
Dutch join backlash at expensive drugs by making their own - patman
https://www.reuters.com/article/us-netherlands-pharmaceuticals-insight-idUSKCN1QP0M4
======
Thriptic
One thing that is typically not mentioned in these debates is the fundamental
structure of the industry. Let's say someone finds a research compound which
looks to be promising, and they start a new company to try to commercialize
it. Often, they are looking at at least 1-2 decades to get that product to
market. Assuming they don't sell out to a big company, they almost certainly
have to go public before starting trials in order to amass the required funds.
Normally, a public company is expected to show regular profits and growth.
This is impossible for a new pharma company because they don't have a product
yet, so they are expecting investors to foot the bill for years and years of
development and trials. During this time, if the compound fails a major trial,
the entire company can go under because it may be prohibitively expensive to
start over again if there is a problem. Therefore, not only is there a
massively delayed ROI but a lot of risk. As such, when a company gets
something to market, investors expect massive profits for shouldering that
risk and delay. It is simply not feasible for companies to charge small
amounts of money because no investor could justify locking up capital / taking
those risks for something other than a huge return.

~~~
JKCalhoun
Maybe drug "companies" should be government entities then and not for-profit
at all.

~~~
aaavl2821
One could make a pretty good argument that a government funded drug research
system would end up with more expensive drugs (in the form of higher taxes)
than a for profit system

Drugs, as a whole, aren't that expensive today compared to other healthcare.
They make up 9.8% of US health care expenditure, which is pretty much middle
of the pack compared to OECD countries. Hospitals, largely "non profit" (but
sometimes massively profitable) make up 35%. But drugs feel more expensive bc
copays are typically higher for drugs than for medical care

As it stands today the drug industry spends ~$200B a year to get 20-50 new FDA
approved drugs a year. Virtually no fda approved drugs are developed solely by
academia. NIH budget is $30-35B and on a steady long term decline. So you'd
have a massive taxpayer expense just to build out that r&d function

Then you'd have to build out manufacturing. And some sales and marketing
analog -- even if you aren't trying to profit, somebody needs to go out and
tell doctors about your new drug and share with them very detailed data about
how the drug works, what patients it works for, compared to the competition.
Doctors can't stay on top of this themselves -- they are too busy and there's
too much info

Then you'd need to build out some administrative function and some way to
decide what projects move forward at what stage. This is where publicly funded
drug research would probably massively underperform private for profit r&d

If you are making drugs for profit, you have a strong incentive to be
efficient with your research. If not you go out of business. The more these
decisions are driven by politics rather than profit motive, the less
productive r&d is. And r&d cost and productivity is the reason drugs are
expensive

There's evidence that startups are 10x more productive at r&d than pharma and
it isn't crazy to attribute a lot of that to less politics

As of now something like 30-50% of published academic findings are thought to
be false. 30%+ of all NIH money goes to "overhead", i.e. Profit to
universities. And yields no fda approved drugs without private company
investment

~~~
Pharmakon
_One could make a pretty good argument that a government funded drug research
system would end up with more expensive drugs (in the form of higher taxes)
than a for profit system._

That sounds like a pretty interesting argument, but I notice that you didn’t
actually make it. The rest of your post is full of claims sans evidence, and a
lot of numbers out of context. For example how many of those newly approved
drugs are novel therapies vs. rejiggered stereochemistry to keep a patent or
compete in an existing field? How many are significant improvements over
existing therapies and not just potential profit centers?

~~~
pkaye
> rejiggered stereochemistry to keep a patent

Can someone tell me how this patent extension works? If they improve on
something, is that a new patent? Does the original patent expire or gets
extended? Why couldn't someone else have discovered the new stereochemistry
before the original inventor dose so? If the new discovery is not significant,
wouldn't its be sufficient to use the generic form of the original chemistry?

~~~
Pharmakon
A great, easy to understand example is found in the drug Prilosec vs. Nexium,
the latter of which is a stereoisomer of the former. Prilosec is Omeprazole,
which is part of a class of drugs called Proton Pump Inhibitors (PPI’s) which
treat severe recurrent heartburn and GERD, as well as esophageal erosion from
those conditions. Prilosec (Omeprazole) was due to go generic, so the company
decided to isolate and purify the S isomer and worked hard to convince the FDA
that it represented a truly new treatment. IIRC the rationale was that the
enantiopure drug was half the dose of the racemic mixture, and regulatory
capture did the rest of the work. Of course there was no tangible benefit to
taking 10mg of Esomeprazole vs 20mg of Omeprazole, except the monetary benefit
for the company.

As to why some other company didn’t snap up the patent, it’s an expensive
proposition and not trivial to make enantiopure drugs, so a lot of the R&D
budget touted by apologists and shills is entirely self-serving. Now sometimes
an isomer is actually superior to a racemic mixture and there are plenty of
cases where one isomer is therapeutic and the other is ineffective or toxic.
Of course in those cases none of this patent fuckery applies, and there is no
way to get a new patent issued or FDA writ because only one viable form of the
drug exists.

It’s also true that a generic in the case of something like Esomeprazole vs.
Omeprazole is viable, and that’s where the astronomical marketing budget that
dwarfs R&D comes into play. Advertising directly to patients and doctors
ensures that plenty of people won’t understsnd the value of a generic is they
were even aware of it. You also get cases, as with Epi-pens, where supplies of
the generic are scarce compared to the expensive branded version.

Good list of this kind of thing found here:
[https://en.m.wikipedia.org/wiki/Enantiopure_drug](https://en.m.wikipedia.org/wiki/Enantiopure_drug)

------
simonsaidit
In Denmark I recently saw a discussion between politicians and the just
resigned head doctor of a major hospital where he said he no longer could bear
the responsibility of “optimizing” and that there was not enough money in the
coming years no mattter how much money the politicians were promising in their
soon to be election campaigning.. and his belief was we had to decide what we
can afford as a country in regard to medicine. Meaning we had to choose who
should live or die or die sooner as medicine treatment prices were too high
and new treatments are coming all the time.

~~~
jknz
I am wondering if any cost-analysis studies have been done to assess the
trade-off between lengthy end-of-life terminal care and the corresponding
cost. Doctors seem to make such decisions all the time; but we may have at
some point to discuss collectively how much of the public money involved in
end-of-life terminal care (last two months, say) for elderly should be used
instead for better care earlier in life.

In countries where such care is provided by private insurance and not the
state, I am wondering why this trade-off is not given as a choice to the
consumer. Many people might be OK to get smaller premiums and better coverage
throughout their life by explicitly rejecting coverage of end-of-life care.

~~~
AndrewGaspar
For better or worse, people don't apply purely rational thinking about trade-
offs to healthcare. I think it would make a lot of people squeamish to hear
this argument about why somebody, where somebody might be mom or dad, isn't
going to receive certain care because they didn't pay for it earlier in their
life.

Unfortunately the trade-offs don't go away, and we haven't figured out a way
of making these trade offs that doesn't feel horribly statist (so called
"death panels") or callous (private insurance denying care).

~~~
dodobirdlord
> Unfortunately the trade-offs don't go away, and we haven't figured out a way
> of making these trade offs that doesn't feel horribly statist (so called
> "death panels")

These already exist. Donor organs are a scarce resource and there aren't
enough to go around, so some person(s) has to decide who lives and who dies.
People already regularly die in the United States because it is uneconomical
to have Level I/II trauma centers within emergency response distance of the
entire country.

People have very different ethical standards for how people should act in
advance planning scenarios versus in the moment. I think most people agree
with the unreasonableness of arranging to have an on call neurosurgeon in a
small town in the middle of nowhere. But I think people would have a very
different reaction if the same neurosurgeon refused to skip a day of teaching
medical students to instead walk across the hospital and carry out a 12 hour
brain surgery on a 90 year old patient with dementia who will be dead from
lung cancer in two months anyway.

I think people will just have to get over it. There aren't alternatives.

------
rocqua
Yes, less payout on rare disease drugs is less of an incentive to research
them. But:

* Drug companies have profit margins of 15% on average indicating there is room. * many recent 'orphan drugs' were not newly developed, but off-label uses registered with the FDA for a whole new patent. * these drugs rely heavily on research done by universities through public funding. It stands to reason the public should get to benefit. * there is something morally wrong about setting the price of drugs purely based on demand. It is essentially blackmail: pay me or die / suffer.

~~~
aaavl2821
Drug companies increasingly fund r&d with their balance sheet, not with
internal r&d. So the money they pay for new drugs is not reflected in the
profit and loss statement.

There are maybe 15 pharma companies that commercialize a large portion of the
drugs developed in the world. The vast vast majority of drug companies never
make a penny in profit. They sell their products or companies to bigger,
commercial companies

So the profits in the industry all accrue to a few big players, and the losses
largely accrue to companies you've never heard of

Something like 65% of FDA approved drugs are developed by small companies that
will never generate revenue. Bigger companies buy these drugs and plug them
into their established sales forces

Virtually (probably literally in the last few years) no drugs emerge fully
formed from academia. For profit companies bear the brunt of the r&d costs.
30% of public r&d goes to academic "overhead" and much goes to research that
will never come close to informing drug r&d. The NIH spends $30-35B a year,
the top 15 pharma companies spend $75B in r&d

~~~
consumer451
I am pretty uninformed in this space, but the D in pharma R&D includes the
cost of direct to consumer advertising, correct?

I see a lot of expensive looking ads on TV. Those ads were made legal in my
lifetime. Maybe it’s time to ban prescription ads again?

~~~
aaavl2821
The "d" is for development. Basically "research" is finding a potential drug
(making a chemical that has an effect on disease in animal or in vitro models
and has good pharmacological properties) and "development" is testing it in
tox studies, scaling up manufacturing, testing it for safety and effectiveness
in humans. There is a ton of risk and cost in the "development" stage

DTC ads would be in the marketing budget under SG&A

------
matthewmcg
The situation described in the article doesn’t seem to be related to patents.
Rather this appears to be a generic drug with a very small market.

There is only one producer of an approved formulation and they are charging
too much.

The article mentions that the compound (lutetium octreotate) has been in use
for a long time, suggesting that any patent term on the compound has lapsed.
Novartis’ specific preparation has been approved for this use by the EMA.
Compounding pharmacies have the right to prepare the drug without this
approval, which they could not do if the compound was subject to a patent.

Theoretically another company could make a generic version of this but the
market is probably too small to justify the approval costs.

------
yread
Strange that the article doesn't mention Oncode institute [1], which has
specific goals of repurposing generic and patent-expired drugs in combinations
to lower costs and there were some discussions about making the drugs
themselves

[1]
[https://www.oncode.nl/research/programs](https://www.oncode.nl/research/programs)

------
forinti
This reminded me of an incident in which the Netherlands intercepted generic
drugs en route to Brazil from India.

[https://www.kff.org/news-summary/india-brazil-launch-
trade-d...](https://www.kff.org/news-summary/india-brazil-launch-trade-
dispute-against-eu-netherlands-over-seizures-of-generic-drugs/)

~~~
hermitdev
That's strange. Reading your comment, my first thought was WTF is the Dutch
Navy doing intercepting shipments from India to Brazil.

Then, I read your link and had another WTF moment: why is a shipment from
India to Brazil travelling through the Netherlands and thus subject to their
customs? India->Netherlands->Brazil seems like an incredibly inefficient trade
route.

~~~
forinti
Central economies gain a lot from simply being in the centre. That's why there
has been an effort to promote South-South relations.

------
radicalbyte
It's worth noting that pharmacists in The Netherlands have a doctorate and the
same training requirements as MDs (the study last until 24/25 with no skip
years). The requirements are considerably lower in other countries (in the UK
for example they just need a BSc).

Source: my wife is a pharmacist and could have worked in the UK after only
completing 1/3rd of her study.

~~~
pard68
In the US it takes:

* 4 years undergrad, of which 90 credit hours must be a specific series of courses * 4 years PharmD, doctorate program * 1800 hours of internship

At this point a student has met all requirements to sit for the two license
exams (NAPLEX and MPJE[^1]):).

Many students will elect for an additional period of education due to the
competitive nature of pharmacist jobs in the USA. Those two extra
opportunities are:

* 2 years of residency; followed by, * 2-3 years of fellowship

Most pharmacists at a common drug store will not have the last 4 or 5 years of
study. However most pharmacists in research or synthesis (including at both
manufacturers and pharmacies) will have these two final steps of education due
to just how competitive these jobs are.

Briefly there was also a 6 year accelerated pharmacy track (BS+) however this
is no longer allowed and any practicing pharmacists with these credentials
have to take a non-degree PharmD program to meet the new requirements. At this
point in time I don't know if any practicing pharmacists still only hold the
accelerated credentials.

[^1]: AK, CA, and VA have their own jurisprudence exams and do not accept the
Multistate Pharmacy Jurisprudence Exam

~~~
pkaye
12 years of training... does that even make economic sense? Do pharmacists get
paid a lot?

~~~
pard68
Yes. The ones at local pharmacies make probably low six figures, that's the 8
year track. The 12 year guys are probably making high six to low seven. I used
to live in Connecticut near Pfizer and that place was densely packed with
large salaries. Granted, I think they invented Viagra so lots of money there

------
stretchwithme
I think it would be better to have bounties for cures rather than patents for
drugs you have to take forever. Pay a fixed price that is easy for innovators
to understand and maybe the energy will focus on what we really want.

------
chicob
This is exactly the kind of excellent initiative that can save lives and
benefit lots of patients, that could also, in principle, be completely
obliterated by ISDS rulings.[1]

[1] [https://en.wikipedia.org/wiki/ISDS](https://en.wikipedia.org/wiki/ISDS)

------
qaq
Majority of Big Pharma expanses are not R&D but sales and marketing.

------
pault
It's really depressing knowing that no matter what policies other countries
adopt to bring drug prices down it will never happen here in the US because
there's too much money to be made from bribes^H^H^H^H^H^H donations from the
pharmaceutical companies.

~~~
pard68
I agree, but it should be added that most other countries can have cheaper
drugs because most drug R&D costs are eaten up by US drug makers and the US
and state governments. Even if we cut out all the bad eggs rebranding old
drugs at huge markup and/or selling generics are ridiculous prices, the US
prices will always be higher because the US market is paying for 90%+ of all
drug research.

------
cedex12
Are there countries where drug research and production isn't privatized? I
would naively consider it ideal if research and “recipes” were made in the
open, shared between countries and the production wouldn't be the job of for-
profits… what am I missing?

~~~
tanzbaer
Cuba maybe?

------
wjnc
The killer detail (in the article) is that 1/3 of the (small) development cost
of 40 million were borne by the Dutch tax payer. How did that patent end up in
a big pharma portfolio?

Who funds this and what kind of shit lawyers and economists draw up the
funding schemes that give away full intellectual property, only with a
(historic) backstop for individual preparation?

We need risked based co-funding, co-profiting (irregardless of wether it's
governments or, say, insurers investing), a backstop on prices via qualy-s,
relatively short patents, no gaming of patents via arbitrarily small changes,
governments creating generics, ... And now I wake up.

~~~
xorcist
> How did that patent end up in a big pharma portfolio?

While it may sound strange put that way, most universities spend a lot of time
thinking about how spin off profitable companies from their research. It's a
huge deal and public spending on research is often motivated like this.
Universities and R&D companies have a codependent relationship and this is
generally regarded as a good thing.

The morally dubious outcome of this is that a lot of research ends up locked
away as intellectual property of some private entity, but it's not easy to
question.

~~~
username223
> Universities and R&D companies have a codependent relationship and this is
> generally regarded as a good thing.

Is it? At best, I'd say it's seen as a "necessary evil," where "evil" is much
more certain than "necessary."

~~~
tomcam
It stinks, I agree. What economic/social arrangement has done a better job in
drug innovation?

~~~
tirrit
Has there ever been made an effort with any other approach/arrangement, in
modern times?

Any sources on this, anyone?

