But not for a customer who is literally dying to take advantage of that same "global market" to save himself?

Like everything else in the global economy, laws are only enforced to protect the strong against the weak, and yet we wonder how all the wealth is accumulating in the hands of the few.

That makes sense. It is interesting that when usually there are "anti-globalization" protests shown in the media, the protesters are presented as fringe idiots, violent, with facemasks and so on. Sort of implying "look at these crazies not wanting countries get close to each other, trade and be friends". The truth is globalization is overloaded to apply only to large companies. And usually the more they "globalize" -- the more they create inequality and pain for those at the bottom. So then they also end up increasing border controls, formulate various laws and agreements and ram those through each country's legislature to protect segmentation and control of market.

We live in a society in which those who control large corporations argue that it is virtuous to relocate significant portions of the business to locations which are cheaper due to more lax or nonexistent laws protecting workers and/or the environment, and thus consumers back in the US receive the same quality of product but at a lower price thanks to the location-based saving.

This opens up a counterargument that it should just as equally be virtuous to purchase medication from places where the retail price is cheaper due to more lax or nonexistent laws protecting intellectual property claims in pharmaceuticals, by which process consumers back in the US receive the same quality of product but at a lower price thanks to the location-based saving.

After all, protection of workers, protection of the environment and protection of intellectual property are all sliding-scale values; if it's fair for one person to do arbitrage on one of these in order to make money, why shouldn't it be fair for another person to do arbitrage on another?

I don't think this is entirely fair. Some of the lower cost can surely be attributed to lower cost of living in those locations, not necessarily due to more lenient laws.

In that case, it isn't comparable to arbitrage over IP.

I wonder what the rate of mass suicide is in general for "all 50 states of the United States" vs Chinese companies like Foxconn.

Didn't happen at Foxconn. They were all on separate days over a few years. Not sure where you got "mass suicide" from. It's not mentioned in the comment you refer to.

So, yes, that's unusually bad with not many in the U.S. that can compare. I'll be interested if you know any companies in the U.S. where over ten people have jumped off one roof with company installing safety nets.

source: http://lostallhope.com/suicide-statistics/us-methods-suicide

This actually has more odds of happening.

I've been inside Chinese factories and they seem just like factories anywhere else. Americans need to stop imagining China as some giant North Korean slave camp. It's got very low unemployment, a huge middle class and quite reasonable working hours, pay and job mobility, especially for young people like those Foxconn workers. Health and safety is a wash though but that's another matter.

Of course, China could always reduce their media censorship so we can get honest coverage of everything. Then, we might know more. :)

The whole medical system in US is broken. This morning I had a strange thought... I need to prepare for trips to US the same way I'd prepare for going to a third-world country: by buying a special medical insurance! It's one of the important TODO items when going to certain countries.

Fun fact: I can get a medical insurance that covers US with deductibles in low hundreds of dollars by doubling my not-so-high premium. As an expat. How crazy it is that I can get a better deal on insurance in US than local people?

If it were legal in the US, no in-patient care insurance would be pretty cheap as well. I'll agree not as cheap as ex-US, but a hell of a cheaper than Obamacare plans.

Regarding US share of research funding versus the rest of the world, this is well established... Public funding and private profits are the two big US sources of medical research dollars. The NE Journal of Medicine reports that the US funds about half of all global medical research spending, and that's split approximately evenly between public and private funding.

Here's [1] a CBO paper on the topic of pharma R&D spending / reinvestment which is also worth a look. R&D as a percentage of sales ("research intensity") is higher in pharma than almost any other industry, and increased significantly in the 80s and has held constant since then.

[1] - https://www.cbo.gov/sites/default/files/109th-congress-2005-...

Howso?

(Upvoted, just out of the feeling of irritation at this.)

Important to note is that that profit margin is after taking into account that pharmaceutical companies spend more on advertising than they do on research. How about we just take out the profit margin, take out the advertising and give the money directly to universities who already do a lot of the research and then make the results freely available? That way US citizens on HN will still be able to feel superior about subsidising the healthcare of the 'entire world' and everyone will have access to low cost generics.

Citation: "5 percent of the United States is the world's population and consumes 75 percent of the the world's prescription drugs."

https://www.drugabuse.gov/related-topics/trends-statistics/i...

(And by "Americans" I and the gov included all those people in the US market who are not "US citizens". Ie me.)

I am ok with that. They can take even more taxes out every month if it means people get access to better healthcare.

By the way pharmaceutical companies also free ride on public universities. Research is often done there. Even if it is from grants, it often means professors end up working and spending their time for pharma companies instead of doing other things like teaching students.

Moreover, if our goal is to win hearts and minds and I don't know, promote Democracy (at least that is what the propaganda tells us), isn't providing health saving medication or building hospitals or schools working towards that goal better than say overthrowing their government or threatening to invade.

Going back to Western Europe, I hear it is already possibly to go to Germany (or was it Norway) and attend a 4 year university there for free. Isn't that free riding So they can have our pills and we can go there and not pay $200k in student loans. Globalization and free markets, we learned that was a good thing, right ...

It's time to reign in patent protections, specifically regarding extension patents, and bring in compulsory license maximums for prescription medicines. Give drug companies 5 years exclusivity once they react market... after that they can only charge X per day for licensing... imho that should probably be $10/day/prescription, and drop every year.

Patent protections, in this case, and many others actually exceed the value they provide to larger society, so I'm in favor of limiting them in this case as opposed to removing them entirely. I understand there are a great amount of expense, but that is usually recouped within 3-5 years, and often in medication less than that.

Earlier competition will lead to better pricing structures that are less restrictive over marginalized costs. In effect benefitting consumers.

The key point in the constitution behind copyright and patents are "limited" exclusivity... those limits don't always have to be larger... sometimes they need to be smaller, and some industries aren't the same as others.

Free ride? You think pharmaceutical companies just come along and pluck the best drugs for free? No, they out-license it from the university and pay royalties.

How else would Northwestern University build a brand new chemistry building from their Lyrica royalties?

So nice for them to be able to pick and choose the successful research while not having to absorb all the other, less interesting research funded with public money.

Complaining that drug companies are free-riding on public research is like complaining that the local 7-11 is free-riding on the public safety provided by police officers.

[1] https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...

[2] http://healthaffairs.org/blog/2015/07/06/serious-risks-and-f...

First off, no, marketing is not where most of the money is spent. Second, marketing spend has a positive ROI, so they get more money back than they spent.

Lastly, this entire discussion is about a wonder drug that cures a terrible disease and you claim most new drugs are minor tweaks.

Or are you claiming that Europe isn't meaningfully free-riding simply because new drug development just isn't valuable, and we'd be better off with much less drug research? I think that's a defensible claim, but it's very contentious and should be stated clearly if you believe it.

We'll get endless varieties of new opioids, blood pressure pills, pecker perkers, and not much else.

What econ doesn't teach is that people are not perfectly rational creatures. Just like we will find people who will write code for free, who will make music for free, there will always be people who are searching for cures for the sake of searching for cures.

I don't buy the argument that only Big Pharma who can deliver cures. As the article pointed out, Gilead didn't develop the cure. They bought the company that did.

No matter how altruistic you are, as a private company you can't put billions of dollars toward a drug that's going to lose money.

>I don't buy the argument that only Big Pharma who can deliver cures. As the article pointed out, Gilead didn't develop the cure. They bought the company that did.

... which they would not have done without the expectation of a profit.

That said, I don't disagree that money is the only motivator. However, good intentions aren't enough to develop a new drug. It takes a hell of a lot of money as well.

If you don't create incentives for private investment, then you need to get that money somewhere else.

And then India can purchase/void their domestic patent, allowing generic brands to fill the market the original creator decided to abandon.

Should Americans pay for a disproportionate share of pharma revenue? I for one am so happy for all the medical research that we fund in this country, it is probably the best thing we can possibly do for the world. Of all the American foreign aid and foreign intervention, very little else will compare to the amazing impact of widespread access to Harvoni/Sovaldi in India. That is truly an amazing gift that America is giving to India, and it's made possible exactly by extreme price discrimination.

This is an amazing miracle cure for a deadly disease. My understanding is that it cost a lot of money to develop, and took a lot highly skilled work, and involved a fair measure of risk of total loss. We want wins like this to be rewarded. We want a significant fraction of the dollars this drug earns to ultimately be re-invested in more of this kind of R&D. We definitely want more drugs like Harvoni/Solvaldi coming to market.

So the conflict I have is, when manufacturing is not the bottleneck, you want to get this cure out to people everywhere, but at the same time you can't afford to pay for it all to happen in one year. So you see cases like OP where they won't pay for the treatment until you are showing symptoms. But the cure is so easy, nobody wants to wait for symptoms, and how can you blame them?

It can be solved by extending patents in return for lower prices. Then the government must enforce patents internationally by putting pressure on countries that ignore patents.

Another concern is poor quality from knockoff manufacturers. You can partially solve that by lowering costs because the original product becomes more competitive. You can also try to apply pressure on countries that don't honor patents.

You can complain about the cost, but you can't just make pharma companies sell their products for less because you believe they are too expensive. You need to give them a reason to believe that they can continue to sell a good product and make money off of the research investment they put in. You also need to give them incentive not to make small changes to drugs to renew patents when the original version of the drug might be a better version.

Granted, it is sick when people make an excessive amount of money at the expense of those most in need. But, most of the bad that happens in pharma is due to suboptimal patents and suboptimal patent enforcement.

One of the reasons why generic drugs prices jumped so much in the last few years, if because manufacturers said "screw this" and just stopped making the drugs because the margins were so low.

Without competition, you get inflated pricing.

I'm guessing somehow both formulae are covered by the renewed patent, but that is wrong on so many levels.

But thats the thing. There will be no drain in revenue as they make money in the US by selling for $84K while they make money from the sales in India as well due to licensing agreement (albeit a bit less revenue).

Overall, still a pretty good deal for these pharma companies if you ask me otherwise why would they even do such a deal with India ?

At the end of the day, you need to give smart people a reason to make their lives' work saving lives instead of selling financial products or advertising algorithms. That's not going to happen if going into drug development means topping out at GS-15 in a government lab.

Maximizing rent-seeking doesn't seem like the wisest course of action.

http://www.costofwedding.com/

It is absolutely reprehensible behavior. If $1,500 is a reasonable price point and profit margin for a company elsewhere in the world then $84K in another part is simply outrageous.

As a matter of economics, the value of something doesn't (or shouldn't) depend on how easy it is to get financing for that thing. In fact, your financing example cuts the other way. That $33k new car is actually worth more like $40k to the buyer, because that's how much they pay after financing it. The market shows that people value an average new car at > $40k. So how is it unreasonable to say that the value of a Hep-C cure is at least $84k?

> It is absolutely reprehensible behavior.

Gilead is saving lives. Apple is making money hand over first selling shiny trinkets that nobody really needs. Which is the reprehensible one? What you're basically saying is that a company should make less money for creating products that fundamentally help humanity. That's crazy!

People should be able to get these drugs, even if they can't afford it. That's the difference between iPhones and Sovaldi. But it's the government's job to make that happen--the companies shouldn't be forced to basically be private charities.

Meanwhile, Apple is selling luxury products that people can buy if they would like to. And those that can't, survive just fine without one.

It's not like Sovaldi grows on trees, free for the picking, and Gilead came along and fenced-in the trees and now is charging $84,000 for access. It created a cure to what used to be a terminal disease. It should be rewarded in proportion to the value of curing the disease.

Creating the cure was admirable, what it has done with it is reprehensible. It certainly has the right to make a significant profit. But a monopoly on medicine paid for by dying people with no other options does not accurately establish the value of curing the disease.

So the moral impact of a company's actions depends not on the net good done by that company, but on the "pretenses" it does or does not put on? It's morally better to waste natural resources on frivolities like new iPhones every year, instead of saving some lives (but not all)?

And if it's morally reprehensible to not save a life when you have the power to do so, aren't all of Apple's customers morally reprehensible for buying iPhones? That money could literally save the life of someone in the world that lacks basic necessities.

No, the decision to make billions extra in profits on top of the billions they would already be making at the cost of millions of lives is still definitely more reprehensible than someone spending a few hundred dollars more than they otherwise would on an essential device that provides information, communication and entertainment instead of giving it to someone less fortunate.

If it's reprehensible to have the means to save a life and not do so, then Apple and its customers are reprehensible. This is the natural consequence of your reasoning. The only distinction you can make between Gilead and Apple is that Gilead invented the means of saving lives, while Apple would have to pay someone else to do so. But how on earth does that count against Gilead? Why is Gilead evil for making profits when they could save lives by giving away Sovaldi, when Apple could just as easily save lives by buying Sovaldi for those who need it?

[1] It costs about $3,300 to save a life from malaria: http://www.techinsider.io/the-worlds-best-charity-can-save-a....

[2] It costs $4,200 to save a child by investing in childhood health: https://www.sciencedaily.com/releases/2015/07/150703072652.h....

If this were a free market system where competition has resulted in $84k being the price at which it makes sense to produce then so be it. Instead, the company can lobby to make sure the government, who we both agree should be involved here for the public good, never gets involved and buy out any company that challenges its monopoly. Then, it can take advantage of global markets for additional profits, while the people who are actually dying can't and have two options - death or debt.

I honestly can't tell if you're being sarcastic or not. I hope so...

Why are you dragging iphones and Apple into this? You are way off point.

"the companies shouldn't be forced to basically be private charities." Wow, I don't anybody has ever compared a big pharma company to a private charity before. I had to reread that sentence twice.

How about Martin Shkreli the CEO of Turing Pharmaceuticals who overnight raised the price of an AIDS drug from $13.50 to $750.00 a pill overnight? Is that OK? He shouldn't in your words "be forced to basically be private charity" right?

When interest on mortgages shrinks the house prices will become inflated. In fact it's smarter to buy a house durng a time of high interest at 400k and later refinance with a lower interest rate than to buy the same house for 800k at a low interest rate without posibility of even cheaper refinancing.

Remember they paid $11B for the right to the drug and they still had to bring it through development.

I'm also in the US. Why is my experience so much different than yours?

(edit: some punctuation)

On the other hand, it's likely that better treatments for your condition are developed in the future and at that point you will complain about how expensive those new drugs are.

But, it's important not to confuse what are actually two different inquiries: what is the fair price for a Hep-C cure, and how do we make sure those who need get it. The first is a purely economic question, not a moral one. Otherwise you create a perverse incentive structure: people make lots of money creating things people don't need (a new iPhone model every year), while people make much less money creating things people do need (breakthrough cures).

Medicine in the US is wwaaaaaaaaaaay overpriced. Things that are critical for life needs to be priced at a reasonable flat rate above costs, and conducted with the attitude of public service and human actualization. Let big pharma reap their R&D costs some other way

That's easy: they'll just cut R&D and manufacture generics or toothpaste or something that is cheaper.

How?! You think they should create a social network for doctors? A billion dollars in ad sales is somehow morally better than a billion dollars from saving lives? They're making their money by saving lives, and being criticized for it. You're effectively saying that they shouldn't do any R&D, like the Indian generic drug companies.

Sorry for the exclamation points. I think that you have a particular system of morality, that is more important than saving lives. To me this is like arguing for abstinence-only sex education, which demonstrably does not work. I wish in general people would be more willing to look at data and outcomes.

* massive step up in grant funding to front-load R&D costs so they're paid by the time the drug is out, or

* worldwide medical R&D fund, bounties for individual re-searchable issues, or

* move private R&D to universities, have profits gained pay back R&D, send any extras to researchers, and shutter R&D aspect of private medicine

At least I'm trying to think of alternatives, and not just trying to shoot other commenters down

I think your ideas should be implemented first in another country, such as India or somewhere in Europe, so that we can see how well they work before throwing away the baby in the bathwater. Personally, I would prefer more gradual changes here in the US. For example, the cost of running drug trials has been increasing. Big pharma companies like this; going through the drug trial obstacle course is their specialty, and the huge barrier means that small drug companies that do the pre-trial drug research have to go through the big companies to get to market. Reducing these costs would lead to more competition.

[1] http://www.aaas.org/page/historical-trends-federal-rd#Agency

Economically crushing people (and removing them from normal economic activity by way of crushing debt) hurts the entire economy except for the pharma industry.

[1] https://cew.georgetown.edu/wp-content/uploads/2014/11/colleg...

The better question is what are insurance companies actually paying and how much should they have to pay? And then we get to the actual reason the drug is priced so high... it's because it is actually less expensive per cured human than all the alternatives. At $84k, this drug is actually saving insurance companies money per-cure.

The problem is that the cure is so damn good that everyone wants it right away, where-as the previous choices sucked badly so only a small percentage of the inflicted even went for it. Exactly how the OP describes, the cure is so good and so free of side-effects, patients want it even before they are showing symptoms of the disease! Of course the insurance companies can't afford to cure the planet of HepC all in one year -- there has to be a way to spread the (lower) cost over time.

[0] http://www.nj.com/healthfit/index.ssf/2015/10/eeuw_nurse_in_...

Yes I believe studying, working, getting ahead ought to give me and my family a better life. Else what's the point? Its not just a game with points; its survival. Its supposed to work that way. If money doesn't buy the most important things, then we need some new system of exchange that does buy important things.

But again, this is not what we're debating. It's why the "average car price" does not apply.

On a grand scale it's socialized medicine but even on a smaller scale it's health insurance. And it's why hospitals don't kick out a dying person just because they're destitute. What we're talking about isn't "why does medicine X cost $Y?" Most people understand that.

And that's why it's unfair to compare life-saving medication to buying a luxury vehicle.

There's still lots of room for a policy discussion. Can we develop such cures and pay less for them?

I'm not entirely familiar with what makes pharma patents that much different from software (you don't really have a monopoly even if you own a software patent), but that's basically what's happening.

Once a company gets a patent, free market rules no longer apply, and they are free to price their drugs as they want.

If that is true, VC's money will be flooding over pharmaceuticals instead of Silicon valley. This "100x" number probably fails to account for the vast number of failed trials that is all cost and no profit.

Drug development is incredibly difficult -- for very good reasons. The FDA has to be risk-averse in order to protect the health of the public and to prevent harm to be done.