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To play Devil's Advocate - without pharmaceutical companies developing and marketing drugs, how do we set up an incentive structure that encourages R&D and innovation?



If there is any devil that doesn't need your help, it's the pharma industry.

It's important to realize that to a first approximation, advertising prescription drugs is pure waste. The main case is pharma companies battling for fixed market share. That is, there are N people who have the problem, and companies X, Y, and Z are spending money trying to maximize their share of the market. The ad spend changes which pharma company does the best, but that money comes from the sick people, who would be better off without it.

The other case for advertising is demand generation, and for drugs I think it's mostly waste as well. I definitely know a couple people who are not sick enough to really need drugs (or perhaps not sick at all), but advertising-induced hypochondria means they badger their doctor until they get a prescription. That's an expensive boondoggle.

I'm sure there are some people who hear an ad and realize they have an actual problem. But if that's a significant issue, I'd rather we just paid for public service announcements for disease awareness, rather than hoping the very profitable drugs are the same ones people have the biggest medical need for.

And theory aside, advertising prescription drugs to the public was illegal for decades and we still did fine on the medical innovation front.


You realize there are a handful of therapeutic areas where they are really competitive?

It’s inaccurate to suggest that’s the only market for drugs.


As I said, I see two basic cases. In one, they're competitive. In the other, they aren't. I think general audience advertising is even less justifiable in the latter case.


Why attach all of developing and marketing, when it's only the advertising that's in question?

Doctors/hospitals can learn about new drugs through dry, informative leaflets - TV ads or salesmen talking directly to doctors distorts the demand.


I find the argument that humans will stop studying pharmacology if they can't monopolize their results quite unconvincing. Current pharma co R&D and innovation only effectively investigates the benefits of drugs with recent patents (with enough years remaining to monetize).

There is moral validity to profit-seeking investment in drug trials which find effective treatments, but the current system enables this only with great amounts of inefficiency.


>I find the argument that humans will stop studying pharmacology if they can't monopolize their results quite unconvincing.

agree

>Current pharma co R&D and innovation only effectively investigates the benefits of drugs with recent patents (with enough years remaining to monetize).

Can you elucidate the connection to your first statement - I don't see how that follows.


Defenders of drug monopolies often argue that removing the monopoly will reduce our intensive drug research spending. This may be true. However, I'd argue that the focus of this intensive drug research spending is perverted by economic incentives and overinflated because of the artificially constrained scope.

For-profit Pharma companies have a fiduciary obligation to only invest in research which they can profit from. This leads them to only invest in research in the tiny proportion of "interesting drug candidates" that can be monopolized.

Ex. - Imagine scientists find that saffron can be an effective antidepressant with few side effects. They research the active molecule and find that adding a bromine atom would make the molecule patentable, but it is slightly less effective and has more side effects. The drug company has an incentive to spend great amounts developing the less-effective patentable drug, and no incentive to research the other. Drug company has incentive to try to convince the public that their inferior molecule is actually preferable.

Now, we have a lot of data about the safety of saffron - people have included in their diets for hundreds or thousands of years. If this can be used to treat depression, it will likely have a much better safety profile than a novel molecule which has never been ingested by humans before. The therapeutic index of saffron (delta between effective dose and aversive side effect dose) is huge! Likelihood of getting it through safety trials has very high bayesian prior.

(Saffron as antidepressant is an area of recent research - all papers I've seen published by academics https://scholar.google.com/scholar?hl=en&q=saffron+antidepre..., I made up the bromine part for the example. Saffron may also be useful as anti-tumor and in ADHD treatment)

Pharma Co's may be investing intensely in researching a tiny fraction of drugs, but this fraction is less likely to contain the safest candidates and thus I don't think those dollars are being spent very effectively.


Unless money starts growing on trees, it makes sense to invest in the profitable drugs, that way you can fund future research.

Investing in a tiny market and low prices means that investment is gone and won’t support future R&D.


From what I understand the vast majority of innovative pharmaceuticals are funded by academia.


The vast majority got their start in academic settings. Most of the R&D money (in particular the expensive phase 3 clinical trials) is spent by pharmaceutical companies.


Yes, so the actual innovation occured in academic settings, as was the query.


No, that isn't the case. The fundamental research occurs in academia, but early development which includes working out how to deliver it, how to mitigate side-effects and then the clinical trials. Getting a drug into use is very distant from finding compounds in a lab.


> so the actual innovation occured in academic settings, as was the query.

Well no not at all. Innovation is both the process itself + the supporting requirements necessary to make it work on a massive scale. We cannot minimize the cost of investment in making sure treatments are effective and non-harmfulu in the general population. That is a critical part of medical innovation.


Absolutely not.

That’s like saying Apple didn’t invent the iPhone because Shockley discovered transistors.


Why do you think advertising promotes innovation? I would see it as the other way around, why innovate when you can just invest more into advertising an inferior product?


Because consumers aren't stupid and that doesn't work, probably? Because your competitor will gladly advertise their more innovative and better product, and yours will look inferior?


If you drug looks inferior to competitor's ad, you will get better return by hiring a better ad agency, not a researching a better drug (that's a crap shot at best times).


Can you discern the quality of two different drugs based on their respective ads? I certainly can't, if you have a way, I'd be interested to hear it.


Another Devil's Advocate argument- make patients aware of drugs that could solve XYZ health problem that they weren't previously aware of. They just want you to "ask your doctor about..."


I can see advertising that a condition exists and or a treatment for it exists. But, I have no idea why naming a specific drug benefits the public.


It ought to be government-funded.

What the current system gives us isn't "R&D and innovation". It's mostly ~equivalents of top-selling products. Plus new stuff that's actually less effective than old products that went generic so long ago that there's ~no promotion.


Submit them to a central, vendor-independent database so doctors (or consumers for non-prescription) can find available ones based on their ailments.


I think the takeaway is that is already available and doctors don’t consistently use it.


It would be nice if we tried to shift our focus away from drugs. We generally over emphasize the importance of drugs and surgeries to so-called healthcare and downplay or outright pooh-pooh more basic things, like hygiene, exercise and good nutrition.


provide big bounties for drug development. from the government.

we're gonna pay for the drugs either way, so we may as well create our own incentive structures to ensure that it's done right.


>how do we set up an incentive structure that encourages R&D and innovation?

Well, there's disease, death, suffering and injury. If you need more of a structured incentive than that, then I am not sure really what to suggest.




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