
How pharmaceutical industry financial modelers think about rare diseases - refurb
http://www.cureffi.org/2019/04/29/financial-modeling-in-rare-disease/
======
dcx
This is an impressive article and an impressive couple. From the site's about
page:

 _My name is Eric Vallabh Minikel and I’m on a lifelong quest to develop a
treatment or cure for human prion diseases. I originally trained as a city
planner at M.I.T. and was working as a software engineer and data analyst in
the transportation sector when, in December 2011, I got some bad news. My wife
and the love of my life, Sonia Vallabh, tested positive for a mutation (PRNP
D178N cis-129M) that causes genetic prion disease, and that had claimed her
mother’s life one year earlier. Sonia was 27 at the time. The mean age of
disease onset for her mutation is around 50, and the mutation is highly
penetrant, meaning she is exceptionally likely to develop the disease unless a
treatment or cure is found._

 _Sonia and I set out on a quest to re-train ourselves as scientists. We both
started taking night classes, reading papers, calling up scientists, going to
conferences. We left our old careers and found jobs in research labs, and
eventually enrolled at Harvard Medical School, where we are now PhD students
in biological and biomedical sciences._

One thing I've learned from smart family and friends about medical care is
that you can sometimes improve outcomes quite a lot if you apply brains and
effort. I have relatives who managed to convert their dad's brain cancer
outcomes from a couple of months in palliative care (which the doctors were
recommending) to five more mostly-good years, by finding better surgeons,
signing him up for clinical trials, and getting to the cutting edge of the
research and applying it. For example they switched him to a ketogenic diet
back when this was just starting to show results for cancer. These guys are
taking this approach to the extreme! I hope they get the result they're
looking for.

~~~
dralley
>For example they switched him to a ketogenic diet back when this was just
starting to show results for cancer

I'm curious as to how this would have an impact. Is there any research
demonstrating that keto slows the development of cancer? Or hypotheses on why
that would be the case?

~~~
Balgair
Though it's incredibly dependent on the type of cancer, it's history, it's
environment, and it's genome, it is related to the metabolic pathway that you
shut off.

This is known as the Warberg Effect [0]. Essentially, for some reason, some
cancers will start eating only via glycolysis and not via oxidative
phosphorylation. Glycolysis requires glucose (sugars, like carbohydrates), so
if you just stop eating foods that turn into glucose, those types of cancers
will starve. Low sugar diets are ketogenic diets.

I'll be clear here, this is _super_ speculative. Cancer isn't something like
measles, each one is super specific to the organism and evolves over time.
Keto diets may work for a while to harm cancers, but may also select for more
'hearty' cancers over time. It's not very well understood, even still.

[0]
[https://en.wikipedia.org/wiki/Warburg_effect_(oncology)](https://en.wikipedia.org/wiki/Warburg_effect_\(oncology\))

~~~
phkahler
But if you've been handed a death sentence, why NOT try a keto diet? That's a
rhetorical question btw of course the is no reason not to try it.

~~~
Balgair
Each cancer is unique to the organism. Not all cancers are death sentences.
Nearly every sunburn you or I have had has been cancerous to some degree; the
inflammation and reddening are your body fighting those cancers (among _many_
other issues). Some cancers can be benign, some can be handled quite easily,
some can be treated in other ways. Again, each is unique.

The data on Ketogenic diets and cancer are showing a lot of promise, but you
should follow the advice of you oncologist/s. They have dedicated some portion
of their lives to helping you out with your cancer. You do not want to end up
in a situation where you have convinced yourself that kale is better than
chemo. Again, each cancer is unique though.

~~~
phkahler
Palliative care is an admission that chemo won't help and pretty much all
options have been tried. At that point one can sit back and die, or try
something.

~~~
Balgair
Again, it depends on the situation at hand. Though ketogenic diets are showing
promise, it depends on the cancer, as such diets may aggravate the cancer. One
should follow the advice of the oncologist/s as well as research on their own.

------
gumby
Having been through the early phases of this (both as bench scientist and
management, up through Phase II) I can say that this author's analysis is
right on.

There is a macro wrinkle he doesn't mention and that makes things worse: as we
increasingly succeed on stopping the big killers (e.g. lung cancer, CIs,
various accidents that constituted most of the causes of death into the 1990s)
the histogram of death starts to flatten out. That is, an increasingly larger
set of conditions kill people, each condition killing a smaller number. At the
limit, everybody would die of a unique condition.

This "problem" has been well understood for decades. The current model doesn't
really work as this process continues, but nobody really knows yet what would
be a reasonable replacement. This is one reason you see more and more ads for
drugs that don't solve anything life threatening but have a larger prevalence
(e.g. incontinence, insomnia, et al).

~~~
SirLuxuryYacht
> histogram of death

Not something you read everyday!

How does your "wrinkle" make things necessarily worse? All [men] must die
(sorry) at some point so succeeding at removing the biggest killers would give
more people a second chance to die of something else later. Just because we
cure cancer won't mean that there are suddenly more causes of death, just that
the people who would have died from cancer will die of a variety of other
existing things.

Anyway, your point likely still stands. It makes sense that companies will
have to spread resources across a diversifying research field once the big
killers become treatable.

edit: format

~~~
jessriedel
> How does your "wrinkle" make things necessarily worse?

If a small number of causes continued to be responsible for a large fraction
of all deaths even as causes were defeated/delayed by medical interventions,
then a continuous application of research resources could plausibly lead to
consistent increases in life expectancy. For instance, if as heart disease
deaths are being reduced by endovascular procedures those people are dying
mostly of colon cancer, then we could divert resources to colon cancer
research and hope for continued progress. But if, once the major diseases are
suppressed, the number of causes of death explodes into a diverse spectrum of
unique illnesses, there is little hope that constant (or reasonably
increasing) resources can do much.

------
iandanforth
This is a well researched, informative and infuriating article. Within the
system I cannot think of a better or more determined approach to this problem,
but as this is HN I need to lay out a few points.

As we mint more billionaires they are going to do an end-run around the FDA.
If I were a billionaire there is no way in hell I'd wait for a standard drug
trial to progress on an FDA timeline.

Eventually one or more of the ultra wealthy is going to survive a disease that
government sanctioned healthcare says is incurable. This will make its way
through the network of the wealthy, and with some luck the whole process of
how a drug was developed outside of the system will come out.

The bloat and overhead of the current process is intolerable. We've managed to
elevate caution to a crippling set of shackles and _at the same time_ put
control of the process into the hands of people who only care about the
calculus the OP so carefully describes. We pay unending lipservice to process
and safety but drug companies are only act in proportion to potential
liability.

~~~
jonlucc
> If I were a billionaire there is no way in hell I'd wait for a standard drug
> trial to progress on an FDA timeline.

You don't have to be a billionaire for this. There aren't many drugs which sit
between proving efficacy in clinical trials and FDA approval, and ones that
are like that only sit there for a few months. Of course, those could be
important months for a particular patient, but there are ways to handle this.
One such program is called "compassionate use". The idea is that if you have
no other hope, you can be prescribed a non-approved treatment.

There aren't as many potholes in this as you seem to believe. Drugs which are
proven efficacious and safe usually are submitted for approval, because it's
expensive to run trials. It wouldn't be the first time a billionaire decided
to do something medically unwarranted or ambiguous, but that doesn't mean it
will become a norm.

~~~
iandanforth
Your comment made me realized I forgot an important predicate.

I think we're near an explosion of drug _targets_. That the front-end of the
pipeline is about to get very full very fast.

That's one of the forcing factors I didn't mention.

------
chadash
I was surprised that this article didn't mention the Orphan Drug Act of 1983,
which was passed by congress to facilitate the development of drugs for rare
diseases (many other countries have similar legislation).

This act gives tax incentives, subsidies, lowers clinical trial requirements
and increases exclusivity for the development of "orphan drugs", which
otherwise might not be economically viable to develop. That said, if a
condition is rare enough, there's probably no amount of tax incentives that's
going to induce a for-profit company to go through the significant costs and
hassle of bringing a drug to market.

~~~
selimthegrim
Avik Roy has an absolutely blood-boiling section of this report devoted to
ways companies are gaming the Orphan Drug Act

[https://docs.house.gov/meetings/GO/GO00/20190129/108817/HHRG...](https://docs.house.gov/meetings/GO/GO00/20190129/108817/HHRG-116-GO00-Wstate-
RoyA-20190129.pdf)

~~~
bluGill
Not really. While he makes it sound bad, what is happening is that in exchange
for actually proving that drugs we "know work" actually work companies get a
monopoly for a short time. I'm glad some of the treatments doctors have been
using for years now have science behind them so we know more about how well
they work.

------
caublestone
I met a PHD chemist who spent 30 years developing drugs. Over that period he
developed 20,000 APIs. 4 were approved. 1 made it to the market.

~~~
loceng
I wonder how many times over tests were done by competing companies,
duplication, and how much waste/inefficiency there was because of data not
being shared - and how much further duplication may continue to happen.

~~~
cknoxrun
My project in University (and now my company) annoyed a lot of companies when
we first published DrugBank in 2006. We basically opened up the data on
potential APIs and their targets into a downloadable and useable data set. I
remember going to conferences and being both lauded by academics and maligned
by pharma folks. This was before Wikipedia or things like Pubchem and ChEMBL
were really a thing.

~~~
refurb
Why would a drug company care if you share public information? Because you
make it easier to search?

~~~
cknoxrun
Good question. They had built a lot of internal tools and datasets that we
rebuilt and released. It was a competitive advantage before.

------
schemathings
When the whole Martin Shkreli saga was making the news I ran across his
youtube channel and did end up watching his 'How to analyze a clinical trial'
series of 4 videos to understand the process .. they're long but it was
interesting to some extent as someone from outside that industry ..
[https://www.youtube.com/channel/UC8gjB1PSXv_oAUSAQ16S0fA/sea...](https://www.youtube.com/channel/UC8gjB1PSXv_oAUSAQ16S0fA/search?query=how+to+analyze+a+clinical+trial)

~~~
swarnie_
I also followed his saga and watched both this series and his general stock
picking analysis videos.

If you can separate yourself from the persona he tried to cultivate and enjoy
having your excel skills emasculated there both great watches

~~~
schemathings
If your goal is to have your ego deflated in Excel, this is always a good
place to start .. "You Suck at Excel with Joel Spolsky" ..
[https://www.youtube.com/watch?v=0nbkaYsR94c](https://www.youtube.com/watch?v=0nbkaYsR94c)
but I agree, Shkreli definitely had the whole speed run thing down with Excel.

~~~
umvi
Is that a parody of "You Suck at Photoshop" tutorials?

~~~
schemathings
Funny, I never even noticed that, but apparently so .. his last comment in the
description is "Apologies to Danny Hoyle" and a (now broken) link to "You Suck
at Photoshop" videos.

------
modzu
Pharmaceutical companies typically claim that the reason for high drugs prices
is because of the amount that they spend on research and development (R&D).
According to the industry, it costs USD $2.6 billion to bring a drug to market
[1]. Critics counter that companies are more focused on and spend more on
promotion than on R&D. Gagnon and Lexchin produced figures that showed that in
the United States in 2004 the industry spent USD $57.5 billion on promotion
versus USD $31.5 billion on R&D [2]. A report from the California-based
Institute for Health and Socio-Economic Policy stated that in 2015 out of the
top 100 pharmaceutical companies by sales, 64 spent twice as much on marketing
and sales than on R&D, 58 spent three times, 43 spent five times as much and
27 spent 10 times the amount [3].

[1]
[https://www.ncbi.nlm.nih.gov/pubmed/26928437](https://www.ncbi.nlm.nih.gov/pubmed/26928437)
[2]
[https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2174966/](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2174966/)
[3]
[https://nurses.3cdn.net/e74ab9a3e937fe5646_afm6bh0u9.pdf](https://nurses.3cdn.net/e74ab9a3e937fe5646_afm6bh0u9.pdf)

~~~
refurb
Companies don't spend $X on promotion unless they gets $X+ back. Otherwise why
bother? So overall, promotion is a net positive to revenues.

~~~
lenticular
The criticism is more that instead of increasing sales by developing more
drugs, they focus their resources on marketing instead. This makes more money
for them but is bad for society.

~~~
jonlucc
I still don't understand why it's bad for society? It seems like this is a
common point that implies something, but I can't figure out what that thing
is.

~~~
modzu
well in the context of developing drugs that cure disease (esp rare ones),
pharma says its so expensive to do, it costs billions to develop a drug. but
if in fact it "costs" billions to "market" a drug then is that the same thing?
i dont have a strong opinion on this

~~~
jonlucc
I'm not super familiar with the numbers, but I believe the "billions to
develop" number is a development number, if a little juiced. I think they take
the total amount of R&D spend and divide it by the number of drug launches for
a given period of time. So it's a good idea of how much money you have to
spend to get a new launch, but it is higher than the cost of a single project,
the majority of which are terminated before launch (many well before clinical
trials).

After you spend a couple billion per launch to make a new drug, then you spend
another couple billion on marketing. Again, I could be mistaken, but I'm
pretty sure that's the position of pharma.

------
aaavl2821
This is a fantastic writeup. There isn't a lot of great info online about the
business of pharma but this is a great intro that hits on a lot of key
concepts.

If you play around with a model like this you see how important _biology_ is.
the risk that something that works in mice but fails in humans is the biggest
reason drugs are so expensive to develop. Front loading this risk / lowering
the cost to "derisk" this risk is one of the most important things to focus on

One other concept that's incredibly important but not discussed is "unmet
need", i.e. How underserved are patients by standard of care. For a fatal rare
disease, unmet need is high; for a disease with drugs that already work pretty
well the unmet need is low. Unmet need + clinical benefit (how much does your
drug make patients better) determines clinical value, which is roughly
correlated with price you can charge. Price isn't directly determined by cost-
benefit calculations in the US, but it's harder for payers to deny a drug if
it would save lives, while payers can easily sideline for ex another slightly
better yet more expensive insulin

Some people view the phenomenon of higher prices for higher benefit as
exploiting sick patients; I don't think that's entirely fair although in cases
like Martin shkrei it is. I've always thought of it as aligning drug makers
incentives with the sickest patients -- you only have a viable product if you
are providing immense clinical benefit to very sick patients. So r&d is very
focused on diseases with severe unmet need. These days roughly half of drugs
are developed for patients with severe rare disease or late stage cancer, as
most other diseases aren't financially viable

------
cbhl
Looking at these numbers, I wonder whether the FDA process is a bit too
conservative with respect to safety.

There were the articles yesterday about diabetics yesterday creating closed-
loop feedback systems out of old insecure parts, because a FDA-certified
alternative is decades out.

I've heard also of folks joining studies for newer-and-better IUDs that are
approved by European regulators, but need to be re-certified for the US
market.

Politics and lobbying are hard, but would some regulatory changes result in a
10x reduction in R&D costs?

~~~
elliekelly
Your comment reminded me of the (ridiculous but sadly necessary) "Sunscreen
Innovation Act" passed a few years ago.[1]

U.S. financial regulators often "vet" their equivalent foreign agencies and
whitelist those whose processes are sufficiently analogous and in some cases
allow US entities to rely upon the work done in those whitelisted
jurisdictions. I've always wondered why the FDA can't work out a similar
system. If the EU has approved a drug and done all of the studies and asked
all of the questions surely we don't need to do all of the same studies and
ask all of the same questions just so we can approve the drug a decade later.

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

~~~
refurb
_I 've always wondered why the FDA can't work out a similar system. If the EU
has approved a drug and done all of the studies and asked all of the questions
surely we don't need to do all of the same studies and ask all of the same
questions just so we can approve the drug a decade later._

The reason is thalidomide. The US was one of the few countries that chose not
to approve it despite other countries doing so. Saved a lot of US children
from birth defects.

~~~
elliekelly
Ah yea, thalidomide. That drug is often used to justify poor policy decisions
at the FDA. It's the reason the FDA banned women of child bearing age from
clinical research.[1] In the late 80's there was even a study conducted to
determine the relationship between obesity and risk for breast and uterine
cancer. Guess how many women were enrolled? Zero. Thanks to the FDA's
misguided knee jerk policy response to thalidomide.

It seems to me the FDA's process _might_ "protect" a small number of people
but that comes at the expense of many thousands of lives.

[1][https://www.drugwatch.com/news/2018/07/25/excluding-women-
fr...](https://www.drugwatch.com/news/2018/07/25/excluding-women-from-drug-
trials-kills-people/)

~~~
refurb
Hey, I don’t disagree that that FDA is very conservative. My comment was more
around the politics of it.

Look back at the Vioxx hearings. People crapped all over the FDA because they
didn’t catch an increased risk of CV issues until post-approval.

If you’re the FDA, it’s “damned if you do, damned if you don’t”.

~~~
elliekelly
That’s fair and the struggle for all regulators I would imagine (though the
stakes are higher with human health).

The crypto people drive me nuts the same way. One minute they’re extolling the
virtue of markets “free” from regulatory interference but the second it turns
out the market was a scam they want to know what the government plans to do to
get their money back.

------
btown
This article does a good job showing how big an impact the concept of "time
value of money" can have on a multi-year investment of any kind -
pharmaceutical or not. (Particularly since many of us in software are
effectively investing nontrivial amounts of our salary in illiquid
investments.)

I'd imagine that many tend to think of a $X investment as a $X investment...
but if that investor could get effectively compounded interest/returns, even
at a single-digit rate, in another investment, they could be risking many
times $X by forgoing that investment to take the one in question. Take a look
at the chart and formulas in
[https://en.wikipedia.org/wiki/Time_value_of_money](https://en.wikipedia.org/wiki/Time_value_of_money)
and
[https://en.wikipedia.org/wiki/Discounted_cash_flow](https://en.wikipedia.org/wiki/Discounted_cash_flow)
. Important stuff to know regardless of how large a financial decision one
wants to make.

And in the context of highly risky drug development, in a capitalist society
it's a miracle that niche drugs are researched at all. It speaks to the
passion of scientists like the author who endeavor constantly to develop
tooling and processes to accelerate/de-risk drug research enough to be an
attractive investment in today's increasingly optimized society.

~~~
csunbird
I agree completely, most people overlook the "opportunity cost" of
investments. If an investment makes %3 per year but you could invest in
something else that makes %4 per year, while you did make profit, you actually
lost money, because you missed an opportunity to make an extra revenue equals
to %1 of your money (or %33 more profit).

~~~
refurb
You see people do this a lot with housing. They make $100k after 5 years and
pat themselves on the back.

They ignore that if they had put their down payment in the market, they would
have made $110k.

~~~
lotsofpulp
The difference is that they can buy homes on margin, whereas no one would lend
to them to invest in the market on margin. Return has to account for only
putting 5% to 20% down. Not that I think homes are a good investment outside
of the few burgeoning cities in the US, compared to index funds, time/labor
costs included.

~~~
refurb
My comment ignores the leverage and just looks at the downpayment alone.

To your point, their $100k gain at 5x leverage kind sucks compared to a $110k
gain at zero leverage.

------
abtinf
The author ignores two obvious, extremely high leverage changes that would
solve the problems in his model.

First, on the revenue side, extend patents on pharmaceuticals as long as
possible. His model assumes a very narrow window of payback; quadrupling or
quintupling that window would make many more drugs feasible to investigate.

Second, to use the author’s word, “de-risk” all trials. The best way to do
this would be to end the FDA. But an intermediate step would be to eliminate
the requirement to show efficacy, only retaining the requirement to show
safety. Safety is orders of magnitude cheaper to prove.

Trials could be conducted much more cost effectively with these two changes.
There would be more time to form patient and investigator networks, the
structure of trials would be less complex, many more drugs could be tested,
and many more drugs would be profitable.

~~~
boyband6666
Extending patents wouldn't work that well in his model - as you can see from
the graphs it is already discounted crazily (I'd argue for a 6% discount rate,
not 8, but it hadly changes the calculus). Besides market exclusivity can
often be extended by adding indications and pediatric studies, so they aren't
as short as first stated. Plus on some drugs you then get other patents - see
inhalers where you have patents on the devices as well as the drugs.

Equally asking to prove safety only... you still have to do the studies, and
need a lot of exposure so why not capture outcomes too? I'm not convinced it
would be a lot cheaper to omit the outcomes - you still have to recruit the
patients, and monitor them. Take HIV, if you don't test blood, you don't know
what is happening to patients blood counts, since you have the blood, why not
also check for efficacy in viral supression?

Regulatory is also based on benefit:risk, without evidence of benefit, why
tolerate any risk? Also how many clinicians would give new drugs with only
theoretical efficacy?Hopefully none. All the drugs that fail trials we also
think should work, and spend money to prove it! Not to mention the market for
pharmaceutical is worldwide, the EMA, Health Canada, Swissmedic and others
would throw something out with no evidence of benefit, greatly limiting your
market, even in the US.

Are the FDA perfect? No. Are they excellent? Yes. Some of my research touches
up against what they do, and my respect for them grows with every interaction.
They're also continually improving. The fundamental problem is that we're
looking at a 'better than the Beatles' problem
[https://en.wikipedia.org/wiki/Eroom%27s_law](https://en.wikipedia.org/wiki/Eroom%27s_law)

What might work? More collaboration between companies. If we can enrol one
placebo arm, but test 4 active products against it, we cut the costs (and
improve the ethics by giving fewer patients placebo). There are a few other
minor tweaks too, but it is something we all want to improve, and are trying
to do so!

------
boyband6666
So I work on the opposite end to discovery, in the interpretation, and
estimation of outcomes seen beyond the studies i.e. what impact will the drug
have. Applied statistics essentially.

The author is completely right about the raw mechanics of investment decisions
(and sometimes they are just that when a pharma company is sizing up buying an
asset), but has written up a really thought provoking piece which was
interesting to read. Though I deal with time preference every day, I hadn't
quite internalised how much influence it had for early spending.

In terms of my experience, very similar, I worked in global HQ for a large
pharma company, responsible for my small part of things for 4 products. 2
failed in Phase 2, and the other 2 failed their Phase 3s. I moved to another
pharma company where I was focussing on launch products, but every now and
then one would disappear off the radar. For other the trial results would come
in, and it only worked on half the patients. We expected all these to work -
the science was impeccable, the animal models demonstrate a good basis for
belief... it just didn't happen. Every drug that works really is a needle in a
haystack.

On the making development attracting, I've been forutnate enough to be able to
volunteer some of my professional time to a patient group trying to attack the
problem in a different way, and make it possible to get medicines
commercialised in Duchenne Muscular Dystrophy. The approach is led by a couple
of really impressive executives* and is trying to get companies to collaborate
to pull together some of the materials the author mentions (rather than all do
them in isolation with variable quality). They recently won an award for their
work, and thoroughly deserve it. These kind of initiatives are what can really
make a difference, and de-risk an area for many companies - the lay of the
land is known, and there is high quality understanding of what matters to
patietns, and the natural progression of disease. It also means that companies
developing medicines can engage to make sure their trial program targets the
right patients, and measures the right things. If anyone is interested:
[https://hercules.duchenneuk.org/publicity](https://hercules.duchenneuk.org/publicity)

* I say executives because that's what they are, and the role they play. They all have sons with DMD which is their motivation, but that label that doesn't do justice to the amazing work the group does - as an example where there are generic medicines that might help, they are funding trials to find out!

------
integrate-this
This is a pretty solid breakdown. IRR isn't mathematically valid though. I
might take a run at cleaning up this spreadsheet tonight to make it look a
little more professional. Need to include things like tax and exit valuations
to get to the correct decision.

~~~
integrate-this
There are a few very important caveats that they miss though. Revenue
determinants are heavily based on conversations with healthcare payers to
determine market size which dramatically effects revenue projections. Most
firms that do deep development plan to sell successful drugs and exit as early
as possible so transaction costs need to be included in the terminal value,
which isn't calculated terribly well in this model.

~~~
boyband6666
I'd also use corporate bonds for pharma companies (or biotechs, depending on
which you are looking at) for the cost of capital, as ultimately that's what
debt costs

------
blittle
Here's non-profit startup trying to tackle this kind of stuff:
[https://www.youtube.com/watch?v=v7V8-dfQ7bM&feature=youtu.be](https://www.youtube.com/watch?v=v7V8-dfQ7bM&feature=youtu.be)

------
agumonkey
Great article. Best of luck to them.

Anybody knows about efforts to lower trial phases costs down ? (without
lowering quality of course). Any out of the box idea ?

~~~
boyband6666
Collaboration - one control arm, 2+ active drugs from multiple companies (why
not 6+?). Fewer patients exposed to placebo, less paperwork, same statistical
power, more so if you randomise 2:1:1:1:1:1 rather than a standard trial with
1:1 or 2:1

------
hammock
Shorten or remove the patent benefits awarded to new drugs, and the calculus
changes dramatically.

~~~
lotsofpulp
The only change I can see is needing to increase the cost of the medicine to
make up for the reduced exclusivity period, or a reduced incentive to research
medicine.

~~~
ekianjo
You can't just reduce the patent period without reducing the regulatory
process that is required to get stuff approved. It would not work otherwise.

~~~
lotsofpulp
I hope we're not on the path to reducing rigorous testing and vetting of
medicines in exchange for cheaper prices. Medical science is extremely hard,
and verifying cause and effect in a system as complex as the human body takes
significant resources.

People want cheap, people want safe, people want well qualified individuals
pursuing these advances. What people don't want is higher taxes to enable
government funding for this research, and would rather have private investors
pick up the tab. And then they scoff at high medicine prices. I'm sure there's
some corruption and paper pushing waste going on, but fixing that is not going
to remove the need for costly triple blind studies that span years, only to
result in failure the vast majority of the time.

That's the cost of good science, and if society wants the fruits, they need to
pay for it.

~~~
boyband6666
This is exactly correct. Also there is a good incentive structure in there - a
well designed clinical trial program will move between phases, collect all
data possible to support an application, and have all the relevant data to get
a timely approval. The better you do on evidence collection, the sooner you
are on the market, and more you have to work with

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Vaslo
Throws a little doubt on those who say the money is in the treatment and not
the cure :).

~~~
cryoshon
not exactly -- it's more that the money is in whatever they can get passed
through clinical trials. if that's a cure, great. if not, it'll still sell.

there is no inherent incentive to deliver a cure from a drug product, provided
that there is no competitor drug. luckily, there's also no realistic incentive
to sit on a cure because it can be priced to be profitable even if the cure
makes itself obsolete, which is extremely unlikely in any event.

~~~
Vaslo
I was joking a bit.

I agree with your last statement, and I'd argue as well that if you had the
cure to say, cancer, you could charge whatever you wanted for it (at least in
the short term). When it comes to money, you just can't take it with you, and
you'll spend pretty seriously to improve your lifespan.

~~~
boyband6666
The people who say pharma don't want cures generally don't understand the
industry. A cure is worth more than a chronic treatment, and the article does
an excellent job of explaining time preference (his 8% discount) - having a
treatment you can sell for more years isn't worth much when you discount it
all.

Fundamentally companies have to follow the science. If the science is there
for cures, that is what is pursued. If the science is on life extending
treatment, that's what gets followed up. You don't get to pick and choose what
you want - both can be lucrative, and both can be failures!

~~~
jonlucc
I truly believe that people don't really understand how difficult cures are.
It's not that we in pharma don't want to cure things, we just don't know how.
Also, most pharma and biotech companies are built around a small number of
mechanisms. Many pharma companies only make small molecules or large
molecules, but don't touch potential siRNA, CRISPR, or stem cell therapies.

Take diabetes for example. By the time a Type I diabetic is diagnosed as
diabetic, they've lost a huge portion of their beta cells (something like 80%
if I remember correctly). It is _very_ hard to slow the destruction of those
cells and harder to completely stop future islet mayhem. It's nearly
impossible to regrow them with the information we have now. Even if it is
possible to regrow those cells, can it be done by giving a drug, or a drug
coctail? Maybe not. Maybe it has to be a stem cell treatment. Or an order of
magnitude more difficult to discover: a stem cell treatment in conjunction
with drug(s). Will that kind of therapy come out of a big pharma company?
Maybe with partnerships with other companies or an acquisition, but the people
who make small molecules probably don't know a whole lot about convincing stem
cells to become beta cells; it's just a different set of skills.

~~~
boyband6666
Fully agree - I work with pharma as an independent (and used to work at GSK &
Sanofi before that - effectively medical statistics). I'm currently working on
a gene therapy from a biotech, if it works it'll be amazing, and be a semi-
cure, holding functionality where it is, but even that isn't a perfect cure.

I've also worked on 2-3 immunotherapies, they again can be amazing and turn
previously uncurable cancer to long term survival (of duration unknown), but
only in a fraction of patients - to work on them was an honour. Most therapies
are incremental improvements, which can make a big difference to patients, but
there is still unmet need.

GSK when I was there were explicit, half the drugs they wanted to develop
internally, but using the commercial knowledge and experience guiding drugs
though trial and approvals, also wanted half of drugs to be invented outside,
and be commercialised by a company who knew how to do that!

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Circuits
I would assume that somewhere on the bottom line there is an analysis of what
the drug itself is doing. For instance, does the drug cure something or does
it treat the symptoms of something? I imagine most of former are thrown out
right off the bat. What we need is a system for testing, developing and
selling medications that is less effected by the human condition. Perhaps, we
should close the private sector and hand this off to the government or at
least breakup the process by allowing the private sector to sell without the
burden of testing and development? Perhaps, we as taxpayers, should be
handling the burden of cost for testing and development?

~~~
jonlucc
> I imagine most of former are thrown out right off the bat.

Why? You don't think cures have monetary value?

