Killing innovation in health care for votes
It’s not bad enough that the FDA watched us die waiting for new medicines, now the anti-market Democrats are going to stop the development of those new drugs by taking the profits away.
Remember that the profits on successful drugs pay for the research that went into the drugs that failed, either clinically or competitively. Viagra saved countless lives by financing research on other drugs that were not worth the risk on their own. No “excess profits” means less research.
Tidewater News and Opinion Forum 
“Excess profits” don’t exist; they go to shareholders, not R&D. Another fear mongering tactic by the right.
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“The cost of developing a new drug has been estimated to be more than $1 billion. Development of this scale involves multiple financing mechanisms, as well as the involvement of numerous partners throughout the process. As background for the workshop discussions, Dr. Caskey provided an overview of the current financial landscape at various stages of drug development, including the investors at each stage and the current state of investments, and put forth several suggestions for ways to facilitate drug development.
The principal investors in drug development differ at each stage. While basic discovery research is funded primarily by government and by philanthropic organizations, late-stage development is funded mainly by pharmaceutical companies or venture capitalists. The period between discovery and proof of concept, however, is considered extremely risky and therefore has been difficult to fund. ”
Drug companies must have deep pockets to get through the middle and late stages.
https://www.ncbi.nlm.nih.gov/books/NBK50972/#:~:text=The%20principal%20investors%20in%20drug,pharmaceutical%20companies%20or%20venture%20capitalists.
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R&D is part and parcel of a business. They are not part of profits, but part of operating expenses. The idea that profits will fall is a misdirection.
Cut shareholder and c-suite dollars and all will be just fine for Big Pharma.
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Your understanding of the private sector was probably hampered by your military career.
Let me give you an example.
Viagra is one of the biggest moneymakers ever. Levitra was actually better for the purpose, but was a loser in the marketplace because it got approval from the FDA a few months later, and Viagra had already become accepted.
Both drugs cost at least a billion to get to market. Pfizer had plenty of profits from Viagra to plough back into research, while Bayer will have to make up its losses on Levitra with other drugs profits.
Neither company has a money tree to finance the research and regulatory approval costs of the next drug that might also be a few months late or not get approved at all.
It is a very high risk business, and if we don’t allow the makers to profit well on the few winners, there will be no dollars for the next generation. the result will be that pharma will ONLY fund research on the sure winners like Viagra, and the small market drugs for less common diseases will never be even researched.
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I still think it is just scare tactics for those who can afford their meds.
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I think of it as standing up for the people who will be saved by medicines that do not yet exist.
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“ It is a very high risk business…”
The profitability of Pharma is way better than all other sectors of the economy.
“ They found that a 39.1% difference in gross profit margin, 76.5% for pharma companies and 37.4% for the S&P companies. When comparing EBITDA, there was a 10.4% difference, 29.4% for pharma and 19% for the S&P companies. The net income margin 13.8% for the pharma companies versus the S&P’s 7.7%, a difference of 6.1%.”
https://www.biospace.com/article/how-profitable-is-the-pharma-industry-a-new-report-shows-the-industry-is-more-profitable-than-most-other-large-companies/
All businesses have risk. Pharma may seem risky, yet investors don’t shy away from drugs because the year in year out financials are very good and safe.
Health insurance is one reason. Without it, $100,000 treatment regimens would have few customers. Public health insurance means simply that the taxpayers subsidize Pharma, but it is not allowed to negotiate like all other entities, except smaller public ones like veterans. And, of course, private insurance, subsidized or not, is another “tax” on Americans.
Americans not only pay the highest for finished product, we also pay in advance for basic and other publicly funded research.
All in all, the risk is born by us. The classic public risk and private profit.
In addition, pre-pandemic, the most profitable drugs are the ones for chronic conditions like blood pressure, cholesterol, ED, etc. Unfortunately this has caused a lag in effective antibiotics to fight the growing threat from superbugs. A small cut can be life threatening for many if only one highly guarded antibiotic is the last resort.
It appears that COVID vaccines will add to the chronic category just by the nature of the beast.
PHARMA is just doing the natural corporate thing, fine. But hardly any need to shed tears for their facing grave risks to better mankind. They are doing better than just about all other legal businesses. So there is wiggle room. Especially if Americans are footing the bills for large chunks of the risks and costs.
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“Your understanding of the private sector was probably hampered by your military career.”
And after some thought, I take offense at the implication that just because I served in the military for over 24 years, I am incapable of understanding the private sector.
You were a dentist. Perhaps YOUR understanding of everything is hampered because you spent so many years staring into people’s mouths.
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Not really.
I was in the most retail level of health care.
But everything I ‘sold’ had to be voluntarily bought by someone. Every employee had the option of working for someone else if they thought they could find a better buyer of their labor.
But in the military, you have a chain of COMMAND for those above you or below you. Persuasion is not necessary, nor is negotiation.
Nor is it necessary to find a willing buyer for your services.
Also, military families necessarily have many things provided that those in the private sector must arrange for themselves.
That doesn’t mean the military isn’t needed and appreciated, but the experience creates a very different mindset.
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If you think that my military service did not allow me the opportunity to understand the “real world”, you are sadly mistaken. Not all military personnel are locked into the military only philosophy.
I am still offended by the thought that you think I can’t be knowledgeable of such things.
Maybe a little too much laughing gas accidentally inhaled causes you to be blind to the idea that military personnel are just as informed, if they choose to be, about things outside their chosen career
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McCaughey’s title is akin to Death Panels with Obamacare. Gotta scare the folks to believe the lies.
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RE: “Remember that the profits on successful drugs pay for the research that went into the drugs that failed, either clinically or competitively.”
It is less (and more) complicated than that. People think profits are a freebie to business owners, but in fact profit is the only source of funding that allows a business to remain in operation.
Most people who think profits are bad have been bamboozled by Karl Marx, although many are too ignorant to know how. But here’s a litmus test the economically ignorant can try out: Is it better for workers to hire on with a profitable employer, or an unprofitable one?
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You are the only person I know of that thinks people have a skewed view of profit or that profit is a freebie to owners.
Money that is plowed back into a company for R and D is no longer profit. It is the cost of doing business.
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Here are the alternatives as I see them. Feel free to add any I’m missing.
Let drug companies charge whatever they want for their drugs. Let CEOs and stock holders get rich and hope they spend a little bit of their profits on research and development. Spend taxpayer money to help the poor pay for drugs they can’t afford.
Nationalize the drug industry. Cut out the CEOs and the stock holders and put all of the profits into research and development. Be sure everyone has access to the drugs they need.
Regulate the drug industry. Set reasonable limits on profits. (And be aware that NO limit will be acceptable to the CEOs.) Require a reasonable percentage of profits go into research and development. Set prices at affordable levels. Spend taxpayer money to help the poor, but be sure taxpayers aren’t being overcharged.
If I were Queen of the World, I’d pick #4. However, it seems option #1 is where we’re heading.
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Thank goodness you are not Queen of the World. Option #1, which you reject, is the best choice. Why?
Because pharmaceutical science is not perfect, it is not complete, and it is certainly not reliable. If the science were “good” you might have a point in arguing that government should involve itself somehow to improve people’s lives. But in the real world, the science isn’t good at all.
To illustrate: Human beings in their current form have existed for about 200,000 years. Science in its current form has existed for only about 500 years.
So, no thanks to the level of government intervention you support. If government could be smart, I might be open to your point of view, but government cannot be smart in this context.
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John, you never disappoint. I knew you’d pick the option that would let poor people get sick, spread disease, and/or die. It’s exactly like option #2 except in option #2, taxpayers pay for drugs for poor people. The drug companies operate exactly the same in both options.
Consider this: In Florida a few years ago, there was one hospital that treated poor people with incurable tuberculosis. The governor decided it was a waste of taxpayer money so he shut it down. The patients were turned out onto the streets. Homeless people, even sick homeless people, tend to hang out in libraries and public parks. Maybe the governor was expecting them to just die and decrease the surplus population, but a few of them lived long enough to spread their incurable form of tuberculosis to a local playground. Rich people’s kids started coming down with TB. By the time they found out why, it was too late.
Providing health care for poor people actually helps rich people. Who’da guessed?
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Do you have a cite for that Florida story? TB is a public health regulated disease, and patients are generally kept isolated until their disease is under control and they are non-reactive. Medication has been provided free for decades.
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RE: “Providing health care for poor people actually helps rich people.”
I’m sure that’s true in some cases. The puzzle for you is showing that it is true in all cases.
I say we are still living in a “Dark Ages” as far as science is concerned. The experience of a single hospital you cite doesn’t even come close to addressing the issue I raise.
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I’d suggest another alternative.
Restore competition.
Remember the hubbub about insulin prices? Insulin has been off patent for 100 years. There are over 100 manufacturers worldwide But the FDA only licenses 4 in the US, of which only 2 produce time release versions. So, prices got pretty high.
But if we could choose from the 100 or so producers, the prices would fall.
During the Johnson administration, generic drugs were first allowed in the US, and pharmacists could substitute them for brand name drugs unless the physician stipulated no substitutions. That worked well for a while. but as part of Obamacare, the FDA got the power to license generics, not just certify them for quality, and began restricting the licensed versions, excluding most imports, to protect the domestic manufacturers.
With a restoration of competition, we can have both inovation and low prices.
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Don, I agree about the competition part. The more manufacturers we have, the lower the prices will be. However, I’m not too comfortable with that competition coming from overseas. If the pandemic breakdown of the supply chain has taught us anything, it’s not to rely on critical products from foreign countries.
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Don, all I know is, it happened in Jacksonville. And the only reason I know that is because the library community is a small world and some of those homeless patients were coming into the public library there. The librarians found out about it when some of their regular patrons warned them about what was happening. The playground to which the outbreak had been traced was a school playground near one of the branch libraries. There was a big discussion about what to do about it. Should the homeless people all be banned? That wasn’t acceptable. Should they be allowed to use the computers? Should they be confined to only certain places inside the library? How could staff disinfect suspected areas? They were also warned not to leak a word about it to the press because it was “tourist season” and the last thing the Chamber of Commerce wanted was to scare tourists away. So far as I know, the story never got to the press.
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TB, like Leprosy, is a disease where treatment is mandatory. Prior to effective treatments people who had it were locked up.
Now, anyone who is untreated is in hiding from the Dept of Health.
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John, it is beneficial to contain the spread of contagious diseases in all cases. If poor people have untreated TB or COVID or ebola or monkey pox or any contagious disease, it benefits the rich to have those people cured before the disease spreads to them. And if untreated, the disease WILL spread to them… maybe sooner… maybe later… but it will spread to them and/or their families. That’s the way plagues work.
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RE: “John, it is beneficial to contain the spread of contagious diseases in all cases.”
I’d call that a “dubious absolutism.”
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Out of curiosity, when would you say that it is not beneficial to contain the spread of contagious diseases?
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I think it is necessary,
Quarantine is a long standing public health technique. Prior to effective treatments, leppers and TB patients were incarcerated until they either recovered or died.
But treatment is effective now, and it is only necessary to quarantine people until they are treated, but they must continue treatment after they are no longer quarantined.
We could have saved a lot of lives by quarantining AIDs patients, but that was not politically correct. The gay community was politically organized and opposed contact tracing and quarantine, killing thousands of their own community as a result.
The same will be true of Monkey pox, and like AIDs, you can expect intentional infection of people not normally at risk to pressure the medical community.
What we should be doing is to use the limited supply of vaccine to protect non-monogamous gay men, and using contact tracing and quarantine
But I bet that odesn’t happen.
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Yet another reason this is a bad idea
Perverse treatment incentives
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It was said that Social Security, Medicare, and Obamacare were all bad ideas, too. With some of the same “the sky is falling” rhetoric coming form the Right. Yet most folks ON THIS FORUM are benefitting from those in one way or another.
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Compared to what?
What I put into FICA over the years, invested the same way I invested what was left, would have me a mulitimillionaire today.
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Yet it is still there for you. Mine won’t be as guaranteed, but it will be there. Yet the sky is NOT falling, even though you and your WSJ posts try to say otherwise.
For you, personally, OK. But for those who worked and slaved at menial labor jobs for decades, and did not have the resources, time, or ability to invest that money, it is a big help.
But yet you have no issue with Medicare or Obamacare now.
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Had I been able to put my FICA for Medicare into an HSA, I wouldn’t need Medicare either, and Obamacare is of no use to me.
We offered Obama a better solution but he wasn’t interested.
http://wp.me/paM4C-dx
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…”and Obamacare is of no use to me.”
That is the issue. Me ME ME.
There are over 320 million “me’s” in this country. Some do better than others. Those that don’t do as well through no fault of their own, can use a little assist every now and the.
And your alternative, while discussed repeatedly wasn’t adopted. Doesn’t matter why. But then again ROMNEYcare WAS the actual basis for the ACA.
As far as HSA’s go: “HSAs were established as part of the Medicare Prescription Drug, Improvement, and Modernization Act, which included the enactment of Internal Revenue Code section 223,[3] effective for tax years beginning after December 31, 2003, signed into law by President George W. Bush on December 8, 2003”
You were retired before or very soon after their enactment.
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The HSA’s proposed in the TLP plan are far more robust than the tepid experiment in place. They were the heart of the healthcare system, allowing sharing of benefits within voluntary groups.
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Yet they did NOT exist prior to enactment of the ACA. Like many proposals, compromise is necessary. And the idea of damning the good in pursuit of the perfect comes to minsd
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Don, maybe you would have been a millionaire today and maybe you’d be a homeless pauper. The stock markets are fickle and one crash can erase a lifetime of investing. Social Security is more than just a retirement plan for people who work in jobs that have no retirement plan. It is insurance against losing everything.
I have a friend who worked his whole life at a mill in Danville. The company had a nice retirement plan. He thought he was set. But the company fell on hard times and they sold to a venture capitalist who raided the retirement fund, declared bankruptcy and left him with nothing but Social Security for income.
My point is, gambling with end of life income is dangerous… no matter how good your company retirement plan is… no matter how good you are at investing in the stock market… stuff happens. I never resented paying FICA because it’s end of life income I knew would be there.
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