WHITHER PROFITS? The government has gotten out of the business of basic R & D, which is part of the reason that big pharma has gone whole hog into ripping off US customers. They wouldn't dare or can't pull the same junk in other places because the governments won't permit it. No about the supposed perils of government R & D infringing on profits? Well, the purpose of the transistor was not clearly known when it was discovered. Given the profits generated by microchips that contain billions of transistors, it's hard to see how the discovery of the transistor has impeded business profits. Likewise with the laser. Its uses were not clearly predicted by those who worked on basic R & D back in the 50s, but lasers are everywhere. Manufacturing would grind to a halt without laser technology. So where's the loss to the corporations that manufacture lasers in the billions?
About new medications. Not all of them work in any way that produces significantly better outcomes than existing medications. So patients are often just as well treated using medications that have been around for a long time. They're often taken off the market not because they're ineffective, but because they don't generate enough profits. Now with Obamacare in place, the government should be able to create markets for drugs that have proven their worth and are economical to produce. In fact, prescribers, overwhelmed with paperwork, often give patients due to drug company rep influence, not efficacy.
About new medications. Not all of them work in any way that produces significantly better outcomes than existing medications. So patients are often just as well treated using medications that have been around for a long time. They're often taken off the market not because they're ineffective, but because they don't generate enough profits. Now with Obamacare in place, the government should be able to create markets for drugs that have proven their worth and are economical to produce. In fact, prescribers, overwhelmed with paperwork, often give patients due to drug company rep influence, not efficacy.
1
I disagree with your premise that the goverment has "gotten out of the business of basic R & D." Most of the innovations ....in particular, the biologics discussed...are based on NIH-funded basic research. As to development, Congress has never funded the NIH sufficiently to cover the large costs of Stage II and III clinical trials for medications. To address your other point - we need to legislate further transparency in drug trials by requiring mandatory filing of ALL trial results - negative as well as positive - in a public database, and to push the FDA to require more proof of better efficacy, not just comparable efficacy, for new drugs. This is not a simple problem, however, as in certain drug classes, there is real variability in patient responses to nearly-identical drugs.
1
This article appears to suggest that one of ordinary skill in the art would not be able to reproduce a biologic by following the patent's instructions (and other information known to them in the art). If that is in fact the case, then the article seems to implicate drug companies for obtaining patents that are invalid because they are not enabled (under 35 USC 112(a)). I would love to hear legal opinions on this matter. It would be a large, if temporary, boon to patients if all these biologic patents were invalid. Going forward, pharma companies would need to disclosure more information about how to make their biologics, and that too would benefit patients as it would decrease the R&D costs necessary for biosimilar manufacturers.
3
I agree. Full disclosure of tool designs are required for a patent. I do not why this is not required for a biologic. Patent law provides or a trade-off: short-term exclusivity and monopoly profits for the increase in publicly available knowledge.
1
Ha! All this proposal would do is allow China to knock-off the intellectual property before the manufacturer has even made it's money back. Good luck with that...
A better way to lower prices would be for the government to ban all the rebates and kickbacks between the manufacturers and insurance companies, which the public doesn't even know about, as well as allowing Medicare and Medicaid the ability to negotiate prices with manufacturers.
Neither of these things happen now.
A better way to lower prices would be for the government to ban all the rebates and kickbacks between the manufacturers and insurance companies, which the public doesn't even know about, as well as allowing Medicare and Medicaid the ability to negotiate prices with manufacturers.
Neither of these things happen now.
1
Medicare and Medicaid both negotiate prices for drugs with the sole exception of low volume specialty drugs that must be administered in the doctor's office or hospital.
Here's how I'd solve the problem rather than asking for more disclosure in patents, which might work but might require phone-books of data to contain all the relevant process information:
1) Give a biologics manufacturer a period of exclusivity (like we do today)
2) The day the drug goes off patent the government requires the original manufacturer to allow either their inspectors or generics firms to come in and inspect EVERY single element of the process for how the drug is made. This post-expiry process is mandated as a condition to be allowed on the US market to begin with. Everyone will agree to this, believe me.
3) The government auctions off to the highest bidder rights to a single generic manufacturer to replicate the process end-to-end, who also needs to undergo all the analytical (and perhaps clinical...depending on the complexity of the biologic involved though I hope this wouldn't often be necessary) testing scientifically needed.
4) That highest bidder becomes a second supplier with a government-set price (I'd put it at manufacturing cost + 20%). Regulated just like a utility. The "branded" drug will probably continue be sold at a slight premium price, but that will come down or the brand will lose most of its market share.
5) The funds raised by the govt. from the auction go directly to the NIH and other govt. agencies funding life science research, replenishing the system that lays the foundation for much of this innovation in the first place.
1) Give a biologics manufacturer a period of exclusivity (like we do today)
2) The day the drug goes off patent the government requires the original manufacturer to allow either their inspectors or generics firms to come in and inspect EVERY single element of the process for how the drug is made. This post-expiry process is mandated as a condition to be allowed on the US market to begin with. Everyone will agree to this, believe me.
3) The government auctions off to the highest bidder rights to a single generic manufacturer to replicate the process end-to-end, who also needs to undergo all the analytical (and perhaps clinical...depending on the complexity of the biologic involved though I hope this wouldn't often be necessary) testing scientifically needed.
4) That highest bidder becomes a second supplier with a government-set price (I'd put it at manufacturing cost + 20%). Regulated just like a utility. The "branded" drug will probably continue be sold at a slight premium price, but that will come down or the brand will lose most of its market share.
5) The funds raised by the govt. from the auction go directly to the NIH and other govt. agencies funding life science research, replenishing the system that lays the foundation for much of this innovation in the first place.
3
A very helpful article, but we're missing a key piece of information. We need to know the actual cost of production of the biologics in question, not their development cost, either as originators or as biosimilars. Only then can we know whether these firms are making a reasonable return on cost of production or gouging us.
I'm also troubled by the underlying assumption that somehow market forces, via competition, will conspire to drive prices down. That didn't happen with drugs for multiple sclerosis; the entry of new agents just spurred hefty price increases by the existing players. A lot of newly minted drugs have been game changers, some even resulting in bona fide cures of former progressive diseases. The manufacturers know they're giving people back their lives, and that's gold. They also know that when they cure a patient, they lose a customer for their maintenance therapy. So they may justify their high prices as compensation for future lost sales.
But frankly, I think the drug companies charge a king's ransom for drugs for one simple reason: They can.
I'm also troubled by the underlying assumption that somehow market forces, via competition, will conspire to drive prices down. That didn't happen with drugs for multiple sclerosis; the entry of new agents just spurred hefty price increases by the existing players. A lot of newly minted drugs have been game changers, some even resulting in bona fide cures of former progressive diseases. The manufacturers know they're giving people back their lives, and that's gold. They also know that when they cure a patient, they lose a customer for their maintenance therapy. So they may justify their high prices as compensation for future lost sales.
But frankly, I think the drug companies charge a king's ransom for drugs for one simple reason: They can.
2
I just don't get this obsession with "reasonable return on cost." More profit = more incentive = more innovation activity. That's econ. 101. Scientists often pick this career since they want to do something meaningful with their lives, granted. But investors won't give them capital if they don't get a similar rate of return to what they could earn elsewhere. Cut price and there will be fewer invested dollars, people who argue otherwise are utterly naive to how the business world works.
Maybe these arguments keep getting made because some folks (i) actually don't want today's level of innovation & will accept less (I think that's deeply misguided) or (ii) they think the incentives today bias us towards unproductive innovation (a point I couldn't agree with more...lots of room for improvement there).
But there is no "reasonable return on cost," folks. It's a meaningless concept. There's simply a tradeoff between prices and level of innovation. A more rational system that pays more for good innovation (high impact of quality of life, innovations that decrease total cost of care) is in everyone's interest. Everything else is a debate about how much we want to invest to get innovation.
I think people forget the magic of a new drug therapy is once it goes off patent it substitutes a cheap-to-manufacture product for human labor for generations to come. And does things for patient's health that labor (physician and caregiver care) could never offer.
Maybe these arguments keep getting made because some folks (i) actually don't want today's level of innovation & will accept less (I think that's deeply misguided) or (ii) they think the incentives today bias us towards unproductive innovation (a point I couldn't agree with more...lots of room for improvement there).
But there is no "reasonable return on cost," folks. It's a meaningless concept. There's simply a tradeoff between prices and level of innovation. A more rational system that pays more for good innovation (high impact of quality of life, innovations that decrease total cost of care) is in everyone's interest. Everything else is a debate about how much we want to invest to get innovation.
I think people forget the magic of a new drug therapy is once it goes off patent it substitutes a cheap-to-manufacture product for human labor for generations to come. And does things for patient's health that labor (physician and caregiver care) could never offer.
3
This concept of tradeoff between return on investment and innovation is bogus - for the simple reason that virtually all large pharmaceutical manufacturers have shut down their R&D labs. Now they rely on NIH discoveries, which spawn small startups funded by venture capital and often small-business government grants, who then develop the discoveries further. Then Big Pharma just buys out these startups and rakes in the money. Just look at the billions from Abilify - a classic case of disinformation marketing ( it's NOT an antidepressant, it's a novel antipsychotic) and pricegouging. The drug market is and will be a monopoly that needs to be better regulated for the public good.
The startups get big bucks for innovation, which they use to pay back their investors for taking the risk and to fund the next innovation. Big pharma is good at manufacturing and marketing. How many startups fail because their drug turns out not to work and their investors get nothing?
How do you plan to regulate. Are you going to have an unelected bureaucrat decide what a fair price is?
How do you plan to regulate. Are you going to have an unelected bureaucrat decide what a fair price is?
Change is absolutely needed. I have many friends who are biologists and chemical engineers who are wasting their entire careers replicating already invented production processes.
Imagine what would happen if these minds were unleashed on doing something original instead, like developing new cancer drugs?
Our patent system was set up to provide a temporary monopoly incentive in exchange for publicly disclosing how an invention works, precisely so no one has to replicate work. The system utterly fails here.
There is no "right" answer in terms of the compromise we strike to fix this. There's a tradeoff between preserving an incentive to innovate and a multi-year price hike to the customer or patient. But the "wrong" answer is certainly for talented people to waste their lives duplicating work. Whatever solution is adopted, let's end the duplication.
Some quick estimates:
*Rough impact on US GDP: 18% spent on healthcare, 10% of that on drugs, perhaps 70% of which is biologics = ~1.3% of our GDP = $172B that could be fundamentally rationalized.
*Rough direct cost savings: ~15 biologics going off patent/yr * $150M saved per biosimilar * 4 biosimilars launched per biologic = $9B / yr. Plus savings to patients / payers through lower prices that would FAR exceed direct savings.
How much innovation could we create with say $100B per year and thousands of smart minds? Let's change the system and work on curing diseases and extending lives.
Imagine what would happen if these minds were unleashed on doing something original instead, like developing new cancer drugs?
Our patent system was set up to provide a temporary monopoly incentive in exchange for publicly disclosing how an invention works, precisely so no one has to replicate work. The system utterly fails here.
There is no "right" answer in terms of the compromise we strike to fix this. There's a tradeoff between preserving an incentive to innovate and a multi-year price hike to the customer or patient. But the "wrong" answer is certainly for talented people to waste their lives duplicating work. Whatever solution is adopted, let's end the duplication.
Some quick estimates:
*Rough impact on US GDP: 18% spent on healthcare, 10% of that on drugs, perhaps 70% of which is biologics = ~1.3% of our GDP = $172B that could be fundamentally rationalized.
*Rough direct cost savings: ~15 biologics going off patent/yr * $150M saved per biosimilar * 4 biosimilars launched per biologic = $9B / yr. Plus savings to patients / payers through lower prices that would FAR exceed direct savings.
How much innovation could we create with say $100B per year and thousands of smart minds? Let's change the system and work on curing diseases and extending lives.
5
Having the means of production be public knowledge would also increase the odds of finding improved treatments.
1
Let Medicare negotiate drug prices. Anyone who opposes that has a financial interest in keeping prices high.
6
I agree. These drug companies work with insurance companies to reduce costs for the privately covered people but the minute you need Part D coverage with Medicare all of those benefits disappear. They (the drug companies) get research money from the government to fund research & come up with new drugs but they then protect this research so others cannot replicate it & then charge senior citizens on Medicare to prices for the medication they need. We need to work to get our government to fight for better prices on drugs for those on Medicare. We are a voting block and we need to make sure candidates understand this!
7
Part D Medicare insurers negotiate prices. There is no evidence that Medicare is paying more for prescription drugs than what you describe as privately covered insured. It is the same insurance companies who are negotiating Part D drug purchases as the ones you describe as privately covered.
It is true that the drug manufacturers will sometimes provide coupons for all or some of the co-pay for non Medicare plans but not for Medicare, but that it because federal law prohibits the drug manufacturers from providing coupons because it is considered a kickback. There are charities that will provide financial support for copays, based on need.
It is true that the drug manufacturers will sometimes provide coupons for all or some of the co-pay for non Medicare plans but not for Medicare, but that it because federal law prohibits the drug manufacturers from providing coupons because it is considered a kickback. There are charities that will provide financial support for copays, based on need.
Monopolies are common enough and maybe sometimes necessary. Price regulation is appropriate in those cases.
3
Big Pharma is controlled by Wall Street. A new drug coming to market to treat
melanoma from Bristol (Opdivo) has a new mechanism and is expensive.
An ancient drug like thalidomide, today used for hematological cancers, still
is priced at about $3,500/month. A drug like Bendamustine, developed in
East Germany about 40 years ago, and approved also for blood cancers by
the F.D.A. a few years ago, is also expensive. Drug pricing is wild, free, and
uncontrolled, and the patient pays.
melanoma from Bristol (Opdivo) has a new mechanism and is expensive.
An ancient drug like thalidomide, today used for hematological cancers, still
is priced at about $3,500/month. A drug like Bendamustine, developed in
East Germany about 40 years ago, and approved also for blood cancers by
the F.D.A. a few years ago, is also expensive. Drug pricing is wild, free, and
uncontrolled, and the patient pays.
9
The biologics are priced exorbitantly, which is unnecessary. Then the patent issue with which the drug companies charge as much as they want. Each drug company tends to imitate the priciest of another and charge ever more with no checks. In other words, drug companies operate as a cartel. Doctors are intentionally or unwittingly blind to such pricing, because the insurance companies bear much of the drug prices, in turn jacking up premiums. This cartel-like behavior is costing consumers tens of $billions annually - annual cost of drugs in the US is $370+billion!
Perhaps a revolutionary solution: let the taxpayers pick up the entire R&D budgets for all US-based drug companies, which would be less than $70 billion annually. And eliminate the patents altogether so that generic manufacturers are free to produce any drug as soon as it is approved by FDA. Taxpayers may save around $100 billion annually.
On top of that this would be the most cost-effective foreign aid to Third World countries that can't afford to buy most patented drugs. I might add, it is estimated that an estimated 10 million preventable deaths occurred in Sub-Saharan Africa alone from AIDS, creating close to that many AIDS orphans, between 1996 & 2004 or so. GW Bush allocated $15 billion for AIDS treatment and prevention in Africa; they worship him just for that, as broadcast on CBS 60-minutes!
Perhaps a revolutionary solution: let the taxpayers pick up the entire R&D budgets for all US-based drug companies, which would be less than $70 billion annually. And eliminate the patents altogether so that generic manufacturers are free to produce any drug as soon as it is approved by FDA. Taxpayers may save around $100 billion annually.
On top of that this would be the most cost-effective foreign aid to Third World countries that can't afford to buy most patented drugs. I might add, it is estimated that an estimated 10 million preventable deaths occurred in Sub-Saharan Africa alone from AIDS, creating close to that many AIDS orphans, between 1996 & 2004 or so. GW Bush allocated $15 billion for AIDS treatment and prevention in Africa; they worship him just for that, as broadcast on CBS 60-minutes!
13
The US consumer finances all drug R & D, not only that which takes place in the US.
If there were no patents, what would motivate people to invent new drugs?
If there were no patents, what would motivate people to invent new drugs?
As long as our politicians hold more allegiance to big pharma than they do the public they supposedly represent, all the great ideas in the world for rectifying the situation will never be enacted. This isn't a pharmaceutical biologics problem - it's a democracy problem.
9
A better and faster approach would be for the patent office not to issue patents if the application doesn't include the information necessary for someone to duplicate the drug. That seems rational, because how can someone know if they're infringing on a patent if the the process isn't spelled out in the patent.
This solution could also work for instances where drug companies are charging ridiculous prices for their drugs. If a drug price is out of line with actual production cost (i.e., not including development costs) the drug patent should be canceled immediately. Development costs can be adequately recovered by the monopoly patents provide, but the actual drug cost should never be out of line with the production cost, no matter how much it cost to bring the drug to market.
This solution could also work for instances where drug companies are charging ridiculous prices for their drugs. If a drug price is out of line with actual production cost (i.e., not including development costs) the drug patent should be canceled immediately. Development costs can be adequately recovered by the monopoly patents provide, but the actual drug cost should never be out of line with the production cost, no matter how much it cost to bring the drug to market.
3
So you're saying that a company shouldn't be able to charge more for a product than what it cost to produce that product? That's not a very sustainable business model - do you not believe a company can profit from its work?
1
The Constitutional tradeoff for granting a patent monopoly was full disclosure of the subject matter, so when the patent expired knowledge would be increased, and the new technology would be available to all for the benefit of the nation. If full disclosure of how the technology works was not made so it could be reproduced, no patent should be granted. That should be integtal to the patent review.
Good question why these patents are being issued without full disclosure, contrary to the Constitutional purpose.
Good question why these patents are being issued without full disclosure, contrary to the Constitutional purpose.
3
Yes, these drugs are expensive to work on. But why must a CEO make enough money to fund a small country? And why must Americans be forced, no matter what the drug is or how it's manufactured, to choose between needed medical care, food, shelter, jobs, and death? That is what this comes down to at this point. If we cannot afford the care we need we don't get it or we do and go bankrupt. All of this research and progress are meaningless if we can't use it. It's rather like what's happening with the ACA: it's there, we can pay for insurance but we can't afford the care because of how the health insurance companies have structured things.
14
The Democrats structured ObamaCare so that the drug companies would get paid, the big hospital chains would get paid and the insurance companies would get paid. Don't blame the insurance companies, they're doing what the law tells them to do. ObamaCare is functioning as designed.
Europe is years ahead in biosimilar development, since the Congress only recently passed legislation to allow it in the US. There are many biosimilars in use in the EU for years that are not, so far, approved for use in the US. Big Pharma is exerting pressure on the FDA to slow down the approval process. So far, we have one biosimilar approved in the US. Let's fast track approvals.
The big impediment to biosimiar development, as this article notes, is the cost of reverse engineering or creating a novel manufacturing process, however the "solution" proposed: extending the patent rights for disclosure of manufacturing process, simply guarantees another decade of so of record high profits and Rx costs for patients. Exactly what Big Pharma wants.
The cost to develop a process is high, because it's done by Big Pharma. The cost for a University research team would be much lower. Process techniques are shareable across drugs, and general knowledge of creating large molecule drugs is becoming more common. It's very limited right now.
Those in the industry with that knowledge understand that the actual cost to produce biologics is frequently lower than the cost to package it. The reason why Pharma has the highest percentage of Lobbyists on K Street and so many law firms on retainer, is to keep anyone with legal impact from looking into the entire process of developing , manufacturing, and pricing drugs.
The big impediment to biosimiar development, as this article notes, is the cost of reverse engineering or creating a novel manufacturing process, however the "solution" proposed: extending the patent rights for disclosure of manufacturing process, simply guarantees another decade of so of record high profits and Rx costs for patients. Exactly what Big Pharma wants.
The cost to develop a process is high, because it's done by Big Pharma. The cost for a University research team would be much lower. Process techniques are shareable across drugs, and general knowledge of creating large molecule drugs is becoming more common. It's very limited right now.
Those in the industry with that knowledge understand that the actual cost to produce biologics is frequently lower than the cost to package it. The reason why Pharma has the highest percentage of Lobbyists on K Street and so many law firms on retainer, is to keep anyone with legal impact from looking into the entire process of developing , manufacturing, and pricing drugs.
10
It seems odd that the law does not require that the manufacturing process be disclosed. That seems like an easy legislative change.
You want to lower drug costs? Simply legalize the import of foreign drugs from India, Canada or any other country. Do that, and this price gouging crap stops tomorrow.
But that would involve *real* competition. It's called "capitalism." The deafening silence of the so called "Republicans" suggests they are unfamiliar with the idea of free market competition.
Will there be quality problems if this happens? You bet. The FDA puts out alerts *now* for unsafe medical products (all made in America). They can do the same for imports. Of course, nobody will rely on that and web sites will start popping up all over rating overseas drugs.
But that would involve *real* competition. It's called "capitalism." The deafening silence of the so called "Republicans" suggests they are unfamiliar with the idea of free market competition.
Will there be quality problems if this happens? You bet. The FDA puts out alerts *now* for unsafe medical products (all made in America). They can do the same for imports. Of course, nobody will rely on that and web sites will start popping up all over rating overseas drugs.
6
Many of our drugs are now manufactured in China, a venue with huge corruption problems and constant quality scandals, anyway. Why is Big Pharma allowed to outsource manufacturing and oversight off shore and citizens are not allowed to import drugs from much safer manufacturing venues such as Canada.
Well we all know the reason for this.
Well we all know the reason for this.
India does not respect intellectual property rights of others. If they deem a drug essential, they authorize their drug companies to manufacture the drugs without paying royalties. They are free riders.
Canada and the other countries with socialized medicine impose price controls. They are also free riders.
If the US legalized the import of price controlled drugs from Canada, for a brief period of time the Canadian pharmacies would make a fortune, buying price controlled drugs and marking them up. The drug companies would then either include in their contracts with Canada that the drugs not be exported or would limit the amount of drugs sold to Canada to an amount appropriate for the population of Canada. Shortages would result in Canada and Canada would ban the export of drugs.
By definition, trading in price controlled goods is not free market competition. It is not capitalism, it is socialism. Socialism is the economic form that allows private ownership of the means of production, but the government controls the businesses.
Unfortunately, Democrats seem to think socialism is about is about providing free stuff, without recognizing that that free stuff has been expropriated from its owner.
It is a problem that the US consumer winds up paying for all of the drug R & D by paying higher prices for drugs, whether invented and/or manufactured in the US or elsewhere. But if we do what other countries do and impose price controls, there will be no innovation.
Canada and the other countries with socialized medicine impose price controls. They are also free riders.
If the US legalized the import of price controlled drugs from Canada, for a brief period of time the Canadian pharmacies would make a fortune, buying price controlled drugs and marking them up. The drug companies would then either include in their contracts with Canada that the drugs not be exported or would limit the amount of drugs sold to Canada to an amount appropriate for the population of Canada. Shortages would result in Canada and Canada would ban the export of drugs.
By definition, trading in price controlled goods is not free market competition. It is not capitalism, it is socialism. Socialism is the economic form that allows private ownership of the means of production, but the government controls the businesses.
Unfortunately, Democrats seem to think socialism is about is about providing free stuff, without recognizing that that free stuff has been expropriated from its owner.
It is a problem that the US consumer winds up paying for all of the drug R & D by paying higher prices for drugs, whether invented and/or manufactured in the US or elsewhere. But if we do what other countries do and impose price controls, there will be no innovation.
It's not just the methods. The materials themselves, the bacterial or mammalian cells that actually produce the biologic, need to be shared. Overall I think the idea is too simplistic to form the basis for a sensible discussion on the very real problem.
4
I think the American public has invested HUGE amounts of money through NIH in various key aspects of drug development. Researches who benefit from grants should be required to assign any patents to a public trust just as they would be if they worked for private companies. I don't think it right that we have laid the groundwork for nearly all drug advances but do not share any financial benefit.
20
Make the creative people who produce expensive things show you how to do it and you discourage them from making follow-up things. Let's not kill the golden goose just to save money on this one batch of golden eggs.
As expensive as these things are, we might even need to do more to allow creators to profit from things before throwing production open to generics, although I see no way to explain this to socialist redistributionists.
As expensive as these things are, we might even need to do more to allow creators to profit from things before throwing production open to generics, although I see no way to explain this to socialist redistributionists.
3
Of course you miss one important point in your little rant. Our whole medical system is based on socialism, called insurance. I pay for your $100,000 drug with my premiums. I say lets do away with all of this socialism altogether and everybody just pay for their own drugs. Soon all the poor people will die and the rich people will live and you and Donald Trump can live together in bliss. Of course without anyone to pay for these biologics innovation will dry up anyway. I think it is better to find ways to encourage innovation, allow reasonable profits and keep our medical system economically viable. The medical system isn't a natural market and so natural market forces don't work!
11
When you buy auto insurance, home owners insurance, disability insurance or life insurance, the premiums you pay are proportional to the risk you present. There are many people who purchase inexpensive term life insurance when they have dependent children and stop buying it when their children are grown or their savings are sufficient to provide for their dependent. In most years, most people pay their premiums and never collect a dime in claims on their auto insurance, home owners insurance, disability insurance or life insurance. But they are not entitled to make claims for oil changes or for when their toilet runs constantly [they have to pay the plumber for routine repairs] or when their roof ages. When their car is in an accident, or a pipe bursts and damages their home or a storm tears shingles off their roof, their insurance pays for the big events.
Health insurance used to be like other insurance, in that people with similar risk paid similar premiums, and individuals paid for routine care. ObamaCare decided that the young should pay inflated premiums to subsidize their wealthy elders, and that the taxpayer should subsidize anyone below four times the poverty level, even of they were wealthy enough to pay for their own health care and insurance. So ObamaCare is unfair and forces you to pay for $100,000 drugs for others even if they don't need your subsidy. It increased the degree of socialism.
Medical services haven't been a natural market since the 1940s.
Health insurance used to be like other insurance, in that people with similar risk paid similar premiums, and individuals paid for routine care. ObamaCare decided that the young should pay inflated premiums to subsidize their wealthy elders, and that the taxpayer should subsidize anyone below four times the poverty level, even of they were wealthy enough to pay for their own health care and insurance. So ObamaCare is unfair and forces you to pay for $100,000 drugs for others even if they don't need your subsidy. It increased the degree of socialism.
Medical services haven't been a natural market since the 1940s.
Does this mean that these patents are being granted - with the assumption that "those skilled in the art" can duplicate the invention, but they do not disclose the trade secrets really required to do the job? Would this not invalidate the patents?
8
The Author has missed one important point. Even if you knew the exact process to manufacture a biologic, you still wouldnt be able to exactly replicate it. Biologics are manufactured using a cloned cell line that has been genetically altered to to express the drug. Different cell lines will make slightly different molecules, differing for example in the amount of glycosylation, even if the manufacturing process is identical. Without clinical trials, there is no way to determine that the slightly different versions will behave the same clinically.
18
This is a critical point. Post-transcriptional modifications that are cell-dependent can make a big difference on efficacy and side effects. Clinical trials are expensive, and would be necessary for a biosimilar made to the exact specifications of its predecessor.
6
Finally a comment from someone who actually understands the process and underlying science and isn't just taking this as yet another platform to bash big pharma.
Biologics are complex, and difficult to manufacture or reproduce. I wonder how many of these other commenters clamoring for cheap imported generics would still be doing that after an allergenic biologic from some cut-rate generics manufacturer cause anaphylaxis in everyone they gave it to?
Biologics are complex, and difficult to manufacture or reproduce. I wonder how many of these other commenters clamoring for cheap imported generics would still be doing that after an allergenic biologic from some cut-rate generics manufacturer cause anaphylaxis in everyone they gave it to?
1
Then regulate an off-patent biologic as a utility. Give manufacturers a set profit percentage and regulate price.
Lot's of different ways to fix this, what doesn't make sense is to duplicate work.
Lot's of different ways to fix this, what doesn't make sense is to duplicate work.
1
The root of the problem is that the patient is the one expected to pay. The economic value of letting the market set prices can be preserved if and only if we all share the cost of every prescription. Single payer, no direct billing to the patient, market rules. Problem solved.
7
What you say is the opposite of the reality. The market can efficiently set a price only if each consumer determines the utility of the purchase. How do you determine price if the consumer doesn't pay for it.
You have hit the crux of the problem with third party payers. If the person consuming doesn't pay, there is no market force to keep the supplier of goods and services from raising prices, and the consumer has no restraint upon how much he consumes. ObamaCare is a recipe for infinite cost inflation, second only to single payer.
You have hit the crux of the problem with third party payers. If the person consuming doesn't pay, there is no market force to keep the supplier of goods and services from raising prices, and the consumer has no restraint upon how much he consumes. ObamaCare is a recipe for infinite cost inflation, second only to single payer.
There is whole bunch of gymnastics that goes in the manufacture of biologic drugs. Giving the process is not the answer. Even extended exclusivity is not the answer either. Drug volume enters the picture also. Yes policies can be made but in the United States till we are able to negotiate based on volume, nit much will change. Under ACA negotiations pharma companies made sure that Medicare cannot negotiate. When the law makers are subsidized for their job, a different tact has to be taken. It will be a challenge. Pharma bottom line is profits before anything else. Their philosophy is patients will pay the highest price as they want to extend life.
8
I think the quid pro quo described in this article would be a fine solution to a problem that promises to become substantially worse over time. In a rational world, a rule that allowed biologic drug makers, say, 25 years to recoup their investment and earn a profit on it should result in lower prices from the beginning to the end of exclusivity. Is the world rational? There's the difficult part....
2
We don't allow industries to become too concentrated in too few hands, and it may make sense to have the FDA the gatekeeper on purchases of drug producers simply to fund private islands for the heartless and greedy as we read about last month - with the guy who bought a cancer drug company and priced a drug out of sight.
4
There are two reasons to lower drug prices.
Prices of some drugs are so high that they are usurious. Those drug manufacturers should be required to disclose the actual cost of manufacture. The government can then allow a reasonable profit margin, not the current thousands of times the cost of the drug.
Secondly we must not forget that the research on which the drugs are based is often conducted at universities that receive government funding. The government must be a party to the patent that is granted thus having a say on the ultimate use of that knowledge. The government can insist on a reasonable, not exorbitant, multiplier of the cost to determine the final market price.
Prices of some drugs are so high that they are usurious. Those drug manufacturers should be required to disclose the actual cost of manufacture. The government can then allow a reasonable profit margin, not the current thousands of times the cost of the drug.
Secondly we must not forget that the research on which the drugs are based is often conducted at universities that receive government funding. The government must be a party to the patent that is granted thus having a say on the ultimate use of that knowledge. The government can insist on a reasonable, not exorbitant, multiplier of the cost to determine the final market price.
8
You have to include the cost of development in the profit margin calculation. Manufacturing can be pretty cheap compared to development.
In the same vein, even if some (usually not all) of the basic research was done at a university, the hard work of learning how to make it in high quantities is paid for by the manufacturer, along with the huge cost of testing for safety and effectiveness that takes years.
If a university is involved, it will seek a patent for itself. This happens all the time and we can tell if a university contributed by seeing who has the patent. Universities can be pretty greedy themselves when it comes to patent royalties.
In the same vein, even if some (usually not all) of the basic research was done at a university, the hard work of learning how to make it in high quantities is paid for by the manufacturer, along with the huge cost of testing for safety and effectiveness that takes years.
If a university is involved, it will seek a patent for itself. This happens all the time and we can tell if a university contributed by seeing who has the patent. Universities can be pretty greedy themselves when it comes to patent royalties.
5
The answer to the ridiculous cost of prescription drugs is to let the Federal and State governments negotiate drug prices. Just as the answer to the outrageous cost oh health care is a government sponsored single payer program.
4
I don't know how many drug manufacturers there are, but I think people would sign up for a lifetime subscription to a drug manufacturer at say $5 per month to get access to drugs at a reasonable price. It might generate more revenue than the current model, and more people would be able to afford it. Many people would pay the $5 per month for possible future need of expensive drugs, even if they didn't need it now. This would provide money for research and shareholders.
2
Interesting idea. Maybe $5 is not enough but there might be a way to calculate.
On the other hand, one could spend the $5 (or whatever) to buy stock in drug companies. This industry has been a big winner over many decades and one might make enough money selling appreciated stock to pay for his drugs.
On the other hand, one could spend the $5 (or whatever) to buy stock in drug companies. This industry has been a big winner over many decades and one might make enough money selling appreciated stock to pay for his drugs.
3
Answer: single-payer healthcare and a shift in the American perspective where "rationing" is not a dirty word and end-of-life care is much more pragmatic.
The latter won't drive down prices of biologics but will push down overall costs when biologics are the norm for everything from toenail fungus to expensive treatments for cholesterol, blood pressure, diabetes, etc. where changes in diet and exercise are often better treatments (and preventatives).
The latter won't drive down prices of biologics but will push down overall costs when biologics are the norm for everything from toenail fungus to expensive treatments for cholesterol, blood pressure, diabetes, etc. where changes in diet and exercise are often better treatments (and preventatives).
22
In a way we ration now. The economically handicapped can't afford the deductible on their health insurance policy and end up dropping it cause they can't afford receiving care. That's economic rationing.
The less economically handicapped forego treatment for the same reason as above. So in reality only the non economically handicapped can afford health care. Economic rationing yet again.
Stay healthy my friends.
The less economically handicapped forego treatment for the same reason as above. So in reality only the non economically handicapped can afford health care. Economic rationing yet again.
Stay healthy my friends.
15
Of course we "ration" now. Resources are not unlimited, in healthcare and every other industry. If we didn't ration every person would get a full body scan every year, 2 hour doctor visits instead of a half hour, in-home health checks and rehab, etc. etc. etc.
"Economically handicapped?" How about "poor," "disadvantaged," or any other term to avoid 9 syllables.
"Economic rationing." All rationing is "economic.' It's inherent to the definition of "rationing."
"Economically handicapped?" How about "poor," "disadvantaged," or any other term to avoid 9 syllables.
"Economic rationing." All rationing is "economic.' It's inherent to the definition of "rationing."
4
You are incorrect. we ration voting, one to a customer, We ration organ transplants on both financial and health grounds. The Roman grain ration was based on citizenship. Etc
2
All manufacturing processes have tolerances (manufacturing variations), and even the best labs can't verify in any reasonable time the sensitivity of the final product for every parameter of a complex process. If there is a final quality metric, that same quality metric can be used for the competitor also.
The mind boggles at the permutations (including the placebo effect, if it's expensive it must be working like in the clinical trials..., different effects for different personal genomes, process drift on a batch or continuous line basis, unexpected sensitivities to process or storage environments, the list is endless)-- and on top of that the competitor's newly verified generic biologic may actually work better because the new generic has not yet drifted into failure, even with an "identical" process. One may actually prefer the latest verified generic biologic, it actually works!