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Indian drug company slashes crucial medicine prices by 76% (medicalxpress.com)
168 points by heroic 718 days ago | comments


nhebb 718 days ago | link

From Times of India [1]:

"Cipla, which has 23 oncology drugs in its portfolio, has been able to offer the price advantage because of backward integration and reverse engineering, its chairman Y K Hamied told TOI"

I'm not sure what backward integration means, but the part about reverse engineering implies these are not drugs that they spent a large sum on R&D. It makes the moral hazard of capitalism vs compassion less hazardous when you copy someone else's product.

[1] http://timesofindia.indiatimes.com/business/india-business/C...

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jandrewrogers 718 days ago | link

Reverse engineering drugs is straightforward and relatively trivial. There is no correlation between ease of reverse engineering and R&D cost.

The very high cost comes from development of a drug candidate, not the initial discovery of a candidate. If you skip the part where they demonstrate that the chemical is effective, efficient, and safe for its intended purpose in large human populations then you are correct. At that point it is just a moderately low-cost chemical manufacturing problem.

However, I only see them copying drugs where someone else spent billions of dollars demonstrating safety and effectiveness. There are myriad drug candidates that no one has proven safe and effective that they are not copying because that would require real investment on their part.

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medstudent 717 days ago | link

Uhm, "Reverse engineering drugs is straightforward and relatively trivial". Any proof to backup your claim?

"spent billions of dollars demonstrating safety and effectiveness". Really? How much of the corporate koolaid have you drunk? Have you heard of Vioxx? Numerous other drugs being recalled. http://en.wikipedia.org/wiki/Rofecoxib Have you heard of how intertwined the FDA and lobbyists are? Sheesh.

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jandrewrogers 717 days ago | link

Reverse engineering a drug is simple for a couple reasons. First, the compound is clearly described in the patent. Second, chemical analysis of so-called "small molecule" compounds is a basic skill every chemistry undergrad learns.

The most difficult part is probably designing the production synthesis process but even that is routine for people who do that kind of thing (chemical engineers).

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rendezvouscp 717 days ago | link

FYI, the term “backward integration” is used in business to talk about a company’s integration with its suppliers, while “forward integration” is used when talking about removing friction with customers. In Cipla’s case, it looks like they purchased manufacturing facilities that were producing their products: http://www.vccircle.com/500/news/cipla-to-acquire-meditab-fo...

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demigod 717 days ago | link

I remember reading on HN sometime ago about the Mumbai High Court verdict that allowed life saving drugs to be reverse engineered and this was what allowed the Indian companies to copy the drugs.

However lifesaving the drugs maybe, this would cause the multinationals developing the drugs to increase costs so they dont lose their R&D investment while the Indian companies make a quick buck on someone else's research.

The goverment should have subsidised the drugs which would have been a balance between capitalism and compassion.

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melling 718 days ago | link

I'm not really sure how I should feel about this. I'd like medicine to be affordable by everyone. However, what I mainly get out of the article is that a company with little or no R&D is simply reducing the price on drugs, which for them is mostly profit anyway. The drugs themselves are cheap to produce, right?

Somehow, I think we'd all benefit if we could get these companies involved in developing better medicines. Maybe reduce the price by 50% then take that additional pool of money and invest it into research within India, for example.

Another idea...We always hear how great the IIT's are, which I believe they are. Let's turn them into great research universities.

[Update]

It's interesting to see my post get upvoted and downvoted, which most won't see. My suggestions don't really seem that divisive. I simply think getting more people working on the problem with funding from existing sales seems like a better idea than just reducing drug costs. Additionally, I think involving other institutions rather than sending the money back to Big Pharma, might provide different insights into solving the problems.

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spiffworks 718 days ago | link

As someone who once worked at an IIT, money is not lacking, imagination is.

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mayanksinghal 718 days ago | link

Teaching, I suppose. Which IIT?

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mnazim 718 days ago | link

IITs have failed to deliver in research and development. In my very humble opinion, they have transformed in glorified employment exchanges main emphasis being on fetching a 7 figure paycheck after 4 years.

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mayanksinghal 718 days ago | link

[A current Dual Degree Student (5 year UG+PG program) here, will be graduating in June] To be fair you are talking about Undergraduate students here, the very best of these go for post graduation in US universities. I know this, because I couldn't get it and a lot of my friends are currently there. And as far as I have been told undergraduate programs in US universities face a similar challenge when a significant chunk of bright students go for Financial and Consulting jobs (There was an article on HN that I am quoting; can dig it up if you want).

As much as I would have want to do research with full rigor and motivation, I find myself not as bright as those who I have seen being very successful. I still try to do as much as I can, hoping that my efforts will be enough. And I know that there are many many others who don't have a zeal for their research projects at all and I can give their point of view as well. IITs are the best place to for Undergraduate programs, they are very popular among parents and high-school students alike. If a student is not 100% sure about what he/she wants to do in life or if the parents are not open enough to let him try extreme things (in the Indian sense of occupation) like acting, fine arts etc, you give JEE and you go to IITs if you can. A lot of students find engineering to be just what they were looking for, a lot of others don't and do something else. As of research work, keeping aside the fact that IITs do lack the infinite resources that US universities have, we lack industrial connections and a research oriented culture for undergraduates. Not sure if US universities face the same kind of issues with their UG students or not, but I think it is unfair to expect a lot from UG students.

Now coming to PG curriculum and research there: I like my research project. I feel proud whenever the simulation ends and when my modeling results match my simulation results, and sad when they don't. Proper PG students (ie not DD students like me) in IITs work harder, much harder, than UG students. The lack of research output may be because the brightest of UG students get into US universities where there are better research groups and opportunities. Or may be because other engineering colleges from where the PG students have completed their Undergraduate programs didn't offer as much as IITs (or US universities do).

It is unfair to compare IITs with other institutes, there are a lot of factors at play. Sure, we want high paying jobs - but if they are available who won't? Think about the socio-economic pressure on the students as well. For a middle income family most salaries that are offered to IIT graduates will bring about a significant change in lives of these students as well as their families. It might be a different case in US (and other countries) but a lot of us face these issues. I was lucky that I don't, but I know many students with parents who will feel happier if their child settles down with a high paying job and not pursue higher education for another 2 - 5 years.

If you really feel so strongly about the issue, I really suggest you give back to an IIT (or your own alma-mater) in some way - donations (you can decide where exactly is your money spent), visits to share experiences and even research projects. I just did 2 Research and development projects in last two semesters - one was in collaboration with an external company. They were great fun!

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microarchitect 718 days ago | link

I'd like to respond to a few of your points.

I find myself not as bright as those who I have seen being very successful. I still try to do as much as I can, hoping that my efforts will be enough.

I didn't get into the IITs after my 12th and thought myself not smart and hardworking enough to do well at an IIT, leave alone at research. Many years and plenty of twists and turns later, I'm now a graduate student at a well-regarded and extremely selective US university. I have a small number of papers, some of which even get cited every now and then (!) and a couple of patents. The main thing I learned from all this is that in research it's not very important to be smart, because I see people smarter than me all the time, what's important is to actually like what you're doing sufficiently that you enjoy thinking really hard about it.

lack of research output may be because the brightest of UG students get into US universities where there are better research groups and opportunities. Or may be because other engineering colleges from where the PG students have completed their Undergraduate programs didn't offer as much as IITs (or US universities do).

There's a combination of factors here. Many good students do choose to go the US/Europe over India and I can sort of see why they do that. Life, in general, sucks a little less here, the professors are little better, opportunities are a little easier to get, and of course, a good job after graduation is significantly easier. I studied at IISc and got to know quite a few faculty there and at a couple of IITs. I feel that the Indian system is improving rapidly and there are many good professors who are doing excellent research at IISc and the IITs. Having said that, I think that some things are still harder to do in India, and some professors are still very mediocre and some still harbour rather regresive views on how research should be done. A generation or two from now I expect things will be a lot better.

It is unfair to compare IITs with other institutes, there are a lot of factors at play. Sure, we want high paying jobs - but if they are available who won't? Think about the socio-economic pressure on the students as well. For a middle income family most salaries that are offered to IIT graduates will bring about a significant change in lives of these students as well as their families. It might be a different case in US (and other countries) but a lot of us face these issues. I was lucky that I don't, but I know many students with parents who will feel happier if their child settles down with a high paying job and not pursue higher education for another 2 - 5 years.

This is an excellent point.

We're still at that phase in our development where it's more important to ensure economic security for oneself so that one is guaranteed a reasonable standard of living. Foregoing these "high-paying jobs" and doing research, in effect, means accepting a significantly lower standard of living and it's completely unreasonable to expect people to do that in a still-developing country like India.

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sravfeyn 718 days ago | link

>>but I think it is unfair to expect a lot from UG students

Each year almost 7000 teenagers are filtered out in India to be sent to IIT, the best place of all in India. At least 10% of these are supposed (or 'have the potential') to drive scientific, technical innovation in India. The present conditions at IIT are not at all encouraging in Research except Computer Science and Electrical mostly. The problems are many fold. One important problem is the faculty, except that of CS, lack a vision and passion for research. While CS, Elec profs have undergrad experience at IITs, it is not at all true for other departments like Physics. [Yup, I am from EP]. The profs are ones who had a B.Sc at some regional university and MTech and Phd at IIT. And I say CS students are not the ones who can contribute to the core Scientific Research. They drive Technological Innovations. But the research in CS is very 'volatile'. There is no sharing of Ideas in other departments as in CS. Ideas quickly spread in CS and give rise to better solutions to problems. But not so in medicine or physics. India already has a great 'research' contributions in CS. I myself has lost all the passion taking Physics as my professional career after coming here, and I am pursuing CS (which I was naturally able to connect, given it's mathematical nature, the first fav subj for any IITian). And I regret for loosing Physics. And there are so many friends in Physics, BioTech who had taken the dept in spite of good chances in other departments. And it is very essential to make use of these bright students for research. The IIT is the only bet for good research. Even if research is not directly produced at IIT, at least the conditions should be encouraging to instill the passion in students, before pumping money.

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mayanksinghal 717 days ago | link

> conditions should be encouraging to instill the passion in students

There are attempts already being made to do this. In past 5 years at IITB I have seen: Student Satellite Project, RaceCar (BAJA) Project, Some very neat summer projects for freshmen, BioFuel project and others. Enthusiastic faculty is now trying on their own time to reach out to students and motivate them. And this was across departments not just CSE or Electrical Engineering.

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sravfeyn 717 days ago | link

Oh well, without all those projects IIT is not just IIT. There is no lack of projects at IITs. It is the passion and research attitude that is lacking. Most (not all) students involve and finish those projects, essentially to get their CVs pretty. In my BTP presentations half of the Physics Panel sleeps in the presentations! The way of teaching is so narrow, it is about exams, CGP. The professor's towards teaching is so materialistic. There are exceptions. We have only 3 professors who makes subject exciting of around 30 professors.

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sundae79 717 days ago | link

Yet 10 Non-IITians from India seem to have received a nobel prize.

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mayanksinghal 717 days ago | link

Not sure if you are trolling or you really believe that IITs should be producing Nobel laureates. Nobel prizes are given for: Chemistry, Literature, Peace, Physics and Medicine, not engineering. IITs are engineering institutes - famed largely for their Undergraduate program. IISc has a much better core sciences program than any IIT.

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sundae79 717 days ago | link

Not saying it should produce nobel laureates. All this talk about as if IIT is the only place in India, when the real work and research is done by graduates of other universities. And nice cop out saying engineering is not science.

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mayanksinghal 717 days ago | link

> the real work and research is done by graduates of other universities 9 not 10 Indians have been honored by Nobel Price, out of which only 4 are for sciences. Out of these 4 only CV Raman did his research work in India and that too before IITs were even conceived[1]. So no, if Nobel prices are the criteria for your judgement, you are wrong. And I am offended, you are insulting my work and that of my peers and professors. May be you have done groundbreaking research in your life or have seen that happening in other institutes, it is most definitely true. I do not wish to say that IITs are the only institutes in India. If you check my last comment you will notice that I have explicitly mentioned that IISc has a better Core Sciences curriculum.

If you believe that we do not do real work and research, either back your claim or keep your prejudice to yourself. IITs are involved in research work[2] and we do not do fictional/worthless work. I have no idea what qualifies as real research work for you, but I am sure you will find a lot of decent research work happening in IITs if you are willing to shed your prejudice.

[And I do not believe that this is the right place to discuss this. We can discuss it here if you wish to continue, you can leave a comment on my profile: https://plus.google.com/112310425433589490684/posts]

[1]: http://en.wikipedia.org/wiki/Nobel_laureates_of_India [2]: List of papers by just IITB Academic Community: http://www.ircc.iitb.ac.in/IRCC-Webpage/DisplayResearchPaper...

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melling 718 days ago | link

I still think the opportunity is there. I've seen several specials on the IITs, and they are a very well respected institution both in and out India. In addition, I think people generally realize that the educational system should offer more. I'll offer up Aamir Khan and friends as anecdotal evidence. :-) Great movie.

http://en.wikipedia.org/wiki/3_Idiots

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mayanksinghal 718 days ago | link

I actually hated that movie. While the message that 'One should pursue his/her own dream' was neat, the portrayal was bad. It showed that Engineering education in India sucks largely because of orthodox bad teachers who lack vision. It portrayed it is alright to play bad hurtful pranks (though a joke, but unfortunately immaturity is still prevails in college students). The professors were shown in such bad light and without any emotions that even suicides don't make them change their facial expressions. They really took it to the extreme, it was sad because it might have demotivated some people.

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vrishabh 718 days ago | link

Definitely the portrayal may have been too aggressive, but that is the reality of the Indian Education system.

Students here are driven by a lot of social pressures to get into an IIT just with a mindset that this wil l help them get high paying job helping them to lead a cushy life.

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denzil_correa 718 days ago | link

> It showed that Engineering education in India sucks largely because of orthodox bad teachers who lack vision.

And pray, you being from IIT what makes you qualified enough to show this statement is wrong? I'm not saying the portrayal of the movie was correct but to make a sweeping generalizable statement above ; one needs to be part of a setup other than IITs.

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mayanksinghal 717 days ago | link

I didn't make that generalization - I was commenting on the sweeping generalization that was made in the movie. I know some very great teachers who do not teach at IITs. My parents are college professors and at least 4 aunts/uncles of mine are also in teaching profession. While I agree that a lot of educational institutes in India suffer from under-qualified or uninspired teaching - I do not believe that it is the core reason of all that is wrong with the education system. My being an IITian actually contributes less to this belief of mine than my school teachers in a small town. It did get reinforced here but I have always had some great teachers.

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movingahead 717 days ago | link

This is based on my personal experience and those of a few friends at non-IIT colleges.

I know some great teachers too. But, the majority of the teachers are just wasting their time as well as those of their students. There is no love for the subject they teach.

"While I agree that a lot of educational institutes in India suffer from under-qualified or uninspired teaching - I do not believe that it is the core reason of all that is wrong with the education system."

Finding a core reason for the maladies of Indian educational system is a never-ending exercise. But, a lot of problems will be solved if we have more inspired teachers.

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kiba 718 days ago | link

Throwing money at the problem may not necessarily speed up research or give us more results.

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pyre 718 days ago | link

How else would you pay for top-calibur talent to sold the problem?

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bilbo0s 718 days ago | link

I believe what kiba is intimating is that no matter how much you pay... some drugs and diseases are just hard to come up with solutions for. To give an example everyone is fairly familiar with... even if you paid USD100 Million per research position to get a cancer vaccine, I'm not certain you would get it any faster than if you paid USD200000 per position. Or USD100000. It's just REALLY hard to come up with.

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melling 718 days ago | link

But what I was suggesting was putting more people on the problem, not offering more per position. In fact, the research done in India would cost less than in the US.

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pradocchia 718 days ago | link

That's a fashionable yet very narrow framing of the matter. If you insist on this formulation, then indeed many many problems are insoluble.

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kiba 718 days ago | link

Figure out a way to speed up the research process itself. We can't afford to wait 10 to 20 years. Many lives will be lost during those time period.

Yes, research take time. Yes, medical research is extraordinary hard. It still doesn't excuse our slowness. We need to look at fighting diseases as a war, not a scientific exploration project. Science is good, but solutions are better. We don't need to understand in extreme details how cancer work, we just need a way to defeat cancer.

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melling 718 days ago | link

Add more cores or make the existing ones faster? I said add more cores. If you can think of a way to make each core faster, that's great. In the meantime, getting more people on the problem should help.

[Update]

Please include include links that discuss the "better" method that you are describing. It sounds like you just want to "reinvent/disrupt" the process without actually having a plan.

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kiba 718 days ago | link

You should instead dedicate newer core into process optimization. We want to find a cure in 9 years, then 8 years, 7 years, 6 years, and so on. With each passing year, medical research should be progressing even faster.

We don't want to wait ten years for a slightly higher chance of a cure appearing. We want a higher chance of a cure in a much shorter time period.

Please include include links that discuss the "better" method that you are describing. It sounds like you just want to "reinvent/disrupt" the process without actually having a plan.

It's not a "plan", or a "method". It's a goal.

You could start with a small. Figure out what people are doing that should be done by robots or computers. What mistakes people are making that delay the whole research process? Are the bureaucrats holding up the approval for no good reason? How much time you spent fighting politics versus getting things done?

The key insight is this: Speeds absolutely matter in medicine. One more day you wait for a cure, somebody die. If speed is not one of your nation's research goal, it should be.

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SoftwareMaven 718 days ago | link

This sounds like a very naive view of biological systems. The complexity of the most complex thing computer science has created (I would argue that is the Internet) is still trivially simple compared to the brain.

What that means is the search space is huge, much larger than any space I've dealt with in computer science.

However, there may be something to what you are saying (I don't know enough about medical research to know whether they are already doing this or not). In public key cryptography, you have a huge key space to try if you want to brute force a key (2^64 for a 64 bit key, unsurprisingly). However, you can break a 64 bit key in about 2^40 operations if you use the right technique [1]. Are we spending enough time looking for those techniques? I certainly hope so. There are a lot of smart people in medicine.

1. http://en.wikipedia.org/wiki/Meet-in-the-middle_attack

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kiba 718 days ago | link

This sounds like a very naive view of biological systems. The complexity of the most complex thing computer science has created (I would argue that is the Internet) is still trivially simple compared to the brain.

I am not naive about the difficulty of the problem.

Are we spending enough time looking for those techniques?

We aren't necessarily looking for better techniques all the time. It could simply be streamlining a step or two in order to make medical research loop tighter. It could mean eliminating a process or two that shouldn't be running.

Whatever the case, our researchers should be thinking about novel solutions to the problem instead of mechanically running the lab. The world fastest machine might not be able to make an intractable problem tractable, but it shouldn't be a bottleneck.

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SudarshanP 717 days ago | link

I have a brother who was working towards a phd at a good biology/neuroscience research institutes. Here is one thing I totally agree with... A lot of people who are the "researchy/analytical mindset" underestimate the value of automation. The mantra should be "no human shall do what a robot can do". The problem with biology is that most of the time spent by the researcher is in "doing" rather "thinking" or figuring things out. And even more work and money in pushing paperwork.

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pmr_ 718 days ago | link

I think one of the failings of the pharma industry is to incorporate both, production and R&D. If R&D would be done in the public sector and its results freely available industrial pharma could compete on an even level concentrating on churning out medication in huge numbers at the lowest price possible and piggy-backing on companies that actively do R&D based on national laws that allow you do produce generica wouldn't be possible.

Of course, this is no silver bullet. There is no guarantee that research in the public sector is going to be as effective as in the private sector. Which makes me wonder why medical research is so unevenly distributed between the academic world and the industry in the first place.

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jandrewrogers 718 days ago | link

The government is okay at funding initial research but has a poor track record at effective development, and development is where you find almost all of the cost in the process of creating new drugs. This is the elephant in the room. The initial research is sexy but it is also relatively inexpensive and (partly) immune to the political process.

Basically, you can't count on politicians to properly and effectively fund hundreds of different billion-dollar long-term programs, many of which will be expected to produce nothing. Because the life cycle of development spans several elections, every program is at the whims and mercy of whoever happens to be in charge of the program at any point in time. One of the reasons military R&D is expensive is because of the constant stopping and starting, changing priorities, and legislatures from one term to the next trying to redirect money into their districts. For government R&D, funding tends to follow fashion, not what would be the best allocation over the long term.

I've been there and done that. Government funding research can work out reasonably well. Government funding development is a disaster that takes twice as long and costs (at least) three times as much because it is subject to the whims of Congress. The constant stopping and starting of R&D projects, sometimes with unfunded year-long gaps in the middle, make it difficult to keep a team together (the beltway government R&D companies exist in part to mitigate this employment risk for people that work on government R&D).

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pmr_ 718 days ago | link

There can be safe-guards against funding gaps, which are already in-place in some universities (e.g. at least in some parts of Europe). While funding is allocated by politicians the exact distribution of that funding is done on another level. Those levels have their own version of politics, of course, but the closer the people that administer funds are to the actual domain of spending the likelier it is to get informed decisions.

Also, current existing research grant programs could be scaled to fit the size that development requires. I wouldn't trust a politician to manage research money directly, so another layer of indirection could help.

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aggronn 718 days ago | link

pharmaceutical research is an extremely expensive, long term process. it could never get the same kind of funding in a public 'open source'-like setting that it could get in a setting where its treated as IP and is given the opportunity to create economic profits.

society is notoriously bad as innovating when there is no profit motive. the pace of the 'march of science' due to curiosity and dedication to the betterment of mankind is, unfortunately, glacial. thats not to say there isn't somewhere in between, but when we have this discussion, we have to appreciate the role that money plays in innovation--something people at HN might be able to appreciate.

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njs12345 718 days ago | link

Total pharmaceutical R&D costs by the big 20 in 2010 were $96bn. That doesn't seem too much to raise globally, given that the NHS alone spends £10bn on branded drugs each year.

It's also worth noting that there are ways of splitting up the research/production integration that exists at the moment while preserving the profit motive for research. I have seen prize funds touted as one way of doing this. There are some other interesting systems as well - see the proposal by Kremer in this article: http://cdn.intechopen.com/pdfs/24647/InTech-Innovative_propo...

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ajays 718 days ago | link

Studies have shown that Big Pharma spends more on advertising than on R&D: http://www.sciencedaily.com/releases/2008/01/080105140107.ht...

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jandrewrogers 718 days ago | link

This makes sense in the same way it makes sense in every other industry. They need to recover all of their sunk costs within a few years and marketing greatly increases rate of uptake and overall sales. Marketing frequently provides a positive return on investment, and in cases where the window to make a profit is short it is essential.

It would be silly to invest marketing dollars in R&D if none of the developed products were able to return the cost of R&D within the patent window due to slow market uptake. The idea that these are independent or that marketing is a waste of money relative to R&D is pernicious and incorrect.

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ajays 718 days ago | link

It may apply in other industries, but medicines are different. You have the whole medical school system to do your "marketing". There are scientific publications galore.

For life-saving drugs, customers aren't swayed by "marketing" at all: if they have a condition that can be helped by the drug, they will go for it, marketing be damned.

I know we like to jump to analogies in these forums ("digital music" == physical stuff; "no password" == unlocked door; etc.), but some situations are unique. I would like to think that the pharma industry, particularly the critical drugs section, is unique.

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vidarh 718 days ago | link

The medical school system and journals is too slow for a new drug. By the time new doctors have enough influence, the drug is out of patent, and you can't count on every doctor to follow up journal articles about every new drug.

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calibraxis 717 days ago | link

The pharma corporations inflate R&D claims, and this R&D is also subsidized by taxpayers. (http://www.citizen.org/documents/ACFDC.PDF)

(I also recall hearing that advertising costs are stuffed into the inflated R&D claims, but it's hard to really know how much, due to lack of transparency.)

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orbitingpluto 718 days ago | link

Yeah, I know. Thankfully computing and the Internet was developed with private funds... no... wait, it wasn't.

I don't disagree with you that a profit motive is a powerful force, but there reaches a point where greed causes more damage than good. Pharma is the prime example.

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spullara 718 days ago | link

The infrastructure was done with public funds. People making something useful out of it was done in the private sector almost exclusively. In fact, the government is now one of the biggest threats to the internet.

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btilly 718 days ago | link

It turns out that pressure to keep patentable information private for potential profit slows the rate of progress in biotech.

See http://money.cnn.com/magazines/fortune/fortune_archive/2004/... for an example of how much things improve when scientists are forced to share data. They wouldn't have done it if Mike Milken hadn't forced the issue. But he wanted to live enough to do so, and the result saves several thousand lives each year.

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option_greek 718 days ago | link

The pharma and media industries are so similar. Both lobby governments for passing bills to support their business models. Both rely on questionable extensions to IP rights and make loud noises about how much money they lose on piracy and generics.

There has to be something fundamentally screwed up to have this much conflict of interest between public good and IP rights.

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gaius 718 days ago | link

Where's the public good if these drugs are never developed in the first place?

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option_greek 718 days ago | link

Whether they would be developed if industry margins go down is a contentious issue. They seem to do just fine despite the competition from generics.

In general everything related to biology seem to suffer from the problem of high cost . There got to be a lot of inefficiency some where to sustain such high cost. It need not necessarily be human inefficiency. Just like computers moved from being as big and costly as big buildings to being very affordable (raspberry pi) - thanks to the invention of transistor, there must be some kind of bottle neck that can be targeted first to advance the whole field. You can't do that by simply throwing more money at it. You have to create incentives to attack the inefficiencies.

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gaius 718 days ago | link

Generics are not directly competing with newly-discovered drugs, but they do reduce the funding available for that discovery.

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DanI-S 718 days ago | link

For me, issues like this raise the question: Does capitalism still make moral sense in a world where a large proportion of the population is so poor as to be unlikely to participate in the free market during their lifetime? Even at $150 per month, those drugs aren't in any way affordable for most without government funding.

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alan_cx 718 days ago | link

IMHO, the problem with capitalism is that some people want to use it as a complete way to run society, where I believe it is a tool to be used by society. Clearly, as you elude to, socialism is also needed, other wise the military would and should be privatised, along with law enforcement.

I find is odd that capitalist bias countries like to use tax money for huge military commitments, yet go insane at the idea of providing health care for its people.

Capitalism does not make any moral sense what so ever. Its is not supposed to. It is survival of the fittest. It is vicious and heartless. And it is supposed to be. So, socialist type stuff is required to serve other needs.

Of course socialist stuff need capitalist profits to support it, while capitalism needs socialist stuff, like law, to support it.

Broadly, that is how I see it anyway.

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dcesiel 718 days ago | link

I think capitalism overall is a good system. Unfortunately, it doesn't work very well with health care due in large part to information asymmetries and moral hazard.

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ashleyw 718 days ago | link

As somebody who's lived in the UK all their life, I can honestly say I'm flabbergasted every time I read something about the US healthcare system. It's like how Japanese cities don't have street names (http://sivers.org/jadr), that completely astonished me too. It's just so outside of the reality I've known all my life, it makes no sense.

(Granted, the US system is still better than that of third-world countries like India. At least you might get some assistance.)

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rational_indian 718 days ago | link

> US system is still better than that of third-world countries like India

I have never been to the US but from what I have been reading about it I have no question in my mind we are in a much better position. Please note I am mostly talking about the privately owned hospitals and clinics here. The government owned free clinics and hospitals are not used by anybody else except the poorest of poor in India.

> At least you might get some assistance.

This statement just reeks of ignorance and prejudice. There is a very good chance that people facing an expensive medical procedure will have higher chance of survival in India due to the abundance of advanced medical facilities throughout the country.

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adiM 717 days ago | link

As an Indian who grew up in a medium sized town in India and who has lived in a medium sized town in the US, I would argue that the US health system is much much superior to the Indian heath system. If you want to talk about private clinics in India, compare them with the treatment that you will get in the US if you are paying out of pocket (as you'd do in private clinics in India), or at least with what you'd get if you have a good insurance plan in the US. The quality of treatment in the US is much better.

People facing an expensive medical procedure may have higher chance of survival in India, but people facing emergency medical procedure certainly do not. Have you ever faced a medical emergency outside of the big metropolitan cities in India? My father had a cardiac arrest and he lost his life because neither the ambulance nor the hospital had a working defibrillator. And could not find one for the three hours that he was in the hospital (This incident took place in a state capital and not some tiny town). In contrast, the emergency response system in the US is amazing. Even the ambulances are well equipped with emergency care equipment.

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rational_indian 717 days ago | link

Please accept my condolences on the sad demise of your father.

I totally agree with you on the state of emergency medical services. We still have a lot to improve on here but things are getting better with time.

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ashleyw 717 days ago | link

I don't even know why I chose India as my comparison. It was indeed prejudice and I'm sorry for any offence caused.

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gaius 718 days ago | link

You don't have to ask us: you can ask the scientists (who should be working for subsistence wages, apparently). Of course manufacturing is cheap once the difficult, risky bit - discovery and clinical trials - has been done.

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DanI-S 718 days ago | link

I'm not sure where you derived 'subsistence wages' from. If I were going to suggest a solution, it would be more centered around increased government funding of drug research, specifically with the aim reducing manufacturing costs. Funding cheap drugs for the developing world would probably reduce the need for other forms of economic aid in the long term, lessening the burden on all.

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jandrewrogers 718 days ago | link

The expensive part is neither the research nor the production. The rate limiting step is very expensive development and clinical trials that happen after research and before production. Due to the way government funding is legally required to work, very expensive long-term investments like drug development cycles would be difficult to do efficiently under a federally funded program (at least in the US).

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aggronn 718 days ago | link

pharmaceutical companies are granted a monopoly on their IP (as everyone else is) because of the extensive, expensive, long term research required to develop the IP. manufacturing costs are almost trivial compared to the costs of R&D--that is to say, there isn't much improvement to be made there.

retail costs can go down, as they do in the rest of the world when governments set price controls, but if every country on earth set a low price on pharmaceuticals, you would begin to worry that these companies would no longer have an incentive to innovate, which is potentially as or more dangerous than the status quo insofar as newer treatments would be less likely to occur in our lifetime.

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jt2190 718 days ago | link

He got that from this phrase:

> Does capitalism still make moral sense...

Suggesting that capitalism is immoral.

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gaius 718 days ago | link

What pays for government funding? Taxes on profits.

Besides manufacturing is already cheap. That's the whole reason generic drugs exist. It's easy to copy something someone else has invested 10s of billions in creating in the first place.

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EvilTerran 718 days ago | link

"What pays for government funding? Taxes on profits."

...those profits don't have to be drug company profits, so that's irrelevant. Not to mention, focusing on the status quo source of government spending power somewhat begs the question in the context of "does capitalism still make moral sense?"

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te_chris 717 days ago | link

I don't understand why you're being downvoted.

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checoivan 717 days ago | link

Even when some of these drugs are very expensive to produce and R&D is expensive, some retail prices are in one word greedy.

Looking up a chemotherapy compound priced bulk online will show you how big of a markup these drugs are being sold at. For example: a quick search shows Everolimus costing USD1341.27 per gram to the public bulk, and one retail box of 30 - 0.010 gram tablets costing around 5,000 usd. And I honestly doubt the bulk chemical is being sold at a loss.

Now mind these aren't aspirins, but the only option to a slim chance of living for many people. Ideal for drugs companies since whoever can afford it will pay any outrageous price.

The problem has gotten big enough that now there are counterfeit chemo drugs being sold, and given this chemo compounds may or may not work for everybody it's hard to track them. That is another problem which may be solved by these companies by selling affordable drugs.

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anusinha 717 days ago | link

This is not _entirely_ relevant, but I would like to illustrate the complexity and cost of the problem. Many large pharmaceutical companies have completely pulled out of the market for developing drugs in one of the three main classes of diseases that affect most Americans: Neurodegenerative diseases (the other two classes being cancer and cardiovascular disease). This is because the cost of drug development is incredibly expensive.

First, suppose we have a drug candidate. Great. This would take many, many years of study of neurons/brain tissue cultures using in vitro techniques (petri dish, etc. out of the native environment). These are great and relatively cheap, but it's difficult to isolate good drug candidates. Eventually, after high throughput screening or whatever other research method is used, a candidate is found. This would (realistically) take many years and require many millions in funding.

Then, once you have this in vitro drug candidate, you have to start testing it in animal systems, starting with simple mice. Animal studies are expensive, because the organisms are essentially disposable. These sorts of studies for neural problems are even more expensive because the animals need to be observed carefully using various research techniques for very extended periods of time, on the order of months to years (since this is the timescale on which most neural disease work). This is obviously both expensive timewise and monetarily.

So our theoretical candidate works in simple animal and in vitro systems. Great! There a lot of drugs that get this far and then utterly fail on human subjects. Assuming that it passes FDA standards for human testing (which, at this point, seems fairly reasonable), human testing will start. The main purpose of Phase I trials is to determine toxicity of the drug in human systems, and to see if it has any significant effect. Let's say ~40 patients are being tested. These 40 (lucky? unlucky?) patients will take the drug, and then be investigated using a variety of techniques to judge the efficiency. One of the standard techniques in neural imaging is the MRI scan. The typical cost to the company carrying out the test is around $3000+ USD per scan carried out. Each patient will need to be scanned many times (let's say 10) over a period of time to determine whether or not the drug had any affect. Compared to other techniques where simpler blood tests or post-mortem tissue analyses can tell the story, this is very expensive. And this is just phase I. Phases II and III expand the number of patients into the several thousands. The cost of drug development for one potential compound for so long (the timeframe can be order of 15+ years) for a very, very small chance (due to the complexity of the field and the few successes so far) of a huge earning is simply unjustified for many companies. Earning back hundreds of millions of dollars of losses back must be done by passing the cost along to the customer.

Note that the patent lifetime on drugs is very short. Nominally, the compound is protected for 20 years. But this is applied for before any clinical trials start, so the effective lifetime is significantly shorter. For a neurodegenerative disease, the effective lifetime of the patent could very well be much sorter than the more "usual" effective lifetime of 7-12 years [1].

Also, as an extra. Organic synthesis is hard. I mean, really, really hard. You have to design a good synthetic pathway, then make sure it works, then scale it up from working in a fume hood, to working in large chemical reactors that can produce it on an industrial scale. I'd like to point people at the synthesis of Tamiflu, the antiviral used against various influenza strains [2]. These are long pathways and accordingly tend to have lower total yields. Drug synthesis is really hard, regardless of the cost of R&D of the drug.

TL;DR: Finding drug candidates is really difficult. FDA clinical trials is really difficult. Making the drugs themselves is really difficult.

[1]: http://en.wikipedia.org/wiki/Generic_drug [2]: http://en.wikipedia.org/wiki/Oseltamivir_total_synthesis

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checoivan 715 days ago | link

Yes. it's very,very difficult, expensive, and takes a long time to develop drugs. Though I still don't believe a hard problem justifies those sale prices.

R&D is expensive but what % of the pharma company income goes to it? Let's take the largest one Pfizer: ~9 billion total out of 67 billion income in FY11.

Even for medical expenses it's not that much of a COST. A Top of the line MRI machine costs 1 to 3 mil Usd. Let's say a hospital scans 5 to 10 people a day. The machine pays itself in 2 to 4 months at that 3K pricepoint.

Drugs also don't have to be made in the US and go through the whole FDA loop jumping.

What I'm saying is pricing seem very wrong to me. There's people with deseases all around the world and supply of drugs is being limited to a very slim percentage of people from 1st world countries due to pricing, because there's people willing to pay those price. Maybe if these cheap drugs companies get to be some sort of "the walmart of pharmaceuticals". Earning way more than current pharmas on mass sales rather than steep prices might turn the balance.

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exim 718 days ago | link

I don't think that this will affect original (western) company. Most people who will choose Indian drug over original, simply can't afford it, even in their dreams. On the other hand, those who can easily afford it, will go for it over "fake" Indian one.

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Freestyler_3 717 days ago | link

Good news, but over here it wont help. Third parties will turn 76% of the price drop into extra profit for themselves. The downside of a closed market where everyone is obligated to have health insurance and the health insurance companies have all the power they need.

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iamgopal 718 days ago | link

A nice idea to get something back from such companies is to have them collect data of the patients and gave back to the original company/copyright owner etc.

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carbocation 718 days ago | link

What you are describing is postmarketing surveillance ('phase IV clinical trial'). In the US, this is overseen by the FDA.

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iamgopal 718 days ago | link

India's huge market could give lots of data point for analysis. My opinion was to look for other opportunities to take advantage of such situation.

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