Health care shmelf care
- Thread starter jmpoet
- Start date
LooseCannon said:
False. I used to work for a generic drug manufacturer, and that's not how it really is.
The specifically false part is "the pharmaceutical companies won't allow their drugs to be mfg'd by third party companies". From a legal perspective, the drug companies can do no such thing. If you or anyone else has the means to reverse-engineer and manufacture generic drugs, you are allowed to do so.
Of course, you can't sell it if the drug is still under patent - but then it's the gov't stopping you, not the drug companies. Once that patent runs out, all the generic makers will jump on the drug.
A major example happened when I was with that company: the patent on Prozac ran out, and my company was jumping all over getting our generic version out. We came in late at night, and started shipping at midnight - literally the instant the patent ran out, as soon as we were legally able to do so. It was the culmination of a decade of effort, reverse engineering Prozac and creating a generic version while Prozac was under patent (which is allowed).
Here's where LC is a little bit right: the generic manufacturers have all been bought up by the majors now. So they still "control the amount on the market" in the sense that they keep the competition to a few elite companies, and thus can keep prices up.
OK, I know that until this all goes done, this topic is pretty used up. This article somewhat leads me to believe that they are just putting a bandaid on healthcare, not 'reforming' it.
Read this
My take, and I could be wrong, but it says that doctors are not going to lose, pharma companies, very little lost, and mostly the insurance companies paying, which translates to higher premiums. Which, to me, doesn't seem like a win situation for the average American. I was really hoping for more 'reform' than 'throw cash at it' type of setup.
Read this
My take, and I could be wrong, but it says that doctors are not going to lose, pharma companies, very little lost, and mostly the insurance companies paying, which translates to higher premiums. Which, to me, doesn't seem like a win situation for the average American. I was really hoping for more 'reform' than 'throw cash at it' type of setup.
Genghis Khan
Ancient Mariner
Here's my summary of that whole thing.
1. Ultimately the average American, the employed American, will be left for worse under this new plan.
2. Insurance companies will surely pass the bill to the consumer.
3. I cannot help but wonder if device makers will be less innovative as a result. I'm sure as things tend to go, some time later, a lobbyist will make a case of how the industry needs help as a result of this health care plan. The result will be to subsidize their research with tax payer's money.
Wasted and the rest of Americans, I have a question for you all, if you don't mind. I have heard that there are state restrictions to doctor access. That is a potential patient cannot seek a doctor in another state. Is any of this remotely true, or just nonsense?
1. Ultimately the average American, the employed American, will be left for worse under this new plan.
2. Insurance companies will surely pass the bill to the consumer.
3. I cannot help but wonder if device makers will be less innovative as a result. I'm sure as things tend to go, some time later, a lobbyist will make a case of how the industry needs help as a result of this health care plan. The result will be to subsidize their research with tax payer's money.
Wasted and the rest of Americans, I have a question for you all, if you don't mind. I have heard that there are state restrictions to doctor access. That is a potential patient cannot seek a doctor in another state. Is any of this remotely true, or just nonsense?
Wasted CLV said:
I agree that they are trying to put a 'band-aid' on what is a formidable wound, but it is bleeding through! And so health care reform becomes DOA yet again. And it's true that the White HOuse, ostensibly run by a man I admire so much, has sold itself out to the powerful pharmaceutical companies already, before the bargaining even started in Congress, a fact I have yet to get my mind around.
I understand that Business Week is far more interested in whatever legislation protects business. Yet wouldn't it be wise to have a public option that takes the duty of providing medical coverage off the hands of employers? It's a huge expense. Wouldn't universal health care save everybody a lot of money in the long run?
Well, some Americans think so now, apparently agreeing with some Dems on this one:
http://www.washingtonpost.com/wp-dyn/co ... 02451.html
And yes, Khan, it is true. If I go "out of network" on my health care plan (which limits me to doctors and hospitals in Southern California, and also limits me to those referred by my primary care doctor - the doctor who decides what I need and when I need it),then I will pay most of the bill. Most of the costs I incur, whether it be some accident I had 'out of network' on vacation in some other state, say for instance, will not be covered, and I will have to fight like hell to get through the red tape to get anything at all back on expenses my so-called health insurer deems 'out-of-pocket'.
The way I see the current bill is that it is becoming dangerously watered down. Dangerously. Without meaningful regulation the new plan will simply transfer the burdens of health care to the government, a government that is already spending far too much money on health care (America spends a larger percentage of their tax income on health care than any other country in the world).
yep, I declare it a Congressional Cluster Fuck. Premiums go up, insurance companies are not hurt, doctors don't change anything, pharma companies don't make any changes. We just end up paying more. Not 'reform' if you ask me.
There's still a chance of a meaningful public option, but that's the only thing I can see that'll save the reforms now.
D
Deleted member 7164
Guest
The only way out of "health issues" worldwide is reducing intellectual property patents on all pharmaceutic industry products down to 2 - 5 years at most.
If anyone thinks that patents on drugs serve as a wheel for invention, you are damn wrong.
If anyone thinks that patents on drugs serve as a wheel for invention, you are damn wrong.
You really believe that? You think that if a Pharma company has its profitability reduced, they will sink as much money into research? I don't buy that.
D
Deleted member 7164
Guest
Yes i do. What'll they do, just close the business? No my friend, this is how corporations work - there are guys at the top who don't actually care about patents and drugs and all of that shit, they just want to get cash. Therefore, to stay solvent, they'll need to release a new chemical substance / drug every five years.
Besides i'm all anticorporation, so 10 cents from each employed American monthly would equal almost three billion annually to sponsor a medical enterprise that would just do research and release chemical formulas for much needed drugs. Pharma companies would just produce the drugs, so the final product would be much, much cheaper, 'cause there's no research needed behind it.
Of course, this kind of system actually has a bit of humanity beneath it, and directly violates all capitalist principles, so it won't ever go into implementation.
Tell me Wasted, if you had perfect health (maybe you have, i don't know that) and you today don't require medical attention of any sort, would you give 10 cents from your wage each month, just to be sure, if you get some nasty illness tomorrow, you could afford treatment with hi-tech medicals with that same wage?
Wait, i have a better method. Why would someone with minimum wage pay the same amount of money as multi-billionaire?
I say rip them off and use percentage based system - 0.0005% of the paycheck goes for medical research. 10 cents for someone that has $2000 / monthly, 10 bucks for someone that has $200K monthly.
Besides i'm all anticorporation, so 10 cents from each employed American monthly would equal almost three billion annually to sponsor a medical enterprise that would just do research and release chemical formulas for much needed drugs. Pharma companies would just produce the drugs, so the final product would be much, much cheaper, 'cause there's no research needed behind it.
Of course, this kind of system actually has a bit of humanity beneath it, and directly violates all capitalist principles, so it won't ever go into implementation.
Tell me Wasted, if you had perfect health (maybe you have, i don't know that) and you today don't require medical attention of any sort, would you give 10 cents from your wage each month, just to be sure, if you get some nasty illness tomorrow, you could afford treatment with hi-tech medicals with that same wage?
Wait, i have a better method. Why would someone with minimum wage pay the same amount of money as multi-billionaire?
I say rip them off and use percentage based system - 0.0005% of the paycheck goes for medical research. 10 cents for someone that has $2000 / monthly, 10 bucks for someone that has $200K monthly.
Genghis Khan
Ancient Mariner
This is Canadian information that is slightly dated, but I thought I post it here.
The PMPRB has no authority to regulate R&D. The PMPRB's mandate is to report on R&D. With the adoption of the 1987 amendments to the Patent Act, Canada's Research Based Pharmaceutical Companies (Rx&D) made a public commitment that the brand name pharmaceutical industry would increase its annual R&D expenditures as a percentage of sales to 10% by 1996. In 2002, the R&D-to-sales ratio was 9.9%
Source.
I wonder how much USA pharmaceutical companies spent on drugs during the year 2002? I dug and found this. Most research comes from USA, but can the prices be lowered despite this?
Here is a slightly old biomedical research article. Many interesting things here.
* What is most interesting is that FDA is actively protecting the drug companies and is essentially a voice box for said companies. At least that is my interpretation.
* According to the article, 58% of world R&D comes from USA, but only 41% of new drugs come from USA. The conclusion is that current USA system is inefficient. A lot of questions arise from these numbers, such as will reform make it better or worse?
* Also, about 18% of the drug industry's research budget goes to basic research for breakthrough drugs. About 82% goes to derivative innovations on existing drugs and to testing.
* Furthermore, government protection from normal competition is now more than 50% greater for the drug industry than a decade ago.
* If American prices were cut in half, research budgets would not have to suffer unless executives decided to cut them in favor of marketing, luxurious managerial allowances or high profits. Chances are companies will not cut R&D because of low taxes.
Food for thought. Take it for what it is worth.
I will try to look for other interpretations.
Source.
Will Lower Drug Prices Jeopardize Drug Research? A Policy Fact Sheet
by Donald Light, Joel Lexchin
2004. The American Journal of Bioethics 4(1):W1-W4
This documented fact sheet provides evidence that all drug research by large firms, net of taxpayers' subsidies, is paid for out of domestic sales in each country, with profits to spare. Prices can be lower without jeopardizing basic research for new drugs. More exposure to global price competition would encourage more innovative research and less of the derivative me-too research that now dominates.
This documented fact sheet provides evidence that all drug research by large firms, net of taxpayers' subsidies, is paid for out of domestic sales in each country, with profits to spare. Prices can be lower without jeopardizing basic research for new drugs. More exposure to global price competition would encourage more innovative research and less of the derivative me-too research that now dominates.
In the U.S., the FDA Commissioner, Mark McClellan, and the drug industry are responding to pressures for lower costs by mounting a large campaign to pressure all other affluent countries to raise their prices to U.S. levels. They claim that lower prices do not pay for drug research costs, but we provide evidence that this is untrue. Ultimately, however, such nationalistic arguments are based on regarding basic research and new discoveries, which can happen anywhere, and the cost of trials, which are carried out in the countries deemed most commercially advantageous, as part of national companies and national accounts, when in fact they are part of a global economy for pharmaceutical products.
FDA Myths
1. FDA Commissioner, Mark McClellan, holds that other affluent countries like Canada and the UK set their prices for patented drugs so low that they do not pay for research and development (R&D) (McClellan 2003). We can find no evidence to support that claim.
On the contrary, audited financial reports of major drug firms in the UK, show that all research costs are paid, with substantial profits left over, based solely on domestic sales at British prices (Pharmaceutical Price Regulation Scheme 2002). Likewise, 79 research drug companies in Canada submitted reports showing their R&D expenditures have risen more than 50% since 1995, all paid for by domestic sales at Canadian prices (Patented Medicine Prices Review Board 2002). Sales to the U.S. and elsewhere are in addition to the positive, domestic balance sheets.
2. FDA Commissioner McClellan says that European or Canadian prices are "slowing the process of drug development worldwide" (McClellan 2003). There is no known verifiable evidence to support this claim. In fact, drug research has been increasing steadily in Europe as well as in the U.S., with some countries having a more rapid increase than the U.S. (Patented Medicine Prices Review Board 2002).
3. FDA Commissioner McClellan says that "price controls discourage the R&D needed to develop new products" (McClellan 2003). But there is no known verifiable evidence to support this claim.
R&D expenditures have been growing rapidly, though it is becoming more and more difficult to discover breakthrough drugs on targets not already hit (Harris 2003). The truth kept from Americans is that first-line treatment for 96% of all medical problems requires only 320 drugs (Laing et al. 2003). In wealthy countries, more drugs might be appropriate to treat people who do not respond to first-line agents.
4. FDA Commissioner McClellan charges that efforts to negotiate lower prices for patented drugs by other countries (and by major employers, unions and governors in the U.S.) are "no different than violating the patent directly" to make cheap copies (McClellan 2003). This charge echoes the drug industry and implies that large buyers seeking better value should be considered a criminal act.
5. FDA Commissioner McClellan paints a picture of other wealthy countries driving down their prices to marginal costs, but the widening gap between prices for patented drugs in the U.S. and other countries is due to drug companies raising U.S. prices, not other countries lowering theirs (Sager and Socolar 2003; Families USA 2003).
6. The "free-rider" problem that McClellan emphasizes can be solved by U.S. prices coming down to European levels, where they will cover all R&D costs, plus profits that are higher than those in most industries.
7. Drug company profits, after all R&D costs, have long been more than double the profits of Fortune 500 corporations. In recent years they have jumped to triple and even quadruple the profits of other major companies (National Institute for Health Care Management 2000). The global firms spend two and a half to three times more for marketing and administration than for research (Families USA 2001).
8. Americans pay for more R&D than any other country because the United States accounts for more sales than any other country. But while the U.S. accounts for 51% of world sales, it took 58% of global R&D expenditures invested in the US to discover only 43% of the more important new drugs (NCEs) (European Federation of Pharmaceutical Industries and Associations 2003). This means that other countries are helping to pay for the large, inefficient U.S. R&D enterprise, the opposite of what the editors of Business Week claimed (Business Week editors 2003). William Safire's claim of a "foreign rip-off" as Americans pay for the world's R&D is contradicted by the facts above (Safire 2003).
Research is misdirected by the industry, against patients' interests
9. Most drug innovation provides little or no therapeutic advantage over existing
Independent review panels plus a major industry review conclude that only 10 - 15 % of "new" drugs provide a significant therapeutic breakthrough over existing drugs and involve a new chemical or molecule (Barral 1996; Prescrire International 2003; National Institute for Health Care Management Research and Education Foundation 2002). Other industry-sponsored figures are much higher but not reliable.
10. The FDA approves drugs that are better than nothing (placebo) but does not test them against the best existing drugs for the same problem. Most research is for "new" drugs to treat problems already treated by other drugs.
11. About 18% of the drug industry's research budget goes to basic research for breakthrough drugs. About 82% goes to derivative innovations on existing drugs and to testing.
The long-standing survey of basic research by the National Science Foundation estimates that basic research has increased to 18% of the total research and development (R&D) budget for the pharmaceutical industry. It used to be less (National Science Foundation 2003). Industry-sponsored figures based on secret unverifiable data are much higher but not reliable (DiMasi, Hansen, and Grabowski 2003). The 85-90% of "new" drugs that have little therapeutic gain reflects equal protection from competition for much less investment and risk.
12. Congress has repeatedly extended patent protection for drugs beyond what other industries enjoy, despite much higher profits year in and year out. Government protection from normal competition is now more than 50% greater for the drug industry than a decade ago (National Institute for Health Care Management 2000). These incentives reward research into derivative large markets, rather than to finding effective treatments for diseases that have none.
13. These facts constitute the Blockbuster Syndrome: the lure of monopoly pricing and windfall profits for years spurs the relentless pursuit for drugs that might sell more than $1 billion a year, regardless of therapeutic need or benefit. Research projects for the disorders of affluent nations proliferate, as do clinical trials. Doctors are paid like bounty hunters to recruit patients for thousands of dollars each. Most patients get the misimpression that the experimental drug will be better than existing ones (Wolpe 2003). The corruption of professional judgment, ethics and even medical science follow (Williams 2003; Wazana 2000; Barnett 2003; Lexchin, Bero, Djulbegovic et al. 2003; Bekelman, Mphil, and Gross 2003; Villanueva, Peiro, Librero et al. 2003; Fletcher 2003).
Drug research costs much less than claimed
14. Drug companies claim to spend 17% of domestic sales on R&D, but more objective data reports they spend only 10% (National Science Foundation 2003). Thus, only 1.8% of sales goes to research for breakthrough new drugs (18% x 10%) (Love 2003).
15. Taxpayers pay for most research costs, and many clinical trials as well.
In 2000, for example, industry spent 18% of its $13 billion for R&D on basic research, or $2.3 billion in gross costs (National Science Foundation 2003). All of that money was subsidized by taxpayers through deductions and tax credits. Taxpayers also paid for all $18 billion in NIH funds, as well as for R&D funds in the Department of Defense and other public budgets. Most of that money went for basic research to discover breakthrough drugs, and public money also supports more than 5000 clinical trials (Bassand, Martin, Ryden et al. 2002). Taxpayer contributions are similar in more recent years, only larger.
16. The average amount of research funds the drug industry needs to recover appears to be much less than the industry's figure of $800 million per new drug approved (NDA).
The $800 million figure is based on the small unrepresentative subsample of all new drugs. It excludes the majority of "new" drugs that are extensions or new administrations of existing drugs, as well as all drugs developed by NIH, universities, foundations, foreign teams, or others that have been licensed in or bought. Variations on existing drugs probably cost much less because so much of the work has already been done and trials are simpler.
About half of the $800 million figure consists of "opportunity costs", the money that would have been made if the R&D funds had been invested in equities, in effect a presumed profit built in and compounded every year and then called a "cost." Drug companies then expect to make a profit on this compounded profit, as well as on their actual costs. Minus the built-in profits, R&D costs would average about $108 million 93% of the time and $400 million 7% of the time.
The $800 million estimate also does not include taxpayers' subsidies via deductions and credits and untaxed profits (DiMasi, Hansen, and Grabowski 2003; DiMasi, Hansen, Grabowski et al. 1991). Net R&D costs are then still lower.
Contrary to some press reports from the industry, screening for new compounds is becoming faster and more efficient and the time from initial testing to approval has shortened substantially (Kaitin and Healy 2000). The large size of trials seems more due to signing up specialists to lock in substantial market share. Advertising firms are now running clinical trials (Bassand, Martin, Ryden et al. 2002; Peterson 2002; Moyers 2002).
17. Because clinical trials have become a high-profit sub-industry, trial "costs" appear to be much more than is necessary.
An international team of experts estimates that clinical trials could be done for about $500 per patient rather than $10,000 per patient, a 95% reduction (Bassand, Martin, Ryden et al. 2002). The most detailed empirical study of trial costs also concludes that costs can be much less than reported (The Global Alliance for TB Drug Development 2001).
U.S. drug prices very high
18. Americans seem unaware how much more they are paying for drugs than other countries, in the name of the "free market" where prices are controlled by corporations. So-called "price controls" abroad are negotiated wholesale prices. Corporate price controls in the U.S. are un-negotiated monopoly prices, which then large buyers negotiate down.
According to a detailed analysis, American employers and health plans pay at wholesale 2.5-3.5 times the prices in Australia and other countries with comparable prices for patented drugs (Productivity Commission of Australia 2001). There is no evidence that these prices do not cover research costs. U.S. generic prices shadow patent drug prices and are also 2.5-3.5 times more.
19. High American prices are essentially monopoly rents charged to employers in every other industry. They shift profits from other industries to the drug industry.
20. If American prices were cut in half, research budgets would not have to suffer unless executives decided to cut them in favor of marketing, luxurious managerial allowances or high profits. They probably would not, because R&D gets such favorable tax treatment compared to other expenses. Lower prices would save other Fortune 500 companies billions in drug benefit costs, and drug company profits could come into line with the profits of the companies who pay for their drugs.
Realign incentives to reward true innovation
21. Current incentives strongly reward derivative innovation. We get what we reward.
22. Because the U.S. is by far the biggest spender, it has by far the most R&D and new drugs. Four other industrialized countries, however, devote more of their GDP to R&D for new drugs than the U.S. (Patented Medicine Prices Review Board 2002).
23. Officials of drug companies commonly claim that nearly all new drugs are discovered in the U.S. However, the industry's own studies (and others) show that over the past quarter century, the U.S. has accounted for less than or about the same as its proportionate share of international new drugs, not more and certainly not nearly all (Barral 1996; European Federation of Pharmaceutical Industries and Associations 2000). Until 2002, even the U.S. pharmaceutical industry was investing an increasing percent of its R&D budget in highly productive research teams abroad (Pharmaceutical Research and Manufacturers of America 2002).
24. Americans are getting less innovation and paying a lot more. Competing countries profit from these American self-delusions by covering their R&D and keeping their own drug prices reasonable, while leaving drug companies to make bonanza profits from the monopoly American market.
25. Price competition has been the greatest spur to innovation for over 200 years. Price protections reward derivative and me-too innovation as well as excessive costs and a focus on blockbuster marketing. If we want lower prices and more breakthrough innovations, we need to change the incentives to reward those goals (Baker and Chatani 2002).
The PMPRB has no authority to regulate R&D. The PMPRB's mandate is to report on R&D. With the adoption of the 1987 amendments to the Patent Act, Canada's Research Based Pharmaceutical Companies (Rx&D) made a public commitment that the brand name pharmaceutical industry would increase its annual R&D expenditures as a percentage of sales to 10% by 1996. In 2002, the R&D-to-sales ratio was 9.9%
Source.
I wonder how much USA pharmaceutical companies spent on drugs during the year 2002? I dug and found this. Most research comes from USA, but can the prices be lowered despite this?
Here is a slightly old biomedical research article. Many interesting things here.
* What is most interesting is that FDA is actively protecting the drug companies and is essentially a voice box for said companies. At least that is my interpretation.
* According to the article, 58% of world R&D comes from USA, but only 41% of new drugs come from USA. The conclusion is that current USA system is inefficient. A lot of questions arise from these numbers, such as will reform make it better or worse?
* Also, about 18% of the drug industry's research budget goes to basic research for breakthrough drugs. About 82% goes to derivative innovations on existing drugs and to testing.
* Furthermore, government protection from normal competition is now more than 50% greater for the drug industry than a decade ago.
* If American prices were cut in half, research budgets would not have to suffer unless executives decided to cut them in favor of marketing, luxurious managerial allowances or high profits. Chances are companies will not cut R&D because of low taxes.
Food for thought. Take it for what it is worth.
I will try to look for other interpretations.
Source.
Will Lower Drug Prices Jeopardize Drug Research? A Policy Fact Sheet
by Donald Light, Joel Lexchin
2004. The American Journal of Bioethics 4(1):W1-W4
This documented fact sheet provides evidence that all drug research by large firms, net of taxpayers' subsidies, is paid for out of domestic sales in each country, with profits to spare. Prices can be lower without jeopardizing basic research for new drugs. More exposure to global price competition would encourage more innovative research and less of the derivative me-too research that now dominates.
This documented fact sheet provides evidence that all drug research by large firms, net of taxpayers' subsidies, is paid for out of domestic sales in each country, with profits to spare. Prices can be lower without jeopardizing basic research for new drugs. More exposure to global price competition would encourage more innovative research and less of the derivative me-too research that now dominates.
In the U.S., the FDA Commissioner, Mark McClellan, and the drug industry are responding to pressures for lower costs by mounting a large campaign to pressure all other affluent countries to raise their prices to U.S. levels. They claim that lower prices do not pay for drug research costs, but we provide evidence that this is untrue. Ultimately, however, such nationalistic arguments are based on regarding basic research and new discoveries, which can happen anywhere, and the cost of trials, which are carried out in the countries deemed most commercially advantageous, as part of national companies and national accounts, when in fact they are part of a global economy for pharmaceutical products.
FDA Myths
1. FDA Commissioner, Mark McClellan, holds that other affluent countries like Canada and the UK set their prices for patented drugs so low that they do not pay for research and development (R&D) (McClellan 2003). We can find no evidence to support that claim.
On the contrary, audited financial reports of major drug firms in the UK, show that all research costs are paid, with substantial profits left over, based solely on domestic sales at British prices (Pharmaceutical Price Regulation Scheme 2002). Likewise, 79 research drug companies in Canada submitted reports showing their R&D expenditures have risen more than 50% since 1995, all paid for by domestic sales at Canadian prices (Patented Medicine Prices Review Board 2002). Sales to the U.S. and elsewhere are in addition to the positive, domestic balance sheets.
2. FDA Commissioner McClellan says that European or Canadian prices are "slowing the process of drug development worldwide" (McClellan 2003). There is no known verifiable evidence to support this claim. In fact, drug research has been increasing steadily in Europe as well as in the U.S., with some countries having a more rapid increase than the U.S. (Patented Medicine Prices Review Board 2002).
3. FDA Commissioner McClellan says that "price controls discourage the R&D needed to develop new products" (McClellan 2003). But there is no known verifiable evidence to support this claim.
R&D expenditures have been growing rapidly, though it is becoming more and more difficult to discover breakthrough drugs on targets not already hit (Harris 2003). The truth kept from Americans is that first-line treatment for 96% of all medical problems requires only 320 drugs (Laing et al. 2003). In wealthy countries, more drugs might be appropriate to treat people who do not respond to first-line agents.
4. FDA Commissioner McClellan charges that efforts to negotiate lower prices for patented drugs by other countries (and by major employers, unions and governors in the U.S.) are "no different than violating the patent directly" to make cheap copies (McClellan 2003). This charge echoes the drug industry and implies that large buyers seeking better value should be considered a criminal act.
5. FDA Commissioner McClellan paints a picture of other wealthy countries driving down their prices to marginal costs, but the widening gap between prices for patented drugs in the U.S. and other countries is due to drug companies raising U.S. prices, not other countries lowering theirs (Sager and Socolar 2003; Families USA 2003).
6. The "free-rider" problem that McClellan emphasizes can be solved by U.S. prices coming down to European levels, where they will cover all R&D costs, plus profits that are higher than those in most industries.
7. Drug company profits, after all R&D costs, have long been more than double the profits of Fortune 500 corporations. In recent years they have jumped to triple and even quadruple the profits of other major companies (National Institute for Health Care Management 2000). The global firms spend two and a half to three times more for marketing and administration than for research (Families USA 2001).
8. Americans pay for more R&D than any other country because the United States accounts for more sales than any other country. But while the U.S. accounts for 51% of world sales, it took 58% of global R&D expenditures invested in the US to discover only 43% of the more important new drugs (NCEs) (European Federation of Pharmaceutical Industries and Associations 2003). This means that other countries are helping to pay for the large, inefficient U.S. R&D enterprise, the opposite of what the editors of Business Week claimed (Business Week editors 2003). William Safire's claim of a "foreign rip-off" as Americans pay for the world's R&D is contradicted by the facts above (Safire 2003).
Research is misdirected by the industry, against patients' interests
9. Most drug innovation provides little or no therapeutic advantage over existing
Independent review panels plus a major industry review conclude that only 10 - 15 % of "new" drugs provide a significant therapeutic breakthrough over existing drugs and involve a new chemical or molecule (Barral 1996; Prescrire International 2003; National Institute for Health Care Management Research and Education Foundation 2002). Other industry-sponsored figures are much higher but not reliable.
10. The FDA approves drugs that are better than nothing (placebo) but does not test them against the best existing drugs for the same problem. Most research is for "new" drugs to treat problems already treated by other drugs.
11. About 18% of the drug industry's research budget goes to basic research for breakthrough drugs. About 82% goes to derivative innovations on existing drugs and to testing.
The long-standing survey of basic research by the National Science Foundation estimates that basic research has increased to 18% of the total research and development (R&D) budget for the pharmaceutical industry. It used to be less (National Science Foundation 2003). Industry-sponsored figures based on secret unverifiable data are much higher but not reliable (DiMasi, Hansen, and Grabowski 2003). The 85-90% of "new" drugs that have little therapeutic gain reflects equal protection from competition for much less investment and risk.
12. Congress has repeatedly extended patent protection for drugs beyond what other industries enjoy, despite much higher profits year in and year out. Government protection from normal competition is now more than 50% greater for the drug industry than a decade ago (National Institute for Health Care Management 2000). These incentives reward research into derivative large markets, rather than to finding effective treatments for diseases that have none.
13. These facts constitute the Blockbuster Syndrome: the lure of monopoly pricing and windfall profits for years spurs the relentless pursuit for drugs that might sell more than $1 billion a year, regardless of therapeutic need or benefit. Research projects for the disorders of affluent nations proliferate, as do clinical trials. Doctors are paid like bounty hunters to recruit patients for thousands of dollars each. Most patients get the misimpression that the experimental drug will be better than existing ones (Wolpe 2003). The corruption of professional judgment, ethics and even medical science follow (Williams 2003; Wazana 2000; Barnett 2003; Lexchin, Bero, Djulbegovic et al. 2003; Bekelman, Mphil, and Gross 2003; Villanueva, Peiro, Librero et al. 2003; Fletcher 2003).
Drug research costs much less than claimed
14. Drug companies claim to spend 17% of domestic sales on R&D, but more objective data reports they spend only 10% (National Science Foundation 2003). Thus, only 1.8% of sales goes to research for breakthrough new drugs (18% x 10%) (Love 2003).
15. Taxpayers pay for most research costs, and many clinical trials as well.
In 2000, for example, industry spent 18% of its $13 billion for R&D on basic research, or $2.3 billion in gross costs (National Science Foundation 2003). All of that money was subsidized by taxpayers through deductions and tax credits. Taxpayers also paid for all $18 billion in NIH funds, as well as for R&D funds in the Department of Defense and other public budgets. Most of that money went for basic research to discover breakthrough drugs, and public money also supports more than 5000 clinical trials (Bassand, Martin, Ryden et al. 2002). Taxpayer contributions are similar in more recent years, only larger.
16. The average amount of research funds the drug industry needs to recover appears to be much less than the industry's figure of $800 million per new drug approved (NDA).
The $800 million figure is based on the small unrepresentative subsample of all new drugs. It excludes the majority of "new" drugs that are extensions or new administrations of existing drugs, as well as all drugs developed by NIH, universities, foundations, foreign teams, or others that have been licensed in or bought. Variations on existing drugs probably cost much less because so much of the work has already been done and trials are simpler.
About half of the $800 million figure consists of "opportunity costs", the money that would have been made if the R&D funds had been invested in equities, in effect a presumed profit built in and compounded every year and then called a "cost." Drug companies then expect to make a profit on this compounded profit, as well as on their actual costs. Minus the built-in profits, R&D costs would average about $108 million 93% of the time and $400 million 7% of the time.
The $800 million estimate also does not include taxpayers' subsidies via deductions and credits and untaxed profits (DiMasi, Hansen, and Grabowski 2003; DiMasi, Hansen, Grabowski et al. 1991). Net R&D costs are then still lower.
Contrary to some press reports from the industry, screening for new compounds is becoming faster and more efficient and the time from initial testing to approval has shortened substantially (Kaitin and Healy 2000). The large size of trials seems more due to signing up specialists to lock in substantial market share. Advertising firms are now running clinical trials (Bassand, Martin, Ryden et al. 2002; Peterson 2002; Moyers 2002).
17. Because clinical trials have become a high-profit sub-industry, trial "costs" appear to be much more than is necessary.
An international team of experts estimates that clinical trials could be done for about $500 per patient rather than $10,000 per patient, a 95% reduction (Bassand, Martin, Ryden et al. 2002). The most detailed empirical study of trial costs also concludes that costs can be much less than reported (The Global Alliance for TB Drug Development 2001).
U.S. drug prices very high
18. Americans seem unaware how much more they are paying for drugs than other countries, in the name of the "free market" where prices are controlled by corporations. So-called "price controls" abroad are negotiated wholesale prices. Corporate price controls in the U.S. are un-negotiated monopoly prices, which then large buyers negotiate down.
According to a detailed analysis, American employers and health plans pay at wholesale 2.5-3.5 times the prices in Australia and other countries with comparable prices for patented drugs (Productivity Commission of Australia 2001). There is no evidence that these prices do not cover research costs. U.S. generic prices shadow patent drug prices and are also 2.5-3.5 times more.
19. High American prices are essentially monopoly rents charged to employers in every other industry. They shift profits from other industries to the drug industry.
20. If American prices were cut in half, research budgets would not have to suffer unless executives decided to cut them in favor of marketing, luxurious managerial allowances or high profits. They probably would not, because R&D gets such favorable tax treatment compared to other expenses. Lower prices would save other Fortune 500 companies billions in drug benefit costs, and drug company profits could come into line with the profits of the companies who pay for their drugs.
Realign incentives to reward true innovation
21. Current incentives strongly reward derivative innovation. We get what we reward.
22. Because the U.S. is by far the biggest spender, it has by far the most R&D and new drugs. Four other industrialized countries, however, devote more of their GDP to R&D for new drugs than the U.S. (Patented Medicine Prices Review Board 2002).
23. Officials of drug companies commonly claim that nearly all new drugs are discovered in the U.S. However, the industry's own studies (and others) show that over the past quarter century, the U.S. has accounted for less than or about the same as its proportionate share of international new drugs, not more and certainly not nearly all (Barral 1996; European Federation of Pharmaceutical Industries and Associations 2000). Until 2002, even the U.S. pharmaceutical industry was investing an increasing percent of its R&D budget in highly productive research teams abroad (Pharmaceutical Research and Manufacturers of America 2002).
24. Americans are getting less innovation and paying a lot more. Competing countries profit from these American self-delusions by covering their R&D and keeping their own drug prices reasonable, while leaving drug companies to make bonanza profits from the monopoly American market.
25. Price competition has been the greatest spur to innovation for over 200 years. Price protections reward derivative and me-too innovation as well as excessive costs and a focus on blockbuster marketing. If we want lower prices and more breakthrough innovations, we need to change the incentives to reward those goals (Baker and Chatani 2002).
D
Deleted member 7164
Guest
However, cutting-edge medicine is not included in that kind of plan.
Genghis Khan
Ancient Mariner
@ cmpoet -- thanks for the answer.
Apparently, USA does not have the highest pharmaceutical costs. Germany, Japan and France have higher costs than USA, but UK has lower costs. Source.
This German article (in English) states that drugs are spiralling in Germany and that the country as well as Switzerland and Sweden have higher prices (one drug looked at) than USA. Source.
Thinking out loud: the only way we'll know the price of pharmaceuticals is to take a particular drug and compare it in many countries. This is the first example of comparing a specific drug in countries. (I'm not putting too much effort into this though).
Apparently, USA does not have the highest pharmaceutical costs. Germany, Japan and France have higher costs than USA, but UK has lower costs. Source.
This German article (in English) states that drugs are spiralling in Germany and that the country as well as Switzerland and Sweden have higher prices (one drug looked at) than USA. Source.
Thinking out loud: the only way we'll know the price of pharmaceuticals is to take a particular drug and compare it in many countries. This is the first example of comparing a specific drug in countries. (I'm not putting too much effort into this though).
The cost is not just on the pharmaceutical side either. The following article is frm a Reuters news report
http://www.thomsonreuters.com/content/p ... are_system
from today, detailing the waste in the US health care system, starting with the duplicate, inefficient excessive paperwork involved -- e.g. something like 1/4 of the budget of a US hospital budget goes to billing and administration which they say is twice that of a Canadian hospital.
Can anyone, maybe Khan or someone, let me know if Canadians use electronic medical records and what their experience was with that?
The opinion in America seems to be there would be a loss of privacy with electronic records, but I disagree and think it would make everything more efficient, especially if you move often or have to change doctors because your employer is changing your health insurer for the third time in six years, as mine is. (My current doctor will cost me about 1 1/2 as much per month in dues because she is out of network of the new carrier.)
http://www.thomsonreuters.com/content/p ... are_system
from today, detailing the waste in the US health care system, starting with the duplicate, inefficient excessive paperwork involved -- e.g. something like 1/4 of the budget of a US hospital budget goes to billing and administration which they say is twice that of a Canadian hospital.
Can anyone, maybe Khan or someone, let me know if Canadians use electronic medical records and what their experience was with that?
The opinion in America seems to be there would be a loss of privacy with electronic records, but I disagree and think it would make everything more efficient, especially if you move often or have to change doctors because your employer is changing your health insurer for the third time in six years, as mine is. (My current doctor will cost me about 1 1/2 as much per month in dues because she is out of network of the new carrier.)
Nova Scotia is currently in the process of digitizing medical records. There was a bit of administrative bullshit, but the project is well underway. They'll be using the same security procedures as are used for government emails and the like, so it should be pretty secure in the end. of course, it's not perfect, but it's a good sacrifice for efficiency of care.
Genghis Khan
Ancient Mariner
jmpoet said:
I recently and bitterly mentioned this in the "Swine Flu" thread: http://forum.maidenfans.com/index.php?topic=18614.120
Here it is. Millions upon millions of dollars were literally wasted. Clearly, the government of Nova Scotia is better than that of Ontario. I'll look up an article for you soon, cmpoet.
"They [the Germans] must have taken lessons from the Canadian government(s) or maybe my politicians took notes from yours. My provincial gov't spent millions on creating E-Heath and they literally have nothing to show for it. They didn't want to use a pre-existing data base, nor were they willing to have a local university do it for free. They'd rather use the tax payer's money to give to their loyal gov't employees that had no other job to do. Health care and government -- you gotta love it."
EDIT: I just realized I accidently typed EI-Health instead of E-Health in my original post.
I seem to recall that you guys went for it first, GK. There was a big patronage scandal around it, but once we took care of that, the work has been proceeding without too much waste. It's costing a few millions but it'll be worth it.
Genghis Khan
Ancient Mariner
I'm not sure which province had the head start, I just know that Ontario is right where it started -- at zero. The plan will go on and eventually there will be E-Health. However, as I indicated it could have been done way cheaper and I'm not even talking about the scandal.
Aside: Both of the major parties really piss me off. There is so much patronage, and pork barrel projects in the last decade it makes me sick to my stomach.
Here are some articles for Ontario's failed electronic Healh care.
Article 1.
Article 2.
Article 3.
By the way, the cost has grown since the news broke earlier this summer; the new estimate is $1 billion wasted.
Is there any further explanation about your article, cmpoet, such as where the numbers come from?
Aside: Both of the major parties really piss me off. There is so much patronage, and pork barrel projects in the last decade it makes me sick to my stomach.
Here are some articles for Ontario's failed electronic Healh care.
Article 1.
Article 2.
Article 3.
By the way, the cost has grown since the news broke earlier this summer; the new estimate is $1 billion wasted.
Is there any further explanation about your article, cmpoet, such as where the numbers come from?