Drug research is difficult and expensive.

Gah. No. That’s not even wrong.

Before the money is spent on research, there is a decision about what to research. We could be alleviating significant human suffering in the world, instead we’re trying to find the female Viagra. Is there any doubt about the reasoning behind this choice?

It’s not their fault. When you program something and it goes wrong, it’s just doing exactly what you told it to do. We create the corporation and the market and the laws and we are the actors, and it all does exactly what we created it to do – opposite our intentions. Big Pharma is broken. We’re technologists – we can fix it. We just need to create the right structure. We need to start talking about this.

How can medical and scientific research be considered proprietary, in any way? Doesn’t this knowledge belong to humanity? Why does the marketplace, with its operant conditioning and distortion, determine the priority of research? Can we delay the female Viagra until we’ve wiped out leprosy, please?

[passes out from apoplexy]

Similarly, I have no proof that patent extension would cause lower prices. I have only an absurdly good base of logic. Prices are set based upon prospective number of pills to be sold, and time remaining to work off invention debt, and desired profit. By extending the time remaining to work off the debt (ie. patent time, before somebody sells the same pill for $5 a bottle), it is logical that prices would go down, since less would need to be charged, per pill, with more years of exclusivity left. While there would remain no competition for that particular pill during the ‘monopoly’ time, there would still be competition from similar treatments for identical problems (which exist except in very rare cases). Competition plus normal patent time would, logically, lead to lower prices, since prices COULD go lower.

It tends to worry me a bit that people so often refer to sale of drugs under patent as some form of ‘monopoly’, while just about any OTHER invention, people don’t mind the patent being granted. Yeah, the pharmaceutical industry can be abusive and immoral. And it’s fine to look to fix those things. But it SHOULDN’T be singled out as unable to make use of patent law, like every other industry gets to. There is plenty of competition out there. The industry already gets fewer years off a patent than almost any other industry in existence. And they do something that’s actually pretty darn important to modern society. I can’t blame them for wanting to recoup their research expenses.

And, despite what folks here say, drug discovery is exceptionally expensive. Not the actual design of a compound: that IS fairly cheap, and a lot of that DOES come from academia or other publicly funded sources. But then there’s clinical trials. Those are stupidly expensive. And most compounds fail during said.

So, the companies work to discover drugs that will turn a profit. Because without a profit, they can’t afford to design drugs. Which is why diseases that target 0.1% of the population will forever stay unsolved under this model. I’m not saying it’s great. I’m just saying it makes sense. And that this government model not only won’t work to change that, but fundamentally CAN’T work to change that, as currently proposed. There almost certainly is a better way. This isn’t it.

Drug companies TRY to estimate the risk and reward of developing drugs, but they often get it wrong. Nevertheless, they know that if they can get into a new market, odds are they will recover their costs and earn a profit. Setting up a prize committee to adjudicate a reward will just result in pharma “teaching to the test”, that is, developing drugs that meet the barest minimum criteria for getting the prize.

There is simply no reasonable way to estimate the value to society of treatment at the level of granularity that is required to actually develop a drug. What would a committee reasonably be expected to set as a prize value for a cancer drug that works for only 30% of patients? What if there could be a diagnostic to tell which 30% would benefit? What if it worked only in combination with a commonly used chemotherapeutic? What if it only worked in combination with surgery?

The only people who can come close to addressing these issues are the people who are currently developing or prescribing these drugs. I’m pretty sure that having the drug developers set the payoff values is not what the supporters of this bill have in mind.

So do we add political oversight of the payoff matrix for drug development? That seems even more fraught with risk of manipulation than the current system.

Another problem that I’ve mentioned before is that the development failures are subsidized by the successes. Any prize structure would have to take this fact into account, or no-one would want to participate.

Finally, there is the problem that innovation, when it occurs, usually does so in areas where no-one expects it. I’d expect that a truly innovative new approach to treating a disease would not be foreseen as a possibility by the medical prize committee. If such a treatment was not in the payoff table, then there would be no possibile rationale for developing it. The system of competition in a free market*, despite its many flaws, at least encourages innovative people and groups to make risky ventures into unexplored areas.

My (somewhat educated) guess is that the price of medical treatment in the US today probably pretty fairly reflects its actual cost and value overall. It is truly phenomenally expensive to provide the kind of health care that we’ve come to expect. (In the case of one successful cancer drug that I have direct knowledge about, a mandated 10% decrease in the drug’s price would wipe out the entire profit margin, and make the drug’s development and manufacture a money-losing proposition.)

I agree completely with your last paragraph: just because a treatment is possible doesn’t mean that we as a society can afford to deploy it. The reality that no-one wants to confront is that maybe we expect too much from our health care system. Maybe we need to get used to accepting our fate when a doctor tells us that we or our loved one have 2 months to live, instead of insisting that everything be done to avoid what we see as a premature death.

*Not claiming that this is exactly what we have now.

http://www.phrma.org/media/releases/rd-investment-us-biopharmaceutical-companies-reached-record-levels-2010

My (somewhat educated) guess is that the price of medical treatment in the US today probably pretty fairly reflects its actual cost and value overall. It is truly phenomenally expensive to provide the kind of health care that we’ve come to expect.

Interestingly, this is a proposition that can be tested, or at least investigated. There are at least 30-40 countries in the world that have the level of health care “that we’ve come to expect”, and their overall costs are known (whether paid for by their respective governments or individually by the patients).

Generally, the per-capita cost of this health care is about half of what it is in the US. There are some exceptions (Luxemburg, Norway and Switzerland), and some manage on a lot less (eg Singapore), but about half (40% to 60%) seems fairly common.

To put it another way, the US government spends $3074 per capita on health care. The UK government spends somewhat less, $2939 per capita [1]. In the US, patients privately pay once again that much, in the UK health care is free at point of use. The health outcomes are pretty similar, with possibly the UK slightly better but pretty much a photo finish.

Conclusion: Either the citizens and governments of a dozen nations are managing to get some fairly substantial discounts… or the US is being over-charged.

[1] Figures for 2006 (latest) from http://www.gapminder.org

Any AIDS activists on BB, please chime in on this aspect of the proposal.

So, at the current amount proposed, no more than 10 very simple, cheap drugs could be put on the market each year. More likely, it would be closer to 5. Which means either a lot of research wouldn’t get done, or a lot of companies would be left with no possible reward for daring to finish a week later than their competition, or the fund would have to be enlarged, tremendously.

Similarly, there is an absurd amount of information about drugs and biology put into the public sphere every day. The NIH funds it by the gob-full. Will this be double-funded by this proposal? Or is it merely industry that gets a reward, when it releases the research that won’t ever be profitable, just like it normally does to get papers for its scientists?

Finally, re: drug patents, it really is worth remembering, the drug companies get the short end of the stick when it comes to patent law. A drug company has to patent a drug a few years before it would even potentially hit the market, specifically before clinical trials begin (the most expensive part of the process). By the time it does hit market, if it does at all, vastly less time is left on the patent than would be left for the patent for almost any other invention in the country (and certainly VASTLY less time than the money-making rights for some guy who spent 2 days and $30 bucks putting pen to paper, and writing a song that happens to jump to number 1). So, the company needs to charge even more per pill, over an ever shortening length of time, to recoup those tremendous expenses.

This, of course, also leads to why drug companies now take rather unethical shortcuts, selectively publish data, etc. People want more drugs, but don’t want to pay for them. And here’s the government threatening to abolish any attempts to turn a profit, and set an almost certainly sub-standard ‘prize’ for taking the time, effort and risk to invent a new compound.

A much simpler way to help fix the problem would be to extend drug patents. Let the companies actually have a monopoly on their sales for as long as any other inventor is granted one, and prices would go down, since less profit would need to be generated per year. But a government prize, with a spectacularly small fund, and a discriminatory law against profit (which is all denying patents to a single class of inventor is)? That just guarantees an end to the American pharma industry. And a lot of lost jobs, and lost expertize.

On top of that, these companies only hold the patent for seven years. After that the drugs that these companies created can be generically manufactured. So in essence, drugs take several years to research and test before they can even be approved by the FDA and then they have only seven years to recoup that investment before other companies can swoop in an make profit off of their hard work.

A prize like this won’t stimulate research in new drugs, it would likely kill it.

I really like Bernie Sanders, but this is a terrible idea.

Then add in cost of R&D, animal testing, legal, FDA and other expenses and you’re looking at how why drugs are so expensive. And that doesn’t include the vast majority of drugs that don’t even make it to clinical trials. Plus a cancer drug takes on average 6 years to go to clinical trials then another 8 years before approval and you’re looking at a huge risk (and money).

1) the organizations developing the drugs still have to come up with the development costs, while hoping that they won’t fail (which is *overwhelmingly likely in all drug development*), or be scooped by a competitor, or just not meet the requirements for the prize. This will make an already risk-averse industry even less likely to pursue anything but sure bets, if anything. Rate of new drugs slows dramatically. Very bad for patients with diseases that are not yet curable or easily treated, i.e. who will rely on future innovation. 2) If you don’t trust the boards of pharmaceutical companies to collectively act in patient interests (because you think their incentives are misaligned with), do you trust a much smaller group of government executives with even murkier incentives to get it right?

I applaud the innovative thinking on this problem. This idea just isn’t the right one for patients.

Oh, wait.

My issue is with the strength of Big Pharma’s lobbying interests which will blindly attempt to smack down any attempt at reform, regardless of said reforms potential benefits.

Also, the Sanders’ Prize Fund bills do provide mechanisms to reward interim research. You might want to read the bills and the background materials to see how they are designed. The big bill would also provide $4 billion a year in incentives to openly share R&D, addressing one of the biggest problems in the biomedical R&D — not enough collaboration and openness.

Normally the argument would be that a prize system artificially fixes a market size and distorts the economics of the situation. But the beautiful thing is that the pharmaceutical industry is already a heavily distorted market place. The consumer of a drug is not the one paying for it. So product costs have already been decoupled from the profit margins.

Added bonus? No more viagra spam, because the actual product would be priced competitively with the knock-off.

Thereafter it should be my right as a consumer to make that risk/benefit decision for myself. The government should not make that decision for me.

Google “Abigail Alliance v. von Eschenbach” to see where I am coming from.

Phase I:         314,000        1,570,000
Phase II:        386,000        5,790,000
Phase III:     7,800,000       78,000,000

Phase I-III    8,500,000       85,360,000

Your high estimate of the cost of Phase I-III trials is $85.4 million per drug. $80 billion is 937 times $85.4 million. $80 billion is 9,412 times the low estimate of $8.5 million per drug. The U.S. only isn’t the whole global market. Last year drug companies only registered 15 new molecular entities in the U.S. market. Only 6 were considered, by the FDA, to be significantly better than existing drugs. Does this sound as though the current system is working well?

“TAXES BAD! ALWAYS! FOREVER!”

The bureaucrats are afraid that they’ll get sued, or fired, or hied up in front of a Congressional committee if 14 people suffer from unexpected side effects.

The 1,500,014 people who were helped by the drug and had no side effects don’t get a voice, in the matter of course.

It was about 400 -800 million, depending on what was included.