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How damn stupid are these people?

The vaccine payday was just another manifestation of pharma’s sweet deal in the U.S. Much of the research and development for new discoveries is publicly funded, and yet drugmakers charge whatever they want, with exclusive monopoly patent grants. Not content to just enjoy that bounty, those companies work to extend that monopoly period, through slight changes to the treatment (known as “patent evergreening”) or even bribing generic companies to not compete (“pay for delay”). As a result, the median net profit margin for large pharmaceutical companies is almost twice as high as other companies in the S&P 500.

Much to argue with there but OK, for the sake of argument. What should be done?

But it doesn’t have to be like that. The federal government can establish its own drug manufacturing apparatus.

But the problem isn’t with manufacturing. It’s with development. So the solution isn’t in manufacturing, it’s in development.

The answer to the headline question is therefore – very.

And the research here, well:

For example, it’s unlikely Aduhelm maker Biogen would have initially priced its Alzheimer’s medication at $56,000, in a move that threatened to singlehandedly bankrupt Medicare, if it knew that came with the risk of a public manufacturer creating a generic version of its multiple sclerosis medication Tecfidera, which accounted for more than a third of the company’s revenue in 2020. (Medicare ultimately decided not to cover the drug widely; Biogen cut the price tag after public outcry—to $28,200.)

But Tecfidera is already just out of patent. The generics are already arriving.

And the base point still stands. It’s development, not manufacturing, that is the problem. Therefore it needs to be development addressed, right?

14 thoughts on “How damn stupid are these people?”

  1. Big Pharma owns the development shops, the manufacture, the academic area, the CDC, the NIH and the FDA. Oh, and most of the senate and the house. If there was government manufacture (as if), they would own that too. Make them subject to competition and take their special treatment away. If you can.

  2. The obvious solution is to abolish the right to a patent. I understand this used to be the policy in India.

    Of course this meant that Indians could not patent their discoveries in the US since US patents were not recognised in India.

    It certainly would be interesting to see how this would turn out. Perhaps this could be tested by cancelling copyright first. We could then see if the flow of entertaining sci-fi stories was strangled.

  3. The thing is that these numbers actually tell us very little: The development cost is sunk, and the manufacturing cost approaches zero for large volumes… Therefore selling at a high – but lower – price may still represent an overall loss (any recovery is better than a complete write-off). The minimum viable manufacturing price must be set by the opportunity cost of manufacturing this product rather than any other, not by the development cost, and if it’s in patent then this will likely yield a higher price than a generic drug.

  4. If I were a giant pharma company with a slew of patents about to expire, I would simply buy up the generic manufacturers, then stop them from selling my drugs. Starting up a generics manufacturer is probably quite costly and lengthy, so this should buy me a few years.

  5. It’s interesting that one of GSK’s major products is Panadol, paracetamol sold at a higher price than generic paracetamol. They might well be better brand custodians than the current nanagemt of Unilever, which is worth thinking about. Of course, another of their top products is still Prep H

  6. The major cost to the individual patient is delay, resulting in deteriorating health and death.
    Delay is mostly caused by the government drug approval process.
    If we simply got rid of the FDA and like organisations, drugs would be rolled out faster.
    They might be less safe. But a pharmaceutical company in danger of being sued into extinction would be much more careful to trial drugs correctly.
    The worst of all worlds is what we got with covid vaccines. Emergency Use Authorisation, where the risk is transferred to government (i.e. the taxpayer) and an incentive to fudge the trials.

  7. Part of the reason I can get a nice ‘phone or a smart flatscreen TV for under 300 sterlings is that CEOs and people on EPL footballer wages once paid £3000+ for such things when they were the size of a brick or only 70cm across.
    I like that system.

  8. @Andrew M
    You’d run into big problems with competition laws doing that.

    Not to mention the cost which would probably far outweigh any gain.

  9. ‘That’s fine, as long as you’re happy with new things not being invented.’

    Yes Snag. That’s why I want to try it on sci-fi stories first.

  10. Bongo,

    “Part of the reason I can get a nice ‘phone or a smart flatscreen TV for under 300 sterlings is that CEOs and people on EPL footballer wages once paid £3000+ for such things when they were the size of a brick or only 70cm across.
    I like that system.”

    Even though I think “why the fuck does anyone spend £1K on a phone?” I should remember that these mugs are funding all the R&D at ARM, Corning etc and in a couple of years, my next £200 Moto will be even better.

  11. Most of the reasearch is *privately* funded.

    The most visible public funding comes in the extremely early research stages – uni researchers. Once they find something worth looking deeper into it shifts to private rd.

    And of course the real expenses come in the decade or more of clinical trials and certification.

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