Parent is asking how it can be ethical to place such a large price tag on a lifesaving therapy if the materials themselves are cheap. It's one thing for AMD or Intel to recoup engineering costs with outlandish per-chip costs as compared to the cost of manufacturing itself. However, serious ethical questions about profit margins and recouping R&D appear once someone's life is directly tied to usage.

That being said, obviously we have to fund development somehow.

It's ethical, because as a society we need to look at the long term rather than any specific treatment. It's better for us if private investors invest money into lifesaving treatments, because it means that more of them will be available earlier to people. If investors go and invest in something else then nobody's getting the benefit of the medicine.

Let's say we have a disease that kills 1000 people per year. Let's look at a 40 year period.

1. No cure is researched or found in 40 years. Total death count: 40,000.

2. For the first 10 years no cure is found. After 10 years a company comes along and creates a lifesaving cure, however it's expensive - only 500 people per year can afford it. The patent on it lasts 20 years. After 20 years another company creates a generic version of it that 990 people can afford. In the first 10 years 10,000 people die, in the following 20 years another 10,000 people die, in the last 10 years 100 people die. Total death count: 20,100.

3. No cure is found in the first 20 years, then a government funded research team finds a cure. A company picks it up and creates a generic, where 99% people can afford it. In the first 20 years 20,000 people die. In the latter 20 years 200 people die. Total death count: 20,200.

Being early matters in medicine. It's always easy to look at an expensive treatment and say that this should be much cheaper, but we usually don't consider that forcing investors out of healthcare means that less research will be done. This means fewer treatments and a longer time before a treatment is found.

I like your comment, it explains a lot. It seems that the system was built the way, that makes a drug research to grow a pie, while in an ideal world where everyone is happy and everything is fair, drug research would shrink the pie: it is the goal of medicine to eliminate all diseases. It means, that all that system is working on self-destruction, but we allow them to get excessive profits now, to make it work.

There is only one detail I cannot understand. Why competition doesn't work? Why some new investors (who are not invested in drugs yet) do not invest in the research of new drug that heals all the diseases, to sell this drug for $1 -- they would destroy existing system, but they would get all the market at once. (Or in a smaller scale they might make a drug that treats some disease once and for all, and shrink not the pie overall, but some part of it).

Competition does work. You can see that by looking at the average profit margins for drug companies: they aren't particularly high. The problem is that drug development is just really hard and expensive. All the low hanging fruit has already been picked.

I mean if we're only looking at made up numbers anyway isn't the 3rd scenario preferable? Almost the same number of people died, but there was no 20 year long period where people were paying extortionate rates for a medicine, and it took 30 years before the diseases was effectively cured, as opposed to the 20 years it took before a government funded cure came along.

You might even argue that the money saved by not having a patent could be used to save even more lives.

It's preferable until it's your own head on chopping block.

...and you also happen to have money.

I invent another imaginary hypthetical situation:

4. Nobody makes any attempt to create a treatment, but after only six months a miracle occurs. Nobody dies and everybody is cured for no reason.

Not saying that there isn't any, but where is the evidence that a government funded research team would be slower than the privately funded one?

The problem isn't that a government funded research team is slower, it's that the private research team is in addition to the government research team. There are an uncountable number of illnesses and conditions that treatments could help with, but we have only so many resources to throw at these problems. Additional resources will allow us to find treatments for problems that we couldn't afford to research otherwise.

If the government invests $100 billion into medical research and private companies invest another $100 billion then we're probably getting more medical research done than if only the government invested $100 billion into medical research, and the private companies spent the $100 billion on making movies.

Considering that many effective research teams are government funded, I suspect there is essentially no evidence of that.

Another important factor is that it's not just a matter of funding but a matter of motivation. So for instance imagine we just do away with market economics and decide 'Okay, from now on the government will distribute $x billion per year to fund research and development of new drugs. In exchange, prices will also be government controlled to ensure equitable access for all to life saving treatment.'

This sounds great. We'd like to imagine that the companies would now expend all their energy towards developing new treatments, even ones that might not have been economically feasible before (think: the 'problem' of cure vs treat), and everybody would live happily ever after. Unfortunately, there's another way of looking at this. You just changed the company's goal away from market success and onto playing a game of min-maxing on government funding.

We have countless analogs to draw from here. Anytime a complex industry starts getting involved with government funding suddenly the entire game changes. It's not about producing anything, but instead about doing exactly what's necessary to keep, and maximize, the amount of funding received. And sure we'd like to imagine you could just create a million rules and regulations to try to ensure that this means exactly 'producing new amazing treatments' but actually doing that is not really practical. And, that's also ignoring the fact that these systems also rapidly lend themselves towards corruption:

'Well I tell you what Senator Pharmaceutical Commission Chair, we've been looking at building a new pharmaceutical research facility. And [your state] is looking right top notch. And you know what, voters will love those jobs we'll bring, and it'll even be a tax windfall in the longrun. The only thing that's stopping us from this is resources. Just something to keep in mind when you go draw up that next fiscal allotment. And ya know, you also might want to consider retirement. Once you leave office - we'd be mighty grateful for some of those great insights you have. We're always looking for consultants with the right sort of experience, if you know what I mean.'

This is a great comment, but I have to say my comment was rather rushed. I was implying more that the idea of trade secrets on life-saving treatment was unethical. The question of funding is an important discussion, but I was trying to discuss the trade secret details and I didn't really get my point across in the comment.

That honestly hadn't occurred to me; I'm much more familiar with fields where most of the important details end up patented. I generally view all forms of intellectual property (patents, trade secrets, copyrights) as nothing more than mechanisms by which to exact funding.

I suppose a trade secret would prevent circumventing IP law by heading to a more permissive jurisdiction and is potentially indefinite. But then again, if anyone ever successfully reverse engineered it (or it leaked) my understanding is you can't patent it in retrospect? So it seems like a huge risk to me.

From an ethical standpoint, I'm not seeing where it would be any worse than a patent (one that's actually enforced). Unless you're concerned about the possibility of the knowledge becoming lost to humanity? Or something else?

An aside: I wouldn't be optimistic about the usefulness of trade secrets on their own in the biomedical sciences. It can certainly be tedious to reverse engineer something, but my impression is that it's generally the IP laws that stop your potential competition.

It's interesting to speculate on the "It costs $1 to press the button and $10K for knowing which button to press" kinds of problems. I mean, if you spend several hundred thousand on a medical degree, it is ethical to ignore someone dying if they can't pay you? Personally, I think it is -- nobody should be forced to do something just because they know how. However, I can totally understand the other point of view. Do the clinics who refuse patients who can't pay watch those people suffer and die? Of course not. It would be horrible if they had to. Would you ever choose to expose yourself to the information that could save people lives if in exchange you would have to choose between watching people suffer or go into bankruptcy as you fail to repay your loans that gave you the information in the first place.

It sucks. I'm with some others who say that we should try to improve our society so that nobody would have to make such a choice.

In the US, hospitals are legally required to treat patients in serious condition regardless of ability to pay. The hospital has to at least get the patient stabilized before discharge. Hospitals receive some government funding for that, and then they try to make up the rest of the cost by raising prices for insured patients.

Clinics aren't subject to the same requirement and can legally turn indigent patients away.