[refurb]

What's needed is a new payment model for anti-infectives. This already happens at a small scale with grants from institutions like BARDA. The DOD of also does this for vaccines for biological weapons like anthrax where there is a high likelihood the drug will never be used, but a vaccine is needed because if there is an outbreak, the consequences are severe.

Basically, rather than paying for drugs on a per unit basis, you pay a lump sum for access to the drug. This solves the issues of spending $100M to develop a new treatment for some disease where there is never a outbreak and you cover none of the cost of R&D.

There have been ideas to have X-Prizes for new antibiotics. Discover a new drug for a anti-biotic resistant infection? Great, here is $500M as long as you agree to produce as much drug as needed for free or some nominal cost.

[_bxg1]

> Basically, rather than paying for drugs on a per unit basis, you pay a lump sum for access to the drug.

Hmm... a system where uncommon but extreme spikes in the cost of care are artificially distributed so that an entire society can bear them as a group... that sounds oddly familiar...

[hnzix]

Please put the invisible hands of the market over your ears and wait for the drugs to trickle down.

Jokes aside - while people are justifiably pointing out the community healthcare angle, arguably this problem is exacerbated by the American FDA drug approval model, ie no corporation will fund clinical trials unless they're guaranteed a profit monopoly.

[cjfd]

Actually, there is a market solution to this problem. I cannot claim to have thought this up, it was discussed in an episode of econtalk. Don't remember the person that was interviewed.

The idea is that big pharma companies have to publicly post a price for each of their patents. If anyone is prepared to pay that price they get the patent for that price. Next there needs to be a tax that is a percentage of the price of the patent. The money that comes from this tax needs to be funneled back into healthcare or even better go straight to the ones who are paying for the particular medicine that the patent protects.

Now the level of innovation can be set by how high the percentage of the tax is. If the tax is very low healthcare will be expensive but there can be lots of innovation. If the tax is high healthcare costs will be low but one can also not expect much innovation.

Of course, there also are some other things that need to be fixed. E.g., doctors should not get all of their schooling financed by pharma companies and so on.

The general idea of such taxes could be applicable to any sort of non-replacable entity, e.g., it could also apply to land. For one thing, this would make feudalism regarding land quite impossible, which would generally be considered a good thing.

[bo1024]

This is the COST (common-ownership self-assessed tax) from the recent book Radical Markets by Weyl and Posner.

[amelius]

Here's another idea: let academia and government institutions develop the drugs, and if necessary outsource the clinical trials to specialized companies while not giving them any of the IP.

[dTal]

Why would there be lots more innovation with a low tax? In the limit, that's the system we have now (0% patent tax, companies are free to price their patents however they want).

[AmpsterMan]

The assumption there is that the current system is already highly innovative in the U.S., which is generally accepted as true.

[dTal]

But the premise of this entire thread is that "With no prospects for profits, big pharma neglects new infectious diseases".

[j_m_b]

>The money that comes from this tax needs to be funneled back into healthcare or even better go straight to the ones who are paying for the particular medicine that the patent protects.

Tax money is allocated for one thing is often used for other things. There is nothing preventing lawmakers from doing this, they after all, make the laws.

[cjfd]

I suppose that is quite possible. I still like the idea though. Like, if they are going to engage in scoundrelism it needs to be as blatant as possible. Now we are stealing from the sick. That kind of thing.

[lordnacho]

Yeah I've read about this sort of idea as well. I guess it's some sort of auction system where you find the best or most efficient holder of an asset via the scheme you describe. In this world someone could invent a vaccine and offer it up at a price, but if they aren't good at selling it or keeping costs down, someone else could grab the patent from them and do it better.

My main issue with it is risk or noise. It's not clear how we avoid a bunch of over optimistic actors from "winning" the patent based on wrong estimates and then themselves going broke. Sure, if one or two firms get in trouble they can sell the patent, but what stops a succession of overly optimistic people from holding it to the detriment of everyone? The person who bids highest at an auction could well be the person with the most wrong inputs to his model.

Kinda like how there's this one building in my town that several restaurants have tried and failed in, but as a monopoly.

I like the idea for land rights though. Those are not gonna hold back all of society if a bunch of people do badly at it.

[boublepop]

> no corporation will fund clinical trials unless they're guaranteed a profit monopoly.

Every single major pharmacy company is actively developing treatments And doing clinical trials where they are in sharp competition and don’t have a monopoly. Obvious example that’s always picked up in US is diabetes. No one has a monopoly on insulin or insulin analogies and you have several corporations constantly competing and innovating improving the treatments.

The reasons for lack of development in some areas is not risk aversion from the pharma companies, it’s just that there simply isn’t a business case for investing there as oppose to other areas in the current setup.

[jyrkesh]

The fact that there's a feasible market incentive for drug R&D suggests to me that that an actual competitive approach to health care would stimulate this sort of behavior on a more widespread basis.

[Frost1x]

Perhaps that market incentive only exists when competition is a small/limited factor (say near monopolistic cases)?

There are a lot of businesses I'd happily set up if I knew I'd have limited to no competition. When competition is more fierce, it disincentivizes me to even try.

If I was guaranteed the lionshare of say, local coffee goers across a large area and didn't have to worry about Starbucks, Peet's, etc. I'm pretty sure I could make it successful and my life would be pretty easy, all things considered.

A lot of rural ISPs can operate this way because it's not viable to compete with their infrastructure foothold in a lot of cases and barriers to entry are high/capital intensive (similar to pharma).

I work in a research environment and there are a lot of funding opportunities/solicitations out there that fit our internal capabilities that we don't even bother writing proposals up for because we know how competitive and unlikely it is to be successful compared to certain other opportunities. Instead, we choose our battles where we suspect we have a higher probability of success: less competitive options. This leads to higher ROI for our time. It works fairly well and I imagine most businesses try to operate under a similar perspective (or more dubiously where they also try to actively stifle their competition).

[refurb]

Artificially distributed? It's no different than paying a drug maker a ton of money to make the drugs and stockpile them.

And at any rate, the alternative is what we have now - no drugs to treat these diseases.

[_bxg1]

I wasn't using the word "artificial" in a negative sense; I was pointing out that this is a narrow example of socialized healthcare and why it's beneficial.

[refurb]

Gotcha.

As an aside, the "netflix model" for drug payments is already a reality in Louisiana. Basically the drug maker and state government negotiated a payment for enough hepatitis C drugs to cure everyone in the state.[1]

[1]http://ldh.la.gov/index.cfm/newsroom/detail/5181

[luckydata]

Yeah, it's called single payer and it's pretty effective. We should try it on other diseases, all of them.

[anewhope]

> treat patients within Louisiana’s Medicaid and Department of Corrections populations

Only Medicaid + inmates, not everyone in the state?

[JumpCrisscross]

> Great, here is $500M as long as you agree to produce as much drug as needed for free or some nominal cost

Why not give $5bn (or whatever the NPV of the drug at a reasonable rate of return might be) in exchange for releasing the drug into the public domain? Then any number of generics manufacturers could be contracted to maintain a stockpile.

[refurb]

Sure you could do that, but manufacturing drugs isn't as simple as hitting a switch - the infrastructure needed along with the scientific expertise is sometimes hard to replicate.

[markdown]

The infrastructure and expertise exists in India, and they'll gladly manufacture drugs at a cost that the developing world can afford.

[refurb]

Depends on the drug. Small molecules, sure? Complex biologics? Even other large pharma companies can have challenges making those.

[sfifs]

Indian manufacturers actually make several complex cancer therapies under the new compulsory licensing law that are made to my knowledge nowhere else except the US. The original manufacturer refused to launch in India.

(Source: a colleague from another country where the manufacturer also made the drug unavailable asked to have the drugs procured from India)

Edit: the drug was Nexavar by Bayer. The CEO was quoted as saying "No, because we did not develop this product for the Indian market, let’s be honest. We developed this product for Western patients who can afford this product, quite honestly". Recently it seems the Indian courts also allowed export licenses for the drug to other markets where Bayer similarly refused to launch - sadly after the relative of my colleague passed away - at least partially from the delay in procuring the drug.

[newyankee]

Could you give an example of what makes complex biologics difficult, is it the actual process or just the fact that IP is not shared easily and the hurdles to get licensing in place.

[hobofan]

A quick google gives you a good rough summary[0]. The quote that summarizes it the best would be:

> for biologics, "the product is the process."

[0]: https://archive.bio.org/articles/how-do-drugs-and-biologics-...

[vikramkr]

Because they're produced by biological processes (grow cells that produce the protein and purify it), you don't really have atom level control and replicability of the end product - there's a lot of variability. So, the exact process that it's produced with is regulated and tracked, and there will be IP over that process as well. You can see the impacts of that in how much harder biosimilars are to develop than generics

[JumpCrisscross]

> the infrastructure needed along with the scientific expertise is sometimes hard to replicate

Then the original developer can be the manufacturer. But no need to add hurdles.

[Aunche]

> Discover a new drug for a anti-biotic resistant infection? Great, here is $500M as long as you agree to produce as much drug as needed for free or some nominal cost.

Most AR bacteria can be killed by trying different antibiotics. Sure they can mutate to something more dangerous, but it doesn't make sense to make drugs for bacteria that don't even exist yet. There are too many variables to account for.

[tus88]

> Discover a new drug for a anti-biotic resistant infection? Great, here is $500M as long as you agree to produce as much drug as needed for free or some nominal cost.

If you were going to develop the drug at your own cost with no subsidy for failure, why settle for 500M? Why not do it on your kwn merit and reap billions instead? And keep all the IP.

[vikramkr]

In other disease areas that makes sense, but for anti-biotics that 500 million is more than you'd be able to make on the market. Especially if the antibiotic is really good - the better it is the less it will be used since we want to prevent resistance developing to our best drugs. That 500 million might be necessary to make the development be worth it.

[_lqaf]

What's needed is for the NIH to get in to the drug manufacturing business, start making generics and vaccines itself.

A huge amount of their research already is directly responsible for private industry profits; they can be happy with that freebie. But for things like vaccines in emergencies and insulin, if this be socialism; let's make the most of it.