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I'm aware of the process by which drugs are approved, how long they take, and how much it costs. I also believe that drug companies are amply able to cover that, and will specifically fail to innovate on types of drugs that are not likely profitable, nor are they willing to to significant basic research. knox_harrington posted:The health system in the USA would actually be very straightforward to solve (though of course complex in implementation). Even here in ultra-capitalist Switzerland there is a way better system, and it is for-profit. I personally can't see the problems being solved until there is a shake-up in how politicians are paid and funded. Notably, Switzerland is I believe the only country that comes close to the US in per capita healthcare spending.
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Oct 21, 2020 17:58
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Color me shocked that the net profits for the HCI were only 3%. I would have assumed much higher than that. At least double. How much would it be if you stripped out the marketing and advertising budget I wonder. I work in large format printing and the amount of poo poo we do HC companies just looking to spruce up their offices is staggering.
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Oct 21, 2020 17:58
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BiggerBoat posted:Color me shocked that the net profits for the HCI were only 3%. I would have assumed much higher than that. At least double. Don't forget the incredible salaries to executives.
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Oct 21, 2020 18:01
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Jaxyon posted:I'm aware of the process by which drugs are approved, how long they take, and how much it costs.
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Oct 21, 2020 18:09
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BiggerBoat posted:Color me shocked that the net profits for the HCI were only 3%. I would have assumed much higher than that. At least double. Very few successful businesses wildly overspend on customer acquisition costs because it will rapidly drive you out of business (if it costs you $5 to earn $4, you can't do that forever). Now, if you didn't have a market based provider system and removed choice (e.g. forced people to go to a specific doctor or take a specific drug) you could get rid of all those costs with some degree of tradeoff. Having stricter standards of care around drug prescriptions would be a great way of lowering marketing costs since the drug companies would just lobby whatever body set that standard of care versus having to lobby every doctor.
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Oct 21, 2020 18:18
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Jaxyon posted:I'm aware of the process by which drugs are approved, how long they take, and how much it costs. Ehh, you've repeatedly said that drug development is just marketing, which isn't close to true. And drug companies absolutely do discovery work and basic research, it's just more effectively done at universities. Rare diseases may need to be approached differently. Yeah companies are not going to spend money on treatments they can't recoup, so governments have the ability to incentivise the development. Governments generally do not want post the $1bn upfront to develop therapies so it kind of needs to be done by industry. The key is pricing control at the buyer side. quote:Notably, Switzerland is I believe the only country that comes close to the US in per capita healthcare spending. Even given the inefficiency and profit motive the proportion of GDP in Switzerland is hugely lower: 12% vs 18%. Anyway the point is that even by the standard of a very suboptimal system the US spend is ridiculous, and a proper insurance or national health system could slash those costs and also deliver better outcomes. knox_harrington fucked around with this message at 20:59 on Oct 21, 2020 |
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Oct 21, 2020 20:57
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Jaxyon posted:As for drug company financials, we both know that drug companies are more accurately described as marketing companies than researchers, spending twice as much on it. Getting a drug through FDA approval requires a lot of spend, and so does that dinner with "thought leaders" at the steakhouse. I have to imagine that without spending billion on stock buybacks and advertising that is only legal in 2 countries in the entire world, they could be a lot more efficient about research. And that's with the taxpayer covering all the actual developments and giving them more or less free to the industry. I'm skeptical of this claim -- I think it's plausible but the evidence for it is flimsy. The problem I've seen is that it's actually not easy to pin down what pharma companies spend on sales & marketing. The typical accounting in financial reports lumps sales & marketing into a broader category of Selling, General & Administration (SG&A), where the S comprises sales/marketing and G&A comprises things like general operational overhead and legal fees. I honestly don't know the breakdown of S vs. G&A expenses, but there are at least some estimates that the S part of S&GA is less than R&D spend (source, source). Another factor is that over the past decade+, many big pharma companies have effectively outsourced their early-stage development programs to small biotechs that they then acquire once they've produced positive results. So while the big pharma companies definitely do spend too much on marketing, there are also a lot of small-to-mid sized biotech companies that spend very little on marketing and primarily spend on R&D. I *think* that the cost of acquisition of these companies does get accounted for in R&D spend figures for big pharma, but this still underestimates R&D spend in the industry overall because of survivorship bias -- big pharma are only paying for the early-stage programs that are successful, but there is a lot of money that is spent on unsuccessful programs that die before ever hitting a big pharma financial statement. At the end of the day, regardless of whether any given pharma company's R&D budget is higher or lower than it's marketing budget, I think we probably can agree that the marketing budget is too high, that a lot of pharma marketing doesn't add value to society, and that with improved pricing regulations pharma would need to spend less on marketing so they could be more efficient with R&D. Jaxyon posted:I also believe that drug companies are amply able to cover that, and will specifically fail to innovate on types of drugs that are not likely profitable, nor are they willing to to significant basic research. Agreed. A good case example is antimicrobials, where the current hospital capitated reimbursement system means that if hospitals use newer, more expensive antimicrobials they lose money, so instead they stick with less effective generics, so the pharma companies don't make as much money as they thought, so they divest from antimicrobial R&D even though it's objectively one of the most pressing needs in drug development globally. Even though it may cost $2billion+ to bring a new antimicrobial to market, there are quite a few major pharma companies that pull in $10billion annually in net profit, so maybe that value should be returned to society instead of shareholders... Here's an article on the antimicrobial crisis in case anyone hasn't read about it before, I can post the full text if needed: https://www.nytimes.com/2019/12/25/health/antibiotics-new-resistance.html
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Oct 21, 2020 23:45
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Antibiotics are similar. So we have the industry making piles of cash where the profit motive specifically interferes with innovation, while we have a bunch of slight reformulations of existing drugs and that counts as "innovation".
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Oct 22, 2020 01:12
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Amazing how all of these other countries with universal healthcare manage to have plenty of medicine and innovation without charging patients thousands and thousands of dollars for necessary medications. We are the richest country in the world, we should have the best healthcare in the world. Sadly, this is nowhere near to what we actually get, due to our for-profit system always looking to find a way to make sure some middleman somewhere wets his beak.
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Oct 22, 2020 01:24
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WampaLord posted:Amazing how all of these other countries with universal healthcare manage to have plenty of medicine and innovation without charging patients thousands and thousands of dollars for necessary medications. Going to have to disagree with your first point. Completely agree with your second point though. A lot of medical innovation happens at a global level. Pharma R&D budgets are primarily funded by the outrageous prices we pay for drugs in the US — I think for most big pharma the US generally accounts for around 40-60% of total sales — and when they are ready to bring a new drug to market, regulatory applications are generally submitted to a ton of countries. So the same medical innovation gets distributed globally, but in the US we pay more for it, thereby funding the next breakthrough drug (but also funding the next me-too drug that adds nearly no value to society and is still expensive as gently caress). If US revenues were cut, pharma R&D would need to become much more efficient, and even if it did I think overall productivity would decrease. Which is where I go back to my previous posts and say that this only matters if we accept the premise that more R&D productivity is necessarily a good thing, which I think is highly debatable if not outright wrong. I think if you could “turn off” medical innovation tomorrow, maybe it wouldn’t be such a bad thing. Maybe it would help us spend fewer resources on finding ways to make people live a little longer, and more on allowing people to live better, which entails thinking about healthcare but also about other sectors of society. The idea that a lack of innovation is anywhere near the top of the US healthcare system’s problems is laughable, so if someone says “we can’t have M4A because it would kill innovation!”, I think the stronger rebuttal is in disproving the premise that more innovation = better healthcare, rather than trying to make a more tenuous case that innovation wouldn’t decline.
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Oct 22, 2020 05:10
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If you can't pay for your medication, AstraZeneca, a British company that cannot advertise it's drugs in Britain, may be able to help.
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Oct 22, 2020 06:14
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At some point the U.S. will have to deal with its primary directive of having greed drive all things I think.....
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Oct 22, 2020 14:01
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Sharks Eat Bear posted:Going to have to disagree with your first point. Completely agree with your second point though. I already posted a study that says you're wrong on this. You disagreed because of your belief, restated here, that the US drug imbalance funds the innovation of other countries as well. However, if that were the case you'd think that US drug companies would disproportionately benefit from the arrangement(via political proximity to the regulatory apparatus and revenue streams), yet the US is more or less exactly in proportion with it's wealth and population, while several countries on that list perform disproportionately better than the US. Right now pharma R&D is a distant second fiddle to marketing, acquisitions, and stock buybacks, financially speaking. And pretty much all drug innovation has come from basic research done on the public dime, including basically every novel drug in the past 10 years(see my earlier citation). R&D may be developing new products, but it's not developing innovation.
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Oct 22, 2020 17:58
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Jaxyon posted:You disagreed because of your belief, restated here, that the US drug imbalance funds the innovation of other countries as well. Drug R&D is largely an international project where revenues are pooled together and used to meet clinical development and regulatory approval needs across the world. Clinical trials predominately run in the US can be used as the basis for approval in Europe. Only certain countries like Japan require clinical trials in their own population for approval. You can look at quarterly earnings statements or the Roche/Genentech finance dashboard to see split of US vs. Europe or US vs. ex-US. For example, US revenues in 2019 were 20B CHF vs. 6B CHF in Europe. US does not have >3x the population of Europe. Jaxyon posted:However, if that were the case you'd think that US drug companies would disproportionately benefit from the arrangement(via political proximity to the regulatory apparatus and revenue streams) Can you explain what you mean by "benefit" here? Novel therapies are almost always approved in the US first followed by EU-5 followed by Switzerland/Austria, Nordics, etc. Companies are going to prioritize approval in countries based on revenue potential because it funds expenses, R&D and otherwise. Jaxyon posted:yet the US is more or less exactly in proportion with it's wealth and population, while several countries on that list perform disproportionately better than the US. Maybe? It depends on what specific metric you're talking about. For example, UK has lower cancer survival rates than peer countries based on a Lancet study. Is this because NHS/NICE rations care and fewer patients receive expensive novel therapies compared to peer countries that spend more per capita? Maybe, maybe not, but it's dangerous to fall into univariate explanations on these things. Jaxyon posted:Right now pharma R&D is a distant second fiddle to marketing, acquisitions, and stock buybacks, financially speaking. And pretty much all drug innovation has come from basic research done on the public dime, including basically every novel drug in the past 10 years(see my earlier citation). R&D may be developing new products, but it's not developing innovation. There are too many things to unpack here, some of which others have already been addressed. "R&D may be developing new products, but it's not developing innovation" doesn't make much sense. A Ph3 trial that doesn't meet its endpoints (e.g., statistically superior efficacy/safety) isn't going to spend money on regulatory approval and commercialization because it won't be used.
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Oct 22, 2020 20:29
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KingNastidon posted:Drug R&D is largely an international project where revenues are pooled together and used to meet clinical development and regulatory approval needs across the world. Clinical trials predominately run in the US can be used as the basis for approval in Europe. Only certain countries like Japan require clinical trials in their own population for approval. US based companies are going to have better access to the source of revenue, which is the US's lack of ability to regulate drug prices, which has been given by you and others as a driver in drug development. I am pointing out, with a study to back me up, that one would expect any disproportionate contribution to innovation to be going to the US int hat situation. Yet it's not. The US is in proportion, and other countries with less access to the US government and market are disproportionately better. So I'm using a research study to say that argument is not well supported. quote:Maybe? It depends on what specific metric you're talking about. For example, UK has lower cancer survival rates than peer countries based on a Lancet study. Is this because NHS/NICE rations care and fewer patients receive expensive novel therapies compared to peer countries that spend more per capita? Maybe, maybe not, but it's dangerous to fall into univariate explanations on these things. By this logic, the US, which spends around TWICE as much as similar OECD nations, would be perhaps a top 3 in many or most metrics. But it isn't. It's above average in some metrics, at best. As an overall healthcare system. it's ranked below most developed nations. The conclusion you can draw is that past a certain point, per capita spending is at best only vaguely related to healthcare quality. Also, you describe the NHS as rationing care, which they do. The US also does, and moreso than the NHS. quote:There are too many things to unpack here, some of which others have already been addressed. "R&D may be developing new products, but it's not developing innovation" doesn't make much sense. A Ph3 trial that doesn't meet its endpoints (e.g., statistically superior efficacy/safety) isn't going to spend money on regulatory approval and commercialization because it won't be used. The pharma industry funded the study I cited above which says that just about every novel drug in the past decade is due to publicly funded research. I don't know how much to unpack there is there.
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Oct 22, 2020 20:49
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Jaxyon posted:I am pointing out, with a study to back me up, that one would expect any disproportionate contribution to innovation to be going to the US int hat situation. Yet it's not. The US is in proportion, and other countries with less access to the US government and market are disproportionately better. Sharks Eat Bear already pointed out the limitations of that study. It's silly to attribute R&D achievements as US or ex-US. Sanofi/Ipsen are headquartered in France, Novo/Lundbeck in Denmark, Takeda/Astellas/Eisai in Japan, Roche/Novartis in Switzerland, AstraZeneca/GSK in UK, Bayer/BI in Germany. All of these companies employ hundreds of thousands of people in the US, working on R&D and whatever else. Biopharmaceutical R&D is a global project, of which the US contributes an outsized share of funding because of the outsized revenue due to the outsized costs. Jaxyon posted:By this logic, the US, which spends around TWICE as much as similar OECD nations, would be perhaps a top 3 in many or most metrics. But it isn't. It's above average in some metrics, at best. As an overall healthcare system. it's ranked below most developed nations. Sure maybe, but it's extremely dangerous and often intentionally misleading to do a correlation analysis between one random healthcare measure and per capita healthcare costs if you aren't controlling for confounding variables. The high obesity rate in the US is a good example of this. Jaxyon posted:Also, you describe the NHS as rationing care, which they do. The US also does, and moreso than the NHS. Agree. The US rations care based on who can personally afford premiums/out of pocket costs. NHS rations care by setting a fixed pool of healthcare dollars and trying to optimize for aggregate outcomes. There's absolutely nothing wrong with NHS approach, but I wish US single payer advocates would at least honestly acknowledge there are trade-offs. The NHS is plenty popular and I'm sure a well-implemented US single payer plan would be too. Jaxyon posted:The pharma industry funded the study I cited above which says that just about every novel drug in the past decade is due to publicly funded research. I don't know how much to unpack there is there. knox_harrington and wins32767 already explained the difference between initial drug discovery (research) and clinical development. KingNastidon fucked around with this message at 21:35 on Oct 22, 2020 |
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Oct 22, 2020 21:22
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Jaxyon posted:I already posted a study that says you're wrong on this. I don't follow this reasoning. My point is that the distinction of drug companies HQed in the US or ex-US is basically irrelevant because ALL these companies have extensive US operations that drive the plurality (if not majority) of total revenues, which is how they fund R&D. Any company with extensive US operations (read: effectively all development and commercial stage pharma companies) DOES benefit disproportionately, and from a lobbying/extorting the government perspective I suspect that the fact that they all have tens of thousands of employees in the US even if they're HQed in e.g. Britain or Switzerland is sufficient to reap a political proximity benefit. Taking a few prominent examples, we can look at GSK, Roche, Novartis, Merck, Pfizer & BMS -- the first 3 being major ex-US companies, the latter 3 being major US companies. Here's the % of 2019 sales coming from the US for each company, from lowest to highest: Novartis (ex-US HQ): 35% GSK (ex-US): 41% Merck (US): 43% Pfizer (US): 46% Roche (ex-US): 56% BMS (US): 56% This isn't just my belief, or me defending the status quo because I think it's a good thing (I don't), but it's the reality of how pharma companies fund their R&D (as well as how they fund marketing and share buybacks and sales rep bonuses, etc etc) on the back of unfettered pricing in the US. That's why I think the study you referenced is flawed -- just to quote its conclusion from the abstract: "many countries with drug price regulation were significant contributors to pharmaceutical innovation." That's nominally true, but it's papering over the fact that these countries contributed to pharma innovation due to having HQs of major multinational companies that derive the plurality/majority of their sales from the US. It would be interesting to know the # of approved NMEs developed by companies/organizations that don't operate in the US; I suspect there would be vanishingly few examples. quote:And pretty much all drug innovation has come from basic research done on the public dime, including basically every novel drug in the past 10 years(see my earlier citation). R&D may be developing new products, but it's not developing innovation. I'm sorry but this is just incorrect. Innovation requires ALL of basic research, translational research, and late stage development. Take any of these out of the equation and you no longer have medical innovation. It's wrong to say that all innovation is done on the public dime, and it's wrong to say that industry is wholly or even primarily responsible for innovation. The fact is that the way the system works today relies on massive levels of private funding, particularly for late stage development, and if we reduce that private funding by cutting into pharma sales in the US (as we should) then the question is whether R&D productivity can stay stable by realizing gains in efficiency to offset decreasing budgets. And as far as I know, the best we can do here is speculate. My personal opinion is that we'd probably see a moderate decline in R&D productivity, but then I go back to my point about this not being an inherently bad thing, which I won't rehash again here.
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Oct 22, 2020 21:32
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KingNastidon posted:Sharks Eat Bear already pointed out the limitations of that study. It's silly to attribute R&D achievements as US or ex-US. Sanofi/Ipsen are headquartered in France, Novo/Lundbeck in Denmark, Takeda/Astellas/Eisai in Japan, Roche/Novartis in Switzerland, AstraZeneca/GSK in UK, Bayer/Merck in Germany. All of these companies employees employee hundreds of thousands of people in the US, working on R&D and whatever else. Biopharmaceutical R&D is a global project, of which the US contributes an outsized share of funding because of the outsized revenue due to the outsized costs. Yes I understand you and they do not like that study. This continues to be you and them picking at my argument which I have supplied data for to back up an argument that nobody has really supported, that somehow fixing pharmaceutical costs is going to stifle innovation. quote:Sure maybe, but it's extremely dangerous and often intentionally misleading to do a univariate analysis between some random healthcare measure and per capita healthcare costs because you aren't controlling for confounding variables. The high obesity rate in the US is a good example of this. Not really a maybe, it's not exactly debated that the US massively overpays for broadly worse healthcare than similarly developed nations. For instance, Canada and the UK are similar to the US in obesity rate(with the US being slightly higher), yet UK metrics broadly trounce the US in healthcare metrics. Canada does better too. Overall, the US ranks at around 35 or so. The US is at the top of very very few metrics, unless you want to talk per capita spending. The US is slightly more obese than those two, but it spends twice as much. But traditionally, the way to defend the US healthcare system has been to cherry pick specific metrics rather than overall results, because that's basically the only way you can make it look good. quote:Agree. The US rations care based on who can personally afford premiums/out of pocket costs. NHS rations care by setting a fixed pool of healthcare dollars and trying to optimize for aggregate outcomes. There's absolutely nothing wrong with NHS approach, but I wish US single payer advocates would at least honestly acknowledge there are trade-offs. What would you say the trade-offs are? The fact that you can be rich and jump the line in the US and pay for things that might not actually work is not really a relevant argument in terms of public health. Because most of us aren't rich. quote:knox_harrington and wins32767 already explained the difference between initial drug discovery (research) and clinical development. Sure have, and it doesn't particularly disagree with what I've said.
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Oct 22, 2020 21:48
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We aren't making much progress here. Let's try a thought experiment. If both US and Ex-US decided to not reimburse pharmaceutical companies for their existing therapies do you believe this would have any future impact on the number of therapies progressing to Ph3 studies or eventually approved by the FDA/EMA/NICE?
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Oct 22, 2020 21:58
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I see youve dropped the part of the discussion where you were talking about actual researchable metrics and focused on thought experiments.KingNastidon posted:We aren't making much progress here. Let's try a thought experiment. If both US and Ex-US decided to not reimburse pharmaceutical companies for their existing therapies do you believe this would have any future impact on the number of therapies progressing to Ph3 studies or are eventually approved by the FDA? Yes I believe that the if people stopped paying for drugs altogether that would change things. This is a real thing that will happen and is worthy of discussion.
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Oct 22, 2020 22:00
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I'd like to thank everyone for making this the best D&D thread I've been read in years. I'm not at all sarcastic. This is genuinely informative and interesting.
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Oct 22, 2020 22:03
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Jaxyon posted:I see youve dropped the part of the discussion where you were talking about actual researchable metrics and focused on thought experiments. Okay, if you're willing to concede that reimbursing pharmaceutical companies 0% of US and ex-US status quo, what about 25%? 50%? 75% 90%? At what point do you think there is non-zero future impact on clinical development or the number of novel approvals? Absolutely no one here is saying that US costs shouldn't be reduced in some way. It's pushing back on magical thinking that there cannot be downstream impacts by making that change. If you're convinced that publicly funded NIH research is all that's needed to bring therapies to market then I can understand why you believe there's little correlation between biopharmaceutical revenues and number of novel therapies approved by FDA/NICE/EMA.
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Oct 22, 2020 22:12
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KingNastidon posted:Okay, if you're willing to concede that reimbursing pharmaceutical companies 0% of US and ex-US status quo, what about 25%? 50%? 75% 90%? At what point do you think there is non-zero future impact on clinical development or the number of novel approvals? "If there exists an endpoint at zero, what hypothetical number reduction would give make you believe my argument that I have no concrete data to support?" This is, as you said, a thought experiment. It's an illogical bit of fluff that exists to justify an assertion("single payer will reduce innovation") in search of a factual basis. If you can't provide data, perhaps you should consider that a weakness in your argument. Rather than asking me to accept your hypotheticals. Especially when the original assertion came from a poster who isn't involved in the conversation and has not provided anything at all(silence_kit) quote:Absolutely no one here is saying that US costs shouldn't be reduced in some way. It's pushing back on magical thinking that there cannot be downstream impacts by making that change. You need to identify the magical thinking and be sure it's not coming from you. Absolutely nobody here is saying that there cannot be downstream impacts by fundamentally changing our healthcare system. In fact, people are counting on their being downstream impacts. quote:If you're convinced that publicly funded NIH research is all that's needed to bring therapies to market then I can understand why you believe there's little correlation between biopharmaceutical revenues and number of novel therapies approved by FDA/NICE/EMA. I never said public funding is all thats needed to bring therapies to market, and your entire counterargument rests on this misunderstanding. My argument is that for-profit pharmaceutical companies are not major drivers of innovation. Due to how little they spend on bringing drugs to market vs simply marketing them, the result of reduced revenues for them is unlikely to make a huge impact on innovation because it's not what's driving innovation. The fundamental disagreement between us probably lies on whether you feel that getting a drug through FDA approval, regardless of whether it's a new treatment or just a slight reformulation intended to make money on an existing treatment, constitutes innovation.
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Oct 22, 2020 23:06
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Jaxyon posted:My argument is that for-profit pharmaceutical companies are not major drivers of innovation. Due to how little they spend on bringing drugs to market vs simply marketing them, the result of reduced revenues for them is unlikely to make a huge impact on innovation because it's not what's driving innovation. My argument is that pharma companies spend MASSIVE amounts on R&D -- this article suggests that the top 10 companies in 2019 spent $82B on R&D, which is 2x the entire NIH budget -- and that reducing their revenues will necessarily reduce R&D budgets which are the primary channel through which publicly funded basic research innovation gets translated into clinical practice innovation quote:The fundamental disagreement between us probably lies on whether you feel that getting a drug through FDA approval, regardless of whether it's a new treatment or just a slight reformulation intended to make money on an existing treatment, constitutes innovation. On this I think we're basically aligned, I agree that the industry wants to frame innovation in terms of productivity, but from a societal perspective that's irrelevant if it doesn't result in better health outcomes, which I think in the US we can categorically say that it doesn't
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Oct 22, 2020 23:57
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Sharks Eat Bear posted:My argument is that pharma companies spend MASSIVE amounts on R&D -- this article suggests that the top 10 companies in 2019 spent $82B on R&D, which is 2x the entire NIH budget -- and that reducing their revenues will necessarily reduce R&D budgets which are the primary channel through which publicly funded basic research innovation gets translated into clinical practice innovation This article says several companies spend more on sales and marketing than R&D, and others spend slightly more on R&D, however it also points out that companies play around with numbers quite a bit to head off exactly the criticism I'm leveling, just as banks can shift money around to juice earnings reports. 82b is about 20% of the 400b those 10 companies make in revenue. Interestingly enough, 20% is what the pharma industry has been claiming it spends on R&D for a long time. And it turns out there's a long standing issue of the pharmaceutical industry claiming it spends a ton on R&D and people calling it budgetary bullshit, and here's a study that goes into that. Also there's this article quote:But as Rep. Ron Wyden, D-Ore., pointed out at the hearing, Bristol-Myers spent $11.5 billion on dividends, stock buybacks, marketing, sales and administrative costs in 2017. The company spent only $4.9 billion in R&D the same year, according to S&P Global Market Intelligence data. and quote:Merck, which had over 28% of operating expenses attributed to R&D, expects to see an increase in R&D spending faster than sales over the next couple of years as the company makes investments in combination studies for Keytruda — which account for the bulk of the company's clinical spend — as well as further investment in cancer drugs Lynparza and Lenvima, CFO Robert Davis said on the company's latest earnings call. Look at all that innovation thats happening on the literally 1-3 drugs they are working on that are already invented. But I mean at least they innovated when they came up with Keytruda! Oh wait a company based in the Netherlands did that. Anyhow, relevant the discussion here: quote:"Drugmakers say changes in the status quo will hurt R&D — a quick look at these companies' finances on both sides of the balance sheet shows that isn't the case," Sen. Wyden said. "Revenue generated from American patients alone dwarfs what they spend on R&D worldwide." Moving on Sharks Eat Bear posted:On this I think we're basically aligned, I agree that the industry wants to frame innovation in terms of productivity, but from a societal perspective that's irrelevant if it doesn't result in better health outcomes, which I think in the US we can categorically say that it doesn't Agreed Jaxyon fucked around with this message at 00:42 on Oct 23, 2020 |
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Oct 23, 2020 00:40
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FWIW I suspect, (and have no proof behind this, but I'll admit that) the US pharma industry could innovate much better by simply having the US government take 100b from what it dumps on defense contractors and spending it on nationalizing drug R&D top to bottom.
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Oct 23, 2020 00:47
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Jaxyon posted:And pretty much all drug innovation has come from basic research done on the public dime, including basically every novel drug in the past 10 years(see my earlier citation). R&D may be developing new products, but it's not developing innovation. When people receive medical treatment, they expect the treatment to work not just in principle, but in practice, in reality. Yes, the basic research is more creative and more novel than product development, but the basic research result doesn't really concretely mean much to society without being developed into a real product that people can actually use and is actually proven to work. The product development is especially valuable in medicine because the theory of medicine is not that great--the researchers can't make good predictions. If they could make good predictions, the drug trial success rate wouldn't be so low. silence_kit fucked around with this message at 00:58 on Oct 23, 2020 |
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Oct 23, 2020 00:56
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silence_kit posted:When people receive medical treatment, they expect the treatment to work not just in principle, but in practice, in reality. Yes, the basic research is more creative and more novel than product development, but the basic research result doesn't really concretely mean much to society without being developed into a real product that people can actually use and is actually proven to work. Hey if you ever want to get around to supporting your argument with factual information like the other posters in this thread do, that would be great. See ya then! 
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Oct 23, 2020 00:57
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Jaxyon posted:Hey if you ever want to get around to supporting your argument with factual information like the other posters in this thread do, that would be great. What claim do you not believe in the quoted post?
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Oct 23, 2020 01:00
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silence_kit posted:When people receive medical treatment, they expect the treatment to work not just in principle, but in practice, in reality. Yes, the basic research is more creative and more novel than product development, but the basic research result doesn't really concretely mean much to society without being developed into a real product that people can actually use and is actually proven to work. Somehow, plenty of other countries have managed to solve this problem while still offering universal healthcare. I'm firm in my belief that America, the richest country on Earth, could figure out a way. For example: Jaxyon posted:FWIW I suspect, (and have no proof behind this, but I'll admit that) the US pharma industry could innovate much better by simply having the US government take 100b from what it dumps on defense contractors and spending it on nationalizing drug R&D top to bottom.
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Oct 23, 2020 01:02
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silence_kit posted:What claim do you not believe in the quoted post? 100% of it because burden of proof exists and since I've been in this conversation you've provided absolutely nothing. At least other people are trying.
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Oct 23, 2020 01:07
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WampaLord posted:Somehow, plenty of other countries have managed to solve this problem while still offering universal healthcare. I'm firm in my belief that America, the richest country on Earth, could figure out a way. This doesn't address my post at all. I'm just explaining the value of the later stages of technology development to Jaxyon. VitalSigns in the previous healthcare thread didn't get it as well. Yeah, in principle, for medicine, in D&D Poster Ideal World, this function could be performed by the government. In D&D Poster Ideal World, this function would still be very valuable though, unless somehow there was a giant breakthrough in medical understanding in D&D Poster Ideal World which would render the testing of medical ideas mostly useless. silence_kit fucked around with this message at 01:28 on Oct 23, 2020 |
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Oct 23, 2020 01:18
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silence_kit posted:This doesn't address my post at all. I'm just explaining the value of the later stages of technology development to Jaxyon. VitalSigns in the previous healthcare thread didn't get it as well. Ah yes, the Virgin candyland of ideas that I draw my post from with my repeated references to studies, versus the Chad Unsupported Realism from silence_kit
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Oct 23, 2020 01:25
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Jaxyon posted:Due to how little they spend on bringing drugs to market vs simply marketing them, the result of reduced revenues for them is unlikely to make a huge impact on innovation because it's not what's driving innovation. I thought this way too for a long time. I pulled numbers for this example from a bunch of places to illustrate why that's misleading. Retevmo just got approved this year, it's a cancer drug for certain kinds of cancer. It will be on patent through 2037, so a 17 year lifetime. It costs roughly $20k/mo and in the clinical trials, patients about 2/3rds of patients were on it for over 6 mo and the other 1/3rd was on it for over a year. For this thought experiment lets call it 9 mo and 15 mo on average. So that's (.67*9+.33*15) = ~11 mo So to calculate the Expected Lifetime Value of each customer (a business term that's somewhat morbid here, but it effectively means how much revenue do we expect to earn from each customer over the duration of their involvement with us) we can do: $20,000*11 = $220,000 per patient. Costs to manufacture a generic are between $00.01 and $1.45/unit, so let's call it $0.70/unit. A patient is going to need 60/mo so that's .7*60*11 = $462 Cost of distribution is ~20% so that means the Cost of Goods Sold is 220,000*.2+462 = $44,462 For a net profit per patient of ~175k, after R&D costs and customer acquisition costs. Let's assume the total addressable market that's treatable by this drug is 20k patients a year. That means the total value of the drug is 17 (patent lifetime) * 20,000 (patients a year) * 175,000 (profits less development and CAC). = 59.5 billion. Subtract out the cost of developing a new drug ($1b), and you have maximum potential profits of $58.5 billion dollars. That sounds great if your a pharma exec right? You spend $1b in R&D costs and you get $58.5b out the other end. Slam dunk, let's just crank drugs out the door, this is a money printing machine! Astute readers will note that there is a key cost we haven't accounted for, which is the sales and marketing costs to get more customers. Without customers none of that 59.5 billion dollars will get made. So how much should you spend on sales and marketing? Quite a lot actually. After you make back your costs plus some money to account for overhead, failed drugs, etc., you would, in theory, be making a profit by paying up to 175k minus 1 dollar per patient in customer acquisition costs. Clearly you could make more than a dollar with 175k spent in different ways, so you have to factor in cost of captial, etc., but at companies I've worked at we were willing to pay $20 to acquire a customer that had a total lifetime value of $22 because all the cheaper to acquire customers paid our R&D costs, overhead, etc. Even a 10% profit after CAC for marginal customers puts us at $157.5k sales and marketing costs per marginal customer. While all of that is waste from a societal perspective, it is the optimum profit maximizing solution in the current regulatory landscape. Since every dollar spent in sales and marketing more than pays for itself, it's misleading to look at the high marketing and sales spend and say "well since they spend so much on sales, they don't do much innovation". The sales spending is driving up the profitability of hits which means more money for R&D under the current model. The way to reason about innovation spending is looking at average net profitability (including CAC) per drug (including the failures). One could construct a single payer model that maintained the same level of profitability and get the same amount of new drugs, but it'd be certainly more expensive than other countries because they've been freeloading off the profits made in the US.
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Oct 23, 2020 01:32
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Jaxyon posted:Ah yes, the Virgin candyland of ideas that I draw my post from with my repeated references to studies, versus the Chad Unsupported Realism from silence_kit Because that sort of response is more conducive to a good discussion vs. just ignoring them.
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Oct 23, 2020 01:35
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I appreciate this post but what you've done is explained why for-profit businesses do things that will generate a profit for them. Which wasn't the question. The question was whether this is producing innovation. As previously covered, I don't consider productivity to be the same thing as innovation. Is Merck spending most of it's R&D budget to find new markets to sell Keytruda(a drug they didn't invent) over the next few years creating innovation? Do stock buybacks and dividends create innovation? Or are they things a for-profit business has to do to create profit? wins32767 posted:Because that sort of response is more conducive to a good discussion vs. just ignoring them. You're right it's not, but as you can see from my posts in the feedback thread, contentless shitposting is pet peeve of mine. You're correct that I should ignore them. I'm just going to ignore them past this point because anyone who had knowledge would have posted something by now instead of explaining how they don't need to.
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Oct 23, 2020 01:49
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Jaxyon posted:As previously covered, I don't consider productivity to be the same thing as innovation. quote:Is Merck spending most of it's R&D budget to find new markets to sell Keytruda(a drug they didn't invent) over the next few years creating innovation? quote:Do stock buybacks and dividends create innovation?
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Oct 23, 2020 02:22
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wins32767 posted:I'd argue yes, though I think we both agree that it's not the best use of innovation. Assuming that the studies are good, being able to prove that Keytruda is an effective treatment for some other disease does actually improve patient outcomes. As an example, I can't take most classes of antidepressants so the fact that there are a half dozen classes means that I actually can get effective treatment. Selfishly, I'm very glad someone did a label expansion study on on the drug I'm on now, because otherwise I wouldn't have blundered into an effective treatment for me when using it for another purpose. Finding novel uses for drugs that are already proven safe is a good use of some amount of funding, though the current system incentivizes it too much. I know what theyr'e doing and why they have to do that. I understand how validations work. The point is they're taking a ton of their R&D budget, most of it in fact, and using that to prove that they can use that same drug they already came up with on other types of cancer, because every single usage has to be researched and proven. And they didn't come up with it. It's an acquisition from a EU company. Are they do that from a sense of innovation, or are they just doing the legwork to justify future marketing?
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Oct 23, 2020 02:29
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Jaxyon posted:I know what theyr'e doing and why they have to do that. I understand how validations work. The point is they're taking a ton of their R&D budget, most of it in fact, and using that to prove that they can use that same drug they already came up with on other types of cancer, because every single usage has to be researched and proven. And they didn't come up with it. It's an acquisition from a EU company. What is the problem with running additional trials in new indications for a drug that's already approved? Arguably this is a more effective use of R&D spend because you don't need to run largeish Ph1/Ph2 studies to evaluate dosing/safety. BLA/NDA submission process is easier. Need to hire fewer office or field staff given adding new indication to existing PI takes less time/effort than a new product. Who cares whether Merck acquired Keytruda from another company? Multiple people have acknowledged that much of R&D today is done at smaller biotechs. Big pharma's acquisition costs aren't reflected in their own R&D spend, but they're eventually paying investors back for the now de-risked R&D spend at the target company up to that point. Oldie but goodie article on the twists and turns of Keytruda development that highlights the uncertainty in R&D despite Keytruda being a blockbuster today. KingNastidon fucked around with this message at 02:50 on Oct 23, 2020 |
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Oct 23, 2020 02:43
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Jaxyon posted:I know what theyr'e doing and why they have to do that. I understand how validations work. quote:The point is they're taking a ton of their R&D budget, most of it in fact, and using that to prove that they can use that same drug they already came up with on other types of cancer, because every single usage has to be researched and proven. And they didn't come up with it. It's an acquisition from a EU company. What I don't get, and maybe because I'm over tired tonight, is why you're so focused on novel drugs versus arguing something like the Quality Adjusted Life Years (QALY) returns on spending are too low. Either it's worth doing label expansions or it's not, right? In other words, is a label expansion that costs $200m and results in 100k QALYs a year in improvement worse than a 1b spent on a new drug that returns 500k QALYs? Or are you arguing that the ratio is more like 200m/50k or 1b/1m? quote:Are they do that from a sense of innovation, or are they just doing the legwork to justify future marketing? E: F,B wins32767 fucked around with this message at 02:59 on Oct 23, 2020 |
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Oct 23, 2020 02:51
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