[throwanem]

The argument in essence is that only permitting pharmaceutical companies these outrageous profits will induce them to continue investing the likewise outrageous costs of new drug development now that all the low-hanging fruit like antibiotics, and sildenafil and other antihypertensives, has been picked. This extends (usually by implication) to trivial variations in molecular chemistry which have no functional effect on a medication but which are used to extend patent protections solely on the basis of a structural change - a practice also visible in the history of one family of drugs I have mentioned, and one which without some sort of justification might be taken for an example of a law's letter being abused to violate that same law's intent.

Look, I didn't say I buy it. But you asked for the basic argument advocates make in support of such practices, and here it is.

[leereeves]

> This extends (usually by implication) to trivial variations in molecular chemistry which have no functional effect on a medication but which are used to extend patent protections solely on the basis of a structural change

How does that work? Does it extend patent protection on the original molecule? Or if not, what stops generic copies of the original version?

[s1artibartfast]

It doesnt. A competitor can make generics of the original.

What is does is stagger coverage with version release so that you have coverage for latest and greatest version.

Generics are extremely common following patent exclusivity. By then, patients and doctors usually want the shiny new drug.

[throwanem]

I found a menu. https://www.obrienpatents.com/extending-life-patents-pharmac...

[throwawaymaths]

it's not a great argument since iirc half of pharmaceutical company spending is on marketing; far far outstripping r&d

[bschne]

2024 numbers -- Selling, General & Admin vs. R&D

Roche (Pharma Division): 7533 MCHF vs. 11096 MCHF

Novartis: 12566 MUSD vs. 10022 MUSD

Pfizer: 14730 MUSD vs. 10822 MUSD

Eli Lilly: 8594 MUSD vs. 10991 MUSD

AstraZeneca: 19977 MUSD vs. 13583 MUSD

Johnson & Johnson: 22869 MUSD vs. 17232 MUSD

The left side here contains more than just marketing, and already "far far outstripping" seems like a mischaracterization.

For comparison, the average R&D spend between these firms is bigger than the 2024 NSF budget (~9bn) and bigger than 1/4 of the 2024 NIH budget (~37bn).

[derektank]

Also worth considering that this only includes internal R&D, not R&D acquired through acquisition of smaller biotech firms (known as in process R&D). VC investment in biotech startups is, at least in part, built around the assumption that acquisition by a larger pharmaceutical company is a viable exit strategy. To take the example of Eli Lilly, I think they spent an additional 10-20% of their R&D budget on IPR&D in 2024, though this obviously can fluctuate more year to year. They acquired Morphic, which produces a pharmaceutical that treats IBS, and Scorpion Therapeutics, which produces a precision oncology treatment, this year and I'm guessing neither spent much on consumer sales.

[dgacmu]

I think you meant to say NIH for the second budget number?

[bschne]

correct, edited, thanks

[tptacek]

That's part of it, but pharma is also a portfolio business, like VC or music; the winners have to pay for the losers.

(I don't know how much that matters in this case, where a tiny company lucked into a blockbuster and then used every lever in the system to protect their exclusivity).

[throwanem]

Yeah, nobody serious is really arguing the winners shouldn't pay for the losers. How many times over, though?

[tptacek]

I sort of don't care, as long as investor value isn't being protected abusively, by anticompetitive schemes with the patent system and exclusivity. We pay lots of money for all sorts of things, most of which don't actually matter to our lives; pharmaceuticals matter a great deal, and I'm OK with the idea that advancements are incentivized by a time-limited lane for nosebleed pricing.

(Pharmaceutical costs, all in, across the board, are a relatively small component of total health spending in the US. They're not why your health insurance is so expensive.)

This is mostly a story about anticompetitive abuses, so that question isn't super relevant to the story. I'm just answering the claim that invisible marketing/SG&A costs are why drugs cost so much. They also cost a lot because most drugs fail, sometimes after billions invested.

[throwawaymaths]

well but the portfolio managers in this case could really do a much better job at picking hits. we wouldn't have 20 years of failing Alzheimer's drugs if pharma identified that the protein hypothesis was junk (which people were talking about in the aughts)

[throwanem]

That's a really interesting point, yeah. Not that I'm really equipped to evaluate the technical arguments, but it's striking on reflection how absent from the discussion the question seems to be of how efficiently on average the funding to trial a given drug and indication is allocated. The governing assumption appears to be that the status quo is acceptably close to optimality.

[smt88]

And a lot of pharma research is based on publicly-funded research in the first place.

[nradov]

Sure, but that's a bit of a red herring. The largest expense in bringing a new prescription drug to market is the phase 3 clinical trial, which now costs on the order of $1B each. Those often fail, so it's a huge gamble. There is very little public funding for type of research.

[throwanem]

And a drug like Revlimid makes its manufacturer tens to hundreds of billions; the "legacy" portfolio in which BMS classes it pulled in a cool $5.6b just in Q1 '25, of which Revlimid itself was about a sixth, or just under a billion - down by almost half year on year. See https://www.bms.com/assets/bms/us/en-us/pdf/investor-info/do..., pp. 8-9.

It is as if VCs in the tech industry demanded the taxpayer guarantee them a healthy rate of profit, to a standard of health the VCs themselves are privileged to define. Indeed, as with Allred and the regional airlines, perhaps now we see whence Altman has cribbed his "innovation."

[nradov]

I don't understand your point. Some drugs are enormously profitable. Others lose money. There are no taxpayer guarantees. Pharmaceutical companies on average don't generate higher shareholder returns than other industrial sectors. A few like K-V and Dendreon have even gone bankrupt.

One could make an argument that taxpayer subsidized health plans which include prescription drug coverage such as Medicare Part D or Medicaid should limit the prices they are willing to reimburse on a QALY basis. And Medicare has started a limited drug price negotiation program. But generally, voters have been unwilling to accept the trade-offs inherent in drug price controls.

https://www.cms.gov/newsroom/fact-sheets/medicare-drug-price...

[throwanem]

My point is that if you want to provide support for the advocacy argument, you've quite a long way yet to go. A good place to start would be to pick any one claim you have made and attempt to substantiate it. Until then, I've nothing with which to attempt further to argue.

(If you want to do something else, I can't tell what it would be.)

[SAI_Peregrinus]

"How can we lower the cost of phase 3 clinical trials without allowing non-functional medication (scams) to proliferate" is very important. The point of a phase 3 trial is to prove that a medication treats what it claims to treat.

[mikeyouse]

Phase 3 trials don’t cost $1B - they’re more on the order of $20M.

[nradov]

Sorry I should have been more specific. Average total cost to bring a new drug to market is on the order of $2B.

https://www.fiercebiotech.com/biotech/drug-development-cost-...

[throwawaymaths]

yes, that includes failures, which includes shit that a beginning grad student could tell you wouldn't work.

[cogman10]

The NIH already creates grants for Phase 1 and Phase 2 trials. It's a bit insane that we don't also do phase 3 trials. Heck, even drug manufacturing is already done both by the DoD and the VA. It's crazy that we have a vision that private investment will somehow make things either cheaper, more affordable, or more available.

Big pharma is providing very little benefit and a lot of cost. We've seen their playbook with people like Martin Shkreli who'll buy up patents to existing drugs and jack up the price to make a quick buck. Do we really need that sort of "private investment"?

[nradov]

I don't think anyone is seriously making the argument that private investment in drug development is making things cheaper or more available. So that's a strawman argument.

The primary claim in support of the current system is that it encourages greater levels of innovation than would happen under a socialized central planning system where government bureaucrats allocate funding for all trials. We don't have any solid evidence about that one way or the other. But year after year, US pharma companies do consistently release more new drugs than any other countries on a per-capita basis. We don't want to wreck that just because of high prices on a few patent protected drugs. Let's take a longer view and consider possible second-order effects before making any drastic changes.

[smt88]

"Number of new drugs released" doesn't feel like a good metric for pharma productivity to me.

An ideal metric would be "person-years of increased healthspan per dollar spent by the consumer," and I'd wager that's very low because the profit motive is to create drugs that treat symptoms (and are prescribed for life) rather than cure an illness.

[cogman10]

> innovation than would happen under a socialized central planning system where government bureaucrats allocate funding for all trials.

What innovation? All the innovation with the current system happens outside the big pharma companies. They are merely swooping in at the final steps and manufacturing to benefit from the public investment.

The actual innovation is happening because of public social investment. Not because if private investment (at least in terms of medicine). Private investment here is simply leaching off of the public investment.

[throwawaymaths]

that number is not correct. you can get phase trials done in 100M ish. IIRC the 1B number is average cost, all three phases, including drug failures.

[tough]

the argument might be, the more profits the pharma's make, the more available cash to buy out poltiicians or create SuperPAC's or whatever they have at hand..

America, the land of the dollar

[ricksunny]

>America, the land of the dollar

Correction: America, the land of the rent-seeking.

[jmward01]

This is trickle down economics for healthcare. It is stupid. No, it is worse than that, it is evil.