Indian Gov't Uses Special Powers To Slash Cancer Drug Price By 97%

suraj.sun sends this quote from the Times of India: "In a landmark decision that could set a precedent on how life-saving drugs under patents can be made affordable, the government has allowed a domestic company, Natco Pharma, to manufacture a copycat version of Bayer's patented anti-cancer drug, Nexavar, bringing down its price by 97%. In the first-ever case of compulsory licensing approval, the Indian Patent Office on Monday cleared the application of Hyderabad's Natco Pharma to sell generic drug Nexavar, used for renal and liver cancer, at Rs 8,880 (around $175) for a 120-capsule pack for a month's therapy. Bayer offers it for over Rs 2.8 lakh (roughly $5,500) per 120 capsules. The order provides hope for patients who cannot afford these drugs. The approval paves the way for the launch of Natco's drug in the market, a company official told TOI, adding that it will pay a 6% royalty on net sales every quarter to Bayer."

Comments

Just keep in mind the tradeoff

[elrous0]

I know I'm going to burn karma for saying this (wouldn't be the first time), but do keep in mind that the R&D costs for developing these drugs is paid from the profits these companies make. Now, maybe governments themselves should be doing the development instead of for-profit companies, maybe the drug company profits are too high, and maybe Bayer were dicks to charge that much for a drug in a poor country. But if you're going to keep the system as-is, you had think long and hard before you just start ripping patents left-and-right. It may be politically popular, but you can't have your cake and eat it too.

If you're going to say "X company doesn't get to patent its drugs" you need to come up with a replacement for the money that X company put into its research and development. If the government wants to serve its people this way, that's fine, but they also have an obligation to pony up the money for their own R&D program (and not one that just does knockoffs of existing drugs). Because without that profit motive from those patents, the drug companies sure aren't going to be developing anything new.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

1. Most drug company expenditure is on marketing;
2. Most drug research is academic;
3. They can settle for less profit;
4. If they won't settle for less profit, someone else will be prepared to take their position in the market.

Problems solved.

Re:Just keep in mind the tradeoff

[ClioCJS]

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies. Only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). It sounds like you read the conservative cliff notes on the issue.

Re:Just keep in mind the tradeoff

[sohmc]

Or even worse, they won't bring the drug to unfriendly markets, making it so that only the people who can afford to go out of the country to receive treatment.

It's not bad karma. It's bad business.

Re:Just keep in mind the tradeoff

[zlives]

I wonder: On the opposite side, if the drug companies no longer develop new treatments; would a non profit based entity (govt, charity) do the work? and if they would then perhaps that is whats best for humanity?

Re:Just keep in mind the tradeoff

[elrous0]

Well apparently the academic institutions, small biotechnology companies, and NIH are motivated by profit too, or they would be putting the drugs into the public domain, wouldn't they?

Re:Just keep in mind the tradeoff

[Anonymous Coward]

How about this:

If drug companies move their labs and staff to India to take advantage of far cheaper resources, cost of living, and less restrictive research laws, they need to give back to the billions of people upon whose backs those savings are made possible.

If they don't want to do business there, come back to the USA and lobby to go to war against countries that do things they don't like. After all that's the American way.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Because without that profit motive from those patents, the drug companies sure aren't going to be developing anything new.

That only applies to drugs where there is a market for them - a big enough market where they are assured their ROI goals.

In other words, if the disease doesn't have many suffers, they will not develop a drug for it regardless of the human suffering.

Then you have drugs where the company spends hundreds and hundreds of millions of dollars because they know they'll make a killing but it really doesn't save lives - like Viagra. Quality of life? You know that a HUGE percentage of folks who use Viagra are also smokers? And smoking is the #1 cause of male impotence. That's right, billions of dollars could be saved every year on hard on drugs alone if cigarettes where eliminated.

Medicine is one of those areas where I honestly think that the free market system causes more harm than good.

Re:Just keep in mind the tradeoff

[i.am.delf]

Don't forget this. http://apps.who.int/medicinedocs/en/d/Js6160e/6.html Look at table 4.3. The only markets that matter are the US and western Europe. Everywhere else is peanuts in comparison. The US, Europe and Japan collectively pay for the vast majority of the world's drug R&D through both government grants, venture capital and big pharma research.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

I'm sure they more than make up for any R&D costs lost by taking subsidies and not paying any taxes.

Re:Just keep in mind the tradeoff

[zlives]

+1 if i could

Re:Just keep in mind the tradeoff

[betterunixthanunix]

if you're going to keep the system as-is

I'll just throw in a vote for "let's change the system and not keep it as-is."

Re:Just keep in mind the tradeoff

[HairOfTheBambit]

I've head this both ways, but never seen the proof either way. Can anyone show me where they are pulling the stats for "Drug companies spend more on XXX than YYY"

Re:Just keep in mind the tradeoff

[CensorshipDonkey]

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies.

If this is actually true, I'd like to see some figures or at least a link.

Re:Just keep in mind the tradeoff

[SaroDarksbane]

Just like Apple needs patents on rounded corners for smartphones, or it will never be able to recoup all the money it put into market research? Aspirin still sells like hotcakes, and I'm pretty sure the patents on it expired long ago.

Patents cause industry to stagnate, aren't necessary for innovation, and get people killed. They are a great way to enrich huge corporations, though, who can keep out competition of every sort by having the cash to keep the FDA in their pocket.

Re:Just keep in mind the tradeoff

[smi.james.th]

I don't disagree with you but can you cite any examples?

Re:Just keep in mind the tradeoff

[SJHillman]

I believe a big portion of the expense, at least in the US, isn't so much the R&D as the time it takes to get something to market. Some drugs take decades of trials and government approval after the initial R&D just to prove it's safe. Having to wait this long to market a product is a major factor in driving the cost up. There's a large time lag between the initial investment and when you see any profit from it, so the profit needs to be fairly considerable to make it worth developing in the first place.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Why not outsource some of the trials? There's a local company that does testing for various drugs and medications and they frequently advertise upwards of $2000 for two-weekend studies. That's just the money that they're paying the college kids to show up, take the meds/placebo, and sit around the facility for the next few days. It seems like this could be done in a more cost-effective manner in a place like India where participants could be paid less, among other cost-saving measures.

You do make a good point that there could be some unintended consequences from this. For starters, the major pharmacutical companies are probably yelling at Congress to do something about this. How long until we have some kind of ACTA-like treaty that applies to medication? We could get rid of the individual companies and have the government handle research, but that still doesn't necessarily change things. Why should one or two countries subsidize the cost of finding new medicines?

Re:Just keep in mind the tradeoff

[bartosek]

Again somewhat true. Academic research is largely funded by private companies, in exchange for exclusive rights to the fruits of the research.

Re:Just keep in mind the tradeoff

[elrous0]

Well, I think you've made a good case for why the government should be doing its own R&D and not relying on Pfizer. But I bet if you asked the Indian government to put their money where they mouth is, you would be greeted with silence. It's that way even in the U.S. Everyone bitches about drug prices, but then they turn around and elect politicians who have no damned intention of funding drug development through the government.

Re:Just keep in mind the tradeoff

[DarthVain]

They get around this by paying royalties on profit to the patent company.

Bottom line, R&D done by the west sold to the west is too cost prohibitive for most other countries. This is not limited to drugs or R&D either. This is why a copy of music, DVD, or Windows 7, or whatever costs X in the USA, and Y in say India. They simply cannot afford X, period. Those that due make up maybe 0.000000001% of the country (3 people apparently). So the reduce the price.

In this particular case the Government is allowing another company to make a generic version of the drug to sell for a profit within India (which breaks a patent really), so long as 6% of their profit goes to Bayer the company that did the R&D and has the Patent to the brand name drug. This way Indians get to have drugs and Bayer still gets paid. Otherwise realistically Indians do not get drugs and Bayer makes nothing anyway.

The only risky part of this business, is if people start "exporting" the generic drug out of the region and into a region that Bayer does sell the expensive brand name drug, in which case they would most certainly loose money (figuratively sort of) and market share. This would be the same as that DVD from China coming back to the US for sale. At least they could try to region code the things etc... Drugs, not so much.

If history has taught us nothing, if you make en expensive drug and divergent markets there will be smuggling. At least in this case the profiteers can have a bit of moral high ground as they might be saving western poor peoples lives with cheap cancer treatments, VS feeding some addicts habit. Anyway should be interesting to see what happens. This already happens to a certain extent, however 97% is a heavy savings, and temptation for smugglers.

Re:Just keep in mind the tradeoff

[tonywong]

If you read the article it does give the circumstances of the ruling. I would be inclined to agree with you on principle, but from the article:

Economist and intellectual property expert James Love said, "The Bayer price of Rs 34,11,898 per year ($69,000) is more than 41 times the projected average per capita income for India in 2012, shattering any measure of affordability. Bayer tried to justify its high price by making claims of high R&D costs, but refused to provide any details of its actual outlays on the research for Sorafenib, a cancer drug that was partly subsidized by the US Orphan Drug tax credit, and jointly developed with Onyx Pharmaceuticals. Bayer has made billions from Sorafenib, and made little effort to sell the product in India where its price is far beyond the means of all but a few persons."

This is in direct contravention to the WTO TRIPS agreement:

Under Section 84, a compulsory licence to manufacture a drug can be issued after three years of the grant of patent on the product, which is not available at an affordable price. Under the World Trade Organisation TRIPS Agreement, compulsory licences are legally-recognized means to overcome barriers in accessing affordable medicines. This is the first time in the history of the Indian Patents Act, 1970, that the provision under Section 84 has been invoked.

Re:Just keep in mind the tradeoff

[cpu6502]

1. Advertising actually save money because it encourages more sales.
2. Academic research is funded by drug companies and other corporations.
3. They don't make that much profit. I don't see Bayer in the top 100.
4. Doubtful. No company sells at a loss. Bayer would just avoid India completely, and not release their patented drugs until 10-20 years later (after they recover their initial R&D investment).

Re:Just keep in mind the tradeoff

[punker]

While it's true that the big pharmaceutical companies don't develop most of their own drugs, they do pay for the R&D done by the small firms. More importantly though, they tend to be what takes the drugs out of the lab and into a usable form. They primarily handle the drug safety (i.e. drug trials), manuafacturing, and marketing (because it's no good if the doctors don't know about it). They're just later in the chain, but they have done their work to create the drugs. If the Indian people/government paid for the work done prior to it being acquired by Bayer, then maybe you can justify setting the price so low for the work they did. But if not, it's just a straight ripoff. They better hope they know everything about the drug, because Bayer certainly won't be looking to help them.

Re:Just keep in mind the tradeoff

[sjames]

It's also worth noting that a drug you can't afford is a drug that doesn't exist for any practical purpose. Even worse is if the price is such that you can either choose death without it or live but plunge your family into grinding poverty it will not likely recover from.

Re:Just keep in mind the tradeoff

[Bill, Shooter of Bul]

R&D is a small part of the budgets for *some* big drug companies, like Purdue Pharma. In fact, they're the bastards that invented modern drug marketing. R&D is expensive and difficult requiring really smart people and luck. Marketing is cheaper and more successful. Purdue pretty much just tweaks existing drugs to get a new patent on it, and then takes all the doctors out for daily lunches.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

um those trail and approval are the D part of R & D, so yes it is the R&D

Re:Just keep in mind the tradeoff

[sjames]

If they choose not to market a drug in India at all, I guess the government will save a lot of deliberation when they approve a local company to make the generic. It's not like they can't figure out how it's being made.

Re:Just keep in mind the tradeoff

[Microlith]

1. Advertising actually save money because it encourages more sales.

Thus, advertising gives you cancer. QED.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

1. Yes, because advertising for cancer drugs increases demand. In what universe?

2. And at a pittance compared to government funding. Plus they demand tax cuts for doing it, so...net loss.

3. Because that kind of comparison is valid, even if it were true.

4. So let's see, Bayer is going to pursue profits from medicine by sitting on their hands instead of taking a lesser cut? At what price? The lives of human beings? You're not defending them, you're indicting them for gross indifference manslaughter. You've made them criminals.

Re:Just keep in mind the tradeoff

[sycodon]

I have a relative with a PhD working at a drug company doing drug development. We have had many conversations about her work and how it may eventually end up on the market. Her single department has a budget of over a millions dollars a year just for the people and facilities and supplies (yes, you have to buy all the shit to do the experiments with). They have about 20 different departments focusing on different kinds of drugs.

Now add on top of that all the trials which are well known to require upwards of a hundred million to conduct, review, and have certified by the feds.

So, your assertion that R&D for a new drug is a small part of budgets is misleading.

But, I will say that the reformulating of a drug and making small changes is complete crap and should be disallowed.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

http://www.annualreport2010.bayer.com/en/bayer-annual-report-2010.pdfx

Bayer (in 2010) spent about 9% of its earnings on R&D. It made about 4% of its sales in profit, after taxes.

Re:Just keep in mind the tradeoff

[Krishnoid]

... maybe Bayer were dicks to charge that much for a drug in a poor country ...

Good point --

FTA:

"The Bayer price of Rs 34,11,898 per year ($69,000) is more than 41 times the projected average per capita income for India in 2012,

To put more familiar numbers on this, that would be comparable (using the naive assumption of a multiplier) to $2E6/year assuming a per-capita income in the US of $50k/year. How would a comparable situation play out in the US? I'm guessing they'd negotiate a reimbursement with large insurers to make it sane for people to buy?

Re:Just keep in mind the tradeoff

[TheCouchPotatoFamine]

Your point 3 is like saying that a car thief (yes! a car analogy, almost!) isn't so bad because he wasn't one of the top 100 most prolific thieves of the year. Your other points aside, that sort of logic - apologist - gets to me since it tries only to win the argument, not provide reasoning. Are you being a devils advocate? Or do you actually think that? Bayer's biggest thing was heroin, and its stayed about the same ever since... drug dealers by anyone's measure.

For the truly wondrous, healing breakthroughs - well, i want industry to be well incentivized, but if "Academic research is funded by drug companies and other corporations" alone, or even predominantly then I am upset. You're telling me we just fought a senseless war and could have invested more money in basic lifesaving research then those companies all, combined?

I only wish "War on Disease" was a catchy as "War on Drugs". Bravo, India.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

See State funding, Federal funding (NFS grants), angel investors, and philanthropists for each of those entities. Public Domain and profit? Devil's in the details, and is grey grey grey depending on each.

Re:Just keep in mind the tradeoff

[cpu6502]

I guess I have to spell it out. You develop a new pill called Viagra. It costs $1000 a pill but you don't advertise it, so very few people buy it and the cost remains $1000 a pill.

Then you decide to advertise it on TV, radio, and the net and within a year you're selling to over 10 million customers. Thanks to economy of scale, the price per pill drops to $1. Therefore advertising actually saved money (rather than waste money as the great-grandparent post claimed).

Re:Just keep in mind the tradeoff

[geckipede]

Drug safety and the manufacturing process are not trivial items, and they are certainly a critical part of the process for bringing a drug to market. (Lab processes for making a substance are usually horribly inefficient, wasteful, slow, dangerous... very flawed. I know very well how huge a task it is to find a usable manufacturing method)

... but marketing a drug is a tricky subject. Doctors are in theory supposed to be highly knowledgeable impartial experts who will judge a drug on its merits - experts that the patients can trust to prescribe them the right stuff when needed - but in practice it seems that doctors are just as vulnerable to marketing as everybody else. Bad drugs can easily be promoted to common use above cheaper or safer equivalents, just by paying for lots of adverts.

Re:Just keep in mind the tradeoff

[networkBoy]

/win

Re:Just keep in mind the tradeoff

[Baloroth]

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies.

I wouldn't call ~$1 billion USD a "small" cost by any measure whatsoever. Primary source (PDF Warning), secondary Wikipedia source. Note that these costs do not include post-launch (which I think it is safe to assume "marketing" falls under) costs, only that of the R&D to get to market approval. And while it depends on the circumstances, a lot of drug research at academic institutions is actually funded by corporations, not the government. Drug research is prohibitively expensive and requires 10+ years in most cases for the drug to reach market. You can't get investment for that from tiny startup companies.

Even the lowest boundary for drug development costs is $55 million: nowhere near something a small biotech company could afford (not by my definition of "small" anyways) out-of-pocket with no ROI for 10 years.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies.

<< citation needed >>

Something credible please. Sicko does not count.

My request is genuine. PHDs and HPLCs are very expensive. So are decade long double-blinds.

Re:Just keep in mind the tradeoff

[WilCompute]

So, just to throw a wrench into the mix, yeah, it might be nice to throw some money at a company for doing a job, a the Indian government has no obligation to fund a company that exist solely as an entity in another country. In fact, the idea that companies in one country can't copy off of countries in another country is quite ridiculous. Why? Until recently, there has not been enough trade to make it matter.

Remember the first priority of a government is its people. We see again and again that people will get rid of their government when the government does not please its people. This is why we get the government we deserve, because we let it stand.

All governments that implement a patent style system have the power, if not the authority, to take over patents for use for the public good. Yes, it is even built into the authority of the American patent system.

Now, personally, one human life is worth 10billion times the money all companies that have ever existed and will ever exist will ever have total. So I hav no problem with this if, and only if, this results in lives saved. Why? Lets look at the actual consequences. Presumably, if this company can make a profit off of this medicine, then so could Bayer. Bayer will not stop selling the drug at the higher prices elsewhere, unless they are forced to compete by other governments doing the same thing.

Now, will doing this across the board stifle inovation? Not really. If the companies don't do the research, governments will. in fact, governments are usually willing to research diseases that don't have enough sufferers to interest companies to research them.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

There you go:

http://www.sciencedaily.com/releases/2008/01/080105140107.htm

If you don't like it, demand they open their books and settle the question once and for all. Or ask the blondes going into doctors offices how much they make.

Re:Just keep in mind the tradeoff

[Anubis IV]

1. Most drug company expenditure is on marketing

Simple fix: Ban drug advertisements. That's the way it used to be and the way it should've stayed, since there is no valid reason why consumers should be the target of drug marketing when they shouldn't even have any say over their prescriptions.

Bonus: No more hastily spoken disclaimers regarding dry mouth and constipation at the end of every other commercial.

Re:Just keep in mind the tradeoff

[mosb1000]

Bear in mind that clinical trials are carried out by these corporations. They aren't cheap. And they don't always play out.

Re:Just keep in mind the tradeoff

[amicusNYCL]

Because without that profit motive from those patents, the drug companies sure aren't going to be developing anything new.

This sums up my distaste for the pharmaceutical industry in general. I hate the fact that potentially life-saving drugs only ever see the light of day if there is profit potential. Any drug company could create enormous goodwill by distributing groundbreaking new drugs for low costs in developing countries, or even in poverty-stricken populations in developed countries, but you don't see much of that. And pharmaceutical ads even manage to beat out local law firm and car dealer ads for the honor of worst commercials on television.

In short, I like the fact that a government is willing to step on a pharmaceutical patent in the name of helping their population. Maybe Bayer would realize that if their prices were lower their volume would skyrocket. Anything to appeal to their sense of greed.

Re:Just keep in mind the tradeoff

[networkBoy]

But, I will say that the reformulating of a drug and making small changes to get awarded a patent is complete crap and should be disallowed.

FTFY.
Doing derivative work on a drug to make it better (cheaper, more effective, less side effects, etc.) is a good thing, and I suppose there is a grey line where a patent may be reasonable, but in general, yes I agree with you.
-nB

Re:Just keep in mind the tradeoff

[MrMr]

http://www.pfizer.com/files/annualreport/2010/financial/financial2010.pdf page 53 says it all. About twice as much on advertising as on R&D. Not counting the sales 'scientific' conferences they fund from the R&D budget...

Re:Just keep in mind the tradeoff

[medcalf]

Sure, someone else will take teir position on drugs already invented. But who's going to invent the next drug? When the risk is billions of dollars, lawsuits, ruined reputations and dead or maimed people, and the reward is making money only until the drug is reverse engineered (maybe a couple of years), then who will take risks on anything but the safest bets? You see the good now (cheaper known drugs) but not the cost later (fewer new drugs).

Re:Just keep in mind the tradeoff

[demonbug]

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies. Only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). It sounds like you read the conservative cliff notes on the issue.

R&D expenditure varies pretty widely. Bayer appears to be one of the worst in R&D to marketing ratio; according to their 2011 Annual Report they spent about 3 billion Euros on R&D and 8.8 billion Euros on "selling" (excludes manufacturing costs). On the other hand, Roche was pretty evenly split between R&D and marketing, with about 8 billion Swiss francs on each. Bristol-Meyers Squibb put about $4.5 billion into marketing and $3.5 billion into R&D.

So yes, drug prices tend to be inflated and a lot of the expense goes to marketing. However, they are also spending a lot on R&D - generally 10% - 25% of income. I won't argue that drugs shouldn't be cheaper - they absolutely should be - but claiming that the pharmaceutical companies don't spend money on research and have no associated costs to recover above the cost of manufacturing the drugs is just plain ignorance. It is certainly worth discussing how drug research and development should be paid for, but India unilaterally deciding to ignore patents without providing any way of funding new research simply isn't sustainable if everyone does it.

Re:Just keep in mind the tradeoff

[theArtificial]

Ah very informative. Thanks!

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Novartis spent 2.5 billion on R&D last Q
the sam Q they spent roughly 4 billion on marketing
they had net sales of 14 billion
so they spent about 18% on R&D

Re:Just keep in mind the tradeoff

[Anonymous Coward]

I seem to recall that Canada has similiar rules for enabling generic drugs (which is why for a while there, the Canadian Pharmacy (really Chinese counterfeits masquarading as Canadian) business was booming.) I see this happening with India too.

I'm not going to shed any tears over drug companies not profiting on drugs, if you've seen how these things are marketed (Oxycotin for example) they are designed to get customers addicted and pay pay pay forever. I'd rather see generic drugs pay process cost +FRAND royalties of not more than 100% the cost to manufacture. Eg it costs 1$ per pill to make, the company with the patent can charge no more than 1$ on top of the original 1$.

It should be split between "prevention" and "treating symptoms" Anything that is preventative should absolutely be made, patents be damned. Anything that is effective, patents be damned. Just make the drugs and figure out how much to pay the patent holder later.

Outside of drugs, no, I don't think it's generally a good idea to just steal IP because the IP holder is unreasonable. There is a certain aspect of quality control that you don't really want compromised when it comes to drugs since it may kill the patient or induce cancer or whatever.

Re:Just keep in mind the tradeoff

[nedlohs]

http://www.sciencedaily.com/releases/2008/01/080105140107.htm

of course 56% of those marketing dollars are "samples" according to http://www.medicine.mcgill.ca/MJM/issues/v08n01/orig_articles/barfett.pdf. Which end up being drugs for uninsured poor people at the doctor's discretion, when I was uninsured and jobless in the US the doctor gave me samples of some antibiotics, for example.
 

Re:Just keep in mind the tradeoff

[Intropy]

California already knew that.

Re:Just keep in mind the tradeoff

[Hatta]

No amount of marketing can change the number of people who need a drug. That is fixed. If the number of sales is less than this number, that can be fixed by educating doctors. If the number of sales is greater than or equal to the number of people who need a drug, more marketing just leads to overprescription. Whatever savings you're imagining here are subsidized by encouraging people to take drugs they don't need. That's bad all around.

Re:Just keep in mind the tradeoff

[Empiric]

I think we have to draw a distinction between the costs to have a product -first- (with the corresponding IP lock-out opportunities), and the costs of producing and selling a product per se.

Developing a current Intel processor was costly. To produce the performance equivalent 10 years ago, would probably have required R&D expenditures equivalent to the whole world's GDP. Which price point would it be ethical to mandate paying (via IP laws, as that's the only reason a company would have the "need" for it "first"), given that hypothetical?

Or, to perhaps put it another way... was the discovery of aspirin inevitable, even if it happened 5 years later on humanity's knowledge curve, at much lower cost?

Re:Just keep in mind the tradeoff

[Anonymous Coward]

So, your assertion that R&D for a new drug is a small part of budgets is misleading.

All you've told us is that they spend upwards of $100 million/year on their 20 departments and drug trials. The original claim is that the majority of the budget is allocated to marketing (you changed the claim!). Without knowing that budget, the $100 million figure doesn't prove anything.

Re:Just keep in mind the tradeoff

[Artraze]

> Most drug company expenditure is on marketing;

On the other hand, advertising, by definition, increases profits or it's a waste of money. Thus, advertising actually _decreases_ individual costs because they sell more units and can thus amortize the overhead costs (which are the primary costs) across more units.
For example, suppose your overhead is $1000, which cores things like labs, employees, trials, and other failed drugs and the cost to manufacture is $1. If you only sell 100 units, you must charge $11/each to break even. Suppose you then spend $200 on advertising and sell an additional 100. Now your break-even price becomes $7/each. The advertising money actually reduced the unit cost.

Now, I suppose you could argue that they're greedy and will still charge $11/each, but that's blatantly ignoring the basic economics that set the price in the first place. After all, they could be charging $20/unit to start, but the idea is that the 'greed' is an overhead cost, not a unit cost, and therefore also amortized across the units.

A viable argument is that on a macroeconomic scale, this increases the overall cost of healthcare because the drug price does factor in some advertising money. To this I have to say: whatever. That just get's too hard to trace. For advertising, if that ad money isn't in your drugs, it's in your Pepsi. Medically, the drug does some good (kinda part of the approval), maybe those people that missed it had much more costly problems because they didn't know the drug existed and had complications with their un/poorly treated condition.

> 2. Most drug research is academic;

Regardless of the truth in this (hint: it's rather limited), most cost is in bringing the drug to market. It's not as if these hypothetical academics make the compound, solve the engineering issues to produce it, and run all the trials. At best they find the drug compound, and usually it's more the mechanics, leaving the drug company to find the molecule that actually exploits that mechanism without killing people. Oh, and then develop the manufacturing process and run years of trials.

> 3. They can settle for less profit;

I guess. Given how much a crap shoot drug development can be, it's hard to define what exactly 'profit' is. Because often times it's just money to pay for the next year's research when income is down.

> 4. If they won't settle for less profit, someone else will be prepared to take their position in the market.

This is blatantly false. If this was the case then the Indian company would have done that, right? But no, they let Bayer do all the real work and are just spitting out chemicals. Hell, they probably are copying Bayer's manufacturing process as well, right off the friggin' patent. No wonder it's so cheap for them.

Finally, regarding your point 3 in particular, let us not forget the elephant in the room:

LIABILITY

If/when this drug is discovered to be doing something bad, who's responsible? This mindless manufacturer? I'm betting not. The Indian governement? HAHAHA. Bayer is the one at the end of the barrel and they won't have any 'excessive profits' to pay damages with. Woohoo!

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Actually...

1) Most drug company expenditure is on CLINICAL TRIALS. The average cost of Phase 3 trials alone is over half a billion US dollars for a given drug.

2) Most drug research is academic but research alone doesn't tell you if a drug is truly safe and/or effective, only that it has potential.

3) Yes, they can settle for less profit.

4) Someone else will take their position only if there is a similar drug with similar safety/efficacy whose patent is owned by another company and has gone through the very expensive and time consuming process of clinical validation in order to ensure that said safety and efficacy is high enough to meet the guidelines set forth by the appropriate regulatory commissions. Guidelines which have been established to protect consumers from snake oil salesmen who used to sell radioactive water as tonics capable of curing all ailments.

Re:Just keep in mind the tradeoff

[StandardDeviant]

The public drug companies are required to file financial reports with the SEC, which generally detail their budgets (at least to a sufficient level of granularity for this discussion). EDGAR is one avenue of getting at them (10-Q for example for quarterly reporting). But yeah, he's not lying, R&D expenditures are not the majority line item for most large pharmaceutical companies. If anything, Big Pharma has been on the whole aggressively cutting R&D over the past few years.

Just for one concrete example, here's Pfizer's 10-Q from late last year:
http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?TabIndex=2&FilingID=8236559&companyid=5709&ppu=%252fDefault.aspx%253fcompanyid%253d5709%2526amp%253bformtypeID%253d13

Click into "Financial Statements" there. I think the given figures are in units of "millions," so they spent about $2.1Bn on R&D during the given quarter, compared to $4.6Bn for "Selling, informational and administrative expenses" (which probably includes marketing) and $3.7Bn for "Cost of sales" (not sure, might be raw materials and manufacturing?).

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Let's see:

(a) I spend nothing not to buy a drug I don't know about. Total cost: $0.

vs.

(b) I spend $1 per pill for years worth of drugs I wouldn't have "needed" had I not known I had XYZ Syndrome. Total cost: More than $0.

So, how does advertising drugs save me money?

Re:Just keep in mind the tradeoff

[Filip22012005]

Often, they buy small companies after the drug's been proven effective. The smaller companies can't afford large saftey studies, manufacturing and marketing. Many small companies take the risks.

Re:Just keep in mind the tradeoff

[Sir_Sri]

1. Drugs don't do any good if doctors don't know they exist to prescribe them. When you are looking at thousands of drugs identified by archaic codes this is a legitimately serious issue. Nor is it relevant where 'most' of the money is spent. Every business spends money on marketing, you have to or you don't stay in business. Marketing in 200 countries, to hundreds of thousands of doctors pharmacies and health agencies is a very different problem than developing in one, and marketing is a problem you can throw bodies at, PhD level research in biochemistry is not. Apply your same test to electronics, cars, games anything. If you separate 'core' R&D from manufacturing R&D from manufacturing from marketing very quickly you start to see that advertising can easily take up a big chunk of a budget for anything, and easily the largest share in some cases. Get used to it.

2. Proof? Stats? Applicability to this particular drug? Manufacturing costs? Capacitive touch screens were probably developed in a lab somewhere, quite possibly a university lab, but there's a difference between spending 200K to make one screen with 4 grad students and a professor, and being able to manufacture 10 million of them a year for 100 dollars a pop with a 0.01% variation. Now apply that to a chemical at a consistent quantity and quality.

3. You can settle for a 50% pay cut while we're on the discussion of arbitrarily giving people too much money. Oh, 50% is too harsh? How's 75%? Ya, I'll stick to 75%, that feels like a good fair number for how much is too much money for you to make. Don't want to work for me anymore? That goes to:

4. And you're going to find people with that expertise? Sure, some indian or chinese company that doesn't care about IP will come and manufacture the drug, and they might be 'good enough'. Maybe the error in their concentrations is 0.1% whereas bayer it's 0.01 (or 3% and 1% or whatever the number happens to be), or maybe it's the same, and the costs of labour are just lower in India and China. So why don't we just have bayer move all of its drug manufacturing to india and china, screw the people who actually developed all the processes being copied in the first place.

Get real about making anything. Yes universities (including the one I'm at) do the fundamental chemistry research, that's a high risk business because for every 1 successful chemical there are a lot of people who make unsuccessful ones. But making one chemical is not the same as making a drug, or making sure it gets to market, or into patients in the right doeses.

That doesn't mean bayers price isn't too high either. As I say, we probably should be outsourcing all drug manufacturing to india and china, after all, if they can make it for 1/30th the price then we should fire everyone who makes drugs in western countries and move it overseas. Still liking this plan? Good, cause I am. You know how I offered you a 50% pay cut, but that didn't feel right, so I went with a 75% cut. Now I have a better offer for you. 90% pay cut, and you move to india, or you're out of work. That you just spent the last 20 years helping me optimize my manufacturing process is why I'm being generous at giving you a chance to keep your job at all.

"Development" isn't just figuring out how to make something in a lab. That's critical to the entire process, but from there you need to convert that into manufacturing at a consistent quality and quantity, convince people that it's worth using (or even experimenting with to try), and then maybe going from there. India is benefiting from Bayer having done all of the rest of the work that goes with the drug, and from buying or otherwise acquiring manufacturing techniques from someone else. Again, that doesn't mean the price of this particular drug isn't too high or too low, but spewing random talking points as though they connect with actually building a safe drug isn't helping anyone understand the difference between 'chemistry' and 'chemical engineering' essentially.

Re:Just keep in mind the tradeoff

[Dunbal]

Drugs with expired patents still make money. Only they have to compete.

Re:Just keep in mind the tradeoff

[zero.kalvin]

I'm sorry but some medicine shouldn't be for profit! I understand a pill for ED costing a lot, I understand my aspirin costing money. But cancer drug, or AIDS should be fucking free, any drug for any disease that robs you of your humanity should be provided for free. I don't care whether I will be perceived out of this world, but for some things ( like this) it is highly immoral to ask money ( and profit ) in return!

Re:Just keep in mind the tradeoff

[Anonymous Coward]

1.) Most R&D medicine is taken by volunteers who don't get paid for being part of the clinical trials.

2.) Most of the scientists and others conducting the clinical trials don't get paid

3.) The government pays for a ton of R&D and contributes a lot to R&D.

4.) Pharmaceutical corporations don't get independently audited to ensure that their government established monopoly prices are justified.

5.) Advancements in medicine will occur, and have occurred, perfectly fine without patents. There is absolutely no evidence, whatsoever, that patents facilitate drug advancements. Most of the evidence suggests otherwise.

http://levine.sscnet.ucla.edu/general/intellectual/against.htm

the pharmaceutical cartel gets all the free work of others and it gets to charge monopoly prices for it and keep the profits to itself.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Your point 3 is like saying that a car thief (yes! a car analogy, almost!) isn't so bad because he wasn't one of the top 100 most prolific thieves of the year.

And what would a good car analogy be if it wasn't completely irrelevant to the original point. I mean, seriously, I don't even know what you're trying to say with this? Or really, I don't understand what you think the OP's original point meant. Now granted, the OP is blatantly wrong (pharmaceuticals have long been one of the most profitable business in the world, Bayer's P/E sits right in between Apple and Google) but your horrendous attempt at an analogy doesn't even draw attention to that. It's just random nonsense. Honestly it will bother me all day that you thought this was a reasonable analogy. I fucking hate you.

Re:Just keep in mind the tradeoff

[Wain13001]

Popularity of a product doesn't lower the price...it results in a raised price or more production which lowers the cost for the company, but it doesn't necessarily lower the price.

Viagra is currently $8-12 dollars per pill *with insurance* under most plans in the US...and you only get 8 or 9 pills (forget how many) for what is supposed to be a 3 month supply.

Only when there is a legal generic in the US will that price drop (mass production/increased availability lowers price). Did the advertising impact the cost? yes it did, it made everyone on earth aware of the product's availability which greatly increased the potential market value, which in turn means the price the market is willing to bear in fact can often go *up*...not saying it did with V or not, just saying that it's not as simple as you're making it.

Re:Just keep in mind the tradeoff

[glop]

If you compare a country where advertisement for drugs is illegal, you can see that:
- new drugs are used just as well (as long as the doctors and patients see the value proposition)
- drugs are actually cheaper in countries where said advertisement is illegal (and we are talking expensive countries here, where most stuff is selling at prices similar to those of the US except for know ripoffs such as Verizon cell phone service or internet).

In such countries the doctors are usually determining what your ailments are and offering what they think are the best corresponding drugs. So drug companies just have to convince these experts that you need the drugs and they will be used. That seems quite reasonable, efficient and reasonably respectful of individual freedom, although there is some abuse (drug companies sometimes offer free seminars in tropical islands for instance).

In the US, advertising to end users also increases some risks that people will ask for drugs they don't really need. When you see the list of side effects, it's easy how to see how this could be quite dangerous and 'give cancer' as was said...

Example: Lovaza is refined Omega3 with some testing done (basically filtered fish oil...). They have ads on TV all the time and the drug is very expensive. You can buy Omega3 for much less from all kinds of supplement manufacturers. That seems to contradict your theory.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

If you commies really think this that's fine. The lesson learned will be felt but never realized. Profit motive is what creates things, I know you fools don't believe this but its sadly true. We are going to see the end of creativity very soon as the reds continue to brain wash people like you on this site.

Re:Just keep in mind the tradeoff

[Zerth]

From their SEC filings on EDGAR.

http://www.sec.gov/edgar/searchedgar/companysearch.html

Pick a drug company and a year. Depending on which companies and which years you look at, both statements are true.

Re:Just keep in mind the tradeoff

[GameboyRMH]

I thought of this, but isn't there a very good chance of the 6% royalties being a greater income than the drugs that would have been sold to the rich few in India? Similar to the idea of selling games for less, better to get 1m purchases at $1 than 10k purchases at $20. Maybe this will be the "L4D Steam sale" moment of the pharma industry.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies. Only a handful of truly important drugs have been brought to market in recent years,

Which does not necessarily mean, that development was cheap, or that the companies (and institutions) did not spend a lot of money on a lot of trials and errors (what research sometimes is like).

and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). It sounds like you read the conservative cliff notes on the issue.

According to the financial report on fiscal year 2011, Bayer spend 1,5 Billion Euros on R&D in their Pharma business unit (the one responsible for Nexavar), which made 10 Billion Euro revenue in that time. That's more than 50% of Bayer's total R&D budget. In total (so, not only Pharma), Bayer employs 13300 people in R&D.

Re:Just keep in mind the tradeoff

[Xtravar]

Yeah, his example only works on things like Viagra, which are completely optional.

Re:Just keep in mind the tradeoff

[PraiseBob]

3. They don't make that much profit. I don't see Bayer in the top 100.
You must've missed Pfizer at 31, and Johnson & Johnson at 40. Those two make more than Target, Kraft Foods, Goldman Sachs, Morgan Stanley, Dow Chemical, and obviously most other companies on the planet.

They can take a 97% decrease in price and still remain profitable? What other industry can possibly have that level of markup and keep customers? It is only possible because of patent restrictions, and a "captive market" where people die or have horrible illnesses when they don't take your product.

Re:Just keep in mind the tradeoff

[gameboyhippo]

Though I agree that drug advertising should not target consumers; I 100% disagree that consumers shouldn't have any say over their prescriptions. I shouldn't have to take it on blind faith that my doctor is going to give me the right drug. I should have the right to research it and know what the pros and cons of taking a medicine is.

Re:Just keep in mind the tradeoff

[EvilBudMan]

Did you see the numbers? It's almost $50 a pill. Some drug company has now patented a propellant for asthma medicine. Since you can't use the old inhalers because of environmental concerns, if you want asthma medicine that used to be off patent is now back on. The patent office is screwed up entirely. Bayer may have lots of research tied up in this but many companies are mere patent trolls.

Re:Just keep in mind the tradeoff

[Sir_Sri]

I gave a longer winded reply to the AC above you, but the same basic point applies. There's a huge difference between the fundamental research (which in just about every field is done in academia), and being able to bring that research to market with a consistent quality and properly informing the relevant people that it's available.

To somewhat over simplify. Drug companies do chemical engineering. Universities do chemistry and biochemistry.

The idea that only handful of truly important drugs have been brought to market recently sounds like talking point waffle as much as you're describing the other view as conservative cliff notes. How do you define important drugs, what's your time frame? Even if you are riding on a gut feeling that doesn't mean it's any more accurate than my impression that trying to build new drugs and failing is as important as trying to build new drugs and succeeding. If you knew in advance it would work it wouldn't be research.

Re:Just keep in mind the tradeoff

[Hatta]

R&D spending is the second largest expenditure most pharmaceutical companies make. The largest expenditure is marketing, of course.

Re:Just keep in mind the tradeoff

[Alex Belits]

If you are capable of such research, you ARE a doctor.

Re:Just keep in mind the tradeoff

[Artraze]

Mod parent up.

This is exactly what happened here:

"BAY 32-9006 was first developed by Onyx Pharmaceuticals. Onyx subsequently partnered with a large and well known drug company, Bayer (Bayer is the "BAY" in BAY 43-9006) to complete development of the drug."
-- http://cancerguide.org/rcc_bay43-9006.html

So this was developed by companies, not academia or the NIH.

Re:Just keep in mind the tradeoff

[chrb]

There are some huge projects that have been donated to the public domain - the Human Genome Project, the International HapMap Project, and there are smaller groups working in less commercialised sectors that release their data as public domain (Laboratory for Drug Discovery in Neurodegeneration, Wellcome Trust, ..).

The problem is that there hasn't traditionally been a path to market for academic institutions and others conducting basic research, and that bringing a drug to market often costs more than the basic research, since you have to pay for human clinical trials and regulatory approval. For these reasons, the system has evolved whereby basic research is funded by the tax payer, the initial studies are funded by the tax payer, and then at some point everything is handed over to external corporations to commercialise. This is a big problem, because from this point onward the company is in a monopoly position, and has little incentive to lower costs for the patient (in fact, they have a strong motivation to raise costs for the end user whilst minimising their own costs). This might change in the next few years, as commercial pressures are prompting companies to drop research funding (Traditional drug-discovery model ripe for reform)

Keep in mind that, before the internet, it was a lot harder to do collaborative globally distributed research. The big question is whether the lessons/success of the "open source" model can be applied to parts of the research community in a way that still enables drugs to come to market. I'm pretty sure that it is possible, if the right model is discovered - e.g. collaboratively funded or X-Prize style systems for achieving basic research goals, leading to public domain data and drug designs, which can then be manufactured by drug corporations and sold for profit. The key to success is not about mandating that a particular solution should be used, but in creating a system that encourages both collaboration and competition in the respective areas where these work best.

Re:Just keep in mind the tradeoff

[toppavak]

A valid point, perhaps one mitigating bit of information worth noting is that compulsory licensing does not mean that the generic manufacturer can violate the patent. Under TRIPS (the international treaty governing intellectual property rights) what the Indian government has done is to deem the asking cost of a drug combined with the asking cost or unwillingness of the manufacturer to license the drug to generic manufacturers to be damaging to public health (I forget the precise phrasing used). As a consequence they've issued a "mandatory license" by which the generic manufacturer can pay Bayer a licensing fee established as reasonable by the government exercising its right to compulsory licensing, essentially granting a license to the patent it issued to Bayer to generics manufacturers for domestic production and consumption in order to ensure access to the drug. Hence the 6% licensing fee on revenues (not profit) referenced in the article. Arguably, Bayer stands to make that money for free considering the vast majority of the consumption of that drug will be by patients who could not have afforded the treatment previously.

Certainly there are potential negative consequences of such an action, but the calculus of such a decision would involve weighing these potential future costs of "decreased innovation due to perceived risk of diminished monopoly" against the very immediate human cost of not having access to treatment. In this case it seems that the government of India decided that the immediate cost outweighed the potential future cost.

Re:Just keep in mind the tradeoff

[GameboyRMH]

No amount of marketing can change the number of people who need a drug. That is fixed.

Correct, Viagra is an exception to the rule (along with things like eyelash extending drugs, acne suppression drugs and other vanity shit) as you don't need it to survive. Savings only applies for drugs you don't need.

Pharma is a lot like digital media in that production and distribution is dirt cheap, and all the costs are in development. You can pretty much look at any pill in a pharmacy and they all cost peanuts to actually produce, like software it's just a matter of pricing it so that the expected sales pay off. And like digital media if there are people who want it and can't afford it, there's a very good chance that the vendor is screwing themselves by pricing too high.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

The cost of getting a drug approved is enormous. My wife participated in 3 cancer drug clinical trials. I can assure you that there are a staggering number of expensive procedures and tests. And not all drugs get approved, so the cost for all the failed attempts must be included in the price of the ones that do.

Having seen the tremendous costs of getting a drug approved I don't fault the drug companies for making all they can on new drugs. That said, it seems to be dance between the drug companies and the insurance companies. Every drug seems to cost about $7000 / month. I suspect this is the maximum insurance companies will tolerate.

The tragedy is for those uninsured or on drugs not approved for their disease. We were in that boat and ended up footing the bill ourselves, once for Nexavar (to their credit, Bayer helped us out and sold us the drug at a 90% discount), and again for Votrient (a plea for help to GSK was answered with "that drug isn't approved for that disease, and we think you really should pay more than your take home pay for drugs - fuckers.)

All in all, I very grateful that companies are willing to attempt to make such drugs. They gave my wife years of quality life she wouldn't have had otherwise. Sure, things could be better, but they could be worse too. And I think India's actions here will tend to make things worse. In fact, if India is setting the price of the drug, it should be footing part of the bill for development and testing.

Re:Just keep in mind the tradeoff

[Znork]

I suspect a lot of pharma ad budgets also go to things like golf conferences for doctors. Considering they tend to spend twice as much on marketing as they do on research there's a whole lot of marketing going on.

But I agree, the ads should go. Either you have a problem or you dont. If you do, consult a doctor (and don't forget to search the net as you can often complement the doctors experience with others experience).

And frankly, I think the patents should go as well. Considering we get barely 20% of money spent on the pharmas as R&D output it's obvious that monopoly rights can make private corporations even less efficient than government. We'd probably get more research done from having a grant system and small specialized R&D companies and arranging publicly funded trials than we're getting now. Best case we'd get five times the R&D from what we're already spending, or the same at a fifth of the cost. Either way it'd be hard to make the system worse than it is today.

Re:Just keep in mind the tradeoff

[zill]

Here's Bayer's 2011 annual report.

Last year they spent 17.975 billion euros on manufacturing, and 2.932 billion on R&D. "Selling expenses", which I assume are mostly advertising costs, was 8.958 billion. Note though that these data also include Bayer's GM food and material science divisions. Medical R&D only accounts for 66.4% of their total R&D expenses. I'm too lazy to tabulate how much of their manufacturing and advertising costs are from the medicinal division.

No offense, but all I had to do was type in bayer.com and click on the "annual report" link on their front page. All that probably took less time than typing "can anyone show me the stats".

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Viagra was supposed to be only a hyper-tension drug, but it was discovered that it made the male mice...extra sexually active. So, it got marketed for both hyper-tension and erectile dysfunction. How do I know this? My wife was working at the Covance testing laboratory when they were testing this drug.

Re:Just keep in mind the tradeoff

[sycodon]

I agree with your clarification.

Re:Just keep in mind the tradeoff

[bws111]

Guess what category 'educating doctors' falls under? That's right, marketing. How do they educate doctors? By buying ads, and sending reps to talk to the doctors. How does a busy doctor have time to talk to a rep? The rep buys him lunch. How does the rep convince the doctor that his meds are right for the doctor's patients? By giving him samples. All of the above costs money (lots of it) and it all comes out of the marketing budget.

As for consumer level advertising: you are assuming that everyone for whom a medicine is appropriate will go to the doctor and tell them about the problem, even if they don't know anything can be done about it. This is nonsense. Before Viagra (and its widespread advertsing), how many men went to their doctor and complained about ED? Almost none, first because it was embarassing, and second because every man knew there was nothing that could be done anyway. Do people with joint pain go to the doctor, or do they just assume it is part of aging and put up with it (or worse, self medicate)? Is constantly feeling sad normal, or is there something wrong that can be fixed?

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Untrue! Marketing is also getting reps out there in front of doctors who have been using X drug since they graduated, and convincing them to use Y drug on Z treatment instead. Marketing goes way beyond TV advertisements. It also includes pamphlets to people on older drugs informing them of a newer drug.

I concur with OP If they think the government can do it better cheaper then have the government do it better cheaper, but to steal something from an organization where people have their retirement savings just because you don't like the price? Fuck that. If you don't like the game change the rules, but breaking them after the fact is shitty.

Re:Just keep in mind the tradeoff

[rolfwind]

4. Doubtful. No company sells at a loss. Bayer would just avoid India completely, and not release their patented drugs until 10-20 years later (after they recover their initial R&D investment).

Wouldn't India just smuggle the drug from a country that has it and reverse engineer it?

I don't that strategy is viable.

Re:Just keep in mind the tradeoff

[j-pimp]

If the number of sales is less than this number, that can be fixed by educating doctors.

That's called marketing. Sure, it might not be direct to consumer advertising, and its a different approach. You're buying doctors lunch as opposed to giving free pens out at health fairs. You're buying ads in journals as opposed to Esquire magazine. Either way, you are spending money to inform decision makers.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Yes, they spend a lot of money, getting a hot blonde to talk to the doctor about the drug. And set up vacation time. And...yeah, sorry, there's education, and then there's what the marketing you're talking about entails.

It's loaded heavily into enticement and distraction, in expensive ways that far exceed the value of education.

And you haven't even bothered to break it down in terms how it is spent. How much do they spend producing neutral stories and how much do they spend with those ads starting celebrities?

You also leave out the people who go to doctors complaining about something they only learned about through television when they don't have a valid complaint.

Re:Just keep in mind the tradeoff

[poity]

1. Yes, because advertising for cancer drugs increases demand. In what universe?

isn't that an argument AGAINST the initial (implied) claim that Bayer spends more on ads than research? It doesn't seem like Bayer would spend money on ads over research when obviously as you've pointed out cancer treatment demand doesn't increase just due to more awareness. So that's more of a rebuttal to the GP anon than to cpu5602

2. And at a pittance compared to government funding. Plus they demand tax cuts for doing it, so...net loss.

which government would fund this, India? If the Indian government had funded the research in its totality, I wonder how it or the tax paying population would respond to another country taking the research without compensation. The solution then is a global fund, but who pays how much?

As for points 3 and 4, it would seem that in a world where research is given away, the countries or companies which invest in their production capability will always win over those which invest their research capability. Just build your factories and wait for the other guys to publish the formulas.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

And 5 years down the line statistics show that the drug has some deadly side effects and the government tries the pharmaceutical company for billions even though it went through all the proper testing and government licensing. It's always a sunny day when you are the government, until you run out of private, for profit companies to destroy.

Re:Just keep in mind the tradeoff

[Anubis IV]

Doing your due diligence in researching drugs is fine. Asking questions of your doctor after doing your reading is fine. Realizing that you had neglected to mention a potentially important detail is extremely valuable. I don't want to discount any of those, because they are very good things. But consumers are not meant to have any say over their prescriptions, and by that I mean that the choice of what prescription you're walking out of the doctor's office with at the end of the day should still be the doctor's and not yours (obviously you should still have the right to refuse and the right to seek a second opinion, of course).

Because of that, there's no good reason to be marketing to consumers, since the only thing you can be doing is indoctrinating an uninformed bunch of people who have no basis for understanding the complex interactions taking place and the results that might occur. For similar reasons, licensed engineers are barred from advertising in America by most of the major engineering associations. People have no basis for measuring the credibility of the claims being made, nor could they without years and years of training, so you'd be taking advantage of their cluelessness by addressing them directly.

Re:Just keep in mind the tradeoff

[Registered Coward v2]

No amount of marketing can change the number of people who need a drug. That is fixed. If the number of sales is less than this number, that can be fixed by educating doctors. If the number of sales is greater than or equal to the number of people who need a drug, more marketing just leads to overprescription. Whatever savings you're imagining here are subsidized by encouraging people to take drugs they don't need. That's bad all around.

Marketing, in the US, is designed to develop a pull from the patient, rather than a push by the doctor. Due to changes in the law, drug companies now want to create demand, for patients who need a drug type, for their prescription drugs. It's about market share, not increasing the size of the market.

Re:Just keep in mind the tradeoff

[that_xmas]

The problem is, they've banned most "advertising" aimed at doctors. No more pretty girls giving out free tickets and sample packs of drugs to doctors. So, the drug companies have decided to advertise straight at potential end-users.

It's not an unexpected result in one of the most highly regulated and government controlled industries.

Re:Just keep in mind the tradeoff

[bws111]

P/E has nothing to do with how profitable a company is, it is just a ratio of the stock price to EPS.

The correct thing to look at when talking about profitability is profit margin. Bayer: 6.77%. Google: 25.56%. Apple: 28.20%.

Re:Just keep in mind the tradeoff

[Forty Two Tenfold]

The only form of marketing allowed should be peer-reviewed paper in a journal for doctors and some kind of simple pharmacological score/summary for the patient/client.

Re:Just keep in mind the tradeoff

[NormalVisual]

If you are capable of such research, you ARE a doctor.

No, not really. You're assuming that the doctors are really researching every new thing the drug companies push on them, and that you have to have an M.D. to read and understand the available information. I recently had the doctor prescribe two rather expensive (and new) medications that also weren't covered under my insurance. I did a bit of research, found a couple of much less expensive alternatives, and spoke to him about it. He agreed that there likely would be no problem with the substitutions and wrote some new scripts, and after having been on the different meds for a little while, he says that the cheaper meds have done just as well as he would have expected the others to do. So, a little research by this non-M.D. is saving me a little over $250/month.

Re:Just keep in mind the tradeoff

[JustNilt]

Just like Apple needs patents on rounded corners for smartphones

I could be wrong since I haven't looked it up but rounded corners on a phone wouldn't likely be patent-able but can certainly be considered part of the "trade dress". While both matters covered by "IP law", patents and trade dress are wildly different from each other. I think conflating the two is a bad idea in general.

http://en.wikipedia.org/wiki/Trade_dress

Re:Just keep in mind the tradeoff

[Registered Coward v2]

If they choose not to market a drug in India at all, I guess the government will save a lot of deliberation when they approve a local company to make the generic. It's not like they can't figure out how it's being made.

I would think, if such tactics become more common, drug companies will push for greater secrecy around patens so the basic formulation would not be available publicly until it goes off patent. Companies could try to copy at the risk of getting it wrong; or have to run trials to ensure their formulation is effective and safe.

Re:Just keep in mind the tradeoff

[dkleinsc]

No amount of marketing can change the number of people who need a drug. That is fixed.

Actually, it isn't. For instance, there are endless TV ads describing a list of symptoms and instructing the viewers to diagnose themselves with a disorder X and ask their doctor for a prescription for treatment Y. This may motivate somebody to seek out medical aid for a real problem, but what the drug companies are really hoping for is that a layperson will be convinced they have X (even if their regular doctor tells them they don't) and shop around until they get a prescription for Y. And since it's a treatment rather than a cure, this same person will get treated with Y for years regardless of whether they really need it, so long as the side effects aren't too bad.

This is part of what's wrong with for-profit health care: It's profitable to create demand that's not only useless but actually counterproductive and sometimes dangerous.

Re:Just keep in mind the tradeoff

[Miamicanes]

> Bayer would just avoid India completely, and not release their patented drugs until 10-20 years later

To a large part, this tactic is why most countries grant compulsory licensing in at least some instances -- to make it impossible for a company to metaphorically "take its ball and go home". Most countries besides the US take the attitude, "If the IP owner isn't interested in selling it here, and won't allow anybody else to sell it here by granting them a license under reasonable terms, we aren't going to stand in the way of somebody else independently taking the initiative to do an end run around them, make it themselves and sell it here anyway." India just happens to be notorious (within the pharmaceutical industry) for doing it openly, loudly, and proudly when lifesaving drugs are priced out of reach for most Indians by rent-seeking drug companies.

India is also somewhat unique in that it doesn't grant or recognize patents for "method of use" or "molecules", only manufacturing processes. So when finasteride was repurposed in lower-dose form as Propecia for baldness, it wasn't eligible for a new patent in India. That's why Propecia is patented and expensive in the US, but costs next to nothing when purchased from India. Likewise, when Indian companies came up with new ways to manufacture atomoxetine (the ingredient in Strattera), they were able to get their own patents and begin selling it, even though the original patent for Strattera was still in effect and valid in India. In the US, you can combine two old drugs in new doses into a new drug, and get it patented for another 17 years. In India, you'd be laughed at (unless you somehow came up with an innovative new manufacturing process that did something differently than just making the two original drugs by their original processes, mixing them together, and pressing them into tablets containing both).

Re:Just keep in mind the tradeoff

[spam4rakesh]

So you think its really takes 10-20 years to recover their initial R&D. And its not like pharma companies don't slightly change the drug formula and extend the patent ? Greed is everywhere. While I am not saying that India doesnt need to honor the patent, I am saying balance is required. We should realize that compulsory licensing approval process is still under the purview of the WTO and other commercial bodies. Rocky.

Re:Just keep in mind the tradeoff

[Registered Coward v2]

I wonder: On the opposite side, if the drug companies no longer develop new treatments; would a non profit based entity (govt, charity) do the work? and if they would then perhaps that is whats best for humanity?

depends. The US government does a lot of research on drugs for extremely rare problems and pay companies to develop stockpiles of for the government; primarily with an eye towards military use.

Re:Just keep in mind the tradeoff

[cdrguru]

In most countries the government has mandated pricing which is very low compared to pricing in the US. I do not know what their justification for these prices are, but they are dictated to the manufacturer.

The US pricing is set by the manufacturer, not the government.

Why India in this case is not simply telling Bayer to sell their drug at $175 I do not know. Perhaps they did and Bayer refused which is pretty rare.

Why do you think both the manufacturers and the US government is concerned about reimportation of drugs from Canada and Mexico? These governments set the prices for the drugs with the clear understanding that this was their price and not for distribution in the US. Clearly the US is picking up the tab for advertising, R&D and testing of drugs worldwide. I think we should stop. How about if the US government mandated pricing for all drugs at $1 for a 30 day supply?

Obviously, after six months the supply would dry up. It might take it a while, but some other country would be forced to pick up the slack and restart drug R&D and testing once again. Might take five or ten years, but then pricing would be lower in the US and we could all have cheap drugs here.

Re:Just keep in mind the tradeoff

[cpu6502]

>>>No amount of marketing can change the number of people who need a drug.

That is true, but if you don't advertise your drug and only 100 people know about it, then the other 1 million people with cancer will be left out. Advertising will make those other million people realize the drug is available, increase the sales, and decrease the per-pill cost. (The same principle that worked on Viagra pills.) So advertising SAVES money rather than waste money, through economy of scale.

Stop committing first-order thinking (advertising == waste of money == bad). Look to secondary and tertiary effects, and it's obvious that advertising increases awareness which is a positive good for the doctors, the customers, and the overall cost.

Re:Just keep in mind the tradeoff

[Artraze]

> Only a handful of truly important drugs have been brought to market in recent years, and they were
> mostly based on taxpayer-funded research at academic institutions, small biotechnology companies,
> or the National Institutes of Health (NIH).

"no true pharmaceutical" ?

I am so lost as to what you are arguing here. Yes, most pure research is done by other entities. (In this particular case the drug was designed by a company called Onyx Pharmaceuticals.) However, that only serves to undermine you point: clearly their budget isn't going to show a large R&D line item then, because they aren't paying "R&D" they're paying their business partner.

Thus, how does this work out to big pharma = evil and justify India's action here? Do you think these knockoffs are paying Onyx for their development costs? Or Bayer for the trial and approval costs (assuming Onyx didn't handle those as well)? What about the liability that Bayer is assuming?

I'm not trying to say that big pharma consists entirely of angels, but if we're taking about cliff notes here, clearly you're the one that didn't spend any time thinking about this. Someone needs to bring drugs to market and it happens to be them. So what if they personally don't (often) have to chemists doing the initial research? They still pay those people, just somewhat more indirectly than if it was their R&D department.
And really, I think that it speaks _volumes_ that the people who initially develop these drugs are so quick to let big pharma bring them to market. Clearly it's something they don't have the money and resources to do themselves, or they would.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

according to this article http://timesofindia.indiatimes.com/india/Govt-uses-special-powers-to-slash-cancer-drug-price-by-97/articleshow/12240143.cms

Bayer tried to justify its high price by making claims of high R&D costs, but refused to provide any details of its actual outlays on the research for Sorafenib, a cancer drug that was partly subsidized by the US Orphan Drug tax credit, and jointly developed with Onyx Pharmaceuticals.

If you did any research on R&D cost of medicine, the cost is like 15%, and t he rest seems to be marketing/sales cost

Re:Just keep in mind the tradeoff

[Canonical Coward]

Simple fix: Ban drug advertisements. That's the way it used to be and the way it should've stayed, since there is no valid reason why consumers should be the target of drug marketing when they shouldn't even have any say over their prescriptions.

You truly are a fool. The patient should have final say over every medical decision concerning his body, including which prescriptions are used. The drug that the doctor tells you to take today may have any number of side effects, varying from the merely annoying to the fatally serious. It is the patient's DUTY to report those, even if they are only potential effects,. and a patient's DUTY to say "no" if there are issues that the doctor doesn't consider.

My first statin (cholesterol) caused a minor cough. I said I was willing to put up with it, the doctor wasn't, but wouldn't have known to change anything unless I spoke up. I am much happier without a permanent cough, and I'm more likely to take the drug without it.

Then I got prescribed a maintenance dose antibiotic. One of the side effects could be tendon damage. When I saw the specialist, I made an off-hand comment about this potential and she changed the prescription immediately. My actions to avoid that potential side effect were interfering with things I needed to be doing for other conditions.

But even when the decisions aren't side-effect based, the patient still has the right and the responsibility to manage his care. My glucose numbers put me at the bottom end of diabetic. The immediate response of most doctors is to start handing out prescriptions. The alternate path is to manage the problem through diet and exercise. If I had no say in the matter I would be on at least two permanent drug treadmills for the rest of my life instead of a real treadmill, and I'd kiss all hope of flying again goodbye. If I fail at the alternate treatment, at least I've given it a shot, but it's my decision.

From a practical standpoint, ignoring all other ethical or moral issues, telling someone that they have no choice in what prescriptions they will get and what pills they will take is a poor way of getting patient compliance. I know, just from my own experience, if I didn't understand and accept the three I'm currently on today, I'd be very unlikely to spend the amount of time dealing with them.

Drug advertisements aren't aimed at the doctors. They're aimed at people who may already be dealing with a problem using a different medication and, well, it just isn't working quite as well as it should, or having to take it four times a day isn't as convenient as once, or whatever, and they can ask the doctor about changing. Or to let people know that there is a medical option for some problem they are having but haven't bothered getting a doctor to deal with because they thought there was nothing that would help -- because maybe ten years ago when they started having those symptoms there wasn't -- and that they should talk to a doctor again. Or just to educate the run of the mill person who hasn't recognized the symptoms as something worth asking a doctor about that they ought to.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Read the article
"Bayer tried to justify its high price by making claims of high R&D costs, but refused to provide any details of its actual outlays on the research for Sorafenib"

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Look, I've spent a lot of time-- decades-- around academia and industry. Granted, that's in engineering and computer science, not drug discovery, but the basic divide is probably the same: There are brilliant people in academia, but they often consider the problem solved when they have a toy prototype working under ideal conditions in a perfect academic lab. Scaling those toy prototypes up to working, affordable solutions is an entirely different skillset, and takes an entirely different set of physical tools.

I'm saying that *as an engineer*, and engineering professors are some of the most practical academics I've ever seen.

Any time the academics-- God love 'em-- want to take a crack at reducing the price of one of their academic toys by 97% in real world conditions, they're welcome to step on up to the plate and take a swing. If they connect, there's billions of dollars to make and millions of lives to save or enrich.

Modern research is a partnership between academia and industry; just assigning all the credit to academia won't wash.

Re:Just keep in mind the tradeoff

[Hatta]

Guess what category 'educating doctors' falls under? That's right, marketing.

Not a chance. Education and marketing are mutually exclusive.

How do they educate doctors? By buying ads, and sending reps to talk to the doctors

That's not education.

How does a busy doctor have time to talk to a rep? The rep buys him lunch.

Also not education.

How does the rep convince the doctor that his meds are right for the doctor's patients? By giving him samples.

Still not education.

Re:Just keep in mind the tradeoff

[NormalVisual]

In which case the drug companies are effectively subsidizing health care for those that can't afford it. You'd think they'd make more of that in their marketing literature.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Having insurance companies make the cost differences between drugs have less influence on which people take also allows the prices to be higher than they would if people needed to pay all of the cost themselves.

Getting laws passed that people have to take your vacines is another way to allow you to jack up prices.

Drugs either need to come with price controls or without patents.

Re:Just keep in mind the tradeoff

[wmelnick]

If that was really true, don't you think that pharma companies would give their money to companies that would do this for them at 5x the return per dollar?

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Large parts of the world solve this by letting the government pay for medicines & treatment. They still pay the pharmaceutical industry for their drugs, but they usually negotiate the price from a strong position.

Re:Just keep in mind the tradeoff

[sjames]

They might try, but I doubt they'd succeed. The actual patent is nearly useless these days as a disclosure anyway. The only way to keep it a secret would be to make sure nobody ever gets a sample (that is, not sell it at all) and make sure never to actually manufacture any (so an industrial spy can't observe the process).

Re:Just keep in mind the tradeoff

[cpu6502]

Yeah well that's one of the reasons I oppose having copy or patent monopolies longer than a generation (20 years). Let the companies recoup their initial costs, but then move the item into public domain as soon as possible.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

R&D expenditure varies pretty widely. Bayer appears to be one of the worst in R&D to marketing ratio

Part of the differences to other companies could also be due to different product portfolio, Different product groups might require different R&D costs (relative to other expenditures). In its Pharma branch, Bayer invests about 15% of its revenue in R&D. Roche invests 21% in its Pharma unit. Still more, but not such a huge difference. I guess, one really would need to take a deep look into their numbers and product portfolio to make a meaningful comparison...

So yes, drug prices tend to be inflated and a lot of the expense goes to marketing.

Although the numbers you quoted (both for Bayer and Roche) were "Cost of Sales", which includes marketing, but is by far not all marketing. In the Bayer report, 2 Billion Euros out of 8.8 Billion Euros are explicitly attributed to "Advertisement and Customer Consulting". Still, what counts as marketing is surely also a matter of definition...

However, they are also spending a lot on R&D - generally 10% - 25% of income. I won't argue that drugs shouldn't be cheaper - they absolutely should be - but claiming that the pharmaceutical companies don't spend money on research and have no associated costs to recover above the cost of manufacturing the drugs is just plain ignorance. It is certainly worth discussing how drug research and development should be paid for, but India unilaterally deciding to ignore patents without providing any way of funding new research simply isn't sustainable if everyone does it.

I completely agree with that statements... :)

Re:Just keep in mind the tradeoff

[Hatta]

That is true, but if you don't advertise your drug and only 100 people know about it, then the other 1 million people with cancer will be left out

That's why you educate(not market to) their doctors. So that the health care professional in the situation can make the most appropriate decision for the health of the patient.

Advertising will make those other million people realize the drug is available, increase the sales, and decrease the per-pill cost.

A visit to the doctor will make those other million people realize that the drug is available, assuming the doctors are properly educated. If your doctors are not properly educated, fix that. Marketing plays no valid role in this dynamic.

Stop committing first-order thinking (advertising == waste of money == bad). Look to secondary and tertiary effects

What are the secondary and tertiary effects of thousands or millions of people taking drugs they don't need because they saw some B list celebrity talk it up on day time TV?

Re:Just keep in mind the tradeoff

[Chris Mattern]

2. Most drug research is academic;

The lion's share of drug research *expenses* is corporate. The expensive part is the mass clinical trials for FDA approval, and the corporations run just about all of those.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Lots of fantasy in your world? Ever invest in anything? A dozen years of your life? Hard work and study... Money... to NOT get anything out of it? How many life saving drugs have you invented and given away? Is that what you do with your life?

Go on, hate people for wanting reward for their efforts the save lives while you do, what? Fantasize? Put a voice to ending their future accomplishments? When they can't make a profit they will stop. You going to step in and discover the next great cancer med, and give it away? If you do, what are you going to pay the lawyers with when someone sues. Every drug company gets sued for every drug - always. Sometimes, they lose millions. How does that play in your fantasy world?

Re:Just keep in mind the tradeoff

[cfulmer]

When was the last time you saw advertising for an anti-cancer drug? The advertising is for things that many people didn't know was a problem -- toenail fungus, restless leg syndrome or problems that they were embarrassed to see their doctors about (Viagra.)

Re:Just keep in mind the tradeoff

[zill]

I really don't get why the parent is modded funny. Plenty of countries have universal health care. There's no reason why these countries can't pool their resources together to research "open drugs".

The vast majority of drugs today are already developed in academic institutes with funding from drug companies. All that would be changing is just the source of the funding.

I bet you're thinking "but wouldn't countries who don't contribute to the "open drug fund" get a free ride?". Well in response I ask: Why would company X spend millions to develop product Y and then open source it? Wouldn't that give their competitors a free ride? (If you can't name at least a dozen X,Y pairs please hand in your geek card)

Re:Just keep in mind the tradeoff

[Anonymous Coward]

I know I'm going to burn karma for saying this (wouldn't be the first time), but do keep in mind that the R&D costs for developing these drugs is paid from the profits these companies make.

Really? I thought it came from all those cancer research charities?

Ehm, yes, that was said in jest. But I do feel there may be a grain of truth in there. The cancer research charities collect vast sums of money, which presumably goes into research. So how come the drugs that do come out are licensed at high cost in the name of recouping the investment money if that money is donated?

Re:Just keep in mind the tradeoff

[Anubis IV]

Let me quote a part of what I also wrote above, since it addresses your primary complaint.

Doing your due diligence in researching drugs is fine. Asking questions of your doctor after doing your reading is fine. Realizing that you had neglected to mention a potentially important detail is extremely valuable. I don't want to discount any of those, because they are very good things. But consumers are not meant to have any say over their prescriptions, and by that I mean that the choice of what prescription you're walking out of the doctor's office with at the end of the day should still be the doctor's and not yours (obviously you should still have the right to refuse and the right to seek a second opinion, of course).

I'm not a fool, but I did overstate what I meant to say. I was thinking, "They shouldn't have the ability to self-prescribe prescription medications," but the way it was phrased it sounded like I was suggesting that everyone should place themselves at the complete mercy of the doctors. That was a failure in communication on my part.

Re:Just keep in mind the tradeoff

[stdarg]

They can take a 97% decrease in price and still remain profitable? What other industry can possibly have that level of markup and keep customers?

That's not markup, it's amortization. The generic producer is able to remain profitable because they are now dealing only with the marginal cost of a new pill, not the costs that led up to the first pill.

Re:Just keep in mind the tradeoff

[wintercolby]

You're missing a major contributor to academic research in point 2. 28% of funding for biomedical research comes from the US NIH. The NIH only contributes to new drugs that have a material impact on the improvement of public health. I would easily believe that 72% of new drugs to market provide little additional benefit over preceding drugs and are mostly there to pad the pockets of Big Pharma. In order to pass the FDA they only need to show that they are as effective and no less safe.

Re:Just keep in mind the tradeoff

[cpu6502]

Exactly. Marketing to doctors and customers promotes the new pill & reduces the cost as sales increases. It's not an evil thing.

Those people who think advertising is bad are the same people who think paying ~$250 a year to get the ad-free BBC is a good idea. (For comparison U.S. cable channels cost ~40 cents a month, because the advertising reduces the subscriber fee.) Some people hate ads soooooo much that they refuse to see how advertising/marketing can be beneficial to the customer.

Re:Just keep in mind the tradeoff

[geoffrobinson]

As someone with a pre-existing disease, I'm relying on the profit motive. It advances humanity and creates cures. Making people do something for free means they'll stop doing it.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

I know I'm going to burn karma for saying this (wouldn't be the first time),

No you wont, this is slashdot, which a randian paradise of perfectly efficient markets. The Slashdot groupthink randian economic attitude says that governments are always evil and markets are always perfect, which is why you are sitting at the highest possible karma and anyone defending India's move has been silenced.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Except that Viagra is NOT $1 a pill, it is closer to $20

Re:Just keep in mind the tradeoff

[SuricouRaven]

There is a very good reason the patient shouldn't have too much control over their medical care too: Very few of them know anything beyond high-school biology. Most of them don't even know that any more. Out of this bunch of medical morons, many of them will believe themselves to be an expert on a condition because they read the wikipedia page. You need to account for the implications of human stupidity.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

"Selling expenses", which I assume are mostly advertising costs, was 8.958 billion.

Well, according to the report you linked, of the 9 billion "selling expenses", 2 billion were for advertisement (page 198).

Medical R&D only accounts for 66.4% of their total R&D expenses.

... while making only 46% of their revenues. And the pharmaceutical segment (a subgroup of Healtcare, and responsible for the anti-cancer drug in question) took 53% of the total R&D expenses, while providing only 28% of the revenue...

Re:Just keep in mind the tradeoff

[HairOfTheBambit]

Thanks,
And just doing a quick look, I see under "4.1 Earnings Performance of the Bayer Group" I see (All numbers in billions)
Net sales: $36.5
Costs of goods: 17.975 (~49% of total sales)
Selling Expenses: 8.958 (~25% of total sales)
Research and Development: 2.932 (~8% of total sales)
...

Selling expenses are broken down later with:
Internal and External sales force: 4.141 (~ 11 % of total sales)
Advertising & Customer advice: 1.173 (~3 ^ of total sales)


So, selling expenses far exceeds R&D. But actual Advertising is little over 1/3 of R&D. But if you include the sales team with advertising, then that's just under twice R&D
Either way, R&D is still a good chunk

Re:Just keep in mind the tradeoff

[Znork]

The advertisement argument would be sound except the customers in this case is a specific group of people who should be receiving it and who will consult experts to obtain your product and no more. Hopefully the advertising isn't what makes people sick, and while informing them on treatments may be commendable, if the ailment is not severe enough to seek help then that money (socialized or privatized insurance) should be spent on people in enough need to seek help without prompting.

Further, mass production to reduce unit costs and for the free market to work you need actual competition. With a patent monopoly you have no competition, so the only thing marketing achieves is raising demand which lets you increase price. As with all such protected sectors, greed and sloth will easily make your $11 unit into $5500 units as nobody else has an incentive to enter the market and compete with $4999 units as that would be illegal. And just wait until ACTA or the next treaty makes that $55000, as we can expect future grey imports will carry a mandatory death sentence.

The drug price doesn't factor in some advertising, it factors in twice what the pharmas spend on R&D. If developing new drugs costs a lot, making sure the potential consumers demand your drug and only your drug and that the doctors will prescribe only that cost heinous amounts of money (not to mention the cost of buying politicians so you can keep the cushy monopoly protection going).

As for macroeconomic effects, imagine if that (largely socialized) money was actually spent paying for R&D.

As far as liability is concerned, it's either socialized and paid for by all producers of pharmaceuticals or it's a pipe dream. Going to go up against a multibillion dollar corporation while dying of the cancer a flawed product gave you? You'll be dead and buried before they run out of ways to postpone the case. Sometimes you might get something out of a class-action (after someone else got nailed by a defect), but a defect insurance is simply the most rational way to offload risk from everyone without making it a lottery.

Re:Just keep in mind the tradeoff

[the eric conspiracy]

It's $50 a pill because it is a very low volume drug. It's usable only by a few thousand people world-wide every year, and it only extends life by 3-6 months. As such the development costs can only be recovered if the cost of the drug is quite high.

The action by India threatens the development of similar drugs. It's a very questionable move.

Re:Just keep in mind the tradeoff

[the eric conspiracy]

There won't be 1 million uses of this drug even if it were free. It has a very small market.

Re:Just keep in mind the tradeoff

[Canonical Coward]

But consumers are not meant to have any say over their prescriptions, and by that I mean that the choice of what prescription you're walking out of the doctor's office with at the end of the day should still be the doctor's and not yours (obviously you should still have the right to refuse and the right to seek a second opinion, of course).

If that is what your doctor is telling you, then you need to find a new doctor IMMEDIATELY. You've been hoodwinked by a power-tripper, or someone who is scared that you'll find out he's not as current or all-powerful as he's pretending to be.

Every good doctor I've seen in the last decade has made it clear that I am an active participant in the process and what I need and want is an important part of the decision making process.I am not simply a robot showing up to be thumped and prodded and then swallow whatever pill he tells me to.

And every BAD doctor I've been to in the past decade has told me exactly the opposite. I had the "pleasure" of a PA yelling at me over the phone that she was the one who knew best about what I needed to do and that if I did exactly what she told me to do that my life would be a hundred percent better. Yes, that's what she told me, and guess what? She lied. That's the same PA who informed me of one set of test results by having a medical equipment company salesman call me to find out when he could deliver the stuff the PA had prescribed. "Yeah, you got a bad case of X", the salesman told me.

The "consumer" is called a "patient", and the patient is part of the process. Telling them they have no business being involved is just patently insane.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Reps can't buy lunch or dinner anymore for doctors.

Re:Just keep in mind the tradeoff

[Rockoon]

On the opposite side, if the drug companies no longer develop new treatments; would a non profit based entity (govt, charity) do the work? and if they would then perhaps that is whats best for humanity?

What are the incentives then? Research for the sake of research? Fame without fortune?

Yes, governments throw money at research all the time.. but its a willy-nilly shower of small bundles of cash often for completely insane things. Did you know that a certain kind of beetle will only attempt to mate with a certain kind of Australian beer bottle? Did you want to know? Did you know that you funded this revelation if you live in the UK, America, or Australia?

Government doesnt care, nor is it motivated to maximize the common good.

Re:Just keep in mind the tradeoff

[the eric conspiracy]

If it's going to be free how are you going to pay for research, development, testing, manufacture and distribution of the drug?

Re:Just keep in mind the tradeoff

[Ihmhi]

I don't that strategy is viable.

I 100% your post.

Re:Just keep in mind the tradeoff

[Anubis IV]

I'm clearly failing to communicate here, since I don't disagree with you entirely, yet you clearly think you disagree with me entirely.

Yes, you should be involved. I had hoped I made that clear, but I apparently did not. Yes, you should talk to your doctor about your prescription. I said as much as well. Where I differ is when the actual decision gets made. I'm saying the doctor is the one making the final call on the prescription being made, not you, and that's the way it should be. They're equipped to decide, you're not. You can discuss all of the relevant issues with them, but if they tell you that you simply don't need X drug despite your claims to the contrary, it's their decision on whether or not to prescribe X drug, not yours. That's where I draw the line. And as I said, if you disagree, you can refuse or seek a second opinion.

Hopefully I've been a little more clear this time. Where do we still disagree? Where do we agree?

Re:Just keep in mind the tradeoff

[paiute]

You must've missed Pfizer at 31, and Johnson & Johnson at 40. Those two make more than Kraft Foods
What other industry can possibly have that level of markup and keep customers?

Somewhat different. Pfizer and J&J need robust R&D departments because the fruits of that department become public property after 17 years. On the other hand, no other company on the planet is going to be able to ever sell Jell-O as long as there is a lawyer who draws breath.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Sorry, but bws111 is right. That's primarily how doctors find out new drugs.

Re:Just keep in mind the tradeoff

[realityimpaired]

Marketing, in the US, is designed to develop a pull from the patient, rather than a push by the doctor. Due to changes in the law, drug companies now want to create demand, for patients who need a drug type, for their prescription drugs. It's about market share, not increasing the size of the market.

There's a reason that drug ads in Canada aren't allowed to mention both the drug name, and what it does in the same ad....

Maybe some day the US will follow suit. But I doubt it.

Re:Just keep in mind the tradeoff

[paiute]

4. Doubtful. No company sells at a loss. Bayer would just avoid India completely, and not release their patented drugs until 10-20 years later (after they recover their initial R&D investment).

Wouldn't India just smuggle the drug from a country that has it and reverse engineer it?

I don't that strategy is viable.

The wouldn't need to bother. The patents fully describe the synthesis of the drug.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

I know I'm going to burn karma for saying this (wouldn't be the first time), but do keep in mind that the R&D costs for developing these drugs is paid from the profits these companies make. Now, maybe governments themselves should be doing the development instead of for-profit companies, maybe the drug company profits are too high, and maybe Bayer were dicks to charge that much for a drug in a poor country.

It's already done. The government already pays for the R&D because the company thinks that the research is too high risk. Then the company takes the profit.

Re:Just keep in mind the tradeoff

[Jaysyn]

Or, to perhaps put it another way... was the discovery of aspirin inevitable, even if it happened 5 years later on humanity's knowledge curve, at much lower cost?

I think that may be a bad example. Asprin was eventually derived from plants, willow & spiraea, and I think something naturally occurring would be something more readily discovered than something less obvious like an ion thruster.

Re:Just keep in mind the tradeoff

[KarrdeSW]

If you have the time to perform such research for every patient you have, you probably ARE NOT a doctor.

There's no magic ability an M.D. gives you when it comes to understanding drug trial reports. A few statistics classes will do more for your understanding of a drug trial than any amount of biology.

Re:Just keep in mind the tradeoff

[TubeSteak]

As for consumer level advertising: you are assuming that everyone for whom a medicine is appropriate will go to the doctor and tell them about the problem, even if they don't know anything can be done about it. This is nonsense.

http://en.wikipedia.org/wiki/Direct-to-consumer_advertising
5 of the top 10 Big Pharma companies are from Europe.
The USA and New Zealand are the only two western countries that have legalized direct to consumer (DTC) advertising of pharmaceuticals

You should read more about ethnocentrism and try to reconsider some of your views.
Especially light of the fact that Europe has cheaper health care costs and better outcomes than the USA and its perscription happy marketplace.

Re:Just keep in mind the tradeoff

[mcgrew]

Do people with joint pain go to the doctor, or do they just assume it is part of aging and put up with it (or worse, self medicate)?

I have arthritis, and have had it since I was a teenager. When I was in the USAF they prescribed a whole lot of drugs, none of which did any more good than aspirin and quite a few which harmed me. To this day, the only other drug that's at all effective is naproxin sodium, which was developed long after I was in the service.

There is one other drug that helps arthritis symptoms -- marijuana. Do I bother seeing a doctor about my arthritis? Hell no, it's a dangerous waste of my money that will do no good and possibly a lot of harm. There isn't anything they can do about it.

Is constantly feeling sad normal, or is there something wrong that can be fixed?

After my ex-wife deserted me and our family I was prescribed Paxil. After that experience all I'll say is if you're just sad, stay away from the damned doctor. Nobody should be on any SSRIs unless they're already suicidal. That is some very nasty shit.

Re:Just keep in mind the tradeoff

[punker]

Where are you coming up with this? Do you know any drug reps? Are you in the business? Getting white papers, case studies, etc to doctors is probably 70% of what drug reps do (I know more than a few of them). The other 30% is price negotiation. But all of that is drug marketing.
And this is all just a matter of accounting, because the point was "Major pharmaceutical companies spend more on marketing than R&D". The accountants put these costs under marketing.

Re:Just keep in mind the tradeoff

[Canonical Coward]

I was thinking, "They shouldn't have the ability to self-prescribe prescription medications," but the way it was phrased it sounded like I was suggesting that everyone should place themselves at the complete mercy of the doctors. That was a failure in communication on my part.

Consumers do not have the ability to self-prescribe prescription medications currently, and advertising has nothing at all to do with that. Banning ads won't prevent it, nor will allowing ads allow it. Claiming that there ought to be a ban on advertising of drugs because people shouldn't be able to self-prescribe is like calling for a ban on advertising of airlines because consumers shouldn't be allowed to fly airplanes filled with other people.

All that banning ads will do is keep information out of the hands of the consumer so they cannot as easily participate (or in many cases, know they need to participate) in the process of their own medical care. Does having that information mean that the consumer is going to run right out and buy whatever it is being advertised? Of course not, because they can't write the prescription, and the ad does nothing to change that. Does it mean the doctor is going to immediately write a prescription for whatever? Of course not. If he does, he's not doing his part in the process.

Re:Just keep in mind the tradeoff

[lgw]

by rent-seeking drug companies.

How can you possibly describe a producer who invents a product (recently) and is offering it for sale to the public as "rent seeking"? Are you simply trolling and I've fallen for it?

Re:Just keep in mind the tradeoff

[paiute]

You're missing a major contributor to academic research in point 2. 28% of funding for biomedical research comes from the US NIH. The NIH only contributes to new drugs that have a material impact on the improvement of public health. I would easily believe that 72% of new drugs to market provide little additional benefit over preceding drugs and are mostly there to pad the pockets of Big Pharma. In order to pass the FDA they only need to show that they are as effective and no less safe.

No. Drugs do not come out of academia. The goal of a scientist in academia is to publish papers. The goal of a scientist in pharma is to sell products. And you have a a gleefully optimistic view of how easy it is to get a drug past FDA hurdles an into the market.

Re:Just keep in mind the tradeoff

[Immostlyharmless]

Pity they can't just sell their drugs to doctors based on the fact that they are actually BETTER at what they are supposed to do. Generally I'd say if you have to bribe someone to choose drug A over drug B for their patients (the ones they want to keep alive in order to pay off those doctor bills) then the medicine probably isn't that great to begin with.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Aside from amortizing costs and all that, it's a balancing act with the insurance companies.

You're company X with a pancreatic cancer drug that just got fda approval. On average it extends patents lives by 90 days. So you have to price the drug to cover the four other projects you had going on that went nowhere, the cost of this one, and all the profit you can get in before the insurance company says, "fuck it, we'll take the heat on not covering that".

Now of course, that number is pretty high on all accounts. Licensing, development, trials, etc. are all expensive gambles. On the other hand, the number the insurance company will suffer on a cancer drug is pretty high because they don't want to deal with a, "Z Insurance Megacorp doesn't cover life saving drugs!" rap.

So in the end, yeah, you have pretty big numbers for anyone that can make an important, marketable drug. Lots of cost, lots of amortized costs from other things, and if you can get it out of the insurance companies, lots of profit.

Though no matter how you cut it... doing something like the article is talking about is bad for drug development and the patients that will want new, better drugs. For now though, the rest of the world will subsidize the losses on India.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Isn't that ignoring the fact that there's no reason at all to lower the cost of the drug regardless of advertising expenses? Price is set by supply and demand. If demand increases while supply stays the same (one manufacturer regardless of demand due to patents) then price goes up, not down.

Re:Just keep in mind the tradeoff

[tacokill]

NO! You can't just go around stealing designs for whatever you want and begin making it. The world does not work that way.

Haven't we been through this all before? Just because you know HOW to do something does not mean it is legal to do it. If you want to rewrite the rules, then fine. But don't sit here and pretend its fine when a government steals. It's not fine and there are real world ramifications.

Re:Just keep in mind the tradeoff

[P-niiice]

Since when does less profit = loss? Less profit (even a little less) and putting the money to good use elsewhere would be the cure for so many of our problems today, it's uncanny.

Re:Just keep in mind the tradeoff

[Anubis IV]

You and I are arguing in too many places (and for reasons I still don't entirely grasp). I'll wait for your response to my post above and will respond there, since it makes points that are relevant to what you said here.

Re:Just keep in mind the tradeoff

[next_ghost]

And it's still not education. Actually, in places where medical care is run by the state, we call this corruption.

Re:Just keep in mind the tradeoff

[lgw]

Bayer's profit margin is about 6%. Far less than Apple or Google or the like. Greedy? I hope so - far more people are motivated by greed than altruism, and I want whatever motivation cures cancer! I would you prefer eveyrone was nice to one another, and no cure for cancer?

Re:Just keep in mind the tradeoff

[cfulmer]

Your #2 is waaay off. Yes, the basic research is often academic, but doesn't cost more than a few hundred thousand dollars -- the institution then licenses the candidate to a commercial enterprise for a royalty (2% is typical). The company then embarks on a series of clinical trials which can easily cost $1B to get the drug to market, with big chunks of that money going to patients whose bodies are being used as test-tubes.

Now, for every successful drug candidate which makes it all the way through those rounds of clinical trials, there are maybe 20 which fizzle along the way, either because they're shown not to work or their side effects outweigh their benefits. The total cost of those trials may, conservatively, be another $5B (not $20B, because they don't go through all the trials). Again, a lot going to the patients whose bodies were used to test the unsuccessful drugs, with more going to their medical care if the candidate actually hurt them.

Re:Just keep in mind the tradeoff

[Xveers]

Yeah, the figures here are in millions. Now, the numbers...

Cost of Sales is another term for Cost of Goods. This involves costs directly related to production, manufacturing and delivery to customer. We're talking factory wages, raw materials, lease payments on factory space, etc.

Selling, informational and admin would encompass management, marketing, sales discounts, and possibly some of the regulatory costs (this depends on exactly how they market things)

R&D would include actual researchers wages, patent litigation fees (possibly. might be under admin), as well as other costs related to R&D like lab leases

Re:Just keep in mind the tradeoff

[Anonymous Coward]

If you spend a million dollars on R&D and your budget is a billion dollars, then R&D is a small percentage of the budget.

If you spend a million dollars on R&D and your budget is two million dollars, then R&D is a large percentage of the budget.

Your example with absolutes numbers does nothing unless we have all other expenditures to compare the R&D costs to.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

That's actually not true. Marketing can cause the number of people who "think" they need a drug to increase (either through direct sales, or by convincing doctors it is needed). Perceived need is no different from actual need in this case. "Marketing" also includes the cost of freebies / payola to doctors, and has a high ROI.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

I cannot recall the name of the drug but in the US there was a government paid researched drug that was then taken by a big Pharma corp who have strangle hold on it and now sell it at huge cost.

Re:Just keep in mind the tradeoff

[freshlimesoda]

To find open doors to Indian market will take care of any R&D costs of any nature for any pharma company. "6% royalty on net sales every quarter to Bayer" - given this fact, they'll probably reach their break-even sooner. Really, healthcare system in India is much better than in US. Not be given exposure to markets like India and China, Bayer will die its own death in US. Forget morality, its simple economics.

Re:Just keep in mind the tradeoff

[cryptolemur]

Ahum, regarding new drugs, it's mostly public funding, at best 50-50 split, but then private companies get tax brakes for R&D, so it's basically from the public purse anyway. Just sayin'

Re:Just keep in mind the tradeoff

[Hatta]

Getting white papers, case studies, etc to doctors is probably 70% of what drug reps do

Still not education, because you can't actually trust an industry representative to give you accurate data. He's going to give you the results from private industry research which always err in favor of the industry. Any results they choose to share will play down risks, and play up efficacy over an academic study.

What we need is real continuing education for doctors. With classes, and tests, and papers, oh my!

Re:Just keep in mind the tradeoff

[gnick]

...things like Viagra, which are completely optional.

Describe it as optional to some aging men. Optional as in:
1) Get hard
2) Go to bed frustrated only to meet your wife's boyfriend

Sure, people lived without it for a long time, but expectations have 'risen'.

Re:Just keep in mind the tradeoff

[holmedog]

In such countries the doctors are usually determining what your ailments are and offering what they think are the best corresponding drugs. So drug companies just have to convince these experts that you need the drugs and they will be used.

In the US we call targeting an audience and trying to get them to use your product advertisement. Apparently you call it something else to get around anti-drug advertising laws.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Can you please post some real numbers to back up that statement? Give me an example on marketing costs vs. R&D for, say, Avastin. Also, research that creates a concept for a drug may well have come from academia but all the the research and development to fine tune the drug, large scale manufacture it and perform clinical trials absolutely is not done or paid for by academia.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

How do they educate doctors? By buying ads, and sending reps to talk to the doctors

That's not education.

Since when does party A presenting information previously not known to part B not equal A educating B.

Maybe if you did more than just simply refute all his statements and actually provide an explanation for why something is "not education," I would understand. The GP's comment may have been an incomplete argument that didn't fully expand on what he meant, but you have not done so in the least.

Just a few comments. An advertisement does not only include TV ads to the masses, but can be more accurately directed through medical related sources. This may not educate well about the product but does at least have the potential to inform a doctor that there is something to be educated on in the first place. Limited education is still education, technically. A rep buying a doctor lunch is incentive for the doctor to meet with the rep in order to receive said education. While the ethics of doing so (for both parties) may be in question it is at least related to getting that doctor educated.

Re:Just keep in mind the tradeoff

[sjames]

Considering that we're talking about a GOVERNMENT, I guess the law there is what they SAY it is. They rewrote the rules, so I guess you consider it fine.

As for the real world ramification, I'm guessing it is that more people with cancer in India will get treatment.

Re:Just keep in mind the tradeoff

[superwiz]

Advertising actually save money because it encourages more sales.

That's an often repeated lie, but you can be forgiven because of how often it is repeated. If the drug is that essential marketing it is very cheap. But even if it weren't, the main cost of producing a new drug is the research and legal fees involved in regulatory approval and related trials.

Academic research is funded by drug companies and other corporations.

The money that comes out of that pot still comes into that pot from the drug company profits.

They don't make that much profit. I don't see Bayer in the top 100.

Their business strategy is theirs to develop. If they had a long-term strategy for recouping the costs of research, then it may appear not to be profitable initially.

Doubtful. No company sells at a loss. Bayer would just avoid India completely,

Which part of compulsory licensing don't you understand? They now have to provide licensing at a loss in order to stay in India at all.

Re:Just keep in mind the tradeoff

[Hatta]

At the end of the day, it's not the doctor's body. It's your body. It should be your choice what goes into it. Whether that's Paxil, Viagara, Cannabis, or Arsenic. It's your choice, period.

Re:Just keep in mind the tradeoff

[Chakra5]

Marketing assumes that the marketer has a vested interest in molding the marketees perception to their own. The actual facts are somewhat to completely academic.

Education starts with the facts and in a perfect world avoids bias.

Marketing reps for drug manufacturers are educators only what their product actually factually beneficial. When that becomes tenuous, their bread is still buttered on the side of their employers. the same goes for TV advertising.

In short, Education is incidental in marketing.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

A high school friend is a pharma drug rep. She was saying that the Viagra patent is going to be up soon and you will see generic versions within a couple years. I imagine there will be a corresponding increase in incidents of people going to the ER because they have an erection that's won't go away after four hours.

Re:Just keep in mind the tradeoff

[superwiz]

I think you take doctors to be researchers constantly going through myriad of pharmacological data coming out every year. It's not so. Not even close.

Re:Just keep in mind the tradeoff

[bws111]

Define better. All medications are a tradeoff between getting the desired effect and avoiding side effects. Medicines do not have the exact same effect on every person. What is a tolerable (or non-existent) side-effect in one person may be intolerable in another. What is very effective on one person may not produce the desired result on another. Samples are a good way for a doctor to see if a particular medicine is right for a particular patient. The alternative is for the doctor to write a prescription, the patient buys the drug, then finds out a few days/weeks later that the very expensive drug is not right, and he gets to buy ANOTHER drug.

Re:Just keep in mind the tradeoff

[zero.kalvin]

I was replying to a comment, the GP said :

Now, maybe governments themselves should be doing the development instead of for-profit companies, maybe the drug company profits are too high

My argument is simple: There is something inherently wrong and morally decadent with a person dying because the drug that can save him is too expensive for him. Now I wasn't offering a solution, harsh may I was with my words. But I know how the world run in a specific way, but that doesn't mean I critique it, or can't wish it was different. And just because we can't think of a specific way to offer a pill for free that doesn't mean there is none! And finally I did say:

( and profit )

.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

In this particular case it only applies in India, which presumably isn't the market for which Bayer developped the drug in the first place.

  I sort of agree with your premise that private companies need to invest a lot in R&D and they must have a return on this investment or else they won't do the research inthe first place BUT :

  The purpose of the pharmaceutical industry, from the perspective of society (i.e. us) isn't to make profits and create jobs (at least it's not its main purpose). Its purpose is to provide drugs that are efficient and can cure people, and to cure people these drugs have to be affordable. So one could argue that private companies are not suited to do pharmaceutical research, OR that they should be ready to compromise on their margins. India represents a market of 1.2 billions consumers for Bayer, surely they can do something about their prices to have access to such a market.

Re:Just keep in mind the tradeoff

[mjpaci]

There are three types of drug ads in the US - http://www.fda.gov/Drugs/ResourcesForYou/Consumers/PrescriptionDrugAdvertising/default.htm

The ones that mention both the drug and what it is indicated for are called Product Claim Ads and must enumerate the benefits and the risks including potential side effects. Reminder Ads give the drug's name but not what it is indicated for and Help-Seeking ads describe a condition does not recommend or suggest a specific drug or drugs.

Re:Just keep in mind the tradeoff

[hairyfeet]

Actually I hate to break the news to ya but not only is the highest expense by far of big pharma marketing but a great number of these drugs were found and researched by universities, you know, those things we tax payers support to a great extent with student loans and grants? yeah those things, who then sell the patents to big pharma. frankly the only real expense they have any more is clinical trials and I believe a lot of that could be streamlined by cutting out a lot of the CYA that goes into those by allowing those with the disease in question to sign up to be long term test subjects. Hell that was the only way I could get the miracle drug i'm on, Remicade, as the wholesale cost is $25k and the retail cost is over $100,000 a year but the drug companies have always loved me because other than psoriatic arthritis i'm in perfect health. Liver, kidneys, blood, everything tests 100 percent perfect which makes me perfect for long term study.I just lucked out my doctor had signed on for one of the long term case studies and put me on the top of the list.

So lets be honest folks, the 8000% markups on many of these drugs have nothing to do with breaking even or even getting a little ROI and EVERYTHING to do with the ass cancer of the planet, which is the financial markets and the plague that is speculators. if you don't make iMoney and CONTINUE to make iMoney then your stock nosedives and may never recover. We need to get rampant speculation and the endless drive for higher stock prices out of the system, i would argue by having massive taxes on those that flip stocks after minutes or even seconds and reward those that do long term investments with lower taxes.

Re:Just keep in mind the tradeoff

[Dog-Cow]

You are fairly stupid. Continuing Education for doctors (which is in place anyway) won't help them understand the trade-offs of different designer drugs. You may think the Reps are full of it and are lying through their teeth, but it remains a fact that there's no other place to get detailed information on new drugs. Until doctors know of it, no one is using it outside of trials. Trials which are run by the drug company.

Re:Just keep in mind the tradeoff

[Hatta]

On the other hand, advertising, by definition, increases profits or it's a waste of money

Quite a lot of advertising wastes quite a lot of money.

Thus, advertising actually _decreases_ individual costs because they sell more units and can thus amortize the overhead costs (which are the primary costs) across more units.

What about the individual costs to the individuals who were mislead by advertising into taking drugs they didn't need?

For example, suppose your overhead is $1000, which cores things like labs, employees, trials, and other failed drugs and the cost to manufacture is $1. If you only sell 100 units, you must charge $11/each to break even. Suppose you then spend $200 on advertising and sell an additional 100. Now your break-even price becomes $7/each. The advertising money actually reduced the unit cost.

But now there's 100 people out there who are taking a drug their doctor didn't think was necessary. You've broken the first rule of medicine, do no harm.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

3. That could be because they are not a US company. If they were they'd be sitting right around 50 on the Fortune 100 with 46bil in revenue

Re:Just keep in mind the tradeoff

[Anonymous Coward]

You guys just botched this argument 6 ways to sunday. How many TV ads do you see for cancer treatments?

Yes, I'm sure Pfizer selling Viagra in a market with alternatives involves a lot of ad dollars. It's probably the same for everyone marketing SSRI's.

Effective cancer treatments, on the other hand, are extremely difficult, expensive undertakings that have to subsidize the losses on other failures. You're not paying $5,000 to cover advertising costs, and the $40 this Indian company gets to manufacture for isn't encouraging drug development.

Re:Just keep in mind the tradeoff

[rs1n]

I'd like to add that in determining the cost of "selling, informational and administrative expenses" they probably include their assessed value of the samples which they give. And if they are charging excessively high prices, that gets figured into the costs of samples. If pill A costs $1,000 (but arguably should only cost, say, $100), think of how much of that inflated 4.6 billion is inflated by ridiculous prices.

Re:Just keep in mind the tradeoff

[nbritton]

The number of diseases out there is, relatively, finite. So assuming a drug can provide complete system control with little to no side effects, why do we have to keep on inventing new drugs for that disease?

Their are plenty of drugs out there that worked great, but got dumped because their patent expired. To be replaced by the "Next Big Thing", that is covered by patents, because the company sabotaged the old drug.

Worse yet is the complete lack of incentive for drug companies to find cures. While they obviously don't want their customers to die, I speculate that they also don't want to loose customers by curing them with a one time treatment. These are public corporations, so their objectives and motives should be clear to anyone, which is to basically make money for shareholders and upper management...

Let's say you're CEO of drugco, two of your scientists come to you proclaiming that they found a new treatment for X. The first scientist says he found a cure that only needs to be taken once and is easy to make. The second scientist says he found a medication that can be taken daily and is easy to make. If I were beholden to shareholders I may pick the daily medication because it would be stable recurring revenue and the price equilibrium would be maximized in our favor. Additionally had I released the cure I would have made the other medication obsolete. So at that point once the patent runs out, or the Indian government gives it away, my company is done for. It is way too much risk to assume something else is around the next corner without first maximizing the value of what you already have.

So anyhow, I think a major conflict of interest exists with for-profit drug companies. The government is best suited to incubate these projects since they benefit all of mankind; in therory only a finite amount of work needs to be done and the reward is essentially infinite. Assuming the government does get into the drug business, would we end up with something equivalent to the military-industrial complex?

Re:Just keep in mind the tradeoff

[Anonymous Coward]

4. Look I mean no offense but either you didn't read the article OR you fail at basic logic :

  TFA states that the india generic manufacturer is going to produce the generic drug and sell it for 3% of the original price from Bayer. that means either of those 2 things :

  Indians are geniuses who can produce expensive drugs for a fraction of their production costs (...)

  OR The production&&Distribution cost of the drugs that Bayer sells represents less that 5% of its prices. And with 95% gross margin I think they will see a return on investment quite soon...

  So maybe, and just maybe, Bayer sells its product at let's say 15% of its original price, and then the indian government will let them make billions of the suffering of its people, but right now it's really a no brainer...

Re:Just keep in mind the tradeoff

[stjobe]

If I had mod points, I'd mod you up so high it'd hurt. Well said, well said indeed.

Re:Just keep in mind the tradeoff

[superwiz]

Most R&D medicine is taken by volunteers who don't get paid for being part of the clinical trials.

But the doctors conducting the trials are not volunteers. Not are the companies producing medical and chemical equipment they use. Nor are the labs doing their tests. Nor are the lawyers filling paperwork by the pound that is related to regulatory approval.

Most of the scientists and others conducting the clinical trials don't get paid

Outrageous lie.

The government pays for a ton of R&D and contributes a lot to R&D.

Roughly 5% (6-7billion out of the 300-400 billion market), but ok, "tons".

Pharmaceutical corporations don't get independently audited to ensure that their government established monopoly prices are justified.

They are justified by the virtue of the fact that they ask for them. In exactly the same way that the gas stations are justified in charging the price for gas that they see fit. If you don't like, don't buy it. The world does not owe you a cookie. And if demand that government makes the cookie maker work for the price other than the one they name, then you, sir, are advocating slavery. And you have 0 moral standing to judge others.

Re:Just keep in mind the tradeoff

[superwiz]

How much did they spend on acquisition? Most research today is done by pharma upstarts which do research at a loss and then get bought out once they have a product. This fuels further research because the most of the money that is transferred in the buy outs go on to start new research companies.

Re:Just keep in mind the tradeoff

[CosaNostra Pizza Inc]

The pharma companies make huge profits.

Re:Just keep in mind the tradeoff

[mjpaci]

And the EVIL Exxon Mobil's Net Profit Margin is 8.68% and its Operating Margin is 15.06% compared with the EVIL Microsoft's of 33.1% and 38.3% respectively.

Re:Just keep in mind the tradeoff

[john82]

Actually, in places where medical care is run by the state, we call this corruption.

Really? In the States we call that ObamaCare (or RomneyCare if you're in MA).

Re:Just keep in mind the tradeoff

[chfriley]

Viagra and Cialis are NOT "COMPLETELY OPTIONAL."

If you are a prostate cancer patient increasing blood flow to the area for up to 3 years will improve healing - for nerve damage and the like. They are only "optional" in the sense that physical therapy is optional or that statins are optional. You want healing for both continence and potency among other things.

A little knowledge goes a long way, but to claim that it is completely optional ignores the studies showing the benefits for at least prostatectomy patients.

The example still holds though: if Doctors and patients are not aware of the benefits of a drug, they won't prescribe it.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

... acne suppression drugs and other vanity shit) as you don't need it to survive. ...

Hmmm. There is actually EXTREMELY little you need to survive. You don't need any dental care today - it is easy to survive without teeth. Nowadays, you can do without most of your limbs, and you probably don't need to see either. Shall we get rid of all drugs that might help you keep those?
Severe, chronic acne, particularly in the Britney/Justin culture we live in, can be a truly debilitating condition. I had it pretty bad was prescribed that nasty drug that works but seriously messes with lots of other things - Roactune. It's horrible, and dangerous but lots of people are very, very happy to take it. If you've never had 15 people call you pus-face in a single day then you will probably make comments like this - if you have you just might not... And I could have done without it - many had it far, far worse than me...

Re:Just keep in mind the tradeoff

[LifesABeach]

It sounds like you know alot about this stuff. So what is the "two bath tub" commericals all about?

Re:Just keep in mind the tradeoff

[Anonymous Coward]

and we are talking expensive countries here, where most stuff is selling at prices similar to those of the US except for know ripoffs such as Verizon cell phone service or internet

you must not be referring to Australia. Those people get reamed over the cost of many goods and services. Some vehicles are sometimes 2-3 times the cost of what they are in the US.

Re:Just keep in mind the tradeoff

[Bert64]

Profit and healthcare simply do not belong together... Any system where corporate greed results in deaths and/or suffering is morally bankrupt.
Research should be conducted by governments and non profits, the results published in the public domain and then companies can compete to produce the drugs as cheaply as possible.

If Natco can produce a drug for $175 while still turning a profit, and it's hard to believe Bayer would have overheads higher than Natco, infact they are likely much lower due to economies of scale... Charging $5500 for something that must cost under $175 to produce is reprehensible in any case, let alone one where people suffer.

And extortionate prices are not the only negative of for-profit drugs companies... It's also far more profitable to temporarily alleviate the symptoms than to actually cure the underlying problem, so this is what corporate research will be aimed at.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Agreeing with you. Why would a company take the risk and spend millions on research and developement only to have another company take no risk and yet reap the profit. Many drugs NEVER make it to the market. Yet, drug companies who develop new drugs have to use profits on drugs that do make it have to subsidise those that don't make the cut.
Allowing an Indain company to manufacture a generic may look like a nice humane fix in the short term, but in the long term it means less new drugs, less miracles down the road. If someone says, well India is far far away from the US, then I ask what is to stop Mexico from doing the same or people just mail ordering from India? Nothing.

Re:Just keep in mind the tradeoff

[thoth]

Sounds like the perfect spot for government to step in and address this free market failure (no company pursues the work due to concerns about profitability, etc.)

If the drug is so critical for saving lives, maybe it'll get spun as a "military" technology, and will be developed like the space program, internet, GPS, nuclear tech, etc. Or maybe it'll get funded like the US Interstate Highway system, seen as critical infrastructure (at least back then) and funded.

But yeah, the free market isn't some magic box that is guaranteed to crank out useful improvements. If it doesn't address something then a gov't will have to nudge (kick, drag it screaming) along.

Re:Just keep in mind the tradeoff

[Artraze]

No. As I said, this ignores the basic market dynamics that set the price in the first place.

Riddle me this, if what you say actually applies, why don't they just charge $1+ million? Well, at that point it becomes obvious: people won't pay it.

The demand curve describes how many people are willing to buy the product at a given price point, while the supply indicates how many people can buy the product at a price point. Now, while it is true that a monopoly can control the _quantity_ of the supply, it cannot control the _costs_. The means that the supply and demand curves are actually identical as in a non-monopoly situation. The difference occurs in determining the final market price/quantity. In perfect competition the price is where supply and demand intersect, meaning that no profit is made. In a monopoly, however, the quantity isn't not set by the supply curve, but rather the company itself. The price still follows the demand curve, and the profit is the difference between that and the supply curve. They will, or course, set the quantity produced to maximize profit, but this point is still completely determined by basic market dynamics.

In short, in a market with no competition the value is set based on maximizing profit, while in a market with perfect competition the value is set based on minimizing profit.

Anyways, this post is taking far too long, so to wrap it up, I'll say that what you are missing here is that the supply curve doesn't look like an increasing line like they show you in school, but actually more like a "U". At very small quantities the fixed costs dominate (e.g. R&D), at medium the economics of scale and amortized fixed costs bring the price to a minimum, and then at high quantities limited resources start to drive the cost up once again. The thing about drugs is that the fixed costs are gigantic and the incremental costs and resources are tiny. This means the supply curve ends up looking more like a "\_" than the school example of "/". Draw a graph of that vs a classic demand curve and then set the market to maximize profit. Note how scaling up the demand curve actually drives the cost down.

Bonus: see the picture on this blog. I didn't read it, so I dunno how good the post is, but I figure the illustration is worth it:
http://economicobjectorvism.wordpress.com/2007/07/27/howto-minimum-efficient-scale/

Re:Just keep in mind the tradeoff

[Kalriath]

4. Doubtful. No company sells at a loss. Bayer would just avoid India completely, and not release their patented drugs until 10-20 years later (after they recover their initial R&D investment).

No they won't. In fact, India is where all the American pharma companies send their drugs to be mass produced. You'll probably find that the company that is licensing the drug is the same one that has been producing the branded version for Bayer. And regardless, the Indian company can just look at the patent, and reverse engineer it (since legally the patent must be sufficiently detailed to allow someone in the field to recreate it).

Re:Just keep in mind the tradeoff

[Securityemo]

After the year-and-a-half stint on SSRIs I had a year ago I've resolved to use them only if I somehow wind up with clinical depression or get a crippling disease that ruins my life anyway. Undeath is a drastic solution and not one that should be applied lightly. But hey, at least they do work.

Re:Just keep in mind the tradeoff

[batkiwi]

For instance, there are endless TV ads describing a list of symptoms and instructing the viewers to diagnose themselves with a disorder X and ask their doctor for a prescription for treatment Y

Fortunately that's illegal in most countries apart from the USA.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

J & J is hardly a "drug company" and don't know about Pfizer being number 31 as I'm wondering what standard they used, but I do know that it has the largest research budget and its a global company. It's also been known to lose millions on just one failed drug so remember that when you are balancing the scales. Also remember that these companies are as you note publically owned and I don't know of too many people who would invest in a company that is not profitable.

Re:Just keep in mind the tradeoff

[Artraze]

> Quite a lot of advertising wastes quite a lot of money.

No one can predict what will be successful and what won't be. The important thing is that in the aggregate the adverting works which is why people do it.

> What about the individual costs to the individuals who were mislead by advertising into taking drugs they didn't need?
> ...
> But now there's 100 people out there who are taking a drug their doctor didn't think was
> necessary. You've broken the first rule of medicine, do no harm.

First, it is absurdly presumptuous to think that all 100 people don't need it. After all, clearly they, their doctors and their healthcare provider all thought is was worth it. With as many safeguards in place as there are, this issue is just a red herring. The real problem in these cases is with doctors prescribing drugs that people don't need, and stopping advertising won't fix that at all.

I care a lot more about useless antibiotic prescriptions are far more dangerous than whatever is being advertised, and it's a lot more common to.

Re:Just keep in mind the tradeoff

[BigFire]

I guess the urge of License Raj is just too much to resist. Bring on shortage. You've asked for it.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

1. Advertisement, - what advertisement? There is no need to advertise a life saving drug!!! Any good doctor should know about it from professional publications. Drug companies spend tons of money on those ridiculous ads that go like "if you feel itchy ask your doctor about scratchy".
2. Since "academic research" is done by outsourced scientists in India, working for peanuts, the R&D cost is really a drop in a bucket. Also it kinda gives Indian people the moral right to demand lower prices for the finished product.

Re:Just keep in mind the tradeoff

[Kalriath]

Drug companies have zero motivation to cure illnesses. They are motivated to treat the symptoms of illnesses, and extend the lives of those people who have them while still not treating the illness itself.

Re:Just keep in mind the tradeoff

[Flammon]

Advertising? Are you kidding me? Satan's little helpers?

http://www.youtube.com/watch?v=gDW_Hj2K0wo

Re:Just keep in mind the tradeoff

[Rich0]

Well, Bayer is being dumb to not charge market-appropriate rates - it really is going to make more money at the lower price point in a country like India. Most likely they're concerned about that product making it back to the first world. However, they would have had more control over that if they had played ball in the first place.

As far as development for non-profitable drugs goes - I would like to see the NIH fund drugs end-to-end and make them royalty-free (or maybe charge royalties to first-world countries that don't reciprocate to encourage others to do the same). There are actually drugs that were developed and made free to poor countries by private companies, but they are few in number. The problem is that it really does cost hundreds of millions of dollars to develop a drug (counting the cost of failures - which applies just as much to charity work), and the drugs still come with liability (how much goodwill do you get if it turns out your free treatment for hypertension causes cancer - even if you escape liability?).

We don't ask game vendors to come out with AAA titles for highly-detailed air traffic control simulators, or train simulators, or other markets that have little value. So, I don't think it is fair to ask private industry to finance charity work either. If we want to see it happen just have the government fund it. I don't think that fully government-sponsored and royalty-free drug development needs to be limited to rare diseases either.

Re:Just keep in mind the tradeoff

[zill]

Last year Bayers spent €227 million to acquire 4 companies, only one of which is human health related (the other 3 are animal health and GM food related). That lone human health pharmaceutical acquisition cost €88 million, which is tiny compared to Bayer's own R&D expenses.

Taking a look at the longer term, Bayer spent €732 million in pharmaceutical related acquisitions from 2008 to 2011:
2011: €88 for Pathway Medical Technologies
2010: €0
2009: €43 for SkinMedica, Inc
2008: €601 million in total; €227 million for Possis Medical Inc, €265 for the OTC medicines division of Sagmel Inc, €109 million for Topsun Science and Technology Qidong Gaitianli Pharmaceutical Co. Ltd

Over that same period Bayer spent €6.6 billion on in-house pharmaceutical research.

Note that the acquisitions are very sporadic. Looking at 2010 or 2008 alone for example would give very misleading results, which is why I had to sum over 4 years. Maybe if you look back further a different trend will emerge. I stopped at 2008 because it's last year with a HTML version of financial statements readily accessible. PDF versions are available all the way back to 1999.

Re:Just keep in mind the tradeoff

[Fnord666]

but what the drug companies are really hoping for is that a layperson will be convinced they have X (even if their regular doctor tells them they don't)

But then they didn't need it and the number of people who need the drug remains unchanged.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

handwriting analysis 4 the win, tiger.

Re:Just keep in mind the tradeoff

[guruevi]

1. Drugs shouldn't be advertised because it leads to consumerism of drugs which is a lot more dangerous to one's health.
2. Academic research is largely funded by the government and individual donations. I work in the field and it's very rare to see drug companies funding any type of research
3. Bayer's profit is in the billions and 2011 Q3 had it's profit doubled in the emerging market.
4. There are a lot of drug companies out there and they would be glad to cannibalize Bayer's share in a large, growing market like India or China. Most research is again, government funded and open, most drugs have alternatives from several companies and it doesn't take 10-20 years to recover their investment. I don't know if you know the processes in those companies but they will cancel internal research if it isn't projected to turn a profit anywhere soon.

Re:Just keep in mind the tradeoff

[Hatta]

Since when does party A presenting information previously not known to part B not equal A educating B.

Biased information can be of negative utility. That's not education.

Re:Just keep in mind the tradeoff

[Anachragnome]

"If/when this drug is discovered to be doing something bad, who's responsible? This mindless manufacturer? I'm betting not. The Indian governement? HAHAHA. Bayer is the one at the end of the barrel and they won't have any 'excessive profits' to pay damages with. Woohoo!"

Let's not forget that India is also side-stepping the costs associated with the regulation of drug development, costs that we American tax-payers cover in the form of our Food and Drug Administration budgeting. They are not just sticking Bayer with the costs of drug development but also sticking us tax-payers with the cost of making sure Bayer is doing it safely.

Granted, we would have spent that money anyways, and I suppose that in itself is enough reason to not be concerned about the fact that we are essentially subsidizing another country's healthcare system, but when you combine that with the fact that WE don't get these kind of cost savings from our own "healthcare system", it starts to grate the nerves.

Re:Just keep in mind the tradeoff

[frosty_tsm]

They can take a 97% decrease in price and still remain profitable? What other industry can possibly have that level of markup and keep customers? It is only possible because of patent restrictions, and a "captive market" where people die or have horrible illnesses when they don't take your product.

That hasn't been proven here. What has happened is that a generic brand drug is being sold with (most-likely) less quality control at 3% of the name-brand price while contributing only 0.18% of the original price back to R&D. It is unreasonable to think that Bayer could make the same price move in all markets.

Re:Just keep in mind the tradeoff

[Hatta]

The important thing is that in the aggregate the adverting works which is why people do it.

Does it really? How do you measure the net returns to the economy from advertising? Nobody really knows how well advertising works. All they can do is pick out a few examples where it clearly did work, and hand wave the rest away for lack of data.

The thing is, the success of advertising is judged by the advertiser. What we really should care about is the end user. Is he better off with this product he wouldn't have purchased except for the advertisement? If not, the ad was unethical. That goes for every type of ad, not just drugs.

After all, clearly they, their doctors and their healthcare provider all thought is was worth it.

Only after swallowing a heaping helping of bullshit from the pharmaceutical company.

With as many safeguards in place as there are, this issue is just a red herring.

Such as? What safeguards are there in place to stop the overprescription of non-scheduled drugs?

The real problem in these cases is with doctors prescribing drugs that people don't need, and stopping advertising won't fix that at all.

Stopping advertising won't eliminate overprescription, no. But allowing advertising certainly exacerbates it.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Well, you can go to your doctor and complain about anything that bothers you. The doctor will ask whether you feel certain symptoms and may diagnose your condition. Any way, if you are serious about the problem that you don't have professional knowledge of, it's better to ask professionals. Passengers do not tell the pilots how to fly the plane, but somehow, when it comes to their own body, they say "I've read some tabloid article and now think that I have such and such disorder, give me prescription for this drug".

Re:Just keep in mind the tradeoff

[pseudofrog]

For you Paxil may have been nasty. But SSRIs are known to have vastly different effects on different people. I wouldn't give a broad recommendation to stay away from them unless you're highly depressed.

Re:Just keep in mind the tradeoff

[Kalriath]

Of course TPPA will make that effectively illegal. Fucking USA.

Re:Just keep in mind the tradeoff

[Phrogman]

Keep in mind that its illegal to advertise drugs in Canada in most cases. Inside a medical journal, probably okay. On TV, not so much. The advertising costs in the US are so high because you allow pharma to advertise everywhere - telling customers to self-diagnose effectively, so that they go to their doctor demanding a drug they may not need

Re:Just keep in mind the tradeoff

[Canonical Coward]

I'm saying the doctor is the one making the final call on the prescription being made, not you, and that's the way it should be. They're equipped to decide, you're not.

That is absurd and utter nonsense. The PATIENT makes the final call. The doctor is not equipped to decide all issues regarding quality of life for anyone except himself. I've already given one example where the doctor's "final call" was a call to berate the patient for failure to follow instructions that the "doctor" hadn't even bothered to give to the patient, and another where the doctor's "final call" would be to issue a prescription for a drug that would have been the final call for a pilot.

The doctor has information about what drugs do what things, and what drugs shouldn't go together. That doesn't mean the patient shouldn't have the same information, and shouldn't be provided current information through outside means. Banning ads would not solve your issues with "self-prescription" or whatever, since self-prescription isn't legal already. You're trying to solve a problem that doesn't exist.

If your doctor has brainwashed you into accepting his word as final, then you need to find a new doctor. You're being set up to be just another cog in the medical machinery, getting the stock answers to the stock problems and doing the same thing every other cog does because it's easiest for the doctor to write a scrip and move on to the next patient. You're being trained to do what the doc says because it is simpler for him to prescribe the same thing to you that he did to the last ten people with the same problem, and it takes time to pay attention to what you need and want and what other options there are. Cookie-cutter medicine. HMOs love it.

Bad doctors want you to say what you are saying. Good doctors don't. I've come across enough of both in the last decade to be able to tell the difference, and to differentiate based solely on the "I have the final say" attitude. What's interesting is that the bad doctors I've had were all PAs under the control of one MD, so it's hard to tell if the attitude was pushed on them from the top or was part of their PA training. I'm betting that it is a little of both. The PA worked for that MD because that MD supported the "do what I say" attitude the PA was taught.

Re:Just keep in mind the tradeoff

[lgw]

That was a cool line for a bad guy in a movie, sure. But real corporations don't think that way - not out of altruism, but simple this-quarter-ism. The kind of long term vision required for that sort of conspiracy theory just isn't to be found around the modern company (and if it were, no doubt someone would realize the far greater long term downside of getting caught at it - so you're proposing a very specific level of foresight here).

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Viagra is currently $8-12 dollars per pill *with insurance*

I know of some people that need to take 4 Viagra per day for their circulatory condition (ie. the original aim of the medication). When contacted, Pfizer said that there shall be no exception in pricing for people that need the drug to keep living vs. people that use it for recreational use.

$30,000/yr in medical costs per year just because the company wants to be an ass about it..

Re:Just keep in mind the tradeoff

[Hatta]

You are fairly stupid. Are you unaware that half of drug R&D is publically funded? Do you think the industry doesn't publish it's research? There's no reason a continuing education program couldn't access the same data the FDA uses and provide objective information to MDs.

As for the continuing medical education that exists, it's laughable. If you want proof, try this. Next time you're prescribed a drug, any drug, ask your doctor how it works.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

No amount of marketing can change the number of people who need a drug. That is fixed

Because there is one "correct" drug for every situation? I mean, it's not like there are multiple drugs that do similar things and new drugs aren't being invented every day that might make more sense for someone who is already on a particular drug.

That would be crazy talk.

Re:Just keep in mind the tradeoff

[ae1294]

It sounds like you know alot about this stuff. So what is the "two bath tub" commericals all about?

There rape tubs. Now you know...

Re:Just keep in mind the tradeoff

[Miamicanes]

> And if demand that government makes the cookie maker work for the price other than the one they name,
> then you, sir, are advocating slavery.

You're conflating 'theft' with 'infringement'.

If India's government forced Bayer to manufacture the drugs and sell them at a specific cost, you could argue that they're being robbed, if not metaphorically enslaved (particularly if they're forced to sell them below cost). However, in this case, what India's government is doing is allowing somebody ELSE to make the drugs and sell them quite voluntarily for a much lower price than Bayer would. It's merely refusing to grant Bayer a monopoly to charge whatever they like and prevent others from selling the same product at lower cost. At worst, it's state-sponsored infringement. And, as everybody on Slashdot should know by now, "Infringement is not theft. Infringement is infringement."

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Yes, because "selling expenses" = "advertising costs" all those pills just walk themselves to the sea and sail across the ocean, and set up their own distribution networks and governmental approvals and test beds and certifications - jesus fucking christ, give me a break.

Re:Just keep in mind the tradeoff

[GameboyRMH]

Maybe "need to survive" wasn't the best choice of words, limbs and teeth certainly have important functions which could severely impact life quality, but I stand by what I said on purely appearance-based items. During my teen years I had horrible volcanic acne, I've always been ugly (and geeky) and on top of that my family was poor when I was a kid - so I'm not yelling it at you from an ivory tower of beauty and cultural acceptance.

Re:Just keep in mind the tradeoff

[DragonWriter]

How can you possibly describe a producer who invents a product (recently) and is offering it for sale to the public as "rent seeking"?

The extra price you can charge above the natural market price for a product due to a monopoly is called a "monopoly rent".

Seeking to extract such a price is "rent seeking".

Patents are legally-granted monopolies.

Seeking to protect monopoly rents in one market by refusing to sell in another market because, even with the monopoly, the prices received in the second market would be so low that flow from the second market back into the first market (and flow of purchasers from the first market into the second market, which amounts to the same thing) would reduce monopoly rents in the first market is a pretty obvious example of extreme rent-seeking behavior.

Re:Just keep in mind the tradeoff

[Hatta]

Oh no not at all. But they should take lessons annually from people who are researchers constantly going through the myriad of pharmacological data coming out every year. And definitely not industry reps!

Re:Just keep in mind the tradeoff

[tragedy]

They're "completely optional" in the cases where the advertising is necessary. In the cases where they're medically necessary the advertising serves no purpose except perhaps to get patients and doctors to choose one brand of drug that can achieve the desired result over the other. When you need medical treatment, the optional situation is to get a prescription for the drug or treatment that best suits your medical condition. The purpose of advertising is to pervert that.

Re:Just keep in mind the tradeoff

[the eric conspiracy]

You can offer the pill for free. But somebody else will suffer as a result.

It's the law of unintended consequences.

http://en.wikipedia.org/wiki/Unintended_consequences

What is unethical is to change a system so that it benefits somebody at the cost of greater suffering of others.

Re:Just keep in mind the tradeoff

[next_ghost]

I'm talking about marketers bribing doctors to prescribe specific drugs.

Re:Just keep in mind the tradeoff

[sonicmerlin]

I took Wellbutrin when I got depressed. Made me lose hair. My doctor didn't believe me, but after 2 weeks of losing more and more hair I stopped on my own. Why wait until I'm completely bald and my doctor finally accepts reality?

Thank god I stopped, because my lost hair never grew back. Sigh...

Re:Just keep in mind the tradeoff

[Zaelath]

Wait, there's eyelash extending drugs? I need those :(

Re:Just keep in mind the tradeoff

[lgw]

Only if you imagine some fantasy land in which capital-intensive research happens without patent protection. Seeking eternal monopoly on IP (as seems to be the case with copyright) is rent seeking, but an invention that was recently cleared for legal sale? No so much.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

You obviously don't know much about the pharma business.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Drug companies can also help subsidize research by universities. Part of my PhD work was to develop assays for antiviral drugs (the other portion being studies showing how the drugs work and how that informs us re the virus). Bayer basically gave us the drugs and developed new ones to test as necessary. Although it's true they were learning more about their drugs, they were also giving away portions of their IP and funding basic viral research.

Re:Just keep in mind the tradeoff

[sonicmerlin]

And how many of the wealthiest people in America are scientists?

It seems only one side benefits monetarily from the partnership.

Re:Just keep in mind the tradeoff

[zero.kalvin]

What is unethical is to change a system so that it benefits somebody at the cost of greater suffering of others.

Are you sure offering a pill for a poor sick person will have that much of a cataclysmic effect ? Plus I like how you phrased it as "somebody" against "others"! But it is not just somebody, it's a lot of people! And this greater suffering is reduced profits ? I am sorry but it seem to be what is wrong with the world is "profit"! I digress, I am not arguing that all medical services needs to be free, only that some can't be ethically run for profit pure and pure. Stopping the invasion of other countries for the oil they have is unethical because this will bring greater suffering for people who works for oil companies, military contractors and any company that produce weapons for the military!

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Okay, and how do they determine the dollar value of samples? The cost of manufacturing or the market value?

Re:Just keep in mind the tradeoff

[Anubis IV]

I think we agree on almost everything you're saying, but we're getting hung up on wording. There are a few places we seem to disagree, but they're not as significant as I believe you think. I'm not sure how to make this clearer, so I'll break out the points I've been trying to make about my own opinions on the matter (none of these are directly related to advertising or even necessarily to what you've said; they're just so I can get everything on the table).
1) You have a right to a second opinion.

2) You have a right to refuse a prescription offered by a doctor.

3) You would be wise to do your research, ask good questions, and inform the doctor of any relevent information.

4) Relevant medical information should be available and accessible to patients (how else would you do #3?).

5) The role of writing prescriptions should be left to the doctor, since they are the ones with the training necessary to do so (i.e. I'm arguing that self-prescription should remain illegal).

6) #5 does not mean the patient should abdicate responsibility in deciding their fate. It merely means that a doctor should be the only one with the ability to write a prescription. That's all. Nothing more.

Regarding ads, my issue with them, and where I seem to differ in opinion with you, is that I do not think they contain relevant and accessible information (as per #4). Ads are ads, and their purpose is to sell a product, not to inform you of the best options available for your situation. Their SOLE value (and one you've rightfully pointed out) is that they can make the consumer aware of the medication. The reason I disregard that benefit is because all of that information is already accessible online at a variety of sites that don't present it in such a one-sided fashion. The ads effectively serve no purpose. Worse yet, they are harmful.

For consumers who do not do research, acting on an advertisement leads to all sorts of problems. At a minimum it leads to a false belief that X medication is the thing they need, when really it might not be the best available or even applicable to their particular illness. It also encourages an attitude of over-medication. As people are exposed to more and more ads about illnesses, they tend to interpret every little sniffle and cough as a sign of an illness that requires treatment. They also waste time by asking dumb questions that could easily be answered with a simple check from a decent source, such as any one of the numerous sites online that will provide lists of common medications for ailments, along with the drawbacks and benefits of each.

Now, that is NOT suggesting that consumers should refrain from asking questions and engaging in critical thinking. It's simply saying that uninformed consumers waste everyone's time by acting on an ad that contains no useful information. If you're doing your research, good, and I should hope the doctors are glad to answer your questions. I certainly have no issues with that, and would actively encourage it. But if you saw an ad for X medication and want to waste their time by asking questions about it without looking into it first yourself, I think that's silly.

As for how self-prescription ties into what I was saying, I was merely using that to draw a distinction between consumers and doctors. Doctors can prescribe, so it makes sense to target them because they are the ones with that power, and no harm comes of it because they can interpret the ad through the lens provided by their years of experience and knowledge. Consumers are generally ill-informed (and can't prescribe), so they do not have the ability to adequately interpret the ad in a useful way, which leads to the ads causing

Re:Just keep in mind the tradeoff

[xero314]

On the other hand, no other company on the planet is going to be able to ever sell Jell-O as long as there is a lawyer who draws breath.

And no other company will ever sell Tylenol. Brand (trademark) protection has nothing to do with patent protection. Patents expire, medical or otherwise, while trademarks do not. Medicine does not have any higher need for R&D than any other product, but there are higher costs in brining to market do to FDA regulations.

Re:Just keep in mind the tradeoff

[DragonWriter]

Only if you imagine some fantasy land in which capital-intensive research happens without patent protection.

Actually, no, that's irrelevant to whether the behavior at issue is "rent-seeking". It may be relevant to whether allowing the monopoly whose rents the company involved is seeking is justified by countervailing public policy concerns, but it is not relevant to whether the behavior is "rent-seeking".

Seeking eternal monopoly on IP (as seems to be the case with copyright) is rent seeking

True.

but an invention that was recently cleared for legal sale? No so much.

No, wrong. Any time you seek to extract monopoly rents (which are defined as the price above and beyond the market price without the monopoly) you are engaging in "rent-seeking" behavior. That's what the word's mean, and they are descriptive, rather than normative. There may be valid public policy reasons for governments to tolerate rent-seeking behavior and, therefore, to grant allow certain private monopolies, but that doesn't transform the behavior into something other than rent-seeking. (And its very hard to see any public policy reason for any government to permit a private monopoly which causes a useful good not to be available at all in their jurisdiction when the monopolist's rent-seeking behavior leads them to not sell the product in that government's jurisdiction to protect monopoly rents in another jurisdiction.)

Re:Just keep in mind the tradeoff

[Kalriath]

Are you suggesting that the short-sightedness of corporate boards is actually beneficial?

Re:Just keep in mind the tradeoff

[Anonymous Coward]

This is the single best post ever on this board. EVER, Aus Gov't sponsors the cortical steroids im on for asthma at a cost to me of $30 a month, they pay about $190 per month when I fill a script.

Im probably going to be on this crap for the next 50 years. I'm one person in a country with hundreds of thousands of people with this condition. Do the math, they're not about fixing things.

Re:Just keep in mind the tradeoff

[tsotha]

And the clinical trials are the expensive part. Drug targets are a dime a dozen in the overall scheme of things. The hard part is getting your drug from the lab to market.

Re:Just keep in mind the tradeoff

[tsotha]

3) Yes, they can settle for less profit.

But they won't. The pharmaceutical industry isn't very profitable, as a whole, and if it becomes even less profitable investors will take their money elsewhere.

Re:Just keep in mind the tradeoff

[tsotha]

I have to believe the samples are accounted for at the full retail price of the drug and not production cost.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Where are you coming up with this? Do you know any drug reps?

I can’t speak for Hatta, but I personally know a drug rep. The largest portion of his time is spent travelling between the doctors he visits. The next largest portion of his work time is spent playing golf with doctors. After that comes lunch with doctors.

I am not saying that he doesn’t know his products or that he doesn’t provide product information to the doctors, but he didn’t become one of the top sales reps for his company by distributing literature and samples.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

tl;dr basically read 'profits are fundamentally of higher priority than the citizens health and lives'.

It never ceases to amaze me that so many so fundamentally misunderstand the reason why some things are quote unquote politically popular.

Maybe the taliban as part of their dictation of US terms of surrender will take ownership of Bayer akin to how we obtained it's ownership and then with some luck there wouldn't be a need for a generic in the first place :)

Re:Just keep in mind the tradeoff

[Johann Lau]

1. Advertising actually save money because it encourages more sales.

When it comes to medicine, the only advertisement you SHOULD need is healthcare professionals knowing how well it works, what side effects it has, and how much it costs. So ads on TV and elsewhere, or a nice holiday for the doc so he knows what to keep ordering (because let's face it, it goes way deeper than open advertisement), just distort that.

There is a HUGE difference between "results need to be published, and professionals need to be aware of them", and advertisement. The former does cost money, too, but nowhere near as much as the latter. Advertisement is there so people make BAD choices, not informed ones, it's supposed to make them spend money on things they don't need -- that just doesn't apply to cancer treatment, of all things... and even a little kid would have noticed that crucial detail. But when you're a mindless whore for money, who cares about the details.. just roll some blurb off the spindle, right? Fuck that. You're talking about boob jobs, not fucking medicine.

Re:Just keep in mind the tradeoff

[rossjudson]

Ever wonder why annual reports always lump together "Marketing and Research"? Yep. So do I.

Re:Just keep in mind the tradeoff

[mug funky]

advertizing is more than TV and print.

doctors and pharmacists spend as much time with sales reps as they do with patients.

i'm not saying it's good, but certainly hiring all those sales reps would cost something, and though it is abused, the system works to inform doctors about new drucks.

a medical journal could do it just as well... but how many GPs actually keep up to date?

Re:Just keep in mind the tradeoff

[nbritton]

As far as who pays for it, just put $100 per person per year into a world medical fund. This would genarate an annual budget of 684 billion, which is still less then the yearly United States military budget. Even with a quarter of that budget we could make a huge dent... a mere 10 cents a day... or would you rather continue spending hundreds of dollars every year for patent protected drugs?

Re:Just keep in mind the tradeoff

[Anonymous Coward]

You just hit the nail on the head.

If you're in the US and listen to the radio (can't speak for tv, I don't watch tv), over the last two months you would have been bombarded with commercials about (some drug that i dont need, or remember) stating that there's no generic form of xxxxxxx. On the day the patent protection ran out, they stopped running the ads.

I'm not sure why they did that, since most HMO/healthcare plans require the use of generics, when available, instead of the still higher-priced original.

Re:Just keep in mind the tradeoff

[kyrio]

It's a shame that seeing your doctor is a "dangerous waste of [your] money". Maybe you should consider that point, first.

Re:Just keep in mind the tradeoff

[mug funky]

the context it was included as marketing (really PR, which marketing is a subset of, as is education and much else), sounds like a budgetary one.

we're not talking about the definition of "Education", rather what part of the balance sheet would the pharma company include education in.

Re:Just keep in mind the tradeoff

[nedlohs]

Of course they are, it's all about reducing taxes. However, it does make up over half of the marketing costs - use production costs instead and they now spend more on research and development than on marketing.

Re:Just keep in mind the tradeoff

[nbritton]

Typically the doctor just asks me what I want to do about medication adjustments, he knows I'm smart and that im very good at doing my own research. He's even gone as far as adopting some of my treatment protocols for his other patients. I'm no expert, but I'm not stupid when it comes to knowing what is best for me.

Knowing what's best for me includes knowing that I need a medical expert to provide guidance and oversight.

Re:Just keep in mind the tradeoff

[mug funky]

it's simple. if the doc writes your script with a pen that bears the same name as the drug they're prescribing, just get a second opinion.

if you don't like it, give the script to a smackie to enjoy.

Re:Just keep in mind the tradeoff

[mug funky]

in an ideal world, doctors would read the journals and current literature, and keep up to speed with medicine.

until that happens, we have sales reps to tell them what's new over a free lunch.

Re:Just keep in mind the tradeoff

[rallen911]

OK... You just spouted 4 statements purporting to be facts. Where are your sources for this information?

You really don't expect me to believe an anonymous coward, do you?

Occupy Facts!

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Yes, you are absolutely right, a country with above billion population, and millions of cancer patient, a country where 99.99% percentage people may not earn 2.8L/yr to buy just 120 capsules, a country which respected all international laws and its own patent laws, had "start[ed] ripping patents left-and-right" and Bayer who charges for ultra cheap life saving critical drugs (remember Natco has to pay royalties, lawyers fees, etc... in the 8K price) like a virgin galactic ticket would go bankrupt and all innovation is going to be stopped by all drug making companies immediately.
The govt. should have left millions die every year, when they can be saved with drugs. After all why Uncle *** cares, we don't have petrol (WMD) here.

Re:Just keep in mind the tradeoff

[mjwx]

I know I'm going to burn karma for saying this (wouldn't be the first time), but do keep in mind that the R&D costs for developing these drugs is paid from

Universities and other publicly funded organisations (including the military) who do a lot of the research which is published freely and turned into a product by for profit corporations.

Fixed that for you.

A lot of Pharma R&D is done with public money.

Re:Just keep in mind the tradeoff

[rallen911]

So you're saying that you expect the doctors to find out about drugs themselves? You must be, because "educating" doctors is actually called "marketing" to doctors. Drug company representatives visit doctors to tell them about their new drug and all the great things it can do. Sounds a lot like marketing to me.

Your assertion of there being a "fixed" number of people who need a drug is false. People become sick all the time! People get old. People hurt themselves. The demand for drugs increases as the population with the affliction increases.

Medicine is a business. Without the promise of profit, we'd still be using leaches and blood letting to "treat" patients. If it only mattered that we care about people, you would have people who care about people being doctors, not necessarily the smart people who could actually make improvements.

Government will never... let me repeat that NEVER be successful at doing this research. They don't have the pressure of getting results. They just have to wring more money out of the tax payers if they aren't making any headway.

If I were Bayer, I wouldn't sell so much as an aspirin in India. They probably don't anyway. That was out of protection years ago.

Re:Just keep in mind the tradeoff

[mesterha]

You can pretty much look at any pill in a pharmacy and they all cost peanuts to actually produce, like software it's just a matter of pricing it so that the expected sales pay off.

This also says something about the massive over regulation of the generics industry by the FDA. Most generics should cost peanuts, but many do not. I would guess the pharmaceutical companies exert considerably lobbying to keep it that way. In fact there is currently a massive shortage of many generics. Instead people are forced to by the name brand version.

Re:Just keep in mind the tradeoff

[dryeo]

Patents are 20 odd years. The problem is when the patent is running out, the pharmaceutical company changes something small, often just the manufacturing process, perhaps a different buffer, or sometimes a slightly different formulation, and re-patents. Then the pharmaceutical company markets the hell out of the new patented drug since it has a high profit margin where the now generic drug is just as good but no longer profitable.
This is one of the problems of drug marketing, the best drug according to the pharmaceutical companies is the most profitable, not the cheapest that works just as well.

Re:Just keep in mind the tradeoff

[sixtyeight]

It may be politically popular, but you can't have your cake and eat it too.

Niggling idiom correction of the day: The idiom is, "You can't eat your cake, and have it too."

Anyone can have a cake and then eat it. (Well most anyone in my country, I suppose.)

Re:Just keep in mind the tradeoff

[ArcherB]

...The rep buys him lunch. How does the rep convince the doctor that his meds are right for the doctor's patients? By giving him samples. All of the above costs money (lots of it) and it all comes out of the marketing budget.

I was raised by a single, self employed mother of two. Insurance was not an option and Hamburger Helper was an expensive, family treat. Of course, our doctor knew this. How did we afford expensive medication? We didn't. The doctor would give my mother samples instead of writing a prescription.

Legal? Don't know. But before I start bad-mouthing "big-Pharm", I have to consider that they had to know what our doctor was doing. What did they think he was going to do with all those samples? I think this was the insurance company's way of keeping their prices high while ensuring that even those that could not afford the drugs still got them.

Later in my childhood, our financial situation improved. Frankly, I don't know if we ever had insurance, but my mother became a fairly successful business owner and married another successful business owner so we could afford our medications and no longer received free samples. I assume our doctor started giving the samples to other single moms who needed them more than we did.

Of course, this is before regulations probably put a stop to such practices, requiring people to become dependent on government provided protection from evil. But when people ask how our country got by without health insurance all those years, things like this is the answer. People knew their doctors and the doctors took care of their patients. Whoever writes the checks writes the rules. When the patient is paying, the patient is the customer. When the government is paying, the government is the customer and the patient becomes the liability. (You may substitute "insurance company" for government in the previous sentence.) Whoever writes the checks writes the rules. The doctors may hate the bureaucracy of government and insurance, but they will do whatever the payer says to do, regardless of what the patient wants.

Re:Just keep in mind the tradeoff

[pepty]

1. So what? See Cpu6502's answer.

2. No, it really isn't. Really. Pick ten NMEs (new molecular entities) approved last year. Tell me how much the NIH spent on them vs industry. Tell me how much the NIH spent on the 1000 NMEs that failed in phase I, II, or III testing vs what industry spent on them. Academic research finds a lot of drug targets ... but that is the cheap part of drug R&D. Finding drugs and developing them is the expensive part, and academia does very little of that.

3. If they settle for less profit when they have the option of getting more, they will get bought out by someone who wouldn't.

4. see #3 for the US. Compulsory licensing is certainly an issue in other countries.

Re:Just keep in mind the tradeoff

[pepty]

There was a study done years ago that found that DTC drug marketing's biggest impact wasn't on generating new prescriptions by getting people to nag their doctors, it was in reminding people to refill their prescriptions.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Bayer's profit margin is about 6%

bull-fucking-shit.

Re:Just keep in mind the tradeoff

[pepty]

Yup.

Samples are a good way for a doctor to see if a particular medicine is right for a particular patient. The alternative is for the doctor to write a prescription, the patient buys the drug, then finds out a few days/weeks later that the very expensive drug is not right, and he gets to buy ANOTHER drug.

One improvement that we'll be seeing more and more of: drugs approvals conditioned on an accompanying diagnostic test, one that substantially predicts who will be a good responder to the drug. Not that Pharmas really like the idea, but it's the only way some drugs can make it through the FDA's increasingly stringent efficacy and safety requirements.

Re:Just keep in mind the tradeoff

[pepty]

Are you unaware that half of drug R&D is publically funded? /p>

If you mean the R&D tax credit and other tax credits, that's true of all R & D in the US, not just pharma. If you mean academic research, cite some numbers. And not just the Warburton ones that conveniently ditch all of the expensive parts (failed drugs, trials on NMEs) as "outliers" and then guesstimate NIH's contribution.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

can often go *up*...not saying it did with [Viagra] or not

It indeed often does go *up* with Viagra....

Re:Just keep in mind the tradeoff

[Anonymous Coward]

4. Doubtful. No company sells at a loss. Bayer would just avoid India completely, and not release their patented drugs until 10-20 years later (after they recover their initial R&D investment).

Nonsense. Companies sell things at a loss quite frequently. For example, say you buy Myspace because you think it is the best thing ever. A year or two later, you might want to ditch it for a 10th of the price because it sucks. Similarly, if you gave out housing loans to a bunch of homeless people, and now you have a bunch of houses that could sell for a great loss, you still may wish to sell them off. Likewise, getting 6% of $100 is better than nothing. The R&D is a sunk cost. But, Bayer might pull out of India to pressure them into changing their policies if they think that would work.

Re:Just keep in mind the tradeoff

[pepty]

They were only selling ~49 prescriptions of Nexavar per year in all of India, so I don't think the price drop affects the profitability of the drug very much.

Re:Just keep in mind the tradeoff

[sixtyeight]

Fair enough! In the U.S., attorneys can't openly solicit for new clients. I'm not sure why it should be any different for Pharma.

Then again, the People used to have a system that represented them, and which hadn't legalized limitless bribes -er, lobbying contributions, to politicians.

Assessment: The political system is corrupt, the People have been lax and inattentive, and this is literally killing people.

Re:Just keep in mind the tradeoff

[__aaltlg1547]

Sending drug reps to persuade doctors to prescribe your expensive drug still ain't R&D.

Let's put this in perspective:

From Bayer's 2011 Annual Report
(millions of Euros)
Net sales 36,528
Cost of goods sold (17,975)
Gross profit 18,553
Selling expenses (8,958)
Research and development expenses (2,932)
General administration expenses (1,713)
Other operating income 859
Other operating expenses (1,660)
Operating result (EBIT) 4,149

That's right. Bayer spent 3x as much on marketing as on R&D. Marketing was their biggest expense category, after COGS, by a wide margin.
In contrast, R&D is only 8% of their net sales.

But all of the marketing is related to new drug introduction. They could cut their research and it would directly increase their profit. But it would also put them in a situation where they'd lose sales of new drugs in a few years. The fact that their managers believe it's in their best interest to spend 2.9B per year on R&D implies that they make considerably more than that per year on patented drugs. Maybe 6B/year. Maybe more.

Now let's get back to India. How many people in India do you think could have shelled out $5500 a month for a cancer drug -- even if it is life-saving? The per-capita GDP in India is only about $1500/year. Bayer can't be making a lot of sales on a drug that people simply can't afford to buy.

They supposedly can make it locally for $175 per months' supply. This will results in a lot more sales, and India's apparently going to have a forced-licensing arrangement whereby Bayer will still get some money. Just not 97% profit. But 6% of the net sales on a drug that Indians WILL be able to buy may bring in more revenue than 97% on the Bayer-branded drug that Indian's WON'T be able to buy.

I expect Bayer will complain for a while then quietly pocket the royalties and maybe in a couple years they'll figure out that they can make more money by licensing their patented drugs in poor countries than they can by selling them at the same prices they'd stick to USAnians.

Re:Just keep in mind the tradeoff

[pepty]

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies. Only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research

Cite? A cite with actual numbers and specific drugs, not just an opinion, that is? Typically about one new drug a year comes out of academic research. Biotechs and pharma companies often get grants from NIH or NCI, but the bulk of the money is still private.

Re:Just keep in mind the tradeoff

[AbRASiON]

Fucking rubbish.

Drug advertisements are BANNED here in Australia and it's how it should be. We don't need people who don't have any ailments thinking they need X or Y because of a bloody television commercial.

They fact they are LEGAL actually astounds me, I didn't even know about the commercials until I saw some American television, just the conept is evil.

Re:Just keep in mind the tradeoff

[dryeo]

In most countries the government has mandated pricing which is very low compared to pricing in the US. I do not know what their justification for these prices are, but they are dictated to the manufacturer.

The US pricing is set by the manufacturer, not the government.

The difference is purchasing power, same as why Walmart has such cheap prices. One large purchaser, whether public or private, can demand cheaper prices and the supplier has to get by with lower profits. This is the way the market works.

Re:Just keep in mind the tradeoff

[__aaltlg1547]

They go find (or define or outright invent) diseases and syndromes to treat with their new drugs. That's part of the Research in Research and Development budgets. But maybe it should be counted as Sales expeditures. Even if the drug is for a real medical problem, sometimes the drugs that pharma rolls out don't really treat it.

Who ever heard of Restless Leg Syndrome before there was Miraplex?
Where was "osteopenia" before Boniva was introduced to treat it and incidentally cause the diseases it is alleged to prevent?
What exactly is "statin deficiency" other than wholly asymptomatic?
If a drug doesn't work for you, you're now a "treatment-resistant" patient (somehow it's your fault!) who should continue taking the drug that doesn't work in conjunction with another drug that likely won't work either.
Why are people inhaling asthma treatments that make them die of athsma and taking pain relievers that cause heart failure?
And maybe you don't have a disease with specific symptoms. Maybe you have a "spectrum disorder" of some kind. You generally don't feel all that great and we have just the drug for that.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

"Outrageous lie."

No, it's true. Many people conducting clinical trials are also volunteers. Not all, but many.

"Roughly 5% (6-7billion out of the 300-400 billion market), but ok, "tons"."

Now that's a lie. For one thing, Pharmaceutical corporations are very well known for exaggerating their R&D costs.

http://www.techdirt.com/articles/20110626/17115214866/priced-out-your-medication-must-be-all-that-expensive-big-pharma-rd.shtml

The government spends a good percentage on R&D, way more than five percent. But go ahead, keep making things up out of nowhere and telling lies without providing any citations.

"They are justified by the virtue of the fact that they ask for them."

No one is entitled to a government established monopoly. The alleged justification for these laws, and the same is true for property laws in general, is to serve a public good (ie: promote the progress ...).

"In exactly the same way that the gas stations are justified in charging the price for gas that they see fit."

Sure, and competitors can enter the market and charge what they want. Don't expect the government to enforce the monopoly of a gas station either.

"And if demand that government makes the cookie maker work for the price other than the one they name, then you, sir, are advocating slavery."

Wow, when it comes to lies you are on a roll today. No, it's not slavery being that no one is requiring them to work.

"And you have 0 moral standing to judge others."

Oh please, you're a liar, why should anyone take your moral standards seriously?

Re:Just keep in mind the tradeoff

[thej1nx]

Nonsense.

What you fail to realize is that the market size for these pills is fixed! Only cancer patients will buy the medicine for cancer. No amount of advertising will get a person who does not have cancer, to consume a prescribed drug for cancer. Capiche?

So all you are doing is just taking the customer base of your competitor. i.e. do not buy his pills, buy mine instead. This may or may not be avoidable, but it is virtually of zero benefit to the customer. If your pill was significantly better, the doctors will prescribe it and customer will even prefer it, without requiring aggressive marketing. Results will speak for themselves, and what matters most to the doctors is having a good reputation, so they will prescribe what is known to give really good results. If it is just nearly same as what competition has got, customer does not really benefits. You have just increased the cost for both yourself and your competitor, and ultimately the customer.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Neither does Sweden, though about the molecules I don't know. But when it comes to US Patents in Sweden they are enforced for some god awful reason even if they are against swedish patent laws.

Re:Just keep in mind the tradeoff

[nosferatu1001]

The actions by India are 100% allowable under the TRIPS agreement, as Bayer has failed in its obligations to provie a reasonable local cost drug.

Bayer are not the good guys in this.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Drug companies have no incentive at all to cure anything. Their incentive as you so nicely put it is money and profit which makes them only want to treat the symptoms. If you want a treatment for cancer you should ask your government or yourself spend money on research universities and academics. They have all the incentive as fame, glory and future profit.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

What other industry can possibly have that level of markup and keep customers?

Software.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Ok, maybe not most scientists conducting R&D are volunteers. I remember reading somewhere that many are, but after further Googling, maybe I made a mistake.

Re:Just keep in mind the tradeoff

[superwiz]

The fundamental property of ownership, as such, is the right to deny use. If you own a car, you have a right to deny its use to others. If you lend the car to your friend, your friend can use it, but doesn't own it. Why? Because if he lends the car to someone else, you have a a right to revoke that lending (as the owner of the car). Taking away from owners their right to deny use is theft because it takes away the ownership. So no, technically, I am not conflating theft with infringement. Your argument that only compulsion of physical act is slavery is equally specious. You are essentially advocating enslaving all the workers of the mind.

Re:Just keep in mind the tradeoff

[superwiz]

The government spends a good percentage on R&D, way more than five percent. But go ahead, keep making things up out of nowhere and telling lies without providing any citations.

You lie again!!!! J'accuse!!! NIH budget is less than 5% of the pharmaceutical market. And most of the research funds do not show up as R&D. They show up as acquisition. So you are a liar twice over. Most of R&D is paid for not through direct support of R&D departments but through buy outs of start up pharma companies which go through clinical trials and such. Such start ups do NOTHING but R&D. So when they are bought out after approval, this M&A money is a direct injection of funds into R&D -- it just doesn't show up as such in accounting. Which bring me to a third point: this

Pharmaceutical corporations are very well known for exaggerating their R&D costs.

makes you three times a liar! They severely understate their R&D costs by hiding most of their R&D costs in M&A.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Not really, that company can be both profitable and share profits with bayer which they calculated would give them the zero-loss or enough profit.

Re:Just keep in mind the tradeoff

[AbRASiON]

"They can take a 97% decrease in price and still remain profitable? What other industry can possibly have that level of markup and keep customers?"

Sounds like Apple to me.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

most of the R&D these companies put in goes into ways to keep people sick and poor for as long as possible. theres no profit in cure.

youve just been listenening to the company spiel too much. ive a pill for that. $5 paypal.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

So you didn't actually research the products, you researched the market? Any numbnuts can do that. Rather a case-in-point here, you're a numbnuts who did.

Tell me, numbnuts, what are the contraindications for the different drugs you looked at, and the variations between, and how are they caused by the different ingredients? You don't know? What's that? You'd rely on a doctor to tell you?

So, what you're saying is that you didn't actually research the drugs, you just shopped around? Shopping around is research now? Who knew.

Oh wait, you did!

You've revolutionised health care!

Moron.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Only the "ask for treatment Y" part is. But if "treatment Y" is the only treatment available, or the one that just happens to have been heavily marketed to doctors, you might still make big money. In most countries, that's what pharma companies do: they fund PSAs and hope that people will "talk to their doctor".

Re:Just keep in mind the tradeoff

[Anonymous Coward]

So I wonder what percentage of Viagra/Cialis users are prostatectomy patients. I see. . . those TV ads are intended for doctors.

Re:Just keep in mind the tradeoff

[Cyberax]

So by your own accounting, if Bayer kills all marketing then they'll be able to drop prices by 25%, i.e. from $5500 to roughly $4000. Nice, but still way too much.

But that's the way the drug industry works - drug discovery and development is HARD.

Re:Just keep in mind the tradeoff

[rtb61]

Obviously you have never heard of debt loading, executive salaries and tax havens. Advertising never saves money. It allows inferior product to out compete superior product (the cost of advertising often drawn straight from production costs guaranteeing lower quality product).

In fact most of the penalties applied to pharmaceutical corporations over the last few decades have been for 'BULLSHIT' advertising, falsely promoting the use of inappropriate drugs which resulted in death and substantial suffering for which not one psychopathic corporate executive went to jail.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

And many of the small companies are set-up by doctors who have been researching that particular disease in university.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

But why only the Bayer's Nexavar? Last time I checked, the similar drug Glivec/Gleevec by Novartis was just as pricey. I've heard anecdotal stories, like this one about a man who was taking Glivec for years to contain his metastatic cancer, spending USD 400000 or so on it, who later went broke due to the bad economy, stopped taking the medicine and finally succumbed to the disease. How many people in the third-world countries could afford to pay these money?

Anyway, something must change in the pharmaceutical companies' business model. One way to cut their expenses drastically (maybe even about an order of magnitude) is to change the laws about the drug companies' liabilities for injuries and deaths. It might sound harsh and cynical, but perhaps it's the only way to both keep these companies in business and at the same time enjoy some reasonable drug prices. Even in the USA there are already some steps taken in this direction - for example, companies were recently given full liability protection for the possible harm done by government-mandated vaccines. It sure looks awful, but else the government wouldn't be able to afford these vaccines, or the companies simply wouldn't make them.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Do you have any citations for any of your claims?

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Oh, it's against the law? Well, that's great! Now no one will do it, because everyone, especially our benevolent corporate overlords, always follows the law! What a wonderful world of cooperation and trust we live in today!

Re:Just keep in mind the tradeoff

[PsyciatricHelp]

Advertising should be illegal for drug companies. That money should be better spent educating Doctors on the drugs. If its a prescription drug there is no need for the average user to be presented with it several times a day. This is why we have drug resistant germs. But then again in my opinion Doctors suck. Money grubbing asshole who will write a prescription for anything just for the revenue.

Re:Just keep in mind the tradeoff

[NormalVisual]

So you didn't actually research the products, you researched the market?

Yes, I actually researched the products themselves, including a fair bit of pharmacological data regarding them. Reading comprehension is important - you should probably look into learning how to do it sometime, because you made a lot of baseless (and incorrect) assumptions. Also, ad-homs are the mark of someone unable to prove their argument, as you so clearly illustrated.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

"NIH budget is less than 5% of the pharmaceutical market."

Not true. The government spends more than that, as the link I provided (and as many other existing citations) show. You make up your numbers, you provide no citations whatsoever, you just make up numbers convenient to you.

"And most of the research funds do not show up as R&D. They show up as acquisition. So you are a liar twice over. Most of R&D is paid for not through direct support of R&D departments but through buy outs of start up pharma companies which go through clinical trials and such. Such start ups do NOTHING but R&D. So when they are bought out after approval, this M&A money is a direct injection of funds into R&D -- it just doesn't show up as such in accounting. Which bring me to a third point: this"

Your point is a lie again. It may show up as acquisition costs under the company that acquired the old one but R&D costs still get reported as R&D costs under the old company name and are still considered part of the overall R&D cost claims that pharma spends. So when I go look up the R&D costs of the acquired company I can still see what they spent on R&D and these numbers do show up in the overall statistics regarding how much the private sector spends on R&D.

superwiz writes
"The fundamental property of ownership, as such, is the right to deny use. If you own a car, you have a right to deny its use to others. If you lend the car to your friend, your friend can use it, but doesn't own it. Why? Because if he lends the car to someone else, you have a a right to revoke that lending (as the owner of the car). Taking away from owners their right to deny use is theft because it takes away the ownership. So no, technically, I am not conflating theft with infringement. Your argument that only compulsion of physical act is slavery is equally specious. You are essentially advocating enslaving all the workers of the mind."

The difference here is that infringing on someone's monopoly privilege doesn't deny them the use of that which is being infringed on. If someone copies your car you still have your car. Now, denying me the right to make copies does deprive me of the economic and social benefit I can make from doing so, so patents themselves are theft. Infringement is not. But keep confusing the two.

Re:Just keep in mind the tradeoff

[parkinglot777]

How does a busy doctor have time to talk to a rep? The rep buys him lunch. How does the rep convince the doctor that his meds are right for the doctor's patients? By giving him samples. All of the above costs money (lots of it) and it all comes out of the marketing budget.

What you are saying happens in the U.S., but I doubt it is the same in any third world countries. In my home country, Thailand, they do their marketing by giving money directly to the head doctor of the hospital. My sister used to work as a pharma rep and that's what others and she does in order to get the sale. The head doctor who has the power to authorize the buy (order) will have a private room to talk to any rep who comes in to sell products. Then in order to get the sale, the rep has to give him (or her but mostly him) a cut by giving cash to the doctor. The higher order volume, the more cash to be given. The pharma company will pay for the cash and will record this expense as marketing budget! So the high cost of medication is not only from the pharma company, but it is also from many others who involve in the business...

Re:Just keep in mind the tradeoff

[Registered Coward v2]

They might try, but I doubt they'd succeed. The actual patent is nearly useless these days as a disclosure anyway. The only way to keep it a secret would be to make sure nobody ever gets a sample (that is, not sell it at all) and make sure never to actually manufacture any (so an industrial spy can't observe the process).

True. Nothing is really secret. The real challenge is to be sure you actually got the components and mix correct; clue enough may not be good enough to ensure it has the same effect on patients or that their are no new side effects from a slightly different formulation. There may not be, but the uncertainty alone may preclude you from producing it without doing trials first unless you are willing to potential put patients at risk in return for saving money.

Ethics aside, I would not be surprised by anything a company would do to protect its drug profits; after all some companies argue that generics, if they do not include the exact same type and proportion of trace elements, should be required to undergo testing and re-approval since they do not match the originally approved drug.

Re:Just keep in mind the tradeoff

[Bigby]

Legalized DTC? Is the default in these other countries to make everything illegal and it must be legalized before you can do it? In the USA we have a think called freedom of speech and press, and although we don't follow it to a T in some cases, we have been pretty good about it.

Re:Just keep in mind the tradeoff

[EvilBudMan]

Maybe so, just sayin'

Re:Just keep in mind the tradeoff

[Bigby]

Because that profit was weighed into their investment decisions. Now they made a smaller profit margin, which would have shifted their investments elsewhere if they had known about it.

What if you had two ideas. You project one will bring you $10,000 and the other will bring you $1,000. Then someone with authority comes along and says "well, that's too much" and takes $9,700. You just lost $700.

What's worse, if companies will stop taking risks if successful risky investments get taxed at extremely amounts on a whim.

Re:Just keep in mind the tradeoff

[El Rey]

How it should work is that the patient tells the doctor the symptoms, the doctor has the education and knowledge to come up with the solution. Period.

The advertising that causes people to self diagnose and come into the office with their own solution at hand in the form of the latest drug is a real PITA for doctors!

Marketing and advertising are not the same as provider education. Don't conflate them.

Re:Just keep in mind the tradeoff

[El Rey]

If your doctor didn't know you had XYZ Syndrome, you either need to start talking to your doctor when you go in or get a new doctor.

Re:Just keep in mind the tradeoff

[superwiz]

NIH budget is less than 5% of the pharmaceutical market.

Not true. The government spends more than that, as the link I provided (and as many other existing citations) show. You make up your numbers, you provide no citations whatsoever, you just make up numbers convenient to you.

Ok, I just looked it up again. They did increase the budget significantly under Obama. It went up to ~$30 billion a year. But it was around $6-$7 billion during the 2000's. The pharma market place is around 300-350 billion. So yes, it does exceed 5% at the moment, but it's still under 10% and it's only been that way for a few years. For the previous 8-10 years, it was 5% or less of the size of the pharma industry. And since we are talking about effects of money on research, it is that long term 5% contribution number that is more significant that the latest 10% development.

R&D costs still get reported as R&D costs under the old company name and are still considered part of the overall R&D cost claims that pharma spends

The old company does not have to file public reports. They are usually private (financed with private capital). All these statistics of R&D vs marketing come out of the filing of the public companies. Private companies' finances are private. And often times this private capital comes in the form of investment from established pharma companies. In this case it shows up as long-term illiquid investment on their balance sheet (again, not as R&D). And again, the private companies which are thus formed do not file public financial reports so their 100% investment in R&D does not show up in any of these figures.

The difference here is that infringing on someone's monopoly privilege doesn't deny them the use of that which is being infringed on.

But the right to use is not ownership. Ownership has to have the right to deny use to others. When the replication cost is nominal the right to use is worthless essentially. The only component of ownership which has any value, in that case, is the right to deny use.

Re:Just keep in mind the tradeoff

[oreaq]

Do not look at the results. Ignore that Eurpe has better and cheaper healthcare than the US of A. Stick to your dogma. It always tells you what is right and what is wrong. Do not look at the results.

Re:Just keep in mind the tradeoff

[superwiz]

Infringement is not. But keep confusing the two.

I am not confused. At ALL. Not even a little bit. Not even a tiny little bit. But you do lie well. I've already explained what specifically infringement steals: ownership. It doesn't steal use (which is worth little in case of IP), but it steals ownership (which is worth a lot in the case of IP). You are trying to compare it to stealing something with non-nominal replication cost (a car), but in case of a car the right to use is worth almost as much as the entire right to own (because of large replication cost). So your comparison is loaded from the start. The key difference remains. The right to use is not the same as the right to own.

Re:Just keep in mind the tradeoff

[superwiz]

No one is entitled to a government established monopoly.

Oh? They have to file their process with the FDA in order to be allowed to sell their product. If the government has the right to demand that they reveal their trade secrets, then it has to compensate them with the right not to have those trade secrets be used by their competitors. And since the government does feel there is compelling public need for those trade secrets to be revealed, it must therefore, by extension, be true that there is a compelling public need for their temporary monopoly to be enforced.

Re:Just keep in mind the tradeoff

[tacokill]

That we are talking about a government is especially egregious! You don't see why Company A will choose not to play next time?

You are right that more Indians will get cancer treatment.....today. However, in 10 years, I guarantee that less people will get served because fewer companies want to participate in the Indian market when the government wantonly steals from them.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

I'm still waiting for your citations.

The right to deny use is not something anyone is rightfully entitled to. It's a government established privilege that the public grants under the pretext that it should provide for a social benefit. If it does not provide for a social benefit, or if we can not properly audit its justification (ie: R&D costs) then it is not justified. You can't steal something that doesn't rightfully belong to you and a government established monopoly doesn't rightfully belong to anyone.

That's like saying I want a million dollars from the government. It's not providing it for me, so it's stealing that million dollars. No, the government doesn't owe me a million dollars any more than it owes you a monopoly privilege on something. So it's not stealing because it's not something you were ever rightfully entitled to.

Re:Just keep in mind the tradeoff

[FreekyGeek]

I can't speak for everyone, but I think a lot of people have the same reaction I do: Making a profit is fine. The question is whether it's an OBSCENE profit or not, and if that obscene profit is coming at the cost of killing people.

If you want to make a new blender and sell it for a 2000% profit, have at it. I don't care. If people want your blender, they'll pay more for it. If they don't want it, they won't. You may lose money, but no one dies. Same thing with shit like Botox. I don't care if rich old bags pay 500% profit on something like that. But if there's something that PEOPLE WILL DIE WITHOUT, then it becoems a moral question. Even then, making a reasonable profit is understandable. 100%? Well, OK. 200%? Starting to raise my eyebrows here. The truth is that one of the huge reasons healthcare keeps climbing so fast is largely because medical fields have realized that 1) people want to live, and 2) will pay anything to continue doing so, and thus 3) you can just keep raising the prices as much as you want and feeding the profit to your investors.

If I were president of the world, I'd pass a law saying that medically required devices and medications (i.e., from injury and illness, not cosmetic stuff) could not be marked up more than, say, 300%. If you say "no point in making something if you can't make a profit", OK, fair enough. But if you're saying "Waaaah!!! 300% isn't ENOUGH profit, I don't care if people die, I need MORE!!" then I reply: "Fuck you, you soulless greedy assholes."

Re:Just keep in mind the tradeoff

[oreaq]

But real corporations don't think that way - not out of altruism, but simple this-quarter-ism. The kind of long term vision required for that sort of conspiracy theory just isn't to be found around the modern company

We are talking about a pharmaceutical company that spends billions of Euro every year on R&D to get patent protection for a couple of products for the next 17 years. You are living in a fantasy world.

Re:Just keep in mind the tradeoff

[cpu6502]

I guess I have to spell it out. You develop a new pill called BreastCancerCure (not the best name but whatever). It costs $1000 a pill but you don't advertise it, so very few people buy it and the cost remains $1000 a pill.

Then you decide to advertise it on TV, radio, and the net and within a year you're selling to over 10 million customers. Thanks to economy of scale, the price per pill drops to $1. Therefore advertising actually saved money (rather than waste money as the great-grandparent post claimed).

Re:Just keep in mind the tradeoff

[cpu6502]

Repeating myself (since you obviously didn't read to the end of my post)

Stop committing first-order thinking (advertising == waste of money == bad). Look to secondary and tertiary effects, and it's obvious that advertising increases awareness among sick customers, which is a positive good (it encourages them to visit the doctor to get the new cure/pill)
.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Medicine should be GPL'ed right? I would love that.
Can't wait for my neighbor to start researching and manufacturing drugs and selling it in the street corner. I mean, distributing it for free.

Re:Just keep in mind the tradeoff

[sociocapitalist]

Bayer's profit margin is about 6%. Far less than Apple or Google or the like. Greedy? I hope so - far more people are motivated by greed than altruism, and I want whatever motivation cures cancer! I would you prefer eveyrone was nice to one another, and no cure for cancer?

Source(s) of your statistic please?

Also, is that before or after executive bonuses and dividends payouts?

Re:Just keep in mind the tradeoff

[Anonymous Coward]

"The right to deny use is not something anyone is rightfully entitled to. It's a government established privilege that the public grants under the pretext that it should provide for a social benefit. If it does not provide for a social benefit, or if we can not properly audit its justification (ie: R&D costs) then it is not justified. You can't steal something that doesn't rightfully belong to you and a government established monopoly doesn't rightfully belong to anyone."

Should read, the right to deny use of copies. Yes, if I sell or own a car or drug, I can deny use of that particular car or drug. I can not deny use of others who want to sell copies. Ownership is about denying use of the original, the 'right' to deny use of copies is a privilege that no one is entitled to.

In response to this post

Drug companies should be required to disclose their ingredients for safety reasons just like food companies should be required to disclose whether or not their foods contain anything (like MSG) that someone might be allergic to. This disclosure does not harm companies beyond the cost of disclosing because the ingredients can be reverse engineered by others and others can and do often independently come up with similar ingredients. So such disclosure, without patents, does little to nothing to harm innovation and are not deserving of a monopoly privilege.

Pharmaceutical corporations overstate the value of patents towards innovation because it's good for their bottom line, what do you expect them to say, patents do little to help innovation and they mostly hinder innovation but we want them because it's good for our profit margins? Of course not, they have to make up some lame excuse to justify their monopoly privileges.

Re:Just keep in mind the tradeoff

[sjames]

The difficulties of making sure things are right occur whenever any manufacturer begins making a generic. They deal with it all the time with great success. In this case, the patients are not at risk, they are terminal either way. The issue isn't saving money, it's getting treated or not.

As for any regulatory capture, they obviously failed at that in India. *I'm sure the Indian government that has authorized the compulsory license is not going to require re-approval based on trace elements.

Re:Just keep in mind the tradeoff

[sjames]

Company A has a choice: Play and make some money from India or don't play and make none. It doesn't matter to India, if A won't play they'll just authorize the generic and get the drugs from B.

Re:Just keep in mind the tradeoff

[El Rey]

I read it. I disagree. What, you are so amazing that no one could possibly disagree with you?

If your existing medication is not working then you should talk to your doctor about alternatives. If it is working great, why switch? If your doctor is not proactive enough to recommend new medications when the become available if they would be better for your particular condition then your doctor is not doing his/her job.

I am not saying we should limit access to drug information. If you want to research drugs online that is fine. You can do that without ads.

I'm just saying that patient self diagnosing / self prescribing because they are bombarded with flashy ads that don't bestow on them the experience and knowledge of their doctor wastes a lot of doctor time explaining to patients why drug X isn't really the best drug for their particular condition.

So, do ads help slacker doctors who aren't keeping up to date by having the patient suggest treatments? Maybe. Is it worth raising the price of drugs for everyone and make some drugs unaffordable? I'm not convinced.

Re:Just keep in mind the tradeoff

[raorajesh]

So long as India's got smarts to reverse engineer the drug and distribute cheaply, good for em. People saved from dying is better than Bayer or xDrug company making profits. A thought experiment would be to think if India or other countries whose folks can not afford expensive life saving drugs, didn't exist... think of this as notional profits that didn't get realized coz they dont exist. It's a marketing and financial projection problem, not a real on-the-ground-savin-lives problem. If Bayer don't agree, screw you - you will get pwned by smart folks. It just takes a small consignment to reverse engineer and political will to save lives.... can't stop the consignment reaching savin hands, the supply chain is is porous, my man

Re:Just keep in mind the tradeoff

[nmr_andrew]

Wow - corporate shill much?

1. Advertising doesn't save money in any way, but it MAY lead to more sales.

2. Most academic research is funded by the government, at least in USA. Lately some companies are funding more, but that's only after they eliminated a large portion of their internal R&D to boost next quarter's profits.

3. Most of big pharma, including Bayer, has profit margins well in excess of 20%. Most other industries are happy with somewhere around 5% and would kill for those returns.

4. They won't be selling at a loss. According to TFA, the generic manufacturer will have to pay Bayer a royalty of 6% of profit. Which implies they can make a profit selling the pills for 97% less.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

"I am not confused. At ALL."

No, you're just a dishonest liar. You conflate infringement with theft.

"You are trying to compare it to stealing something with non-nominal replication cost (a car)"

"which is worth little in case of IP"

The replication cost is irrelevant, stealing refers to taking the original of something that's in the possession of someone else and depriving them of that. The worth of that which is stolen is irrelevant, whether it's a candy bar or a penny. Just because a monopoly privilege is worth something doesn't mean that those who infringe are stealing.

For a gas station to have a monopoly privilege is valuable, and the gas that the station sells also has value. But when a competitor sells competing gas, they are not stealing.

In the case of drugs, having a monopoly is valuable and when a seller sells a competing copy, that copy also has value. But selling a competing copy is not stealing. Patents are stealing, they deprive me of any benefits I can gain from either buying cheaper copies or selling copies. But making a copy of something is not stealing because you still have the original and can use it, regardless of the 'value' of either the copy, the original, or the ability to deny someone the right to copy (just like with the car analogy).

You're just twisting the definition of the word 'stealing' to suite your self serving interests by defining it based on what has most value (to you). With your definition, if the government gives me a million dollars, that has value to me, so them not giving it to me is stealing. No, I was never entitled to a million dollars to begin with, just like you were never entitled to a monopoly privilege,regardless of any value it may have to you. Conflating infringement with theft and using a definition of theft that's favorable to your self interests is dishonest and brings question to your moral standards.

Re:Just keep in mind the tradeoff

[Registered Coward v2]

The difficulties of making sure things are right occur whenever any manufacturer begins making a generic. They deal with it all the time with great success.

True, but with off patent drugs the information is available to produce a copy; my point was if more countries institute compulsory licensing of patented drugs companies will seek ways to make it as hard as possible to determine the exact makeup of a drug. In short, it's to their advantage to create doubt as to wether the copy actually mimics the real thing.

As for any regulatory capture, they obviously failed at that in India. *I'm sure the Indian government that has authorized the compulsory license is not going to require re-approval based on trace elements.

No doubt they won't. In fact, if something goes wrong (I'm not saying it will) they've effectively given the drug company a pass on any responsibility for the outcomes. To me, this is the question - If companies succeed in getting changes to patent law to keep drug compositions secret; how much risk is a country willing to take to make drugs available at low costs without assurances their manufacturing process produces a copy that is equally effective and has no side effects beyond those for the patented version? \

Re:Just keep in mind the tradeoff

[lgw]

Seriously? You need a cite for the profits of a publicly traded company? I hope you don't have any strong opinions about economics.

About 6.8% before "other" (all the stuff not easily catergorized, or losses the company is trying to hide the nature of), about 4.9% before taxes, about 4.3% after taxes, most of which is paid out as dividends.

Re:Just keep in mind the tradeoff

[lgw]

Wow, there really are people on /. more libertarian than me. Suddenly I feel ... moderate.

Re:Just keep in mind the tradeoff

[sjames]

What makes you think a pharmaceutical company will automatically make more information available when a drug goes off patent? I'm sure they would LOVE to keep the details locked up tight so they can continue in a de-facto monopoly.

Likewise, Even if they manage to get their patents locked up in Fort Knox until it expires, the information will STILL be available to an entity with the resources of a country. There is always a way. Meanwhile, I doubt very much that a multi-national would like to be declared public enemy number one in a significant number of countries.

Re:Just keep in mind the tradeoff

[superwiz]

I'm still waiting for your citations.

I barely ever feel compelled to respond to "citations please" when the phrase is used as a nonsensical counterargument. Citations don't exist to prove anything. In fact, they don't prove anything. They only serve to further one's knowledge on a topic. I am fully convinced that is not your intent. And I would feel not only unjustified, but actually unethical in giving in to the bully demands of an AC trying to derail the conversation. Citations only give credence to a point by showing that some authoritative source agrees with it. AC responds by not revealing even the source of his own comments (his name). In other words, all your "oh how convenient" arguments are bs when you post as AC.

The right to deny use is not something anyone is rightfully entitled to. It's a government established privilege that the public grants under the pretext that it should provide for a social benefit.

Once again, it's not given freely under arbitrary assumptions. It's given in exchange for revealing the trade secrets to the FDA. It's an exchange -- it's a not an arbitrary give away. Without it, the industry would be wiped out and that would unquestionably make us all suffer. US drug industry is the modern day mirracle. Very few of the drugs come from the universities which get the overwhelming portion of the NIH money.

No, the government doesn't owe me a million dollars any more than it owes you a monopoly privilege on something.

Your argument would have some weight if the drug companies didn't have to reveal their trade secretes to the FDA before being allowed to engage in business. As it is, it hold no water.

So it's not stealing because it's not something you were ever rightfully entitled to.

Anything you get in an exchange with the government is something your are entitled to if both sides made good-faith efforts in the trade. And for the millionth time, since the FDA insists that you have reveal your process before you can sell the product, you have to have a right to be the only one selling it. That is enforced through IP. Otherwise, FDA has nothing to offer the drug companies. And no company would go through the expense of R&D and clinical trials (and those are incredibly expensive -- to the tune of $100million+ for each drug) if it meant that a competitor could copy them the next day and undersell them because the competitor would not have to recoup the expenses. Just so we clear, you are not only anti-human slave-system-wishing Neanderthal. You are attacking humanity's ability to sustain itself. You disgust me.

Re:Just keep in mind the tradeoff

[tingentleman]

Because without that profit motive from those patents, the drug companies sure aren't going to be developing anything new.

I was with you right up to that last point. When will we in the west realise that most people are not exclusively motivated by profit? This pure-free-market thinking ignores that most great works / breakthroughs come from people who do it principally because they love it - in the case of medicines the academics (sure they earn money too, but not the millions that Bayer's CEOs almost certainly do). Profit motives drive drugs with good profit margins. Helping-people-to-live motives drive good drugs.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

"Selling expenses" is more than just marketing. From the same report:

Selling expenses comprise all expenses incurred in the reporting period for the sale, storage and
transportation of saleable products, advertising, the provision of advice to customers, and market research.
They mainly included €4,141 million (2010: €4,063 million) for the internal and external salesforce,
€2,078 million (2010: €2,032 million) for advertising and customer advice, €1,173 million
(2010: €1,119 million) for the physical distribution and warehousing of fi nished products, €553 million
(2010: €566 million) in commission and licensing expenses, and €1,013 million (2010: €1,023 million)
in other selling expenses.

Draw your own conclusions.

Re:Just keep in mind the tradeoff

[El Rey]

Nothing you have said in this post would be prevented if there were no pharma advertising.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

OR, put a federal tax on all drug advertising, of 75% of the cost of each advert, and an 85% tax, both payable solely by the drug company (not passed on to the consumer), on the retail price of any drug which exceeds 400% of what it actually costs to manufacture it and deliver it to the retail drugstore. And,if they continue to do so for more than six months, make those conditions trigger immediate expiration of patent protection on that drug, so that the drug may be manufactured and sold as a generic. These tax funds to be paid into a trust fund for National Health Care, to subsidize, on a sliding income/cost of living scale, the purchase of healthcare and Rx costs for citizens. That should significantly reduce the volume (both kinds) of advertising, and sharply reduce the totally barbaric and obscene pricing of on-patent drugs in the U.S.. And make it illegal, as noncompetitive, for any agreements to be made between drug manufacturers, to limit or fix the price of the cost of any generic drug.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

It was wrong when you called it Viagra, so what makes you think it'd suddenly be right under a different name? Hell, if anything, it's even more wrong now, given Viagra's totally optional status vs a cure for cancer, which, if the doctors are educated about available treatments, will get to the people who need it, with no need for the people themselves to be marketed to.

Re:Just keep in mind the tradeoff

[tolkienfan]

This isn't a case of "company x doesn't get to patent its drugs."
They've actually been forced to license the drug.
Bayer still gets royalties.
Of course, your main point still stands - there are trade-offs.

Re:Just keep in mind the tradeoff

[lsatenstein]

What is the purpose of creating drugs, if it is not to provide cures for illnesses. Should a company be humanitarian, or say, no money, no drug. The drug will generate a profit ratio of about 1000 times or 1/(1-.97) times more expensive than the cost of manufacture and distribution.

We have a strange thing taking place, where the FDA is closing down generic manufacturers, seemingly because the quality of the generic is not within certain tolerances. I agree with this if the standard deviation was .05 milligram per tablet, but the manufacturer has a .5 mg spread per tablet. Oh yes, the body can tolerate ± 2 mg per day differences without bad effects.

So, the question is, if high precison is required (possibly due to alergies to a drug), then prescribe the original, otherwise prescribe the generic. Just dont stop the manufacture.

For you who are ill, be prepared to see your insurance plan run out of money.

Re:Just keep in mind the tradeoff

[yourdeadin]

How long before they do this to Viagra?

Re:Just keep in mind the tradeoff

[yourdeadin]

So I can buy this in India and take it to the US and sell it there for cheap.?

Re:Just keep in mind the tradeoff

[Anonymous Coward]

No, you don't have any citations, you just make things up.

Re:Just keep in mind the tradeoff

[__aaltlg1547]

No, but they could drop prices by 25% without changing their spending AT ALL.

Marketing BRINGS IN MONEY or they wouldn't bother doing it. Marketing has an immediate (this quarter) effect on sales. R&D has very little immediate effect on sales. It's for the longer term. If you stop spending R&D money, your sales cruise along fine... for a while. Then they begin to drop off because you have no new, premium product to sell, only the same-old-same-old that's gone generic and has thus become a commodity. Like aspirin.

The fact that they spend 9 billion a year on sales and marketing means that sales and marketing increase their top line by more than 9 billion a year, which is 25% of their take. R&D may provide, by my SWAG, as much as 6 billion, but certainly a lot less than the snake oil guys.

Re:Just keep in mind the tradeoff

[superwiz]

You are an idiot. I would link to all of your comments as citations to prove this fact. But unfortunately, I can't tell one AC from another.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

At least drug companies test their products.

Re:Just keep in mind the tradeoff

[Anonymous Coward]

Has been pointed out multiple times before, but I imagine their concern is the export market.

Re:Just keep in mind the tradeoff

[Magius_AR]

Drug companies have zero motivation to cure illnesses. They are motivated to treat the symptoms of illnesses, and extend the lives of those people who have them while still not treating the illness itself.

Ya, because I'm sure a cure for cancer would be worthless in the free market. Zero motive. Right.

Re:Just keep in mind the tradeoff

[tacokill]

That's how wars start, sir. It's the "they'll just authorize" part of your description that's problematic. Nation states (certainly not India) can't go around just authorizing whatever the hell they want to. There are and will be reactions to said lawlessness. World commerce has never turned a blind eye to something like this and this situation won't be any different.

Re:Just keep in mind the tradeoff

[sjames]

India has nukes. Many countries will be extremely uninterested in going to war to make sure people don't get medical care. Given sentiment in the U.S. it would be political suicide for the U.S. to get involved.

Re:Just keep in mind the tradeoff

[AK Marc]

And they don't always play out.

Sure they do, even if they need to lie a little.

Re:Just keep in mind the tradeoff

[AK Marc]

Bayer's first pill was over 100 years ago. We should accept 100,000% markup for how many hundreds of years to come?

Domestic use only, I presume

[OldGunner]

The issue with compulsory licensing would get very muddy if Natco Pharma is allowed to export the medication outside of India's borders.

Re:Domestic use only, I presume

[i.am.delf]

I'm sure if they tried to export this drug they would be seized as counterfeit or unapproved.

Re:Domestic use only, I presume

[Anonymous Coward]

Then India can expect a ridiculously large number of people moving in.

Let's see... I have 3 choices. A relatively fast death, getting life-saving pills, but financially crippling myself and my family, or moving to India and having life-saving pills at an affordable pice.

I may be mistaken, but the next 'war on drugs' will in actuality be a war on prescription drugs like this. I assume such a 'war' is already ongoing quite viciously, but is just kept out of the news for the most part. And I also assume it's kept under wraps because there would be insane backlash if politicians and higher-ups started publicly saying that people dying of cancer have only the choice of dying or paying $5000 a week, and will be arrested (and thus die very quickly in prison) if they're caught buying the black-market $20 pill.

Re:Domestic use only, I presume

[Kalriath]

That war does exist. It's called TPPA negotiations. The US government is trying to remove the provisions allowing this sort of thing on behalf of their parent companies (the US government is a subsidiary right?)

Re:Domestic use only, I presume

[mjwx]

The issue with compulsory licensing would get very muddy if Natco Pharma is allowed to export the medication outside of India's borders.

You can guarantee this drug will be available in Thailand, Cambodia and maybe as far as China less then 2 weeks after manufacture begins.

It's not difficult to buy prescription meds over the counter in Thailand, the cheap generic stuff sometimes comes in original Indian boxes printed in Sanskrit with Thai/English labels stuck on top.

W00t

[NicknameAvailable]

Go Vishnu!

Companies will stop selling New drugs in India

[cpu6502]

Not immediately but that will be the eventual result. Bayer and others won't waste their time patenting drugs in India if they are unable to recoup their R&D costs (i.e. they won't sell at a loss). Instead India will get the new drugs 10-20 years later after the initial R&D has been paid-off by EU and US and RF customers.

Re:Companies will stop selling New drugs in India

[Maximum Prophet]

If a drug has been patented, and made it's way through FDA approval, it's chemistry is well known, and any decent lab will be able to make it. Not selling in a market is only cutting off the nose to spite the face. They will continue to sell in that market, because rich people will still pay for it rather than the generic.

R&D are sunk costs. *Any* sales over your fixed production costs results in profit. If you want to maximize profit, you sell. (Of course, as others have pointed out, you have to make sure none of the low cost sales gets resold to someone in another country. YMMV)

Re:Companies will stop selling New drugs in India

[betterunixthanunix]

Or India will just produce its drugs domestically, using its intelligence service to procure samples of high-priced drugs in other countries.

More likely, though, the WTO and the USA will attack India for "stealing" and threaten India with various trade sanctions as retribution for this action. We would not want the Indian government to work for the benefit of its citizens at the expense of foreign corporations' profits, would we?

Re:Companies will stop selling New drugs in India

[zlives]

If its not patented in India, do any laws protect the drug from being patented by another NATCO as theirs?

Re:Companies will stop selling New drugs in India

[theArtificial]

Regarding the patenting of things in India wouldn't an easier route be to have someone look at the patent in the US (or elsewhere)? I understand they're intentionally vague at times, I'm ignorant of patent details in general and doubly so with pharma patents. Failing that what about corporate espionage? One way or another if they're motivated they'll get what they want, much like software pirates, right?

Re:Companies will stop selling New drugs in India

[Anonymous Coward]

Apparently they weren't interested to sell in India to begin with and completely priced themselves out of the market. If that's the kind of things that will 'stop', then it doesn't make a bit of difference.

Re:Companies will stop selling New drugs in India

[Anonymous Coward]

You don't seem to understand, india does not care if Bayer sells $newdrug there, they simply allow a local drugcompany to produce $newdrug. If Bayer does not want to sell under the conditions in india, fine, all the money goes to the local drugcompany.

Re:Companies will stop selling New drugs in India

[Anonymous Coward]

well if they want to benefit their citizens they could always pay full price from Indian budget directly to Bayer by redirecting some money assigned to building roads or growing food or school system or ...

Re:Companies will stop selling New drugs in India

[stdarg]

More likely, though, the WTO and the USA will attack India for "stealing"

Yes, this, since that is exactly what is happening. "Stealing" in the IP sense, of course.

While it's great that India is getting something to help Indians, it does nothing for me except keep my costs high by not distributing the burden more widely. Maybe India shouldn't have to pay full price, but I would expect to AT LEAST see something based on purchasing power parity. And based on these tables India is not 33 times poorer in that sense, so the 97% discount rate cannot be morally justified. At that point they are doing it at our expense, not doing it in any sense of equality.

Re:Companies will stop selling New drugs in India

[Billly Gates]

Who is stealing from whom?

Doesn't it bother you that your paying more in your health care costs than rent? 15 years ago $75 a month was considered a lot for health insurance. Wages have remained stagnent since then adjusted for inflation too. Now if you over 40 expect to pay $900 a month if you have a family!

These drug companies are the reason and I see more stupid commercials targetted to consumers on TV than any other product. You pay for it every month in your premium.

These companies do not operate on a free market because they have a monopoly. Not only a monopoly, but a monopoly where you get it for free if you have insurance ... WAHOO and what if your life is in danger you will pay anything for it. So the drug companies are taking all of us as consumers, benefitors, and tax payers for a ride with most of the research done by universities anyway where the companies buy the research for $100,000 and turn it into a $50,000,000,000 product.

Good for India. Maybe regulation is needed ... oh god forbid that is socialist ... as it is obviously a public good since only one company can own a particular drug or patent a set of genes in your body.

Re:Companies will stop selling New drugs in India

[Rich0]

You don't need intelligence services to procure samples of drugs.

Everything that really matters about a drug is a single key/value pair. The key is the structure and is about 400 bytes in size. The value is a single bit - whether it has a net benefit. I guess you could add the intended use of the drug to the key and add an extra 10-20 bytes or so.

That 420.125 bytes of info costs about $500M to obtain. Once you know those 420.125 bytes working out the rest of the manufacturing details takes maybe a million or two of development costs, but it is basically zero-risk work that is nearly guaranteed to pay off. Many of the big drug companies have been spending billions per year on R&D and have only generated maybe a drug per year for it, so the cost if anything might be higher (most of that cost is sunk on failures, but you can't avoid it).

That is the problem with drug development - nobody really wants to pay for those 420.125 bytes, and the people who have already paid for them want to make a lot of money for having done it. I'd really like to see the model change to one that more equitably spreads out the costs and avoids the overhead like administration and marketing (and the resulting inappropriate use), but I don't expect that the costs will just magically go away because we want them to.

Re:Companies will stop selling New drugs in India

[Kalriath]

There will be no retribution. The Indian government acted in full accordance with TRIPS, which means this action is fully legal. Sanctioning India would violate WTO regulations and likely expose the sanctioning country to sanctions in response.

Re:Companies will stop selling New drugs in India

[Kalriath]

Not all the money. Compulsory licensing still requires that a royalty be paid, just that the local authorities decide what is a reasonable payment.

Re:Companies will stop selling New drugs in India

[stdarg]

Doesn't it bother you that your paying more in your health care costs than rent? 15 years ago $75 a month was considered a lot for health insurance. Wages have remained stagnent since then adjusted for inflation too. Now if you over 40 expect to pay $900 a month if you have a family!

Yeah, so let's do something about it. But let's do something fair and morally acceptable. In our free market driven economy that means relaxing regulations, especially the insane ones like the cap on medical schools, the stranglehold of the AMA and AAMC over medical school accreditation, etc. In other words, we need more doctors! They make too much money and the supply of their services is artificially restricted.

Seriously, look at health care costs sometime, the biggest factor is doctor salaries and hospital administration costs, not all the red herring crap like drug prices and malpractice. Popular Science had a great article about it a few years ago if you're curious and want to search for it.

Good for India. Maybe regulation is needed ... oh god forbid that is socialist ... as it is obviously a public good

Well here's how I know that's a lie. I can't go down to Walmart and pick up a $4 non-generic, brand new, blockbuster drug developed by the good will of any single socialist society on Earth! They don't exist! And yet there are plenty of socialist and communist countries.

Do you think Indian people are stupid? How about Chinese people? Are they all dumber than greedy evil white people?

Nope! And yet their good will, morally upright, pro-regulation, communist leaning societies have not produced top notch medicines available for free or at cost to the entire world. The best they've got is to copy an existing drug. Why not? Do you think China, which graduates more scientists and engineers than the US, doesn't have the brainpower? Is there no room in India's budget, which allocates $72 billion/year to military spending (about 20 times the R&D budget of a big pharma like Bayer mentioned in the article), to take on this noble, power-to-the-people project? And shit, according to you, if they just cut out the advertising it will only cost $100k, not $1 billion, to develop a blockbuster, world beating drug. Why, you'd think that a country like India would leap at that opportunity. They could increase their GDP by $100 billion a year easily by outcompeting every drug company in the West.

You're full of shit. You see the success of people engaged in capitalism and think you can just regulate it, just say "Make it so" and it will happen for free, or at 2% of the capitalist cost. Do you see how much bullshit that is? The communist/socialist fake good-will approach fails in these kinds of endeavors. You're crazy first of all if you think any socialist government REALLY cares that much about its people and second of all if you think that politicians are able to efficiently organize that kind of thing. So if one day you get what you ask for, you'll be shocked, just shocked, that the people in power don't want to spend money developing new cancer or HIV treatments, and if they claim to try it never works and all the money goes into the party-supporters pockets.

Re:Companies will stop selling New drugs in India

[nosferatu1001]

No, it isnt stealing. TRIPS lays out legal means for this to be performed, and India has complied with the rules on this.

You did read the article, right?

there's a reason they're overpricing this drug

[ruebarb]

average life expectancy according to an article on the BBC is extended by only 3 months -

http://news.bbc.co.uk/2/hi/health/8367614.stm

with results like that, you have to overcharge like hell to get your money cause the patients will only be around three more months than usual if they weren't taking the drug -

but if you're desperate and dying anyways, why not blow 2 months salary on a 120 day supply, right? And yet, I have no sympathy for the drug companies - I wonder why....could it be their way of using lawsuits to keep generics off the market for a few extra years while they re-release a "timed" version of their product?

Drug companies are vultures - and I'd love to see more university/public funding of this research for the public interest and less for the profit motive - especially when lives are at stake

Re:there's a reason they're overpricing this drug

[Anonymous Coward]

Wow, so they make you pay almost 6 grand for a 3 month supply of a pill that can't actually keep you alive long enough to take all 120?

Re:there's a reason they're overpricing this drug

[Anonymous Coward]

why not blow 2 months salary on a 120 day supply, right?

More like 41 years' salary - FTFA: "The Bayer price of Rs 3,411,898 per year ($69,000) is more than 41 times the projected average per capita income for India in 2012, shattering any measure of affordability."

Re:there's a reason they're overpricing this drug

[sjames]

Yes. That's why there is no UK market for the drug at all. NHS refuses to approve a drug with such a poor performance.

Re:there's a reason they're overpricing this drug

[rolfwind]

I yearn for the days of the Dr. Jonas Salks of the world.

Re:there's a reason they're overpricing this drug

[JanneM]

No. An average is not really informative for things like this. Rather, it likely fails to help some people at all, it extends the lifetime of others only modestly, and it saves the life of a few.

Re:there's a reason they're overpricing this drug

[Anonymous Coward]

Statistically, it works out to pretty much that, yes. It's an ugly outgrowth of the US system of private health insurance, believe it or not. In countries with saner systems, money tends to be spent on preventing and (gasp!) actually curing diseases, not on expensive and temporary medical miracles. To take the canonical example, it's much cheaper (and therefore less profitable) to prevent obesity by education and legislation than to keep hordes of people with sick hearts alive using drugs and pacemakers and transplants.

Re:there's a reason they're overpricing this drug

[Anonymous Coward]

1) The 6 grand is "for a 120-capsule pack for a month". In other words, 6 grand for a month.
2) The 3 month is the extension on the life expectancy. In other words, if you were expected to live 18 months, with these drugs it goes up to 21 months (21 months x $5500 = $115,500 for the drugs, and 21 months x 120 capsules = 2520 capsules).

That argument is empirically false in this case.

[langelgjm]

That argument does not work in this situation. Bayer had priced the drug so high in India that it was clear they had no interest in serving the Indian market. I'm on a listserv for this type of information, and someone close to the issue noted that "Last year Bayer sold 493 boxes of 120 tabs of Sorafenib in India. That was enough for about 49 people, in a country with a population of 1,210,193,422."

Any money Bayer was making in India off this drug was a rounding error compared to the lucrative North American and European markets. Furthermore, Bayer argued to the Indian court that the Indian population did have access to the drug through an infringing version produced by Cipla, while at the same time Bayer was suing Cipla for patent infringement, trying to get their product off the market.

Given the 6% royalty rate that NATCO has to pay to Bayer, I wouldn't be suprised if Bayer ends up making more money with the compulsory license than before.

The problem being what?

[betterunixthanunix]

If other countries want to maintain Bayer's profits, let them. Why should the Indian government forbid Natco from exporting the drug to those countries that are willing to import it?

Re:The problem being what?

[elrous0]

For one thing, you would lose the moral high ground of being able to say you were doing it for the good of your people, not just for the profits of selling the knockoff. For another thing, this would probably violate a stack of trade agreements.

Re:The problem being what?

[PeanutButterBreath]

For one thing, you would lose the moral high ground of being able to say you were doing it for the good of your people, not just for the profits of selling the knockoff.

That depends entirely on the price. Why can't they sell it at a reasonable price for the good of the people in other countries too?

Black Market?

[Drethon]

If India forces low price and other countries still have higher prices, even ignoring what the company selling the drug thinks, I hope they have plans to control this carefully or I can foresee an increase in legal drug smuggling... Just my $0.02

Or get "creative" with things

[RobertLTux]

1 allow companies to do Human testing under gov contract (this kills the liability part mostly) so that R&D is cheaper
2 don't require retesting of the components of a multipart drug ( the paperwork will refer back to the original tests) just because you are combining them DO FINAL TESTING ON THE COMBO (skip the animal testing parts go directly to human trials)
3 fast track new formats of drugs (Profican now in Liquigel format!!)
4 allow companies to cut deals for exclusive early rights to the "generic" version (okay for 10% of the take we will allow you to make the Generic for Profican 2 years early)

im sure that all sorts of very Profitable Things can be drawn up

Re:Or get "creative" with things

[Anonymous Coward]

allow companies to cut deals for exclusive early rights to the "generic" version

They already do in the US. When a drug patent expires, they can register to be an exclusive generic producer. Some companies have registered and not produced the generic version to pad out their brand name version's sales.

Re:Or get "creative" with things

[Anonymous Coward]

1 They already do this just not in the US but in way cheeper markets with 0 liability
2 see 1

looking out for the little guys

[schlachter]

Nice to see a gov looking out for it's citizens over corporate interests. In the US this would never happen unless it was needed to fight the war on terror.

I realize there are benefits to the Indian gov as well as Indian corps, but it still benefits the people greatly.

Re:looking out for the little guys

[tekrat]

"In the US this would never happen unless it was needed to fight the war on terror"
-----

Could you detail even one instance where *anything* was done to benefit the people of the United States during the so-called "War on Terror"? Because I can't think of anything.

Re:looking out for the little guys

[jon3k]

What about the Bayer employees? Who's looking out for them? And what about all the people who are willing to pay the asking price for the drug? What if Bayer decides it's not worth it to do any more research if they can't recoup their costs?

Re:looking out for the little guys

[Anonymous Coward]

What if Bayer decides it's not worth it to do any more research if they can't recoup their costs?

umm... so think about all the the drugs that they wont bring to the market simply because it wont make them money. This is simply another addition to that list.

Yes, and domestic production only, too

[langelgjm]

Yes, it's for domestic use only. It also has to manufactured domestically, which is why this type of agreement doesn't work in smaller countries without adequate manufacturing capacity for pharmaceutical products (e.g., most of Africa).

Re:Yes, and domestic production only, too

[Kalriath]

Actually, TRIPS allows a country without manufacturing capacity to issue compulsory licensing to a foreign manufacturer provided it's not exported outside of the country granting the license too.

Cheap knock offs

[Digital_Quartz]

Expect it to get muddy quickly, even if Natco Pharma is not allowed to export the medication. I suspect we will quickly see the Natco version smuggled out for sale on foreign shores, and I also expect we will see counterfeit versions claiming to be smuggled Natco which may or may not even come out of India (and may or may not contain cancer fighting drugs.)

Protections

[theArtificial]

Realistically what are Bayer's options, how do you combat something like this? Normally things are limited by expertise or manufacturing capabilities, however, India seems to have both of these covered. I'm asking because I'm ignorant and genuinely curious. I don't fault the Indians for wanting to help their people (that's a good thing). This seems to underline the downside of Intellectual Property. I guess the another option would be to keep the formula as a trade secret, but since they didn't this (and most pharma doesn't go this route) there is probably a good reason. I guess one saving grace of the patent system is that if the domestic Indian company tries to sell outside of India there may be problems? Not to single out China, but tons of knock offs come from there too and there is little to be done about it except to all but the largest players.

Re:Protections

[betterunixthanunix]

Realistically what are Bayer's options, how do you combat something like this?

Buy off some Indian politicians and get that government back in-line: get that government to stop working for the benefit of its citizens, and to start working for the benefit of foreign corporations.

Re:Protections

[theArtificial]

Thanks for the quick reply. You make it sound very noble especially the foreign corporation bit. Your argument is: ignore everything everywhere when it benefits the citizens? Please, I'm not a defender of corporations, but surely you must see that this is a slippery slope?

Re:Protections

[betterunixthanunix]

Your argument is: ignore everything everywhere when it benefits the citizens? Please, I'm not a defender of corporations, but surely you must see that this is a slippery slope?

Well, if governments are not supposed to work for the benefit of their citizens, then I have to wonder what you think the proper thing for a government to do might be. Where would you suggest that slippery slope leads?

Keep in mind that the governments of the US and of western European nations work very hard to benefit their citizens at the expense of other nations, which is basically how India found itself in this situation. The west became wealthy through the exploitation of other countries; even our poorest citizens have better lives than the citizens of some of the countries we took advantage of. We pushed other countries to adopt certain industrial regulations that our corporations wanted, like copyrights and patents, rather than using our influence to affect changes that would benefit the working class (e.g. better education, better food and water, better living conditions, etc.). If we are willing to let another nation languish in poverty so that we can continue to exploit its labor force, we really cannot complain when other countries ignore corporate profits so that their citizens can get affordable medicines.

At the end of the day, a government that is not doing what benefits its citizens is a government that fails the legitimacy test.

Re:Protections

[Anonymous Coward]

I think corporations have been price gauging for ages. The prices Bayer are quoting for this medication would be difficult for somebody in the U.S. or other Western nations to swallow - assuming their government or insurance isn't paying for it - nevertheless India.

There's an international treaty in place to:
      a: Make necessary medications affordable
      b: Still compensate the corporation who developed the compound. As others have pointed out, since Bayer is simply getting royalties, they'll most likely make *more* on this deal than if they were selling at their hyper-inflated rate to the few who actually purchase them.

Of course, I don't think the real concern is with Indians - they weren't really selling there anyway. The real concern is that the super cheap solution will make it back to the first world, where we'll continue to pay the 97% or more mark up.

Re:Protections

[langelgjm]

Trade secrecy probably wouldn't matter, as the composition of the drug could be legally reverse engineered without too much trouble (this is probably what Cipla did). The Indian company is prohibited from selling their version outside of India. What will Bayer do? They will complain to the U.S. Trade Representative about India's actions, and the US Trade Representative will write a nasty entry about India in their annual report citing this episode.

Re:Protections

[Amouth]

you didn't ask what they "should" do .. but rather what they "could" do.. and given track records.. just because they shouldn't doesn't mean they won't.

Re:Protections

[wmelnick]

Since India is a signatory to the Berne convention, they could be sued in an international court, or even in a national court in Germany (I think Bayer is from Germany) and then the Indian government and/or the generic house could owe Bayer ALL of the money they would have made on every pill sold by this generic house plus potentially other damages.

Re:Protections

[theArtificial]

Keep in mind that the governments of the US and of western European nations work very hard to benefit their citizens at the expense of other nations, which is basically how India found itself in this situation.

Very true! However, when you say the west, you should be more specific as India was under the brutal boot of the U.K., the one and the same America had wars with to get out from under.

Where would you suggest that slippery slope leads?

Granted this isn't a 1:1 example, but bear with me. I'm not able to afford a BMW (it's many month's salary and I have a pressing need for quality transportation), but everyone I know including myself would benefit immensely from having access to these vehicles for a fraction of the price which they're currently offered (they're superior machines and highly desirable). Let's begin making them locally and paying a 6% royalty to BMW. (I'm aware that there are plants here which are responsible for all or part of these vehicles)

We pushed other countries to adopt certain industrial regulations that our corporations wanted, like copyrights and patents, rather than using our influence to affect changes that would benefit the working class (e.g. better education, better food and water, better living conditions, etc.).

'We' as in The West or as in America? I'm not arguing from the west's perspective. Bayer is originally a German company which was absorbed into IG Farben a German chemical company conglomerate following WWI reparations where America and Canada and several other countries acquired trademarks and patents. Industrial Regulations were these for the benefit of citizens? Straight from your mouth you say a government should be looking out for its citizens at the end of the day weren't these things benefiting citizens? If I follow your logic, both governments are doing things for/in their interests. The west has helped move, feed, and educate the world, see below. If a local government cannot meet the needs of it's people, how does the responsibility fall upon outsiders to right things?

The west became wealthy through the exploitation of other countries...If we are willing to let another nation languish in poverty so that we can continue to exploit its labor force, we really cannot complain when other countries ignore corporate profits so that their citizens can get affordable medicines.

The West is not unique in this behavior, how is Tibet or Somalia doing, or KONY 2012? The West has also helped feed many of these people, see Normal Borlaug, German engineering has improved transportation with the highly popular gasoline and diesel combustion engines. Western Learning has enabled modern Architecture to surpass simple stone and brick structures, Hydro-Electric power, the development of medicines and cancer treatments, Women's rights, Homosexual rights instead of public stonings instead of a caste system etc. The industrial revolution required peoples needs to be met and access to education, coal, steel/iron which England had in abundance. Let's keep this more specific than East vs West since America isn't the main reason why India is where it is today. I'm not complaining, I'm asking for solutions to how to combat IP issues.

At the end of the day, a government that is not doing what benefits its citizens is a government that fails the legitimacy test.

Indeed. Which brings me back to how do you combat what's occurring?

Re:Protections

[theArtificial]

Seems like a horrible position to be in as a company but I'm sure they've figured this into their business model. Thanks for the insight.

Re:Protections

[Kalriath]

This is completely incorrect. India is a signatory to the TRIPS agreement, which explicitly permits compulsory licensing of medications where public health interests prevail such as in this case. Bayer has no legal remedy apart from appealing (in Indian courts) India's determination of what is a reasonable royalty rate.

Re:Protections

[Anonymous Coward]

I think the problem with arguing about this is that the politicians we're used to dealing with are in the gutter on the slope opposite to the one you're talking about. Pretty much anything going in favor of everyday people instead of corporations is such a rarity that most of us who don't have delusions of future wealth are more than willing to take the risk of things becoming too much in favor of the people, especially since we know while arguing this that it'll never happen without something like the complete financial bankruptcy of the country.

Re:Protections

[Anonymous Coward]

Another thing that the Indian government could do is to drag its feet when it comes to a companies patent infringement case. After 20 or 30 years, if finally reaches India's highest court and by that time the patent has expired. It then could be ruled that the case is moot because the patent has expired.

Re:Protections

[nosferatu1001]

Or, in an ideal world, the US Rep will notices Bayers actions lef to India taking lawful action under TRIPS, and admonishes Bayer for wasting their time for their own stupidity

Re:That argument is empirically false in this case

[zlives]

Bayer could just lower the price to match NATCO and still take 6% from them on top... if they cared!

Drug price arbitrage

[langelgjm]

There are already many, many opportunities for arbitrage in legal pharmaceuticals, but I don't think anyone has hard evidence about how much of a problem in the North American and EU markets this really is. Typically seniors on Medicaid don't buy their drugs out of the back of El Camino that has a bunch of Folexes and Foakleys in it...

Re:Drug price arbitrage

[TopSpin]

but I don't think anyone has hard evidence

The gray market for drugs in the US is alive and well and entirely understood. The operate quietly by fax and email, reselling drugs to doctors and hospitals. They anticipate shortages, buy stocks of drugs and sell high when normal channels run dry.

Many drugs have few or even only one qualified production facility. When change-overs interfere with production or unanticipated events occur (regulatory action, facility damage, sudden new demand, etc.,) shortages appear. Last year Congress investigated medical drug shortages. Gray market drug resellers were publicly discussed as part of this testimony.

Typically seniors on Medicaid don't buy their drugs out of the back of El Camino

They don't need to. The drugs are sold through doctors and hospitals that have contacts with gray market resellers.

Medicare, not Medicaid

[langelgjm]

Sorry, that should be Medicare...

Re:Medicare, not Medicaid

[JustNilt]

There are already many, many opportunities for arbitrage in legal pharmaceuticals, but I don't think anyone has hard evidence about how much of a problem in the North American and EU markets this really is. Typically seniors on Medicaid don't buy their drugs out of the back of El Camino that has a bunch of Folexes and Foakleys in it...

Sorry, that should be Medicare...

No, that'd be the seniors on Fedicare ... ha!

I'm not opposed to Medicare, BTW.

Drugs are like software

[Maximum Prophet]

Any decent chem lab can reproduce almost any drug given the patents and FDA approval documents. (Some drugs are difficult or perishable) People are responding that the big pharm companies will leave these markets, but if they do, it's unrelated to this.

R&D are sunk costs. *Any* sales over your fixed production costs results in profit. If you want to maximize profit, you sell.

What this might do, is limit the number of new drugs in the pipeline, but even that isn't a given. It's possible that (most) every good idea is being worked on, and all the great scientists are working on them. Once you've reached idea saturation, more money in a system just increases profits to the shareholders.

Wait, wait, I hear people yelling. If there's more money given to the shareholders, then they will invest in venture startups, and many more great new drugs will be discovered. Maybe. It's also possible that too much money in the drug company ecology will just lead to more viagra clones if not "snake oil" type products. More money might lead to more advertising, causing people to misuse drugs they don't really need.

Re:Drugs are like software

[the eric conspiracy]

Surely you must realize that the money to develop Nexavar came from profits on previous drugs.

Re:Drugs are like software

[Maximum Prophet]

Surely you must realize that the money to develop Nexavar came from profits on previous drugs.

Not without studying their balance sheets.

Money comes from a variety of sources. Yes, ultimately for a company that has been in business a long time, some of the R&D money comes from it's bank account, but these days there's almost always some government money in the form of University grants.
My point is that just because N dollars of past profit may have lead to this new drug, N+M dollars isn't necesarily going to lead to more, new, better drugs. It's entirely possible that more money might lead to fewer better drugs. Just look at the TSA. The piles of money that have been given them have just led to snake-oil solutions.

Holding out for more money is ethical if it's the difference between someone's good life and luxury. It's not ethical when it's the difference between life and death. (You don't have to give someone your last dollar, but to let them die because they won't give you theirs isn't ok)

Re:Drugs are like software

[Anonymous Coward]

R&D are sunk costs.

That doesn't make it free. It means that previous products need to make enough profit to cover current R&D. Proofs off this will be then be used to cover R&D expenses to come.

Re:Drugs are like software

[Rich0]

Holding out for more money is ethical if it's the difference between someone's good life and luxury. It's not ethical when it's the difference between life and death. (You don't have to give someone your last dollar, but to let them die because they won't give you theirs isn't ok)

The problem with this is that it leads to the Viagra/iPod problem. You can charge whatever you want for Viagra or an iPod, since it doesn't save lives. On the other hand, you can't charge whatever you want for a live-saving medication, because then you're evil. So, as a result it is more profitable to develop the next iPod or Viagra then to develop a life-saving medication. Then everybody wonders why we don't have enough antibiotics (setting aside the fact that idiotic regulation basically wastes the ones we already have). Of course, you make more money on lawsuits or financing then either, which is why we spend even more lawyers and economic meltdowns than we do on iPod R&D.

If you want more life-saving medications then those are EXACTLY the drugs you want to make super-profitable. Either that, or you have to just government fund the whole development process so that profit motive doesn't enter into it.

What you can't do is sit back and wait for private companies to be successful, and then cut them off at the knees. If you do that you end up with what you see now in the Pharmaceutical industry - scientists being laid off left and right with more money going to advertising, lobbying, etc. I don't suggest that we should be happy with the status quo either - but if you want to fix the situation you need to deploy solutions that actually are sustainable and not just kill the goose that laid the golden egg.

Re:Drugs are like software

[Maximum Prophet]

The problem with this is that it leads to the Viagra/iPod problem. You can charge whatever you want for Viagra or an iPod, since it doesn't save lives. On the other hand, you can't charge whatever you want for a live-saving medication, because then you're evil. So, as a result it is more profitable to develop the next iPod or Viagra then to develop a life-saving medication. Then everybody wonders why we don't have enough antibiotics

Perhaps then, investors should be investing in "ethical companies" vs. maximum profit, if they want life saving drugs, (What good is money when you're dead?)
"No snowflake in a avalance feels responsible". That principle cuts both ways. People don't feel their vote counts for anything, so they don't feel responsible for their governments misdeeds, nor do they think it can help.
Greed may be a deadly sin, but it's feedback is immediate. Investing in the company that gives the highest return seems the responsible thing to do when you are looking at retirement, but altruism might increase your odds of living to retirement. Mostly, people are worried that the other guy will have more than them at that time.

Re:Drugs are like software

[Rich0]

The problem here is the tragedy of the commons. Let's say that 95% of the population decides to invest in "ethical companies" that have little growth but do lots of wonderful things.

I decide to be a greedy bastard and invest in "evil company" which only invests in stuff that makes a buck.

We all retire. I get all the free benefits to the world that 95% of the population funded, plus I get a big fat bank account since I invested in a company focused completely on increasing shareholder value. Everybody else gets to watch me mooch while I sit on my yacht, and they all worry about social security payment reductions because their investments haven't grown over time.

Pretty quickly 95% of the population is buying stock in "evil company" and "ethical companies" collapse.

If everybody kept investing in charity work then sure, we'd all be a lot better off. However, all it takes is for every single person to be a little bit selfish and the whole thing collapses. Unfortunately, human nature is that we're all a little bit selfish.

It would be wonderful if charity alone could address the drug discovery problem. However, for whatever reason it hasn't happened yet, and I'm skeptical as a result that it will ever happen, any more that charity will be able to fund road maintenance. The only really effective solution to the tragedy of the commons is government taxation.

Re:Drugs are like software

[Maximum Prophet]

The only really effective solution to the tragedy of the commons is government taxation.

Yep. And things like expiring patents that are round-about taxation. Good argument for estate (death) taxes.

Re:Drugs are like software

[Rich0]

Yep. And things like expiring patents that are round-about taxation. Good argument for estate (death) taxes.

What do you mean by "expiring patents?" Do you mean revoking them before the planned expiration date? If so, that is basically like trying to fix the homeless problem by taxing anybody who feeds homeless people.

The idea is that you tax the people not working on drug R&D, and give the money to people who will do it. Or, more typically you just tax everybody in proportion to their income, since that is easier to administrate.

Basically if you want less of something, tax it. If you want more of something, subsidize it (either with cash or with some kind of artificial market manipulation like patents - though the latter may not distribute costs in a desirable manner). If you want more drugs that DON'T cost lots of money, the last thing you want to do is tax the people making drugs. If anything you offer to pay them for drugs, on the condition that they become royalty free.

Re:Drugs are like software

[cfulmer]

Sure, it may be that every conceivable good idea is being worked on -- we've hit "peak drug development" and there's nothing worthwhile waiting to be discovered. And, based on that possibility, you don't worry about destroying the incentives for drug companies to do future work. Of course, it may be that the opposite is true. And, if so, then destroying those incentives is really a bad idea. Also, recognize that there would be spill-over effects in other industries: what would be the incentive effects on, say, medical devices? Or safer cars? Or iPads? Surely, when the government starts saying "Ok, you've had enough profit, thank you" to one industry, other industries need to ask if the government will do the same thing to them.

Re:Drugs are like software

[Maximum Prophet]

Patents expire after a certain amount of time (much, much, shorter than copyright)

By not allowing one company to have a permanent monopoly on a drug, the government encourages new drugs to be created. Note that's there's no evidence that the current expiration period is optimal, it's just the best guess of Congress many years ago. There's also no optimization based on whether the company is actually producting new, useful products, and no requirement to do so.

When the first patent law was passed, it was something like 1/3 to 1/2 the lifetime of the average inventor.

Imagine that drug and medical device patents expiration period is set at 50% the lifespan of the average person. Would that encourage them to produce more life sustaning inventions? Discuss.

Re:Drugs are like software

[Rich0]

Yeah, I'll be the first to agree that patent durations probably aren't optimal. They're far better than copyright, but across the board they probably need adjustment. They probably should be set by industry to reflect the pace of innovation. Within the drug industry it probably would make sense to adjust them to some degree based on need/volume. You might offer a really long patent for a drug that treats some really rare disease to give somebody more incentive to go after it (orphan drugs as they're often called). You might offer a short one if it sells $5B/yr - after the first $25B I'm sure they've made back their investment. And so on...

To a degree this is already done with a few laws that give patent extensions of six months or so for doing certain things, like testing your drug on children.

All that said, if you want to solve the way costs are borne you either need universal insurance or government-funded R&D. Otherwise you'll always have issues where poor people can't afford medications.

Academia? More than you'd think

[Sycraft-fu]

Since the public has decided they do not wish to pay more taxes to education, public funding has been getting slashed over and over. So we turn to the only place we can: Companies. They are willing to give money to fund research. However they own the results when they do that.

If you don't like that I'm afraid universities will need more public funding and that means higher taxes.

Re:Academia? More than you'd think

[Anonymous Coward]

I just want my government to give me everything for free and I don't want to pay taxes. Figure it out.

Re:Academia? More than you'd think

[Anonymous Coward]

Interesting. The funding gets cut, but my states taxes have only gone up. Huh. I wonder what causes that.

Re:Academia? More than you'd think

[Anonymous Coward]

I'd love to fund universities if they weren't so busy trying to pump out BA/BSc students who only want those letters to get a job and have absolutely no interest in the education or any research at all.

If universities would go back to their old ways of focusing on higher education rather than "Go to university to be a computer programmer/fix cars/swab decks" they might get more public support for their activities.

Re:Academia? More than you'd think

[horigath]

I'd love to fund universities if they weren't so busy trying to pump out BA/BSc students who only want those letters to get a job and have absolutely no interest in the education or any research at all.

That's the same problem: reducing public subsidies to educational institutions encourages them to feel desperate and start trying to maximise their other income. It leads to them treating students as customers, where tuition payment becomes a simple transaction which pays for an entitlement to a degree title.

Better public funding is absolutely part of the solution to declining academic cultures and performance standards.

Re:Academia? More than you'd think

[sixtyeight]

If you don't like that I'm afraid universities will need more public funding and that means higher taxes.

I sometimes think our society is filled with either (a) very gullible people, or (2) extremely unimaginative people. Where did the spirit of innovation we had in yesteryear go?

Universities are a broken model. Mortgaging the rest of your working life just to get a diploma that is recognized by a job market, so that you can have a career to mortgage in the first place. In the U.S., people who have mortgaged their working lifetime just to get that diploma are finding out not only that it's nearly worthless, but also that the job market hasn't enabled it to make much of a difference for them anyway.

With the internet, we have the greatest information distribution medium in history. I'm not aware of any reason in the world why we can't use gamification to make learning games happen on a prevalent basis, and use them to form full and complete curricula that are (a) thoroughly free or very nearly so, and (2) thoroughly enjoyable as well. In fact, keeping track of who got what high score rankings would tell a prospective employer far more than the standard university diploma would anyway.

I sometimes think the human race is just not very bright, or enjoys doing things in the most grueling and inefficient ways possible.

Re:Academia? More than you'd think

[sociocapitalist]

Universities, which are also businesses, also aren't the answer as things stand. They protect 'their' IP and go and make money on it just like any other type of business.

The answer is putting patent law back the way it should be and having reasonable limits on how long innovation is protected before it should become public.

Mod parent up, please...

[morningstar8]

Mod parent up, please, +1 informative.

Re:That argument is empirically false in this case

[Mr Z]

And in either case, cancer patients in India get access to the drug at reasonable prices. Let's not forget about the cancer patients in this, shall we?

Nonsense! Capital will flee

[unassimilatible]

If they won't settle for less profit, someone else will be prepared to take their position in the market.

Who is "they"? Spoken like a guy who doesn't own stocks. Scare investment capital from drug companies, and it won't go elsewhere in the market - it will go to Exxon and Apple! Buh-bye, private R&D!

Government will never give out free gas and iPhones, so my investment dollars will go there.

Re:Nonsense! Capital will flee

[conscarcdr]

Tai Yong Medical

Re:Nonsense! Capital will flee

[Anonymous Coward]

Fuck you and your stocks. Your stocks are the reason everything is so screwed up. The stock market pretty much runs the world and what runs the stock market is people wanting something for nothing. People don't invest in companies, they invest in the price of the stock. They just buy something hoping that the price of the stock goes up and they can sell and get money for doing absolutely nothing. It's pathetic. Meta-investing is really what it is.

Re:Nonsense! Capital will flee

[sixtyeight]

Spoken like a guy who doesn't own stocks. Scare investment capital from drug companies, and it won't go elsewhere in the market - it will go to Exxon and Apple! Buh-bye, private R&D!

You make a good point. Why have we not heard of whoever's doing internet crowd-funded R&D? And if no-one is yet, why not?

Crowd-funded R&D, crowd-funded manufacturing... seems to me the public would fund what it actually wanted, and you'd thus have a market demand for the resulting product. Shareholder revenues don't get much better than that, I would think.

Re:Nonsense! Capital will flee

[sixtyeight]

This is absolutely correct, in my experience.

What corrects the problem isn't outrage - at least, not until the majority of the public are torches-and-pitchforks outraged by it - but rather presenting viable alternative approaches. This is why I suggested investments in things like crowdfunded R&D and crowdfunded on-internet-demand manufacturing. So that investors can throw capital into the market in ways that don't contribute to the problem.

Re:Nonsense! Capital will flee

[bingoUV]

Need regulation. Stock markets are regulated so that it is difficult for companies to get money from primary markets, show fictional losses in fictional enterprises and run away with the money. Various other accounting regulations make it difficult to perform less complete fraud too. I am not saying fraud is completely impossible but there is a huge regulatory framework and legal case history to keep things under control.

If you open a crowd funded R&D enterprise, how can the "crowd" trust you that the fruits of thus funded R&D will go on to reward the "investors"?

Ironically, your best bet is here too to open a holding company, get reputation somehow, open child company IPOs in the regular stock market based on that reputation and use each child company for a particular R&D effort. This will keep it legal, trustworthy and to a degree conventional

Re:Nonsense! Capital will flee

[sixtyeight]

Those are valid concerns. Government regulation might be unnecessary - not to mention untrustworthy as well. But getting third-party certified and/or audited might make a lot of sense. Gambling sites do it to ensure players that the software isn't rigged. Penny auction sites ought to do it. And it would make total sense for something like this. Even having third-party bookkeeping from an outsourced company might be able to do it.

Thanks for the idea!

I have a very rare disease...

[bmajik]

...that can only be cured by the heavenly touch of Natalie Portman's hand upon my forehead.

Without this treatment, I fade in and out of conciousness, slowly losing body weight, muscle mass, and organ function. I have only 6 months to live if I do not get the treatment I need.

I've asked Mrs. Portman many times if there is a way she could lay her hand upon my forehead for the prescribed 8hr sessions 3 times a week. I've offered her all of my money. I've sold my home and my surviving family members have taken up disreputable work.

Alas, she refuses to lower her price, she has told me that she will not help me even if I pay her 1 million dollars per week!

I emplore you, caring people of the modern world. Please won't you save me?

I desperately need Natalie Portman's healing hand to save my life. But I cannot afford the outrageous prices she is demanding.

Can't someone do something?

Re:I have a very rare disease...

[Anonymous Coward]

That's a motivational speech for "Make it yourself"... Just give me the blueprints dog. I'm going to give all of my friends deluxe chemistry sets for christmas.

Re:I have a very rare disease...

[Anonymous Coward]

Portman is a skank. You want Padma Lakshmi.

Re:I have a very rare disease...

[wmelnick]

forehead? too bad.

Re:I have a very rare disease...

[Anonymous Coward]

You need to offer her some grits.

Re:I have a very rare disease...

[Anonymous Coward]

...that can only be cured by the heavenly touch of Natalie Portman's hand upon my forehead.

Without this treatment, I fade in and out of conciousness, slowly losing body weight, muscle mass, and organ function.

I have the same disease! But it's not my forehead that needs the touching. And other body parts of Natalie Portman will heal me better.

Re:I have a very rare disease...

[Nidi62]

Maybe you can get the government to allow the production of the generic cure for your disease. However, you may not want that as I am told the generic is actually Snooki.

Re:I have a very rare disease...

[JustNilt]

Do you have Stalkeritis? Do you need that special "treatment" for this serious "medical condition" and just can't manage to convince your preferred provider to, well, provide it? Just call 1-800-Girl-Now! We have genuine look-a-likes for all your medical needs. Offer not valid in all areas, some restrictions may apply. Satisfaction guaranteed, assuming you aren't finicky.

(You may not want to actually call that number; I have no clue what it goes to for real.)

Re:I have a very rare disease...

[Anonymous Coward]

Sure, we're going to get someone who sort of looks like Natalie Portman to stop by your house... actually she's a very close facsimile that we can provide at lower costs... they both have two hands, both have at least several teeth, a nose... OK yes, so the facsimile is missing one eye, but it's OK because we've determined through extensive testing on animals that it doesn't reduce the effectiveness of her hand...

She normally hangs out at a street corner near your home, so we've agreed that she can visit just your home, and those in the surrounding neighborhood, and she only wants $20/day.

Re:I have a very rare disease...

[Anonymous Coward]

heres a revolver and a bullet. Or if you prefer the swiss method a neck tie and a hook.

Re:I have a very rare disease...

[Anonymous Coward]

Where's the hot grits? Why I can't see the f****** hot grits?

Re:I have a very rare disease...

[El Torico]

Too bad I don't have mod points. That's the funniest post I've read in weeks.

Citation please

[unassimilatible]

Only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH)

Nice general talking points there, now how about some proof in the form of cites?

Besides, it's utterly pointless to say one does more than the other. How about encouraging as much funding you can going toward lifesaving drug research, instead of private sector capital fleeing to oil companies and tech?

thanks for the free research

[Anonymous Coward]

Looks like high end research firms will start offering in-house dosing only...

Brazil already does that

[TechkNighT_1337]

Here in Banana Land, we already do it for more drugs. It Works!

End copyrights and patents - just one more reason

[roman_mir]

This just proves my point, that I am making here for a long time - patents and copyrights are gov't subsidised nonsense and you see how a gov't can easily confiscate something from you, you thought you had in your pocket anyway.

Copyrights and patents need to be abolished and for companies that produce drugs this is only a plus in a situation where it's really their own research, it's called: trade secret.

Sure, pills can be reverse engineered, but that's always the case. The difficult part in many situations is not what is but how it is made, the difficult part in many cases is the actual manufacturing process.

As to the /. crowd, who is very often against the suggestion of ending copyrights, because many here believe that they have some 'natural right' to be given a government subsidy in form of a patent or a copyright - that's not a natural right.

You have some information that you don't want anybody to have? Don't release it or release it only under strict non-disclosure act. You don't get any protections from government against people plagiarising your work, and that's it. You have other tools in your disposal: trade secrets, a strong brand (I am not against trademarks by the way, but again, not trade marks that are enforced by government in any way :)

Re:That argument is empirically false in this case

[Maximum Prophet]

Yep, they can, and that would probably maximize their profits. Rational economic theory says this is just what they will do.

However, if the legal department at Bayer is overstaffed, the VP of legal might make up some bogus numbers and get the approval to go ahead a sue, even though the production department wants to sell. Lets say the profit in question is $50,000,000. If the VP of production is bogged down with $100,000,000 decisions, the $50 million decision will get backburnered. Also if the VP of legal plays a worse game of golf with the board members, then he gets his way.

Most companies are not about maximizing profit, they are run for the egos of their leaders.

the pharma-bashing is fun and all..

[argStyopa]

...but if it's so easy/cheap to do (since everyone's claiming most of pharma $$ are spent on advertising, etc), why doesn't India just develop it themselves?

In other news, were I a pharma company, I would immediately stop selling anything in India...PARTICULARLY where there's an exposure in a local-owned subsidiary that could be nationalized (which is effectively what this decision does).

Re:the pharma-bashing is fun and all..

[cpghost]

In other news, were I a pharma company, I would immediately stop selling anything in India...

While I understand the reasoning behind their logic, I'd still say to them: Go ahead. Do you really think that India's reverse-engineers aren't able to get the original drug overseas?

That's the dilemma of the drug companies: they're damned if they stay, they're damned if they don't. And considering all the pain they're inflicting on dying or extremely sick people by withholding their drugs through prices that don't reflect the local purchasing power by a long stretch, they damn well deserve being damned. Maybe it's time they've got a taste of their own overly expensive medicine?

Re:the pharma-bashing is fun and all..

[Rich0]

Yeah, but their dilemma is yours as well. In 30 years they might discover a cure for a disease that will ruin your life in 40 years. However, they will only discover that cure if they're still around and doing R&D.

I'm all for reigning in some of the abuses, but keep in mind that when you "punish" a big company by making R&D not pay off, all you really end up with is a lot of unemployed scientists. You don't think the CEO is going to take a pay cut short of the last office chair being sold off in bankruptcy, do you?

If you want to have drug R&D belong to the public, then start paying for it with taxes (the whole thing - not just the fun and exciting and cheap academic part). That is a model that is actually sustainable, and I can't see the NIH being any less competent than a lot of the MBAs running pharmaceutical companies these days...

Re:That argument is empirically false in this case

[b0bby]

Given the 6% royalty rate that NATCO has to pay to Bayer, I wouldn't be suprised if Bayer ends up making more money with the compulsory license than before.

But as you said before, they have no interest in the Indian market. What they're scared of is these cheap Indian drugs leaking out to their lucrative North American and European markets. That's where this is likely to hurt their bottom line.

I don't see it... care to elaborate?

[F69631]

Thanks for the quick reply. You make it sound very noble especially the foreign corporation bit. Your argument is: ignore everything everywhere when it benefits the citizens? Please, I'm not a defender of corporations, but surely you must see that this is a slippery slope?

You might be saying "If we do stuff like this, we hamper R&D in the long run... so this is a bad idea" but that (whether I agree with it or not) wouldn't be discussing long-term benefits vs. short-term benefits and doesn't seem to be what you're getting at. It'd be about tuning the algorithm and have nothing to do with slippery slopes.

You might be focusing on the "the citizens" bit, meaning that you're essentially saying "We're all human, so a state putting its own citizens ahead those who live elsewhere doesn't act in an ethical fashion". I might actually agree with that to some extent but I got the feeling that this isn't the point you're trying to make. Besides, it's hard to say "It's a slippery slope" when essentially every state in the world already does that more than what's involved in this specific story.

My best guess at the moment is that your worldview simply differs from mine (Perhaps more weight on individual liberties for their own sake and less weight on maximizing happiness) but feel free to elaborate. :)

Re:I don't see it... care to elaborate?

[theArtificial]

I'm looking at it as if it were my company and I spent time and money investing in a product only to have it counterfeit and sold in another market. What distorts this perception is the unknown real cost of developing, testing, and ultimately marketing a "life saving" product. I have no idea what the cost is and how much they've been able to get back (or profit immensely from) from their investment. Aren't most of the inflated costs are borne by the insurance companies?

For example, I know with medical tools which doctors use, some have failed when initially offered in the market place for being too cheap! The same product was re-marketed with a higher price and succeeded. Perhaps that also plays a role in the inflated price we see for this medicine.

You might be focusing on the "the citizens" bit, meaning that you're essentially saying "We're all human, so a state putting its own citizens ahead those who live elsewhere doesn't act in an ethical fashion". I might actually agree with that to some extent but I got the feeling that this isn't the point you're trying to make. Besides, it's hard to say "It's a slippery slope" when essentially every state in the world already does that more than what's involved in this specific story.

As another poster said (I'm paraphrasing), at the end of the day a government which doesn't look out for it's citizens isn't legitimate. I agree with that, what I'm struggling with in this situation is which side is right.

Problem created

[Shivetya]

a life saved today may cost hundred if not thousands in the future if sovereign states continue on such course as it may induce people to invest their money in safer environments.

Then there is this whole transfer of cost to nations that do pay the costs associated with drug research. How is this different than rising countries who get manufactures to build plants in their country and declare that intellectual property must be surrendered?

Eventually you produce a situation where the risks of losing the investment curtails the activities you need to go forward. You cannot expect companies and people to pour billions into research if it can effectively be stolen or co-opted.

This is no different than when Greece changed laws regarding bonds they had already sold. They induce a new and more severe level of risk in the market which not only harms their chances to borrow but the chances of others to borrow.

Sovereign states bear a greater responsibility to uphold property rights. If they don't like the price Bayer charges they should be able to buy the right to produce and sell it within their country. If it cost you a billion to develop something; not including the costs of other failed but related attempts; would you feel inclined to do it again if I summarily declared you only deserve a hundred million for it? What about 1 billion plus half a million more? Where do we draw the line.

Yes it can be claimed to have been done for a good cause, but as I started out this post, you save a dollar today only to cost yourself ten times that later.

Re:Problem created

[Anonymous Coward]

Human lives, suffering, and human rights override property rights in all cases, no exceptions. Property rights, especially intellectual property rights, are a gentleman's agreement that are only to be upheld when it benefits the common good. Don't take this as some socialist anti-ownership manifesto. In most cases it's in everyone's best interest to uphold that, if for no other reason that it's a very good tool for society and evidently very efficient.

However, somewhere the property rights guys got a little self important and forgot why they were granted the privilege of ownership. They game the system of ownership and cry foul when others take issue with their exploitve behavior. We call these people a lot of things, but they usually call themselves libertarian.

Remember. Gentleman's agreement - Anyone who thinks "Intellectual property" is the sole commodity that will help us compete against China is a damn fool. China will do what's in it's own best interests.

Or not

[chrb]

Brazil already imports Efavirenz from India. Efavirenz is the anti-HIV drug that the Brazilian government compulsorily licensed.

Re:That argument is empirically false in this case

[Anonymous Coward]

I know it is heartless but IT IS TRUE

Re:That argument is empirically false in this case

[Anonymous Coward]

Ah, but perhaps if those patients (from their pockets, or the pockets of their governments, or the pockets of the alien space bats for all I care) were paying their "fair share" (whatever that means) maybe the prices in Western markets would be "more reasonable" (whatever that means) and there would be more research dollars available overall.

This is an arms race

[cpghost]

I expect drug makers to react by slapping some kind of DRM on their future inventions in a way similar to the infamous Monsanto Suicidal Seeds (a.k.a. GURTs, terminator seeds). Expect the DRM to be deeply hidden in the manufacturing process, and designed in such a subtle way as to cause middle-term casualties or at least strong pain in patients who, being poor, dare to use an affordable copy of that drug that was made by a competing company unaware of the specifics of the production process.

Re:This is an arms race

[Maximum Prophet]

I don't know how the FDA approval process will work, but in the future, drugs will be tailored to your DNA. So your drug won't work for anyone else.

I suspect the rich will get their healthcare on remote islands beyond the FDA, while the rest of us will have to use generics.

Re:This is an arms race

[Kalriath]

And they would quite rightly be charged with thousands of counts of assault and/or murder. Your idea is even dumber than their pricing model.

I would appreciate citations if you have any...

[langelgjm]

The gray market for drugs in the US is alive and well and entirely understood. The operate quietly by fax and email, reselling drugs to doctors and hospitals. They anticipate shortages, buy stocks of drugs and sell high when normal channels run dry.

But "gray market" can refer to any number of strategies. The specific worry in this case is that generic versions of a drug are going to make their way out of India and into the U.S. and European markets. This isn't about trips to Canada, or buying low and holding to sell high during a shortage...

If you have peer-reviewed studies or any other kind of study with hard, empirical evidence (numbers) about this, I would greatly appreciate the citations. I'm interested in the prevalence of it, and specific instances that someone can point to where generic versions have been diverted from low-income countries and resold in siginificant quantities in high-income countries..

Re:I would appreciate citations if you have any...

[Anonymous Coward]

The specific worry in this case ... This isn't about trips to Canada

Sorry, but no. You broadened this topic to 'arbitrage in legal pharmaceuticals,' as opposed to smuggling illegal contraband. You don't get to reel the scope back in just because your ignorance showed.

You also wrongly suggest there is no 'hard evidence.'

I'm interested in the prevalence of it

Watch/read the testimony I linked. Punch "gray market drugs" into Google. First try got me here. This isn't the mysterious phenomenon you appear to believe it is and you can easily find your own answers just as soon as stop insisting they don't exist.

Re:End copyrights and patents - just one more reas

[wmelnick]

The problem with that is that without patent protection the company has to keep the formula and process to make it secret, which means no peer review because you cannot review something that you cannot look at. That makes drugs far more dangerous.

What is Seen vs. Unseen

[geoffrobinson]

The bias is always towards what is seen. We can see the drug prices getting cut. We cannot see a drug that will never get created.

This is not the first use of Compulsory Licences

[Anonymous Coward]

I'm not sure where the author of got the notion that this is the first use of Compulsory Licenses. There have been several examples of countries using these provisions of the TRIPS Agreement, noteably, Brazil, among others.

The problems with compulsory licensing is that a determinative factor in the original provisions of TRIPS and the relevant subsequent legislation was that a domestic pharmaceutical industry was a pre-requisite to using these provisions. This has since been amended, but originally only a country that could produce its own medication could use the compulsory licencing provisions. This is obviously problematic as countries that need essential medicines and pharmaceuticals are often unable to produce these medicines and sufficiently under-developed.

I believe it was with the Doha Agreement (essentially, an amendment to the compulsory licensing provision in the TRIPS agreement) that occurred in roughly 2001 in Doha, Qatar, when this blatently restrictive obstacle was finally removed.

A much more remarkable story is that countries, after Doha, were allowed (if they followed the proper procedures) to produce patented medicines for people in very poor countries and this was done under the guise of the compulsory licensing regime.

I believe the first (and only, to my knowledge) use of this provision is the Canadians providing Rwanda with a cocktail of antiretroviral drugs. Over 15 million doses were approved under this regime. This transfer of medicines was further allowed under the Patent Act (s. 21.09) of Canada and all the particular international rules and regulations.

Just wanted to add this.

Brazil broke Mercks patent on AIDS drugs (2007)

[jtoj]

It should always happen when cost for R&D is payed for. Brazil broke Mercks patent on AIDS retroviral drugs. Merck had offered to sell the drug for $1.10 per pill, down from $1.57, while Brazil was seeking to purchase the drug at 65 cents a pill, the same price Thailand pays. Brazil provides free AIDS drugs to anyone who needs them and manufactures generic versions of several drugs that were in production before Brazil enacted an intellectual property law in 1997 to join the WTO. http://www.msnbc.msn.com/id/18490388/ns/health-aids/t/brazil-break-merck-aids-drug-patent/#.T1-j_xHy92A

Tit for tat

[tacokill]

To give an non-comedic answer......companies will just go elsewhere next time. They, simply, will not offer their wares in countries where they can't make any money and/or get ripped off.

Why do you think there is so much business being done in Somalia?
Closer to home, why aren't more people investing in Mexico?
Answer: Because they are completely lawless.

It's the same reason we are discussing this. Business isn't stupid. India will get away with this exactly once. After that, I assure you that the Indian people are the one's who will take the worst of it. They won't even know that there are better cancer meds being sold outside their country. And when they ask, "why can't we buy these" -- the answer will be simple: because you can't pay what we charge and you steal from us when we come into your market. Therefore, we choose not to serve you. Good luck with your healthcare needs.

Hopefully, the Indian people/group/whatever who approved this robbery can find the funding to start their own cancer R&D for their people. If they are lucky, it will be 1/100th as good as what they just stole.

Re:Tit for tat

[theArtificial]

India will get away with this exactly once. After that, I assure you that the Indian people are the one's who will take the worst of it. They won't even know that there are better cancer meds being sold outside their country.

I appreciate the insight, next time my guess is it won't involve a patent but corporate espionage or reverse engineering. India has the ability and resources to manufacture pharma. Apparently all that's missing is the formula. Bummer if you're in the pharma industry...

Business isn't stupid

Explain out sourcing then! jk =)

Hopefully, the Indian people/group/whatever who approved this robbery can find the funding to start their own cancer R&D for their people.

Hopefully. Cancer sucks.

Re:Tit for tat

[tacokill]

Yes, you are right that espionage becomes a serious concern. However, again....business isn't stupid. They will do what they need to do to protect themselves. They will also require the same of anyone they work with (such as universities, governments, etc). Don't forget, there are also world bodies that don't look kindly on what India did here (WTO, UN, etc)

The other thing to keep in mind is that this stuff happens over the course of a decade (or more). It won't happen instantaneously. It will happen as more and more businessmen run the cost/benefit calculations and decide not to do business in India. You can see almost the same exact thing happening with China over the last decade. Many people got burned outsourcing their high-tech designs and now, as word starts spreading, who doesn't know that the Chinese are stealing stuff right and left???? Everyone knows now! (and many companies are having 2nd thoughts about what they have built in China. Certainly they are more aware now)

As a businessman myself, I don't begrudge India or take it personally because I know....in the long run.....it is self serving and they only undermine themselves. Who will they steal from when there is noone left to steal from? At some point, innovation matters and that is where the USA excels far beyond the rest of the world....

Re:This is not the first use of Compulsory Licence

[PPH]

The problems with compulsory licensing is that a determinative factor in the original provisions of TRIPS and the relevant subsequent legislation was that a domestic pharmaceutical industry was a pre-requisite to using these provisions.

So, if Elbonia wants cheap drugs, they have the option of sourcing them from India. And then this continues all the way up the drug manufacturing food chain, stopping just outside the US borders. Because we live behind an economic Iron Curtain.

Brazil was there, and people won.

[dragisha]

http://www.usatoday.com/news/world/2008-09-17-brazil-AIDS_N.htm

It is logical thing for governments to do. At least as long as they have enough sovereignity for such action. Think World Government here...

Re:This is not the first use of Compulsory Licence

[Anonymous Coward]

It would still have to be done under the very restrictive guidelines of TRIPS and the subsequent agreements, which provides for remuneration for the producers of the drug regardless, among a bunch of other restrictions and remedies. This sort of stuff still drastically favours the developed world.

Consider the PR you would get...

[Anonymous Coward]

... from "combating" cheap medication for cancer patients. Public opinion would eat that company alive, and they would deserve it.

It works!

[gtirloni]

This has happened in Brazil (not specifically to this drug) and it works just fine.

The pharma companies that were crying out the end of the world are all here, still making a profit, everything is fine.

I really doubt $5500 is the correct price for that drug in India. Whoever decided to charge that much should go to jail.

Re:It works!

[Anonymous Coward]

This has happened in Brazil (not specifically to this drug) and it works just fine.

The pharma companies that were crying out the end of the world are all here, still making a profit, everything is fine.

I really doubt $5500 is the correct price for that drug in India. Whoever decided to charge that much should go to jail.

This has happened in Brazil (not specifically to this drug) and it works just fine.

The pharma companies that were crying out the end of the world are all here, still making a profit, everything is fine.

I really doubt $5500 is the correct price for that drug in India. Whoever decided to charge that much should go to jail.

Its actually $5600. 280000/50(exchange rate) = 5600.

Re:This is not the first use of Compulsory Licence

[Anonymous Coward]

This is the first use of Compulsory Licences *in India*. The article makes that clear.

Re:That argument is empirically false in this case

[jbov]

Bayer could just lower the price to match NATCO

You're right, but they won't. They want to keep the high price in other countries until the drug's patent expires. It is tough explaining to CountryA how you can afford to sell your drug 97% cheaper in CountryB. This situation in India is a win/win for Bayer, for the time being.

Re:That argument is empirically false in this case

[Whorhay]

True, but with such a huge chunk of the worlds population in India I wonder if they still won't more than make up for it.

Re:This is not the first use of Compulsory Licence

[PPH]

This sort of stuff still drastically favours the developed world.

The developed world being who? The consumers or the drug manufacturers?

We (the consumers) in the developed world end up financing cheap drugs for the poor nations. Which isn't really wrong, except that I don't really consider the likes of Canada and Europe to be poor. So the developed world ends up being the USA, and the poor nations end up being everyone else with a gov't that has the balls to step up and negotiate on behalf of its citizens.

Re:End copyrights and patents - just one more reas

[roman_mir]

that's a really weird argument, because to do testing of drug safety, there is no test of how the drugs are made, there are all sorts of tests against more and more complex organisms (going up the ladder towards animals and then humans).

The price of pain in Britain

[Anonymous Coward]

If you know the rules you can get traditional painkillers for half the price of Name Brands.

Boots one of the largest national chemists in Britain sell "own" brand paracetamol/codein tablets fro about £2.50.
Exactly the same mix for an advertised brand is over £5.

Just how much does it cost to produce the codein and paracetamol?
Not anywhere near as much as the cheapest version, I'm sure.

So how much would a poor man in a poor country be expected to pay?
OK he can grow his own poppies -so could I. But I couldn't produce my own cure for TB or anything of the sort no longer under patent.

I believe that patents should not be allowed on proven medicines.
And many such have been invented without the help of venture capitalism.

 

here's to hoping

[superwiz]

Now that India is involved in blatant IP theft, let's hope that high tariffs are imposed on all IT outsourcing to India.

Re:here's to hoping

[Kalriath]

It's not theft, it's perfectly legal, and imposing sanctions against them for their action would be illegal. Those are the WTO rules (and swathes of treaties).

Re:here's to hoping

[superwiz]

The fact that a government does it, doesn't make it legal. Every violation of WTO rules is a government action. Blatantly ignoring IP of law abiding entities is no less theft than downloading the latest Bieber song. Some would argue that it is less of a theft than stealing something which has a non-nominal replication cost. But as long as we are comparing apples to apples, taking away someone IP rights because you really, really, really, really need what they created (or what what acquired by paying those who created it) is all the same.

Re:here's to hoping

[Kalriath]

No, it is perfectly legal, because it's in perfect compliance with the TRIPS agreement - a WTO treaty - permitting compulsory licensing of medications under public health grounds. They're not taking away any rights, they're simply exercising their right to force a compulsory license at what they see as a reasonable royalty rate. Bayer also has the right to appeal that rate (but not the license itself) in Indian courts if it feels that it should really be getting paid more. Frankly though, they are unlikely to do this as they get the best of both worlds through this process - they sell to people who otherwise wouldn't get access to the drug (more $$$) and because it was government action not voluntary price discrimination, it won't affect pricing in developed countries.

Re:Just keep in mind the tradeoff (bull)

[Anonymous Coward]

1. Advertising never saves money. Advertising costs money.
2. If it's "academic research", corporations must be getting a bargain (no full-time researchers on payroll, fewer operating expenses).
3. You don't see Bayer in the top 100 of what? They're listed as the tenth largest pharmaceutical company in the world, by Wikipedia, with the comment: "Bayer has additional revenue not included here." (Meaning: Bayer is a holding company, not just a pharmaceutical company.)
4. Selling for less profit doesn't necessarily mean selling at a loss. If they only make $400 million profit instead of $800 million on a product, do you think they'll unload it? (Doubtful.)

-cpu68030

Two big problems

[Vrtigo1]

I didn't RTFA, but I see two big problems here.

1) This sets a dangerous precedent by removing the incentive for large companies like Bayer to invest R&D dollars to develop new drugs. If governments can arbitrarily decide that your product isn't affordable enough and grant other companies licenses to sell it at prices which massively undercut you, then you sort of lose the desire to spend tons of money developing these products.

2) The cheaper drugs are stilling for $175 for a month's supply. Is this actual manufacturing + distribution cost or very near to it? It seems somewhat high, and I strongly disagree that the other company that has been granted a license to produce the drug should be doing so at a big profit since they didn't have a horse in the race when it was time to pony up the big money during the R&D phase. IF they should be granted a license to produce the drug, they should be compelled to do so at a price that is at or just very slightly above their cost.

Re:That argument is empirically false in this case

[Kalriath]

What the fuck are you talking about? The Indian government isn't stealing a cent from Bayer - as Slashdot readers are wont to constantly remind us in any story about how pirates are "stealing" billions from the record industry per year.

Besides, under the TRIPS agreement, this is perfectly legal. By law, Bayer must have the right to appeal (in India) the determination of what is adequate payment for royalties, but ultimately it is up to the Indian government to decide what the adequate royalty payment is. Other than appealing (and at best getting a slightly higher royalty rate) Bayer has absolutely no course of action available to it.

The naked truth

[Anonymous Coward]

It's great seeing the law being broken so the CITIZENS are protected. And in truth, no-one got rich by playing fair so ultimately, it is a little bit of payback.

Re:End copyrights and patents - just one more reas

[Rich0]

The difficult part in many situations is not what is but how it is made, the difficult part in many cases is the actual manufacturing process.

Give any first-rate chemist a few million dollars, a bottle of pills, and a team to lead, and they'll be able to replicate just about anything. Let's set aside the fact that all you have to do is bribe somebody in the FDA to get a copy of all the details - or are you proposing that the details be kept safe from the government as well?

The difficult is not the manufacturing process - it is figuring out what to manufacture. Almost all of the costs in the commercially-funded side of drug development are in the clinical trials, and the repeated attempts to find something that works. Each attempt costs tens of millions of dollars (well, for the ones that make it past the cheap stuff like computer simulations), and it usually takes quite a few to find something that sort-of works.

If you don't allow for patents the only practical alternative is to have the government pay for end-to-end drug R&D. I'd actually like to see that happen, but there is no reason to not get that up to speed BEFORE you tear down the existing industry.

Sounds like Natco has friends in the government

[PolygamousRanchKid]

No more, no less.

Forgot about good motives.

This is all a question about money, and who gets it.

So much for the incentive to innovate

[EmagGeek]

When you spend $300M to develop a drug that is only going to be used by 3000 people, of course it has to be expensive to recover the cost of R&D.

If, the day after you release the drug, some jackbooted thug declares that some competitor of yours can steal your formula and sell the drug for 3% of what you need to sell it for to recoup your cost, then you have zero incentive to develop life-saving drugs. And, neither does anyone else.

Same profit by selling more drugs for less price

[Anonymous Coward]

Bayer did not understand that it could have made the same profit by selling more drugs for lesser price. Such an issue would have never comeup.

Once again

[Anonymous Coward]

India takes more shit from America.

Re:That argument is empirically false in this case

[tsotha]

What Bayer is probably worried about is grey-market imports from India to the markets that support their costs.

Re:That argument is empirically false in this case

[Anonymous Coward]

pirates are "stealing" billions from the record industry per year.

well (majority of)pirates are not stealing from record industry because most pirates would not buy that music anyway BUT India is stealing since all those people would otherwise be forced to purchase those medicine from Bayer OR DIE and people do not like dieing so they would find way to pay Bayer full price

Economy 101 if customer is FORCED to buy your product reducing price is stupid and can only REDUCE your stock price

LOL...so much for drug research!

[p51d007]

Keep garbage like this up, and you will KILL research. Yeah, they'll do it for the common good of mankind LOL. Companies will do it if there is a PAYOFF at the end. It costs millions of dollars to research ONE drug, and bring it to market. 1 in 1000 "adverse reactions" and you'll see countless "if you or a loved one took xxx drug, you may be entitled to compensation. Call xxx-xxx-xxxx". That would cost a company billions. Drug research is a risk, and if there is no chance of a payoff, they will just stop doing it.

Re:Just keep in mind the tradeoffs

[Anonymous Coward]

Wrong, its theft plain and simple. If I take say an IPad and get another company to manufacture a copy at a cheaper price because my friends can't afford a shiny new IPad, am I stealing from Apple? I would say yes, I'm stealing all the research and development costs put in and the failures that came before. Not to mention taking away manufacturing jobs from Apple. Whether we like it or not, a drug is a product like any other and there are basic principles involved in trade. If the Indian government wants to make that drug cheaper than it can subsidize it.

Re:That argument is empirically false in this case

[Kalriath]

Face it, your argument is specious, and incorrect. They are not stealing anything. Especially since their action is completely legal.

Crowdsourcing

[bartoku]

Drug research, like all IP, should be funded up front and released with an open license.

I have started a web page just for such funding: drugstarter.com.

The site is kind of like kickstarter, but it is for funding a lab to develop drugs to fight diseases.

The lab raises the funds up front, then releases the drug to the public domain upon completion.

No big PharmCo or government involvement to mess things up.

Re:Crowdsourcing

[sixtyeight]

Very nice concept.

I notice that you still have a blank placeholder page. I've done a lot of research into Kickstarter-like options in Drupal. If you're interested, perhaps we should confer privately.

I'd suggest a few add-ons to your idea as well.

- Use BitCoins

- Give the people who invested a percentage of the profits, in something resembling the proportion to which they've invested.

That would give people a whole lot of incentive to throw in capital. The result would be a lot more capital, and thus a lot more research.

Re:Crowdsourcing

[bartoku]

I definitely stand by my first sentience, but honestly the second portion started out as joke.
However I got to thinking about it a bit more and the idea actually sounded viable and exciting.
I am not sure I am the person to make it happen, but I am open to exploring it and thank you for the encouragement.

The website drugstarter.com sounds more like a place to get instructions on doing illicit drugs, hence my attempt at humor.
Perhaps pharmstarter.com or pharmfunder.com would better convey the direction of the site.

Addressing your suggestions:

I love the concept of Bitcoins, still do not quite understand how they work technically, often think they are treated as a joke on Slashdot.
Forgive me for asking if you are serious about using Bitcoin. If so why Bitcoin over other forms of payment such as Kickstarter using Amazon Payments?

Based on my proposed model there would not really be a business model for profit.
Once the drug was completed it would be released into public domain for anyone to produce, no licensing, no avenue for profit other than mass production.
Therefore the primary incentive to invest is altruism.
The primary goal is to produce drugs as cheaply as possibly, unencumbered by licensing that artificially inflates the cost of the drugs sometimes out of the price range of the people that need them the most.
People turn over money to cancer research all the time, so I figure they could throw some at producing the drugs cheaper.
Unfortunately, if drugstarter.com went with the for profit model, it seems it would be no better than big PharmCo's.

Re:Crowdsourcing

[sixtyeight]

At the risk of sounding like a trendy PR firm, crowdfunding is huge. I'm glad you stopped to think about it.

Basically, it can accomplish a lot of what's lacking in industry at present: accomplishing what many people, rather than a few CEOs, want.

The typical model for it would work like this: Anything, from books to inventions to R&D to political accountability to getting something (like a pharmaceutical) manufactured can effectively use crowdfunding. Someone creates a site for it - which is happening frequently now - and someone else makes a post about what they'd like to see materialize in the world. Typical average people throw in a modest amount each, and the fund presumably fills up. The Whatever It Is uses the money to get researched and/or manufactured. When it goes to market, a percentage of the profits would be returned to the people who invested, in whatever proportion they invested. It becomes a small investment opportunity for average-type people, and things they actually want start to happen.

This would enable pharmaceuticals to not only get R&D'd (even into the public domain) but then also manufactured as well. You could have things in the public domain manufactured and sold, with no problem. You'd just happen to be one of the few interests who were actually manufacturing it. This seems likely, in the case of unconventional pharma.

I was quite serious about using BitCoins. They're often joked about on Slashdot, but then again so is racism. That doesn't make either one particularly funny. There are a lot of interests out there who have a vested interest in people abandoning BitCoin, and talk - particularly internet talk - is a cheap tool to make that happen. There are also a lot of people out there who are disgruntled that the value of BitCoins haven't made it the market speculation commodity they had hoped it would be. But it wasn't designed to be that - instead, it's a convenient, accessible, anonymous, encrypted and perhaps most importantly Peer-to-Peer-based currency that can't be inflated.

I'd suggest using it precisely because it's decentralized like that, with the added bonuses that it's becoming easier to use (and people are more likely to spend BitCoins once they've already acquired some), and that allows anonymous transactions. That last point is always important when you're dealing with ideas that the current power structure is predisposed to take exception to.

And of course, they're not under the control of Amazon or anyone else. So there's nobody who could arbitrarily freeze accounts just because they're feeling contrary. Additionally, lots of website Content Management Systems like Drupal are starting to have capabilities for using BitCoins, and building those has been much easier in a lot of ways than using proprietary APIs for Amazon or PayPal. That means it's easier and quicker - and therefor cheaper - to code for.

There is a lot already implemented for building the majority of a Kickstarter clone in Drupal, and for using BitCoin with it. What little is left could be implemented very cheaply with manhours from India and other low-cost, IT-aware countries using sites like Freelancer.com. It wouldn't be very difficult to put together. Myself, I would make a site that would be a Kickstarter for everything from inventions to creative projects to R&D to actual manufacturing and distribution, and then just put each of those in a separate listing on the site. It wouldn't be that difficult, or take a lot of money. It would take a fair amount of time to oversee the coders and get the thing put together and working properly. If you have an inclination, I have the time and could do that part of it.

Incidentally, while I've been noticing a lot of listings on sites like Freelancer for "Build me a Kickstarter clone website", what I haven't seen is people afterward putting the software and code they've paid to get developed up for digital resale. If people did that, they'd be able to recoup the money they'd put into ha

Re:Crowdsourcing

[Anonymous Coward]

The typical model for it would work like this: Anything, from books to inventions to R&D to political accountability to getting something (like a pharmaceutical) manufactured can effectively use crowdfunding.

I doubt this.

One "feature" of pharma R&D is that finding promising medical agents often takes years of research, that turning knowledge about possible agents into medicaments takes a lot of work/research and often fails and that at the end you have extensive (animal/human) trials and expensive approval processes.

Once the first few projects have been financed via crowd-sourcing and have burned a couple of million dollars on reseach with nothing or only vague hopes to show for it the popularity of your approach would take huge dive.

In practice even the large pharma firms are not willing to take the extreme risk of basic R&D - they usually acquire their knowledge through research agreements with small research firms (more often than not spin-offs from academic projects) which go broke all the time but are motivated by the small hope to strike big. Only once it is reasonably certain that the research can be turned into a medicament big pharma acquires the intellectual property from the small firm(s) it cooperates with and even then the risk of failure and required investment is still huge.

Re:Crowdsourcing

[at0mjack]

Kickstarter works very well for small projects. It seems to work OKish for medium-size projects - there was a recent Slashdot article about someone getting ~$1M for development of a sequel to a popular old computer game.

However, developing a new drug is going to cost you at least $100M, and probably closer to $1B[*]. How the hell do you think you're going to raise that much?

[*] Yes, I know there are articles out there by loons that claim the "actual cost" of drug development is $2.50 plus the handful of small change that we found down the back of the couch. They're talking crap. AstraZeneca spent US$24B over the last 12 years on R&D, and has released 3 new drugs in that time. if you want another data point, Cancer Research UK, an enormous UK-based charity, spent >£200M last year on research. It's spent roughly that much every year for the last 20 years (accounting for inflation). Do you know how many drugs they've developed? None.

Without insurance Americans would not pay 5k/month

[Anonymous Coward]

There is a question of producers deserving a profit for their R&D. By far the biggest cost is the regulatory and approval process which can cost 100 million easily. Each successful drug must pay for the 5 that fail. However, I suspect the high prices are also a consequence of the existence of insurance. If there were no insurance there would likely be a very small market for the drug. The existence of insurance itself contributes greatly to medical costs in the US.

Actually, the original comment was about India

[langelgjm]

Sorry, but no. You broadened this topic to 'arbitrage in legal pharmaceuticals,' as opposed to smuggling illegal contraband. You don't get to reel the scope back in just because your ignorance showed.

First off, why are you posting anonymously? Second, my original post was specifically responding to a comment about the potential for generic versions of these drugs leaking out of India and making their way into other markets.

Third, by "arbitrage in legal pharmaceuticals", I meant something different than what you assumed. I'm referring to taking advantage of price differentials between countries when dealing with non-counterfeit prescription drugs (which is a relevant topic in this discussion). For some reason, you read that as having to do with drug shortages in the U.S., which is not relevant to this discussion.

Watch/read the testimony I linked. Punch "gray market drugs" into Google. First try got me here [premierinc.com]. This isn't the mysterious phenomenon you appear to believe it is and you can easily find your own answers just as soon as stop insisting they don't exist.

Well, I don't really have time to watch 2.5 hours of CSPAN right now, but I'll take your word for it. However, it's still not relevant to this discussion. Nothing in the linked document you noted even hints that gray market drugs are coming from other countries (rather, it points to domestic US theft). Even if they were, I suspect the number one candidate would be Canada, not India.

I'm sorry you completely misunderstood my comments and instead resorted to personal insults.

Techincally true but practically unlikely

[langelgjm]

While that's technically true, my understanding is that it's only ever happened one time (Canada and an African country I don't remember off the top of my head), and that the drug manufacturer had such a bad experience with the process that they vowed to never do it again.

Re:That argument is empirically false in this case

[nosferatu1001]

Actually it isnt under the various treaties - the rights of countries to compulsory licence is enshrined in those treaties.

See article, which you didnt read:
This is in direct contravention to the WTO TRIPS agreement:

Under Section 84, a compulsory licence to manufacture a drug can be issued after three years of the grant of patent on the product, which is not available at an affordable price. Under the World Trade Organisation TRIPS Agreement, compulsory licences are legally-recognized means to overcome barriers in accessing affordable medicines. This is the first time in the history of the Indian Patents Act, 1970, that the provision under Section 84 has been invoked.

Cheap IT Support is good, but not cheap drugs?

[hooaamai]

Bayer has its office in India for IT support. They save millions by having their office in India because they find cheap IT support here. When the same country expects some cheap drugs to save people who are bringing them profits in other ways, the company has pain. How fair is that?

Good on them!

[Anonymous Coward]

Good on them!

Re:End copyrights and patents - just one more reas

[roman_mir]

Pure nonsense. The only reason the R&D takes all that money is that FDA is standing in the way with its requirements not only for safety but also for proving efficacy, while the market would do that just fine on its own.

Re:End copyrights and patents - just one more reas

[Rich0]

Yup, I hear that worked really well for sulfanilamide.

The problem with this approach is that it is very difficult for consumers to determine if a pill is safe to take. A bad pill can look exactly the same as a good one. That stems both from quality issues during manufacture, and also from whether the drug itself is safe.

Figuring out if a drug is effective will cost hundreds of millions of dollars with or without regulation. All getting rid of regulation will do is let you sell it without bothering to figure that out, as with herbal supplements. How will a $5 pill compete with a 10 cent supplement when neither has any evidence to support it. And, if the $5 pill has evidence, how do you know it isn't just cooked up if nobody is auditing the books?

setting an example

[Anonymous Coward]

The U.S. can -- and should -- learn from India's example in this case. Too often, the patent system gives the appearance of favoring private profit over the public interest. Certainly, innovators have a right to benefit financially from their intellectual property; but in some life-and-death cases it seems to me that basic human rights should trump considerations of revenue maximization.