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[P]
The First One Is Always Free

By skyknight in Op-Ed
Sat Jul 26, 2003 at 07:50:01 PM EST
Tags: Politics (all tags)
Politics

Earlier Friday morning, in a major upset to pharmaceutical lobbyists, the US House of Representatives approved a measure, 243-186, that would facilitate the importation of inexpensive medicines from Canada and Europe. The debate was vigorous and aggressive, and the final verdict heavily contested. Both sides have valid issues, though clearly their objectivity is in question, as all involved parties have heavily vested interest in the outcome.


The crux of the matter is straightforward enough. Proponents of the bill assert that its passing will usher in a new era of affordable medicine to Americans who cannot afford prescription drugs, while opponents of the bill claim that it will not only decimate the revenues of American pharmaceutical companies, seriously curtailing funding for research, but will also endanger American consumers by exposing them to unsafe products. These concerns are real, and at first glance seem simple enough, but upon delving beneath the surfaces, a melange of entangled issues become apparent.

A resolution to the perceived prescription drug crisis could yield enormous political capital to its progenitors when voters head to the booths in 2004, and as such both the House and Senate are paying close attention to this play as it unfolds. The White House, too, is in on the action, as providing affordable prescription drugs to the masses is a central item in Bush's "compassionate conservatism". At the same time, however, many politicians are apt to receive campaign contributions from the large and powerful lobbyists associated with these issues. The vote in the House most decidedly did not fall along party lines, as each representative shrewdly weighed the political value and cost of his or her action.

Most of the benefits of this proposed plan would manifest quickly and predictably. Proponents argue that pharmaceutical companies are presently engaging in pernicious, predatory profiteering, and that opening the market up to importation will increase competition, yielding cheaper drugs for all. Indeed the companies' hands are by no means clean, many of them engaging in practices that rightfully garner them substantial ire.

Among numerous and varied tricks, some companies have exploited legal loopholes so as to effectively extend their patents for an indefinite period, preventing cheap generic forms from finally appearing on the market after the ~20 year patents have expired. This is accomplished by what is effectively a filibuster: unscrupulous pharmaceutical companies can obtain an automatic 30 month extension by filing suit against a generic manufacturer, claiming that secondary patents on packaging and other related things will be infringed; in some cases companies have managed to file repeated patent infringement suits, dragging things out for years.

So, there are most assuredly problems with the system that need to be addressed, but we must be excruciatingly careful that in implementing remedies we are fully cognizant of secondary effects. As with many governmental actions, the benefits are immediate, but the costs lie years or even decades down the road, and are notoriously difficult to ascertain with great foresight. Let us first examine a downside that may materialize in the short-term.

If safety is truly to prove a problem, the effects will be seen sooner than any deleterious economic consequences may become evident. Why might drug safety as it pertains to the proposed bill be a valid concern? As you know, a chain is only as strong as its weakest link, and by lowering importation standards, we may very well be introducing a weak link into the chain that is our drug distribution channel. One of the real sticking points of previous drug importation related bills has been a requirement that the secretary of health and human services certify that the imported medicines "pose no additional risk" to consumers. Both Bush as well as Clinton before him have refused to accept this and the bills have thus been shot down. The present bill does not contain such a requirement, and has accordingly caused a clamor not just from the drug companies, but also the FDA (who some claim has been bought off by the drug companies, but that's another story).

How then are consumers to be assured of the safety of the drugs that they consume? Barring domestic efforts, drugs will only be as safe as the regulations of foreign countries stipulate. In most cases this will be perfectly adequate, as established manufacturers in these countries are apt to be above board and honest, but what of the suppliers in these countries that are merely acting as intermediaries in an extended channel? It is one thing to receive drugs from a European manufacturer. It is an entirely different matter altogether to receive drugs from a European trafficker that is getting their store from from a third party in, say, Africa. The additional bureaucracy required to ensure safety may prove quite expensive, taking a substantial bite out of the savings of importation, not to mention that the endeavor may prove wholly futile, as sovereign nations will do as they are wont to do.

If safety concerns are not sufficient to sway you, let us now consider the economic impact, and how it may affect the long term quality of the drugs that are available. To appreciate the potentially dire consequences, one must possess prior knowledge of the rigors to which novel drugs are exposed on their way to the market.

Drug research is phenomenally expensive. "Bringing new drugs to market has always been an expensive, high-risk proposition, and our latest analysis indicates that costs have continued to skyrocket" says Tufts Center Director Dr. Kenneth I. Kaitin in a 2001 study. This study reports that "the full capitalized resource cost of new drug development was estimated to be $802 million (2000 dollars)". Part of the reason for this staggering cost is that it includes the underwriting of expenses incurred in the development of ultimately failed drugs. For every drug that successfully makes it to market, several are shot down during clinical trials due to adverse reactions. In the long run, it is far cheaper and more humane for these dangerous drugs to be nixed, as the resulting lawsuits would be more expensive, and the cost to human life unacceptable.

Now that you have had a brief edification in the costs of drug development, let us consider how importation issues damage the long term viability of research operations. First off, let us stipulate that simply propping up drug companies for the sake of protectionism is a fairly odious option from the perspective of a free market proponent. Drug companies must be in ferocious competition with one another if we are to end up with the best drugs at the best prices. Unfortunately, many situations in the world make this a woefully complicated proposition.

As you are certainly aware, many destitute African countries are presently in quite a bind. Tens of millions are afflicted with AIDS, many more with other easily curable diseases, and hardly anyone there earns in a year what most of us gross in a week. Branded prescription drugs are a luxury of which they can only dream. To bridge this gap, some drug manufacturers are trying to arrange special concessions that allow generic versions of drugs to be manufactured for use in Africa and other similarly impoverished regions.

Enter immoral, profiteering generic drug manufacturers...

The altruistic intentions of brand name drug companies (read: their rational and selfish interest in not having their public image completely sullied) are completely undermined when foreign manufacturers of generic drugs, licensed or otherwise, start exporting their wares back into the US. Suddenly the American market is awash with cheap alternatives, and the brand name drugs sit on the shelves, unsold, to the detriment of drug companies' revenues. "Yeah, so what, screw the greedy bastards" you may be thinking. This is not an entirely unreasonable sentiment if you know someone personally who can't afford necessary prescription drugs, and you've seen the extravagant salaries of today's CEOs.

Alas, a "stick it to the rich" strategy will not have the intended effect in the long run (assuming your intention is to make things better for the general populace). CEOs aren't going to vote themselves lower salaries, but instead slash research budgets. This will indeed sabotage the development of future drugs and thus the long term viability of a company pursuing said strategy, but the present CEO won't care overly much, as by the time the ship has started to sink they are apt to have already jumped. This is actually a common problem in lots of industries in which the ramifications of stupid and short-sighted management take a long time to fully manifest. Sure, present drugs might become cheap, but given the so-so quality of today's drugs, people would be wise not to make such a Faustian bargain. Where would we be today had penicillin been the end of the line?

The prescription drug conundrum will doubtlessly be at the center of debate for a long time to come. The issues are complex, and fraught with unseen peril. If we are going to successfully address today's exigencies while still heeding the prerequisites for sustainable long-term development, then we must carefully weigh short term benefits against long term costs, and go forward with both eyes wide open.

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Poll
Root cause of the problem:
o Profiteering drug companies 54%
o Short-sighted grabs at cheap medicine 7%
o Opportunistic politics 2%
o All of the above 34%
o Other (please post comment) 2%

Votes: 98
Results | Other Polls

Related Links
o phenomenal ly expensive
o Also by skyknight


Display: Sort:
The First One Is Always Free | 293 comments (269 topical, 24 editorial, 0 hidden)
Here's more interesting links (4.50 / 4) (#1)
by pyramid termite on Fri Jul 25, 2003 at 08:35:14 PM EST

One says that drug companies spend more on advertising, $15.7 billion in 2000, then they do on research. Another source claims that "In the 1980s, the basic research budget in clinical development represented 19 to 20% of gross revenues, as compared to 30 to 40% for marketing and sales," Murad said in a report by the Washington Fax News Service. "Today, the percent of gross sales going to basic R&D is probably 13 to 15%, with even more going into marketing and sales." Also, federal revenues given to drug companies for research don't seem to be counted.

On the Internet, anyone can accuse you of being a dog.
The fraction of budgets going to advertising... (3.00 / 1) (#4)
by skyknight on Fri Jul 25, 2003 at 08:45:46 PM EST

is indeed quite depressing. I'd like to think that we could funnel a much larger fraction of total revenues into research and thus get better drugs that would sell themselves, but I don't know how practical that is. In the real world, image sells, and if there weren't sales, there wouldn't be money for research, and if there weren't money for research there wouldn't be any drugs at all. I don't know that there is a good answer to this problem, as it is rooted in the incurable ills of human stupidity and gullibility. In a world of Britney Spears and McDonald's, what hope have we?



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
advertising (4.33 / 3) (#10)
by jjayson on Fri Jul 25, 2003 at 09:40:11 PM EST

Advertising returns revenue, though. Just because these companies have large advertising budgets doesn't mean that is bad. If these companies stopped advertising, then sales drop. With fewer sales, they have to charge more to make what they consider an acceptable profit. Sure as some point that can be overdone, but nominal or percentage rates of spending don't mean shit until weighed aginst revenue generated.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]
But how effective is it? (4.50 / 2) (#15)
by pyramid termite on Fri Jul 25, 2003 at 10:15:24 PM EST

Advertising returns revenue, though. Just because these companies have large advertising budgets doesn't mean that is bad. If these companies stopped advertising, then sales drop.

Of course, if they're advertising prescription drugs, they've got to persuade the doctors to go along, too, don't they? Which, from what I've heard, isn't too difficult these days.

Then again, if there's a generic available, people often flock to it, without the benefits of advertising. I suspect that advertising is beginning to show the effects of the law of diminishing returns as people get more used to it and more disbelieving of it. But that's another discussion ...

On the Internet, anyone can accuse you of being a dog.
[ Parent ]
generics (5.00 / 1) (#25)
by jjayson on Fri Jul 25, 2003 at 11:18:47 PM EST

People probably flock to generics because they already know of the non-generic version, from their advertising and them having been around for two decades prior.

I don't know how much advertising helps or not (aparently it does quite a bit or companies wouldn't do it). The latest trend is to advertise to consumers (which I am not sure is a good thing, but it is hard to argue that giving consumers less information is ever a good thing). You are the one who is saying that advertising is costly, you should have the burden to show that it actually is expensive.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

$15.7 billion isn't expensive? (4.66 / 3) (#27)
by pyramid termite on Sat Jul 26, 2003 at 12:05:36 AM EST

It's more expensive than drug research, obviously. But I'll admit, it is less expensive than, oh, say, the Iraq war.

That's an interesting priority list - war, advertising and humanitarian drug research coming in third. Wonderful, isn't it?

On the Internet, anyone can accuse you of being a dog.
[ Parent ]
What's more entertaining... (4.66 / 3) (#28)
by skyknight on Sat Jul 26, 2003 at 12:12:01 AM EST

is that we were/are talking about providing universal health care to Iraqis... Regardless of your stance on the morality of that in America, it is somewhat comical that the most rich and powerful nation doesn't want to provide such things for its own citizens, but will try to do it for a nation that it just ran roughshod over with its military.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
since when should you have to advertise for drugs? (4.00 / 1) (#87)
by auraslip on Sat Jul 26, 2003 at 08:24:29 PM EST

If your sick you need medicince. So what is the advertising for? To convince people that they are sick?
I guess you could say "to convice the public to buy ours rather then our competitors", but drugs are patented, so how similar can they be?

___-___
[ Parent ]
a few things (5.00 / 2) (#89)
by jjayson on Sat Jul 26, 2003 at 09:33:40 PM EST

There are many drugs that are constantly released and even the best doctors can fall behind in the research (not to mention just get complacent and just keep presecribing what they have in the past even though something new has come along, but that really doesn't matter as most people will just take whatever the doctor gives them).

Many people also do not know there is something that can be done about their condition. Many allergy sufferers, without the Allegra ads, might just sit back and pop some Benadryl every day. People don't go to the doctor enough, often only when they are sick, and they do not always tell the doctor everything since they don't deem some problems fixable.

Regardless, even I don't really know how it works, byt it obviously does work or they wouldn't be doing it. The people that run these companies are not stupid.

--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

Did you know... (none / 0) (#141)
by nicklott on Sun Jul 27, 2003 at 09:12:50 AM EST

That only two of the World's developed countries (Technically OECD members) allow Direct to Consumer Advertising (DTCA)?

They are the US and New Zealand. And NZ is trying to ban it.

(http://www.cptech.org/ip/health/marketing.html)

[ Parent ]

People are too stupid to think for themselves... (none / 0) (#143)
by skyknight on Sun Jul 27, 2003 at 09:31:15 AM EST

right? I hope you're not arguing that we should just let the government do our thinking for us. As you may note, the government is made up of people, and they don't tend to always be the best and the brightest. Often they just got to where they are because they were the most ruthless and compromising.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Well, (5.00 / 3) (#146)
by Alfie on Sun Jul 27, 2003 at 10:22:49 AM EST

I hope you're not arguing that we should just let the government do our thinking for us.

I think he's arguing that doctors should do the thinking when it comes to diagnosing and treating diseases. People these days are coming to doctors with a disease and a treatment in mind before even the very first visit. And I don't think I even need to go into the details behind Viagra usage.

It's not that I don't want people to be pro-active in their treatment. But some would argue that the advertising is convincing people that they have diseases which they don't have, or even medicalizing problems which have, traditionally, been thought of as non-medical but social or emotional problems. This has been a problem long before the pharmaceutical companies were allowed to direct advertise because they found ways around the law, such as spending millions to fund "grassroots" mental health advocacy groups which "raise awareness" about issues.



[ Parent ]
Advertising (4.00 / 1) (#207)
by thejeff on Sun Jul 27, 2003 at 07:39:31 PM EST

Who said anything about government?

Since, for prescription medicines, doctors have the knowledge and make the final decision to give a drug to a patient, why advertise to the consumers. I don't have anything against people doing their own research to find what their options are, but without advertising the information is still available, and most of the advertising adds little actual data.

There was a billboard on my commute a few months ago, with a picture of a beautiful woman standing in front of a sunny field. The copy read something like  "For a better life... ask your doctor about <drug name>"  It doesn't even hint at what the drug was for. What use is that?

[ Parent ]

I assume if you take the drug... (4.00 / 2) (#208)
by skyknight on Sun Jul 27, 2003 at 07:44:45 PM EST

then you get the girl. Why is this complicated? Either that or it was an allergy suppressant.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
price controls (4.50 / 4) (#12)
by jjayson on Fri Jul 25, 2003 at 09:55:53 PM EST

You really should meantion how price controls effect this. Some countries, like Canada or the Scandinavian ones, restrict prices by law. When Americans are allowed to import from other countries, they will be able to buy at these artifically low prices. This has been used as a reason in the past for such high prices in the States, beause the lost revenue has to be collected from us. These quasi-socialist policies that these countries are so pround of just shift the burden, artificially keeping prices low in their towns, but fucking over others.

Anyways, in a global market without restrictions, the law of one price takes hold. Can drug companies in the US really survive when other countries are setting price controls that can have global effect?

I would like people to be able to buy from the cheapest source around the global, but that is a capitalist idea and it is cut against by price controls.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." -

That's a great point... (none / 0) (#13)
by skyknight on Fri Jul 25, 2003 at 10:07:35 PM EST

I'll see if I can work it in somewhere... I could probably work in another paragraph, though I'm running a little long as it is. Of course, I'll have to be careful, as if I use the word 'socialist' in an overly deprecatory it'll be the abyss for me, and then I'll be shooting oh for five.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Don't say socialist (none / 0) (#14)
by jjayson on Fri Jul 25, 2003 at 10:14:11 PM EST

Just mention price controls. I haven't heard about this legislation actually (I've been very out of touch with politics and stuff for the last month). I'm just about to post an editorial comment, but I'll see if I can find a way to tighten it up to give you space too.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]
And I'm just about to... (none / 0) (#16)
by skyknight on Fri Jul 25, 2003 at 10:16:34 PM EST

go purchase some buffalo wings and beer, as the reward that I so richly deserve for writing this piece. :-)



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Well, I meant to try to work it in... (3.50 / 2) (#52)
by skyknight on Sat Jul 26, 2003 at 09:19:44 AM EST

but I've gotten bogged down with replying to numerous comments. At this point I think it would be unfair to the people who have posted significant topical comments to change the article out from under them. Furthermore, the issues that you mention have ended up seeing substantial discussion in comment threads.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
sorry about editorial (none / 0) (#74)
by jjayson on Sat Jul 26, 2003 at 03:21:17 PM EST

I forgot to hit the submit button on my editorial comment before I left last night, sorry. I got home this afternoon to find the comment still sitting in my browser. Since the story has already gone to voting I just closed the window. sorry.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]
I wondered about that... (none / 0) (#75)
by skyknight on Sat Jul 26, 2003 at 03:22:38 PM EST

It would have been cool to see it, but the story seems to be doing quite well regardless.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Re: price controls (4.50 / 2) (#153)
by Toshio on Sun Jul 27, 2003 at 12:34:21 PM EST

You really should meantion how price controls effect this. Some countries, like Canada or the Scandinavian ones, restrict prices by law. When Americans are allowed to import from other countries, they will be able to buy at these artifically low prices. This has been used as a reason in the past for such high prices in the States, beause the lost revenue has to be collected from us. These quasi-socialist policies that these countries are so pround of just shift the burden, artificially keeping prices low in their towns, but fucking over others.

I have never heard of successful company that would be so stupid as to sell their products for that would not at least cover the costs of production and shipment. If you truly beilive in what you have said here, then I hope you will explain the reasoning behind your opinion in more detail.

Anyways, in a global market without restrictions, the law of one price takes hold. Can drug companies in the US really survive when other countries are setting price controls that can have global effect?

Price controls are not arbitrarily set but are used to prevent price extortions. They are usualy set little above the average price of generics (identical chemical compound). This price control only guarantees that the chemical companies actually have to compete for the business. If Pfeizer for example can not offer the drug at such low price it simply means that it has to improve techological process or make distribution more effective. The simple fact that Pfizer, Roche et. all still compete at these markets is simply a statement that thay can still make profit even at such prices. To sell under the production costs would be suicidal as it would simply mean that every pill that I produce can not be sold. This is easily avoided by simply reducing the number of pills produced and retracting form the particular market. To say that it is this approach (that is slowly gaining support around the world) that would destroy your companies is overly simplistic. In your place I would feel pretty much cheated of the value of the drug I'm using simply because if Pfeizer can sell 1 pill for 0.1$ and still profit in some overseas market, then why do I have to pay $1 for the same pill at my home. As stupid as it sounds, this usualy means that medicine price control actually increases competition by forcing people to recognize that drugs are not brand names we are buying, but simply chemical compunds that can be prodced anywhere where there are technical capabilites to do so.

The other thing to remember is that it is not only countries (with what you call quasi-socialist policies) that do the price settig. Do you think that large clinics don't run on the same principle. They don't buy drugs by the package in the local pharmacy store. The simply send out the tender to buy such and such amount of such and such chemical compud for such and such top price. If you can get the price that low, you send your offer, if you don't, you don't run for the deal. Since the price control here is simple informative number that is used by the buyer to obtain the largest possible number of offers that are as cheap as possible (keep the costs low, have competitve pricing compared to other clinics, try to have lower prices). I don't see a reason not to use such approch (at least not prevent using such approach) everywhere else. If some private medical facility uses this approcah because it makes sense, I don't see a reason for countries with general health care (quasi-socialist?) to do the same, since they are just acting like any other buyer would. Price control is not trying to forbid the sales above the price set, price control is simply letting the providers know how much are you willing to pay. I there are no offers, the maximum price somebody is willing to pay simply raises and a new tender goes out again (and this happens a lot - i.e. it is perfectly normal to do so). If I let only the ODM (original drug manufacturer) to give me an offer (as it is currently case in USA) then I can't have any competition. The monopolist on the chemical substance automaticaly wins because of lack of competition. This is good for ODM, but this can only last so long. 20 years is more than quarter of somebodys life. If we are talking about deadly condition, this can be all of the life one could get. By allowing others to import the generics (that are identical) you force the ODM to rationalize and start developing more effective drugs, or cheaper drugs. IMHO, this is the only way for consumer (in this case a patient) to benefit. Then all you have left is to modify the government regulations (particulary the patent laws) in a way that ODMs will still have incentive to develop and research, and the patients will still have the benefit of cost effective treatment.

I find it amusing that there is some firm determination that generics are of inferior quality. Unfortunately for ODMs generics are of identical chemical structure with varying amounts of leftovers from the technological process that created them. As generics are never automaticaly accepted as replacements, they undergo complete clinical trials and test to assure their efficiency and their safety. Generics are not just some cheapo bang-togethers ODMs would like to present them as. If you take a look at ownership structures and consolidated economic reports, you would be surprized to see that Pfeizer, Roche, and Novartis (I don't know about the others) all own or partially own generics manufacturers and show significant income from licencing deals with other independant manufacturers of generics. With such financial backing there is only little chance of having this big drug companies to collapse if the market around them changes. They will certainly change their tactics, but they will come nowhere near bancrupcy. Everything said above goes for the prescription drugs. Non-prescription drugs are freely marketed (once approved) and for all practical reasons original M&Ms are still being produced although almost a dozen other brands exist that offer similar or identical products without the magical letter 'M'.

Irony is that government regulations create deformations in the free capitalist flow of goods. To circumvent these deformations we introduce more regulations that create new deformations. Just image Duracell(TM) Rabbit. It just goes on, and on, and on, and on, ... IMHO the greatest deformation in this case is the patent law. While it has reasons to exists, it also has reasons to be seriously rethought in the case of such narrow markets with constant (and predictable) demand. This doesn't mean we need new regulations, it just menas that we need to fine tune the existing one.


--- To boldly invent more hot water ---
[ Parent ]
explanations (5.00 / 1) (#204)
by jjayson on Sun Jul 27, 2003 at 07:19:58 PM EST

I have never heard of successful company that would be so stupid as to sell their products for that would not at least cover the costs of production and shipment. If you truly beilive in what you have said here, then I hope you will explain the reasoning behind your opinion in more detail.
Pharma companies are willing to seel above marginal costs, the cost to produce each successive pill, but below average, the total cost of production and divided by the number of pills, in places like Canada because the US exists. R&D costs are shouldered by the American population (we are forced to pay higher costs since Canada refuses to pay for R&D), so price controlled areas are just gravy. If all nations were price controlled, nobody would be left to take on private R&D costs and it would collapse (as it does in all price controlled industries, like SF and NY housing). Also, there isn't really a choice. Canada has already said it will break patents to get drugs to their population (they've done it to two patents too).

Price controls are not arbitrarily set but are used to prevent price extortions. They are usualy set little above the average price of generics (identical chemical compound).
Not quite. Generics don't exist when the name brand comes to market. From what I've read from a Canadian source, the prices are set using a guideline of similiarity. Pills that do similar things and treat similar conditions should cost similarly. These prices are set near marginal costs, and they actually discourage generics from going to market because the generic will not get much market share since it cannot be offered at a substantially lower price. This has the the effect of actually raising generic prices (generics are often cheaper in the US, I just showed MichaelCrawford in another post how one of his generics is abotu 10% cheaper in the US so to not expect much of a reduction in med costs).

This price control only guarantees that the chemical companies actually have to compete for the business. If Pfeizer for example can not offer the drug at such low price it simply means that it has to improve techological process or make distribution more effective.
You are only looking at marginal production costs, not R&D costs. If Canada set prices above average costs and nost marginal costs this wouldn't be a problem.

The simple fact that Pfizer, Roche et. all still compete at these markets is simply a statement that thay can still make profit even at such prices.
They can compete because Americans shoulder the R&D burden. Somebody has to pay for it and when price capped countries like Canada effectively refuse, we are left to do it. If Pfizer decided to not sell phramaceuticals in Canada, their patents would just be broken. They have two unfair choices, one is just less unfiar than the other.

As stupid as it sounds, this usualy means that medicine price control actually increases competition by forcing people to recognize that drugs are not brand names we are buying, but simply chemical compunds that can be prodced anywhere where there are technical capabilites to do so.
Once again, you are thinking like a Canadain. No matter how much you ignore the cost of R&D it doesn't go away. Marginal costs are different from average costs. If you cap prices you lose private R&D. Why do you think there is so little private R&D in Canada? Why do you think that what used to be a European strength has moved to America (even the big names like SGK has moved most of their operations to the States).

The other thing to remember is that it is not only countries (with what you call quasi-socialist policies) that do the price settig. Do you think that large clinics don't run on the same principle.
I read that Aetna insures more people than Canada, yet Aetna cannot negotiate a price similar to Canada's because they don't have the ability to break the patent. That is what allows Canada to get a lower price. If the drugs company doesn't like the price they can tell the company they will just produce it themselves. It is a no-win situation. If Canada bought from pharma companiues at market value and resold to their citizens at a reduced rate that would fix the problem as now they can enter into bulk price negotiations without the hammer of patent breaking.

If I let only the ODM (original drug manufacturer) to give me an offer (as it is currently case in USA) then I can't have any competition. The monopolist on the chemical substance automaticaly wins because of lack of competition.
Yes. Prices are a social construction that assigns a number value to the different goals of the producer and consumer. The more a consumer wants something the higher price he will pay. The more the producer wants that marginal sale the lower he will drop the price. Since drug production has very low marginal costs, the larger the free-market is the cheaper the price gets.

As generics are never automaticaly accepted as replacements, they undergo complete clinical trials and test to assure their efficiency and their safety.
I really have no problems with generics, but I think this is wrong. In 1984, the Waxman-Hatch legislation allowed knock-off drugs to bypass clinical trials as long as they could prove they were the same as the patented drug. In exchange for this, patented drugs can now extended the length of the patent to compensate for the time spent in trials (since the patent has to be filed before trials begin), but only up to 5 years. I think the average length of trials is a little less than 12 years though.

--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]
Re: explanations (none / 0) (#247)
by Toshio on Mon Jul 28, 2003 at 10:03:15 AM EST

If I understand your answer correctly, then your major grudge with price control (setting the maximum price the buyer is willing to pay) that it prevents ODMs (original drug manufacturers) from recouping their R & D costs. This is what I completely agree with, as I am perfectly aware fo the price of the first pill that has to be spread over all the following ones. I'm also aware that R & D costs (complete with clinical trials) take huge amounts of money (cumulative costs come in range of tens of millions of US$ even for simplest drugs).

Since completely deregulated market would give advatage to manufacturers of generics there has to be some form of government regulation that enables R & D companies to sustaion themselves. The problem with this is that these companies get, for limited time, control over the production and distribution of the active chemical compound they have found, researched, and tested. It is in nobodies interest to pass (or remove) legislation that would in effect remove all incentive to develop new methods and drugs for treatment.

I belive that the main point of disagreement between the two of us is the fact that we see the problem from two different angles. I for example would be prepared to accept 2x the price for the drug I'm paying for today because, over time, I belive that amount would foot the bill for the R & D if it would be equaly spread over the planet. I have no data that would support this thesis of mine (I could never obtain it anyway), but the thesis might be proved by observing the price trends in USA compared to the amount of places that have introduced on or another system of drug price control.

In short: I belive that ODMs are artificialy keeping the prices high to maximize their profits. One of the ways they are using is to produce marginaly different chemical compounds and for them obtaion new patent. By using marketing approches (that suck money from R & D) they promote the new drug as "breaktrough" eventhough the clinical trials show marginal or no differences in the effectivenes between old and new variant of the drug. This is impossible to prove, but I belive that one form or another of legislation should address the situation to even the things a little. Patients (consumers) have interest in having cheap & affordable medicine, but at the same time they have interest to support development of new medicines. IMHO, this balance needs improving all over the world. I agree that price control has bad sides, but at the momment it enables more people to be treated than ever before. This now has to be balanced against more even participation in price structure of the pill around the world.

The last open thing that I would address here is quasi-socialist politics of some countries. Since I live in the EU, I can only address this part of the world, and can not comment on others. I am all for capitalism that would in theory enable anyone with and idea to succeed and attain as much wealt as he/she deserves. This capitalism is bounded by rules that are usualy written in the legislation. This legislation defines what is considered moral & normal practice as opposed to illegal one. Some parts of this legislation also provide for things that are not profitable but are legislated to enable and further common good. One example of such non-profitable legislative part is right to "Fair use" of copyrighted works. As it comes out, I strongly belive that people included in the capitalist system have to be considered an entity that can be either productive or unproductive. It is in best interest of the contry to protect healt and condition of the active part of its population, so legislations have been passed in the past that have invalidated patents for periods of time to enable some common good.

If I recall correctly, USA invalidated patent on one of antibiotics to enable fast production that would enable it to protect the general population in case of attack with anthrax. While threat of terrorist attacks can be considered a valid reason to dump the protection for some time, some countries might decide that the general health of its population merits such measures. If you think how many people die from complications occuring with such basic conditions like high blood pressure or diabetes, then maybe it can be excused for some countries to decide to use such socialist approch as to use price controls. They are certainly one more obstacle, but they are usualy put in effect where there is visible public interest to do so. (Un)fortunately wherever on this planet where some country decides to allow use of generics despite the patents on them and to use price controls, it suddenly becomes obvious that USA diplomats begin with quite undiplomatic moves (sometimes approaching threats) to remove such legislation or practices. So the issues get more or less blanced again.

Maybe my answer isn't too strong in arguments, but I belive that it would be as unwise for Pfeizer to raise already high prices any more, in case of more price control, as it would be unwise to drop them in case of less price control around the world. In USA the compund is patented and it means that yu can use substitutes that I don't consider generics in true sense of the word. Generics, for me, are identical compunds marketed under different name, sometimes produced without licence in the country where the compound wasn't patented. With growing harmonization of patent laws across the world these issues will probably peter out into something quite manageable in ,possibly, near future.

Everything I have written is IMHO.

---


--- To boldly invent more hot water ---
[ Parent ]
quickly (none / 0) (#263)
by jjayson on Tue Jul 29, 2003 at 01:42:55 AM EST

If I recall correctly, USA invalidated patent on one of antibiotics to enable fast production that would enable it to protect the general population in case of attack with anthrax.
A little off. The drug is called Cipro and developed by Bayer. A senator asked the White House to break the patent to increase stockpiles. The Secretary of HHS said that breaking the patent was illegal. The US bought Cipro from Bayer at a bulk price. Canada is the one that initially broke the patent. They ordered something like a million pills from a local company, and when Bayer found out they were pissed. Canada said that they needed them quickly, and Cipro said they never even asked. In the end, Canada stopped the generic order and bought from Bayer. Bayer also ramped up production in all their centers and started a new production center on pumping out Cipro too. (This is just what I remember, so some of the details maybe wrong.)

If you think how many people die from complications occuring with such basic conditions like high blood pressure or diabetes, then maybe it can be excused for some countries to decide to use such socialist approch as to use price controls.
The pharma companies, since Africa and Brazil, have started learned how pick their battles. I think that developing countries should be exempt from drug patents, however no developed countries should be allowed to import from them.

Right now with price controls put on drug companies, it is difficult to determine things like how long patents should last. If the market was evened out amoung developed nations, it would be easier to adjust the patent length. Twenty years is surely too long (I believe this give the average new chemical entity 16 years of patent protection), but maybe chopping 6 years off that would be better, or maybe removing 11 years, or maybe leaving it alone. Its hard to tell in the current environment.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

Re quickly (none / 0) (#284)
by Toshio on Wed Jul 30, 2003 at 04:53:05 PM EST

In the end, Canada stopped the generic order and bought from Bayer. Bayer also ramped up production in all their centers and started a new production center on pumping out Cipro too. (This is just what I remember, so some of the details maybe wrong.)

It sounds about right, so I think your explanation will hold.

I think that developing countries should be exempt from drug patents, however no developed countries should be allowed to import from them.

One of the hardest things will again be to determine what constitues undeveloped country. The hardest question would probably be who will actually decide... The idea is sound and sane, however it is probably impossible to implement when one cosideres overall "love" between most developed countries on the planet right now.

Right now with price controls put on drug companies, it is difficult to determine things like how long patents should last.

...

Its hard to tell in the current environment.

Market right now is certainly unbalanced. Here in EU I get more for less that somebody in the USA. This might in part be just because of the generics. It seems that if companies like Roche, Beyer, and Novartis (I think these are all european based, but not necessarily EU based) managed to survive this price controlled markets, it will certainly be interesting to see what would generics effect in the USA. I think that if there would be any possibility of great harm to USA based companies the congress wouldn't need long to enact import dues that would even the ground. In any eventuality, the patents would still be valid and there should not be any serious harm to being swamped with cheap generic drugs during the time of validity of the patent.

Probably more interesting issue, you have mentioned in one of previous posts, is re-export of imported drugs. It would be deadly for the industry to allow for drugs to be exported and then imported back for lower price that the drug is available for originaly. The issue has little to do with generics, since the drug is already registered and legal to prescribe in USA. It is also produced by the company that has right to produce and sell it in USA, however it is cheaper than it would be, because it was bought for the price that was meant for different market. Now this might sound harsh to some, but I think these kind of sales realy hurt drug manufacturers in the USA right now. The other possibility is that you could get something packed in original packaging, but dilluted, or even mixed with inactive substances. These kinds of imports should be checked if they are not already, because they really eat into domestic profites of the companies. IMHO much more that generics can.


--- To boldly invent more hot water ---
[ Parent ]
fascinating (4.00 / 2) (#17)
by muchagecko on Fri Jul 25, 2003 at 10:32:40 PM EST

I'll try to be around when you get it to the vote.

"My wish to slaughter my coworkers in an unholy blood bath is no more prevalent today than most days."
Tainted imports (4.40 / 5) (#19)
by ad hoc on Fri Jul 25, 2003 at 10:43:55 PM EST

Ponder: are the drug companies corrupt enough to actually taint or water down the strength imported products to throw a scare into the pro-import movement? One well-placed and -publicised bottle of water marked "tamoxifin" would be enough to shut this down cold.  It's certainly been done in other industries.


--

Stranger things have happened... (none / 0) (#21)
by skyknight on Fri Jul 25, 2003 at 10:49:31 PM EST

Remember the Tylenol murders? You are right that it would only take one well publicized fiasco to make the masses panic and stampede to the exit.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
St. Louis (4.00 / 1) (#22)
by ad hoc on Fri Jul 25, 2003 at 10:58:40 PM EST

I'm thinking of the pharmicist in St. Louis who watered down the strength of the breast cancer drugs he was mixing up for treatment centers, then charging the centers the full price. The weakened drug was, of course, nearly useless, but no one knew that until who knows how many died.

If this one guy was greedy enough to risk the lives of many people for a few thousand dollars, would the drug companies be greedy enough to risk the lives a few people for million and perhaps billions of dollars? They would be craftiers, too, and be much less likely to be caught. (It took forty years after the Surgeon General's report to actually find out what the tobacco companies were doing.)


--

[ Parent ]

Errata (none / 0) (#24)
by ad hoc on Fri Jul 25, 2003 at 10:59:26 PM EST

It was Kansas City, not St. Louis.


--

[ Parent ]
Short Answer: Yes (none / 0) (#35)
by skyknight on Sat Jul 26, 2003 at 05:38:41 AM EST

I remember reading about that and not only being sickened, but stupified. I find it odious that someone would kill other human beings to steal money, and I'm flabbergasted that someone would do it for so little money, exploiting, of all people, cancer patients! It's like he asked himself "what is the most foul and despicable thing that I can do?" and then went ahead and did it.

This kind of thing could happen with the drug companies, and it won't even take a conscious, condoned effort on the part of the industry. All it will take is one lone-gun cowboy loony who decides that he alone knows what is best to do and starts tampering with stuff. I don't reckon it'd take much to buy off a couple of guys working at a loading dock.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
your economic argument is flawed (4.25 / 4) (#20)
by martingale on Fri Jul 25, 2003 at 10:46:57 PM EST

From a free market point of view, your economic argument is flawed.

A basic tenet of free market economics is the concept of comparative advantage. By opening two hitherto separate markets, the agents in each market change their manufacturing mix to what they do better than the other market. This leads to lower prices overall, and (presumably) higher standards of living.

You're suggesting that a flood of cheap imports would eat American companies' lunch, and thereby prevent them from conducting research and promoting progress.

This betrays a simple misconception that in fact American companies have the comparative advantage in drugs research, which is not at all clear.

Once the markets open up, the research carried out by American companies will be carried out by the best party, which may or may not be American companies.

If American companies stop researching, and if their type of research is required by the market, then some other, better qualified company will do the research in their place. Prices will be more affordable all around, and progress will be improved.

Note that the free market doesn't affect basic research sponsored by governmental policy, although it may affect governmental policy about research.

My economic argument is not flawed... (4.00 / 1) (#23)
by skyknight on Fri Jul 25, 2003 at 10:58:41 PM EST

from a free market point of view, simply for the reason that I was not making a free market argument. We are presently in a hopelessly rigged system, and because of the political climate and short-sightedness in our democracy, there is no good way out of it. We are in a rigged system, and we have to be very careful about how we move because if we make just a few false steps, the house of cards comes tumbling down and we'll be paying for our mistakes for decades to come. For a good addendum to this matter, see jjayson's comment below ours, the gist of which I hope to add to my piece before voting.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
it's tricky (4.66 / 3) (#26)
by martingale on Fri Jul 25, 2003 at 11:48:39 PM EST

Your explanation of the economic argument against (independently of your own position on the matter, which you've nicely kept out of the writeup) describes dumping as a direct threat to drugs research. I didn't mean to suggest you origninated it, and I shouldn't have used the words "your argument", as it's not a new argument.

The reason the free market description applies to this problem is that the drugs companies involved are private sector players, in a country whose health policies overwhelmingly favour private sector solutions.

The drugs companies (who, let's face it, put up this argument), are suggesting that they must be propped up against cheaper imports because their glamorous activites (research, progress, helping people) are vital to American society.

Since these companies' activities are vital (due to health policies favouring the private sector, thereby reducing the role of government health services), they should not be reduced or stopped, irrespective of their comparative quality and efficiency, *as there is no American alternative* (again, the alternative here are American governmental health services).

What you can do is point out that dumping is a direct threat to American private sector drugs research, which may not matter to the ordinary American drugs consumer, if alternatives are available.

I guess I'm simply objecting to the implication in your writeup that drugs research as a whole is somehow threatened by dumping in the American market.

While previewing, I remembered you mentioned jjayson's comment. He's suggesting that European dumping hides the true cost of drugs research by distributing the cost among the population in the form of taxes. This misses the point that European dumping still bears the full cost of drugs research, it is simply capitalized differently.

From an American point of view, the EU market is a black box which manages to create drugs at a certain price, and therefore is subject to the same market pressures as the American drugs industry in America. Whoever can sustain the lowest price for the same product is more efficient, regardless of the way it's funded.

[ Parent ]

Remember (5.00 / 2) (#32)
by leviramsey on Sat Jul 26, 2003 at 04:50:11 AM EST

...that the pharmaceutical industry is extremely globalized. The USian drug companies sell in Europe, and the EUians in the US. The question then becomes to what extent EUian companies rely on the US market for their products. If it's a significant amount, then a drop-off in the profit expectations of US drug sales would have a significant effect on EUian drug companies.



[ Parent ]
of course (none / 0) (#39)
by martingale on Sat Jul 26, 2003 at 08:08:56 AM EST

I wouldn't want to give the impression that this is an EU-US only trade problem (but its convenient below).

The article (or some comments, I don't remember) discusses the problem of dumping in the US as a limiting factor on US research, but exactly the same applies to EU companies in EU markets competing with US products.

The free market assumption will let exactly that company (or companies) win which has the comparative advantage, be it an EU company or a US company. But the point of it is that either way, the consumers always win in both markets, US and EU. Even if one company stops doing research.

[ Parent ]

The dumping with which I take issue... (none / 0) (#44)
by skyknight on Sat Jul 26, 2003 at 08:48:06 AM EST

is when either nations that have been granted concessions due to dire economic circumstances, or nations that are imposing price controls with their sovereignty, turn around and dump the cheap drugs back into the US. If intellectual property issues weren't inextricably tangled up in this, then things would be a lot simpler. Unfortunately, as Blarney points out in a thread above, the value of a drug is entirely in the research that generated the information that made its manufacture possible. The actual manufacturing costs per pill are typically on the order of pennies, but the pills sell for several dollars each as a corollary of the research and advertising efforts. This is why dumping of unauthorized generics can be so problematic.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
why is this a problem? (none / 0) (#50)
by martingale on Sat Jul 26, 2003 at 09:10:23 AM EST

Let's say company A sells in the US at a high price, and in the EU at a low price (fixed by the government). Now that drug is reimported into the US and the consumers flock to it. In effect, if the price difference is noticeable in the US, the effect is the same as if the US government had fixed a low price themselves.

The drug company which makes the original decision to sell to the EU does so because it finds it more profitable than only selling in the US. So the added low price bottleneck is actually increasing company A's profits and incentives compared to only selling in the US at the high price.

I don't see the problem.

Unfortunately, as Blarney points out in a thread above, the value of a drug is entirely in the research that generated the information that made its manufacture possible.
This isn't such a big issue. Many industries require large capital outlays to begin with. Think of the price of a printing press for the NYT. The difference is that with drugs, the ongoing cost of labour and maintenance is very low. But this is entirely beneficial to the drug companies, since it effectively means there is no lower bound on the price they can charge, and therefore no upper bound on the number of customers they can have (subject to the size of the market).

Basically, the drug company's problem is this: how big is the market at each price point? If you maximize this, you have the maximum capital outlay for the drug's development.

[ Parent ]

marginal production costs (5.00 / 1) (#73)
by jjayson on Sat Jul 26, 2003 at 03:19:38 PM EST

I'll try to make this very simple. You seem to view all costs as magnial, but the phrama industry (along with others such as software) doesn't work like this. You need to break up the developmental costs from production costs.

A drug company will sell in a price controlled area since they can make a marginal profit over production costs. However, this is not sustainable, espcially given high development costs.

Maybe a similar situation from the view of subsidies will make things clearer. There are two factories, South Bend and Los Angeles. Making widgets in each factory costs $100 a month, totaling $200 a month if both as used. However, fixed costs of designing the widget is $800 regardless of how many factories produce the product. Since South Bend, Indiana, is filled with poor kids earning degrees from a subpar college, they will give the company $500 to work there. The total costs for the first month, if they produce only in Los Angeles will cost them $900. In only South Bend, it will cost them $400. However, if they produce out of both it will cost them (adjusted for amount of product) $250. Producing in both the subsidized area and non-subsidized is clearly superior to producing in either single market.

Now, back to price controls. These have been tried in all forms and when you are dealing with a single market, they don't work. They simply lead to artifical scarcity. NY and SF rent controls are excellent examples of this. The rent controls caused a worse housing cruch and kept prices artificially inflated longer than a they have would have existed since a market clearing level was never found. Nixon tried them and had absolutely disasterous consequences in the late '70s. They only reason they work with nations like Canada is that it isn't a closed system. The excess costs can be soaked from Americans.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

yes (none / 0) (#98)
by martingale on Sat Jul 26, 2003 at 10:38:58 PM EST

I did make a related calculation in another comment somewhere in this thread.

A drug company will sell in a price controlled area since they can make a marginal profit over production costs. However, this is not sustainable, espcially given high development costs.
This is exactly what is important here. What you are saying is that sometimes, drug companies overinvest in a particular R&D program and find it difficult to recoup their investment because the market isn't big enough. There are just so many customers for altzheimers' treatments. If a drug company consistently overestimates the market size, it hemorrages money and deserves to fold.

Now, back to price controls. These have been tried in all forms and when you are dealing with a single market, they don't work. They simply lead to artifical scarcity.
The scarcity in the case of drugs is not a function of price controls, but rather depends on the fruits of the research being done. But research breakthroughs cannot be financed. Whether someone has an insight or makes a discovery is pretty much independent of how much they get paid.

They only reason they work with nations like Canada is that it isn't a closed system. The excess costs can be soaked from Americans.
What happens is that the companies estimate that Americans are willing to pay higher prices (perhaps unreasonably so), and therefore are willing to invest more in R&D (to an unsustainable extent, probably). The rate of true discoveries and breakthroughs however is mostly unaffected, so the excess R&D is mostly a waste of money.

[ Parent ]
How odd of you. (none / 0) (#109)
by jjayson on Sun Jul 27, 2003 at 12:39:24 AM EST

If a drug company consistently overestimates the market size, it hemorrages money and deserves to fold.
Of course that is true. However, how can you apply a free market argument to support a position that is inherent against the free market? A similar, yet opposite, statement would be: if a drug company correctly judges market size, it deserves to keep making their profit. It is purely your assertion that these companies are irrationally wasting money and no company does that intentionall. Pharma is a high competitive industry. Any company that wastes money would be weeded out by the market.

The scarcity in the case of drugs is not a function of price controls, but rather depends on the fruits of the research being done. But research breakthroughs cannot be financed. Whether someone has an insight or makes a discovery is pretty much independent of how much they get paid.
What is the saying: invention is 1% inspiration and 99% perspiration? Besides just the initial idea, there is a lot of work that goes into developing a drug, trials, and getting it approved. The point about price controls creating artificial scarcity is related to other attempts: when prices are capped, fewer will enter the market (this is just empiracle fact) since there is more risk of not recouping investment and not making as much. This creates an artificial scarcity of what you are trying to control. This often backfires and keeps prices high that would they would normally be (the Canadian system shows this as they actually have higher generic drug costs). When Nixon attempted price and wage controls it created scarcity. It always happens.

The rate of discovery is highly tied to more open markets. 15 of the top 20 drugs are American creations and 7 of the top 10. Canada and the Scandinavian countries are tiny development spots because of this.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

your scarcity argument doesn't work (5.00 / 1) (#121)
by martingale on Sun Jul 27, 2003 at 01:24:27 AM EST

It is purely your assertion that these companies are irrationally wasting money and no company does that intentionall.
This sounds good in theory, but fails to account for the way the world operates. Plenty of companies invest in products that turn out to be duds. Pharmaceuticals are no exception.

It's entirely possible to, exceedingly efficiently, develop a product for which the demand is next to nonexistent. The software industry has plenty of examples of this, but it occurs in all industries. And yes, these companies, however efficient they may be, are still weeded out of the market.

I'm all for private drug research, but I'm not interested in buying a new pill just because it exists. Pharmaceuticals must do their homework and still get it right (which I'll admit is very difficult to get right over such long timescales as their products require).

The point about price controls creating artificial scarcity is related to other attempts: when prices are capped, fewer will enter the market (this is just empiracle fact) since there is more risk of not recouping investment and not making as much.
I don't buy that in cases involving scientific research. The research gets done regardless of the market barriers to entry. People in universities find ways to discover new facts and ideas all the time, and they do so without any monetary incentives. Sure if you tell them they can patent their discoveries they'll do so, and maybe found a company. But they would have researched the problem regardless.

Private investment to develop a new drug can help speed the process, and attracts more people into the field, thereby benefiting humanity at a certain extra cost. I've been arguing essentially that the higher prices in the US reflect the possibility that private investment is simply too high. Less private investment and less private research relative to the public research and development done by governments and non profits may in fact offer better value. See my toplevel software analogy for a caricature of this idea.

[ Parent ]

How does a.. (4.00 / 1) (#122)
by Kwil on Sun Jul 27, 2003 at 01:34:56 AM EST

.."highly competitive industry" manage to continually generate record profits?

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
Well, I didn't quite keep my opinion out... (none / 0) (#37)
by skyknight on Sat Jul 26, 2003 at 06:44:38 AM EST

but I did make a serious effort to temper the article with viewpoints from both sides. In the end I think that my opinion bled through, but hopefully people from both sides of the debate will enjoy the piece all the same.

I don't think that the drug companies are asking to be propped up, per se, but rather they are asserting that this is already a rigged system, and so free market principles don't quite apply in the usual sense. You'd hardly ever see me in any other context supporting what could be deemed "protectionism", but we're almost forced to have some form of it here because of the price fixing in the system at large, in regions that the US cannot control, and because there are complex intellectual property issues at work.

The concessions that drug companies offer to generic manufacturers of poor nations is a particularly messy situation, and there are also many European nations that have price controls and thus fix prices at an artificially lower value, forcing the real cost of the drugs to be offset by Americans who end up paying what is actually above full market price. This was the point of jjayson's comment. European countries are actually having their drug purchasing subsidized by American drug purchasers because there are unrealistic price controls in these countries, but not in America.

If we were to move to a purely free market system, and stipulate that everyone paid the same price, the poor nations that are currently receiving concessions would be brutalized. Keeping these concessions in place requires that further restrictions be placed on the system, or the game is up and the house of cards comes crashing down.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
well (5.00 / 1) (#45)
by martingale on Sat Jul 26, 2003 at 08:51:02 AM EST

I must be a little desensitized from all the Iraq op-ed flamefests ;-)

I don't think that the drug companies are asking to be propped up, per se, but rather they are asserting that this is already a rigged system, and so free market principles don't quite apply in the usual sense.
The system isn't quite rigged. If, as I hinted at in my previous comment, you account for the local subsidies and trade barriers as another form of capital expenditure for the drug's development (ie instead of the investors paying X million for the drug, the true cost is X + Y million where Y are government subsidies in exchange for a lower or fixed price in their market), then for two competing but equivalent drugs, you would have a price (X + Y) in the EU (to take EU-US as an example), and a price Z in the US. If (X + Y) <Z, then the US company goes out of business and the consumers in both the EU and US win. If (X + Y)> Z, then the EU company goes out of business and the consumers in both the EU and US win.

So price fixing doesn't really matter here, as it can be adjusted for. In practice, time plays a role as do successive government policies and incentives, making the adjustment a dynamical system.

there are complex intellectual property issues at work.
That is a different problem. What's interesting here I think is that, because it's the health industry, there are ethical issues besides the IP issues. Perhaps someone well informed will comment.

nations that have price controls and thus fix prices at an artificially lower value, forcing the real cost of the drugs to be offset by Americans who end up paying what is actually above full market price.
I don't buy this argument. The decision to sell drugs in a particular market is fully the selling drug company's choice. In fact, that is why there are such concerns with African nations, which simply don't attract drug companies willing to sell to them.

In the case of EU markets with fixed drug prices, the US companies also make a choice whether to sell or not. The individual details can of course get messy for large companies with several product lines, whose hands can be forced through local politics. But even so, the US companies will sell in selected EU markets if and only for as long as they find it profitable to have a presence there.

Now the higher prices in the US simply reflect the fact that US consumers are willing to buy at a higher price point. If the US market is opened, then either the US companies will lower their prices or go out of business (or downsize, orwhatever) due to competition.

Lowering their prices may in fact mean first exiting those EU markets whose fixed prices are too low. Right now, the higher US prices aren't subsidizing local EU markets, they're going straight into the pharmaceuticals coffers, so that they can marginally maximize their profits by *also* selling in less profitable markets.

If we were to move to a purely free market system, and stipulate that everyone paid the same price, the poor nations that are currently receiving concessions would be brutalized.
The free market obtains a single price as an equilibrium, in which some people simply elect not to buy. The only way to let *everyone* pay the same price is if everyone can afford to buy at that price, which means a very, very low price. This wouldn't be a free market at all. In fact, I believe the Russians tried this for a few years.

[ Parent ]
Unfortunately... (none / 0) (#51)
by skyknight on Sat Jul 26, 2003 at 09:13:12 AM EST

things are a little more complicated than you describe in your first paragraph. It's not a matter of "American company A and European company E make competing products; they compete; consumers win". In fact there is just one authority that can exercise control over the licensing of the drug. This was my referent when I stated that "complex intellectual property issues [are] at work". This monopoly is needed if drug researchers are to recoup their investments, and things get really fouled up when unauthorized generics come onto the market. The economics would be really screwed up if these cheap alternatives were to make their way back into the US.

The free market obtains a single price as an equilibrium, in which some people simply elect not to buy.

Ah, but we're not really in a free market system. In fact there is a complex system of price discrimination in place. Blarney has done us the favor of delving deep into this issue in another top-level comment that I encourage you to read it.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
I addressed some of this in #50 (none / 0) (#56)
by martingale on Sat Jul 26, 2003 at 09:55:58 AM EST

Blarney has some very good points on the mechanics of profit maximization from the point of view of the drugs company, but I don't see how this invalidates competition issues. In fact, it seems to me entirely parallel to competition issues.

property issues [are] at work". This monopoly is needed if drug researchers are to recoup their investments,
There are many sources of intellectual property. I mentioned governmental agencies, but there are of course universities. Research into new drugs and treatments is not the sole province of private companies, regardless of the huge costs involved. For example, the Pasteur Institute is a world class non-profit institution.

Now given that world wide the research isn't dependent solely on the profit and loss decisions of drugs companies, it doesn't make sense to try to protect their profit calculations by preventing unauthorized generics from lowering their higher prices in selected markets.

Among all the players in this arena, only the drugs companies research for profit, and risk closing shop (thereby stopping their research). Governments depend on taxes, so have a captive source of funds for spending on research. This gets redistributed to universities and some non-profits. The non-profits can also market products and compete with the for-profit drug companies.

The research being done is therefore a function of both the governmental budget and the profits of private companies. Simply the existence of the governmental budget should already imply an upper bound on selected drug prices (namely the final cost due to government funded research alone). The more the government invests, the lower this upper bound, and conversely. Private companies can play below that upper bound profitably. The US government simply spends comparatively less, therefore allows higher profits to the private sector. But this is getting back to what I was saying right at the beginning.

The real question I suppose is this: as a percentage of all the research being done in the world, how much should be left to do by private companies to maximize the benefits for humanity?

[ Parent ]

I think the simple fact... (none / 0) (#60)
by skyknight on Sat Jul 26, 2003 at 10:22:50 AM EST

is that the situation is a hopelessly tangled medley of anarchy and authoritarianism somehow co-existing to the detriment of just about everyone. I don't know that it's even possible to fix the mess, whatever "fix" means. It's quite depressing actually... I don't know how I managed to sit down and write a full length article about it without getting so demoralized that I stopped in the middle.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Off topic (2.33 / 3) (#30)
by Verbophobe on Sat Jul 26, 2003 at 02:36:26 AM EST

Don't you find that the title of this article sounds like something Homsar would say?

"I brought my best foot floured!"
"I'm saving the best for last!"
"'Twas the pride of the peaches!"

I guess "off topic" isn't strong enough an expression to describe this post.

Proud member of the Canadian Broadcorping Castration

Yes... (none / 0) (#36)
by skyknight on Sat Jul 26, 2003 at 05:41:39 AM EST

"Off topic" fails to convey the full absurdity of this post. "Off topic" would imply that there was in fact some kind of linkage to the posted story, but I can't see it, so I'm afraid I'll just have to file this under "random".



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Price discrimination (4.81 / 11) (#38)
by Blarney on Sat Jul 26, 2003 at 07:21:32 AM EST

Someday I intend to post an article on this subject - it's more general then the drug market, carrying through the entire medical services and insurance markets in the United States, causing many of the problems which are distressing so many people (such as insurance which denies perfectly reasonable treatments and the inevitable bankruptcies of those without adequate insurance coverage), and rendering many supposed political solutions (tax credits for HMO's, more subsidies, medical purchasing coop arrangements) mathematically unworkable. For now, I'll discuss price discrimination in the context of the drug market. If people like this, I'll write more.

All this removal of cross-border drug barriers is a way to shortcut the price discrimination which the drug companies are engaged in. It's not some sort of evil collusion between Canadian smugglers and bought-off politicians designed to destroy drug research. Yes, it will reduce drug company profits, but it actually brings the market for drugs closer to the classical competitive ideal of a price set to bring demand and supply to a clearing point. It's all a trade-off, perhaps a worthwhile one.

Here's how the market works: there is only one source of a patented drug - the patent holder - and often for regulatory reasons generic drugs are only available from a few sources as well. Competition is nonexistent - the only thing keeping the prices down is the lack of demand when the price rises enough! Now, the R & D expenditures are sunk costs - they've all been spent and written off before a single pill rolls off the production line. The cost of producing a pill is negligible - in other words, the marginal cost of production is nil. All the costs were incurred up front for research, clinical trials, lawyers and paperwork, marketing... maybe a hundred million spent, but everything from this point on is gravy.

Follow me now.... let's suppose that drug companies could only set one price per pill of drug X for all their customers, now how would this work for them? If the price was too low, they wouldn't make enough money to justify their investment. However, if the price was too high, they'd start losing customers. They'd pick a point in the middle, but would lose potential profit on both ends. There will be customers who are unable or unwilling to pay the price - they don't get the pill, and this is bad for the drug company's profits because it doesn't cost them hardly anything to make the pill, and they'd make a profit even if these poor people paid half the regular price, maybe even 10%. On the high end, there are customers who would have still bought the pill even if it cost twice as much - they've just saved some money which they could have been made to pay (known to economists as "consumer surplus"), which the drug company could have pocketed rather then letting them keep the money. So the drug company is unhappy with a classical market with a fixed price point that matches supply and demand.

Suppose that the drug company could charge it's customers, rather than a fixed price, an amount equal to the maximum amount which each customer would be willing to pay for the drug. Now they can sell to the poor at a cheap price, to the richer customers at a much higher price, and can make money on everybody so long as they cover the extremely small marginal costs of production. They make just as much money as before on the customers who would have paid the old market-clearing price, they make money on customers who would otherwise have not bought the pill at the old price, and they make more money on the customers who can be made to pay more than the old market-clearing price. It's pure profit all around, and completely eliminates the (for the drug company) troublesome phenomenon of consumer surplus. If this theoretical ideal could be reached, it would be known as a market with "perfect price discrimination".

Nothing is perfect in this world, and the drug companies cannot read the minds and finances of each and every customer in order to determine the exact maximum price which they would be willing to pay for a pill. They could hold an auction for every prescription, but this would be far too troublesome to be practical. Rather than attempting to achieve the impossible goal of perfect price discrimination, the drug companies find it worthwhile to approximate this by dividing their customers into groups and setting a market-clearing price for each group. Poorer groups will pay a lower price, while richer groups will pay more, and this will get them bigger profits than setting one price for everybody would.

Now, a convenient way to split customers up is to do it by country. There is already infrastructure for restricting the unfettered flow of drugs across borders - various safety, health, and moral regulations are in place. So the drug company will set one price for the United States (a high one, the US is rich), a lower price for Canadians, an even lower price for Mexicans, and they've got a better approximation of a perfect price discriminatory market than they otherwise would have. Sell some higher-priced formulations which are more convenient to administer and have the same effects, give out a few discounts to some identifiable low-income groups (and maybe get government grants for their "sacrifice"!), and they're pretty close to their goal of charging each customer as much as they can afford, and no more.

Removal of border barriers to pharmaceuticals will tend to equalize prices and bring the market closer to a classical situation with one market-clearing price. The Canadian and Mexican prices will go up, the US prices will go down... the drug companies will lose some profits, but not enough to make it worthwhile to stop making existing drugs (though it may cramp development of new drugs) ... some poor customers in other countries will have to do without their drugs, but you'll see less Americans declaring bankruptcy after incurring unpayable medical debts ... on the whole, customers pay less for the same drug. Is this good or is it bad? Depends upon who you are.

But hey, the Republicans always want the market to solve everything, and the Democrats want cheaper drugs for Americans, so this reform should have bipartisan support and pass easily. And even if it doesn't, the word is out and buses loaded with old folks are crossing borders to drugstores every day, no matter what the laws are. Yes sir, it's the invisible hand.

classical is already broken (5.00 / 1) (#41)
by karb on Sat Jul 26, 2003 at 08:25:48 AM EST

I believe part of the issue is that many foreign governments (like canada) put price controls on medicine ... high enough for production to be profitable, but too low to recoup R&D costs. No pharmaceutical (sp?) can resist making more money, so they sell in countries with price controls. But reimportation of price-controlled drugs probably isn't consistent with classical supply and demand.
--
Who is the geek who would risk his neck for his brother geek?
[ Parent ]
Not really (5.00 / 1) (#92)
by RyoCokey on Sat Jul 26, 2003 at 10:05:14 PM EST

The price controls are over production costs, but way under R&D costs. Thus, they would break the model. Except, there are countries (primarily the US) which don't have price caps. Thus, almost all the money for R&D comes from profits on US drugs. The price-fixing only works because there's somewhere without price-fixing to take the hit.



And if you gaze for long into an abyss, the abyss gazes also into you.
[ Parent ]
or alternatively (none / 0) (#99)
by martingale on Sat Jul 26, 2003 at 10:48:01 PM EST

The R&D costs are way overblown. The US market has no price caps, thus encourages the drugs companies to conduct inefficient R&D, knowing that they can recoup those costs with sufficiently high prices.

By fixing prices in the US, the companies would be forced to cull frivolous R&D. This results in fewer drugs, but obtains sustainable drug collections in the long run. The rate of new drug discovery is unaffected in dedicated research institutions such as universities.

[ Parent ]

inefficient? (none / 0) (#105)
by jjayson on Sun Jul 27, 2003 at 12:28:04 AM EST

No way. The drug industry is highly competitive. There is no room for mistakes or your competitor might beat you to market.

No company fighting for profits is intentionally wasteful. If all else being equal and a drug could have been developed for $100 million less and a year sooner, it would be done.

--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

I don't mean inefficient in that way (none / 0) (#113)
by martingale on Sun Jul 27, 2003 at 12:47:11 AM EST

What I had in mind was something I've much better described in another toplevel comment, titled "a software analogy". I meant something like an inefficient allocation of research topics.

[ Parent ]
Well (none / 0) (#245)
by RyoCokey on Mon Jul 28, 2003 at 09:17:03 AM EST

You may be right, or you may not be. We'll probably never have a method of analyzing this. I suppose we could compare new medicines brought to market before and after, but even then, what part does chance have in medical research? What of research that has already had money plowed into it, will trends continue for a while an taper off?

Also, how will Rx companies redistribute their programs after losing? Relatively useless medicines such as Viagra and very, very profitable while drugs to combat Sleeping Sickness are virtually an economic dead end. We'll have to see what priorities they use.



And if you gaze for long into an abyss, the abyss gazes also into you.
[ Parent ]
They have the option (none / 0) (#272)
by pyro9 on Tue Jul 29, 2003 at 10:27:45 AM EST

The Pharmaceutical companies DO have the option to solve the re-importation problem by refusing to sell in Canada at all. They are not entitled to legal protection from re-importation.

If they do that, Canada will either just do without (be that to their benefit or detriment) or will alter their price controls to the point where the companies find it at least a little more profitable to reduce their prices and sell a larger volume (the most likely outcome).

Markets have always had to deal with unfavorable external barriers such as laws, cultural differences, geographical difficulties such as nearly impassible trade routes, and so on.

In a sense, permitting re-importation will permit the market to operate freely enough to reduce prices for Americans and break up the artificial low prices in Canada.

On the other hand, it may be that the Canadian price point is actually close to the real market price point and all the anti re-importation laws have done is help the pharmaceutical companies rip off Americans.

My observation is that most corperations do not act in rational self interest. They act in mindless greed. Every once in a while, we have to trap them with peanuts in a narrow necked bottle so we can keep an eye on them. Naturally, they do their best to lobby to make narrow necked bottles illegal.

In the current case, rational self interest would have informed them that if they keep soaking up government research grants and then bleeding Americans dry, laws such as this would eventually get passed and cost them in the long run.


The future isn't what it used to be
[ Parent ]
Wrong. (none / 0) (#275)
by skyknight on Tue Jul 29, 2003 at 11:06:22 AM EST

The Pharmaceutical companies DO have the option to solve the re-importation problem by refusing to sell in Canada at all. They are not entitled to legal protection from re-importation.

If they do that, Canada will either just do without (be that to their benefit or detriment) or will alter their price controls to the point where the companies find it at least a little more profitable to reduce their prices and sell a larger volume (the most likely outcome).

What Canada will actually do is break patents. They are notorious for either breaking them, or using the threat of breaking them as a bargaining chip in price negotiations.

There are lots of good comments attached to this article discussing this issue as it pertains to Canada, particularly by jjayson. If you have the time to do some serious wading, dig around in here.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Unrelated interdiction (none / 0) (#276)
by pyro9 on Tue Jul 29, 2003 at 12:55:35 PM EST

While it will be legal to re-import pharmaceuticals, I wouldn't be at all surprised if they will still be able to block the import of patent violating generics under other laws. Of course, that will stioll have an equalizing effect since it's not hard to set up a mail order business in other countries.


The future isn't what it used to be
[ Parent ]
Excellent points... (4.00 / 1) (#42)
by skyknight on Sat Jul 26, 2003 at 08:31:44 AM EST

This is the kind of discussion that I had hoped to foster with this piece. Flesh your comment out, generalize it, and it would make a fantastic stand-alone write up. I encourage you to go to the trouble to do so. It seems like you've worked through a lot of the issues in your head already, and it would just be a matter of organizing them. I have a few comments, though.

Having good price discrimination, it would seem, is an extraordinarily difficult endeavor in some situations, and the requirements are often different. Sometimes the situation must be coerced by government (something that leaves a foul taste in my mouth), and sometimes you can actually get price discrimination in a voluntary system. A perfect example is my situation when I want to fly. I live in a suburb of Boston, and thus am very near Logan airport. It's quite convenient to get there; I can just hop on the subway, or if I'm extra lazy I can get a reasonably cheap cab ride. I can also get to TF Green in Rhode Island, but it's incredibly inconvenient and time consuming. Tickets for flights often cost substantially more at Logan as they do from TF Green, but because my profession renders my time fairly valuable, it's actually a net loss to me to fly out of TF Green. I imagine this is the same situation for a lot of people around here, and thus the airports are able to exact very effective price discrimination. Other markets, however, can only dream of such discrimination efficiencies.

Part of the reason that this discrimination works is that it involves a geographic barrier that creates an inconvenience that is a waste of time for richer people, and a worthwhile effort for poorer people. Unfortunately, it is not really possible to have effective price discrimination internal to America for drug sales, as every neighborhood has oodles of pharmacies that are highly convenient. There exists no natural, free market discrimination agent. Maybe pharmacies in Beverly Hills can charge a little more, but if they were to raise their prices to something anywhere near in proportion to the income differences with surrounding areas, people would just fill their prescriptions in adjacent neighborhoods. Thus, there is only one alternative that I can see...

You'd have to either explicitly or implicitly link people's payments for drugs to their income. Obviously this isn't going to happen at the pharmacy, as declaring and filing your income there would be a bit inappropriate, and too obvious. People would cry foul. The only real way to accomplish this system would be through a level of indirection: taxes. If there were universalized health care then money for drugs would be getting funneled into a common pool, with everyone paying what they could bear (assuming government was "fair", whatever the hell that means, and which is of course impossible), the rich subsidizing the poor. This would indeed yield us superior price discrimination, but it is an option that I find odious as it would greatly reduce if not completely eliminate the benefits that we see from free market competition. Government would be making all the purchasing decisions. Not only would we lose the the data processing of having millions of autonomous nodes doing their own valuation calculations, but a single, consolidated purchaser is also dangerously vulnerable to corruption. Instead of free market forces, we'd have what Ayn Rand dubbed "the Aristocracy of Pull".

Personally, I prefer systems in which there are discrimination inefficiencies over systems with information inefficiencies. Of course, I am almost certainly going to be accused of bias, as I reside on the more advantageous end of the socio-economic bell curve.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Cost of reserach? (repost) (5.00 / 2) (#47)
by Julian Morrison on Sat Jul 26, 2003 at 08:55:05 AM EST

(Reposted because my earlier comment was an "editorial" by mistake.) How much of the "huge cost of research" is intrinsic? I'm thinking that people would be willing to knowingly take the risk of using less-tried-but-promising drugs (eg: for AIDS or cancer) and less-tried-but-cheaper drugs (especially poor people, as preferable to no drugs at all). In the absence of all the current "safety" red tape, I'm thinking that, in effect, all but the earliest trials would be funded by "early adopters", much as in any other industry. Compare for example the X-Prize space devlopment. If they had by law to prove and guarantee perfection before allowing any sales, spacecraft R&D would be impossibly hard.

Freedom of choice... (repost) (5.00 / 3) (#48)
by skyknight on Sat Jul 26, 2003 at 08:58:27 AM EST

Personally, I'm not a big fan of the FDA being the arbiter of what is and isn't acceptable. Over the years there have been numerous cases of the FDA strong arming situations in ways that were really inappropriate, including conducting SWAT team style raids of health food stores that sold herbs that weren't on the FDA's approved list.

I think that we'd be better off with a paradigm more along the lines of the Underwriters Laboratories (you know, the "UL" you see on a bunch of your appliances). It may in fact be beneficial for society to have various agencies playing an advisory role, but the government shouldn't be telling you what drugs you can and cannot take, whether it's marijuana or an experimental AIDS drug.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
A Data Point (4.75 / 8) (#53)
by localroger on Sat Jul 26, 2003 at 09:19:55 AM EST

A few years ago we visited rural Mexico. At that time the rule allowing you to import a three-month supply of any drug for your own personal use had been in effect for a couple of years. Since we were going anyway, and birth control pills are ~$30 a month, GF decided that she would grab three months' supply while we were down there.

So on our last day in Cardel (a village of about 5,000 about an hour inland from Veracruz) we headed to the Pharmacia. We had considered getting more pesos since we only had about US$20.00 in equivalent currency. I suggested that we check the price first so we'd know how much to get; we'd have no use for Mexican currency once we left Cardel.

So GF found her medication; the Pill is OTC in Mexico. Same exact package, probably packed in the same exact plant, except all the text is in Spanish. And the price was 28 pesos.

Just under three dollars.

I'm sorry, but you cannot convince me that if the same company can make money shipping product to Cardel, Mexico and charging $3.00 for it that they are not ripping us off when the charge over $30 for the same thing in New Orleans. Yes things are more expensive in the USA, and yes their costs are higher, and yes there is an approval process to deal with, but none of that adds up to a 10:1 ratio. They are simply pricing to market and making up excuses.

Birth control pills aren't the only thing like that. I will probably have my teeth fixed in Mexico for the same reason. It's worth a lot of travel and research to save $15,000 on what would be a $20,000+ job.

While the importation bill is a refreshing surprise it's not all that surprising. Older Americans are more politically active and they also use medical services more. The rat fuckers in Congress know that it doesn't matter what political party your constituent belongs to, if you vote away their medical care they will vote you out.

What will people of the future think of us? Will they say, as Roger Williams said of some of the Massachusetts Indians, that we were wolves with the min

Something to consider... (5.00 / 4) (#58)
by skyknight on Sat Jul 26, 2003 at 10:15:03 AM EST

Blarney has made a comment below that is very apropos to this issue. I have some issues with what he said, as you may infer from my comment below his, but he makes some very good points about the reality of the situation. I'll try to discuss your comment in the context of his...

You and I are both in the software industry. As such, we are pretty high up on the pay scale as compared to the general population. We are both human beings as well, no more or less than the guy who pumps gas for minimum wage, and yet, we are taxed disproportionately high based on our comparative humanity. Society has decided that because we [[work [harder | smarter]][are more [lucky | privileged] | whatever], we shall pay more in taxes. I don't like this, but it's the opinion of the masses, and in a democracy the tyranny of the majority reigns supreme, so my opinion is largely irrelevant.

There is a parallel issue in the pricing of drugs. As you note, the 10:1 consumer cost disparity is not based on development cost disparity. Any given drug is being sold all over the world at wildly varying prices. In essence, it boils down to the drug companies charging what the market will bear in each system.

Right now, with multifarious barriers in place, it is possible for a given, identical drug to fetch $30 in the US and $3 in Mexico. This reflects that by and large people in Mexico are dirt poor as compared to us. Were we to eliminate all barriers, the price for any given drug would stabilize (for the most part) at a single value throughout the world as a result of the fact sans government manipulation, technology has rendered the world a single, monolithic marketplace.

The drug companies still have to mind their bottom line, so they will set this universal price to the optimal point on the supply/demand graph, somewhere higher than $3 and lower then $30. Let's just arbitrarily say for the sake of argument that it settles at $15. Well, now Americans are no longer being gouged. Rich Americans now have more money to spend on their widgets (the "consumer surplus" that Blarney mentions), and poor Americans who previously could not afford the medicine at $30 now can. On the flip side, nobody in Mexico can any longer afford the drug because $15 is hopelessly outside of their price range? Is this better or worse? I guess it depends where you live. You decide.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
No reason to settle at $15 (4.75 / 4) (#70)
by localroger on Sat Jul 26, 2003 at 02:40:11 PM EST

GF's formula for the Pill is mature. Several companies make it. If it can be sold for $3 in Mexico and fetch a profit that makes it worthwhile for them to run the plant, then without trade barriers it could be sold for $3 anywhere.

Competition should drive the price down not to an average between $3 and $30 but to $3. Otherwise, there is no way the company would be bothering today to market the drug in Mexico.

While I see our ridiculously expensive approval process driving the price up noticeably given the number of birth control pills sold, I can't see it going up more than a dollar or two a pack. (The situation is different and worse for drugs that are used less often.)

Other than approval, I don't see what the "barriers" are to distribution in the USA. What I see is a population of people who are capable of paying $30 a month for birth control so, when all is said and done, that's what they charge.

What will people of the future think of us? Will they say, as Roger Williams said of some of the Massachusetts Indians, that we were wolves with the min
[ Parent ]

$15 was entirely arbitrary, and perhaps misleading (5.00 / 1) (#78)
by skyknight on Sat Jul 26, 2003 at 04:31:17 PM EST

I did not mean to imply that it would necessary fall in the middle. Also, as an old generic, the drug which you are citing as exemplar is perhaps not a good candidate for our Gedankenexperiment. I was thinking along the lines of recently released drugs, still under patent, for which the original research company is the one with the rake.

Competition should drive the price down not to an average between $3 and $30 but to $3. Otherwise, there is no way the company would be bothering today to market the drug in Mexico.

Maybe this is true with generics where manufacturing costs are the only cost, and several companies are competing on roughly equal footing, but I would disagree in the context of drugs that are under patent and being marketed by the original research firm. Compared to the cost of research, actual manufacture is a piddling expenditure, perhaps pennies per pill. After the initial expenditure, every unit they can move is gravy. As such, it is in the best interest of the company to sell the drug in every market, at virtually any price that they can fetch. The company may in fact need to charge a higher mark up in some places to make up for the lower prices in other regions, so as to meet their profit expectations, but in all regions it's basically a "we'll take what we can get" proposition.

A key thing to note: during the life of the patent (~20 years), the original manufacturer has a monopoly, so there aren't any competitors to drive the price down. Monopolies are always an unfortunate situation, but in this case there isn't much of an alternative. If a monopoly were not allowed, there would be no way whatsoever for the company that originated the research to recoup its capital outlay, and there couldn't be the research in the first place.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
My point... (5.00 / 1) (#80)
by localroger on Sat Jul 26, 2003 at 05:03:53 PM EST

...If they are ripping us off this badly for a nearly universal generic drug like the Pill, what do you think they are doing when they can do whatever they like? Their level of ethics is proven. One doesn't generally ask, if they are ripping you off when it is hard, will they bother to rip you off when it's easy?

What will people of the future think of us? Will they say, as Roger Williams said of some of the Massachusetts Indians, that we were wolves with the min
[ Parent ]
Except (5.00 / 2) (#88)
by Bartab on Sat Jul 26, 2003 at 09:19:20 PM EST

There is manipulation you do not see, because of the product you are looking at.

Birth control manufacturers receive money from UNFPA to sell at certain price points in certain (i.e. poor) countries, Mexico is one of them. Thus to compare Mexico prices to US prices and declare the US to be gouging is missing a huge part of the picture.

--
It is wrong to judge people on the basis of skin color or gender; therefore affirmative action shall be implemented: universities and employers should give preference to people based on skin color and gender.
[ Parent ]

Reimportation (3.00 / 2) (#67)
by greenrd on Sat Jul 26, 2003 at 02:02:37 PM EST

What I want to know is: Why can't someone buy a truckload of drugs from Mexico, repackage them and sell them over here? What is preventing them? Tariffs? Legal threats?

The drug company presumably has a patent on manufacturing, but how could they claim rights on how their drug is sold? If they don't like you using their trademark on it, use the generic name instead.

I heard of a recent court case of Tesco reimporting either jeans or running shoes - can't remember which. They were sucessfully smacked down in the courts for - get this - "damaging the manufacturer's reputation". That's whacked.


"Capitalism is the absurd belief that the worst of men, for the worst of reasons, will somehow work for the benefit of us all." -- John Maynard Keynes
[ Parent ]

It's illegal. (5.00 / 3) (#71)
by localroger on Sat Jul 26, 2003 at 02:42:46 PM EST

In the USA you can't sell scheduled prescription drugs at all unless you are a licensed pharmacist. And even if you are a pharmacist there are packaging and tracking requirements. Basically, what you propose is just plain illegal.

The rule allowing you to buy a three month supply for your own personal self was passed at the behest of the AIDS lobby so that AIDS victims could import and try experimental drugs, bypassing the US approval process for themselves only.

What will people of the future think of us? Will they say, as Roger Williams said of some of the Massachusetts Indians, that we were wolves with the min
[ Parent ]

Legal Costs (none / 0) (#139)
by Bad Harmony on Sun Jul 27, 2003 at 07:55:48 AM EST

How much of the USA price is earmarked for the inevitable lawsuits that the company has to deal with in the USA?

I pay a substantial "lawyer tax" on many of the products that I purchase in the USA. Peter Angelos, a local lawyer, bought the Baltimore Orioles out of his share of the loot.

54º40' or Fight!
[ Parent ]

The "phenomenal" expense of drug R&D (5.00 / 5) (#61)
by desiderandus on Sat Jul 26, 2003 at 01:04:39 PM EST

This is likely going to decrease in importance as an issue in the future, actually. Pharmaceuticals have incurred huge costs mainly by following up with expensive animal and human trials of drugs that eventually don't make it to market for regulatory reasons (not safe enough). What they used to do was randomly pick lots of substances and try them all because there was no good way of distinguishing which would be better - a practice known as the shotgun approach.

However, pharmaceutical companies don't really use the shotgun approach anymore, because it's obviously stupid. Instead, they select which drugs will be the likeliest to succeed at various stages in their internal testing process, thus cutting out the number of flunkie drugs. These tests are getting better and better as the fields of proteomics and genomics get better; as more and more proteins, protein structures and functions are identified, it becomes increasingly easy for people to model all these drug-body interactions on a computer, which is a lot cheaper. Already, a lot of the more altruistic drug projects (AIDS and cancer projects) are doing these modelling using distributed computing networks over the Internet, just google "distributed computing drug research." Even more competitive pharmaceutical companies can use their own computing power to do this too - this is why drug R&D costs are likely to decline. Heck, by the time proteomics becomes a mature field and protein folding is understood to some degree, it will be possible to make easily customizable, or "designer" peptide-based drugs.
_________
Our sins catch up to us in the worst possible way; they become part of our essential identities.

Excellent point but (3.00 / 2) (#62)
by michaelp on Sat Jul 26, 2003 at 01:23:21 PM EST

look for MPAA & RIAA type shenanigans as big pharma tries to protect their 'traditional' gross revenues while dramatically reducing their expenses.

IOW, simply reducing the cost of production will not magically lead to cheaper products, as well demonstrated by the recording industry & CDs.

In the short run anyway, in the long run the doc will simply email the prescription to our Epson Peptide Printer 3000, which will spit out the prescribed drugs & a nice set of directions:-).



"Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed."

[ Parent ]
I agree with you (5.00 / 1) (#64)
by desiderandus on Sat Jul 26, 2003 at 01:48:07 PM EST

I think that this bill should be passed - it's high time that pharmaceuticals were shoved out of their easy-living niche. I've seen some of their more dubious practices up close and personal, most of them scary "market research" tactics that look a lot like bribery. Pharmaceutical makers spend a lot more on advertising and less on R&D than they routinely claim, as they try to maintain the "helping the people" image. Thankfully price controls (in the short term) and decreasing costs of entry into the drug market will provide an opposing force to necessary safety regulations and copyright laws and make pharmaceuticals more competitive, drugs less expensive.

Then again, I'm Canadian, so maybe I place too much value in health care and accessibility to it than most Americans ;-)
_________
Our sins catch up to us in the worst possible way; they become part of our essential identities.
[ Parent ]

Cool technology, the Epson Peptide Printer 3000... (none / 0) (#69)
by skyknight on Sat Jul 26, 2003 at 02:19:25 PM EST

but what happens when there is a defect in the software driver, or some l337 h4x0r 5crip7 kiddy cracks your grandma's machine and gives her cyanide instead of her arthritis medication? It's one thing to trust your Word documents to an insecure machine, and an entirely different matter to trust the machine to create things that you plan on ingesting. The printer had better have all its software be ROM based, and be setup to only process recipes that were digitally signed by a trusted authority.

This could be really dangerous technology, and we are getting very close to realizing it. There are already serious research projects for printing circuit boards like you presently print documents. Other bizarre "do it yourself" type things are apt to soon follow.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
What happens when the pharmacist (5.00 / 1) (#108)
by michaelp on Sun Jul 27, 2003 at 12:38:54 AM EST

is drunk, stoned, or stupid?

Its not as if having overworked docs prescribe & overworked nurses check your meds leads to 100% safty.

And then you still have the problem of malicious haxors putting cyanide in your tylenol.

When the auto-doc comes it will of course have safegaurds as advanced as the med producing tech, and just as likely there will be some mistakes.

It doesn't have to be 100% perfect, just better than what we have now, with so many mistakes due to human error rather than malicious attacks, and with some human beings tragically having to choose between meds and food or shelter.



"Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed."

[ Parent ]
Patent Reform can solve that (none / 0) (#286)
by Sloppy on Thu Jul 31, 2003 at 01:16:35 PM EST

IOW, simply reducing the cost of production will not magically lead to cheaper products, as well demonstrated by the recording industry & CDs.
It will if you fix the barrier to competition. When someone makes a huge profit and has a government-granted monopoly, then something is going wrong.

Patent duration needs to be a function of development cost. It needs to be a way for an inventor to get their R&D money back with a nice juicy profit as incentive, but no more than that.

If costs go down, then patents should shorten. Then as profits go up, competitors can step in and push them back down to fair levels. Everybody wins.
"RSA, 2048, seeks sexy young entropic lover, for several clock cycles of prime passion..."
[ Parent ]

write in poll option: (1.23 / 17) (#65)
by rmg on Sat Jul 26, 2003 at 01:48:42 PM EST

the cause, my friends, is the white man. has there in history ever been a force more pernicious than the european male? if so, it is only its latest incarnaction, the white, american male. is it any wonder that poor negro children are dying in the streets? hardly any with the rich white man at the helm of the medical industry.

americans are the great white satan. they will prey on their own people and the people of the world until there are none left to oppose them. our course is clear:

we must kill, kill, kill the white man.

_____ intellectual tiddlywinks

You know, you're probably right (2.00 / 4) (#83)
by monkeymind on Sat Jul 26, 2003 at 05:48:54 PM EST

I never looked at it from this perspective. You definitely have something here.

I believe in Karma. That means I can do bad things to people and assume the deserve it.
[ Parent ]

well, i'm glad someone's willing to stand up (1.50 / 6) (#84)
by rmg on Sat Jul 26, 2003 at 05:58:29 PM EST

and do what's right. you should be commended for your open-mindedness in this matter.

_____ intellectual tiddlywinks
[ Parent ]

You know, you're probably right (1.00 / 4) (#85)
by monkeymind on Sat Jul 26, 2003 at 06:06:50 PM EST

I never looked at it from this perspective. You definitely have something here.

I believe in Karma. That means I can do bad things to people and assume the deserve it.
[ Parent ]

DUPLICATE POST. PLEASE MOD DOWN. /nt (1.33 / 6) (#86)
by rmg on Sat Jul 26, 2003 at 06:23:02 PM EST



_____ intellectual tiddlywinks
[ Parent ]

WTF (none / 1) (#136)
by Rhinobird on Sun Jul 27, 2003 at 06:43:56 AM EST

What a racist thing to say. I'm offended.
"If Mr. Edison had thought more about what he was doing, he wouldn't sweat as much." --Nikola Tesla
[ Parent ]
R&D and Profits (4.66 / 6) (#72)
by jpmirabeau on Sat Jul 26, 2003 at 03:14:54 PM EST

"Drug research is phenomenally expensive."

Well maybe, but no one really knows. The pharma industry refuses to disclose the details of its R&D spending. The only data open to the public is what shows up on the 10K's. That's one line: "R&D expenditures." Pharma can, and likely is, hiding non-R&D expenses in this line. Until pharma wants to share more info on its R&D spending, it can't hide behind this rational for high drug prices."

And besides...the pharma industry is repeatedly--almost every year--one of the top 5 most profitable industries. We can rationalize high profits where there are high risks. However, if the industry remains one of the most profitable year in, year out, then the industry is not a high risk industry. Pharma risk is diversifiable, and the profits are economically unjustifiable.

Kudos to Congress for the bipartisan understanding that pharma enjoys excessive market control. The future will look back on Bayer, J&J and Amgen as we now look on Standard Oil. This is the beginning of the end of pharma monopoly power.

initial outlays (4.00 / 3) (#76)
by jjayson on Sat Jul 26, 2003 at 03:56:06 PM EST

I've seen costs estimates from $500 million to almost $1 billion average per drug (this includes amortizing the costs of failed drugs). The Tufts source that the story links to seems accetaptable. They say that the cost of producing drug grew by 120% since 1987 (I adjusted for inflation off the numbers they gave).

The link says, "That figure is the major conclusion of a recently completed in-depth study conducted by the Tufts Center based on information obtained directly from research based drug companies." So it seems that they were working off more than just SEC filings. "Over the past two decades, the Tufts Center's comprehensive studies on the cost to develop a new drug have been consistently cited worldwide as providing the most reliable estimate of the total cost of new drug development," they say. When it takes 10-15 years of production you need a high margin to offset inflation and possible failure.

It is well known that price controlls hurt the small companies and those that wish to enter the market more than large companies. They cannot charge the fair market value so they need much more to enter the field. (Especially when countries like Canada threaten to ignore patents when they think they are too expensive, like they did last year). There was a study done by a Canadian institute that shows this really does happens from the artificial prices set by the Canadian Drug Price Review Board (generics are actually more expensive in Canada than in the US partially because of this).

I find this idea of regulating an industry that does well sad. Why would anybody ever want to create and streamline a company when the government is just going to step in an allow their profits to be controlled by a third-party. The drug companies have good profit margins because they are so competitive. They need to constantly find new ways to reduce overhead, defray R&D costs, and develop new partnerships. Allowing an industy that has such a strong record of innovation to be regulated in a global marketplace is just dumb.

The problem isn't completely that drug prices are high from gouging. Tort is a huge reason. When we are approaching 9 figure settlements it becomes very risky to get anything wrong. Nations like Canada cap pain and suffering rewards to about $180,000 (CA$ 250,000) (not that I support this entirely, I think letting a judge decide on monetary rewards would greatly help, though). Also when other countries set price limits the American public is left to pick up the tab (if governments want to set price controls, they should be forced to buy at full price from the open market and then sell it to their own people so they bear the costs of their quasi-socalist policies).

You just don't regulate highly competitive industries. There is a long history of this failingm yet nobody seems to every learn.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

Government doesn't mind getting payback. (4.00 / 1) (#79)
by Sanction on Sat Jul 26, 2003 at 04:31:18 PM EST

I think a lot of what is spurring this is the debate over a senior perscription benefit that has been going on recently.  Most of the original research for the drug companies is actually done with government, they just package it and bring it to trial.  A lot of congressmen are looking at the astronomical prices being charged inflating the cost of providing the senior drug benefit (a guaranteed re-election for many of them, seniors are a powerful voting block), and then at the free research they provide these companies, and deciding that they want some return on their investment.

I can either stay in and be annoying or go out and be stupid. The choice is yours.
[ Parent ]
high drug prices (3.00 / 1) (#82)
by jjayson on Sat Jul 26, 2003 at 05:43:46 PM EST

That is somewhat a different discussion than just the economics of opening up American consumers to a global market that isn't totally capitalist. Surely there are many things that can change to help keep down drug prices, and just the idea that we really do pay higher prices is very debateable. The literature than many people bring up to show this was done by a Congressperson's office and has terrible flaws, such as only looking at a few high profile drugs, not looking at generics, ignoring the fact that Canada refuses to supply some of the most expensive drugs on the basis of cost, and not weighting for how often a drug is prescribed (if a drug that is prescribed 10 times more often than another is 1/20th of the price, are drugs really more expensive).

However, you don't fix an intellectual property problem by adjusting trade laws.

What I don't understand is why people get so pissed off at American subsidies (which as an aggreage are still the lowest amoung developed nations), yet when other countries pass laws refusing to pay the fair market value and stick American consumers with the price tag, they are praised.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

On the other hand.. (4.50 / 2) (#120)
by Kwil on Sun Jul 27, 2003 at 01:23:11 AM EST

..what I don't understand is why people get so pissed off at other countries with price controls when the companies are entirely free not to sell their products in that region.

Besides, the entire idea of supply and demand goes out the window when it comes to health services. When something is needed to save your life, the demand point is no less than the total economic worth of that individual. This is a good way to destroy an economy if it's allowed to happen.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
Because (3.00 / 1) (#127)
by wij on Sun Jul 27, 2003 at 03:10:27 AM EST

Drug companies can indeed not sell to countries with price controls, but then two things would happen:
  1. They would have to charge even more in countries without price controls (i.e. America).
  2. The price control countries would probably then just ignore whatever patents exist, and bypass the drug company.
The drug companies have to worry about R&D overhead. If they can sell drugs for more than it costs to manufacture them, they'll do it. Price controls aren't set so that drug makers lose money making every pill, they just externalize most of the R&D costs to other regions, so someone else has to pay it.

"I am an intellectual of great merit, yet I am not adequately compensated for this by capitalism; this is the reason for my opposition to it."
[ Parent ]
patent breaking (4.00 / 2) (#199)
by jjayson on Sun Jul 27, 2003 at 06:39:18 PM EST

Canada has broken two patents, but withdrew the illegal orders once they entered negotiations with the drug companies. They have said they will break patents to get drugs to their population for any reason that would prevent drugs from getting to Canada.

I read somewhere that Aetna insures more people that the Canadain system, yet Aetna cannot negoiate a price anywhere close to Canada's since Canada has the ace that Aetna doesn't have -- they can just decide to break the patent.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

Except (4.66 / 3) (#119)
by Kwil on Sun Jul 27, 2003 at 01:14:29 AM EST

..there was an expose done on this that we saw in Canada. Interestingly, it was run on ABC.

They looked at Tufts centre and found three things of interest:

  1.  Tufts entire income comes from supporting the pharmaceutical industries.
  2.  The pharmaceutical companies requested this report.
  3.  None of the figures Tufts uses in these reports are available to be checked on by anybody except Tufts and the pharmaceutical industries.
These three things throw the report's reliability into question.

It could still be accurate, but you can certainly see the means, opportunity, and motive are all present to just have it be hogwash.

Couple this with the drug companies behavior on patent infringement claims as well as patent extensions by doing such things as adjusting dosages (eg. Take one pill for fast relief gets repackaged with a slightly different inert material and sold as Take one pill for 8 hour relief.. and gets a whole new patent) and we see that this report probably shouldn't be trusted - the companies certainly can't.

Perhaps you don't regulate highly competitive industries. Yet because of the patents and patent tricks, pharmacomps really aren't highly competitive other than in their legal and marketing divisions.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
Two points (5.00 / 3) (#234)
by jpmirabeau on Mon Jul 28, 2003 at 02:49:29 AM EST

"I've seen costs estimates from $500 million to almost $1 billion average per drug."

The Tufts Center study as well as the BIO study (actually done by Ernst & Young) are almost worthless in this debate about the size and nature of pharma R&D spending. Both "think tanks" are proxies of the pharma industry. Nader's Public Citizen defines the opposing camp, but their work is plagued by the same problem as the other studies: nobody, except pharma CEOs, really knows the truth about pharma R&D; the only data out there is voluntarily reported by the pharma industry. Would the pharma industry report R&D data that tends to undermine their arguments? Would we depend on the auto industry to report honest safety data?

If the pharma industry wants to rationalize drug prices it needs to yield to public scrutiny of its R&D spending.

"You just don't regulate highly competitive industries. There is a long history of this failingm yet nobody seems to every learn."

Agreed. But the pharma industry is not a competitive industry, if by "competitive" you are following the lingo of economists. Pharma products are not homogenous, there are significant barriers to entry (e.g. sales forces), there are only a few firms, and the government grants pharma companies limited duration monopolies over new drugs. The pharma industry is repeatedly one of the most profitable industries (where profits are after expensing R&D). The industry is not a competitive industry, has monopolistic (not monopoly) aspects, and enjoys excessive market power. Regulation, in such circumstances, is necessary and for the social benefit (for example utilities).

[ Parent ]

Fund for what by whom (4.75 / 4) (#77)
by cronian on Sat Jul 26, 2003 at 04:04:07 PM EST

A lot of funding for drug R&D actually comes from the government or non-profit foundations, especially for more important drugs. Meanwile, drug companies drug companies spend lots of money developing drugs like viagra, or drugs that make kids behave like prozak. After developing drugs people don't need, drug companies need large marketing campaigns to sell them which costs them lots of money.

Hopefully, these changes will force the drug industry to focus more on drugs people actually need, since their margins for advertising will probably be lower. Also, they might start caring more about drugs for poor people since they will need more volume rather than larger margins.



We perfect it; Congress kills it; They make it; We Import it; It must be anti-Americanism
I address this somewhat... (none / 0) (#91)
by skyknight on Sat Jul 26, 2003 at 09:48:29 PM EST

in the above comment. I'm a little concerned, however, about how we would go about defining what drugs are "needed". In come cases, such as AIDS, it's easy, but I'm not a big fan of all powerful legislative bodies making these decisions.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
R+D. Government, and the Rule of Law (5.00 / 5) (#81)
by mulescent on Sat Jul 26, 2003 at 05:24:14 PM EST

Interesting article, but I think you forgot to mention some important points. First, drug companies are not always motivated by rational self interest. Recently, many (Astra-Zeneca, Abbott labs) have been given massive (hundreds of millions of dollars) fines by the government for breaking a variety of laws. Astra-Zeneca colluded with doctors to defraud the Medicare system. Abbott labs has been fined for a similar scheme. The total of these fines is almost 1 billion dollars... apparently enough to put a drug or two on the market. Big pharma has let its greed run out of control, and the recent legislation you wrote about may be indirect retribution by the U.S. government for the actions of these companies.

Secondly, the issue of drug research R+D and patents is many-sided. Taxpayers around the world (not just the U.S.) bear a large percentage of the burden for drug research. Federal governments spend large amounts of money on basic scientific research, which is then utilized by drug companies to produce new drugs. While the drug companies do (and should) make a profit from their investment, they should not forget that significant public investment has already occured. Blatant manipulation of patent laws has skewed the situation in favor of the drug companies - patents last longer and cover more than ever before. This benefits the drug companies' bottom lines, but hurts the taxpayers who also made a significant investment. Properly balanced patent regulations ensure that the public gets their share of the returns on the investments they made. Drug companies seem to have forgotten this... and now people are angry. It would be more intelligent to rebalance the patent laws than to legitimize imported generics, but I suspect the U.S. public would not be able to see the connection.


You better stop that laser game, or you'll smell my mule
Everyone always acts in rational self interest... (3.00 / 2) (#90)
by skyknight on Sat Jul 26, 2003 at 09:39:31 PM EST

unless one has literally lost one's mind, and is willfully engaging in acts of self destruction. It's just a matter of the time line that you are examining. I would argue that "altruism" is typically just far-sighted selfishness. When drug companies do things that seem selfless, what they are really doing is trying to cultivate a favorable public image. This in turn results in better profits in the long run, as opposed to grabbing short term profits at the expense of long run.

You are right about public funding with taxes being tangled up in the mess, but it's difficult to make any hard and fast assertions about what drug companies "owe" society for the benefits they have reaped from public knowledge. All new scientific developments stand on the shoulders of former researchers stretching back to the dawn of time, many of whom died paupers, never having seen a cent for their troubles. It's unfortunate, and it's unfair, but I don't know how it could be fixed unless everything were pulled under the auspices of the public, and that doesn't sound like much of an alternative to me.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Psychological hedonism is wrong (4.00 / 2) (#101)
by pde on Sat Jul 26, 2003 at 11:34:22 PM EST

Everyone always acts in rational self interest unless one has literally lost one's mind, and is willfully engaging in acts of self destruction. It's just a matter of the time line that you are examining. I would argue that "altruism" is typically just far-sighted selfishness.

The theory you are advancing is called psychological egoism, and it is demonstrably false. There are plenty of thought experiments, and real, well-design empirical psychological studies which show that self-interest cannot explain all human behaviour.

The reality of the matter is, the human brain is a big, complicated computer. Sometimes it does things which approximate "rational self-interest", but there's no reason (evolutionary or otherwise) why this should always be the case.

A quick though experiment to demonstrate this: I am captured by a Mad Ethicist, who has a gigantic weapons platform orbiting above Manhattan. He gives me a choice: either, submit myself to a liftetime of horrendous torture in his dungeon, or, say the word, he'll nuke Manhattan, but I get a quick and painless death (or even a luxurious life in his spaceship).

Now, personally, I would go for option 1 (saving Manhattan). Some people would go for 2. But it's clear that psychological egoism (which says everyone must got for 2) is just wrong.

Visit Computerbank, a GNU/Linux based charity
[ Parent ]

It's just selfishness at a different level... (1.00 / 1) (#111)
by skyknight on Sun Jul 27, 2003 at 12:46:13 AM EST

In actuality, we humans are nothing more than vectors for selfish genes and memes. All of our actions, were we to have sufficient computational power, could be predicted as the vector sum of their interactions. Usually this reality manifests itself as selfish action at the level of the organism (at least in the case of genes), but occasionally and in certain circumstances, the selfishness manifests directly at the level of the gene.

We as humans share various genes and memes, and the closer we are to any given person or group, the more likely we are to act "altruistically" on their behalf. This is because the genes/memes are acting in concert across their carrier boundaries. The more genes/memes we share, the more concerned I will be about your welfare. Given sufficient commonality, I might even be willing to risk my life for yours. The size of the group upon whose behalf I may act will also affect my decision.

I may not have a ton of close genetic ties to people in Manhattan, but when we're talking about millions of people, the benefit of my sacrifice would be great enough that the genes/memes carried within me would enact a decision that would result in the sacrifice of my own personal body, so as to carry on the lineages in the millions of entities I would save. So, in summary, the key to all this is that you must consider aggregate selfishness of genes/memes across organismic boundaries.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
"selfishness" doesn't cut it (not OT) (4.00 / 3) (#124)
by pde on Sun Jul 27, 2003 at 01:49:26 AM EST

I may not have a ton of close genetic ties to people in Manhattan, but when we're talking about millions of people, the benefit of my sacrifice would be great enough that the genes/memes carried within me would enact a decision that would result in the sacrifice of my own personal body, so as to carry on the lineages in the millions of entities I would save. So, in summary, the key to all this is that you must consider aggregate selfishness of genes/memes across organismic boundaries.

Well, in my case, the decision to save Manhattan would have very little to do with genes and a great deal more to do with abstract judgement based on ethics-related memes.

Suppose that my ethical reasoning is utilitarian. You could perhaps argue that in this case, we are observing "rational self-interest" on the part of some utilitarianism meme, since there is way more net-utilitarianism in Manhattan than there is in me.

But imagine another thought experiment: the Mad Ethicist has constructed a completely deontological, rule-based scheme for creating a near-perfect society of happy people. The only catch is, her brave-new-world social plan requires the abolition of thought about ethics (since all those ethicists reach troubling and contradictory conclusions which inevitably lead to Strife and War). So she asks me to go around subverting/cajoling/blackmailing/assassinating all of the ethicists in the world, in order to allow happiness for humanity.

Being a good utilitarian, I agree to do this. But here we observe that the utilitarianism meme has made conscious "decision" to eliminate itself. That doesn't seem like "selfishness" to me.

The behaviour of human beings can theoretically be predicted as the outcome (vector sum?) of physical processes. Some of those processes are subjected to evolutionary pressures, in which "survival strategies" (not rational self interest) will tend to arise. But there is also non-linear interaction between these processes, and there are many other factors affecting these systems which are unrelated to evolution. From the point of view of evolutionary theory, these factors often appear as "randomness", "background noise", or even "the environment" -- but they may sometimes turn out to be systematic and important.

Just so this post isn't completely off-topic, you should all read this (sorry about the Word document :).

Visit Computerbank, a GNU/Linux based charity
[ Parent ]

Errm (none / 0) (#257)
by spiralx on Mon Jul 28, 2003 at 12:52:11 PM EST

How on Earth would your genes push you to act towards saving a bunch of random people you've never met? It's a completely different situation from one in which a car is hurtling towards your child or sibling. Maybe if you knew you had a load of relatives in Manhatten then genetic selfishness would push you to sacrifice yourself, but genes aren't all-knowing or smart.

You're doomed, I'm doomed, we're all doomed for ice cream. - Bob Aboey
[ Parent ]

Even if they are not very direct relatives... (none / 0) (#261)
by skyknight on Mon Jul 28, 2003 at 04:18:56 PM EST

you have a great deal of genetic material in common. As you may have noticed, while humans have lots of quirks from entity to another, we have a hell of a lot of similar biological functions.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Works for the military (4.00 / 1) (#131)
by michaelp on Sun Jul 27, 2003 at 03:45:22 AM EST

everything... pulled under the auspices of the public

We have the best military in the world by public direction and funding of public/private expenditures.

And profiteering in time of war is routinely decried.

Seems to me that if millions of Americans were being killed by Russians or Iraqis or lions every year we wouldn't sit still while private corporations made huge profits on market driven counterattacks.

So why should virii, bacteria, mutant cells, and other human killers be treated with a laissez faire approach?

Seems to me more a practice arising from learned helplessness in the face of disease rather than the smart way to approach the problem.



"Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed."

[ Parent ]
Right, Wrong? It doesn't matter (4.33 / 3) (#93)
by RyoCokey on Sat Jul 26, 2003 at 10:12:53 PM EST

Regardless of whether it's a good idea or not, it's going to happen. Most people don't understand the reason we have high drug prices, just like they don't understand the reason behind many oil prices. That's the reason each time oil prices go up, we have another around of investigation into collusion. Even though each round always turns up empty handed.

But it comes down to this: People want cheap drugs, and they think that they can be legislated. Because the main disadvantages are intangible (Who knows whether we're really losing the cure for cancer or not?) most people aren't going to see them. They see the cheap drugs you can buy in Mexico in Canada.

In an ideal world, drug companies would band together to force countries to recend their price controls. There's a wide number of reasons this can't happen: Such action would be industry collusion and would run afoul of anti-trust laws. Secondarily, if European countries suddenly found themselves minus most drugs, they'd lift intellectual copyright restraints so that their companies could make them. As for new drugs developed in the US, drugs are pretty easy to reverse engineer. So the US would still end up with all the burden for R&D.

I'm suprised things lasted this long. Oh well, it was nice while it lasted.



And if you gaze for long into an abyss, the abyss gazes also into you.
We'll just vote ourselves rich! (4.50 / 4) (#95)
by skyknight on Sat Jul 26, 2003 at 10:22:37 PM EST

I wish that people would stop thinking that government can and will solve all their problems, but this does not seem to be a reasonable hope. Like-minded people have been dreaming of such things for eons. As Mencken said: "Every decent man is ashamed of the government he lives under."



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
eliminating price controls (5.00 / 2) (#104)
by jjayson on Sun Jul 27, 2003 at 12:22:00 AM EST

That really doesn't need to happen. Each country should just be required to buy what they want to control the price of off the global shelved at the fair market value. They can then sell them to their distributors or population at a reduced cost. This allows them to maintain their price controls while not making the free markets of the world foot the bill.

However, I think that developing nations should have special privledges when it comes to important drugs. People should not be able to import from countries like Mexico so the pharma companies could keep the low prices they have there without holding the developed world to the same standard.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

But they do.. (4.50 / 2) (#126)
by Kwil on Sun Jul 27, 2003 at 02:51:20 AM EST

..unless you think that the companies are being forced to sell to the people who live in countries that have price controls.

Apparantly, the price controls that Canada and Scandanavia set are the fair market value, because the drug companies are still willing to sell them here. You're just upset because the companies have realized that people in the US will pay well above fair market value and they feel no qualms about charging this to you.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
no (3.50 / 2) (#198)
by jjayson on Sun Jul 27, 2003 at 06:36:08 PM EST

They are being forced to sell above marginal costs, but below average costs and market value. Canada cannot lose. They have already said they will break a patent to get a drug to their people. They have done it with two patents already (although backed down and withdrew orders once they negotiated with the patent holders). This is akin to tell me that you will either take my toy or you will pay me $2 for it when I payed $2. I get no choice. If phrama companies decide not to sell to Canada, they will just have their patent broken.

There is no such think as paying "above market value" in a free-market economy. However price controls are explicitly designed to let people pay less than market value. If it really was the fair value, they Canada shoudl ditch the price caps because they would have nothing to worry about.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

I think in all fairness I should be subsidized (none / 0) (#94)
by CoolName on Sat Jul 26, 2003 at 10:15:35 PM EST

Brand name drugs are much cheaper in Italy than in the U.S just as an example.There is no reason why someone in the US should pay more for drugs than someone in Italy. Free markets make good sense for every other product. Time medicinal drugs become free market goods. All companies make the case the business will tank if profits were a penny less. Some do go out of business when profits are hammered. Some learn to work smarter and more efficiently. This is called capitalism.

"What does your conscience say? -- 'You shall become the person you are.'" Friedrich Nietzsche


Er, you mean "not be subsidized"? /nt (none / 0) (#96)
by skyknight on Sat Jul 26, 2003 at 10:24:13 PM EST



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Why I support this bill (4.71 / 7) (#97)
by MichaelCrawford on Sat Jul 26, 2003 at 10:35:37 PM EST

You've done an excellent job of explaining the issue, for which I must commend you. It really made me stop and think.

However, I still feel we ought to allow drug import. One effect you don't address is that drug import will encourage investment in research by foreign manufacturers, who have no shortage of biochemical expertise. So I'm not that concerned about any trouble the law might cause to American manufacturers.

I have a very personal reason to support the law. That's why just yesterday I emailed everyone I know to ask them to write both their Senators to ask them to vote for it - I think I've only done that once before, when the authorization for the use of force in Iraq came before Congress. That's why I'm going to write them too, and have asked my wife to write as well.

I take four medications for my schizoaffective disorder. If I didn't take them, life would be miserable at best and at times I would suffer unbearable, life threatening symptoms - suicidal depression, paranoia, hallucinations.

I take imipramine, valproic acid, propanolol and Risperdal - this last a patented, brand name drug that in my view (and that of many people with schizophrenia and schizoaffective disorder) is nothing short of a medical miracle. Risperdal is the most expensive of the four, because there is no generic form of it available.

A month's supply of these drugs in the United States costs me $350.00. Like most Americans who have a mental illness, I am not able to get insurance, so I have to pay for it myself. But I lived for most of the year in Newfoundland during 2000, when I married a woman who was from there. How much did my medication cost then? In United States dollars, the total came to $80.00. This included the cost of the patented, brand name Risperdal, manufactured by the same company (Janssen) at the much lower price it is sold in Canada.

Even without considering the single-payer medical care, it is much more affordable to be mentally ill in Canada.

I'm very fortunate that I have a salable job skill and am well enough to work. I have a good job as a software consultant. It's tough to pay for my medication every month, but I usually manage. There have been times that I've had trouble with my business and have gone without my medication, and have sufferred from unpleasant symptoms as a result.

I asked everyone I know to write their Senators not just because I want to save money. It's because I know that most people with schizoaffective disorder and the closely related schizophrenia are rarely able to hold jobs, or at least jobs that pay well. 30% of the homeless people in America are mentally ill, and a large portion of those are schizophrenic.

The only way most people who share my diagnosis can hold down a good job is to take an atypical antipsychotic like Risperdal. None of these have been on the market for very long, so they are all patented. I started taking Risperdal in 1994, just a few months after it was approved by the FDA.

For some, being able to buy their medication each month means the difference between being able to live well or eventually dying at their own hands.

A question to ask your Senator to consider is why manufacturers sell their own patented brand-name drugs much cheaper in other countries than they do in the United States.

The cost of prescription drugs is just one example of the many problems inherent in the American medical system. Another point to consider is how much cheaper it is to obtain medical care in other countries. Being pretty stable, I don't really need to see a psychiatrist to get my medication, so in Newfoundland I saw a general practitioner. As a non-resident, I wasn't covered by Canadian medical care, so I had to pay for my office visit out of my own pocket.

Do you know how much my doctor charged me for an office visit? Twenty five Canadian dollars. At the exchange rate at the time, that was sixteen American. And he was a good doctor too - smart and knowledgeable, caring, eager to get to know me as a person, and willing to spend time with me during my visit in a way that I haven't experienced with American doctors since the 1970's.

Perhaps next time you go visit your doctor, you should print out this post and give it to him. The price he charges isn't entirely his own choice, as he has to pay for malpractice insurance, but maybe it would light a fire under your doctor's ass if he knew how things worked in other countries.

You can find your Senator's address at http://www.congress.org/ Email George Bush too, as there's some possibility he might veto the bill. Don't email them - they get so much spam they no longer pay attention to email. If you can't take the time to write a letter, you can call them on the phone, but they give more weight to snail mail because of the investment in time it takes a constituent to write a letter.

My personal feeling about it is that it is immoral to make a profit from the sale of medication that treats a life-threatening illness.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


Mail my post to your Senator too (3.00 / 1) (#102)
by MichaelCrawford on Sat Jul 26, 2003 at 11:37:46 PM EST

If you write to your Senator to support the bill, consider including a hardcopy of my post above along with it, as a way to support your position.

Include my contact information so they know it's legit, and so they can follow up with me if they want. I mailed a letter about solar water desalinization to my Senator back when I lived in California, and got a telephone call from the Senator's staff who wanted to know how it worked. That's one way I know our congresscritters really do pay attention to the letters they receive.


--

Live your fucking life. Sue someone on the Internet. Write a fucking music player. Like the great man Michael David Crawford has shown us all: Hard work, a strong will to stalk, and a few fries short of a happy meal goes a long way. -- bride of spidy


[ Parent ]

better idea (3.00 / 2) (#116)
by jjayson on Sun Jul 27, 2003 at 12:52:05 AM EST

Email Canada, Italy, the Scandinavian countries, and all others that impose price controls and tell them to stop fucking up the global market and making America foot the bill.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]
well, seems canada, italy et all (none / 0) (#134)
by vivelame on Sun Jul 27, 2003 at 06:20:58 AM EST

aren't so eager to have high medication prices and risk having people like you not being able to pay for their meds.

And i can't blame them.

--
Jonathan Simon: "When the autopsy of our democracy is performed, it is my belief that media silence will be given as the primary cause of death."
[ Parent ]
They are eager for their own people... (1.00 / 1) (#150)
by skyknight on Sun Jul 27, 2003 at 11:34:00 AM EST

not to have high prices, and are foisting even higher prices off on Americans as a result. It's basically a tragedy of the commons, where everyone outside the US reaps the gain, and the tragedy befalls the poor people in the US.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
I can't find the link (none / 0) (#197)
by jjayson on Sun Jul 27, 2003 at 06:31:37 PM EST

I just finished reading something the other day about the chunk each region pays in drugs revenues.

American sales made up almost 50% (47 or 42, I can't remember) of all revenues. It gave other regions like Canada, Eastern Europe, Japan, etc. but I can't find the link any more.

--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

Even more interesting to know... (none / 0) (#201)
by skyknight on Sun Jul 27, 2003 at 06:46:46 PM EST

than just the fraction of gross revenues for each nation, would be to compare that to the volume of consumption in each nation, e.g. "America consumes 10% of the volume, but pays 50% of the cost."



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Yes (none / 0) (#206)
by jjayson on Sun Jul 27, 2003 at 07:33:54 PM EST

I saw a comparison between the US and Canada. If there was a drug to treat a condition, in the US they were something like 52% likely to get it, while in Canada that number dropped to 15%.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]
But it's not the only thing they do (none / 0) (#149)
by grzebo on Sun Jul 27, 2003 at 11:30:16 AM EST

They also subsidize these drugs, buying them with tax money for people too poor to normally afford them, thus increasing the amount sold. So even if the prices are lower, the other countries make up for it in volume.


"My God, shouts man to Himself,
have mercy on me, enlighten me"...
[ Parent ]
nope (2.00 / 1) (#196)
by jjayson on Sun Jul 27, 2003 at 06:29:25 PM EST

Canada accounts for a tiny slice of drugs sales (America acounts for almost half). Are they buying at their price controls, just above marginal cost but below market and average costs?

The tiny amoung they expand sales is probably dwarfed by the amount lost amoung the rest of the population. Patients in the US actually are far more likely to get prescription drugs because the Canadian system is going dead broke.

Also, if you want to subsidize the poor that is great. Develop a tract for them. Just don't make American subsidize the rest of your population.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

I don't think you understand the Canadian way (none / 0) (#209)
by DominantParadigm on Sun Jul 27, 2003 at 08:03:46 PM EST

Patients in the US actually are far more likely to get prescription drugs because the Canadian system is going dead broke.

That doesn't even make sense! What system is going dead broke, and why does this have an effect on the availability of drugs? Do you think that doctors directly hand drugs to their patients in Canada?



Caller:So you're advocating bombing innocent children? Howard Stern:Yes, of course!


[ Parent ]
budgetary impacts (none / 0) (#222)
by jjayson on Sun Jul 27, 2003 at 11:29:06 PM EST

A Canadian institute pointed to numbers saying that if there is a drug to treat a condition, an American was three times more likely to get it than a Canadian. I can't seem to find the report right now, so I cannot be entirely sure of their methodology. However, some of it stems from the fact that Canadian doctors prescribed drugs less often and new drugs that are very expensive they will not provide either.

The financial difficulties of the Canadian healthcare system are well documented. Price controls are about the only way it can continues to exist.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

financial difficulties of canada's healthcare syst (none / 0) (#242)
by DominantParadigm on Mon Jul 28, 2003 at 07:35:54 AM EST

What in God's name does that have to do with drug availability?

Caller:So you're advocating bombing innocent children? Howard Stern:Yes, of course!


[ Parent ]
not new investment (4.00 / 2) (#103)
by jjayson on Sat Jul 26, 2003 at 11:54:39 PM EST

One effect you don't address is that drug import will encourage investment in research by foreign manufacturers, who have no shortage of biochemical expertise.
Not really. This legislation only covers drugs that are already approved for use in the States, so there will not be any net increase from overseas buying as these drugs would still need to go through the same approval process. It may spur production of generics, however generics are already lower in the US that the other countries (The US beats Canada in price in most generic drugs as Candian reasearch group found out). Also, if a country makes generics then they can already be easily approved to sell in America. From what I see, there will not really be any new research and no new production, just new prices to buy at (some lower and some higher). For example, I just looked up Valproic Acid generic (not the Depakote brand) 100 pills 250mg: in the US $16.65 while in Canada $18.31 (in converted US dollars). Your cost savings are mostly going to come from patented drugs and even then the most expensive may not be any cheaper since some countries with national medical systems refuse to supply those to its population (such as Canada), so the price will probably be lower, but not these 66% off figures that you see for some drugs.

In United States dollars, the total came to $80.00. This included the cost of the patented, brand name Risperdal, manufactured by the same company (Janssen) at the much lower price it is sold in Canada.
Yes, I think that is because Newfoundland drug prices are controlled by the Canadian Drug Price Review Board. They are kept artifically low by law and and reason it works so well is that free markets, such as the US, pay higher prices. You cannot have all markets price controlled and history repeated bears this out.

By allowing purchases from other countries, mostly, we are not getting cheaper prices because of increased compeition. We are instead importing Canadia's price controls. This is not a sustainable situation. What should really happen is that Canada should be forced to buy on the open market then resell to their national institutions. This would provide the level playing field for all countries instead of free-loading on the American back.

A question to ask your Senator to consider is why manufacturers sell their own patented brand-name drugs much cheaper in other countries than they do in the United States.
They are cheaper because of price controls, not from price gouging. Have you ever wondered why free-market medical economies produce far more advancement than other nations? Because price controls create an artificial scarcity. When price controls were enacted for rent in SF and NY it was the same thing. It prevented new builders from entering the market or large ones from building because while their input costs (labor, materials) float with the local price inflation, their ability to sell is regulated.

Canada shouldn't be able to set prices for sale in their country to outsiders (if they do, they should pay the market difference), however you want to establish areas that you cannot import drugs from, like Mexico, to allow developing nations the ability to buy what would be very expensive drugs for cheap. A completely open economy is great, but you need to build people up to the same level. For an unnecessary product, like a boat, it really doesn't matter if Mexicans cannot afford them yet. They will be able to in time. However, for life and death matters like drugs, we should make exceptions to this rule.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

Indeed, human costs are a very real concern... (3.66 / 3) (#106)
by skyknight on Sun Jul 27, 2003 at 12:32:26 AM EST

and your post does an excellent job of bringing this to light. It's easy to crunch the numbers and make a rational, economic decisions when you're just dealing with balance sheets, risk assessments, and margin calculations. It's not so easy when you bump into real people, with real problems. At the same time, however, if the numbers don't work then everyone loses. Let me see if I can try to address some of your points...

However, I still feel we ought to allow drug import. One effect you don't address is that drug import will encourage investment in research by foreign manufacturers, who have no shortage of biochemical expertise. So I'm not that concerned about any trouble the law might cause to American manufacturers.

I'm very free market minded. I have no desire to see American companies propped up in a protectionist arrangement designed to shield them from foreign competition. My main economic concern involving importation, safety issues aside, is what will happen if countries that don't respect IP laws are allowed to dump generic versions of drugs into American markets without the permission of the patent holder. This would undermine the company's ability to recoup its capital outlay, and thus hinder its ability to funnel money back into future development.

Even without considering the single-payer medical care, it is much more affordable to be mentally ill in Canada.

I think Canada is able to save an extraordinary amount of money because they manage to maneuver into the tailwind of the US. The Cold War was not won because of Canada's military, and neither is the majority of drug research being fueled by Canada's economic input. Prices are artificially lowered by national regulation in countries such as Canada, and drug manufacturers are forced to make up the loss by charging exorbitant fees in countries where there are not price caps. This is why prescription drugs are priced outrageously here in America. Other countries have unfairly shifted the burden to Americans, and all the while are bragging about how great their health care is. Well, yeah, it's being subsidized by screwing over poor Americans. Their purportedly noble socialism is underwritten with the misery of others.

Yes, America can be overbearing, arrogant, and sometimes downright stupid, but in reality it is the economic powerhouse, at least for the moment, that largely drives the world economy. It is constantly derided, yet all the while everyone else is happy to go along for the free (subsidized) ride.

My personal feeling about it is that it is immoral to make a profit from the sale of medication that treats a life-threatening illness.

I am truly sorry that you have such an unfortunate medical condition, and I sympathize with your resulting opinion. However, I don't know that it's practical, or even possible to somehow remove money from the equation, as ugly and despicable as it is that it comes into play with life threatening illnesses. It is an awful burden that you must fork over so much money each month, and a terrible thought that others cannot afford it and thus go without, but at least the drugs exist!

Were it not for the research programs that made these miracle (albeit expensive) drugs available, your life would perhaps be in shambles. What of the diseases that we'll be curing ten years from now with future drugs whose research will be funded by the sale of the ones you take now? If it's any comfort at all, you might think of your monthly bill as paying the favor forward.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
a software analogy (none / 0) (#100)
by martingale on Sat Jul 26, 2003 at 11:25:07 PM EST

The similarities between the pharmaceutical industy and the software industries in terms of production and development costs have been mentioned in some discussions already.

I'd like to introduce another analogy on the level of the research being carried out.

Suppose a software company X decides to sink 1 billion dollars into a next generation, super duper OpenGL Microsoft Office Clippy plugin, that lets you see the *backside* of the text bubble containing Clippy's advice. This plugin is of particular interest to 24 people world wide, who are willing to spend whatever it costs to get the plugin (42 million dollars each, if X gets its way). The plugin is advertised around the world, and generates some novelty interest. But people are only willing to pay at most 5 cents for the plugin. If everyone in the world buys the plugin at that price, the company makes only 60 million dollars, which is insufficient to cover the R&D.

Naturally, the company doesn't want to allow the 24 people who are going to pay the development costs from knowing that the rest of the world pays 5 cents. Is the company justified in opposing import controls so as to prevent those 24 people from paying the same as the others? Should the others be forced to pay a higher price for a product that, let's face it, is only of true importance to a small minority (although these 24 people will despair and be forever miserable if they don't get the plugin)? Should the company have gone ahead to build the plugin in the first place, at that price?

I think everything should be voluntary... (none / 0) (#117)
by skyknight on Sun Jul 27, 2003 at 01:02:22 AM EST

If a group of people wants something, and a group of people can provide something, they should just hammer out a mutually voluntary agreement. Import barriers are a red herring. I don't like trade barriers, but we're forced to have them, as far as I'm concerned, because of the IP issues involving ripped off generics, and the artificial price fixing of other countries.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
that's how I see it (none / 0) (#217)
by martingale on Sun Jul 27, 2003 at 11:11:35 PM EST

If a group of people wants something, and a group of people can provide something, they should just hammer out a mutually voluntary agreement.
That's how I see the US drugs market. Companies are offering to sell high priced products, which the local population (at least part of it) is willing to buy. Whether other countries introduce price caps is irrelevant. If at some point the US market no longer accepts to pay the high price, it shows that the selling companies have essentially failed to estimate their market correctly (possibly through no fault of their own, but reality doesn't take prisoners).

I'm concerned, because of the IP issues involving ripped off generics, and the artificial price fixing of other countries.
Since scientific research is open around the world, that part of the IP representing the "state of the art" cannot be considered ripped off from private companies. The only thing IMHO to be concerned about is the added value, on top of the state of the art, which current drugs companies offer. This is extremely muddy, because the question is whether this added value is solely attributable to monetary incentives.

Personally, I know and argue here that scientific discoveries are uncorrelated to monetary incentives. It follows that I don't buy that drugs companies necessaily offer added value which humanity wouldn't discover any other way.

What companies offer is speedy development at a certain price. Unlike with public research, there is no rationale for *what* is to be developed speedily, except for the profit motive. There also is no economic argument that suggests that speedy development now, using existing state of the art, is better value than speedy development in ten years, using the then state of the art.

For example, the telecommunications industry was revolutionized by mobile telephones. Old industrial countries heavily invested in expensive infrastructure, such as land lines. The result is a heavily networked country for a certain price. Newly developing countries prefer to forego expensive landlines and network using mobile telephony. The result is a heavily networked country for a much lower price, a generation later.

[ Parent ]

Market Segmentation (none / 0) (#154)
by Bad Harmony on Sun Jul 27, 2003 at 12:34:24 PM EST

There are other ways of charging varying prices to different markets. The software company could sell the hyper-iridium version of the plugin for 42 million dollars, and after a suitable period of time, release the pot metal version of the plugin for 5¢.

54º40' or Fight!
[ Parent ]

sure (none / 0) (#218)
by martingale on Sun Jul 27, 2003 at 11:18:43 PM EST

That's exactly where generics come into it. The drugs companies make a bet that they can sell X units at 42 million, thus recouping their costs. There is no need for whining on their part if they lose the bet because increasing numbers of potential customers realize that they actually don't mind the pot metal version.

[ Parent ]
fuck the pharmaceutical companies (3.00 / 9) (#107)
by crazycanuck on Sun Jul 27, 2003 at 12:37:31 AM EST

AIDS sufferers could all be treated if it weren't for greed.

that's why I fully support Brazil's attitude: fuck the foreighn pharmaceutical companies, build generic drugs yourself for very cheap and provide treatment for all infected people.

if it were up to pharmaceutical companies we'd never have any cures only meds that hide the symptoms. After all, if you cure a disease, the company doesn't make money off you anymore.

short-sighted (4.00 / 4) (#114)
by jjayson on Sun Jul 27, 2003 at 12:48:25 AM EST

Yeah, if we broken the AIDS patents, the population of the world could be treated (not even cured, just partially treated with poor success), however the next generation of drugs wouldn't be developed.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]
What good... (5.00 / 3) (#129)
by Kaki Nix Sain on Sun Jul 27, 2003 at 03:20:55 AM EST

... is being far-sighted, when you will be dead in a year?



[ Parent ]

individual v. society (4.66 / 3) (#195)
by jjayson on Sun Jul 27, 2003 at 06:24:44 PM EST

For an individual, there is always reasons to screw over the society to get an advantave (the Randites have this down to a science). However, you are errecting a strawman that nobody is saying. Developing countries that are not economically built up enough to support R&D costs need a way to opt of the global market until they can help should the burden. Places like Canada that can clearly pay for R&D but refuse to are just free-loading.

If we decided to break all AIDS drugs patents today, then all research for it would have to be government run since no private company would any longer do it. You could be pushing a cure back 50 years. Now, how many people did you just kill by being greedy?
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

an interesting point (4.00 / 1) (#213)
by martingale on Sun Jul 27, 2003 at 10:33:56 PM EST

If we decided to break all AIDS drugs patents today, then all research for it would have to be government run since no private company would any longer do it. You could be pushing a cure back 50 years. Now, how many people did you just kill by being greedy?
There's one of your hidden assumptions. What makes you think that private AIDS research brings forward a cure by 50 years?

Remember your quote "1% discovery, 99% hard work"? If you claim that private companies can significantly shorten the time to bring about a cure (if one actually exists), then you are essentially claiming that the discovery phase is complete, and all that is left to do is the tedious developmental work, for which drug companies need only throw sufficient amounts of money at the problem.

But discovery is not simply an increasing function of the effort expended. Throwing more people at the problem doesn't guarantee a solution will be discovered more quickly.

[ Parent ]

In contradiction to facts (3.00 / 1) (#236)
by beijaflor on Mon Jul 28, 2003 at 05:36:04 AM EST

How do you explain the fact that, despite Brazil and SA breaking AIDS drugs patents, new ones are deveopped, tested and used?

[ Parent ]
fuck yourself (4.00 / 6) (#115)
by skyknight on Sun Jul 27, 2003 at 12:49:36 AM EST

This is what you're proposing in the long run. This cavalier attitude, while yielding plentiful short term benefits, totally sells out the future. It is about as rational and sane as racking up huge credit card debts, thinking that somehow you'll be able to pay for things tomorrow.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
What good... (5.00 / 5) (#128)
by Kaki Nix Sain on Sun Jul 27, 2003 at 03:20:04 AM EST

... is investing in a future where someone, somewhere has medicine for the horrible disease that you have, but you can't get any because you are too poor?



[ Parent ]

it's a "survival of the fittest" future (2.33 / 3) (#133)
by vivelame on Sun Jul 27, 2003 at 06:14:26 AM EST

and it's a built-in feature of market economy, so get over it.
If you can't afford expensive AIDS medication, you don't deserve to live, so go crawl under a rock and die, thank you.
</conservative>


--
Jonathan Simon: "When the autopsy of our democracy is performed, it is my belief that media silence will be given as the primary cause of death."
[ Parent ]
You don't understand progress, do you? (5.00 / 2) (#210)
by kcbrown on Sun Jul 27, 2003 at 08:16:22 PM EST

This is what you're proposing in the long run. This cavalier attitude, while yielding plentiful short term benefits, totally sells out the future. It is about as rational and sane as racking up huge credit card debts, thinking that somehow you'll be able to pay for things tomorrow.
That's nice. Too bad it's totally irrelevant.

Tell me something: do you really believe technological progress didn't exist prior to the use of patents? No, of course not.

The entire purpose of patents is to maximize the benefits to society that come from the free expression of ideas. Their only reason for existing is to encourage people to publish their ideas rather than keep them secret. So it behooves us to use them only in cases where the developer of an idea would otherwise be more inclined to keep the development to himself rather than share it with the world.

But in the case of pharmaceuticals and just about anything else, most of the actual baseline R&D can be (and probably already is) done in public institutions like universities. In fact, this is exactly how many medical companies get started here in the U.S.: the basic R&D gets done at a university and at the point the idea has developed into something salable, the researchers start a company to produce and market it, patent in hand. Alternatively, a pharmaceutical company will invest a small amount of money into a university's R&D program (with the majority of the funding of the program coming from government institutions like the NIH) with the understanding that it will own the patents on anything that comes of it. That's fine except for the fact that said company is not the exclusive investor into the research.

So: the R&D will happen ane will be published regardless of whether or not there's a patent to be had, because it's human nature to explore and because history shows repeatedly that research is a good investment independent of the development of specific products. This, after all, is primarily how we got to where we are today. We could eliminate patents entirely and very likely be at least as well off afterwards as we are now, if not better off -- because the free expression of ideas has been shown over and over throughout history to be the most effective way to stimulate progress, and a patent stifles that expression for a generation. Consider, too, that much of the research that happens today is not collaborative in nature precisely because there may be a patent in the offing, that without that "incentive" the researchers in question would very likely be more willing to share ideas and results with others in the same field, thus enrichening not just themselves but everyone.

And as evidence, I refer you to the free software movement, in which ironically the biggest threat to the progress it can make comes from patents!

[ Parent ]

patents and R&D costs (2.00 / 1) (#216)
by jjayson on Sun Jul 27, 2003 at 11:01:20 PM EST

First, I have a hard time taking anybody serious who uses random bold to make his argument stronger. It's like scare quotes and just pointless. If you cannot make your arugment through words on a literaty medium, bold isn't going to help you. It is very distracting to read too.

Patents have another reason to exist. For products that are difficult to develop but easy to clone, the limited monopoly provides a way to recoup R&D outlays. Without it, private R&D would evaporate. Do you really want all development like this to be done by the government? The government is good at filling holes, but most reseach is private.

The tightest estimate available is the Public Citizen numbers. Their figures already count government grants, tax incentives, and failed products. After bringing the data up to date and fully capitalizing the investment (which they don't do, but it is a decision factor and an economic cost), it is still almost a quarter of a billion dollars. If you look at the DiMasi numbers it almost hits a billion dollars (DiMasi used a higher rate of capitalization and was a before tax calculation).

The costs of full clinical trials alone accounts for about $75 million per successful drug: $10 million for stage-I, $20 million for stage-II, and $45 million for stage-III.

Alternatively, a pharmaceutical company will invest a small amount of money into a university's R&D program (with the majority of the funding of the program coming from government institutions like the NIH) with the understanding that it will own the patents on anything that comes of it. That's fine except for the fact that said company is not the exclusive investor into the research.
Wonderful. You've just found a way to strain university budgets even more by ruining one of the most profitable departments. These companies enter into agreements with the university because they are mutually beneficial. Obviously the university like the deal and so does the company. If they couldn't get patents out of it their donations would be curtailed.

So: the R&D will happen ane will be published regardless of whether or not there's a patent to be had, because it's human nature to explore and because history shows repeatedly that research is a good investment independent of the development of specific products.
Research as been shown to be beneficial precisely because there is a way to capitalize on it. It is unknown what will come out of it, but it is known that whatever does will have a chance of turning a profit. If any research can just be copied by free-riders, then this private research dries up. Pushing all medical research into the government system has been shown to not work. Europe has gutting their phrama industry and now the US is poised to do the same.

And as evidence, I refer you to the free software movement, in which ironically the biggest threat to the progress it can make comes from patents!
Ignoring the atrocious quality of most free software and relative lack of innovation, they are drastically different. Pre-clinincal and clinical trials do not pay for themselves, and there is also an accesibility issue. While any 15 year old with a computer can be a programmer, it takes significantly more education, a well stocked laboratory, and inputs (software has invirtuall no input cost). The comparison doesn't seem to be valid.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]
AIDS (4.75 / 4) (#123)
by DarkZero on Sun Jul 27, 2003 at 01:36:42 AM EST

if it were up to pharmaceutical companies we'd never have any cures only meds that hide the symptoms. After all, if you cure a disease, the company doesn't make money off you anymore.

Yeah, that's right. Every CEO of every pharmaceutical company is telling his board that they have to shelve their new AIDS cure because if they did that, then only THEY would be filthy fucking rich and become a heroic footnote in the annals of medical history, with all of the other pharmaceutical companies getting left out. They want to make sure that instead of themselves and their shareholders becoming soaked in gold, riches, and disgustingly expensive clothing in ways that pimps can only dream, everybody should get a piece of a smaller pie.

Fuck the shareholders. Hell, fuck themselves! All pharmaceutical company CEOs care about is making sure that their competitors stay in business and don't have to deal with any rough spots or embarassing second-place finishes.

[ Parent ]

to all the fuckheads (2.00 / 3) (#144)
by crazycanuck on Sun Jul 27, 2003 at 09:41:05 AM EST

that moded me down, then moded up comments like "fuck yourself"

you can't deny the truth. If you're suffering from AIDS you have the best chance of survicing in Brazil, not the states or other countries that give more importance to "intellectual property" instead of human lives

http://www.aegis.com/news/ct/2003/CT030601.html

[ Parent ]

I think you've misinterpreted... (5.00 / 2) (#145)
by skyknight on Sun Jul 27, 2003 at 10:14:25 AM EST

my usage of the phrase "fuck yourself". Maybe you didn't read the body of my comment. I was most certainly not saying "why don't you go fuck yourself?" I was doing word play on your "fuck the pharmaceutical companies", implying that in the long run you'd only be fucking yourself over by selling out your future. I do not engage in petty name calling. Read my comment again if you thought I was.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
but what future (4.50 / 2) (#147)
by crazycanuck on Sun Jul 27, 2003 at 10:32:26 AM EST

will we have if we're all infected with an incurable deadly disease?

at what point does human life become less important than intellectual property?
I believe that for things like AIDS, where the survival of our race is at stake (maybe you don't see that in north america, but in africa a huge number of people are infected. when 10% to 20% of your population has AIDS, pharma profits should even enter the equation), the phrmaceutical companies should sell the drugs for no profit. they make enough money on meds for other non-lethal diseases.

[ Parent ]

Drugs don't grow on trees... (5.00 / 2) (#148)
by skyknight on Sun Jul 27, 2003 at 11:10:09 AM EST

Whether you like it or not, money is what makes the world go around. It's the abstraction that we use to exchange labor. You can try to make it go away by abolishing currency, or private industry, or whatever, but things will still be bartered, just in a different medium. Instead of traditional currency, everything will be done with political capital. I personally believe that this has the potential to be much worse, as evidenced by the USSR.

My main point is that if we panic and stampede to the exit, we're all doomed in the long run. Finances come into play in lots of unpleasant things. Look at automobiles, for example. They kill something like 50k/year here in the US, but we keep on using the damn things because it's economical to do so. Were we to go back to to a pre-car era, our economy would collapse because of our present day geographical setup.

Life is very ugly sometimes. I won't disagree with you on that. Sometimes, however, the most abhorrent situations result when people try to create Utopias. The road to Hell is paved with good intentions.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
the problem with this. (5.00 / 2) (#160)
by Work on Sun Jul 27, 2003 at 01:31:00 PM EST

when 10% to 20% of your population has AIDS, pharma profits should even enter the equation), the phrmaceutical companies should sell the drugs for no profit. they make enough money on meds for other non-lethal diseases.

This sounds quite similar to the plan companies had for making money off of linux. Give away the core product, make money selling trinkets.

It does not work. If 10-20% of a population has AIDS you're going to be working overtime to produce the drug. It will become your biggest manufacturing burden, dwarfing your other drugs. As such, it is your main product. Rule #1 to staying in business: Do not give away your most expensive product (in manufacturing terms) and try to make up for it with lesser items. It simple will not work.

Should the companies work with countries to get the drug at reduced cost? Yes. But most of these poor african countries can't even afford to buy the drug if it was sold at a loss for the drug manufacturer, not when you have enormous parts of your population with AIDS. Couple that with the sheer denial in some of these countries that a problem exists and theres a disaster in the making.

Western nations should view this as a type of economic aid, to offset the enormous production and development cost of these drugs so that the 3rd world nations can afford them. Unfortunately, I don't see anyone aside from the US even considering such actions.

[ Parent ]

costs of drugs (4.50 / 2) (#161)
by crazycanuck on Sun Jul 27, 2003 at 01:49:36 PM EST

you're implying that since so many people have AIDS, the pharmas can't give it away for cheap because it would cost them too much.

that's not the case in Brazil, the healthcare example I provided. The brazilian government is producing those drugs themselves, without any pharma involvment.

Big pharma companies are pissed because they get no money from Brazil's government, but they're not losing anything because they don't manufacture anything.

and no, there's no alternative. people in brazil are too poor to buy drugs from big pharma. there are two choices. "steal" from big pharma and cure your people or don't "steal" and let them die.

[ Parent ]

brazil can afford to do this. africa cannot. (5.00 / 2) (#182)
by Work on Sun Jul 27, 2003 at 05:19:21 PM EST

Brazil is a large country with significant resources - both natural and human, and a government that is well organized and capable of funding such an operation. You must remember, Brazil is the size and population of the united states. They're also one of the leading up and coming economic powerhouses of south america.

No african country can build a pharmaceutical plant capable of sustaining the massive output they require to tackle the issue. Not only are the african people beyond impoverished - so are the governments. Well, except for the dictators and their gold plated dining halls. But I don't think they're interested in helping their own people that much. You need huge amounts of money to purchase/build the equipment. You need chemists and other well educated people to work the formulas. You need a government capable of handling the distribution - this in nations where they cannot even feed their people.

[ Parent ]

developing nations (5.00 / 1) (#194)
by jjayson on Sun Jul 27, 2003 at 06:20:19 PM EST

Developing and undeveloped nations, such as Brazil and Africa, often deserve ways to opt out of the global marketplace. They are exceptions to the rule. That hardly makes it fair for Canada to do the same since they can actually afford to be picking up part of the R&D tab.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]
Nope (none / 0) (#255)
by RyoCokey on Mon Jul 28, 2003 at 11:10:08 AM EST

Your chance of surviving is still zero. Unless you could "surviving" dying from something else. There is no cure for AIDS, why to people then demand drugs that only buy you a little more time and up the viruses resistance?



And if you gaze for long into an abyss, the abyss gazes also into you.
[ Parent ]
Hmmm (3.40 / 5) (#110)
by wji on Sun Jul 27, 2003 at 12:41:07 AM EST

Since creating and manufacturing drugs is such a terrible burden on these poor misunderstood pharmecuticals companies, I'm sure they'd be overjoyed to have a public corporation -- or even better a multinational public corporation funded by the technically advanced nations of the earth -- take over their duties. What possible objection could they have to that? After all, unlike the politicians you disdain, private corporations have no "vested interests". How could they?

Here's a hint: intellectual property is parastic monopoly capitalism. There is no such thing as a free market when state power artificially protects secret formulas. So what if Pfizer takes risks? Pfizer made more than 9 billion dollars last year. I'm happy to take that kind of "risk", sign me up. And by the way, drug industry margins dwarf those of most other companies.

$802 million, you say that as if it's a crushing burden. That's about four percent of what the US gov spent on shoveling money to agribusiness this year, in the process contributing significantly to the economic devastation of Africa. So in simply correcting that massive inefficiency, that's contributing to unknown millions of deaths a year, we free up funds to develop 25 new lifesaving medications a year. And don't tell me how you're opposed to subsidies since you're a good little libertarian free marketeer; every "free market" that ever has and ever will operate is based on exactly this kind of radical violation of market principles. And that figure of 25 is almost certainly quite low, given the credibility of the study the $802 million figure comes from.

The Institute you cite obviously exists to serve pharmecuitcal execs, they don't even hide it. Their little speil about the courses offered spells it out -- "This limited attendance event for senior executives from the research-based drug and related industries, now in its seventh year, provides a unique forum for exchanging ideas on critical issues shaping the global pharmaceutical industry." Why not just cite Pfizer's own pamphlets? (And, by the way, you're a study behind, the latest one says $897 million. I love how they specify it to three significant digits, it's so much more credible that way.)

For that matter, a great number of those "$802 million" drugs are me-too exercises in coming up with new processes to produce essentially the same drug -- an insanely inefficient practice forced by the monopolistic nature of so-called intellectual property.

In short, take your market and shove it.

In conclusion, the Powerpuff Girls are a reactionary, pseudo-feminist enterprise.

your misunderstanding of patents (3.75 / 4) (#112)
by jjayson on Sun Jul 27, 2003 at 12:47:04 AM EST

intellectual property is parastic monopoly capitalism. There is no such thing as a free market when state power artificially protects secret formulas.
State power does not protect secret  formulas. A trade secret gets very little governmental protection compared to patents that are open. It is a trade: You open the formula so others can build off of it, in exchange you get a limited monopoly for a few years. The alternative is companies hording all their secrets and there is far less sharing of information.

The rest of your post, ranting about very unrelated topics, is just too random for my mind to even comprehend.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

I see (4.00 / 4) (#118)
by wji on Sun Jul 27, 2003 at 01:05:33 AM EST

I don't know how I could have misunderstood that, what with everyone using all those far cheaper derivatives built on patented Western drugs. (You transposed "trade secret" and "patent" btw.)

I'm not sure what your definition of "a few years" is, but I don't think I can stretch mine to include twenty years. You're technically correct if we pretend that the legal system hasn't changed since the late eighteenth century; if you're interested in the real world you might want to look at how those laws have been applied and amended.

In conclusion, the Powerpuff Girls are a reactionary, pseudo-feminist enterprise.
[ Parent ]

uh, no he didnt (4.00 / 1) (#158)
by Work on Sun Jul 27, 2003 at 01:21:35 PM EST

do you know anything about IP law? Trade secrets and patents are two very separate things. They both in fact, have entirely different legal definitions and protections.

[ Parent ]
Personally.. (4.58 / 12) (#125)
by Kwil on Sun Jul 27, 2003 at 02:37:00 AM EST

..I think the whole damn pharmaceutical industry should be government run because being run to maximize profits has a lot of bad side-effects when it comes to the public at large.
  1. The most striking side effect to me is that there is more profit to be made for the company if you're sick than if you're healthy. Ergo, there is little incentive for the company to actually cure you. Consider a researcher who develops a pill that basically eliminates all the symptoms of cancer for a day. Take one every day and you can live your life without cancer. A year or so later, the researcher finds a way to make a pill that actually cures the disease. Take it once and the cancer is gone. At this point, the company actually has a fiduciary duty to not release this curative pill until the patent (and the infringment claims, and repatents of slightly different formulations) on the symptom curing pill run out.  In fact, they should even patent this new drug and keep any other companies from releasing it as well if they want to maximize profit.
  2. Maximizing profits means not doing research on drugs that may be unprofitable, such as examining drugs which have expired patents and no brand awareness for use in other situations. If they did examine something and found out, then without the patent, they'd be in the same position as all the generic manufacturers -- except out the research money spent on finding the new use.
  3. The flip side of that is maximizing profit also means not spending as much on  new research on drugs if an old drug that has brand awareness is shown to be partially effective for some other use. (ie, Aspirin for heart conditions. Because of this, there is less reason for private companies to look for things that might be better unless they are a lot better, and that generally costs a lot of money.) In these cases, it's likely more cost-effective just to market the old drug more than try and come up with something new. The brand awareness issue is key.  Everybody knew Aspirin before the heart condition thing came out, so marketing was significantly easier. Added to that is that the owners of Aspirin weren't the ones who did the research determining the drugs effectiveness for heart conditions, that came out of publically funded research.
  4. It is more beneficial to market rather than research. Take a pill that cures symptoms for 4 hours. Double the dosage, call it something new, sell it as a pill that cures the symptoms for 8 hours. Take out a new patent. That's a heck of a lot cheaper than making something actually new.
  5. It is more beneficial to market rather than research. Same point, different aspect, and ties into number 1.  If you can convince a population that some normal condition is not normal (such as kids being very active and not concentrating on one thing for a long period of time) then you can sell more of a drug for that (such as various ADD drugs) rather than risking that money researching something different.
The only argument I've ever seen against a public system is "It's not efficient". However there is nothing saying that a public system has to be inefficient. There is nothing saying that a public system has to be monolithic.. it is conceivable that multiple sections could be set up, with those sections competing against each other, and being given bonuses on how much their work helped the general population.  There are other ways to encourage efficiency among government run institutions.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


Best argument against the 'effieciency' attack (4.20 / 5) (#132)
by michaelp on Sun Jul 27, 2003 at 03:54:12 AM EST

IMO is the US Military. Sure its not as efficient as some militarys, maybe.

But it is the most effective in the world at it's job, which should be the most important criteria, not efficiency (and certainly not profit), since it's role, protecting us from our vicious enemies, is so important.

Ok, well, hello, disease kills alot more Americans every year than any foreign power ever did, so why should we let our defense against disease be determined by market efficiency & maximum profits rather than effectiveness?



"Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed."

[ Parent ]

Heh (none / 0) (#189)
by maren on Sun Jul 27, 2003 at 05:53:07 PM EST

How do you know and measure this? Surely not casualities per spent dollar? :)

[ Parent ]
That wouldn't be such a great metric... (none / 0) (#202)
by skyknight on Sun Jul 27, 2003 at 06:51:44 PM EST

seeing as we spend a great deal of money trying not to kill people. If casualties per dollar were the ratio we were chasing, carpet bombing with unguided ordinance would be the way to go.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Of course (none / 0) (#246)
by maren on Mon Jul 28, 2003 at 09:31:33 AM EST

That was a joke. But anyway, I'm interested on HOW you measure the effectivity of an army. Or is this an anti-american question?

[ Parent ]
Um... (none / 0) (#270)
by skyknight on Tue Jul 29, 2003 at 09:24:19 AM EST

Oil prices? ;-) I have no idea... probably something along the lines of objectives completed, and the minimization of friendly losses and collateral damage. This could explain our fondness of cruise missiles.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Several ways (none / 0) (#254)
by michaelp on Mon Jul 28, 2003 at 11:09:47 AM EST

-You can measure equipment readiness & technical merits. Measure the US' main battle tank against the leopard, t-92, cheiftan, for armor strength, surviability under fire, weapon power, range, load times, etc. You can use similar metrics for air craft carriers, submarines, fighters, etc.

-You can measure unit effectiveness in war games, to measure squad, task force, battaliion, effectiveness, etc.

-And finally, though less precisely, you can poll your friends in other militaries and find out how many of them feel their unit is effective enough to hold a piece of ground 3rd infantry has been ordered to take.

Of course, if you are hinting that the US military isn't so effective at doing some things like creating spontaneous peaceful democratic uprisings, recall that such tasks were also not part of the original design criteria.

A nationalized health care system might similarly fail if suddenly tasked with maintaining the hiways, which would hardly be a fair argument against it's effectiveness.



"Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed."

[ Parent ]
I'm not hinting anything :) (none / 0) (#267)
by maren on Tue Jul 29, 2003 at 08:25:12 AM EST

I agree that there are many possibilities on measuring technical effectivity between units and divisions and helicopters and what not. But an army needs an bureaucracy and bureaucracies as such are prone to ineffectivity. (Public Choice theories) How many bureaucrats do the US army / navy have for every soldier in the field, should be one more questions you should ask. :)

[ Parent ]
Cost of effectiveness (5.00 / 1) (#251)
by Boing on Mon Jul 28, 2003 at 10:52:07 AM EST

Sure its not as efficient as some militarys, maybe... But it is the most effective in the world at it's job, which should be the most important criteria

That statement is meaningless without a comparison against the performance of the other armies of the world given the same operating budget as the U.S.'s. Of course our army is the most effective... I'd bet we spend more on it than the combined rest of the world spends on food.

Also, our military technology is largely developed by private defense contractors, like Lockheed Martin and Northrop Grumman. Therefore, a lot of the effectiveness of our military can be attributed to the efficiency of private markets.

In any event, I don't think that the two industries in question are very comparable. Military technology is pretty easy to define in terms of quality... if the missile hits, it's a good missile. If the night-vision goggles don't work at night, they're not very good night-vision goggles. Drugs, on the other hand, have side effects, varied effectiveness depending on the patient's physiology, etc. The parent's parent comment gives a hypothetical, but very possible example of a drug company's focus on profits being contrary to the quality of their product. That just wouldn't happen as directly in the defense business.

[ Parent ]

Comparisons (none / 0) (#258)
by michaelp on Mon Jul 28, 2003 at 02:11:13 PM EST

That statement is meaningless without a comparison against the performance of the other armies of the world given the same operating budget as the U.S.'s.

The point about the US military is directly relevent to the folks who say we would have a worse medical system if we let the Govt. run it. To the contrary, we have the best defense system and look who's in charge. Of course, most of the other countries of the world also find their militarys too important to leave the structure of the market to chance, making your call for a comparison rather impossible unless you can find a country who uses their defense budget primarily to contract with mercenaries?

Also, our military technology is largely developed by private defense contractors, like Lockheed Martin and Northrop Grumman. Therefore, a lot of the effectiveness of our military can be attributed to the efficiency of private markets.

Sure, the effectiveness of the combination of private enterprise with socialist market direction is well demonstrated by the US military. The point is not that private enterprise should be discouraged, the point is that relying on the profit motive to determine what products and services are available for defense of the nation is not the best way to run things, whether than defense is from Iraqis or from Ebola.

That just wouldn't happen as directly in the defense business.

But it certainly has, check your history. The difference is profiteering is expected of a private company serviing itself in a private market, but it is a crime when a private company is working for the national defense.

As far as your idea about the simplicity of developing a weapons system, I really think you haven't thought things through: weapons design certainlly must take in 'side effect' type criteria. Your night vision system might work perfectly for instance, but weigh 50lbs, or take a different kind of batteries than the other systems, or not fit in the standard shipping crates, or be affected by dust, ice, cold, etc. Now imagine designing a fighter plane or a sub, the design that flies fastes or dives deepest may not be workable for a range of other reasons. Meanwhile, as genomics & proteinomics advance, developing new medicines becomes more and more like engineering and less like voodoo every day.



"Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed."

[ Parent ]
Government run? (5.00 / 1) (#135)
by Rhinobird on Sun Jul 27, 2003 at 06:30:36 AM EST

Be careful, government run programs have a tendancy to be craptacular. Look at NASA, while it may be fairly good at doing basic research, so are the aerospace companies. And when NASA tries to deliver a 'product' we get the space shuttle, a 'reusable' lauch platform in which 2/3 of it is desroyed every launch and the remain 1/3 has to be practically rebuilt.

A government run pharmecutical would likely produce mainly paperwork and rather expensive drugs.
"If Mr. Edison had thought more about what he was doing, he wouldn't sweat as much." --Nikola Tesla
[ Parent ]

Blame Nixon (4.00 / 1) (#137)
by Bad Harmony on Sun Jul 27, 2003 at 07:12:31 AM EST

Many of the problems with the Shuttle can be traced back to the Nixon administration. Funding restrictions forced NASA to turn down design proposals that would have produced a more reusable Shuttle. On multiple occasions, up-front costs were reduced by design choices that resulted in higher operational costs over the life of the program.

NASA has successfully delivered many "products" over the last thirty years. The problem is that most people only remember the spectacular failures.

54º40' or Fight!
[ Parent ]

Seems to me you'd like everything state run... (3.00 / 4) (#142)
by skyknight on Sun Jul 27, 2003 at 09:28:10 AM EST

because all of your arguments and points could be applied to the behavior of one or more companies in every industry under the sun.

  1. Some software companies pursue a strategy of planned obsolescence. Some appliance manufacturers deliberately build appliances with the idea that they will burn out in three years, requiring a new purchase, even if they perhaps had the tech to make it last twenty years.
  2. Nobody is going to do reliability tests on appliances or pieces of software that are twenty years old.
  3. Why redesign your software/car/whatever when you can just give it a new interface and name?
  4. Image sells! Big surprise! Do you think it's different in any industry?
  5. You can't live without Microsoft's productivity aids! Your company will run itself into the ground! FUD! FUD! FUD!

There are lots of unpleasant aspects to the ways that many companies from all industries behave, just like in the population of individuals there are a lot of assholes. You can't change this. All you will accomplish is a re-org where private sector assholes become public sector assholes.

I'm of the opinion that we must limit government function to things that are extremely impractical in the private sector. The reason for this is that government power is effectively absolute and unescapable. If it makes stupid decisions, well, that's it. We're stuck with it. At least in the private sector stupid decisions are severely punished (at least, eventually) by having a company tank.

Efficiency? You haven't even begun to scratch the surface. How about abuse of power on an unparalleled scale? Tell me, how can you make an argument for nationalizing the drug industry without arguing for the nationalization of everything? Furthermore, if you're going to actually make an argument for everything, please take the time to sit down and read Friedrich Hayek's The Road To Serfdom.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Difference in scope and market. (4.80 / 5) (#155)
by Kwil on Sun Jul 27, 2003 at 01:00:18 PM EST

Not everybody needs a toaster.
People don't die if they can't get software.
People's lives generally aren't on the line if Chrysler remarkets a Neon as a PT Cruiser instead of investing in a hybrid energy car.

Everybody needs their health.
People do die if they can't get their drugs.
People's lives are on the line when promising avenues of medical research aren't followed through on.

In short, profiteering does not have an overly negative effect on the population as a whole in most other industries.

Your slippery slope contention is just silly. You might as well argue that if we allow driving at 55mph, knowing that accidents that cause death occur, we may as well allow people to drive at whatever speed their car can reach, as otherwise we're being hypocritical.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
You're stepping onto a very slippery slope... (3.33 / 3) (#159)
by skyknight on Sun Jul 27, 2003 at 01:28:49 PM EST

if you think that somehow we can decide what are and are not "necessities". You've seen how absurd this can get with the occasional Homeland security fiasco. Remember when the seaports shut down momentarily within the last year because of a labor strike? It was claimed, through convoluted logic, that this was actually a threat to national security because it jeopardized commerce, which in turn jeopardized tax revenues, which in turn jeopardized our ability to fund our military. I shit you not. My jaw dropped when they made these several, successive leaps of logic. If you think you can step onto this slope without slipping, you're in for a nasty surprise and a long fall. Government is notoriously lousy and knowing where to draw the line for itself. To put it in the more clever words or P.J. O'Rourke: "Giving money and power to government is like giving whiskey and car keys to teenage boys."



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
The slope on the other side is just as bad.. (4.50 / 6) (#163)
by Kwil on Sun Jul 27, 2003 at 01:55:03 PM EST

..that being that if we accept your suggestion, absolutely nothing should be regulated and there should be no government. If you believe that, then you do so against the evidence of history or even of our own time in places such as Iraq and Afghanistan.

Somewhere a line has to be drawn, I think at the point where it has a direct effect on if people live or die is a good place to draw it.

Yes, some governments are inherently untrustworthy and will twist and turn anything to get their way. Guess what, it doesn't matter what the situation is then -- an untrustworthy government is an untrustworthy government. Since they're the ones who make, interpret, and enforce the laws, if you don't elect wisely, you're screwed in any circumstance.

I still tend to believe it's better than leaving it to private industry where the people who are most effected don't even get a chance to elect.

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
voting with votes versus dollars (4.33 / 3) (#171)
by kubalaa on Sun Jul 27, 2003 at 04:15:59 PM EST

The question is, which is a more effective way of enforcing public will, representative voting as in the government, or market pressure?

I'm not up to really thinking about the differences now, but it seems to me like they are important. For example, market pressure can be more subtle -- you can "vote" for one product that a company makes but not others. You can also support a company that caters to your niche and get the benefits of that without affecting others -- whereas government is by nature all-or-nothing, laws apply to everybody.

[ Parent ]

Bingo! We have a winner! /nt (none / 0) (#173)
by skyknight on Sun Jul 27, 2003 at 04:25:22 PM EST



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Direct Democracy n/t (3.00 / 1) (#200)
by guidoreichstadter on Sun Jul 27, 2003 at 06:42:40 PM EST




you are human:
no masters,
no slaves.
[ Parent ]
Naw, it's better than that. (none / 0) (#205)
by skyknight on Sun Jul 27, 2003 at 07:22:14 PM EST

It's a form of democracy where you're not stuck with "one size fits no one". It's possible for everyone to buy something that they like, instead of everyone having their money swiped and spent to buy something that they don't want.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Mostly correct.. (4.00 / 1) (#203)
by Kwil on Sun Jul 27, 2003 at 07:19:29 PM EST

.. but you forget that in the market, votes are not equal. Compare research and marketing on drugs such as Viagra(TM) as compared to, say, drugs for combatting monkey-pox.  Which really has more value to the public at large? The comparitively few people who want Viagra(TM) are able to pay high amounts for it, making it a better investment for companies, even though research on a monkey-pox cure is more likely to lead us to a life-saving discovery.  Should those who have money but can't maintain a hard-on be pulling money away from solutions to severe, life-threatening illnesses? I tend to think not.

You also forget that there isn't free competition in the drug market, because of patent laws and the pharmaceutical corporations' prediliction to do everything they can to extend those patents while they are profitable (see my very first point about what this really means)

While I agree with what you're saying for consumer goods, for things which people don't actually need, or for where there is adequate competition, pharmaceutical companies do not fall into these categories.  

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
All governments... (3.00 / 2) (#174)
by skyknight on Sun Jul 27, 2003 at 04:28:14 PM EST

given enough money and power, are untrustworthy, no matter how hard you try to elect reputable officials. The comparably absolute power of government draws the worst people to it, the people that you'd least like to have managing your affairs. It's just the nature of the beast. The less power government has, the less potential for abuse, and the happier I'll be.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
All Companies... (5.00 / 3) (#190)
by monkeymind on Sun Jul 27, 2003 at 05:58:36 PM EST

given enough money and power, are untrustworthy, no matter how hard you try to enforce reputable standards. The comparably absolute power of a large monopoly draws the worst people to it, the people that you'd least like to have managing its affairs. It's just the nature of the beast. The less power a company has, the less potential for abuse, and the happier I'll be

I believe in Karma. That means I can do bad things to people and assume the deserve it.
[ Parent ]

Good one... (3.50 / 2) (#192)
by skyknight on Sun Jul 27, 2003 at 06:09:49 PM EST

but I'm no mindless defender of corporations either. I just think that giving power to governments is a lot more dangerous than leaving things to corporations. Governments have a nasty tendency to behave like ratchets; you can crank them up, but not back down. Corporations can do some nasty, gangster shit, but they don't possess the omnipotence that governments do, as they are not backed by the US treasury, military and police. Well, not usually anyway, unless they've done a really good job of buying them off. ;-) Even then, though, governments have a tendency to eventually bite the hand that feeds them.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
You generalize too much. (5.00 / 3) (#232)
by Kwil on Mon Jul 28, 2003 at 01:54:54 AM EST

That may be the case in America right now, but here in Canada things are going the opposite direction and the Government is backing out of a lot of things. I think you should maybe stop looking at the US situation and thinking it applies in the general case.  

I'll agree governments are not panacea, but at least they have elections. Which means if things get too bad, the people have a chance to change it. If the population doesn't take advantage of these opportunities, is that a fault of government in general, or a specific fault of those people who did not make use of the opportunity?

On the other hand, when you're dealing with a monopoly company, or a company like pharamceuticals for which the normal rules of supply and demand really don't apply (because if they did apply, the House measure would not be needed, people would just choose not to buy the products if it was felt the drugs were overpriced) then if they decide to screw you, you're screwed with no chance of fixing it. What are you going to do, refuse to buy the medication you need?

That Jesus Christ guy is getting some terrible lag... it took him 3 days to respawn! -NJ CoolBreeze


[ Parent ]
At least an elected government (4.00 / 2) (#280)
by monkeymind on Wed Jul 30, 2003 at 04:36:16 AM EST

Is at some level suposed to look out for the interests of 'the people'. I know that this seldom this happens the way many people want.

While the ONLY reason for a company to exist is to earn increasing returns for shareholders, nothing more, nothing less.

I am a believer that there are a range of services for the population that the government should never ceed to corporations.

I believe in Karma. That means I can do bad things to people and assume the deserve it.
[ Parent ]

health & drugs (5.00 / 1) (#285)
by krkrbt on Thu Jul 31, 2003 at 02:26:48 AM EST

People do die if they can't get their drugs.

yes, some people will die if they "can't get their drugs", but more people die because of their drugs.  Drugs have side effects, and almost all perscriptions fail to address the factors which cause the symptoms that the drugs are being perscribed for.  I'd go get links to support this statement, but it's late - so go read my last comment instead.

[ Parent ]

I think the difference is clear-cut (4.85 / 7) (#166)
by michaelp on Sun Jul 27, 2003 at 02:44:34 PM EST

medicine is about protecting human lives, not about selling the latest word processor, car or fashion accessory.

Tell me, how can you make an argument for nationalizing the drug industry without arguing for the nationalization of everything?

Flip side: how can you make an argument for nationalizing the military without making an argument for nationalizing everything?

Pretty easily: When the job is about directly protecting American lives, like for instance the military, we turn to the Govt. to take the dominant hand away from the market, to make absolutely sure the job gets done, without concern for cost being the primary determinant of whether the job gets done.

Why not for medicine, then? Isn't disease at least as dangerous to the American public as Al Qaida or Saddam Hussein? The practice of the Govt. determining the market has lead to the development of the very best weapons in the world. We don't say that the protection afforded by the M1 Abrams, the Raptor, the Seawolf, etc. is only available to those Americans who can afford it, right?

The dangers to the American people posed by virii, mutant cells, and bacteria are at least as threatening as the dangers posed by our foreign human enemies, right? So why don't we give all Americans the best protection we can invent, rather than the best the individual can afford?

Speaking of FUD, I think it is a strawman to raise the spectre of complete Govt. control in this discussion. Obviously one can decide something is as important as defending the nation and that therefore the 'invisble hand' should not be the controlling one, while not applying the same rule to obviously less critical industries.



"Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed."

[ Parent ]
Greedy Drug Companies (5.00 / 9) (#130)
by froehle on Sun Jul 27, 2003 at 03:22:38 AM EST

In my experience as a Pharmacy Technician, I'd like to point out two cases of corporate greed:
  • Claritin (loratadine) was soon to be going off patent, so Schering-Plough decides that this would be a good time to introduce Clarinex (desloratadine) essentially to extend their existing patent by switching all the existing Claritin customers to Clarinex.

    And the clinical diffences between the two seem minimal: Claritin (also known as loratadine) is actually metabolized in the body to Clarinex (also known as desloratadine). Although the two drugs have not been compared head to head, they appear to have essentially the same clinical effects at the same potency doses.

  • Prilosec (omeprazole) is set to come off patent, so AstraZenica decides to release Nexium (esomeprazole). I'm sure you've seen all the commercials (Nexium The Purple Pill, by the makers of Prilosec). However, they fail to mention that the two peform nearly identically: For symptomatic GERD [gastroesophageal reflux disease], labeling reports that in three European trials that compared Nexium 20 and 40 mg and Prilosec 20 mg, "no significant treatment related differences were seen."
I'd be interested to hear any rebuttals to this argument claiming that this doesn't show complete corporate greed.

OTC Drugs (4.50 / 2) (#138)
by Bad Harmony on Sun Jul 27, 2003 at 07:26:59 AM EST

In a perverse way, they are performing a public service for patients with medical insurance. My insurance company sent me a letter saying that they would no longer cover the costs of prescriptions for Claritin. If you need it, buy it OTC, out of your own pocket. At roughly $1 a pill, Claritin is expensive for an OTC drug. If my doctor writes a script for Clarinex, my out-of-pocket costs are much lower.

54º40' or Fight!
[ Parent ]

the good news is now (3.00 / 1) (#151)
by puppet10 on Sun Jul 27, 2003 at 11:45:52 AM EST

that some generic equivalents of claritin are out the price is coming down a bit from the $1.00 a pill level

[ Parent ]
Cheaper Generics (none / 0) (#224)
by froehle on Sun Jul 27, 2003 at 11:59:42 PM EST

I'll just give the example of the new generic for Claritin, loratadine: Bottles of 100 tables of Loratadine retail for $29.99. That amounts to $0.30 or so per pill. In comparison, a month's supply (30 tablets) is then going to cost you $9.00 or so. So certainly this will be more expensive for some of you with $0 or $5 copays, but certainly this will be cheaper for others.

[ Parent ]
hm. i dont see why this is 'greedy' (4.00 / 2) (#156)
by Work on Sun Jul 27, 2003 at 01:14:56 PM EST

considering that when the first 2 come off their patents, generic drug manufacturers will be making them.

Further, insurance companies are well in tune to this and will likely insist clients begin using the identical behaving generic drugs as they're cheaper. I wouldn't be surprised if they're the ones who funded such studies in the first place.

[ Parent ]

A couple of clarifying points (5.00 / 7) (#140)
by JanneM on Sun Jul 27, 2003 at 08:18:47 AM EST

First, the measure will only allow import of drugs approved in the country from which you get it. There will thus be no shady trafficking with the european distributor acting as a front (unless fraud is being committed, and as we've all seen, the US distribution system isn't exactly foolproof either in this respect). The approvement process in european countries are as rigorous - and in some respects more so - as the US process.

Second, for all the moaning about the high development cost of drugs (and it is high), pharmaceutical companies seem to easily forget that a lot of the basic research they depend on for drugs are done by universities, and funded by the public. If "fair pricing" is so important to them, I suggest they begin by reimbursing the institutions for the basic research they did for any successful drug.

One reason development costs are so high is that the companies are all going after the same kind of market. Most resources are spent on treatments for conditions prevalent in industrial countries, that carry little malpractice risk and that ideally require recurrent (maybe lifelong) treatment. That's where the big money is, after all.

Problem is, of course, that's where all the competitors are as well. Conditions like ulcers, headaches, high blood pressure and diabetes are fields that have been plowed over and over again. It is hard to make improvements in treatment of these. I'm not saying it's not worth doing so, and I'm not saying advances aren't made, but I am saying that this is medically not low-hanging fruit anymore.

When a drug company compares what it spends on better ulcer drugs as a baseline for treating malaria, they are being dishonest. For many development-country diseases there is still lots of low-hanging fruit available. There are even cases where universities have done pretty much the whole development needed for a treatment (better ways to transport and administer vaccines in harsh conditions, for example), but failing to attract any drug company to do the manufacturing - not because it wouldn't be profitable, but because it wouldn't be as profitable as other projects.

How to solve this? I don't know. Drug companies are just companies. Maximizing profit (or, really, share holder value) is the only game in town for them. On the other hand, development is typically too expensive for the state (through publicly financed university projects, for example) to pick up the cost of drug development. Also, there is something skewed about the public financing the basic development of new treatments, and a
private company (not associated with the researchers) getting the full rights - and the money.

/Janne
---
Trust the Computer. The Computer is your friend.

Free Market produces best results (4.50 / 4) (#152)
by dh003i on Sun Jul 27, 2003 at 12:02:34 PM EST

And a free market means that there are no tarrifs on imports or exports. It means that the interests of the community overall will be served. Those who advocate tarrifs and other restrictions on imports are special interest groups looking to create priviledge for themselves. There is no reason why pharmaceuticals should be exempt from having to compete on the market-place.

Regarding safety, the free market will figure that out quick enough. Lets not pretend that pharmaceutical companies actually care about our safety. That's just a sideliner argument for them, so they can continue to maintain special priviledge, enjoying the anti-capitalistic monopolies granted them by government patents.

As a side-note, of course the voting was not down party lines. It was down another very different line -- who gets money from pharmaceuticals and who doesn't. I can guarantee you that the average politician who opposed this bill was paid significantly more by pharmaceuticals than the average politician who supported it.

Social Security is a pyramid scam.

Personally, I'd love for there to be free markets (3.57 / 7) (#157)
by skyknight on Sun Jul 27, 2003 at 01:15:54 PM EST

The problem is that in the world, by and large, there is a general disdain for intellectual property and market pricing. If we're not careful, we're going to end up with a situation where cheap imports are dumped on the American markets, and those cheap imports will not be competing products, but rather the same thing.

Foreign countries are imposing price controls on the drugs that American companies sell there, so if American drug companies want to be able to sell there at all, there is an artificial ceiling placed on their profits. It's suboptimal for the drug companies, but it's better than nothing. The problem starts when those countries turn around and dump those same products back on American markets, undercutting the companies' ability to sell the product at market value. This is even worse than the present situation in which American consumers get screwed by having to make up for the artificially low prices in other countries.

"So, maybe the American companies should just flat out refuse to sell to the foreign countries" you say. Well, that is indeed an option. Unfortunately, the most likely outcome of that is that these countries would pirate the IP and start cranking out unlicensed generics, which would also be imported to America.

The whole situation is a colossal mess. I would like there to be free markets, but there's no way we can have them unless everyone agrees to play by the same rules. This reminds me of a joke.

A tourist is traveling through a city, and trying to find a particular museum. He can't find his way, but eventually bumps into a cop, and asks for directions. "How do I get to the museum, sir?" The cop scratches his head, thinks for a minute, and then responds: "Well, I wouldn't start from here."



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
re (5.00 / 2) (#164)
by dh003i on Sun Jul 27, 2003 at 02:08:17 PM EST

<I> The problem starts when those countries turn around and dump those same products back on American markets, undercutting the companies' ability to sell the product at market value. This is even worse than the present situation in which American consumers get screwed by having to make up for the artificially low prices in other countries.</I>

The only way that companies get the rights to those drugs is by an artificial monopoly granted by government (e.g., a patent). The free market does not require patents to work. Indeed, patents hinder the free market. One person discovers an innovative solution, publishes how that solution works, then no-one else can use that. Companies using inefficient methods are prohibited by law from moving to more efficient methods, unless they pay others millions for those methods. We would be better off abolishing patents all-together; it would be better, in free market terms, if they didn't reveal how it worked at all. This gives them the finders advantage, but also allows others to move towards that more efficient solution.

Mises and Rothbard supported copyrights as a voluntary contract; but abhorred patents as a government-granted monopoly, paid for pay our tax-payer dollars.

Social Security is a pyramid scam.
[ Parent ]

I don't see how this could possibly work... (5.00 / 2) (#167)
by skyknight on Sun Jul 27, 2003 at 02:49:29 PM EST

The only way that companies get the rights to those drugs is by an artificial monopoly granted by government (e.g., a patent). The free market does not require patents to work.

It would be extraordinarily difficult, if not impossible to recoup the outlay of capital for research if one were not to have exclusive rights to its usage, at least for a limited time. The concept of possessing an idea is funny, and perhaps even counter-intuitive at first glance, but without this artificial construction, technological progression would be severely curtailed.

it would be better, in free market terms, if they didn't reveal how it worked at all. This gives them the finders advantage, but also allows others to move towards that more efficient solution.

Reverse engineering would completely undermine this strategy. One could probably crush/dissolve a pill, run it through a few chemical analyses, and know how to make it within a few hours. Setting up production might take weeks or months, and then the original researchers are screwed. Worse still, what about software? If people were able to just grab and redistribute binaries freely, repackaging and selling them at will, that's pretty much destroy the commercial software model. I'm a big fan of open source, but it doesn't make sense in every model.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
wrong-headed approach (5.00 / 2) (#168)
by dh003i on Sun Jul 27, 2003 at 03:19:38 PM EST

If anything, patents have hindered the progress of science and the useful arts in many areas, especially computers. It is inherently anti-free-market to give the first person who happens to flop onto a more efficient idea a monopoly over that idea, thus forcing other competitors to use less efficient methods. This is a government-granted monopoly.

Software patents have, for example, been decried by individuals ranging from Bill Gates to Linux Torvalds. They do not foster invention and innovation. They discourage it.

Patents in biological techniques are equally troublesome and progress-hindering. The inherit absurdity of using the coercive force of law to prevent anyone else from using more efficient means is only exacerbated by the extreme and unending incompetence of the US Patent Office, which grants patents on things that are bannally trivial or simply impossible (they have granted patents on 'perpetual motion machines'). The great abuse of patents also exacerbates the problem.

Millions of dollars are wasted supporting the US Patent Office, which -- like all other government agencies supported by tax-payer dollars -- does its job both incompetently and inefficiently. Furthermore, if person A and B developed an idea independently, but A finished it one day before B, it is simply absurd to grant complete monopoly rights to the idea to person A. Furthermore, it is an insulting expression of coersive government power -- funded by our tax dollars -- to decide who gets and who doesn't get a monopoly.

Social Security is a pyramid scam.
[ Parent ]

You're making lots of assertions of opinion... (3.50 / 3) (#169)
by skyknight on Sun Jul 27, 2003 at 04:02:26 PM EST

and providing little if any corroborating evidence to back them up, or logical argument to otherwise convince me why your (mostly implicit) conclusions are true. Let me pick apart what you've said...

If anything, patents have hindered the progress of science and the useful arts in many areas, especially computers. It is inherently anti-free-market to give the first person who happens to flop onto a more efficient idea a monopoly over that idea, thus forcing other competitors to use less efficient methods. This is a government-granted monopoly.

Assertion. Assertion. Obvious fact.

Software patents have, for example, been decried by individuals ranging from Bill Gates to Linux Torvalds. They do not foster invention and innovation. They discourage it.

Vague fact. Assertion. Assertion.

Patents in biological techniques are equally troublesome and progress-hindering. The inherit absurdity of using the coercive force of law to prevent anyone else from using more efficient means is only exacerbated by the extreme and unending incompetence of the US Patent Office, which grants patents on things that are bannally trivial or simply impossible (they have granted patents on 'perpetual motion machines'). The great abuse of patents also exacerbates the problem.

Assertion. Assertion. Assertion.

Millions of dollars are wasted supporting the US Patent Office, which -- like all other government agencies supported by tax-payer dollars -- does its job both incompetently and inefficiently. Furthermore, if person A and B developed an idea independently, but A finished it one day before B, it is simply absurd to grant complete monopoly rights to the idea to person A. Furthermore, it is an insulting expression of coersive government power -- funded by our tax dollars -- to decide who gets and who doesn't get a monopoly.

Fact. Logic! Assertion.

Yes, patents have some very real negative effects. Yes, the patent office is incredibly stupid. They gave a patent to some guy in California for, I shit you not, "e-commerce". These things being true, you have done nothing to back up your assertions, and you have offered no alternatives, failing to explain how a patent free system would make lengthy and expensive IP research feasible.

Please, try again.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
distinctions (3.50 / 3) (#191)
by jjayson on Sun Jul 27, 2003 at 06:08:13 PM EST

There are differences between computer, software, and drug patents. In software for example, the patent it a tiny piece of the overall product, and it is also very difficult to reverse engineer. However, with drugs, the patent is the entire product (minus a few very generic components) and it is much easier to reverse engineer.

Mises would have favored abolishing the FDA approval process as Machlup does. They also rely on commonality in the marketplay. Machlup says that getting the product fo market first would be enough of an advantage, but that is hardly true. When somebody else could be filling the market a year later with the same product that just took you a third of a billion dollars to produce, the R&D intensive companies are not going to make it. If they are looking for just a 15% return on investment, that means they would need to turn $350 million in the first year. Advertising costs would not shoot through the roof too, since they need to get their product into the spotlight fast and ould aso need to create a product differentiation with the generics on their heels.

There are some things that are just not possible to do politically that Mises would advocate.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

Heh. (3.00 / 2) (#193)
by skyknight on Sun Jul 27, 2003 at 06:16:54 PM EST

There are some things that are just not possible to do politically that Mises would advocate.

More generally, hardly anything that is a good idea is politically feasible. Practically everything that is politically feasible is short sighted, overly simplistic, and ultimately destructive.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Ok then (4.50 / 3) (#214)
by tjb on Sun Jul 27, 2003 at 10:53:02 PM EST

So, in your ideal, patent free system, my choices are:

1)  Spend gobs of money developing a new drug, at which point somebody else can take a pill, analyze it, produce an exact copy within a relatively short period of time, and manufacture it without having to recoup the initial R&D investement, thereby undercutting my business.

or

2)  Sit and wait for someone else to do the R&D and make gobs of money by copying their pill and then selling it at a lower price.

If this is the case, R&D becomes a waste of money.  Any rational business is going to choose option #2.  And if R&D is a waste of money, nobody is going to do it and the drug industry will come to a standstill.

Tim  

[ Parent ]

not quite (3.00 / 2) (#220)
by martingale on Sun Jul 27, 2003 at 11:24:42 PM EST

Just a nitpick. In that patent-free world, private companies would all go for #2, but in fact basic research would be entirely unaffected. Consequently, the competition between companies would become this: follow closely what the researchers are doing and be the first to market a product based on that research.

[ Parent ]
You keep saying but it isn't true (3.25 / 4) (#230)
by jjayson on Mon Jul 28, 2003 at 12:54:52 AM EST

You act as if all research is done in the public sector. I've seen numbers that claim a 60-40 split for private and also flopped, a 60-40 slip for public. Even if we take the split, both of these numbers have methodology problems. They could all university research as public when a significant amount is supported by corporate funding when deals are made with university progams in exchange for patent rights. Most drug research comes from America. Other countries add only minorly to R&D outlays.

Are if you totally collapse all private investment you just cut development in half (and most lifestyle drugs are not longer researched). Even if aggregate R&D is only cut 1/3rd, that is still a very significant amount: That drug that comes out in 30 years could have been out in 20 years.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

why I'm saying this (4.25 / 4) (#233)
by martingale on Mon Jul 28, 2003 at 02:00:29 AM EST

I'm thinking of the people who do the research and development.

The core discoveries and breakthroughs, I think, only come from dedicated and talented individuals in the field, who can and do work either in the private or public sector - it's irrelevant to them, modulo incentives by the private sector. By the way, many of these people, even if they work in America, don't originate from the American system. US school and undergraduate education isn't competitive with some other countries. However, postgraduate education is much better.

When the private sector is flush with investment, it attracts many new workers, in the same way that the IT industry during the boom years attracted lots of extra people. Few of these are likely to advance the state of the art, they're just in it for the money and a 9 to 5 job, and leave when investment dries up. In the software industry, they were the legions writing yet another web front end, back end, etc.

These extra people are exceedingly useful for mainly unchallenging work, which mostly occurs during the long and complex development phase.

In summary, from the point of view of the people who fuel the innovation and development, I don't see the public/private split as particularly significant.

Are if you totally collapse all private investment you just cut development in half (and most lifestyle drugs are not longer researched). Even if aggregate R&D is only cut 1/3rd, that is still a very significant amount: That drug that comes out in 30 years could have been out in 20 years.
Perhaps because I don't depend (yet) on any, I don't see lifestyle drugs as particularly important. I have no problem with drugs companies developing them, if they can find customers willing to pay, but that is not to my mind the kind of research that justifies removing price caps. I'm not interested in encouraging this kind of development, but if others do so that's fine. Funding AIDS research or the aborted eradication of malaria is worth it, however.

Your claim that a certain drug may in fact come out ten years earlier also leaves me wondering why I should support such a drug. What does it do? And if the brightest people work on such a drug, does it push back other basic research by ten years? These questions are obviously not answerable, but they show that there is a priori no good reason to prefer that particular drug coming out in 20 instead of 30 years.

[ Parent ]

Abolishing Patents (none / 1) (#287)
by Sloppy on Thu Jul 31, 2003 at 02:07:15 PM EST

We would be better off abolishing patents all-together
IMHO, here's your problem, dh003: you're so preoccupied with fairness, that you don't see the strategy in compromise. You're going to get fucked one way or another, and the sooner you accept that, the sooner you can suggest that lube be used.

Yes, when you get right down to it, patents are a socialist construction. The government grants a monopoly at the free market's expense, in order to provide incentive for R&D for the common good. It's a performance hack.

The thing is, a lot people want that performance hack, and they vote. We could have a free market where drugs are cheap and the makers get their profit, and I would be happy with that. I think you would too. But a lot of people wouldn't. They would bitch about medical technology not advancing fast enough, because the market just wouldn't be able to support big R&D.

So do you know what would happen? They would push for government to get in on it. It would be NASA all over again (except a lot bigger). All of the arguments in favor of using government to advance space exploration, would equally apply to using government for medical R&D. And then we would all be getting taxed to pay for it, regardless of whether we wanted it or not. You and I would be paying for someone else's drugs.

The patent system is an interesting compromise. It's not free market, but at least the costs are mostly born (in theory) by those who benefit from it. If you want a drug that was made in a high-performance environment outside of the free market, then you can get it, at great expense thanks to the monopoly. If you don't want it, you don't buy it.

In practice, it gets corrupted when you throw socialist medicine into it, because then people choose to "buy" the expensive drug that was developed outside of the free market, but then somehow the rest of us get the bill. So it doesn't feel much different than paying for publicly-funded R&D. But that's really a different battle.
"RSA, 2048, seeks sexy young entropic lover, for several clock cycles of prime passion..."
[ Parent ]

You know... (none / 1) (#288)
by skyknight on Thu Jul 31, 2003 at 04:22:20 PM EST

You're so preoccupied with fairness, that you don't see the strategy in compromise. You're going to get fucked one way or another, and the sooner you accept that, the sooner you can suggest that lube be used.

I just might have to sig you. :-)



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
You should realize, Skynight (2.00 / 4) (#178)
by DominantParadigm on Sun Jul 27, 2003 at 04:44:48 PM EST

That anyone who has taken Economics 101 is feeling horribly embarassed for you. I think you should get yourself edumacated, you don't have a clue what you're talking about.

Caller:So you're advocating bombing innocent children? Howard Stern:Yes, of course!


[ Parent ]
+1 FP: brilliant! (3.00 / 2) (#180)
by skyknight on Sun Jul 27, 2003 at 05:09:00 PM EST

Why, you have so roundly and soundly thrashed me in the elegant proof of your thesis that I am too overwhelmed to even attempt a rebuttal. I encourage you to flesh this out, and make it into it's own stand alone piece in which you stir in facts, logic, reason, and (if you really get into the spirit) proper grammar.

Edification, here we come!



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
Here's the thing Skynight (2.00 / 4) (#181)
by DominantParadigm on Sun Jul 27, 2003 at 05:17:34 PM EST

No refutation is necessary. Your argument is hideiously awful.

Caller:So you're advocating bombing innocent children? Howard Stern:Yes, of course!


[ Parent ]
Sigh, why do I bother (2.25 / 4) (#184)
by DominantParadigm on Sun Jul 27, 2003 at 05:20:22 PM EST

But I gues I have to. This news is FANTASTIC news for American consumers, and you're so fucking ignorant that you don't even realize it.

Caller:So you're advocating bombing innocent children? Howard Stern:Yes, of course!


[ Parent ]
Fantastic this week, horrid in five years time /nt (3.00 / 2) (#188)
by skyknight on Sun Jul 27, 2003 at 05:53:06 PM EST



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
foolish comment (3.00 / 3) (#187)
by jjayson on Sun Jul 27, 2003 at 05:32:07 PM EST

He is right. Or would you care to actually explain anything. Some of us to have econ training (and are looking to go back to get our Masters in it).

Price controls are artificial. Of developing nations, Canada has already broken two patents. They had said they will break any patent to get a drug to its people. Obviously for drugs that are used by very few they don't want to expend the political capital, but for more common drugs, if the company refused to sell the drug at the determined price, they would just produce it generically.

These countries enter into price negotiations with an unlosable position. If they don't like the price they can just walk away. The Canadian drug price control board sets prices dependant on the price of other similar drugs. They are set so low that generics are often never brought to market, keeping the prices artificially higher than they would have been. And when they are brought to market, they are not set low enough since the brand name drug is roughly equivalent and the price is keyed off that. I just showed this to MicharlCrawford how one of his generic prescriptions is about 10% higher in Canada than the US.

When they only agree to sell above marginal costs but below averge costs, somebody has to pay. Too often it is the American consumer.

Damn free-riders.

--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

Damn free riders (none / 1) (#250)
by fhotg on Mon Jul 28, 2003 at 10:49:37 AM EST

Hey, you believe that autonomy is a good thing or not ? If groups of people ("socialist" countries) decide that the health of their people is more important than respecting certain IP-laws, they act totally reasonable, IMHO.

The pharma lobby - argument: " But then we can't do D&R anymore" is bogus, for I reply: Then stop it, pansies. Either there is a market for "the original new drug" which is profitable in the time-span it takes to get in with generics, or there isn't.

Research on really important, needed drugs (cancer, AIDS) will continue, and if the inflationary number of useless products today deflates, everybody would profit.
~~~
Gitarren für die Mädchen -- Champagner für die Jungs

[ Parent ]

How many times does this need to be said here? (3.00 / 1) (#185)
by jjayson on Sun Jul 27, 2003 at 05:23:08 PM EST

By opening up to import, you are not creating competition between companies. You are allowing the world to be treated as a single market. However, this isn't even true since some countries decide to legislate price controls. Now, how is that freemarket?
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]
there just is no issue on this (4.33 / 3) (#212)
by martingale on Sun Jul 27, 2003 at 10:13:52 PM EST

I've said this repeatedly, too. The countries which legislate price controls can be treated as buyers who will not buy above a certain price. If the company doesn't like it, they need not sell. Since they do sell, they clearly have no problem with this.

The only problem is on the part of some markets such as the US which, because they are willing to pay higher prices, encourage the drugs companies to develop products at unrealistic and possibly unsustainable costs. So long as there are enough rich people to pay for these expensive products, all is well. However, there is no need to expect those who aren't willing to pay these high prices to somehow help carry the burden of keeping the private drugs companies in business.

If the market collapses, some drugs companies will fail, others will reduce dramatically their costs and associated product offerings, public medical research will continue to research and develop drugs and treatments at its own rate. New companies will appear, offering quite different products whose R&D costs are an order of magnitude smaller.

etc.

Now some consumers (perhaps some posting here) have grown to depend on a particular product line which would realistically be discontinued when the companies decide it isn't sustainable due to the size of the market. This is a real possibility, but clearly there is nothing that can be done about this unless the rest of the world population chips in and decides to pay a higher price solely for the benefit of the minority needing the product. This is not about to happen in your or my lifetimes.

[ Parent ]

No issue? (3.00 / 2) (#219)
by DarkZero on Sun Jul 27, 2003 at 11:19:27 PM EST

I've said this repeatedly, too. The countries which legislate price controls can be treated as buyers who will not buy above a certain price. If the company doesn't like it, they need not sell. Since they do sell, they clearly have no problem with this.

And as everyone else has repeatedly replied to these sorts of assertions in these comments, it is perfectly clear to every pharmaceutical company that whoever they don't sell to will just relax their enforcement of intellectual property violations in respect to that company and allow their markets to be flooded with copies of the drugs that will be sold just above cost. These copies will then be exported to other nations that would normally respect IP laws, thus undermining the pharmaceutical company's entire international business model.

Afterward, we may end up with the same problem that the Chinese entertainment industry has. Pirate DVDs and CDs are cheap because the pirates don't have to pay for the actual production of the film or album, but instead just the medium that they are placed on. This hinders the production of new films and albums because the market demands that those products be sold at the same price as pirated DVDs and CDs, but selling them at that price could never recoup the losses from the actual production of the film or album. Similarly, pharmaceutical pirates will only have to pay for the production of the drugs that they are copying, whereas the actual pharmaceutical company will have to pay many more millions of dollars producing a new drug, but the market will still demand drugs sold at the pirates' prices. This will stifle innovation in much the same way it has in the Chinese record industry, which releases appromixately 25 new albums per year (as opposed to the US, which produces hundreds), but pharmaceutical companies can't fall back on the same alternative business models that entertainment companies can. Both companies can sell their products in stores, but Viagra or Prozac aren't going to play VJ for a day on MTV or headline a rock festival.

I don't pretend to have the answer to this whole situation, but it certainly isn't as simple as, "If the company doesn't like it, they need not sell."

[ Parent ]

research just isn't only motivated by profits (4.50 / 2) (#223)
by martingale on Sun Jul 27, 2003 at 11:49:34 PM EST

Afterward, we may end up with the same problem that the Chinese entertainment industry has.
Hogwash! You're assuming that medical scientific progress is due solely to the existence of private companies. Even if all drugs companies were eradicated in the world, medical research would continue at a sustainable pace. That's because researchers will do the research, whether they get paid a lot or not. If given the choice, they will grab the high paying positions, but if these don't exist, they will work for subsistence level renumeration.

There is simply no comparison with the entertainment industy on this. Actually, in some ways there is. Think of the researchers as artists who form bands because they want to play music, whether they get paid or not.

I don't pretend to have the answer to this whole situation, but it certainly isn't as simple as, "If the company doesn't like it, they need not sell."
I'm not suggesting my comments are any sort of answer. First of all, the problem isn't even properly defined. It's a jumble of competing requirements - lower prices, health care for all, lots of differentiated products, scientific progress, you name it. I'm only saying that the possible demise of private drugs research isn't such a big issue as it's made out to be.

[ Parent ]
Overhead? (none / 0) (#278)
by Control Group on Tue Jul 29, 2003 at 02:37:33 PM EST

That's because researchers will do the research, whether they get paid a lot or not

I'm sure they will; most of the doctors I know do it primarily because they feel it's a valuable contribution to society, and only secondarily for the money. (Granted, these are practicing doctors, not medical researchers).

But, even if the researchers are high-mindedly willing to work for nothing, it's a bit disingenuous to then claim that research need cost nothing. To defend this stance, you'll need to show that the labor cost for research is far and away the lion's share of the overall R&D budget.

Secondly, you'll have to demonstrate that these researchers will somehow either have donated to them, or be able to put together on the cheap the facilities which they require to work (though the cost of the facilities when amortized across all the drugs researched may be vanishingly small, and therefore not factor into point one above, it is a cost that is incurred and must be addressed).

***
"Oh, nothing. It just looks like a simple Kung-Fu Swedish Rastafarian Helldemon."
[ Parent ]

non-sense (2.50 / 4) (#221)
by dh003i on Sun Jul 27, 2003 at 11:26:38 PM EST

Countries are not buyers. Countries are simply a collection of individuals, governed by the government. A government which institutes such socialistic policies is draconian and illegitimate, period. The only legitimate function of government is to protect the rights of its citizens from both internal and external threats.

When governments create tarrifs and other price-controls, they are not helping the country. They are imposing a draconian burden on the citizens. The reason why they are doing that is simple: they, the government, have received bribes from special interests. It's a fact. Politicians who, for example, voted for these kinds of controls were paid more money by pharmaceutical companies. Though this may help the special interests who bribed the government, it hurts most citizens, by either creating higher prices, or reducing supply.

The typical case with the assinite government price control goes something as follows. Some dolt in the government, realizing that the price of say milk is very high. This, the idiot reasons, is not good: after all, babies need milk. Think of all the poor milk-less babies! So, this idiot decides that there shall be a price-control demanding that milk cannot be sold above a certain price. The result, of course, is that the supply of milk is reduced. Now, instead of having high milk-prices, there simply is no milk at all. Absolutely brilliant. Hillarious examples of government idiocy can be observed in states where there are water-supply shortages, despite the states having plenty of water. One state -- California, I believe -- had a shortage of water-supply during a time when there were floods.

Social Security is a pyramid scam.
[ Parent ]

there are around 200 countries in the world (4.66 / 3) (#225)
by martingale on Mon Jul 28, 2003 at 12:04:31 AM EST

A government which institutes such socialistic policies is draconian and illegitimate, period. The only legitimate function of government [...]
Who are you to speak for the citizens of countries with different social aims and emphases? The function of government varies, according to the rights and obligations conferred to it by its people and history. If you don't like socialist countries, don't live in them. You probably don't already, so I don't see an issue.

When governments create tarrifs and other price-controls, they are not helping the country. They are imposing a draconian burden on the citizens.
In some scandinavian countries, the population is quite willing to hand over 50 to 70 percent of its income to the government for redistribution. That may seem draconian to you, but isn't your concern.

Your real beef with price controls is that you perceive that it imposes a heavier burden on the citizens of those countries without them. Wouldn't it be nice if the citizens of those countries with price controls accepted to relax their standards, pay voluntarily more to share the burden of the citizens of those countries whithout price controls? Aren't you just arguing for global socialism and solidarity in that case?

Let's face it. Medical research is not solely dependent on the good graces of drugs companies. There is no reason to prop up their business models because somehow, without them, the world would be much worse off. Companies have their place, but must operate sustainably. If the market decides it wants to pay at most X, then the companies must adjust. Basic medical research will continue at a sustainable rate regardless.

[ Parent ]

the true solution (3.00 / 1) (#228)
by jjayson on Mon Jul 28, 2003 at 12:36:23 AM EST

Your real beef with price controls is that you perceive that it imposes a heavier burden on the citizens of those countries without them. Wouldn't it be nice if the citizens of those countries with price controls accepted to relax their standards, pay voluntarily more to share the burden of the citizens of those countries whithout price controls?
If Canada and the Scandinavian countries want to run a price-controlled quasi-socialist medical establishment, fine. However, the country should be forced to buy at market prices without the threat of breaking patents. Like any other large institution, they can still bargain for bulk discounts. Then they can resell these drugs to their distributors and population. They can keep their socialism while still participating in a free market and not free-riding on American backs when they can pay for it.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]
fair enough, who's going to enforce this? (3.00 / 1) (#229)
by martingale on Mon Jul 28, 2003 at 12:49:11 AM EST

Obviously, this is meant as a rhetorical question, so feel free to ignore it.

I agree with you in principle, though politics will always make this difficult.

[ Parent ]

Atena disproves (3.00 / 2) (#227)
by jjayson on Mon Jul 28, 2003 at 12:30:55 AM EST

When a pharma company is entering the Canadian market they get two choices. Either they can sell at the reduced price that the Canadian Prices Review Board sets (above marginal, but below average) or they can not sell. They chose the first opetion for two reasons.

Since Americans cover the cost of R&D, the Canadian market is gravy. It's free-riding. If all countries inacted Canadian price controls, private research and supported trials would dry up. However, since there are open markets, such as America, Canada works. It's like sitting on a tandem bike and not peddling. Sure it works, but it is not sustainable. These are the same reasons that tarrifs are shunned. I don't see why this is any different.

Also, Canada has an unbeatable position. They can break the patent. They have already broken two patents in the past (although they recinded their orders after negoiations with the patent holders), and they have said they will break any patent in the future if they cannot get drugs to their people. If the company decides not to sell, Canada will just generically produce it domestically. This isn't free trade when one orgainization doesn't need to follow the rules. I read that Aetna insures more people than the Canadian government and uses far more drugs. However, Aetna cannot get prices anywhere nearly as low as Canada. Now, why do you think that is true? Precisely because phrama companies have no choice. They have to give into Canada's implied threat. If it were really a free market, then Aetna would have lower prices than Canada from bulk discounts.

According the most restrictive numbers by a cosumer group Public Citizen, after adjusting for inflation and capitalizing investment costs, it is still almost $250 million per drug. This number includes tax breaks, public research, and amortizing failures. It is naive to think that we could reduce R&D and have the same rate of innovation. The US produces 15 of the top 20 drugs and 7 of the top 10. Europe destroyed its drug industry and now people want to let them destroy ours.

When we enact soft lumber tarrifs, America is vilifies. Yet when these gravy-training Canadian take advantage of the American people it's lauded.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

a couple of things (5.00 / 3) (#231)
by martingale on Mon Jul 28, 2003 at 01:28:00 AM EST

Also, Canada has an unbeatable position. They can break the patent.
Given the complex international patent agreements in place, there is a reverse side to this argument. Normally, a new bio/pharma patent would be filed in the US first. If it is approved there, its chances to be extended to other countries is much higher or certain depending on agreements.

We all know that the 90s have seen an explosion of approved patents in bioengineering, to the point where the US patent office had to radically rethink its policies. I believe the extent of the patenting frenzy was even worse than that in the software industry, but I don't have time to google for links (I'm wasting enough time on this article as it is ;0) If the US was a weak link in the chain at some point, is Canada obliged to follow through and cover the failures of the US patent office? (the reverse question is valid as well).

I don't have an answer, and obviously a country shouldn't break treaties willy nilly. But painting Canada as bad because it may break a patent is simplistic.

According the most restrictive numbers by a cosumer group Public Citizen, after adjusting for inflation and capitalizing investment costs, it is still almost $250 million per drug. This number includes tax breaks, public research, and amortizing failures. It is naive to think that we could reduce R&D and have the same rate of innovation. The US produces 15 of the top 20 drugs and 7 of the top 10. Europe destroyed its drug industry and now people want to let them destroy ours.
A few questions to ponder.

1) 250 million per drug doesn't rank drugs by their utility or importance for humanity as a whole (since we're talking about the whole world as the market). I don't expect you to rank those drugs for me, but quoting a statistic on the average price of a drug is incomplete. How many are used for life saving treatments. How many simply make life more bearable to sufferers. How many are luxuries, designed for a select few who can pay for them? Such statistics only make sense with a utility function, but I'm not about to offer a dollar price on human suffering.

2) Who actually produces the innovation. Is it the company(ies), or is it the people who work for them? I've been arguing it's the people. If private companies don't employ them, they would find employment in universities or government institutions. The output would likely be comparable, although the actual products worked on would likely be subtly different.

3) If the swiss government announced it would pay twice or more the market rate for the top people in the top pharma companies to come work for the swiss government, you would see a rebirth of the drugs industry in Europe. Whether it is worth doing so is another question entirely, but I think your claim that Europe gutted its drug industry might also be viewed as the result of consolidation and US companies' practice of headhunting experts throughout the world. The real question to my mind is: can US companies sustain this practice of hiring the best and brightest, and for how long?

[ Parent ]

How was it done (4.00 / 2) (#237)
by Halo on Mon Jul 28, 2003 at 05:38:02 AM EST

The 2nd, 4th, 6th & 8th largest drug companies, by global sale's for the 12 months to July/August 2002 were European. This make's me wonder how Europe managed to destroy it's drug industry so quickly. Maybe you could submit an article on this amazing feat and the wicked intention's Europe has for the US.

[ Parent ]
moved companies (none / 0) (#262)
by jjayson on Mon Jul 28, 2003 at 06:37:46 PM EST

7 of the top 10 drugs and 15 of the top 20 were developed in the States. This say nothing of where the company was founded (this overseas production isn't even counted towards the GDP of the counry the company). Just 20 years ago Europe was the center of pharma development. However as price controls and regulations started to eat into private R&D, some of the largest Eurpoean companies have picked up their headquarters and main research and clinical arms and moved them to America, such as Glaxo, Novartis,

It hasn't been as bad as some thought. "Europe needs to undergo massive consolidation to prevent the US dominating the drug business in the coming decade. Its pharmaceutical firms will supply only three of the world's top twenty-five top-selling drugs by 2002, according to Evaluate Pharma, a British consultancy," was reported in Jan 2000.

PhRMA reported that from 1988 to 1988 the US increased their share of the top 50 drugs to 33 from 19, and in 1999 they sold 8 of the top 10. In the 2000 report they then go on to predict that by 2002 European firms will only produce 4 of the top 25.

A 2003 AEI report says, "Those price controls prevent innovative pharmaceutical firms from reaping free-market rewards anywhere but in the United States. That is one reason why the world pharmaceutical industry, which twenty years ago was mostly based in Europe, has largely relocated to the United States. American manufacturers now account for seven of the top ten worldwide best-selling medicines, and fifteen of the top twenty. This reflects a large and growing disparity in research and development expenditures. In 1990, European pharmaceutical firms outspent American firms on R&D by approximately 8 billion euros to 5 billion euros ($7 billion to $4.3 billion). In 2000, U.S. firms outspent European firms by 24 billion euros to 17 billion euros ($20.9 billion to $14.8 billion)."
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

Patents, Intellectual Property, etc. (4.80 / 5) (#162)
by jd on Sun Jul 27, 2003 at 01:50:51 PM EST

At one point, I believed that the problem could be resolved by thinking in terms of Intellectual Privacy. ie: you had the right to what was in your mind, for X number of years. This would standardize all the different concepts that are under this umbrella term, and help people to understand what the hell was going on, and why.

Since then, I've come to the conclusion that this is unworkable. Techniques, such as bait-and-switch (such as name changing, adding passive ingredients and re-patenting the new product, etc) to extend patents, and outright bribery to get copyright extended, show that the industry isn't willing to play fair, even when the deck is stacked heavily in their favour.

On this basis, I think it might be better to alter the concept completely. How about this as an alterinative? The company produces recepits to show the total cost of R&D for the given product. Each year, they must produce receipts showing the profit made from that product. They are permitted to hold the rights to that product until either they have recouped strictly more than double the costs, from the time of patenting until the end of financial year N in net profit, or a total of five years has expired.

The reason for the 5 year time is that it effectively kills patents used purely to obstruct other people's work. (If you've not made your money back by then, then the patent is probably not about making money.)

The reason for the profit threshold is that you want to kill the argument that excessive protection is needed in order to justify the R&D expense. By factoring the R&D cost in, you ensure that R&D is profitable enough to be justified.

By rounding to the end of a year (or maybe some number of years), shareholders are covered because the company is essentially saying "we can make good money, fast, and we're putting our name to that".

Finally, a short-lived patent forces R&D to be streamlined and progressive, rather than beaurocratic and stonewalling. By forcing an R&D team to be working on a much shorter lifecycle (such as that found in the IT sector), you force them to work smarter and with a keener eye on the long-term. Remember, R&D cost would be factored into the patent lifespan, so more R&D workers and better equiptment are automatically covered. But to be worth it, they have to get results within a much more limited timeframe.

IMHO, tying the patent to the cost of production answers the main complaint by industry, but at the same time, forces them into making real progress.

Those numbers seem awfully arbitrary... (4.00 / 2) (#172)
by skyknight on Sun Jul 27, 2003 at 04:20:30 PM EST

Governments have a way of carelessly damaging or destroying things by wantonly sticking numbers on things that they don't understand. I also don't think that long term patents are necessarily instances of stonewalling. The history of science is littered with inventors who created answers to questions that hadn't even been asked yet, and died without ever seeing a penny for their troubles. For a particularly good example of this, read up on the history of bar-code scanners, noting the huge lag between inception of idea and commercialization. Neither of the men made much of anything on what was to become an enormous business.

If you push for dramatically shortened patents, you're apt to really screw over small-time inventors, much to the advantage of large manufacturing firms. Bleh. :-/



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
pantent extensions (4.50 / 2) (#183)
by jjayson on Sun Jul 27, 2003 at 05:20:15 PM EST

A company doesn't get a patent extended by making slight changes in the drug. They get a new patent for it. The old patent still passes into the public. This is why advertising costs are high because they want to convince people to switch over to the new patent drug even though a far cheaper, almost as good drug is about to go generic.

The problem isn't that they make these copycat drugs, but that they are prescribed instead of the generics.
--
"Fuck off, preferably with a bullet, if you can find one that's willing to defile itself by being in your head for a split second." - Parent ]

loopholes still exist with this (4.00 / 2) (#211)
by martingale on Sun Jul 27, 2003 at 09:33:21 PM EST

How do you deal with R&D that takes twenty years to come to fruition? What happens if, each year, the basic design is "improved", with the relevant changes only being patented?

There are also issues with guaranteeing a multiple of the development costs as profit. Suppose I announce I am investing one hundred billion dollars in investment for the product. 99% of this will be salaries to my subcontracting employees, who need it because they have to pay 99.99999999% of their salaries in rent for their offices, which are located in a house I happen to own. With the multiple profit rule, I've been guaranteed a profit of one hundred billion dollars.

Mainly, however, guaranteed profit is a bad idea, because it will encourage private companies to invent just about anything, so they can claim to have a product and a source of profits.

[ Parent ]

Re: Patents, Intellectual Property, etc. (4.33 / 3) (#215)
by DarkZero on Sun Jul 27, 2003 at 10:59:24 PM EST

On this basis, I think it might be better to alter the concept completely. How about this as an alterinative? The company produces recepits to show the total cost of R&D for the given product. Each year, they must produce receipts showing the profit made from that product. They are permitted to hold the rights to that product until either they have recouped strictly more than double the costs, from the time of patenting until the end of financial year N in net profit, or a total of five years has expired.

Unfortunately, while this plan would work for most drugs currently on the market today, it removes the market's natural incentive for true innovation. If you can only recoup twice what you spent on a drug before someone else can directly copy it and sell the same thing, then there is no incentive to spend billions on a cure for AIDS, a cure for Cancer, or even just the next Viagra.

Under the current system, whoever cures AIDS or Cancer is going to be rich. Really, really rich. "Do you like this new no-emission flying car that I invented", "Through the wonders of alchemy, we can turn lead into GOLD", "You just plant the seed and out sprouts a money tree" sort of rich. We're talking more money than God. Under your system, they can only make back twice as much as they spent. In a perfect world, this would lead to companies continuing to reach for the brass ring and spend billions of dollars doing it, and then shortly after let the drugs proliferate for free. In the real world, they would simply aim lower and produce the next Allegra or Prozac instead of risking billions of dollars for the possibility of a comparatively modest return.

An enormous return is required for most people, especially CEOs, to take enormous risks. Most people would jump in front of a speeding car to save a loved one or a small child. Few people would do the same to save their cell phone or their keys. A 500% return on your investment is worth risking the loss of billions of dollars on an AIDS cure that may either fizzle or be beaten to the market by a competitor. A 200% return is not worth that sort of risk.

[ Parent ]

These numbers won't work (none / 0) (#260)
by Rich0 on Mon Jul 28, 2003 at 02:48:39 PM EST

You obviously haven't thought this through, or have little knowledge of the pharma industry.

First - on capping profits at double research expenditures.  Suppose I knew for certain that I could develop a drug for $10, 100% rate of success.  I spend $10, and then make $20 in revenue.  Then I lose the patent, and make about $1 over the rest of the life of the product (big pharma companies are research companies - they can't outcompete generic companies in India on price, so they make very little after losing a patent).  After getting $21 in revenue I end up with $11 in profit.  Basically all I did was get back the $10 I spent in the first place - I'd do better just to put it in a bank.  Plus, in a bank there is a near-zero failure rate, which is NOT the case of pharmaceuticals.

Also - how do you measure costs?  For each drug that is marketed there were 10 the company bet big on and didn't make a dime since they turned out to be unsafe.  Given a 10% success rate the company would have to make at least 11x costs on a single drug just to break even (paying for 10 drugs, plus getting the original money back).  

Your other area of regulation was time.  You suggest that from time of concept in basic research to end of profit should take 5 years.  In practice it takes 7-10 years before the drug is even on the market.  And this isn't due to inefficiency - it is because government regulators want to - heaven forbid - have you test your product to make sure it is safe.  If all a company had to due is guess at a dose and decide on what color to make the bottle they'd be out in time for christmas like software products.  Do you want drugs with safety profiles similar to your typical v 1.0 of a hot-selling computer game?  Equate crash with death.  To demonstrate safety requires you to first shoot the drugs in rats/dogs/monkeys and wait a month or two to make sure it is remotely safe, then try healthy voluteers.  If you want to prove that the drug actually works (which is also a regulatory requirement) then you need years of clinical trials.

There is a big industry in the US for herbal supplements.  They are cheap and get onto the market in months.  It sounds like this is the sort of market you are more interested in.  Why don't you try taking an herbal to cure your cancer?  Of course, any health improvement you experience will be purely coincidence, but it will be cheap...

Companies don't develop drugs unless they stand to make handsome profits.  Most pharmaceutical workers would be willing to do so even if the profits weren't there, but most pharmaceutical workers can't afford to outfit their own labs and saleries.  They need capital investment, and you don't get that without showing profits.

In IT you can work on open source as a volunteer.  You can't do that in pharma - the capital costs are not even comparable.  Plus, in IT beta testers are in more ample supply.  Not too many folks are willing to have serum 157X which looks somewhat safe in dogs injected into their arms...

[ Parent ]

yet another chauvinism ladden article (3.33 / 3) (#165)
by xutopia on Sun Jul 27, 2003 at 02:32:00 PM EST

"[...]but will also endanger American consumers by exposing them to unsafe products. These concerns are real[...]"

Since when are Canadian or European drugs dangerous?

The truth is disapointingly that American drug compagnies cannot produce better drugs than other countries. Pharmaceutical compagnies in the US had their strenght in marketing and price fixing which hurts American consumers but certainly gave them lots of advantages when it came to reinvesting benefits into research.

In many sectors American compagnies have been using monopolies and illegal strangleholds on markets to gain that edge over competition. I'm glad for once that some laws are written to level the playing field a little bit.

not necessarily. (4.50 / 2) (#186)
by Work on Sun Jul 27, 2003 at 05:26:26 PM EST

Just because the formula is the same doesn't mean its safe. Chicken is safe to eat too, so long as you cook it right.

The FDA in the USA keeps a tight leash on drug manufacturers - both brand name and generic. They have extremely strict codes on maintaining drug purity, rules on the smallest things down to what chemicals you can clean your equipment with and so on.

I remember reading awhile back that a generic version of a popular drug was being held up because the company that was going to make it was having troubles getting their plant up to FDA standards.

With other countries, there is no guarantee that the quality control or purity of the drugs is as good as the US are. Considering the FDA is the strictest food and drug organization in the world, that is saying alot.

Sure, your mexican prozac might be cheaper. But what if they forgot to scrub all the cleaning chemical out of the vat before making your batch?

[ Parent ]

Strictness (3.00 / 1) (#239)
by LeftOfCentre on Mon Jul 28, 2003 at 06:19:02 AM EST

How do you know that the FDA is "the strictest food and drug organization in the world"...? It might be, but do you have any reason for assuming that?

[ Parent ]
Why do you say that? (4.00 / 1) (#240)
by GenerationY on Mon Jul 28, 2003 at 06:54:26 AM EST

On what do you base the assertion: Considering the FDA is the strictest food and drug organization in the world, that is saying alot.? Please tell me its not simply that its an American body so it must be the best?

I'm certainly aware that the FDA allows a number of products and practices illegal in the EU. For example, the sale of hormonally treated beef (only legalised in the EU following the intervention of the WTO, and currently still under further review). A practice legal in the USA but not the EU is the attempt to sell food and beverages as medicinal without formal certification of those products as medicines. For this reason when these products are exported, they must be relabelled.

My aim is not to knock the FDA in a "our organisation is better than yours" way, but just to point out its a two way street and your assumption (which is actually kind of prevalent in the main article) may not be entirely safe.

[ Parent ]

You're right, for the wrong reason (5.00 / 1) (#277)
by Control Group on Tue Jul 29, 2003 at 02:08:24 PM EST

You're right, insofar as I'd like to see some sort of evidence for the unfounded assertion that the US FDA is "the strictest food and drug organization in the world," but I question your counterexamples.

First, I don't think he meant "strict" in terms of what is allowed to be sold; rather, in terms of what tests must be undergone before something can be sold. Hence, hormonally treated foods being allowed in the US and not in the EU isn't a function of the strictness of the controlling organization. The tests which determined whether or not to allow it to be sold are the determining factor, and whether it's allowed or not doesn't necessarily reflect on the number, accuracy, or quality of the tests used (unless you assume that hormonally treated foods are a health no-no, which is hardly a more valid assumption than the "strict FDA" assumption).

Second, whether or not the FDA is put in charge of so-called herbal remedies is hardly a reflection on the strictness of the FDA. It's a reflection on the lawmakers who determine what authority the FDA does or doesn't have, but you can't fault the FDA for not being given authority over a class of substances, any more than you can fault it for not properly controlling firearm sales.

What it amounts to (as I mentioned earlier, but not very clearly) is that your definition of "strict" and the parent's definition of "strict" are different. You seem to be looking solely at number of substances legally sold, whereas I believe the intended meaning had to do with the rigorousness of the testing process.

It's still a completely unfounded assertion, though.

***
"Oh, nothing. It just looks like a simple Kung-Fu Swedish Rastafarian Helldemon."
[ Parent ]

Yes, all fair points <nt> (none / 0) (#281)
by GenerationY on Wed Jul 30, 2003 at 07:11:13 AM EST



[ Parent ]
Tainted drugs in Florida (4.00 / 1) (#241)
by hebertrich on Mon Jul 28, 2003 at 07:20:18 AM EST

Dont tell me American drugs are safer.. Last week they dismanteled a network that was selling tainted,diluted if not bogus medication in south Fl ,and there's a bunch of pharmacies here that were selling them to their customers.Greed my friend is the key.Canadian drugs , or American its the same .The problem with dangerous medication here is nothing else than the product of greed and criminals. Canadian drugs or American or Mexican it's all the same. Noone can guarantee me that when i go get medication at a pharmacy that the product is not bogus or tainted. Ric

[ Parent ]
bill maher said it best (3.25 / 4) (#170)
by the77x42 on Sun Jul 27, 2003 at 04:05:19 PM EST

"Give the top executives of the first 50 of the Fortune 500 companies cancer and you'll have a cure within a week."

The problem is money and funding for research and no matter how many different drugs you import, you aren't going to change that.


"We're not here to educate. We're here to point and laugh." - creature
"You have some pretty stupid ideas." - indubitable ‮

That's just dumb. (4.80 / 5) (#175)
by RofGilead on Sun Jul 27, 2003 at 04:32:59 PM EST

That statement might be true for some obscure disease that less than .000000001 % of the population has. However, finding a treatment for cancer would be TREMENDOUSLY profitable for a company, and there are large amounts of public funding in the form of grants for cancer research, as well as private sector funded research. Cancer, it turns out, is just a really complex problem. With many diseases, like say, phenylketonuria (a condition where a metabolic pathway is flawed, a genetic condition - a person can't ingest large amounts of phenylalanine (look on diet soda labels sometime) ), with these disorders a single pathway is responsible for the illness. Fix this one pathway somehow, and you'd fix the disease. Cancer, however, can be caused by any number of different mutations or certain combinations of mutations that would otherwise not be harmful. How the hell do you make a treatment for this!!! But maybe, someday, there will be something discovered common to many different cancerous cell divisions properties which can be exploited. I have a feeling that there will be cancer for a long time still..

-= RofGilead =-

---
Remember, you're unique, just like everyone else. -BlueOregon
[ Parent ]
uhhh (2.50 / 2) (#235)
by the77x42 on Mon Jul 28, 2003 at 03:48:51 AM EST

like i said, funding and money for research is the problem. although i agree that a cure for phenylketonuria might be easier to obtain, it doesn't kill as many people as say cancer or aids. the idea, after all, is to save lives, and you want the treatment that can do just that. my point was simply that to eliminate the disorders that cause the majority of deaths, you are going to need a shitload of money and importing and exporting isn't going to solve the problem, mentioning other (smaller) diseases doesn't disprove my point.


"We're not here to educate. We're here to point and laugh." - creature
"You have some pretty stupid ideas." - indubitable ‮

[ Parent ]
Gaaaaah!!! Ow ow ow ow ow! (4.00 / 2) (#177)
by skyknight on Sun Jul 27, 2003 at 04:43:38 PM EST

I am honest to god carpal tunneling my right wrist into oblivion... Instead of repeating myself, go read this comment for a counter to this. I am not in favor of protectionism. I am in favor of proactively guarding against IP related problems.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
Just like Linux? (3.00 / 1) (#226)
by tebrow on Mon Jul 28, 2003 at 12:28:24 AM EST

I don't see how you can compare an operating system to chemicals that have the potential to kill. Some drugs are "unsafe" because they can have any sort of detrimental effect on the user. Linux cannot, which is why it does not face stringent FDA regulation.

I'm sure if Linux crashed... (4.00 / 2) (#238)
by whazat on Mon Jul 28, 2003 at 05:48:07 AM EST

in Commercial large scale e-commerce websites or accounts it could cause a few heart attacks and stress related illnesses.

[ Parent ]
Advertising (4.00 / 2) (#243)
by Jebediah on Mon Jul 28, 2003 at 07:42:17 AM EST

If the drug companies are really going to be hurt by this to the point their R&D suffers then they should quit with their marketing blitz on TV. Drugs like Nexium (prilosec with a fancy new name) and that bladder control medication (don't even remember the name, that campaign worked real well) are advertised almost as heavily as new cars. Between the massive profits and deluge of advertising there is more than enough money for R&D.

That can't be the cause of high prices (none / 0) (#252)
by RyoCokey on Mon Jul 28, 2003 at 10:53:09 AM EST

Prescription drugs could only be advertised on TV within the last couple of years. Additionally, if the advertising brings in more money in sales than it costs to create and broadcast, shouldn't you continue doing so even if you're losing money elsewhere?



And if you gaze for long into an abyss, the abyss gazes also into you.
[ Parent ]
So what about Africa? (4.50 / 4) (#244)
by Hairy Hippy on Mon Jul 28, 2003 at 08:16:19 AM EST

If the US is considering allowing generic drugs in to treat its own poor, how about watering down the stranglehold that GATT/Trips has over developing countries who can't afford branded drugs...Strikes me as being as hypocritical as Bush's attempts to prop up the US steel industry against imports using the exact type of tariffs and restrictions they insisted should not be used against US firms in the international market...


"A subversive is anyone who can out-argue their government..."
Prescription Drug Costs (none / 0) (#248)
by bearclaw on Mon Jul 28, 2003 at 10:26:56 AM EST

According to the FDA's head guy (can't find his name right now), prescription drug costs only amount for 1 out of every 10 dollars that are spent on medical care. I heard this while he was on the McLaughlin Group (one on one) show. http://www.mclaughlin.com/


-- bearclaw
Poor pharmaceutical industry (3.00 / 1) (#249)
by fhotg on Mon Jul 28, 2003 at 10:31:58 AM EST

So, drug research is expensive ? If you look at this money in relation to something, say for example the PR-budget, its going to look less impressive.

Also, most "new" drugs are just the old known-to-work stuff in a brand new packaging and peppermint flavor added. The number of available pharmaceutical products is orders of magnitude higher than the substances and substance-combinations that are known to work.

Safety issues ? In prescription-free land, the consumer already has a vast variety of opportunities to poison himself. If a doc prescribes something, he better knows about supplier-quality.
~~~
Gitarren für die Mädchen -- Champagner für die Jungs

Advetising and Safety... (5.00 / 1) (#274)
by malfunct on Tue Jul 29, 2003 at 10:58:55 AM EST

I agree that the advertising budget for most drug companies is VERY large which always suprised me because you aren't supposed to get any of these drugs unless you have the problem they "fix" and if you have that problem your doctor will do all the advertising that the drug company needs. Then again if I come in and ask for a drug, 9 times out of 10 my doctor happily gives it to me.

As far as safety concerns go, its not the name brand drugs that are the issue, those companies most likely are american anyways and so thier drugs have passed all the tests. The issue is with foreign made generics which do not undergo testing. This wouldn't be a problem if the doctor/patient got to choose which drugs a person took, but unfortunately in many cases the insurance companies decide which drugs a person ultimately gets. My insurance company is always "rewriting" perscriptions for me from the name brand to the generic brand and they do not have to consult with my doctor or with me to do so. In some cases the generics don't "seem" to work as well for me (some sort of psychological anti-placebo effect?) so I specifically request a name brand but do I really get that choice? No I don't. This will be FAR worse when we have lots of foriegn made generics on the market because the insurance companies will choose those if they get a chance. It sort of scares me in a way.

That said I'm for competition so I think the US govt needs to work out some way to punish the manufacturers of generics that cause harm in a way that encourages them to test thier products and bring them up to safer standards.

Another small thing I'm worried about is drugs that have been restricted in the US due to harmful side affects or addictive nature that would seemingly now be back on the market in the US. I hope that we haven't totally gotten rid of our drug regulation by enacting this new trade law.

[ Parent ]

safe drugs ? (none / 0) (#279)
by fhotg on Wed Jul 30, 2003 at 03:57:15 AM EST

I do not agree that "foreign" generics are necessarily worse quality. Actually I would expect from a sane import-regulation strategy, that all drugs no matter who made them, are tested to the same quality standard before they are allowed to enter the market. That's how it works over here too.

If subtle differences between brand-names and generics exist (and they might well, since not only the ingredients are important for the effect but also the production process which is easier to keep secret), the doc should know and prescribe accordingly. If your insurance can alter your prescription, thats clearly a problem of the insurance system and not of the available drugs.

As for your last paragraph, I believe US "drug regulation" is a big joke. I am convinced that anybody who relies on "they ban the bad stuff, so I'm safe with whatever I can buy / get by prescription" is doomed. There are lots of substances on the (legal) market that are most addictive and basically have only harmful side-effects but are happily advertised, bought and consumed.
~~~
Gitarren für die Mädchen -- Champagner für die Jungs

[ Parent ]

Safe drugs... (none / 0) (#292)
by malfunct on Mon Aug 04, 2003 at 09:46:51 AM EST

I'm not saying US drugs are safe, just that they are regulated. I'm also not claiming that foreign sourced generics are necessarily more dangerous or lower quality, just that they have no requirments of quality on them. Both of these things should at least bother a person.

As far as the insurance thing goes they are not "changing the perscription" they are supposedly getting the same drug, just from a cheaper source.

Anyways just wanted to clarify those points because it seems they weren't entirely clear in my first post.

[ Parent ]

background viewing: PBS's Frontline on rx drugs (5.00 / 2) (#253)
by cce on Mon Jul 28, 2003 at 11:01:40 AM EST

For some more background info on the issues surrounding prescription drug pricing, research costs, and government, check out The Other Drug War, by PBS/WGBH's excellent Frontline news program. The entire show (first broadcast only a month or so ago) is available in streaming video.

Use ASFrecorder if you want to save the WMV stream.

This'll stop US consumers from subsidizing others (4.00 / 2) (#256)
by rujith on Mon Jul 28, 2003 at 11:14:11 AM EST

Currently, drug companies charge what each local market will bear. U.S. consumers, being richer on average, are charged more than consumers in poorer countries. Re-importation coalesces multiple local markets into a single global market. The price differential will reduce - other countries' consumers will pay more, and U.S. consumers will enjoy lower prices. That is why U.S. politicians support this move - it benefits their constituents. As a U.S. consumer myself, and an advocate of free trade, I support it as well. - Rujith.

Americans would be healthier if... (5.00 / 4) (#259)
by krkrbt on Mon Jul 28, 2003 at 02:12:24 PM EST

... the present incarnation of the pharmaceutical industry just disappeared.  That industry has a stranglehold on the medical profession, so complete that when you or I visit the doctor - it's not to figure out what's really wrong with you, but to decide what to perscribe you.  "Resolving the [real] issue" has taken a back seat to "managing the issue".  

Some of the top-selling perscription drugs fall into these categories:

  1. antidepressants

  2. cholesterol control

  3. heartburn/antacids

Each & every one of these conditions is probably best treated in some other manner for the vast majority of people who currently receive a perscription drug for the issue.

1.  antidepressants:

My grandfather's on antidepressants.  He's depressed because he can barely walk, and so his days are limited to waking up, eating, watching T.V., and taking care of those other basic human obligations.  Okay, so maybe it's okay to put him on an antidepressant.

Someone else I know also recently got a perscription for an anti-depressant.  He's in overall fine physical condition, and its obvious to me that he's depressed because his days consist of waking up, going to work, getting stressed working on & thinking about [x] ("life").  He comes home at night, has dinner, and sits down in front of the t.v.  Within 20-30 minutes, the thing has put him to sleep (typically, 7:30-8pm).  And he wonders why he can't sleep at night.

Its obvious to me that there's nothing wrong with person #2, and he simply needs to get off his ass and DO SOMETHING THAT HE ENJOYS.  But no, his doctor happily puts him on a drug, which does not address the real problem.

Look at this story:  Exercise Better Than Drugs For Depression.  Some people really do need a perscription, but for the vast majority of people there are options 1000x better than drugging them up.

2.  Cholesterol

I recently met an older woman my grandma's age whose doctor had been telling her for years that she needed to get her cholesterol levels under control.  About five years ago, she stopped for a milkshake, and had a bad experience directly attributable to that food item ("explosive diarreha").  Not wanting to repeat the experience, she gave up milk products entirely soon thereafter.  Coincidently, she hasn't had a cholesterol problem since.

Cholesterol drugs can be dangerous.  But they do do what they're advertised to do ("lower levels of 'bad' cholesterol"), so whether or not they really improve quality of life is irrelevant to the company marketing the drug.  

"Well, with half the population anticipated to take these drugs in the future, it is time that we seriously re-evaluated what we are doing with them. Just like our weight, there is an optimum with cholesterol as well. Some people believe that the lower your cholesterol, the healthier you are. Nothing could be further from the truth. If your cholesterol is too low you will have an increased risk of mood disorders, depression, stroke, violence." -  Cholesterol Drugs May Increase Cancer Risk

also check out this story:  New Cholesterol Guidelines for Converting Healthy People into Patients

3.  Heartburn/antacids

I recently had a little bout with heartburn..  Not one to like to take tums/pills/etc., I did some searching online, and found some other options that I felt comfortable doing.  Then I was like, "hmm, I wonder what Mercola has to say on this subject", so I did a search on his site too (heh, is it obvious that I like the man's style?).  I finally decided that my heartburn was due to my being temporarily lazy & not eating my veggies with dinner, but this page reminded me of something I'd heard previously:  99% of the cases of (chronic) heartburn are due to a bacterial infection.  Resolve the infection, and the heartburn goes away.  But do the makers of Prilosec/Nexium tell you that?  Maybe in the fine print, but certainly not in their ads.  Hah!  Imagine hearing this coming out of your T.V.:  "If you're not one of the 99% of people whose heartburn is caused by bacterial infection, try the Purple Pill!"

"To address the question of the long term effects of taking antacid drugs, the main problem is simply that our stomach acid is not only necessary for protein digestion, but it protects us against a variety of gastrointestinal infections. Long term blocking of this acid is a very poor strategy indeed." - http://www.mercola.com/2003/apr/23/gerd_treatment.htm

---

I'm sure I could go on, covering other drugs & other conditions, but I think this is enough to make the point.  If each & every drug company was to go broke tomorrow, Doctors would have to learn how to become healers instead of drug-dispensers.

Playing Devil's advocate (none / 0) (#291)
by John Thompson on Mon Aug 04, 2003 at 09:29:35 AM EST

krkrbt wrote:

Someone else I know also recently got a perscription for an anti-depressant. He's in overall fine physical condition, and its obvious to me that he's depressed because his days consist of waking up, going to work, getting stressed working on & thinking about [x] ("life"). He comes home at night, has dinner, and sits down in front of the t.v. Within 20-30 minutes, the thing has put him to sleep (typically, 7:30-8pm). And he wonders why he can't sleep at night.

Its obvious to me that there's nothing wrong with person #2, and he simply needs to get off his ass and DO SOMETHING THAT HE ENJOYS. But no, his doctor happily puts him on a drug, which does not address the real problem.

How can you be cetain that the lack of motivation this person shows is the cause of his depression and not a symptom? A responsible physician will try to sort this out before writing a prescription for an antidepressant, and will continue to follow-up with the patient to monitor results of the treatment. If the prescription doesn't seem to be working, the physician may suggest a change in medication, but this is a slow process, as one needs to be weaned from the current medication before starting on the new medication. The weaning process often takes several weeks, with several more weeks needed to achieve therapeutic results with the new medication. Have you asked this person what sort of work-up and monitoring was done as part of his antidepressant therapy or are you just assuming that since you see him sitting on his ass in front of the TV that he is simply lazy?

I recently had a little bout with heartburn.. Not one to like to take tums/pills/etc., I did some searching online, and found some other options that I felt comfortable doing. Then I was like, "hmm, I wonder what Mercola has to say on this subject", so I did a search on his site too (heh, is it obvious that I like the man's style?). I finally decided that my heartburn was due to my being temporarily lazy & not eating my veggies with dinner, but this page reminded me of something I'd heard previously: 99% of the cases of (chronic) heartburn are due to a bacterial infection. Resolve the infection, and the heartburn goes away. But do the makers of Prilosec/Nexium tell you that? Maybe in the fine print, but certainly not in their ads. Hah! Imagine hearing this coming out of your T.V.: "If you're not one of the 99% of people whose heartburn is caused by bacterial infection, try the Purple Pill!"

First of all, your numbers are way off. Nor are proton pump inhibitors (ie, Nexium, Prilosec, Aciphex, Protonix) considered to be first-line treatment for heartburn. Prescription medications should never be used to control "a little bout with heartburn;" over-the-counter antacids are perfectly adequate for that type of thing, or even H2 receptor inhibitors such as ranitidine (Zantac) or famotidine (Pepcid) that are also now available as OTC medications. I had severe, chronic heartburn for several years before I was started on a PPI, and only then after I had tried H2 blockers and had a gastroscopy to rule out H. pylori infection and other potential causes (eg tumor, ulcer, etc.). PPIs are not cheap; they run about US$4/tablet and insurance companies insist on a thorough work-up before agreeing to cover the cost of these meds. And BTW, my gastroscopy biopsies came back negative for infection.



[ Parent ]
responses (none / 0) (#293)
by krkrbt on Sat Aug 09, 2003 at 07:21:07 PM EST

How can you be cetain that the lack of motivation this person shows is the cause of his depression and not a symptom?

observation.  Whenever this person is DOING something that engages him, he's not thinking about how "depressed" he is.

A responsible physician will try to sort this out before writing a prescription for an antidepressant, and will continue to follow-up with the patient to monitor results of the treatment.

I've heard from various sources that the majority of physicians don't have sufficient time with a patient to do a full diagnostic.  It's easier to just write a perscription (and that's typically what the patient wants anyways), so that's what usually gets done.

...

Have you asked this person what sort of work-up and monitoring was done as part of his antidepressant therapy

no, i haven't.

or are you just assuming that since you see him sitting on his ass in front of the TV that he is simply lazy?

Not lazy - it's a chicken-and-egg sorta thing...  Something happens to trigger "feeling bad", because he feels bad he doesn't want to do anything besides sitting on the couch and get hypnotized by the frickin history channel.  Not doing anything leads to more time to ruminate over feeling bad, which leads to even less of a desire to "do stuff".  So the question is, how to break the cycle?  Drugs are the quick & easy route to getting over "feeling bad".  Unfortunately, drugs don't cause someone to go out & develop habits they enjoy, so it only takes a slight trigger to start the cycle all over again.

---

your critique of my comments on antacids are probably quite valid - thank you for the feedback.  In my "little bout" with heartburn, I found OTC-antacids to be almost completely ineffective.   I think the statement originating from Mercola's site is still quite valid, that 'it is a poor strategy indeed' to just go & turn off stomac acid production.  There is a reason why someone is having a problem with excess acid; most doctors are incapable of rooting out the source of the problem.  I believe this is probably because the model most M.D.'s work from when addressing patients' bodies is woefully incomplete (overly mechanistic).  Also, until recently, medical schools have only had a pitiful amount of training in nutrition for their students.  

I know a lady who's turning 90 soon.  She was telling me recently about how she'd gone to this doctor and he asked her, "What perscription drugs are you on?"  So she told him that she wasn't on any, and noted a bit of shock on his face.  So she said, "But I do take vitamins & minerals..." & pulled out empty bottles of stuff she takes every day.  The doctor looks at the bottles and says, "I can tell you that these don't do you a bit of good."  That's Bad Hypnosis.  [all communication is hypnotic].  So, she immediately says to herself, "what do you know anyways", and hasn't been back to see him.  Because even if biologically the vitamins & minerals don't do much for this lady, SHE BELIEVES THEY DO, and that belief is the most important thing she can do to improve her health.

There are a few good doctors out there.  There are also a helluva lot of doctors who think they're gods, but are actually quite destructive.  The best thing an individual can do to improve their health is to take an active roll, and apply a healthy bit of skepticism to anything a "medical authority" tells them.

[ Parent ]

re: response (none / 0) (#294)
by John Thompson on Sun Aug 10, 2003 at 09:50:24 AM EST

krkrbt wrote:

[me] How can you be cetain that the lack of motivation this person shows is the cause of his depression and not a symptom?

[you] observation. Whenever this person is DOING something that engages him, he's not thinking about how "depressed" he is.,

One of the criteria in diagnosing clinical depression is that it precludes healthy thought and activity patterns. That is, the depression prevents you from being able to initiate normal activity.



[ Parent ]
re: response (none / 0) (#295)
by John Thompson on Sun Aug 10, 2003 at 12:05:11 PM EST

krkrbt wrote:

[me] How can you be cetain that the lack of motivation this person shows is the cause of his depression and not a symptom?

[you] observation. Whenever this person is DOING something that engages him, he's not thinking about how "depressed" he is.

One of the criteria in diagnosing clinical depression is that it precludes healthy thought and activity patterns. That is, the depression prevents you from being able to initiate normal activity.

I think the statement originating from Mercola's site is still quite valid, that 'it is a poor strategy indeed' to just go & turn off stomac acid production. There is a reason why someone is having a problem with excess acid; most doctors are incapable of rooting out the source of the problem. I believe this is probably because the model most M.D.'s work from when addressing patients' bodies is woefully incomplete (overly mechanistic). Also, until recently, medical schools have only had a pitiful amount of training in nutrition for their students.

A significant fraction of chronic heartburn is caused by reflux espohagitis and hiatal hernia where stomach acid refluxes into the distal esophagus causing heartburn symptoms and if chronic can progress to "Barrett's esophagus" and ultimately esophageal cancer. Certainly in these cases it is appropriate to suppress stomach acid to prevent more serious sequelae. A proper work-up by the physician should determine this. The text I linked to above is from a standard medical text and is considered to be "standard pratice" for physicians. Note also that a number of dietary and other non-pharmocological interventions are suggested in addition to medications.

In case you're wondering, although I am not a doctor I work in a clinical setting with new resident physicians and thus have some insight into what is being taught in medical schools today.



[ Parent ]
Not sure if anyone has posted this... (none / 0) (#264)
by causticmtl on Tue Jul 29, 2003 at 03:02:54 AM EST

You can watch an excellent PBS-Frontline documentary concerning this topic here:

http://www.pbs.org/wgbh/pages/frontline/shows/other/

It's not the fault of the companies (none / 0) (#265)
by Quila on Tue Jul 29, 2003 at 05:15:39 AM EST

Proponents argue that pharmaceutical companies are presently engaging in pernicious, predatory profiteering, and that opening the market up to importation will increase competition,

Why do people villify the pharmaceutical industry over this? They currently make 50% of their profits in the U.S. only because of protectionist laws enacted by the lawmakers who are complaining.

I don't care if there was a pharmaceutical lobby getting them to pass these laws -- they should have known what kind of situation they'd create and how much they'd screw the people by doing it. As P.J. O'Rourke says, most laws are passed to fix the mistakes made by old laws, and the fixes will be fixed, and so on.

This goes to show you can't trust politicians. The industry paid them lots of money to keep the protection racket going, but as soon as it's not politically feasable anymore the industry is now the bad guy. I think the pharmaceutical industry should be entitled to a refund of their political bribes.

There are numerous good comments below... (none / 1) (#266)
by skyknight on Tue Jul 29, 2003 at 08:00:05 AM EST

that address this. You can start with one of mine, and then proceed to others. They are all worth reading if you have the time. jjayson in particular has made a boatload of good ones. I think he has spent the better part of the past two days dispelling various misconceptions, as about 1/5 of the comments in this piece are his. Were it not for him, my carpal tunnels would be substantially more inflamed than they already are, as you may note that I've got a boatload of comments here too.

Also, I was tricky in this article, as you may note by the prepended phrase "proponents argue that". I let my own personal views bleed through, while still giving fair treatment to the opposing arguments. Don't mistake the views to which I gave air time with my own.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
My point was not the economics (none / 1) (#268)
by Quila on Tue Jul 29, 2003 at 08:58:19 AM EST

That's been well-covered as you said.

My problem is that the politicians who enabled the current situation are acting like they're victims instead of the co-conspirators that they are.

My other problem is that the industry paid good money for those protectionist laws, and they are now getting ripped off.

[ Parent ]

What... (none / 1) (#269)
by skyknight on Tue Jul 29, 2003 at 09:14:57 AM EST

you only just now noticed that all politicians are back-stabbing, lying, hypocritical whores, available to the highest bidder? ;-)

Fortunately for them, the average American is too busy paying the monthly bills to remember what politicians said last year. They only care about what largesse they are being promised for the next set of elections, which will ultimately be broken, but won't matter because the voters will have forgotten anyway. As a politician, it's easy to rape your constituency when they all have severe amnesia, or at the very least, selective memory.



It's not much fun at the top. I envy the common people, their hearty meals and Bruce Springsteen and voting. --SIGNOR SPAGHETTI
[ Parent ]
It's just wrong (none / 1) (#271)
by Quila on Tue Jul 29, 2003 at 09:47:39 AM EST

you only just now noticed that all politicians are back-stabbing, lying, hypocritical whores, available to the highest bidder?

But then even the highest bidder doesn't necessarily receive the services paid for. That's not right.

Or maybe they didn't pay enough in the last election cycle.

[ Parent ]

My two cents. (none / 0) (#273)
by valeko on Tue Jul 29, 2003 at 10:57:39 AM EST

I'm not really fit to comment on the economics or juridical meaning of any of this, but I know that European medicines that aren't commercially imported into the U.S. are much better, in my experience. For example, my mother has some fairly chronic stomach problems stemming from health problems earlier in life, and American medicines just don't work for her because of their shotgun approach - too-strong anti-biotics, for example, in a situation where balance of good and bad intestinal bacteria is desirable. I've seen and heard similar complaints all across the board, and the overwhelming, enthusiastic consensus among all who know there's a pharmaceutical industry outside of the U.S. is that European medicines are nicer, gentler, incorporate less harmful elements, have less bad side effects, and so on. I just take it for granted, at this point, although I'm sure there's exceptions for everything, and I lack clinical qualifications to assess "scientifically," of course.

For us, we have to ask our grandmother to buy widely available European medicines in Russia and send them to us occasionally. This usually includes everything from various creams to anti-biotics to vitamin supplements, because American ones are just too rough and well, synthetic.

"Hey, what's sanity got going for it anyways?" -- infinitera, on matters of the heart

Why don't you go home then? (1.28 / 7) (#282)
by sellison on Wed Jul 30, 2003 at 11:28:50 AM EST

to your land of better medicine, please.

Its widely known that US medicines are the best and US doctors are the best, the thing that makes our medicine so expensive is too much government regulations and the blatent ripping off of patent secrets by unscrupulous foreign 'pharmaceutical' firms (where keeping the lab sterile often means 'hey I washed last week').

So why don't you toddle on home and leave your windows cds behind!

"No, I don't know that atheists should be considered as citizens, nor should they be considered as patriots. This is one nation under God."- George H.W. Bush
[ Parent ]

Danke schön. (4.00 / 4) (#283)
by valeko on Wed Jul 30, 2003 at 11:45:46 AM EST

That was a very enlightening response. Spurred on by your wisdom, I may take your advice.

"Hey, what's sanity got going for it anyways?" -- infinitera, on matters of the heart
[ Parent ]

wonderful US healthcare (3.50 / 2) (#289)
by werner on Sat Aug 02, 2003 at 01:44:08 PM EST

Its widely known that US medicines are the best and US doctors are the best.

while it may be true that the best medical care can be had in the US - after all, that's where Europe's top sportsmen and women go for treatment if all else fails - it is definitely true that this superb care is only available to those with the means to pay for it.

the fact of the matter is, US healthcare is shitty compared to that in many other countries because so many people simply can't afford it.

i wouldn't compare the US to most European countries, but rather to somewhere like Turkey, where there are many fine hospitals reserved for the use of the priviledged few, while the rest just have to suffer.

[ Parent ]

personally, i think (none / 0) (#290)
by werner on Sat Aug 02, 2003 at 02:32:48 PM EST

that is the wrong idea.

there's no doubt that the american healthcare system is profoundly fucked up and unfair, but it would seem we face the risk of destroying worldwide pharmaceutical R&D budgets.

nevertheless, you can hardly argue that it is more profitable for pharmaceutical companies to refuse to sell at lower prices to african countries, or indeed any government which wants them. more sales is more profit, providing they are selling above production cost.

the refusal on the part of the large drug companies to provide african countries with drugs at reasonable prices (and the rest of us, for that matter) shows their utter contempt for human life and profiteering attitude.

thousands of people die every week because of this, and it MUST STOP.

in a similar vein in Germany, the government wants to make people insured under (legally required) government healthcare pay more towards their own dental costs. so, if i need a crown i will have to pay half a month's wages for it. mr. dentist, though, will still have his 2 mercedes and summer residence in spain/holland/wherever.

mr. dentist works more or less exclusively for government-insured patients, and is effectively a state employee. so why the hell should we, the people, have to pay twice, just so mr. dentist can buy yet another car (not forgetting that we also paid for mr. dentist's training and study)?

i am in a situation where i CANNOT afford to be treated properly by a dentist, because the government condones his greed. and i am lucky. at least i can still be treated in a hospital without having to pay again. there are many, many people in the 3rd world, and the US, who don't even have that.

healthcare is too important to let poor people go without just so rich people can become even more rich.

essentially nullifying patents is not the solution, but governments MUST ensure that medical care is available to and affordable for EVERYONE.

The First One Is Always Free | 293 comments (269 topical, 24 editorial, 0 hidden)
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