There are plenty of 50-100M pharma startups; they wouldn’t exist if your number was right.
Isn't there a selection bias in that the startups that got to 50-100M survived because they were lucky with a candidate treatment. The ones that failed were the ones that never found a candidate in time? The difference being that large pharmaceutical companies have to swallow ALL the failures, whereas startups can "just" die.
Not to say that pharma companies don't have some fat that can be trimmed...
How do you account for the failed attempts?
As yomly alludes to, pharma startups exist because they don't own the risk - their investors bought it when they were funded. Big pharma does own the risk.
A company that is spun out from a PhD project in a research group, that has done a lot of the groundwork on grants will need less funding
Same goes for a start-up that for instance make non-invasive assays for diagnosis, since the documentation requirements are lower for such products
Producing something that has to be injected into humans is an entirely different league, since the amount of documentation required for such products is staggering
The cost for marketing will vary significantly depending on your definition of the word, and I suspect that it might be misconstrued as only being "commercials and paid holidays for doctors"
GP said idea to product costs 1B just for r&d. That and 1B amortized over failures (and including marketing) cannot be true at the same time unless there are no failed attempts and unless marketing cost is zero.
I'm also not sure what you would define as a failure. Drug development often starts with several candidates for a target. Over the cause of development the list is trimmed, as candidates show lack of affinity for the target or have side-effects that make them unviable. Would you consider each of the excluded candidates a failure?
I don't get to define that, companies do, but basically it includes everything that does not involve a lab, technician, doctor, nurse, statistician/programmer, etc. The US and the rest of the world are quite different here - if you've ever watched US broadcast in the evening, you'd see TONS of ads for prescription only medicine ("suffering from foo? Ask your doctor about bar"); that's marketing. Taking three hundred cardiologists on an all-expenses-paid 7-day cruise with one 30-minute "purely informative lecture about our new drug" and 7 days of fun? That's marketing too. Lobbying to congress? That's also marketing.
Outside of the US, the marketing budgets are smaller and less overt - but the cruise-style legal bribe-like events are prevalent everywhere.
> Would you consider each of the excluded candidates a failure?
Possibly. You've described one style, but it's not the only one. Many times, it's a weird result from some other research (how Viagra was discovered, how DCA tests were started).
But many things are essentially complete and utter failures - you have a line of research where no viable compound was found at all. BiondVax just failed a 15-year mission trying to develop a universal flu vaccine. Remdesivir is essentially failed even though it is FDA approved (It failed for Ebola; if you look at the data critically, it failed for SARS-COV-2 -- which the WHO's recent studies show even more clearly).
There is some benefit from this research - new techniques, often new devices - but the drug itself is a failure in the sense that it will not generate any income to the company.
Edit: just saw your earlier comment about marketing. It is those things (which you and I mentioned) and a lot more, but it is basically for the company to define in their books and a rule of the thumb would be “an expense a university department developing this to completion without expectation of profit would not have to spend”
Not this year!
This doesn't apply so much to Covid vaccines, as the time frame is accelerated and demand is already high.
There's so many ways to calculate the cost, that I think it's more important to be aware of the assumptions made for the estimate, than the number itself (which I also failed to do in my original answer)
I think people underestimate the cost of drug development, because the numbers are so big, that it doesn't seem realistic for companies to survive
Pfizer’s trial will run for 2 years, so ~$900M for the trial alone. That’s excluding all the work to scale up the production, regulatory filing, distribution, etc.
Edit: my math sucks. $900M, not $90M
I just think big pharma are fundamentally ok with huge cost for trials and are not motivated to decrease it/make it more efficient, since they're ok with their pie being larger. They will just shift costs to healthcare system and will be happy with larger profit.
Now, $10-15k per patient-year is for a typical therapeutic. And that is an average across global trial sites, not just the US. It’s not much money. You go a 15 min doctors appointment and your insurance is billed $150. Now imagine going 1 per week and having multiple tests run each time. Or having to stay in the hospital for a day when the drug is administered. You can burn through $1,000 per month pretty damn quickly.
It doesn't work this way. Pricing of pharmaceuticals is independent of the cost of development. Nobody will pay $200 per Covid vaccine dose just because the cost to develop it went up 10x. Every extra dollar spent on development, is one less dollar of profit.
That's why some drugs never make it to market - the cost to bring them to market and the low price means they'll never be profitable.
Given the amount of work being done by this and other research labs hired Astrazeneca, and comparing this to quotes I've received for a very modest UX usability studies, it's hard to see see this an sort of money grab.
Most basic research is government funded.
It also feels deeply wrong to pull the "but all the research efforts that did not lead anywhere" argument, when Pfizer did not do the research in the first place. They should get compensation for organizing the huge trial, of course; that expertise was why they were on-boarded in the first place. And nobody expects them to manufacture that stuff at loss or cost. But we should not accept public money buying them goose laying golden eggs either.
Oh, and now there are multiple competitors in the market.
The quantity of vaccines needed will make even a $0.50 markup worth billions of dollars every year
I hate to link to a Youtube video, but this doctor walking through the research in the first part of the video is honestly better than any news article I've seen: https://www.youtube.com/watch?v=gFeJ2BqCFY0
I also noted that 40 of the participants were excluded because they had no PCR test done to confirm covid and no antibodies were found in the assay. This is in my opinion a major flaw, as the subjects could have been infected, but had no antibodies left, when the blood sample was taken
Finally seven of the 18 authors declare competing interests, which might have affected the research
Getting back to your post itself, I agree that you can't measure immunity for a longer period than the virus has been around, but that also means you can't say that there will only be a need for one round of vaccines, which was what I was disagreeing with
It might very well turn out, that you gain permanent immunity for a specific strain off the virus, but unfortunately that immunity also introduces selective pressure. Whether the virus is able to mutate in a way that bypass existing antibodies in a subject is obviously still an unknown, but we have seen that it's able to jump to other species like mink, which caused the emergence of the Cluster-5 variant
Since the virus is able to use other species as a reservoir and selective pressure is being introduced, I think it's reasonable to prepare for a scenario, where a vaccine won't be a permanent fix
The society at large is making huge sacrifices and making painful changes to address this collective problem. Are these companies part of "Human society" or not? If they are party of Humanity, then they can make 'adjustments' as much as we are asked to make adjustments.
Still won't be a fraction of the profit that stands to be made from these vaccines.
They then get to recover their R&D expenses and make a smaller but probably decent profit from its production.
It’s easy to complain about Pharma profits when you ignore all the money spent that goes “poof”.
I'd be glad to be shown some examples, otherwise it's "privatize profits, socialize losses".
And if you fold in the start-ups who have one shot and if it doesn’t work out? Plenty of those. They go bankrupt.
Busting the patents on Covid vaccines would be “socializing the gains and privatizing the losses”.
However I'm certain that the category "bankrupt pharma company" is littered with examples.
a) researching Covid-19 vaccines?
b) will they actually get to produce millions and millions of doses?
Almost every case I know of, it's a huge company or even a state owned one.
Who are we actually arguing for/against? The hypothetical "small pharma"?
Keep in mind that just like for banking, due to the amount of (necessary) regulation, there aren't many small pharma companies out there.
But the reasons and ethics of the system being the way it is are separate from the reality of what it is for the purposes of getting things done in the here and now.
For better or worse, as things stand right now, pharmaceutical companies, like other companies, need to make profits - or at the very least avoid crippling losses - in order to survive and continue doing their work.
That includes covering the formidable costs of the many research studies that go nowhere and yield no revenues.
I'm sure you wouldn't find a single person in a pharmaceutical company who would feel good about withholding treatment from any person with a life threatening illness. But what they also have to care about is remaining in business so they can treat and cure many more people with serious illnesses.
Practically speaking, I suppose a hypothetical scenario could be that the:
- the companies are granted patents
- the vaccine lasts for a limited amount of time
- before each patent expiry they companies make minor modifications (say, storage temperature requirement decreased by half a degree)
- the company make "unfair" profits by extending the oligopoly for a very long amount of time
I'm not stating that this will happen, but on the other hand, I find this plausible.
In addition, the aforementioned patents prevent disruption. Even long after the original patent expires.
That is something we want to encourage!
This ensures equitable access, ...you know, that the whole world is actually saved.
In reality, these costs are microscopical compared to the cost of the Covid recession, and all the "stimulus packages" across the planet.
I assume most governments will pay the cost of vaccines, or even pay people to take the shots. The US says it will.
I prefer a system where it's very worthwhile for people to risk a lot and work hard to save my life.
If it was all about altruism, I doubt a vaccine would be developed for many more years.
Money quote from linked article:
"News of the vaccine's success was first made public on April 12, 1955.[7] Salk was immediately hailed as a "miracle worker", and chose to not patent the vaccine or seek any profit from it in order to maximize its global distribution."
But I also know that my grandmother suffered terribly from rheumatoid arthritis, and it destroyed her life. Long after she died, enbrel was developed for profit which was the first really successful treatment for it.
No profits => no treatment => misery.
The organizations who funded the research looked into the viability of a patent and concluded it wouldn't have succeeded.
"the idea of patenting the vaccine had been directly analyzed and the decision was made not to apply for a patent mainly because it would not result in one."[1]
The distinction should also be made that a patent doesn't necessarily affect global distribution. It just gives the rights to license the technology. They could have patented it and then licensed it for free.
[1]https://www.bio.org/blogs/real-reason-why-salk-refused-paten...
It doesn't really scratch at his integrity though, since it was the institution he worked for that raised the issue.
If he was just a brilliant salesman (apart from a brilliant scientist) we never know.
What is beyond dispute is that his discovery saved (arguably) millions of people from a life in misery.
Enter public trading: the opportunity alone for global ransoming will inevitably become the projection that defines the street price for shares and once valuation is up there ransom-level profits would suddenly appear not excessive but appropriate, given the level of paper investments of the latest, valuation-defining round of buyers.
I wish regulating anti-social behaviour out of industry was more popular.
Sounds like you're simply defining a tyrant as someone who runs a profitable company.
I also want to push back on "everything commercially successful is run by tyrants" kind of narrative. I get the frustration, but these blanket, ideological statements do not help anyone, anywhere. Do you make money? I guess you're a tyrant!
Let's not forget, the countries that we put up on a pedestal as the shining examples of how a country should be run (Norway or whatever) are very much capitalistic countries with free markets, IPOs, and commercial companies. I hardly see businesses there characterized as tyrannical.
I do really get the frustration, but it needs to be directed at the failures of our elected representatives. Not, commercial entities.
Companies are unlikely to stay profitable if they’re overly generous. They need to profit handsomely to survive.
Eh, I think that’s kind of old-school thinking.
> Companies are unlikely to stay profitable if they’re overly generous. They need to profit handsomely to survive.
Yep. That’s fine. (Also ignores low-margin industries that rely on volume, but whatever).
If you want a modern society, people have to be able to take risks with their money in order to make more money. Otherwise we can go back to subsistence farming. Do you work? You’re charging a profit. How evil of you! Being a few steps removed from the transaction doesn’t make you any less guilty of profiteering. You’re just as bad as these tyrannical CEOs, the difference is you’re a sucker for building their product while they make money hand over fist.
(I don’t actually believe the last part, but w/e).
I pray anyone of like mind is never in a position to enact such progress-killing madness and fear terribly that government is already full of them.
And besides, it is mind-numbingly complicated to calculate "at-cost" because as others have pointed out, that includes all of the dead-end R&D, ongoing legal exposure, interest on the loans used to cashflow operations at pharmaceutical giants, appropriate licensing of existing intellectual property that these vaccines are built on, and the million other ways money is spent to develop pharmaceuticals.
We all have things (and people) in our lives who are probably a net negative in terms of financial outcome, but we enjoy them anyways because our value systems are more complex than just "maximize profit"
But: this is not a medicine made of a molecule that can be synthesised by the chemical industry. Such a vaccine requires input from the creator and then specialist equipment to manufacture. Poor countries don't have the infrastructure to manufacture and the creator labs are not going to tell you how to produce the vaccine just because you ask them.
In any case, governments should pressure labs to enforce an low prove.
These programs were federally-funded with the goal to produce as much as possible. For production I'm sure that factories were financially compensated for the work.
I'm also sure that you realize the difference between taking a small profit, and the huge margins big pharma companies have.
In addition, the pharma companies have already been compensated with massive grants.