I\’m Not All That Sure About This

It\’s taken as an item of faith that medicine is going to continue to get ever more expensive:

First is rationing. Nearly all of us now know that the NHS � the taxpayer � cannot afford to pay for all the treatments and drugs that are already available, still less for those that will be developed in the future.

The demand is going to be almost infinite; tax receipts are not. As more conditions become treatable and patients’ demands become more sophisticated, this problem will soon be a great deal worse.

I\’m not convinced.

Yes, the services part of health care, the labour that goes into it, is going to continue to get more expensive as compared to manufacturing (Baumol\’s Cost Disease). But the drugs part of treatments? I have a feeling that, a decade or two down the line, they\’re going to be vastly cheaper. The reason is patents.

I don\’t think it\’s all that controversial to say that we\’re going through a technological revolution in medicine. The human genome, new drug testing methods, advances in cancer drugs and so on. We also know that this is leading to some very expensive treatments (£ 20,000 for a course of Herceptin, isn\’t it?). But patents on such drugs only last 17 years. Perhaps a decade from the time they first come into use (given the time it takes for approval). At the end of that time they are available for generics manufacturers to make. And thus end up costing something closer to spit, rather than the $ 1 billion or so that has been recouped to pay for the development and testing process implicit in the pricing while under patent protection.

So this rise in medical costs is only going to continue as this technological revolution works its way through the system: costs should fall after that.

6 thoughts on “I\’m Not All That Sure About This”

  1. Is there a technological revolution in medicine? I thought most of the treatments remain decades old?

    The other cost pressure is more elderly societies – in fact surely this is the cost pressure – as the ratio of workers to elderly rises. And that will have an impact at some point, even with immigration/more births, I think.

  2. We were also told that nuclear reactors, which produce power at two cents/KWH, would provide cheaper power.
    No cost of anything provided by the state ever goes down, because their desire is to hurt, not help, people. Particularly taxpayers, whom they universally hate.
    As catholicfundamentalism.com quote, “love your enemies, do good to them that hurt you.”
    The only thing the state does is effectively is provide us with more enemies to love.
    Lots more.

  3. “No cost of anything provided by the state ever goes down”

    Cost of fishing from the beach today: £0. Cost of fishing from the beach under new Government proposals for licensing all anglers: £25. Yep, sounds to me like you’re right. Even when the State doesn’t provide the fish and the sea.

  4. Whilst the cost of Herceptin may come down in the future it will be replaced by new expensive drugs that will cure, or at least delay, some other illness. The same goes for capital cost – there will always be some new imaging or scanning technology that hospitals need.

    Overall health costs are also being kept high by the desire to treat ever more cosmetic or non urgent health conditions eg removal of tatoos, IVF and some cosmetic surgeries. These are far removed from the ideals of Bevan et al when setting up the NHS

  5. Any pharma company that enjoyed patent protection in the market for ten years would be absolutely overjoyed, I can assure you.

    Around four to five years is the actual figure, given the time it takes to get approval – much longer than you think, and getting longer.

    If the FDA continues as it’s going, they’ll be lucky to get three years soon, and with maybe $500m development costs to recoup, that means one of two things. Either much more expensive products, or no new ones at all.

    Take your pick, Mr. Regulator.

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