Aside from that, more than half of pharma budgets are spent on spent on marketing and patent-workaround redevelopment than on actual productive drug research (even after accounting for new discoveries that sometimes come out of workaround research).
> If we don’t want it to work this way, we need government to spend much more on research,
NIH already funds something close to half of drug research. Even more if you include basic research that has a longer time horizon.
Overall spending would go down, with the side-effect that there would be less penis pill popup ads and way less funding for the Super Bowl halftime show.
You're conflating two things. Orphan drugs are drugs that aren't profitable to produce, for whatever reason. Shkreli did something a bit different and more complex:
https://en.wikipedia.org/wiki/Pyrimethamine#Availability_and...
> NIH already funds something close to half of drug research. Even more if you include basic research that has a longer time horizon.
The NIH spends 32[1] billion per year, whereas the global spending is ~160[2] billion. So around 20%. That's a lot, but not nearly half.
> Overall spending would go down, with the side-effect that there would be less penis pill popup ads and way less funding for the Super Bowl halftime show.
That's a fairly simplistic interpretation of the world. In general, companies tend to be much more efficient at spending their money than governments. We should expect a substantially higher level of productivity per dollar from businesses than we get from government spending.
There's definitely a reasonable debate to be had about public funding models, but it ought to be properly contextualized by the realities.
[1] - https://www.nih.gov/grants-funding
[2] - https://www.statista.com/statistics/309466/global-r-and-d-ex...
The global R&D spend is
I don't understand how comparing the spending of an American institution to worldwide spending is relevant. NIH isn't the only governmental institution doing research. But I may not understand something.
Private industry has been very effective indeed at hooking millions of people on opiates. Meanwhile, where are all those new antibiotics?
Market competition is an important element missing from government research, but commercial entities have their own pathologies.
> There's definitely a reasonable debate to be had about public funding models, but it ought to be properly contextualized by the realities.
I favor acknowledging that all markets are constructed, even supposedly "unregulated" ones. The trick is then to construct hybrid models incorporating marketplaces and informed by the limitations of both government and industry.
I'm not sure what your point here is. Do you think pharmaceutical companies aren't trying to produce new antibiotics? Do you think there isn't any money in that? Because there most certainly is. It's just a hard problem, we've mined a lot of the low hanging fruit in the antibiotic space and squandered it on colds and farm animals.
> Market competition is an important element missing from government research, but commercial entities have their own pathologies.
I agree with this.
> I favor acknowledging that all markets are constructed, even supposedly "unregulated" ones. The trick is then to construct hybrid models incorporating marketplaces and informed by the limitations of both government and industry.
I'm not sure what you mean here by 'constructed'. Unregulated markets are genuinely not 'constructed', they are truly organic. That doesn't mean they are morally good, just that they aren't constructed.
I agree that hybrid models are desirable. I'm not sure what the right answer there is. My intuition about markets tells me that the best approach might be for the government to provide guaranteed cash prizes for drugs meeting certain criteria, rather than funding specific projects. That would allow the market to choose how best to meet those criteria, while still incentivizing the stuff the public wants incentivized. That being said, if you define metrics, they can get gamed, so figuring out how best to define those things is difficult and essential.
Opiate addiction is a direct result of government policy regarding drugs going back over a century. You can't put the blame for that on pharmaceutical companies.
> Meanwhile, where are all those new antibiotics?
We're literally commenting on an article about curing Hepatitis C. Not too long ago, chronic Hepatitis C was a long and slow death sentence. There was a time during which having HCV was considered worse than being diagnosed with HIV, because the prognosis and treatment was so bad. Now, it's completely curable in just a few months. The cure for Hepatitis C was funded and developed in the US off by private industry, using funds obtained from pharmaceutical sales.
Incidentally, there have been discoveries recently about developing new lines of antibiotics, though that's not really the issue. The point is that you're missing the forest for the trees, if you ignore all of the unbelievable advances that have been made in pharmaceutical development in the last 25 years alone. Almost all of that - including pharmaceuticals developed by European companies - was funded from US pharmaceutical sales.
Many of those who became addicts would not have save for sinister machinations by Purdue Pharma. See this article on "Oxycontin's 12-hour problem":
http://www.latimes.com/projects/oxycontin-part1/
I don't like prohibition and the recreational drug market is ripe for reform. There are better and worse ways to do that -- see Mark Kleiman's writings for strategies to construct legal marijuana markets where the incentives for companies to manufacture addicts are minimized.
But the opiate crisis is not an example of supply inadequacy due to prohibition. The pharmaceutical industry has artificially increased demand.
If you believe that we should be skeptical of both, perhaps there's common ground where we can agree. Power corrupts, power collects within both government and industry, and they constantly reinforce each other through corruption and regulatory capture. The state has the monopoly on violence so it deserves special care, but commercial entities (especially multi-national corporations) have plenty of power to threaten and ruin individuals.
True, though one has to remember three things: more efficient is not necessarily very efficient; a companies goal is profit, not the best product/result; and companies factor in the ability to fail. The successful company was more effective with their money, but there may be numerous failed efforts and if you factored in their costs the balance is different. After the fact we ascribe great intelligence to the choices of the successful companies rather than the same intelligence but more luck than the unsuccessful companies.
Which doesn't contradict any of your points - I'm just pointing out to others tgat it isn't as simple as industry good with money, govt bad with money.
Consider, how much money drug companies spend advertising, now reolise there are basically one new drug per week or less if you exclude packing drifts A and drug B in one pill and calling it something else. Doctors can easily keep up with that rate of new drugs without a lot of effort.
That's true, but a fraction of that is spent on actual drug discovery. The NIH funds a lot of non-pharmaceutical research.
Do you have sources for this? It could really change my point of view on the issue but I need something more...
...which shows that big pharma generally (Roche excepted) spends more on marketing than R&D.
Of course, it's not actually half of all spend, as suggested, as this ignores other operating costs.
For example, to take Roche in 2017, sales and royalties brought in ~55.5m CHF. On the flip side, 14.4m CHF was spent on 'cost of sales' (= production costs, overheads, royalties, etc.), 9.5m CHF was spent on 'marketing and distribution', 10.3m CHF was spent on R&D, and 2.5m CHF on 'general and administration'.
So in the best case from the WP, R&D > Marketing & distribution, but R&D spend was roughly 28% of total spend.
https://www.roche.com/dam/jcr:b70415c0-954f-4a2a-a0e2-47f94b...
Most of the people actually doing the research and the boring (but thorough, and necessary) test studies are paid a pittance, while the company has every incentive to do some hollywood accounting and overstate what they spend on everything. In the end it's mostly profit for execs and shareholders.
Edit: I think the article referenced Joe DiMasi's work [0], which uses a Capital Asset Pricing Model for cost of capital. Essentially, it says there's only one source of risk in the world, and you get paid 11% per annum for taking that risk. I'm pretty sure this work really informed public policy. Shitty economics strikes again.
https://www.thebalance.com/who-funds-biomedical-research-266...
Some would suggest that the drug companies actually take on the lower risk research, leaving the high risk work to be funded by other sources:
http://www.latimes.com/opinion/op-ed/la-oe-1027-mazzucato-bi...
There are more questions opened by these pieces, sure, but it's clear that we would still have research and still have cures without the businesses stumping up for research.
otherwise we will just get fewer new drugs.
I thought I had a link here somewhere, but can't find it; I have a strong suspicion that the companies have a preference to repackage or reformulate existing drugs, and that basic research on new drugs is disproportionately covered by the public purse and charity.
Absolutely there are companies which do this, and there are some very interesting examples of somewhat shady practices, but the vast majority of companies which you think of as 'pharma' --i.e. big pharma, and the big biotechs-- survive by discovering or insourcing and then developing new drugs, and/or developing their existing drugs in new indications.
Hasn't Shkreli' story shown us that medication prices are made up? A fraction of those $84,000 might be necessary to keep new cures being researched, but most of it is pure speculation on sick people's lives.
Link to chapter: http://levine.sscnet.ucla.edu/papers/ip.ch.9.m1004.pdf
IMO we should make drug research a public endeavor. Probably EU level. We'll pay the costs anyways, as taxes fund pricy healthcare/drugs.
Besides the private sector is very risk adverse, that bad when you're developing drugs.
If taking a moonshot costs $1000 and if it’s successful, you make $10000, but after capital gains you net $5000, that means it cost $1000 to make $5000, however if the percentage chance of success is just 5%, private markets would be less likely to invest compared to a $1000 investment that has a 90% chance of making $2000.
Which means you get a lot of the “safer” investments and very few of the high risk investments because the risk/reward ratio is destroyed by high confiscatory taxes.
But, if capital gains taxes were zero, you would have a necessarily higher percentage because the reward side of the ratio is much better.
This somewhat explains why a French VC is much more risk adverse than a Silicon Valley VC. My point is risk aversion is a function of the risk/reward ratio.
Since government isn’t really directly accountable to anyone, they can pour money into highly risky “investments,” because they really aren’t beholden to anyone. The US, for example wasted billions on so-called green energy investments in companaies that no sane private investor would have supported: Solyndra as an example. In Houston, taxpayers are being forced to pay for Astrodome renovations to turn the aging structure into a parking facility; government promised that the facility would be “profitable,” yet, if that were that case, they would have had no trouble raising private capital for such a “profitable” endeavor.
My other point is that governments have a long, illustrious history of treading in areas that are actually terrible investments, but since they can literally print money (and provide payoffs to various constituencies,) they are under less pressure to actually do their diligence (or ignore diligence that counter argues their project viability.) As long as the right groups “get theirs,” a government effort continues unencumbered by pesky ideas such as return on investment.
There's waste in both private and public institutions. They work in different ways, and when you make a public institution work it can be extremely efficient in terms of value per dollar.
My point was that maybe public funds could play a bigger role... Imagine a drug being developed by many private subcontractors the same way the space program worked.
I'm sure private competition would be good at optimizing cost of drug trials.. just an example..
I don't have a recipe... Just the feeling that the big picture risk is probably better absorbed by public investments.
The pharma industry makes money by not curing disease and treating the symptoms. They want people to be addicted to their pills. Curing a disease means you can stop taking the pills and stop paying for them.