Comments on: Drug prices and the logic of collective action

By: Antoni Jaume

Antoni Jaume — Tue, 02 Dec 2003 20:00:49 +0000

“[...]This makes no sense. Is there a truckload of knowledgeable scientists who think that all the real work is being done in Europe, but that it just ends up in America ‘because of the evil profit’? (Cue Darth Vader Voiceover)” I take that you are a crook, because nobody has said that “all the real work is done in Europe”, in fact some of it happens in Africa. But yes, some of the more promising result are cherry-picked or their data used without attribution, did you forget the Montagnier-Gallo dispute? “The real research is done in America.” And what is more, nobody has either said that the research done in the USA —because America is bigger than the USA, you “forget” Canada and Mexico to begin—, is not real or of low quality. “And much of the research done in other countries is funded by the profits from drug sales in America. Drug profits fund research. It is that simple.” The USA, while an important market are not the only one, it is at most 300 millions individuals (and about a sixth of these are not covered so may not get the correct treatment in time), while the rest of the world is some twenty times bigger. Even if only the EU and Japan markets allowed for some profit, it would be succulent enough. There is no real reason for the greater prices paid by the US inhabitants for their drugs other than the corruption of their politicians. DSW

By: sebastian holsclaw

sebastian holsclaw — Tue, 02 Dec 2003 04:41:32 +0000

“Again, if other systems worked better than the profit driven systems, WHY DO WE NOT SEE THEM? Why isn’t Europe inventing AIDS drugs with government money and then distributing them to the world at a low cost?” Because the US lets you freeload on public and academic research? Just an idea. This makes no sense. Is there a truckload of knowledgeable scientists who think that all the real work is being done in Europe, but that it just ends up in America ‘because of the evil profit’? (Cue Darth Vader Voiceover) The real research is done in America. And much of the research done in other countries is funded by the profits from drug sales in America. Drug profits fund research. It is that simple. “Sebastian will tell you that price controls lead to shortages, which may be true in general, but I seriously doubt that in a universal system we would allow such shortages to occur.” i’m not trying to be snarky, but I don’t think you understand the price control—shortage linkage if you think we can ‘disallow’ the shortages. Price controls ultimately cause shortages because of the way which they deform alternate use signals and priority of compenents signals (i.e. prices). The government can’t disallow this without taking over the entire economy, which causes other problems.

By: Vinteuil

Vinteuil — Mon, 01 Dec 2003 23:18:01 +0000

jason mccullough: I’d love to look at European administrative costs. Can you provide a link? This stuff is severely testing my Googling skills—lots of noise and not much signal.

By: Jason McCullough

Jason McCullough — Mon, 01 Dec 2003 20:07:35 +0000

“Does anyone seriously believe that administrative costs would go down in a fully publically funded system? Marketing, sure. But administration? Ever been to Brussels?)” Seriously, look at European administrative costs. They’re lower as a percentage of outlays than in the US. “Again, if other systems worked better than the profit driven systems, WHY DO WE NOT SEE THEM? Why isn’t Europe inventing AIDS drugs with government money and then distributing them to the world at a low cost?” Because the US lets you freeload on public and academic research? Just an idea.

By: msg

msg — Mon, 01 Dec 2003 06:17:29 +0000

“profit driven industry, which has proven quite adept at developing needed drugs” Right. Meaning there’s very little demand now for new drugs, because they were so adept at creating all those others. Or maybe what you mean is, most of the drugs they market have a market? Needed. Right. I have this image of some pharmco R&D hack with an armful of wonder drugs that nobody’s buying, because they aren’t needed. Do you know anything about current antibiotic therapies? Are you aware that victory in that particular arms race seems to be going to the bug/virus side? I’m sorry but underneath the graduate language and attitude I just see that same money-hunger and rationalization that’s been such a colorless feature of the social landscape for so long. The argument that the demand for therapeutic drugs is steady therefore the price-scale and willing participation of end-users is not crisis-driven fails even the most rudimentary test of logic. No crisis for Pharmco there though, you bet! The other posts seem to be variants of the old Cold War hairball, derision of the other side that ignores any responsibility for its condition. Listening to the fool chorus scorn Cuba back in the 80’s, as though an island with a US base at one end, and the US 90 miles away at the other, and the biggest guns in the world arrayed against it, could be said to stand or fall on its own merits. I wish Lord Acton had said something about the acquisition of power. I’ve got a feeling it has something to do with a pre-existing condition. — John Moore’s question, …where are those other methods…, can be answered a few different ways. Most pertinently in a rehash of the efficiency trope. It would be more efficient to eliminate the non-working elderly. The little bit of economic activity their progressions of debility and dependence create are overshadowed by their non-value-added consumption of resources. That’s of course factoring out the perpetual motion machine of insurance and health care that the American elderly power with their increasingly anxious lives. It is my still firm contention that the economic philosophies, to dignify what are after all merely aggregates of blind groping after power and privilege, which have created the inhuman leviathan of current ‘health care’ will lead to just that elimination. And worse. Currently the ‘special needs’ sub-populations of California and I’m sure the rest of the US as well, are facing bleak months of funding cuts and the chilling sight of their margins being drawn in in ever-tightening cycles of exclusion, in euthanisic legislation performed by attrition. We’re not talking about ‘units’ of consumption, we’re talking about real human beings, people who are far more aware of their needs and dependencies than you are, watching the most needy among themselves fall away. All that ‘Social Darwinism’ horseshit. Rough tough cowboys of survival, making those hard manly choices to cull the undeserving. Now that their own marginal genes have risen to the top of the pool, after millenia of NON-Darwinian selection. I’m sorry I know that’s way tangential; it fits but the connections are so tedious to make plain. Let’s just say that behind the question of drug pricing is a question of drug-providing, and behind that a question of healing and behind that a question of deserving and behind that a question of how we got here and behind that a question of where we go next and you know eventually it seems almost a little too metaphysical for this venue. Almost.

By: jimbo

jimbo — Mon, 01 Dec 2003 04:00:54 +0000

Yes, I agree Antoni – it is simply scandalous how the U.S. uses it’s military power to prevent the rest of the world from developing those drugs we all know are much more efficiently created under a state-funded system. An outrage, I tell you!

By: Anthony

Anthony — Sun, 30 Nov 2003 22:42:07 +0000

Worth looking at http://www.nofreelunch.org if talking about marketing. While I’m critical about some of the marketing practices of the industry (although it has to be said health professionals are complicit in this activity) I have no problem with research being undertaken by companies. Compare the history of drug innovation in the US and the UK from 1950 to that in Soviet Russia. No contest.

By: Antoni Jaume

Antoni Jaume — Sun, 30 Nov 2003 17:47:54 +0000

It is the USA that free-rides the world. Well, to be precise it is not absolutely free: they spend more on weapons, military and war than the rest of the developed countries. It is this fact they use to press the interests of their owners over the interests ot the people living in other countries. DSW

By: John Moore (Useful Fools)

John Moore (Useful Fools) — Sun, 30 Nov 2003 17:23:50 +0000

I see way too much static analysis going on here. The issue with drug development involves a long timeline, with factors ranging from the incentives to invest venture capital to the incentives to get an education and enter into drug research. I will believe the arguments that governments can do a better job than profit driven (i.e. evil to some folks here) companies when governments deliver the goods. So far, they haven’t. In the US, academics funded by the government (whether at NIH or at Universities) concentrate on the basic science. They do not have the resources, infrastructure, or experience to perform the huge task of drug qualification (which, as been pointed out before, usually results in failure). Instead, we have profit driven industry, which has proven quite adept at developing needed drugs. And we have profit driven secondary industry which develops techniques and equipment needed for the R&D. These are active, lively sectors full of brilliant people. Some have a problem with profit involvement in medicine, because it is “crisis driven.” I find this argument absurd, except in some utopian world. Firtst of all, the drug market is not crisis driven, except in the individual sense. But the market responds to the aggregate demand, which is steady and not at all crisis driven. In that sense, it is much closer to the food market. Many criticize the pharma companies for their large advertising expenses. Perhaps those people should study the slow adoption of new practices and drugs in the medical industry, and recognize that while the advertising is self serving, it nonetheless is a major source of ongoing education for physicians. Finally, it is true that the rest of the world is free-riding on the US consumers. We are paying high prices because we don’t have the purchasing power of single payer health systems (although it is true the HMOs and PPOs do negotiate discounts). Again, if other systems worked better than the profit driven systems, WHY DO WE NOT SEE THEM? Why isn’t Europe inventing AIDS drugs with government money and then distributing them to the world at a low cost? I have yet to see an advocate of government development of pharmaceuticals come close to answering that question! Although the private enterprise system draws lots of criticism from ideologues and others, and people point to high advertising costs (as if that meant someting), this messy system with the (gasp) profit motive delivers the goods. No other system is doing so. That means that either the other systems will not work, or people are unwilling to pay the taxes to support them, while free-riding on, and simultaneously attacking the US model which is saving their lives or making their lives more tolerable!

By: Antoni Jaume

Antoni Jaume — Sun, 30 Nov 2003 15:49:51 +0000

“But the number of researchers, unlike the number of front-row seats in the analogy, is not static. More spending means more researchers and more R&D. Is that a bad thing?” the limiting factor is the number of different corporations. And the high cost of entry in the market for new entrants. The fewer companies the fewer researchers on different lines. DSW

By: Vinteuil

Vinteuil — Sun, 30 Nov 2003 15:36:32 +0000

David: presumably “creating imitations” is cheaper than working de novo. Moreover, the availability of cheaper knock-offs must tend to drive prices down. I can see why the company that developed the first drug in a certain class would not like this, but I’m not sure why it would bother anybody else. Bryan: what does your story of regulators asleep at the switch have to do with profits?

By: Vinteuil

Vinteuil — Sun, 30 Nov 2003 15:27:05 +0000

Antoni: you seem to suggest that the high profits of American pharmaceutical companies allow them to buy up the available researchers. They then jack up the price of the resulting new drugs to keep profits high. Is this the point of your quote from Edward Hugh? But the number of researchers, unlike the number of front-row seats in the analogy, is not static. More spending means more researchers and more R&D. Is that a bad thing? Besides: what is to prevent the Europeans from upping their public funding ante if they want a bigger piece of the action? Wealthy private universities like Harvard and Stanford drive up the price of the best academics in all fields—but that just means the states have to spend more on education if they want to keep up. The ultimate result is more and (possibly) better academics all round. Why shouldn’t people profit from doing socially valuable work? Personally, I would like to see pharmaceutical researchers profit more than, say, real-estate agents…

By: bryan

bryan — Sun, 30 Nov 2003 13:31:06 +0000

well I for one definitely think profits should be increased

By: David Tiley

David Tiley — Sun, 30 Nov 2003 10:19:17 +0000

Here’s an argument: Of the research and development costs by private pharmaceutical companies, much more than half is spent creating imitations to share a market and evade IP. The reason emerges above: the risks for a genuinely new drug working in a new way are much higher – first in absorbs the danger. Is that true? And if so, does it not suggest a way in which the market is actually inefficient and sustains high costs?

By: Antoni Jaume

Antoni Jaume — Sun, 30 Nov 2003 10:07:12 +0000

Vinteuil, if I were a monied criminal the USA are the place to go. Then I could control my business in criminal ways, putting my profits over other individuals life, which is a very similar way to the US drug industry. The true ability to do drug development has nothing to do with exacting profit, unless you obstaculize that development. It is a similar behaviour to the one Edward Hugh describes in: http://fistfulofeuros.net/archives/000145.php key excerpt in my perspective: “On my travels I met what you could consider to be a pretty bright programmer: he writes spider programmes. Now if you were silly enough to want to sit in the first few rows of a concert from some mediocre but popular pop star, you would probably want to be cursing him: for his boss and his spider programme would already have the tickets. He works for an entrepreneur in a nameless but extremely large country, who buys up all the tickets for 250 dollars and re-sells them at around a thousand a go.” DSW