Worth noting as well that J&J have shut down their entire division in communicable diseases because it was so unprofitable for them.
(Source: I work in this industry)
Part of the costs are labor and materials, the majority is regulatory burden. It is a well established financial de-risking activity before spending the hundreds of millions more for a US/EU trial.
Edit for visibility:
The drugs in this trial are all previously developed and approved by other companies, some as early as the 1950s. They ran the trials in Kazakhstan, India, and similar developing countries. They have no manufacturing and supply chain, because they buy commercially available generics off the shelf for pennies.
There is a lot to say about pricing, but the guardian is shamelessly engaging in disinformation.
If you can make more money by not doing X, than doing X, it doesnt matter.
You can donate time or money even if you are running a loss in real, nominal, or opportunity costs.
Seriously, the argument is that drug companies should only do the most profitable thing? If that's the case, they deserve to have all subsidies removed, and be regulated into oblivion, because they will serve no purpose, but profit.
Just see what happened with the opioid epidemic. If you're only looking at next quarters profits and destroy public trust, while skirting the legal boundaries you'll make bank until you're not.
You're the first one to make any kind of suggestion for what they should do, so I'm not sure why you're jumping to that conclusion
>If that's the case, they deserve to have all subsidies removed, and be regulated into oblivion, because they will serve no purpose, but profit.
The purpose that they serve is to save your life with drugs. If that doesn't mean anything to you and isn't worth any money then I don't think we will find much common ground.
In your analogy, drug companies are the doctors. They want to make money for saving your life. Why would you want to regulate them out of existence?
>Was it 'unprofitable' as in 'losing money', or 'unprofitable' as in 'not worth
the time'?
>If you can make more money by not doing X, than doing X, it doesnt matter.
>The purpose that they serve is to save your life with drugs. If that doesn't mean anything to you and isn't worth any money then I don't think we will find much common ground.
Frankly, most doctors, biochemists, and pharma-chemists I know have little difficulty seeing this. It is about helping people not just making money, and doing otherwise while selling it as the former, is unethical.
I thought I was clear, but I will try again. The financial calculus is the same between "losing money" and "not worth it". It doesnt matter if the J&J division of communicable disease is running a positive or negative balance if J&J (or its owners) can more doing something entirely different. The question is do we want to be losing money on this. That is not to say they can't or shouldnt keep doing it as a public service or out of altruism, but the question is the same.
>My point was that if their purpose is only to do the things that make marginally more money.
I dont think that is a valid assumption to make about the industry. 99.9% of the time, the way to make more money is to make a product that saves or cures more people. If your product saves fewer people, People would by the old thing instead of the new thing for 2x the price.
Now, everyone is free to say they dont like the price, which is fair. However, the price is high because rich American customers dont care about the price. IF they did, they could always buy the cheap old thing.
It is like someone who is angry at the butcher for the price of filet minion, but keeps paying ever higher prices, and refuses to buy the tri-tip.
Europeans prices are half the US simply because they stop buying filet minion and get tri-tip when the price gets too high. US prices are twice that because we pay it!
It is crazy to blame the butcher for raising the price when you willingly keep throwing more money at ever higher prices!
No industry anywhere in the world expects the seller to keep prices low when customers keep throwing money at them.
The fundamental problem with US healthcare costs is that not one party in the system is willing to control spending. Nobody will say no to a treatment 1% better for 200% the cost.
Patients will pay anything for the latest drug because they want it, and the costs get spread over everyone's premium. Insurance is happy to see medical costs balloon because their profit is capped as a % of healthcare costs. manufacturers are happy to see costs go up, because that's what they are selling.
I'm sure Americans that were rationing out their insulin would love to hear more about how they "don't care about the price" and you comparing their need for life-saving drugs to simply choosing to keep buying filet minion over cheaper beef cuts.
Or if they do, they run out of money and have to stop.
There is no "should" here. Just a description of how the world works.
When a pharmaceutical leader says that developing new drugs "isn't profitable," it would be nice to know if that meant "clinical trials don't make as much money as cosmetic drugs" or "clinical trials actively lose us money."
Thanks for putting the disclaimer. But your argument is still not convincing that pharma industry has no fundamental moral backbone (a reason I left it after my PhD).
A company where revenue is 90% of expenses is in big trouble.
Another company that could make 120%, but is only making 110%, is doing fine.
More directly: If every division is profitable, there's not a great need to cut the less-profitable divisions. And if that division was doing something useful, it can be negative for the public if it's shut down entirely, so it's worth wondering how we could save these still-profitable endeavors.
Opportunity cost.
That's why I specifically said "great need". Opportunity cost is not usually dire.
But in a global sense, shutting divisions down entirely also tends to be pretty bad in terms of opportunity cost.
And without knowing the specifics, there can be a lot of value from continuing to produce those sorts of things, if it's within reason. I mean shit they probably spend more on ads saying how great they are than it would cost to actually be great (by saving lives with cheaper meds)
https://www.ama-assn.org/medical-students/specialty-profiles...
Majority will have a micro, breast or hand practice and have a side hustle in aesthetics so the overall satisfaction stat you’re citing is not reflective.
There are different hassles in cosmetics like increased overhead, patient expectations (which are much higher in cosmetics) and advertising/patient recruitment. Call can be worse as the patient paying $50k for a rhinoplasty expects the surgeon to answer the phone for every whim.
This is the system we built, neoliberal capitalism, and this is the system we would have to modify to do the things you think we should be doing.
It's about time, frankly.
If people are not willing to pay at least as much as research costs, the drug certainly won't get created.
what if every other company in your industry is making 135% and hiring all the best people away from you.
Not being in line with the rest of your industry also has negative consequences for the future of a company.
If a company can make X% return on capital (researchers, equipment, marketing, regulatory engagement, office space etc) working on communicable diseases, but Y% >> X% doing something else, a responsible steward of somebody else's pile of money is supposed to direct the capital towards Y.
Not to speak for the other poster, but because it's too damn expensive for the average person now. And when the average person can't do things like "eat", "pay rent", or "get live-saving or misery-ending medical treatment", that person bands together with their ilk and tears society apart.
Doctors, I'll let slide, because they do actual labor and spent decades in school (often going nearly-broke doing so) to get where they are. Most doctors are well-paid but they're not financier or c-suite level rich, and that's who today's drug prices serve. That and a bunch of ambiguous "shareholders" who more often than not had more ambition for their retirements than the economy they spent the last 50 years operating can support, despite decades of warnings.
If so, that's the problem, not the amount of profit.
Increase pay to match, making the profit 105% of expenses, is there still an issue? If there are other negative consequences I need you to explain them.
(Side note, if you say everyone else is making 135%, but our company could only make 120% if we switched focus, are you sure it's not us that's paying higher salaries?)
Everyone in America who makes <138% the poverty level qualifies for free insurance.
qualifies is kind of a weasel word though, "in theory they qualify, in practice ..."
I'm guessing this is the US Medicaid system that recently
dropped enrollment by more than 11 million people in the past year, including 4.8 million children, the vast majority of whom were kicked off their healthcare for surprise procedural issues.
Admittedly that's the UK Guardian reporting on John Oliver which is indeed an auto nope for some, but the issues highlighted here seem real.
Can you explain it?
As I understand it, Medicaid has waived all ongoing requirements for coverage due the pandemic, and people are now required to verify they still qualify. People who make too much will and do not qualify for Medicaid now need to purchase subsidized insurance on one of the markets.
Of course the article does noting to explain what "surprise procedural issues" means. IT seems that the word surprise is an entirely editorial insertion. Based on KFF reporting, it seems that it just means anyone who didnt complete the renewal processes. This includes those that no longer qualify and therefore did not complete complete the renewal process. Of course there is valid concern that some of these people may still qualify and did not complete the paperwork, but it completely unclear how many that is. It could be 0.1% of the 11 million or 99%.
https://www.kff.org/report-section/medicaid-enrollment-and-u...
My only point of reference is ~4 decades of usenet and web forums routinely having mention of people (in the USofA) being bankrupted by medical incidents (heart attacks, car accidents, sporting injuries, non elective surgeries, etc) that here and in the UK are relatively mundane affairs.
I struggle to fathom a country where there is a need to "renew" health coverage .. here we have 'adequate' and 'private' and essentially everybody has adequate as a fallback with no need to tie basic health coverage to an employment package that is lost when someone fires|quits.
Each to their own, here the ideals of good health and sufficient basic wage have been tied in to social contract since Federation.
This is a naive statement.
Viagra made a ton of money, while only benefitting a slice of a slice of humanity. It doesn't save lives, it helps some people get erections.
Compare and contrast to real, widespread diseases that affect millions, and are risk factors for billions, but require public research dollars because the pharmaceutical industry doesn't see enough profit compared to a new erectile dysfunction or baldness treatment.
That's not an industry working to the public's benefit. That's an industry working to old white men's benefit. It's helping itself and to hell with anyone else.
It is high because of the system structure and the fact that most people are willing to tolerate.
I'm pushing back on the moronic idea that prices are high because drug companies are too “greedy“ in the US, but the same exact company is mysteriously less greedy in the EU or AUS. The difference is that insurance in those places negotiate a lower price, so they get one!
Insurance companies in the US operate on a cost plus basis, so they want prices as high as possible.
Medical bankruptcies do happen in the US, at a rate of about 1 per 1,000 people per year.
If the company is spending $1B/yr for a 1% return in that division, but the return on bonds is 5%, the financial answer is to liquidate, and put the cash in bonds.
The truth is, you absolutely can provide a life-sustaining level of care to most people without bankrupting them. In fact, we used to, and many countries do. We just don't want to do what's necessary (punish excessive executive compensation, reduce the importance of equities as a store of value, make unhealthy foods more expensive than healthy, etc.) in order to make that happen, because somehow, the laws of human behavior in western nations just don't apply in the United States.
My claim was a bit too strong. But I think my general point stands.
There was no checking for a while thus little need for resources needed for checking (there was still some because people still came into the system.) Now there's a big demand for renewal checking and it's working on a basis of dropping people if they don't complete it even if the problem is on the state's end. And, yes, it's completely unclear how many--because the red states want these failures, they're not keeping track.
It's the usual garbage of putting roadblocks in the way of benefits to keep down the amount paid out.
you imagined a scenario in which a company was not maximizing profitability of their drug production and development and asked what would be the problem with that, I provided an example problem that might exist if that were the case and your response is ok let's make a different starting assumption?
My assumption though is if we switched focus we could make 135%.
>Increase pay to match, making the profit 105% of expenses,
at some point in this imagined scenario it ends up profit of 99% of expenses, which it seems from your previous example is not ok. The company with higher profit margins has more room to maneuver, can offer better perks to employees, can offer higher salaries, assuming only some of the employee pool is self-interested that still means you have less ability to get them one way or another.
Assuming also at the top level that wages are not a percentage but rather negotiated, oh well rich pig pharmaceuticals said they would pay 195 per year, that's 40 more than you're offering - can you match? At some point not being as rich as the other players starts to affect your game.
Oh, I didn't realize your example was supposed to be different from my example. I thought you were adding on to it. If your example is different, then you left out several important numbers.
> at some point in this imagined scenario it ends up profit of 99% of expenses, which it seems from your previous example is not ok. The company with higher profit margins has more room to maneuver, can offer better perks to employees, can offer higher salaries
It can, but will it? How many industries do you see dumping all their revenue into extreme wages?
If that happens, fuck it, that's basically a utopia, maybe I should join those businesses.
But most of the time extra profit goes to the shareholders, not the employees. The money doesn't end up improving the company's hiring game.
I'm new to the issue so I assume it is 99% individuals failing to respond
But this is really all besides the point. The point is that prices are high because the system is fucked up.
Prices aren't twice as high as Europe because the companies more greedy here. It is the same companies! The difference is the system. Different laws and institutions
>But this is really all besides the point. The point is that prices are high because the system is fucked up. Prices aren't twice as high as Europe because the companies more greedy here. It is the same companies! The difference is the system. Different laws and institutions
And who, pray tell, lobbies against changing laws and institutions in the United States re: drug pricing? The industry itself: both drug manufacturers and the insurance companies that pay for them. Ultimately a switch to a system like that found in, say, Europe, reduces the pool of money that gets spent on medicines every year in the United States. That's bad for their bottom lines.
I do think that the US policy has pretty bogus incentive on both sides. If you think it is just the lobbying, I think you are fooling yourself. Most Americans hate the idea of a fully social system, and both parties reject common sense hybrid options like in the best European systems. They are too radical for the right, and not radical enough for the left. As a result, we get the worst of all worlds. We spend more public funds on healthcare than most european countries, but dont have universal coverage, and we pay extreme private costs on top of that.
There are lots of better options the US could pick, but wont .
With that said, Viagra was initially developed for high blood pressure and chest pain. Testing didn’t pan out but it worked wonders for erections so it was rebranded. It is also used in pulmonary hypertension.
Look at the reports of huge backlogs with the IRS. What would happen if they automatically started prosecuting you for failure to file as of June 1st?
I do think that newer more expensive products provide worse patient outcomes at rates significantly higher than 1 / 1000 times.
However, the comment I objected is discussing "ways to make money" as a pharmacutical company. Which is a generalization that is laughably naive at best. We have plenty of examples of drug companies trying to make money in ways that harm patients from how they fostered the opiod epidemic.
Without superiority, it you will struggle with investors, trials, approval,and then convincing doctors to to switch to it.
Everyone can come up with an example, and point to per due, but the FDA processes 10s of thousands of device and drug submissions per year. Most are in cutthroat markets with competitors.
If we are talking about individual company actions or statements, and not products, then the numbers are even worse. There are literally millions of actions associated with a product, and I would again argue that >99.9 are made in the favor of patient interest.
Making a inferior product and scamming your way to profit is an exceedingly rare strategy because it is both extremely difficult execute successfully.
I think it is clear that new product development doesn't prioritize optimal patient benefit, but that is a different topic. It needs to be good enough to sell, then it becomes a question of how good vs how much money.
That isn't even true at non-profits, let alone for profit companies. You seem to have no idea how the world works.
I didn't say "free", I said not being exposed to medical bankruptcy.