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Pharma Execs Worry About Presidential Candidates Demanding Reform
 [TheIntercept.com] Responding to tough talk by presidential candidates about price gouging by drug companies, pharmaceutical executives have told investors that they are working actively to influence the political debate. And in a move that reveals how much leeway drug firms actually have over pricing decisions, some are even saying that they have minimized price hikes in recent months to avoid attracting attention.
Democratic contenders Bernie Sanders and Hillary Clinton have both called for the government to do much more to bring down the price of medications. And last week, Republican candidate Donald Trump came out in support of allowing Medicare to negotiate for cheaper drug prices, a move that places him even to the left of some leaders in the Democratic Party.
Drug prices are jacked up in the USA. The same drugs are far cheaper in Canada. This could be easily fixed by passing a US law requiring that all drugs sold in the USA must have a price no more than the lowest price offered anywhere in the world.
We could easily have Canadian prescription drug prices in the U.S. In fact, we already do at the VA. The VA accomplishes it the exact same way Canada does: by negotiating with the manufacturers the price they are willing to pay for medications, and by strongly restricting which medications their patients may get. The VA,and Canada, only allow prescribing older, cheaper medicines, most of which have come off patent and are made by generic producers... and don't work nearly as well as the newer meds, as well as having nastier side effects.
It is very expensive to develop a new medication, only partially because the FDA has become more risk averse over the years. As of a few years ago, it cost $2.87 billion -- with a B -- to turn a scientific discovery into that prescription your doctor writes, a process that takes on average ten to twelve years. And that's for the discoveries that are successfully turned into medications.
Venture capitalists expect that only 25% of the ideas they invest in will go on to turn a profit, ie. they have a 75% failure rate. New drug research has a 98% failure rate, which means that the overhead each successful drug carries is a great deal more than the mere $2.87 billion mentioned above -- there is no guarantee that out of any fifty projects, one of them will work. So pharmaceutical companies have to have hundreds of projects going at once, hoping that at least one of them will pan out.
But where pharmaceutical companies are not allowed to "jack up" their prices to cover research costs, they simply stop doing research. To do otherwise would bankrupt them within months. (This is why we haven't had a significant new antibiotic in decades -- at a time when more diseases are becoming resistant to the current antibiotics. I really, really don't want to go back to the old days of hygiene and hope, but that's where we're headed.) Generic drug companies in the US don't do original research. They just have to show that their products contain the same amount of active ingredient as the name brand that spent $2.87 billion and twelve years to develop the thing.
Which brings up another issue: patents. Drug patents, as I recall (it's been a while since I worked in a lab), are good for twenty years, after which anyone can make them. Drug companies take out a patent as soon as they think they have something viable -- because what's the point of spending all that time and money if someone else can claim prior discovery, and therefore sole right to manufacture the result? Out of a twenty year patent, the company therefore has on average eight years to make enough money to pay off the cost of development plus the overhead to keep the company going before they will have to drop the price to near that of the generic companies if they want to keep selling the medication at all.
This is why most of the new drug research in the world is done in the US, with most of the rest done in Israel. Take that away, and you will get to have the latest research from 1990, just like they do in Canada, and never know that it could have been better. Or in cases like mine, or anyone infected by the Zika virus, that there could have been any treatment at all. |
Posted by: Sven the pelter 2016-02-05 |
