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GAROVORKIN

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

79 posts in this topic

19 hours ago, Triskele said:

Sorry if I got that detail wrong.  Would you say that Gleevec is indeed a game-changer for that disease though?  

I actually almost chose Harvoni as my example instead of Gleevec, but my knowledge of drugs isn't all that great.  Those were two of the blockbusters that first came to mind.

Yeah. Sorry if I seemed to be nitpicking. The thing about Gleevec is that it's at this point an "old" drug that has been superseded by "better" BCR-ABL inhibitors. The problems with drug company profits vs prices arise from poor and/or insufficient regulation, since at some point they become rent seekers that "innovate" only insofar as they have a marginally different drug than the nearest competition. 

10 hours ago, Mudguard said:

And even if a nonprofit discovers a cure or a potential cure, it's most likely going to be taken from the lab and developed to an actual product by a for profit company.  Very few nonprofits if any (none come to mind) are set up to take a product from the lab and develop it into a product that can be sold in the market.  It's hard for me to imagine a completely nonprofit based system working well.  If the US tried to implement such a system, it would simply drive out all drug, biotech, and medical device companies out of the US.  The idea is so impractical and unfeasible that it's not worth seriously considering.

The device industry if anything has less robust regulation than pharma. Not to say that devices aren't safe (some aren't!), but the evidence underlying their use is often a lot poorer and even more industry-driven. But you're not going to get non-profits to manufacture anesthetic machines or endoscopes. The reason we need regulation is not because "profits" in themselves are problematic, but the market imperfections and failures in health care more broadly create such intractable problems of information and "demand". 

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On 4/12/2018 at 7:21 PM, Aemon Stark said:

Lots of curative therapies exist for various maligancies. Most myeloma patients, for example, died within about 2 years of diagnosis. Now survival is often more in the range of 15-20 years. That's just one example. Yes, for many things there are ongoing adjuvant therapies that continue for a long time to maintain sustained remission, but there are lots of cancer cures via some combination of chemo, surgery, radiation, and now "targeted" therapies. 

How many of them came from for-profit agencies, though? Not very many, is my understanding; most came from cancer research facilities and nonprofits. 

 

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6 hours ago, Kalbear said:

How many of them came from for-profit agencies, though? Not very many, is my understanding; most came from cancer research facilities and nonprofits. 

 

How many non-profit research labs or facilities actually took a cancer therapy to market and sold that therapy to patients?

I don't doubt that many of these therapies start out at an academic lab or a nonprofit research center's lab, but they don't develop the actual product that is sold.  They just patent their discovery and license the patent to a for-profit company.  You can't just get rid all the for profit drug, biotech, and medical device companies and expect that the non-profits can take up the slack.  You'd have to try and build a massive replacement organization to replace all the for profit companies.  Good luck with that.

What about hospitals and doctors?  Is it OK for them to make a profit, or should their profits also be capped at zero?

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1 hour ago, Mudguard said:

What about hospitals and doctors?  Is it OK for them to make a profit, or should their profits also be capped at zero?

Doctors should be paid for their work just like anyone else. The for-profit hospital is just as disgusting a concept as the for-profit pharmaceutical industry.

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3 hours ago, felice said:

Doctors should be paid for their work just like anyone else. The for-profit hospital is just as disgusting a concept as the for-profit pharmaceutical industry.

Profits tend to win out. 

Edited by GAROVORKIN

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On 4/10/2018 at 0:29 PM, 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. 

I know little about medicine. And I’m not really in a position, to intelligently discriminate, which drugs I should take or shouldn’t be taking. As I do basically what my doctor tells me (actually, I’ve been lucky enough I don’t have to see the doc regularly. But, if I did I’m really not going to contest her advice, at least most of the time).

And several posters here have pointed out the informational disadvantage that most consumers are at when it comes to looking for drugs. In most cases and most of the time, most of us don’t have the knowledge to “shop around” for the best deal.

And of course, this lack of information, creates a big space for pharma companies to develop “innovations” that have dubious benefits.

Sure, the US may have more innovations than other countries, but there is a real question whether those innovations are worth much.

To wit:

https://voxeu.org/article/us-healthcare-inefficiency-evidence-prescription-drugs

Quote

Our tabulations suggest that low-quality drugs diffuse more quickly compared to high quality drugs in the US relative to these four comparison countries. These patterns are consistent with the assertion in Gruber and Skinner (2008) that the US healthcare system may be “uniquely inefficient” in the sense of fuelling the rapid adoption and diffusion of medical technologies with small or unknown benefits.

 

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6 hours ago, Mudguard said:

How many non-profit research labs or facilities actually took a cancer therapy to market and sold that therapy to patients?

I don't doubt that many of these therapies start out at an academic lab or a nonprofit research center's lab, but they don't develop the actual product that is sold.  They just patent their discovery and license the patent to a for-profit company.  You can't just get rid all the for profit drug, biotech, and medical device companies and expect that the non-profits can take up the slack.  You'd have to try and build a massive replacement organization to replace all the for profit companies.  Good luck with that.

What about hospitals and doctors?  Is it OK for them to make a profit, or should their profits also be capped at zero?

I love how we've gone from non-profit to "no one in the industry gets paid".

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On 4/9/2018 at 10:47 AM, GAROVORKIN said:

When it comes to the medications that they develop  They spend millions researching and developing and marketing  drugs to cure and combat diseases and yes ,Im well aware they don't do this out the goodness  of their now hearts .  This is  first and foremost a business which has to make profit in order to be worthwhile and in ordered to keep Research and Development  going for newer drugs and treatments.  Theres is the  incredible high costs the people are forced to pay for medications, with bring up the word gouging . These companies justify these  high prices  by saying that they do so to recover the costs of developing the medications.  And they hold on the patents for years delay generics which will cut into their profit and that is contributor to higher cost of drugs  and very probably health insurance costs too.   Do drug companies as business enterprises  have a right to earn profit ? and if so how much ? What do you think is fair and reasonable and what do you think is unfair and unreasonable ? 

Typically when we talk about the term “profits” there are two meanings of the term.

1. Is the ordinary layman’s definition which is any money received by an institution for doing stuff.

2. The more technical term, which means payment beyond, to get the factors of production ie labor and capital to do useful stuff ie ,monopoly power or rents.


 And right now, US consumers pay a lot for US pharmaceutical companies to allegedly produce useful innovations through our patent system, which effectively gives pharma companies a monopoly over drug production ie I have to wonder whether our patent system is giving too much profit in the more technical meaning of the term to drug companies, which may often produce dubious “innovations” because of informational problems between them and consumers who aren’t in the best position to judge the efficiency of new innovations.

I get the argument that pharma companies deal primarily in intangible capital and not physical capital and since intangible intellectual capital is easier to steal, than say a machine sitting on the floor of some random plant. So maybe some patent protection is necessary, but lets remember monopolies are not considered an ideal situation.

And I have to wonder, whether our current method of financing drug research, mainly through patent monopolies is ideal, and I suspect it is not. Redesigning our current system with weaker patent protections and more public funded research may get us on the route to lower drug prices without killing innovation, or at least useful innovations.

And while were on the topic of normal returns, the returns needed to induce investment are determined by risk and the time before the investment bears fruit, at least under standard theory. More public investment might very well be able to reduce both, decreasing the returns demanded by investors, lowering cost.

I’m not totally against for profit pharma companies, but it seems to me that the way we pay for innovation right now, at least in the US, leaves a lot to be desired and that weakening our current patent laws and boosting public research and promoting more non profits may get us to where we’d like to be.
 

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8 hours ago, Mudguard said:

.What about hospitals and doctors?  Is it OK for them to make a profit, or should their profits also be capped at zero?

Certainly I don’t think medical professionals should not get paid for their time. But, I think there is a real question here whether we can make reforms to increase the supply of medical services offered, lowering their price.

Secondly I don’t get the argument here about non profit hospitals making profits. I guess it the argument here is that paying normal returns to private investors is worth it because private hospitals will innovate so much that in the long run the cost of hospital administration will be lower. Uh, I’m not too sure about that. Certainly it doesn’t mean though that the people that work at non-profit hospitals aren’t paid for their time and work. And I’ll just through in that more non profit hospitals may keep for profit hospitals more honest, so that their private investors receive only normal returns on their investment and not economic profits.

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17 hours ago, Kalbear said:

How many of them came from for-profit agencies, though? Not very many, is my understanding; most came from cancer research facilities and nonprofits. 

Well things like Bortezimib (for myeloma) or Rituximab (for various lymphomas, vasculitis, various other immune diseases) were developed by industry. Cancer research facilities are not lacking for industry connections either. 

"Nonprofits" often assist in raising money for research and other aspects of care but drug design and research is big business because it's expensive and (yes) risky too. 

2 hours ago, OldGimletEye said:

Certainly I don’t think medical professionals should not get paid for their time. But, I think there is a real question here whether we can make reforms to increase the supply of medical services offered, lowering their price.

Uh, thanks I guess...

The problem with health care delivery trending in the more corporate/for-profit direction is the shift in power toward MBA types don't know much of anything about front-line work. 

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1 hour ago, Aemon Stark said:

Uh, thanks I guess...

The problem with health care delivery trending in the more corporate/for-profit direction is the shift in power toward MBA types don't know much of anything about front-line work. 

There are some real questions in the United States, I think, we need to ask, like

1. Do we need to have Doctors go to school for 8 years? My understanding is that Europe they train for about six.

2. We might make it too hard for foreign trained doctors to obtain license to practice.

3. I think there is a reasonable question whether we should allow nurses to provide some services without a doctor's oversight.

And I don't disagree with your main point.

Edited by OldGimletEye

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8 hours ago, OldGimletEye said:

There are some real questions in the United States, I think, we need to ask, like

1. Do we need to have Doctors go to school for 8 years? My understanding is that Europe they train for about six.

2. We might make it too hard for foreign trained doctors to obtain license to practice.

3. I think there is a reasonable question whether we should allow nurses to provide some services without a doctor's oversight.

And I don't disagree with your main point.

"Europe" has a lot of variations in medical education. Generally speaking the initial medical school +/- undergraduate degree stage there is shorter, but postgraduate training, whether called residency or housemanship or whatever tends to be longer. 

Credentialing foreign-trained physicians is challenging given substantial variations in what happens throughout the world. 

I would say the US has generally gone too far in giving "mid-levels" responsibility at the expense of quality (and sometimes cost effective) care. 

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9 hours ago, Aemon Stark said:

"Europe" has a lot of variations in medical education. Generally speaking the initial medical school +/- undergraduate degree stage there is shorter, but postgraduate training, whether called residency or housemanship or whatever tends to be longer. 

Credentialing foreign-trained physicians is challenging given substantial variations in what happens throughout the world. 

Then why does the US have fewer doctors per population than several countries, we pay more for them, and they don't seem to deliver better results than their foreign counterparts?

 

9 hours ago, Aemon Stark said:

I would say the US has generally gone too far in giving "mid-levels" responsibility at the expense of quality (and sometimes cost effective) care. 

You can say it. But, I'm not buying it. As far as I know, most of the available evidence seems to contradict your assertion here. I have no idea where your getting this. In fact, the evidence for this probably averages right around 0.

Edited by OldGimletEye

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4 hours ago, OldGimletEye said:

Then why does the US have fewer doctors per population than several countries, we pay more for them, and they don't seem to deliver better results than their foreign counterparts?

Not exactly a simple question! The time for training piece is not very different overall, but in many countries all postsecondary education is highly (or even wholly) subsidized. There's also a lot of variation in US training. Health outcomes, of course, are driven mostly by public health initiatives and social determinants. But the US is also a country where the main public health authority is banned from researching gun violence, so things are a good deal more disorganized and fucked up then even the surface suggests.  

4 hours ago, OldGimletEye said:

You can say it. But, I'm not buying it. As far as I know, most of the available evidence seems to contradict your assertion here. I have no idea where your getting this. In fact, the evidence for this probably averages right around 0.

The evidence that does exist is very low quality and subject to a lot of selection bias. To take the examples of nurse practitioners in a lot of settings, they work fewer hours, see fewer patients, make $100-150k with full benefits, and don't provide call coverage or after-hours care. We're starting to see some more physician assistants in Canada, but all they have is an abbreviated med school training without any residency. Classic example of people that "don't know what they don't know". 

In any case, nurses do a lot more procedures now that once were the purview of physicians only (e.g. IVs, bloodwork, etc.). Those are pretty simple, though. The issue is that a lot of assessments and plans look simple but are underpinned by a whole lot more. 

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1 hour ago, Aemon Stark said:

The evidence that does exist is very low quality and subject to a lot of selection bias

Just for the sake of argument, I'll say the evidence is low quality and not very good.

Saying that isn't the same thing as your original assertion, to wit:

"I would say the US has generally gone too far in giving "mid-levels" responsibility at the expense of quality (and sometimes cost effective) care. "

The evidence that does exist seems to suggest that allowing nurse practitioners to administer some services does decrease cost, without sacrificing quality. Now it's possible to say you need more studies on the matter, and I'm fine with that. But, your original assertion was quite a different matter ie suggesting that it reduced quality and increased cost. And there seems to be little empirical basis for that proposition.

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On 4/15/2018 at 8:07 AM, OldGimletEye said:

Typically when we talk about the term “profits” there are two meanings of the term.

1. Is the ordinary layman’s definition which is any money received by an institution for doing stuff.

2. The more technical term, which means payment beyond, to get the factors of production ie labor and capital to do useful stuff ie ,monopoly power or rents.
 

There's a lot of confusion about this in the US hospital world.  A majority of hospitals are non-profit, and in my experience a lot people think that non-profit = charitable organization.  Or something close to that.  I read years ago that in the non-profit hospital world there's a line of "no margin, no mission."  And indeed they may reinvest those profit margins into a lot of solid stuff, but certainly some of it goes to highly paid execs and whatnot.  

Still, there are hospitals that are quite literally for profit and owned by larger corporations that pay out to shareholders.  I believe that Rick Scott's former hospital that performed open heart surgeries on people that they knew didn't need them was such a place.  

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1 hour ago, Triskele said:

There's a lot of confusion about this in the US hospital world.  A majority of hospitals are non-profit, and in my experience a lot people think that non-profit = charitable organization.  Or something close to that.  I read years ago that in the non-profit hospital world there's a line of "no margin, no mission."  And indeed they may reinvest those profit margins into a lot of solid stuff, but certainly some of it goes to highly paid execs and whatnot.  

Still, there are hospitals that are quite literally for profit and owned by larger corporations that pay out to shareholders.  I believe that Rick Scott's former hospital that performed open heart surgeries on people that they knew didn't need them was such a place.  

.. What?

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9 minutes ago, TrueMetis said:

.. What?

And this earned him the governorship of the great state of Florida and perhaps a US Senate seat.

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