Drug Compromise
Congress will consider authorizing Medicare to negotiate lower drug prices. As discussed in this article.
In response, the drug industry argues that reducing their profits will reduce the number of new drugs they can develop.
I wonder if compromises like these have been considered?:
Can we continue to allow the market to determine most medicare drug prices, but also authorize Medicare to negotiate for those drugs that resist market forces such as those still under patents and for which there is no comparable competing drug?
Can we reduce the amount of regulation and cost of developing drugs?
Can we begin to consider drug evaluations that are conducted outside of the US?
Can we expedite the authorization of drug that were successfully developed and used overseas?
Can technology be used for “Virtual” evaluations?
Can we be more flexible on experimenting with drug for terminal cases?
Can we reconsider using prisoners or even illegal immigrants for testing drugs as part of their restitution to society?
Can we reduce the legal liabilities for drug that have unintended negative consequences if it can be established that the evaluation process was honorable?
Is there a way to lower drug prices without thwarting progress in the drug industry?
11 Responses to “Drug Compromise”
The pharm. industry is scare mongering when they say that Medicare negotiations will inhibit their ability to research, simple as that. Yes speeding up the FDA authorization process would be all well and good, but the drug industry doesn’t give a rip about that. They’re looking after their all mighty profit margin, nothing else.
I’m going to suppose you put that one there as a provocation. Especially with the illegal immigrants, do you round them up and imprison them and then test them? I seem to recall someone doing that in Germany not so long ago….
Assuming this wasn’t really meant seriously and going to the other questions; I’m no economist, but it seems to me that this threat of not being able to research drugs if their obscene profits are touched is a false one. The drug companies would still be very profitable, just not free in every single aspect. If they took money out of research to compensate their shareholders for the profit loss, THAT would hurt them more than the initial loss, since a company that keeps researching gets new drugs, and hence new patents and new markets.
As for authorizing drugs approved elsewhere, I think that agreements with different countries would work better than case by case analysis. In Spain the Royal Medical Society has a list of countries and/or universities from which they accept medical licenses. If you learned to be a doctor in the US, you are automatically authorized to practice medicine in Spain, if you carry one from Rwanda, you’re not. The government could do the same for drugs. Study which countries have sufficiently rigorous testing and regulation, and state that from then on, a drug authorized in that country can be used in the US.
The real question. The question no one seems to ask. Why does the Unites States subsidize pharmaceutical development for the rest of the developed world?
Movie Direcctor Robert Rodriguez wrote the screenplay for his breakthrough film “El Marichi” while participating in a drug evaluation program.
Most drug testing is looking for relatively minor side effects. It is not the Tuskegee Syphilis Experiment.
Prison testing was discontinued because it was abused. But the concept can still make sense.
My concern is to minimize any resistance by the drug industry to explore new remedies. Particularly the one that will keep me from dying an agonizing death
Just because his last name is “Rodriguez” doesn’t mean he’s an illegal. He’s from Texas. Lots of Mexicans from Texas. You’re point being?
Whoops. My point wasn’t about his nationality. It was that reasonable people participate in Drug evaluation studies.
I have to second Dustin’s point. The idea that lower prices would affect development of new drugs is nothing but fear mongering. First, pharmas are making more than enough money to cut into their profits without worrying about jeopardizing R&D money. Second, any good pharma executive knows that cutting into R&D funding means cutting into future profits. No good pharma executive would cut R&D funding simply because profits will be a little lower in order to keep profits rising in the short term because they know that will mean a drastic drop in profits in the long term.
Some of the ideas listed should be done whether or not Medicare is allowed to negotiate prices. Others (testing on illegal immigrants? come on…) don’t seem like good ideas no matter what.
I think there’s a lot of naivete here about profits and R&D. Shareholders are the investors, so yes, the companies can take a cut in profits is necessary to keep their R&D money from declining and to an extent shareholders will understand the need to do so, but if the profitability declines then the investors will put their money elsewhere. You have to factor in risk when you look at profit margins and I don’t have the source handy but I know I’ve seen comparisons with other industries that have a high reliance on R&D like computer/tech industry. Wherever there is a need for a great deal of profit to be funneled into R&D in order to maintain long term profits, investors will attempt to put their money into these industries only if there is sufficient revenue for the companies to distribute to R&D AND profit.
And do you really think, in this era of an increasing aged population, that the demand for pharmaceutical drugs is so low that profit and R&D can’t both be supported? I doubt it, especially when one factors in the government support these companies receive in their research endeavors.
I am concerned about all the drugs that won’t be developed because the number of victims is too low to justify investment.
It becomes a big deal if it is your child.
The concern that the Drug companies express that lowering their profits will lower the number of drugs they can develop is one that is accepted by a large number of legislators. Some may be convinced because they get large donations. But most may also be legitimately persuaded that this is not in the best interest of the country.
I am reluctant to stick it to the Drug industry because we may be cutting off our nose to spite our face.
Dustin,
It’s not that the demand isn’t there, but that some of these suggestions would manipulate the market effects of demand. And I’m not suggesting that major drug companies would go bankrupt, but I see no way that the amount of R&D wouldn’t decrease over the long term under some of these scenarios. Also, the govt doesn’t provide funding for research on specific drugs (only basic research that sometimes leads to development). That’s why the drug companies have to pour large amounts into R&D, and lowering profit margins would decrease the amount of investment in the industry.
Paul: Exactly. Politicians shouldn’t follow dictates of Big Pharma but they should be aware of how their policies would affect the interests of consumers.