This is why most of the new drug research in the world is done in the US, with most of the rest done in Israel. Take that away, and you will get to have the latest research from 1990, just like they do in Canada, and never know that it could have been better. Or in cases like mine, or anyone infected by the Zika virus, that there could have been any treatment at all.
Posted by: Sven the pelter ||
02/05/2016 00:00 ||
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#1
It's been some time since I practiced but ....
The patent timeline is only going to get more negative from here on out. Until a couple of years ago the US, alone, utilized a "first to invent" system. However a couple of years ago our illustrious political masters implemented a longstanding dream of our European and Asian competitors and "harmonized" the US system with the rest of the world by adopting a "first to file" system. This incentivizes earlier and more frequent filings.
In light of the rather extraordinarily protracted timelines involved in bringing new drugs to market, thanks largely to our hyper-regulatory state and the unlimited liability to which we subject pharmaceutical companies, this incentive to file even earlier will only shorten the effective profitable term of any patents that actually issue for useful compounds. Recall that the term of a patent is presently 20 years from the filing date, itself a worse deal for patent owners than the prior 17 years from issue date regime. Thus, even earlier filing + constantly lengthening lead time to market = ever shortening window in which to recoup one's investment. Which, in turn, leads to higher prices during said shortened widow.
As noted above many single-payer systems simply won't allow new treatments. Other nations regulate the cost to less than necessary to keep the lights on in a third world factory (forget about recouping research costs or meeting FDA manufacturing requirements). Much of the world does not recognize drug or other medical patents. Many of those governments encourage, even actively participate in, counterfeiting. The free rider problem here is as enormous as it is intractable; a few hundred million persons, primarily in the United States, essentially pay the cost of all the world's pharmaceutical R&D.
One cannot have unlimited liability, absolute safety, heavy-handed regulation, a trend towards lessening the financial value of IP and a robust pipeline of new treatments. Sadly, it's the latter that will die while the others march on.
[DAWN] ON Nov 5, 2013, Brian Holt, a hospital porter, died after colliding with a lorry in East London. His death marked the start of a two-week period that would see five more cyclists die in a series of accidents across London.
When another cyclist -- the sixth in a fortnight -- died from a similar collision on Camberwell Road, in a remarkable show of solidarity, more than 1,000 cyclists staged a 'die-in' protest outside Transport for London's headquarters in Southwark. As the protesters lay on their backs with their cycles flattened across the floor, they demanded greater governmental spending on improving road safety for cyclists. The government responded and Metropolitan Police launched Operation Safeway -- an effort to improve road safety by deploying officers at key junctions across London during rush hours.
A little more than a year later, and several thousand kilometres away, seven gunnies from the Tehrik-e-Taliban Pakistain (TTP) stormed the Army Public School in Beautiful Downtown Peshawar
Continued on Page 49
Posted by: Fred ||
02/05/2016 00:00 ||
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#1
Is it not Allah's will?
Irony aside, the author makes a good point which leads me to believe that he was educated in England.
Posted by: Sven the pelter ||
02/05/2016 11:14 Comments ||
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A multi-volume chronology and reference guide set detailing three years of the Mexican Drug War between 2010 and 2012.
Rantburg.com and borderlandbeat.com correspondent and author Chris Covert presents his first non-fiction work detailing
the drug and gang related violence in Mexico.
Chris gives us Mexican press dispatches of drug and gang war violence
over three years, presented in a multi volume set intended to chronicle the death, violence and mayhem which has
dominated Mexico for six years.
Rantburg was assembled from recycled algorithms in the United States of America. No
trees were destroyed in the production of this weblog. We did hurt some, though. Sorry.
[TheIntercept.com] Responding to tough talk by presidential candidates about price gouging by drug companies, pharmaceutical executives have told investors that they are working actively to influence the political debate. And in a move that reveals how much leeway drug firms actually have over pricing decisions, some are even saying that they have minimized price hikes in recent months to avoid attracting attention.
