
Trump Sends Pharma Stocks Down with New Tweet on Drug Prices - ayanai
https://www.bloomberg.com/news/articles/2017-03-07/trump-sends-pharma-stocks-down-with-new-tweet-on-drug-prices
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StClaire
It costs a quarter to manufacture each pill but the manufacturers charge
several dollars for that pill.

But they don't just price gouge. Drug companies need to file patents on their
drug almost as soon as they sketch they come up with drug. From there they
need at least 8 years to get through the FDAs approval process, so the
manufacturers don't get nearly as much exclusive time with their IP as other
industries. (They started getting around that by slightly tweaking the formula
to last longer and calling it XL.) Plus they have to recoup the money they
sank into other drugs that never made it to market. Sure, they can write down
those losses, but a write-down ain't a refund.

If the government wants to start lowering drug prices, they can start by
creating a special patent for the drug industry—call it a research patent—that
can get converted to a regular patent when it gets FDA approval, and then give
the drug companies the patent for the standard 20 years plus a renewal if they
work the patent.

The next step: they can shorten time to market. We have evidence that the FDA
errs too conservatively and doesn't approve (or delays) drugs that would have
turned out totally safe and helped people. I remember they granted special
approval to bring in a meningitis vaccine that Europe had for a while when an
east coast school saw an outbreak. The vaccine still hadn't cleared the FDA,
but I guess FDA special clearance is better than doing nothing. If it's safe
enough for Western Europe, it's probably safe enough for Americans.

~~~
dethswatch
>It costs a quarter to manufacture each pill but the >manufacturers charge
several dollars for that pill.

What are the manufacturing costs for software?

~~~
koolba
Shhh!

Our whole racket is based on pricing our services on value while pricing our
cost of goods on production inputs.

It's not "fair" to let other industries do that right?

~~~
drewrv
Pricing based on value provided to the customer makes a lot of sense for
phones and web apps and cheetos.

But how much do you value being alive? The "value" of a lifesaving drug is
essentially unbounded, most people will pay anything to stay alive. That's one
of the reasons healthcare is an edge case where the typical rules of
capitalism don't work.

So yes, it is unfair to have some industries price their products based on
"value".

~~~
refurb
Go talk to the NHS. They value a year of healthy human life at 30,000 GBPs.

And if you take your idea to the extreme, then every person should have access
to every type of medical care regardless of the value offered?

~~~
huxley
Most people won't know what you're referencing.

[https://www.channel4.com/news/drugs-life-breast-cancer-
nice-...](https://www.channel4.com/news/drugs-life-breast-cancer-
nice-20-000-a-year-of-life-nhs)

[https://www.nice.org.uk/news/article/kadcyla-too-
expensive-f...](https://www.nice.org.uk/news/article/kadcyla-too-expensive-
for-routine-funding-on-nhs)

NICE (National Institute for Health and Care Excellence) sets the guidance on
the QALY (Quality Adjusted Life Year) at between 20000-50000GBP for a year's
worth of a single drug treatment.

Of the drugs that they approve for coverage the annual regimen has to be under
a threshold of 50000GBP or it may not be covered by the NHS.

But that 20000-50000GBP is per drug per person, someone could be on multiple
drugs and treatments simultaneously for much more than that and they'll be
covered.

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kar1181
Having lived in both the UK and US I find the cost of medicines very hard to
understand here. For example in the UK I can buy a ventolin inhaler for £10
over the counter (if I went to the Doctor it would be free). But in the US, an
inhaler costs me $60 (with insurance).

Why is it _that_ much more expensive here?

~~~
lukasm
In UK government has almost a monopoly for buying drugs, so they have a
leverage in negotiation and there is a lower overhead with paper work.

Americans subsidize drugs for the rest of the world.

~~~
FireBeyond
Yeah. That's not so accurate.

Top 10 pharma companies, 5/10 are US (2 UK, 2 Swiss, 1 French).

4 of the top 6 for profit margins (from 43%(!) to 19%) are US (Merck is the
only outlier, 9th, at 10%).

4 of the top 5 for Sales and Marketing Spend (both on raw dollars and as a
percentage of revenue) are US.

3 of the bottom 5 for R&D spend (as a percentage of revenue) are US.

I think I see a little fat that can be trimmed in the name of our so-called
subsidization...

Source:
[http://www.bbc.com/news/business-28212223](http://www.bbc.com/news/business-28212223)

~~~
kgwgk
For all those companies the largest and more profitable market is the US, the
country of domicile doesn't have much relevance for this discussion.

~~~
ebalit
It's not the case for Sanofi if I understand the table on page 5 of this
document correctly:

[http://www.eucope.org/lib/downloads/basic_facts_about_the_eu...](http://www.eucope.org/lib/downloads/basic_facts_about_the_eu_pharma_market.pdf)

~~~
kgwgk
These figures are pretty old. See for example:
[http://en.sanofi.com/Images/40647_GlobalGBUs_NewGeo_2015.xls](http://en.sanofi.com/Images/40647_GlobalGBUs_NewGeo_2015.xls)

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curiousgal
Step 1: Ask friend to short a bunch of stocks

Step 2: Tweet up a storm

Step 3: Profit

~~~
coldcode
This is what scares me the most. Anyone of his family or friends could do the
shorting. No one will ever catch them as the President will ensure the SEC is
kept in the dark or suppressed. He might not even know they are doing it.
Imagine knowing we are about to drop a nuke somewhere (like NK), you could
make a fortune.

~~~
not_that_noob
And even better, he's the damn president - he can pardon whoever he wants for
whatever he wants.

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DarkKomunalec
Ending the ban on importing (often the same) drugs from abroad would go a long
way to achieving this goal - no fancy system needed.

Also: "Johnson & Johnson and Merck & Co. have taken steps to increase
transparency about their prices." \- let me know when they disclose how much
they spend on development of non-generic drugs to treat serious medical
conditions, vs. their other expenses (such as advertising). According to [1],
the numbers aren't pretty. And that's lumping all of 'research' together -
subtract generics and cures for baldness and similar, and how much money is
being wasted in medicine becomes even more apparent.

[1]:
[https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-p...](https://www.washingtonpost.com/news/wonk/wp/2015/02/11/big-
pharmaceutical-companies-are-spending-far-more-on-marketing-than-research/)

~~~
refurb
Do you really think reimportation would work? It hasn't worked in the past.

A decade or so ago there was a big push to import cheaper drugs from Canada.
What did drug companies do? Put a cap on how much drug would be sold in
Canada. Canadians ended up restricting exports so that they had enough drug
for their own citizens.

------
protomyth
If the government really wanted to lower the price of drugs it would pay for
the FDA clinical trials[1] and lengthen the amount of time a drug company can
collect royalties. I remember when I was at a place that did clinical trials
the cost of one protocol was $50,000 a day because of all the test kits that
needed to have lab work done each day and the drug company only really had 3
years to get back its investment (plus pay for new research and have some
profit) before the generics could happen. Cost of manufacture and distribution
(just like software) is not the problem.

With the extends royalty period have a required pricing structure that has a
set price to prevent gouging.

~~~
makmanalp
I understand the idea of the government paying for clinical trials, but then
doesn't that incentivize pharma companies throwing stuff on the wall and
seeing what sticks, and basically wasting money on trials that they know are
long shots? I think the trial costs belonging to the company is right.

Anyway, regardless, what if pharma was only slightly or moderately profitable
instead of insanely profitable? I don't want to be snarky, but the "we're not
doing it unless it makes us a very big bag of cash" model of business just
seems counter to the idea that having access to good healthcare is a basic
human right. This is what makes me want to just create a whole DARPA +
universities + national labs sort of system that takes on a lot of that
responsibility of developing and testing drugs that is driven by more than
just profit.

~~~
protomyth
Well, frankly, having a big bag of cash is what got us a lot of the specialist
doctors in tough areas requiring a lot of years of work. There is nothing
wrong with making money if you provide a service worth it. We get nowhere when
we deamonize money.

Don't pay for failure if you care about that, but maybe we need a whole heck
of a lot more throwing it at the wall than we have now. I can see some
startups wanting to play where they cannot now.

~~~
makmanalp
Yeah, I'm absolutely not against researchers and specialists and people who
/work on/ this stuff being well paid, it just seems like the bulk of the
profits goes to shareholders (I'm guessing mostly large institutional
investors) rather than getting reinvested back into other efforts for the
greater good. I'm questioning whether we _really_ need that component of it
all.

~~~
protomyth
So do the bulk of the risks. Those profits power retirement accounts among
other investors. Given on what forum we are discussing this, investors are
important too.

------
rkhassen
Pharma stock prices should go down. That is a good thing. Drugs should be
first a service and second a source of profit and that should always be the
order of it, or we will continue to have drugs that bankrupt people till they
cannot afford it.

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overcast
Awesome. Have to give at least one thing to Trump. He's addressing exactly
what he said in his campaign.

~~~
asdfologist
All he's done so far is send down pharma stock prices.

~~~
judah
In case one is blinded by partisan bias, remember than Hillary Clinton made a
similar statement[0] against the pharmaceutical industry during her campaign,
and likewise sent stocks temporarily falling.

[0]: [https://www.thestreet.com/story/13684503/1/hillary-blasts-
dr...](https://www.thestreet.com/story/13684503/1/hillary-blasts-drug-prices-
biotech-stocks-plunge-yes-it-could-be-happening-again.html)

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james_niro
Pharma stocks are never a good buy anyway, they have high liabilities

------
dragonwriter
It's probably just a smokescreen to divide the attention of people concerned
about healthcare between this distraction and the bill repealing the ACA,
Medicaid, etc.

