[wjnc]

The killer detail (in the article) is that 1/3 of the (small) development cost of 40 million were borne by the Dutch tax payer. How did that patent end up in a big pharma portfolio?

Who funds this and what kind of shit lawyers and economists draw up the funding schemes that give away full intellectual property, only with a (historic) backstop for individual preparation?

We need risked based co-funding, co-profiting (irregardless of wether it's governments or, say, insurers investing), a backstop on prices via qualy-s, relatively short patents, no gaming of patents via arbitrarily small changes, governments creating generics, ... And now I wake up.

[rayiner]

> The killer detail (in the article) is that 1/3 of the (small) development cost of 40 million were borne by the Dutch tax payer. How did that patent end up in a big pharma portfolio?

It says so in the first few paragraphs: Novartis licensed (bought) the right to sell the drug in Europe. The patents remain with the hospital.

The hospital that developed the drug is a public hospital associated with a public university. So the government paid for development, and (indirectly) to government is benefitting from the license fees paid by Novartis. That is co-profiting.

[eecc]

The article reads as follows:

“Novartis bought the rights to Lutathera with a $3.9-billion-euro takeover of French company AAA last year.”

Where exactly does it say that the patents have remained with the hospital?

[fouc]

Buying the rights means licensing the rights of the patent, otherwise it would've said "Novartis bought the patent to Lutathera"

[sonnyblarney]

"Buying the rights means licensing the rights of the patent"

I don't think journalistic language necessarily so accurate.

I don't think we can say for sure what changed hands in the transaction, but it should not matter anyhow.

If they bought everything, then the total lifetime value of the asset would hopefully have been baked into the price.

[Vinnl]

There's an interesting Dutch article from January about how the rights ended up with this company [1]. It doesn't say anything about patents, but it does say (my translation):

> The producer (AAA, later bought by Novartis) gets exclusive rights to sell the drug, for ten years in the EU, and for seven in the US. The only exception is hospital pharmacies preparing the drug for their own patients.

[1] https://nos.nl/artikel/2266712-hoe-nederlands-kankeronderzoe...

[xorcist]

> How did that patent end up in a big pharma portfolio?

While it may sound strange put that way, most universities spend a lot of time thinking about how spin off profitable companies from their research. It's a huge deal and public spending on research is often motivated like this. Universities and R&D companies have a codependent relationship and this is generally regarded as a good thing.

The morally dubious outcome of this is that a lot of research ends up locked away as intellectual property of some private entity, but it's not easy to question.

[username223]

> Universities and R&D companies have a codependent relationship and this is generally regarded as a good thing.

Is it? At best, I'd say it's seen as a "necessary evil," where "evil" is much more certain than "necessary."

[tomcam]

It stinks, I agree. What economic/social arrangement has done a better job in drug innovation?

[tirrit]

Has there ever been made an effort with any other approach/arrangement, in modern times?

Any sources on this, anyone?

[username223]

Publicly-funded research universities, along with the March of Dimes, funded the polio vaccine, which has almost entirely eliminated the disease, and was not patented.

[xorcist]

I think so. Funding research is difficult as it is, and the potential to leverage that spending to create jobs and tax income is important. It certainly helps that it concerns an highly qualified academic workforce. Most universities tend to keep people employed just to expedite the process.

[aaavl2821]

without for profit companies, all that taxpayer funded research would be sitting on a shelf, never becoming medicines to treat patients. In the last 2 years I think every drug that got approved by FDA was developed by a for profit company.

Drugs don't emerge fully formed from academia, just waiting for pharma to patent them and jack up the price. Pharma spends more on r&d than academia

[eecc]

Please provide conclusive proof this process is not consequence of neoliberal policies, aimed at defunding public spending and encouraging for-profit spinoffs, aligning the research process to its ideology

[ls612]

A very large portion of R&D costs for drugs are in doing phase 3 clinical trials. These will always be expensive because you have to recruit and closely monitor several thousand people with a relevant condition to determine if a treatment is better than existing alternatives and what sort of side effects a medication has. Many drugs which were developed by academia using federal dollars and which passed phase 1 and 2 trials fail phase 3. Pretty much every phase 3 trial is paid for by private industry.

[Retric]

I don’t agree that phase 3 trials must be that expensive.

Currently they cost ~19 million each which is frankly not that big of a deal. A larger issue is only ~15% of drugs make it through the process. With ~20 new drugs a year this only adds up to 2.5 billion per year which a frankly a drop in the bucket compared to drug costs.

[sonnyblarney]

If you're going to make such a conspiratorial claim, then the onus is on you to provide the proof.

I think the answer is probably a little bit more grey FYI.

[Retric]

Seems likely either drugs would end up being used, or government would stop funding drug R&D research.

Saying funding would continue without any benifits seems to be the least likely outcome. Personally, I would be fine stopping all public drug research, but I suspect more people would want to continue...

[refurb]

How would the drugs be used? They still need another 5 years and hundreds of millions of dollars before they are approved?

[replicatorblog]

This is an important point. There's nothing to stop Harvard or Stanford from commercializing their research directly. They have massive endowments of financial and human capital.

The flip critique of the drug industry is to suggest they're basically taking miracle cures developed in toto in publicly-funded labs and taking pure profits.

If that were the case, shouldn't one of the dozens of well-capitalized research institutions just go to market?

The reality is the drug companies take on a tremendous burden turning high-level research into a product that works, including:

+ Formulating a product that will work at scale,

+ In widely diverse populations,

+ While eliminating potential side effects, + Adapting for human UX limitations,

+ Exhaustively guarding against adverse reactions,

+ At the same time, building production capacity,

+ Creates marketing materials for patients, but also to educate doctors who don't have scads of time to study new treatments,

+ Physically distributing the product

+ Monitoring the product fastidiously once it's on the market for negative reactions,

+ Sending humans to almost every doctor's office to answer any questions about the product,

+ While staffing a 24/7 customer service number to sort out any problems

It's not as easy as it's made out to be!

[rocqua]

> relatively short patents, no gaming of patents via arbitrarily small changes

This, so much. I'd add no gaming of orphan drug patents. It's through the patent system that pharmaceuticals get their pricing power.

http://sourceonhealthcare.org/orphan-drug-act-fostering-inno...

[yread]

That's also not a silver bullet see CF where foundation funded research and sold the IP to pharma company for 3.3B$ and the patients were then charged 300k a year for it.

https://philanthropynewsdigest.org/news/cystic-fibrosis-foun...

[zaroth]

I think you have cause and effect reversed.

They helped fund the development of the new CF drug by Vertex, which Vertex sells for $300k. Because of the success of the drug, they were able to resell their royalty rights to another investor for $3.3 billion.

Funds which they will use to drive massive amounts of additional R&D to make even better treatments at lower costs. In the process they have created therapies which did not previously exist, saving and improving people’s lives.

You can debate the profit motive (as your link mentions) but the Foundation considers this a massive win for their ability to fight CF and make CF sufferers lives better.

[wjnc]

The important question is... why is it ethical for a foundation to deliver a product at $300k/yr where the cost are borne by other people? [1] In my world that price would never be paid, since about €100k/yr would max out the qaly. They would still have their medicine albeit at a perhaps $1 billion profit / return on risk. I'll bet my ethical balls here that none of the small contributors to a CF foundation expect a billion dollar windfall to come out if there contribution, regardless the merits that billion goes to afterwards.

[1] Some economic reductionism here: if you know the cash flow, you can project the value and the other way around. So if someone offers you 3 billion and you know the effect of the medicine and the number of patients, you can infer the price of the medicine. This to establish the (moral) link between the selling of the IP and the price.

[zaroth]

The pharmaceutical company Vertex sells the drug for $300k. Because CF Foundation helped fund the development, they get royalties, just like universities sometimes do when they help develop a drug.

This is great for CF because it’s mostly the insurance companies (and therefore healthy people) who are bearing the costs of the treatment.

So the CF Foundation is “forcing donatations” from the healthy populace through increased insurance premiums to bankroll their continued investments in treatments and such.

I don’t know if that makes it any more or less ethical, but certainly if it were mostly individual CF patients on the hook for the $300k (in aggregate that is — I’m not saying that never happens) then it would make less sense for the CF Foundation as a strategy.

[JKCalhoun]

> This is great for CF because it’s mostly the insurance companies (and therefore healthy people) who are bearing the costs of the treatment.

Don't we all bear the cost of treatment in the form of higher insurance costs because insurance companies are paying exorbitant prices on drugs (among other things)?

[dodobirdlord]

Sure, that's how insurance works. The crux of the issue is whether the prices are actually "exorbitant" or whether that's just political spin. I happen to think it's just political spin.

[netjiro]

> Funds which they will use to drive massive amounts of additional R&D to make even better treatments at lower costs.

This is a _myth_

Big Pharma is an insanely inefficient structure for turning money into useful R&D results.

Big Pharma often spends on the order of 25-30% on marketing, vs 15% on R&D. From societal standpoint this is horribly inefficient considering that most medical costs are paid for communal money via taxes and/or insurance programs.

R&D should be paid by government funds. Testing should be transparent and open. Production should be done by private companies. This would be a significantly more efficient use of our money. It would also align R&D expenditures much better with actual costs to society for medical issues.

[zaroth]

I do not concede the point as it relates to Big Pharma, but in this particular case I was talking specifically about the $3B that was earned by the CF Foundation.

Are you contending that the non-profit CF Foundation is going to take their $3B and not do something useful with it to serve the CF population?

> For well over a decade, CFF has employed a venture philanthropy model that provides upfront funding to pharmaceutical companies to help reduce the financial risk associated with the development of drugs to treat CF. As a result, the organization has a pipeline of drugs in various phases of development and reinvests the funds from any royalties it owns to advance drug discovery and efforts to find a cure.

> The proceeds of the sale will dramatically accelerate and expand the foundation’s research, care, and patient programs and significantly boost its funding of research targeting the genetic cause of CF. The organization also plans to use the funds to strengthen the specialized care and support that people with CF and their families receive at more than one hundred and twenty centers across the country and to expand its resources for people with CF and their families.

[rayiner]

Typical R&D spend in pharma as percentage of revenues is 10-20%. That’s in the same range as Google, Intel, or Microsoft, which are widely considered to be very efficient structures for turning money into innovation. By your reasoning, we could cut out a lot of the fat and get better R&D for less by nationalizing Google.

[eecc]

Of the main customer of Google was the government itself then why not? (The point is: it’s not. So so what’s your point?)

[rayiner]

Who the customer is has no bearing on whether a company spending 15% of revenues on R&D is a sign of efficiency or inefficiency. If your premise was true—that you can achieve increased efficiency by nationalizing research because it lets you cut out the other costs of running a company, then that principle would be applicable to Google as well as Novartis.

[Entalpi]

Lets not say that Google and Pharma companies operate under the same conditions. There are enough of brainjuice in the world to study both in isolation.

[vonmoltke]

> Big Pharma often spends on the order of 25-30% on marketing, vs 15% on R&D.

That is also a myth, perpetuated by people who do not understand how to read an income statement. Please provide a source for that, and if the source is or is using the SG&A line from an income statement, it's wrong.

[mft_]

Do you really think that the marketing spend doesn't result in greater returns than without the spend in the first place?

If a company could increase its bottom line by cancelling marketing spend, that's an easy equation to figure out.

Or... maybe (profit after marketing - marketing spend) > (profit without marketing).

And as (in a reasonable stable company) the research spend will be related to profit... marketing spend likely does result in more money being available for research.

[sykho]

In European countries the marketing spend is essentially zero for all companies since they are banned from advertising. As you say, marketing clearly does increase profits for the pharmaceutical companies in the U.S. However, from a societal point of view it seems to me that it is much better for society for there to be no marketing of drugs. My wife is a physician and listening to her and her colleagues they all hate drug company TV commercials.

The current system seems to incentivize companies to hold on to patents by making minor, insignificant changes to drugs to maximize profits. They are incentivized to ignored exotic diseases that have too small of a market share for each individual disease but affect, collectively, a lot of people. There is also the fact that in a system like the U.S. where people have large out of pocket expenses at the point of contact with the health care system having companies maximize profits for a particular life saving drug causes some people to view said maximization with disgust.

[mft_]

> In European countries the marketing spend is essentially zero for all companies since they are banned from advertising.

Advertising direct to the public is banned in many countries, but not the US - I assume this is what you're referring to. However, pharma companies can and do spend billions on marketing to healthcare professionals within the EU.

> However, from a societal point of view it seems to me that it is much better for society for there to be no marketing of drugs.

Your point about the societal value of drug marketing is complex. In some cases, I totally agree with you that it's not money well spent - selling one beta blocker or statin against five others with broadly comparable data hardly helps the cause of humanity. However, in other cases the marketing/sales actually helps ensure that patients are given the drugs that they need - doctors aren't infallible, and not all doctors are created equally.

> The current system seems to incentivize companies to hold on to patents by making minor, insignificant changes to drugs to maximize profits.

This is actually relatively rare.

> They are incentivized to ignored exotic diseases that have too small of a market share for each individual disease but affect, collectively, a lot of people.

Like it or not, the overall cost of discovering a drug, then testing it all the way through the many phases over many years, is roughly billions. Rare diseases can be ignored because it's simply not sensible business to develop drugs for them. Unless a company can find a way of charging a very high price, or find short cuts to development, or the current system of regulations is eased, this won't change.

[vonmoltke]

> In European countries the marketing spend[ing] is essentially zero for all companies since they are banned from advertising.

Companies are prohibited from advertising to doctors? I thought it was just direct-to-consumer.

[lordnacho]

The pharma will likely also be employing people who were trained on the public bankroll. Not sure what's reasonable there though, it's not like society owns your output because you had your education paid for.

[benj111]

I'm not sure if we are thinking of different things, but in the UK I believe Drs and Nurses have to stay with the NHS (or at least not work for the private sector) for a certain period of time, if they got bursaries. That seems reasonable? Society benefits from their output, in return for paying for their education.