I'm disappointed this article doesn't mention the effect this will have on future pharmaceutical investment. Companies spend billions researching and testing drugs for safety and effectiveness. Companies capable of developing successful drugs need an adequate period in which to recoup their investment and earn enough to fund new drug research. If companies know they won't have meaningful ownership over medicines they develop, they won't spend the huge amounts of capital necessary to develop them. When countries like India let competitors produce generics of American drugs, they are stealing the fruits of other people's labor. That isn't to say this theft isn't justified; generics will save the lives of those who can't afford the original. But those lives would have been lost all the same if no such drug had been developed in the first place. Stealing drugs will certainly help India in the short run, but it will slow the advance of medicine in the long run, for Indians and everyone else.
> spend billions... adequate period to recoup... earn enough... huge amounts of capital
All these words don't carry meaning without proper data. Unless we know how much they've spent, how much they need to recoup & grow, these claims are vague.
> stealing the fruits of other people's labor
Without studying the merits/demerits of the patent, this is a hyperbole. I'm saying, maybe your statements are true, maybe not. But without backing up with facts, they are merely sentimental.
Here's an interesting case of drug pricing. Albendazole is a fairly common/old drug. It's a broad spectrum anthelmintic that retails for a few cents in most parts of the world. Recenty, U.S. price of albendazole has increased by >4000% to over US$100 per 200-mg tablet[1].
Another example: Novartis, the company that makes the leukemia drug Gleevec, keeps raising the drug’s price, even though the drug has already delivered billions in profit to the company. [...] Novartis is just keeping up with other companies as they charge more and more for their drugs. They know we can’t say no.[2]
Many generic drug manufacturers did not have the proper acilities to meet drug standards. The recent prow increases are a direct result of those direct manufacturers having to spend to bring their processes up to code.
I don't think companies spend as much as we believe in researching drugs. Companies spend most on advertising and incentivizing the doctors to prescribe their medicines. The book: Bad Pharma [1] is an eye opener.
The drug "Sovaldi" is making them $2.8ish billion dollars per quarter, that is almost $12 billion a year. I don't believe they spent tens of billions in developing the drug. [2]
It's not what they spent developing Sovaldi -- it's the fortune the industry as a whole spends developing drugs that never make it to market.
That said, it's quite likely true that marketing is a bigger share of costs than R&D. Pharma companies are out there to maximize revenue, just like any other corporation. It's a reflection of the poor state of regulation in the US that we pay far more of than our share (compared to the rest of the world).
Here's the piece of the picture that everyone's missing from this particular example - an $11b acquisition [1]. Gilead bought Pharmasset for $11b. It no longer matters what it cost Pharmasset to research/test/approve/produce the medicine anymore. Certainly all of that was factored into the acquisition price but since Gilead's total cost ended up being $11b, that is what they need to recoup at the least.
There are 3.2 million hep C patients in the US [2] but most don't feel ill or even know they have hep C. If every single person buys the drug, Gilead must still sell it for at least $11b / 3.2m = $3500/person! But if only 5% buy the drug, they need to sell it for $69,000 just to break event on the acquisition without even taking any other costs into account.
This is just rough calculation to highlight that a sky high acquisition price resulted in a company demanding an equally high price per dose. Gilead paid the high price to acquire Pharmasset because they thought they could sell the drug for at such a high price per dose. If Gilead is proven right (and their stock price from $18 in 2011 to $100 in 2015 seems to reflect that indeed), then this just encourages more and more drug companies to be bought at astronomical prices.
And the worst part of this is that the very government that gave this company the right to operate a monopoly via a patent is now asking them why they're charging so much [3]. None of this happened because of some singular evil cabal. It happened due to misaligned incentives.
Government grants pay researchers, who develop medicines at paid-for-by-public-funds university labs, which sell the patents back to the researchers at fire-sale prices, who then go on to create biotech startups, which productize the research, and then sell to Fortune 100 pharmas, who can then demand almost any amount of money, which CMS will have to pay because USPTO said nobody else can sell this drug, FDA agreed that the drug works, and ACA ensures that the patients cannot be denied any drugs that work at any cost.
well that's nice and all, so next time CEO wants a new fleet of jet aircrafts for him, all should pay more for the medicines? Because, you know, we can?
Companies should definitely make profit, but their default modus operandi is "milk the cow as long as possible", which would directly result in many deaths... not much sympathy from the crowd there. Let's not forget simple math here - company is/was charging for medicine that doesn't cost more than few tens of bucks to produce... 69,000? Sorry, ridiculous all the way through. Don't care about research bla-bla
Just turn on that weird device that used to be called TV. During winter, 1/3 of the adds are medicines. Who pays for those adds? All those who buy medicines...
Of course you wouldn't, since that's what costs billions to discover the medication that eventually costs "tens of bucks" to produce, which completely undermines your argument.
One reason we pay so much more is that one lawsuit can cost a company billions. In a place like China, good luck suing anyone and actually winning.
Elimination of punitive damages or more importantly making punitive damages excluded from lawyer commissions would be a step in the right direction. Additionally, punitive damages ought not go to the complainant, but to the taxpayer and thus funneled into grants, etc for basic science research to potentially lower the costs of future development. The only person that benefits from a punitive award is the lawyer and the 'victim.' Lawsuits should not be a lottery ticket.
Isn't that because the US disallows importing drugs? It's supposedly for safety but of course it's just protectionism as I, at least, have heard of no other country doing the same.
This would be easy to study, figure out, and possibly come to conclusive results over: examine the budgets and expenses of pharmaceutical R&D departments.
A single FDA clinical trial can cost up to 100 million. Total spend to get a new drug to market can be as much as 1 billion dollars. Most drugs don't make it. So the successes have to pay for themselves and all the losses. And the potential upside to having a success must be worth the significant financial risk required to get there.
Not every drug reasearch ends up in a commercial big bang. From what I understand very few do, so the money they bring in end up financing all of the research.
You don't understand gravity of situation. India has third highest population of AIDS patients. Around 2.1 million people are infected[1]. That is twice the population of Cyprus. Around 170k children and adults lost their lives in 2009 [2]. India has 32.7 % of its population below poverty line [3]. That's an income below $1.25 per day. If they can't pay for the drugs doesn't make them less deserving.
And as far as drug developments go, due to GPU computing and molecular dynamics and monte carlo simulation methods, the cost of developing drugs has gone significantly down [4][5]. For starters they take a molecular structure, add or replace a functional group, and run the simulation with a particular protein structure. Drug development costs are not that high now, compared to twenty years ago. Most of the money goes in marketing.
If Government of India thinks more about it's 2.1 million than bunch of corporate companies trying to siphon money from wherever they can, then YES, they are in the right direction.
> And as far as drug developments go, due to GPU computing and molecular dynamics and monte carlo simulation methods, the cost of developing drugs has gone significantly down [4][5].
I don't see where they show that the cost of clinical trials etc. for getting drugs through the FDA is affected. From what I can tell, those are the largest costs involved. Especially considering that most of the drugs discovered, even using those advanced methods, fail in the trial phase after hundreds of millions invested.
> If Government of India thinks more about it's 2.1 million than bunch of corporate companies trying to siphon money from wherever they can, then YES, they are in the right direction.
"Siphon money" or "capture the rewards of the value they provide"? Undermining global incentives to invest billions in research that could save hundreds of millions around the world does not seem like the "right direction". Not the first time the Indian government has done something selfish but shortsighted. (Pokhran comes to mind.)
> I don't see where they show that the cost of clinical trials etc. for getting drugs through the FDA is affected. From what I can tell, those are the largest costs involved. Especially considering that most of the drugs discovered, even using those advanced methods, fail in the trial phase after hundreds of millions invested.
Agreed, but I compared the costs of developing drugs 20 years ago. They had to synthesize and experiment with each and every drug. Not that's not the case. And most of the drugs which being developed now, use the principals I explained above. If clinical tests are proven successful then they file patents, but it's not an "innovative" process as per say. India has been working to get rid of such patent trolls for some time now.
> "Siphon money" or "capture the rewards of the value they provide"? Undermining global incentives to invest billions in research that could save hundreds of millions around the world does not seem like the "right direction". Not the first time the Indian government has done something selfish but shortsighted. (Pokhran comes to mind.)
Agreed, these kinds of researches has to be done, but not at cost of people's lives, I have explained statistics of people affected by AIDS above. It is a grave social injustice. These research and development processes are flawed in the sense that they cannot provide affordable alternatives to existing methods. These companies must adapt to affordable and agile development processes or someone else will replace them, remember "Mars Orbiter Mission" by ISRO.
And speaking of Pokhran, it was not a short sighted decision. India has Pakistan, an irresponsible nuclear capable neighbor, with whom India has been in state of war since 1947. Effects of Pokhran economic sanctions were not severe, because foreign trade of India constituted to 4% of it's GDP, while USA participation was only 10%. After Pokhran, under then PM Atal Bihari Vajpayee, India achieved record breaking 6-7 % growth rate in GDP. A few problems could be pointed out, but it was not a short sighted decision at all.
I am not being a socialist, but I must add that such innovation and development should be done for the people, not American people, not British people, but keeping people of the world in mind. Please don't monopolize products which can save a lot of peoples lives.
> And speaking of Pokhran, it was not a short sighted decision.
Pokhran very certainly was a short-sighted decision. It benefited absolutely nobody except the government by buying it some temporary popularity while actively retarding the country's economics for years afterwards.
> India has Pakistan, an irresponsible nuclear capable neighbor, with whom India has been in state of war since 1947.
Pointing to Pakistan is not an excuse: the whole world knew India had nuclear weapons capability. It had nothing to gain by proving the world what it already knew. Consider Israel: it's geopolitical situation is even worse, being a tiny country surrounded on all sides by many, much larger nations that would see it destroyed. Israel also is known to have nuclear weapons capability. Did they have to go perform a demonstration so the world?
And despite Pokhran, Pakistan has not wavered. Pokhran did nothing to slow Pakistan's regular shelling across the borders. Pokhran did not prevent 26/11. Pokhran did not reduce the number of subsequent terrorist attacks and infiltration attempts. It has done nothing at all to improve the Pakistan situation, and very likely made it worse.
> Effects of Pokhran economic sanctions were not severe, because foreign trade of India constituted to 4% of it's GDP, while USA participation was only 10%. After Pokhran, under then PM Atal Bihari Vajpayee, India achieved record breaking 6-7 % growth rate in GDP.
I don't think anyone knows the true extent of the economic effects, but they are much worse than you suspect. It was not just the US that imposed sanctions. Many countries and companies imposed official and unofficial sanctions that directly impacted business relations and international collaborations. It was not only foreign trade. Companies that were going to set up local manufacturing plants and partner with Indian companies pulled out. That was a direct loss to the local economy. I personally know of business deals with private companies in Germany and Japan that abruptly fell through because of this. Nobody has measured the real impact. The 6 - 7% GDP growth may well have been much higher, but we will never know.
Funny you should mention ISRO because they were also directly impacted: https://news.ycombinator.com/item?id=6552947 It's a credit to ISRO that they delivered despite the governments actions. ISRO could have dedicated resources towards newer and more interesting projects rather than re-inventing technology that became unavailable purely due to political posturing. The opportunity cost is unmeasurable.
The only thing Pokhran bought was national pride that was short-lived and had ultimately no practical value, economic or otherwise. I have seen nothing positive come out of it, only a large amount of negative impact. I cannot see how it was anything but a terrible decision.
Drug development costs are not that high now, compared to twenty years ago. Most of the money goes in marketing.
That is entirely false.
1. Why would you include marketing in the cost of developing a drug? They don't market it until it's launched.
2. The cost of drug development is not lower than it was 20 years ago, even by a long shot. FDA approval requirements have gotten more and more complex each year. 20 years ago you could run a trial on a few thousands patients and call it a day. Now the FDA would require a 10,000 person trial over two years for approval. That costs money.
1. Getting justified fruits for people's labor (researchers). Say- getting a great ROI like 1000% or huge ROI of 100000%
2. Getting greedy and trying to multiply the the ROI at the cost of human lives.
I have seen pretty stupid patents (that are logically obvious or near common sense) granted to American companies in tech sector (and have been astonished since I helped create some of those). I believe pharma is no different.
This is a textbook example of why some economic activities cannot be based on a profit motive.
There should be an international drug research agency, to which every country should contribute, and that agency should be responsible for exploring cures for diseases, by funding academics, labs, etc.
There are national labs. Canadian one sold Ebola vaccine license for $200K to some no name US lab, that same lab turned around and resold it to Merck for $50mil. Merck bought it only because it is standing to make few billion off of it.
I am also disappointed, but not because I have presupposed the answer. I am genuinely curious as to whether Gilead will say "All right, drugs were fun but we're gonna do mobile gaming now," or whether they are making enough revenue from other markets and perhaps other drugs that they'll continue to discover and develop drugs like Sovaldi. I don't think the answer is obvious to someone (like me) who hasn't been paying close attention to the profitability of drug development, so I would have appreciated
In particular, while I can see grassroots protestors not thinking about the long term, I vaguely assume that Médecins Sans Frontières knows what they're doing, and wouldn't have been backing this strongly if they didn't think it was also a long-term good strategy. But I definitely would have appreciated more discussion of that point, since I don't put much stock in my own vague assumptions.
