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For a fantastic discussion about the Byzantine process for generic drug approval, I recommend a recent episode of EconTalk[0]. The guest wrote a book called "Drug Wars: How Big Pharma Raises Prices and Keeps Generics off the Market"[1]. When up to half a billion dollars of revenue is at stake, the drug companies have incredible incentives to delay or prevent generics coming to market. Believe or not, they often simply refuse to give a sample of the old drug to the generic company. No sample to compare, no FDA approval. It is illegal to dispense a drug without a prescription, and the sample is not for a patient, so it can take some maneuvers to get a legal sample. Or the drug company can change a tiny feature of the drug, re-patent the new drug, and then destroy/withhold all the old drug. No old drug sample, no FDA approval of an "identical" generic. The drug companies will contract with a generic company that never, actually gets to production (wink, wink). Those contracts are finally being understood by judges, so now they are going to a second level of contract obfuscation that is even harder to notice, but still keeps the generic off the market.



> The drug companies will contract with a generic company that never, actually gets to production (wink, wink).

Sounds like I should setup shop as "generic drug company" and land me one of those contracts where I promise to never reach market :)

Finally, a career fitted to my sharp ability to never follow through on goals.

Sounds like a good career move for Bighead (Silicon Valley)

Sorry, i have a patent on that.

Is this a worldwide problem? Or is this really an American failing?

I live in Brazil and generics for drugs which patents are expired are widely available, accounting for 30~40% of all drug market. If I'm not mistaken, we even broke patents in some cases (HIV drugs), which is cool.

Why is that cool? Intellectual property law is necessary for industries like Pharma. No IP, no new drugs.

It's difficult. On one hand, the pharmco needs to make money to continue on their mission. (What their mission is is another difficult problem, I believe is isn't "shareholder value", that is a cancer on society.) On the other hand, the product alleviates human suffering, sometimes on a large scale.

A case study that everyone should be aware of is the story of Praziquantel in South Korea.

Here's a reference: https://cdn1.sph.harvard.edu/wp-content/uploads/sites/480/20...

Praziquantel is about the only thing that works against schistosoma, a very debilitating condition. The compound was discovered in the early 1970s in a joint venture between Bayer and Merck KGA. At that time South Korea had a major schistosoma problem, but Merck could not supply at a price Korea was willing to pay (at that time Park Chung-Hee was in power, it was a military dictatorship).

Korean leadership declared praziquantel a national security issue (true) and started manufacturing their own, and in a collaboration between KIST and Shinpoong Pharmaceuticals developed their own process, which was much cheaper than the original Merck isoquinoline route.

The effort was a major part of the development of a domestic pharmaceutical industry. Shinpoong still hold 50 % of the market in praziquantel.

>No IP, no new drugs

Maximizing profits for shareholders is not the only motivation that we as humans have for creating life saving medicines. There are countless examples throughout history of new drugs being invented without IP laws. This is akin to how advertisers say the internet wouldn't exist without them.

The people who do the actual discovery are not paid an exorbitant amount of money. They mostly just want to do research and solve problems while living a comfortable life. A pharma company making billions in profit isn’t necessary. It’s just the common way it currently is done. There are other ways to accomplish the same goal. We could try to replicate Jonas Salks’ way Of doing things.

I work in drug discovery. You're right that the bench-scientists don't usually get rich. But it's an extraordinarily risky, expensive, and unpredictable business and for every billion dollar drug there's a graveyard of failed companies and projects that didn't make it. The only business reason to take those risks are for a chance at patent-protected profit. And those bench scientists wouldn't have labs to work in if investors and rich companies weren't willing to pay for it.

What about government funding research? It doesn’t have to be just rich people or corporations. It could be all of us in the form of government. I believe that most of a drug’s overall cost is marketing. I might be wrong on this but it is a significant, useless expense. Remove filthy rich profit motive and we might get drug companies that don’t resort to shenanigans.

In an ideal world, I'd agree with you. In the real world, government funding (at least in the US) is often administered by bureaucrats without relevant scientific expertise to ensure proper oversight. Furthermore, the checks and balances for grant awards are lacking at the NIH/NSF/etc. The panels who decide who gets funding and who doesn't comprise researchers who are far from disinterested judges. Some grant approvals are less about scientific merit and more about rubbing elbows with the right people, which ultimately means that political capital becomes more important than substance in a lot of cases. I've seen large grants funded for experiments that from a methodological standpoint, made no sense, and yet the PIs who submitted the proposal were well-established and had connections.

Corporate science, in contrast, just wants results that work and earn money and as a result is more geared towards weeding out fruitless avenues of research. My general impression is that this is sometimes at the expense of creativity, since companies are more risk-averse generally speaking, which limits what is discovered to mostly non-sexy stuff. I also suspect (but am not certain) that replications are performed more routinely, and are just file-drawered / kept as trade secrets and that the current reproducibility crises in some fields (such as cancer research) have been known about for a while in industry.

Rich people just want to cure cancer, childhood obesity, condition X that afflicts them personally. It's hard to get funding for just basic research because philanthropists generally lean towards the applied side of things as well and don't go for the moonshots. It's not the best, but typically there's some common ground for researchers to get money out of them (or some way to make basic research look applied to an undiscerning eye).

You are simply wrong on this. It costs hundreds of millions of dollars to develop a new drug, prior to approval and marketing. What percent of a companies budget is spend on marketing versus R&D at a given time is kind of irrelevant because (1) the development costs occur before market and (2) often drugs are in-licensed or acquired after significant expense towards R&D has been expended. They don’t buy all the companies whose products fail (most of them) so that cost isn’t factored in. Making new drugs is very expensive and risky.

Edit: I’m describing the development of novel drugs here. “Me-too” drugs are significantly less risky and probably less costly but there’s still a lot of risk amd expense.

>We found that the premiums pharmaceutical companies earn from charging substantially higher prices for their medications in the US compared to other Western countries generates substantially more than the companies spend globally on their research and development. This finding counters the claim that the higher prices paid by US patients and taxpayers are necessary to fund research and development. Rather, there are billions of dollars left over even after worldwide research budgets are covered. To put the excess revenue in perspective, lowering the magnitude of the US premium to a level where it matches global R&D expenditures across the 15 companies we assessed would have saved US patients, businesses, and taxpayers approximately $40 billion in 2015, a year for which the Centers for Medicare and Medicaid Services (CMS) reported that total US spending on pharmaceuticals was $325 billion.

Curious to hear your thoughts.


Developing drugs costs money. Marketing them does too. Which one has more money spent on it?


I was skeptical of this graveyard because it gets referenced a lot, largely due to how we humans constantly ignore the sunk-cost fallacy all the time.

BUT it turns out the FDA is what prevents that from happening, and yes less drugs are getting approved. https://www.reuters.com/article/us-pharmaceuticals-success/s...

I think you're seriously underestimating how much thought goes into the risk-benefit analysis during drug development. The FDA does create some regulatory burden but they certainly aren't the main driver of why drugs fail. Drugs fail because they don't work or they cause unintended toxicity.

American pharma companies spend a lot more on marketing than R&D.

I consider myself libertarian to the point where I'm willing to accept the uncomfortable extremes of the ideology that many people have issues accepting. I vehemently defend the right of a corporation or person to do shitty things that I do not necessarily agree with. However, abusing/commandeering regulatory processes to chokeslam competitors out of the market is a clear cut case of a business or individual using government power to engage in practices that would otherwise be impossible.

Because with patents the IP eventually wears out, and IP = expensive drugs = less customers = more ill people = less productive society. I know, I know, the reality is more nuanced, but thus is the core of the counter-argument.

If you study the subject of drugs R&D carefully, in most of the cases companies break even in 1 or 2 years after the release of the drug.

...for drugs that they release.

They take a bath on drugs that don't get released.

I'm not trying to claim Pfizer isn't profiteering, but it's not quite that black & white.

That is a bit naive. There are other ways to fund drug research, such as government grants.

It's definitely a US only problem. There are, for instance, multiple competing competing brands of EpiPen competitors in Europe. In the US the FDA's mandate concerns safety only and private entities can sue it to force it to do its job if they think it isn't. Which makes it easy for big companies to launch lawsuits alleging that their potential competition can't prove that they can produce drugs as safely as the incumbents.

I think it is worse in the US.

India goes as far as waiving patents if a drug is too expensive.

There are companies which have patented drugs in India, but do not make their drugs available in India. The Indian Patent Law allows for compulsory licensing of such drugs to another manufacturer under certain conditions which meet public interest. This is not a free for all - there are significant legal tests that the manufacturer has to meet to get the CL, and i think only one or two cases have been granted. This provision of indian IPR laws has led to having India being put on an IP watchlist in the USA, though India's laws are compliant with the TRIPS agreement.

Some of these techniques (like tweaking and repatenting a formula) are definitely used worldwide.

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