There are times where the government, can, and should drop in and buy the entire IP associated with a medication. This price should be set with a council of various representatives, and it should not be something that the drug manufacturing company can reject.
Most of the research here is already partially funded by the tax payer through Government funds of colleges, etc etc anyway.
This isn't even something unheard of. The US has the power to unilaterally cancel patents.
For what price?
This is part of the cost of doing business. If a drug company is going to close shop and want to go operate in Europe or China, that's a risk we should be fine taking.
Solving obesity is free. For the vast majority of people, Ozempic or Wigovy is solving a motivation/discipline problem, not an obesity problem.
> This price should be set with a council of various representatives, and it should not be something that the drug manufacturing company can reject.
Any other authoritarian ideas? What a great way to destroy innovation.
Obviously not, silly. A product is a product. It doesn't matter if it saves millions of lives, ends them, or nothing in between - companies should be free to charge whatever they want, and if you judge them negatively for that, you're clearly in the wrong.
I can't believe I have to explain this!
I'd invert that: on the scale of a population, motivation and discipline are empirically not the cure for obesity. The statistics and the studies are on my side here. I agree that it would be convenient if that strategy, which we've been trying for about 80 years now, suddenly turned out to work. But my guess is doubling down on it wouldn't be any more effective than it has been, so let's take this new approach, which appears to work much better, seriously.
Drug X was funded for development for $XXX million because it was perceived to have a strong positive expected ROI dependent on selling the drug for $Y leading to an expected value of $ZZZ million.
If you're offering $ZZZ million for it then the drug companies won't complain but you're just having the public pay the total cost up front. If you're offering substantially less than $ZZZ million, then the drug company will not invest $XXX million because you've just slashed he potential ROI.
Private R&D can still fund development and set prices how they want. But they’ll have to compete with publicly funded alternatives.
The shame is that NIH already provides an incredible quantity of funding, but it certainly doesn’t result in the US getting any better drug prices…
Why not take the extra step then? Government funds the research, result is free-to-use for all.
Or: drug developed through research mostly at public institutions like universities etc? -> sorry, no patent 'protection' then.
Pharmaceutical companies could then produce whatever they consider worthwhile. But... squeezing buyers too hard? Competitor will step in with a cheaper offer.
And the research is not paid for by the taxpayer. The NIH budget is $20B per year. Pharma R&D is $200B per year.
And you have to be very careful about what counts as R&D, for example Merck reported $30B in R&D, but one half of that was actual for mergers and acquisitions (of research related companies). I have yet to find anyone who has good numbers on this, which is why the study in this article is interesting: it sounds like the article is going to be very transparent about what it means.
And for absolute candor here, you have to remember that once the NIH grants arrive at a university somewhere between 15% and 60% (really, it varies wildly) is taken off the top for University expenses, some of which are related to the research (e.g.: building costs), and some of which are not (arguably: university administration).
More likely they are two different treatments that maybe take the same general approach. If the publicly funded one is available at cost, the private one would have to be significantly better to make any money.
It would be great if the public developed useful, novel drugs. But if you're proposing a system where the private side can still develop them, patent them, and sell them at a high price; then it's not really different from today. You shouldn't assume that both parties would solve problems independently and redundantly. It doesn't even really make sense to pursue alternative development. If there's a cure for X; are you REALLY going to encourage public researchers to find a different cure for the same thing to try and lower the cost of the drug? That sounds like a very ineffective approach.
In which case, shouldn't I be asking you what optimal profit looks like? Why would that be a question to me, when I was listing it as a problem with profit models?
If that wasn't your argument, then I have no idea what you're arguing.
(But I will go ahead and answer, which is that individual affordability should not be a factor in buying medicine, which implies that normal patent-and-profit models are not the way to go.)
This sounds like the government just seizing assets once they realize they are valuable.
What do you feel might be the consequences of this?
Acquired companies in drug development are essentially spending investor money on R&D until: a) they get to market standalone (unlikely, risky, too expensive), b) the clinical trials fail hopelessly early on, or c) they get acquired by a drug company with a large balance sheet and expertise to finish trials and commercialize the drug.
Because M&A includes likely profits for the sellers?
As a simple example using unrealistically low figures: if I spend $100 developing a drug, and the drug is so good that you decide it's worth buying the patent from me for $1M, you surely wouldn't argue that $1M has been spent on R&D?
But before you complain about that, R&D paid to universities also include overhead for the universities, and it is quite significant. In US it is over 50%. The universities partly act like investors in this way, the administration invest money (e.g. start-up grants, some professor salary) into research groups and expect them to bring external grants, and the overhead partially pays for that.
Depending on what you want to measure, you need to include the cost of people and resources involved in the production of the thing you want, and not just the marginal unit cost of the thing. It may not be easy to draw the line, but you have roughly two choices:
1. Deduct a reasonable percentage from both university grants and M&A
2. Accept that without profit, people would not have funded certain research (which carries risks and requires selection), so you include those as costs of doing business in your assessment
Another way to think about it is that the money you spend on research itself containts other people's profits too. If you buy equipment, the equipment company makes a profit. Staff has savings. The govt always takes a cut. It's profit all the way down.