What's wrong with Drug Companies???

rhbblb1

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May 4, 2010
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I would like to bring up a few more points. First, part of the problem is that the FDA is not allowed to consider price when approving drug. If a drug is even sightly better than the current standard it will be approved without regard to cost.
Second, I believe that the current patent law is flawed and contributes to this problem. A drug patent is 17 years. That is from the time the compound is discovered. A billion dollars spent on 10 years of research leave only 7 years for the drug company to recover R&D costs and reasonable profit. Thus, they must amortize a large amount of money return over a short period of time. Then, when it goes generic, there is often a new and improved and expensive modification that takes its place. I believe that if patents lasted longer, then costs and profits could be amortized over a longer period of time which would, hopefully, reduce drug costs. I know this is opposite to what was intended, but we often seen unintended or opposite results from legislation.
This brings me to what I believe is the greatest cause of the marked increase in medical costs: technological advancements
 

rbbert

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Dec 12, 2010
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Here we go again LOL

What explains the dramatically higher cost of medical care in the US compared to comparable care in the rest of the developed world?
 

GaryProtein

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Jul 25, 2012
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Be careful what you wish for. Drug company profits are far from what they used to be (with some rare exceptions). In my area we are having drug shortages on a daily basis. If you make a drug generic and there is little money to be made no one will make it.

You can hardly get tetracycline anymore for that reason.
 

rbbert

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Dec 12, 2010
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You can hardly get tetracycline anymore for that reason.

No, that's not the reason. The reason is that there is no demand for it because it has no use as an antibiotic, only as a sclerosing agent (a fairly rare indication). Other, more effective tetracyclines are available, and generic, and quite inexpensive.

BTW, you can usually still get tetracycline at a tropical (or other) fish store.
 
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Phelonious Ponk

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Jun 30, 2010
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No, that's not the reason. The reason is that there is no demand for it because it has no use as an antibiotic, only as a sclerosing agent (a fairly rare indication). Other, more effective tetracyclines are available, and generic, and quite inexpensive.

BTW, you can usually still get tetracycline at a tropical (or other) fish store.

Of ourse demand has to be the answer. If the demand were there and the supply was low ("you can hardly get it anymore") the price would go up.

The bottom line, I'm afraid, runs against the grain of the current American trend -- pharma needs much more pro-active regulation of patents and perhaps prices. If you truly have instances in which drugs for which there is strong demand are unable to recover development costs in the time remaining on their patents, and others in which a drug company can put two inexpensive generics in one pill, and get a 17-year monopoly and an outrageous price for their "product," the rules are broken

Tim
 

wisnon

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Dec 12, 2011
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I would like to bring up a few more points. First, part of the problem is that the FDA is not allowed to consider price when approving drug. If a drug is even sightly better than the current standard it will be approved without regard to cost.
Second, I believe that the current patent law is flawed and contributes to this problem. A drug patent is 17 years. That is from the time the compound is discovered. A billion dollars spent on 10 years of research leave only 7 years for the drug company to recover R&D costs and reasonable profit. Thus, they must amortize a large amount of money return over a short period of time. Then, when it goes generic, there is often a new and improved and expensive modification that takes its place. I believe that if patents lasted longer, then costs and profits could be amortized over a longer period of time which would, hopefully, reduce drug costs. I know this is opposite to what was intended, but we often seen unintended or opposite results from legislation.
This brings me to what I believe is the greatest cause of the marked increase in medical costs: technological advancements

There are many ways to extend base "composition of matter" patents beyond the 17 years. There is data exclusivity, formulation patents, process patents, etc. Companies form a 3D web of interlocking protection that can easily double that final 7 years post approval. Additionally, biologics get a longer ride normally.
 

wisnon

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Dec 12, 2011
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Here we go again LOL

What explains the dramatically higher cost of medical care in the US compared to comparable care in the rest of the developed world?
Free pricing (going away slowly now), litigition costs, insurance, greed, high doctor's fees needed to pay for the ill-advised financial hole they have to dig for themselves thru medical school, expensive DTC advertising, and GREED.
 

Mark (Basspig) Weiss

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Aug 3, 2010
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It is the cost of government regulations. It costs $10B to get a drug to market.
In addition to that, medical insurance has decoupled the patient from the pain of cost, thus the drug companies, seeing a cash cow, took advantage of this situation.
 

wisnon

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Which drug ever cost $10B to get to market??

That is news to me.
 

Mark (Basspig) Weiss

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wisnon

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Dec 12, 2011
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Read your articles again. NO single drug has ever cost anywhere near $10B to develop. Not even when you count multiple indications.

Simply dividing Total R&D spend by number of successes is disingenous in the extreme (on the writes' part).

If they want to go there, then pick apart those R&D numbers and see exactly what the money is being spent on.
 

Mark (Basspig) Weiss

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Research Spending Per New Drug
CompanyTickerNumber of drugs approvedR&D Spending Per Drug ($Mil)Total R&D Spending 1997-2011 ($Mil)
AstraZeneca AZN -1.91%AZN511,790.9358,955
GlaxoSmithKline GSK +0.16%GSK108,170.8181,708
SanofiSNY87,909.2663,274
Roche Holding AGRHHBY117,803.7785,841
Pfizer PFE -0.48% Inc.PFE147,727.03108,178
Johnson & JohnsonJNJ155,885.6588,285
Eli Lilly & Co.LLY114,577.0450,347
Abbott LaboratoriesABT84,496.2135,970
Merck & Co IncMRK164,209.9967,360
Bristol-Myers Squibb Co.BMY114,152.2645,675
Novartis AGNVS213,983.1383,646
Amgen Inc.AMGN93,692.1433,229
Sources: InnoThink Center For Research In Biomedical Innovation; Thomson Reuters Fundamentals via FactSet Research Systems

 

wisnon

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Dec 12, 2011
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This is failure rate statistics. The amount spent on each drug approved is far less. They are throwing in failure spends as well. No single drug approved costs anywhere near that. I know that as fact. Read my previous post again.
 

Mark (Basspig) Weiss

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Aug 3, 2010
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If you don't include all the failed attempts, then you aren't measuring the true cost of drug development.
Maybe Forbes is lying about the costs, but I don't see any motive for them to do so.
 

GaryProtein

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Jul 25, 2012
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If you don't include all the failed attempts, then you aren't measuring the true cost of drug development.
Maybe Forbes is lying about the costs, but I don't see any motive for them to do so.

Mark is right, you must include the total cost of all corporate, legal and clinical activities to successfully bring a drug to market. The cost of a drug that never makes it can be millions, which represents a total loss to the company.

What's ironic is people want the drugs in a hurry when they are sick, but when there is a problem with it, even after testing has shown the drug to be reasonably safe, they are eager to sue anybody they can, even if the drug is their selected treatment of choice or their only treatment option.

No drug is completely safe or without drawbacks, side effects or downright dangers (black box warnings) and people know this even before they start taking them. DEATH is even mentioned on TV drug commercials as a consequence of taking a drug.
 

wisnon

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Dec 12, 2011
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R&D includes all costs. My companies that I have worked for have never spent even $10b in total on R&D. Yes, I know Oncology is more expensive, but still no single drug costs over $1B. If you want to includes all unrelated costs, then why not the Janitorial/finance/admin costs too? LoL

Perhaps some of these companies need to be more judicious in their spending. The direct cost per drug may not be the issue...
 

amirm

Banned
Apr 2, 2010
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Here is a meaningless comp :) : Apple's R&D expenditure is $5B. They usually produce what, a phone and a tablet/year? That makes it $2.5B per device! Wonder if this will make it to Forbes. :D
 

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