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How Much Profit Do You Think Pharmaceutical Companies Are Entitled to?


GAROVORKIN

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On 4/9/2018 at 2:42 PM, Kalbear said:

That might be. At the same time the number of people with access to drugs they need would be significantly larger, and more lives would be saved as a rule. We know that because we've seen that in other areas where the government strictly controls what is allowed as a cost for medicines and procedures, and the result is more effective, more used healthcare.

 

Companies aren't in the habit of looking for cancer cures, as a matter of fact; non-profit organizations and research facilities do that. The reason is obvious: there's no profit in curing cancer, so they don't even bother trying

Celldex Therapeutics and 4 other companies are doing  research for Cancer Drugs.  There have to be other other companies doing similar research.:(

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There are situations where private enterprise and the invisible hand generate more innovations but healthcare and pharmaceuticals in a mature market are not among them.  With only minor healthcare improvements (at a population level) potentially remaining in the US, and more benefit available from lifestyle improvement than further medication, the profit motive has a lot more downside than upside in pharmaceuticals. 

We all know the horror stories: inventing and marketing pathologies to create demand for new drugs, opioids dispensed like candy, more money spent on lobbying and marketing than R&D, price gouging to milk patents, pointless composite drugs to beat the patent expiring on the sub-components, direct marketing to consumers, marketing/bribing doctors, only minor improvements in health outcomes (use of statins vs placebo leads to only 1% fewer people in a group having a heart-attack over five years: 4% vs 5%), focusing only on the most profitable products (a daily pill for life is much preferred to an actual cure), etc.  

But even aside from all those specific examples, pharmaceuticals should not operate in general on a for-profit basis healthcare is not a market.  Patients are not informed consumers and they don’t have an option to buy a substitute or just not buy.  If a market cannot function then you need a non-market structure instead. Any attempt at a market structure will always result in some form(s) of exploitation because of the asymmetry. 

By the way, govt institutions are notoriously prone to inefficient bureaucracy but private non-profits are just as prone to insider capture.  Non-market structures aren’t ideal but they are better than a market structure in this situation, and that you just need to rely on good governance and transparency to limit the inefficiencies. 

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The thing about profit lead pharmaceutical R&D is that it is not directed at dealing with the most important health problems, it's directed at making products which give the greatest profits. And only occasionally those two things coincide. R&D to deal with the most important health problems often rests on philanthropic organisations directing their not-for-profit funds towards specific research, like the Bill and Melinda Gates foundation, which spends a lot of money on third world medical problems which would otherwise be ignored by bog Pharma.

So to assume corporate market capitalism is the best solution to drug development is just wrong.

There is basically no research being done into new classes of antibiotic, because there's no money in it. Despite the fact that antimicrobial resistance is an increasing concern, and while reduction in unnecessary prescription is par of the solution,m for the forseeable future we will still need effective antibiotics as part of our pharmaceutical toolbox.

Or at least not as much money as there is in dealing with chronic first-world lifestyle problems, which pharmacologically is the gift that keeps on giving. A person with a lifetime chronic lifestyle problem is a revenue stream until death, and easy to get people dependent on the drugs which address those issues. A person with an infection is a revenue stream for 7-10 days, most of the time. Chronic first-world lifestyle problems are legit and there should be therapies for them, but there is an imbalance, caused by profit-seeking being the primary motivation for the drug companies.

And the question isn't entitlement. The question is, can a society use it's collective buying power to negotiate the lowest possible price for drugs, or should drug companies be allowed to divide, conquer and make massive profits?

If people in the USA don't like that Canadians, NZers, Aussies and more or less every other developed country pay far less for medicine than they do, they should not be insisting that the other countries change and pay more, they should be insisting that as a society, they get together and do what other countries do to reduce drug prices.

Just because I pay $5 for a prescription drug, doesn't mean $5 is all the drug company is getting. Taxes pay for substantially more. In a recent year our drug buying agency had a subsidy budget of approximately $795 million, which was used to subsidise 43.1 million prescriptions. So that's an average of about $18 per prescription. For some prescriptions for new drugs under patent the subsidy could be hundreds or thousands of dollars. For other drugs that are generic, off patent drugs the subsidy might be $2 or $3. Each pharmaceutical company negotiates with the drug-buyinng agency an agreed price for each drug. 

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29 minutes ago, Triskele said:

I don't know it.  Will you share?

In the beginning, we were ordinary street rats, stealing our daily bread, and living off the efforts of man's work. We were captured, put in cages, and sent to a place called NIMH. There were other animals there, in cages. They were put through the most unspeakable torture, to satisfy some scientific curiosity. Often, at night, I would hear them cry out in anguish. Twenty rats and eleven mice were given injections.

.Our world began changing.

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8 minutes ago, Darth Richard II said:

Man not to detail too much, but that movie freaked the hell out of me as a child. I wonder if it's on blu ray?

It's on Hulu or rental from GooglePlay.

Justwatch.com ;)

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19 hours ago, Triskele said:

Many good points have been made thus far, and many are things I've heard over the years.  There's one additional one worth a mention that I think makes the situation even worse.  This relates to the old stat that pharma companies spend more on marketing than on R&D.  And it's the extent to which government labs fund the basic science that forms the foundation of many drug discoveries.   This largely comes, at least in the US, from the National Institutes of Health (NIH) which funds research at the universities and whatnot.  Some of this is not the final clinical trial that brings a good drug to FDA approval and market, but much of it is downstream from that and was absolutely essential in getting the science to a place where something near the final drug can be tested in humans. 

So pharma in effect is positioned to piggy-back off of plenty of R&D that they did not fund.

Lots of things to think about.:(

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5 hours ago, Khaleesi did nothing wrong said:

Given that the US is the source for the majority of the world's new drug discoveries, I'm not sure its pharmaceutical industry is really that poorly functioning. 

And is all that research coming from private for-profit companies, or is it funded by government and philanthropic efforts?

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22 hours ago, Iskaral Pust said:

direct marketing to consumers,

I've always wonder how this is even legal. I remember the first time I saw an ad asking to to ask my doctor if I needed drug X. It seemed wrong then and it does now too. My doctor should be telling me what I need, not the other way around.

18 hours ago, Week said:

In the beginning, we were ordinary street rats, stealing our daily bread, and living off the efforts of man's work. We were captured, put in cages, and sent to a place called NIMH. There were other animals there, in cages. They were put through the most unspeakable torture, to satisfy some scientific curiosity. Often, at night, I would hear them cry out in anguish. Twenty rats and eleven mice were given injections.

.Our world began changing.

*slow clap* 

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It means in  general things like researching better antibiotics, better standard medicines, and medicines that will likely destroy a certain thing (such as malaria) are not prioritized, because they simply don't make the money other drugs too. It doesn't assume anything about doctors or conspiracy; it assumes rightly that corporate money will always favor making more money, and point of fact they have a duty to do so if they're a public company.

There are lots of other people working on cures, as I said - but they tend to be nonprofits, funded by philanthropic organizations or by government orgs. They are the ones that are the leading edge on producing things and tend to have the highest prestigious doctors. 

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5 hours ago, Tywin et al. said:

I've always wonder how this is even legal. I remember the first time I saw an ad asking to to ask my doctor if I needed drug X. It seemed wrong then and it does now too. My doctor should be telling me what I need, not the other way around.

*slow clap* 

Iirc that was a bill clinton special, classic neo liberal bullshit deregulation that screws everybody but the elites donors and buddies.

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I think pharma companies serve a legitimate purpose, at least when they're not being allowed to do stuff like buying up the rights to drugs with few or no generic competitors and jacking up the prices on them until they can't. 

The amount of spending that private pharmas do on R&D is larger than public drug R&D spending in the US. Moreover, the public spending tends to be either general research or finding potential "targets" that could turn into drugs - which is not the same thing as developing drugs. Actually testing all those targets (most of which will turn out bad, because finding targets is the easier part), turning them into drugs,  putting them through multiple rounds of testing to satisfy safety rules - that's largely done at the private sector level. 

You occasionally see proposals for alternatives to the existing system. I'd love to see public efforts do more to test drugs, but I don't like the idea of moving towards a fully publicly directed system for drug research. One of the advantages of the existing system is that it encourages companies to try all kinds of drugs as long as they can potentially make a profit off of them, which is good because we don't tend to know in advance where the "low-hanging fruit" is when it comes to drug discoveries. A publicly directed system could pour a ton of money into a particular kind of research with little to show for it for years because it's popular and has political support, while a bunch of potential other easy discoveries go little touched for lack of funding. 

As for antibiotics, the lack of discovery of those has more to do with it being really hard to find new ones that work and aren't toxic. A number of the existing "last line" antibiotics are already pretty toxic (Colistin is nasty on your kidneys, for example). 

EDIT: For the OP, it's not so much about a specific profit number as it is about preventing particular kinds of predatory practices. Having the US government negotiate drug prices for a single-payer system would be good. Blocking companies from drastically raising the prices of drugs long out of patent would be good (or at least cap the increase to a certain percentage per year). Allowing for matching approval of drugs with other countries whom we believe have adequate FDA-style approval of drugs would be good. 

 

 

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