America, the land of the dollar
Correction: America, the land of the rent-seeking.
It is as if VCs in the tech industry demanded the taxpayer guarantee them a healthy rate of profit, to a standard of health the VCs themselves are privileged to define. Indeed, perhaps as with Allred and the regional airlines, now we may see whence Altman has cribbed his "innovation."
One could make an argument that taxpayer subsidized health plans which include prescription drug coverage such as Medicare Part D or Medicaid should limit the prices they are willing to reimburse on a QALY basis. And Medicare has started a limited drug price negotiation program. But generally, voters have been unwilling to accept the trade-offs inherent in drug price controls.
https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price...
(If you want to do something else, I can't tell what it would be.)
https://www.fiercebiotech.com/biotech/drug-development-cost-...
Big pharma is providing very little benefit and a lot of cost. We've seen their playbook with people like Martin Shkreli who'll buy up patents to existing drugs and jack up the price to make a quick buck. Do we really need that sort of "private investment"?
The primary claim in support of the current system is that it encourages greater levels of innovation than would happen under a socialized central planning system where government bureaucrats allocate funding for all trials. We don't have any solid evidence about that one way or the other. But year after year, US pharma companies do consistently release more new drugs than any other countries on a per-capita basis. We don't want to wreck that just because of high prices on a few patent protected drugs. Let's take a longer view and consider possible second-order effects before making any drastic changes.
What innovation? All the innovation with the current system happens outside the big pharma companies. They are merely swooping in at the final steps and manufacturing to benefit from the public investment.
The actual innovation is happening because of public social investment. Not because if private investment (at least in terms of medicine). Private investment here is simply leaching off of the public investment.
If we want to have new a lot of new drugs every year that meet the FDA standard for being safe and effective then someone has to put in enormous capital investments. In theory I suppose we could raise taxes and socialize the whole system but so far I haven't seen any evidence that would be a net improvement. More likely just another opportunity for graft and corruption.
90% of the system is socialized. The remaining 10% is what pharma funds.
> I suppose we could raise taxes and socialize the whole system but so far I haven't seen any evidence that would be a net improvement.
The entire process is already experiencing the worst parts of what being fully socialized would bring. Everyone is paying for health insurance whose rates are partially set by the cost of the drugs to the general public. We also already pay taxes to develop these drugs via the NIH. Heck, part our taxes pay to manufacture these drugs via the DoD and the VA.
The main benefit of fully socializing these drugs is that it will be cheaper for everyone and we can bring more drugs to market. We don't have to pay advertising, executives, or shareholders for new drugs. We don't have to worry about these new drugs turning a profit.
The graft and corrupting in government is nearly entirely in the form of private contractors working for the government. It's how the current system works where the public funds a huge portion of the research while a few large companies rake in exhobitant fees.
And even worse, we have examples of vioxx, Dalton, and oxy where these companies knowingly push unsafe medicine to turn a profit. That simply doesn't happen with a fully social system as there's literally no benefit to anyone to keeping unsafe drugs around.
> The primary claim in support of the current system is that it encourages greater levels of innovation than would happen under a socialized central planning system where government bureaucrats allocate funding for all trials.
Oh, I see. You argue against the barely reanimated corpse of Nikita Khrushchev, in the breath after you accuse someone else of playing with a strawman.
Considering that I obviously disagree with the argument you've been trying to advance, I hope I can be forgiven some surprise at having presented so much stronger a formulation to argue against than you seem prepared to present in arguing for. Whom do you imagine yourself convincing in this way?
But if you want to argue innovation instead, I see that as particularly worse in terms of medicine and science. Pure research is rarely profitable which is why you pretty rarely see it in an open marketplace.
It's not that it never happens. Obviously some research specifically targeted at manufacturing efficiency does happen as that will increase profits. However, outside of maybe semiconductors you'll almost never see a purely private institution invest in something like material sciences. More often than not, that research actually comes from something like the DoD contacting out to a defense agency trying to do better tank armor.
With medicine in the US, pretty much all innovation has come from public investment. The polio vaccine, for example, didn't come from a drug company, it came from a university researcher. That's the story of a large number of modern medicines.
A private company doesn't need or in some cases even want new medicines. Why would they want to make something that benefits 1/100000 of the population when something like insulin has a huge market and few competitors. Manufacturing new medicines for rare diseases isn't profitable, so why would they ever research it in the first place?
The argument is also not too well presented, in that it lacks grounding. For example:
> Why would [a pharma company] want to make something that benefits 1/100000 of the population when something like insulin has a huge market and few competitors?
Because insulin has a huge market and few competitors. That means they have defense in depth on pricing because their manufacturing will be highly specialized and high-throughput, else they could not continue to serve the market unless protected: someone would acquire them or shoulder them out. If you try to disrupt that incumbent, the same will happen to you; you'll be either acquihired, vivisected, or left to go bankrupt in peace for lack of anything novel enough to attract interest.
If, conversely, you can go to one person in every hundred thousand and offer them a pill that will make the difference between life and death - a pill that no one else, ideally, can possibly sell them - well, what can't you ask in return? The traditional rate I understand to have been in the order of one to ten firstborn sons and heirs.
We do things differently now, of course, or less overtly at least. But the business case when considered amorally, as any of that species must be to be understood on its own terms, is trivially clear. The discussion you really want to have is that of whether income inequality can and must be allowed to dictate even partially the dimensions of a human life, versus whether that can and must be prevented. I'm not going to pretend I could summarize the state of the field on that one, which has much older names even than "theodicy."
If someone is going to find that Benadryl can treat a new disease, it won't be a pharma company.
That's the sort of question folks like my prior interlocutor, who appears now to have abandoned the effort, really don't want to answer. And no wonder! There's no way for them to do so while maintaining the usual comfortable abstraction over the essential bloodthirstiness of their philosophy.
An ideal metric would be "person-years of increased healthspan per dollar spent by the consumer," and I'd wager that's very low because the profit motive is to create drugs that treat symptoms (and are prescribed for life) rather than cure an illness.
Curing cancers also will remain a particularly lucrative trade. Particularly because cancer is a million different diseases which everyone gets if they live long enough.
There is never just one person that gets a disease.
That said, it's definitely true that pharma will never spend research dollars to see if a disease can be treated with a generic drug. Universities and the NIH can and do.
Prediabetes and hypertension. Assuming long term dietary changes, outside of treatment those effects are pretty permanent.
> What outside the treatment period does it prevent?
Again, assuming dietary changes, it'll prevent type 2 diabetes and heart attacks.
My point in any case is precisely as you note: People rarely stick to diets. Semaglutide for obesity therefore presumptively is a maintenance medication. That is, if I diet and take semaglutide and lose fifty pounds, and then cease both treatments, I will almost certainly gain back fifty-plus pounds. But - as I understand it, at least - if I only take semaglutide and make no effort at dietary regulation, I will still lose weight, because the medication limits hunger and increases satiation: even with an entirely slovenly eating habit, I won't do myself the damage I would otherwise, but only so long as I remain on the medication. If I stop, I'll minimally gain back weight and likely rebound in the manner of a yo-yo dieter. I have not been "cured." And it is the novel obesity application, not the longstanding diabetes indications, which is the breakout moneymaker. (I said I wouldn't cavil about that, not that it didn't bear talking about.)
I concede I might have a different view of the matter if I had a weight problem, but it is not actually complicated to diet off fifty or sixty pounds to a healthy weight and body composition, and then stay that way. It's only difficult, in that it requires more or less reorganizing one's entire life for years, to support the firm entrenchment of new and healthier habits. That's obviously not something everyone can do. For those unable, I'm glad options like semaglutide also exist. I just don't see any reason to dissemble over what they can actually do and what they cannot.
That indicates to me it's doing a bit more than just appetite suppression.
I don't know if that matters, or how much, for the obesity application, where appetite suppression seems plausibly the effect of sole or major interest.
Cures are hard. No companies are suppressing cures that would make them tens of billions of dollars out of long term self interest. You take the cash and move on to the next one (or not).
The time value of money means that profits more than 10 years or so into the future are essentially irrelevant compared to money today.
Roche (Pharma Division): 7533 MCHF vs. 11096 MCHF
Novartis: 12566 MUSD vs. 10022 MUSD
Pfizer: 14730 MUSD vs. 10822 MUSD
Eli Lilly: 8594 MUSD vs. 10991 MUSD
AstraZeneca: 19977 MUSD vs. 13583 MUSD
Johnson & Johnson: 22869 MUSD vs. 17232 MUSD
The left side here contains more than just marketing, and already "far far outstripping" seems like a mischaracterization.
For comparison, the average R&D spend between these firms is bigger than the 2024 NSF budget (~9bn) and bigger than 1/4 of the 2024 NIH budget (~37bn).
(I don't know how much that matters in this case, where a tiny company lucked into a blockbuster and then used every lever in the system to protect their exclusivity).
(Pharmaceutical costs, all in, across the board, are a relatively small component of total health spending in the US. They're not why your health insurance is so expensive.)
This is mostly a story about anticompetitive abuses, so that question isn't super relevant to the story. I'm just answering the claim that invisible marketing/SG&A costs are why drugs cost so much. They also cost a lot because most drugs fail, sometimes after billions invested.