I'm not really sure how I should feel about this. I'd like medicine to be affordable by everyone. However, what I mainly get out of the article is that a company with little or no R&D is simply reducing the price on drugs, which for them is mostly profit anyway. The drugs themselves are cheap to produce, right?
Somehow, I think we'd all benefit if we could get these companies involved in developing better medicines. Maybe reduce the price by 50% then take that additional pool of money and invest it into research within India, for example.
Another idea...We always hear how great the IIT's are, which I believe they are. Let's turn them into great research universities.
[Update]
It's interesting to see my post get upvoted and downvoted, which most won't see. My suggestions don't really seem that divisive. I simply think getting more people working on the problem with funding from existing sales seems like a better idea than just reducing drug costs. Additionally, I think involving other institutions rather than sending the money back to Big Pharma, might provide different insights into solving the problems.
IITs have failed to deliver in research and development. In my very humble opinion, they have transformed in glorified employment exchanges main emphasis being on fetching a 7 figure paycheck after 4 years.
"Cipla, which has 23 oncology drugs in its portfolio, has been able to offer the price advantage because of backward integration and reverse engineering, its chairman Y K Hamied told TOI"
I'm not sure what backward integration means, but the part about reverse engineering implies these are not drugs that they spent a large sum on R&D. It makes the moral hazard of capitalism vs compassion less hazardous when you copy someone else's product.
Reverse engineering drugs is straightforward and relatively trivial. There is no correlation between ease of reverse engineering and R&D cost.
The very high cost comes from development of a drug candidate, not the initial discovery of a candidate. If you skip the part where they demonstrate that the chemical is effective, efficient, and safe for its intended purpose in large human populations then you are correct. At that point it is just a moderately low-cost chemical manufacturing problem.
However, I only see them copying drugs where someone else spent billions of dollars demonstrating safety and effectiveness. There are myriad drug candidates that no one has proven safe and effective that they are not copying because that would require real investment on their part.
FYI, the term “backward integration” is used in business to talk about a company’s integration with its suppliers, while “forward integration” is used when talking about removing friction with customers. In Cipla’s case, it looks like they purchased manufacturing facilities that were producing their products: http://www.vccircle.com/500/news/cipla-to-acquire-meditab-fo...
I remember reading on HN sometime ago about the Mumbai High Court verdict that allowed life saving drugs to be reverse engineered and this was what allowed the Indian companies to copy the drugs.
However lifesaving the drugs maybe, this would cause the multinationals developing the drugs to increase costs so they dont lose their R&D investment while the Indian companies make a quick buck on someone else's research.
The goverment should have subsidised the drugs which would have been a balance between capitalism and compassion.
I think one of the failings of the pharma industry is to incorporate both, production and R&D. If R&D would be done in the public sector and its results freely available industrial pharma could compete on an even level concentrating on churning out medication in huge numbers at the lowest price possible and piggy-backing on companies that actively do R&D based on national laws that allow you do produce generica wouldn't be possible.
Of course, this is no silver bullet. There is no guarantee that research in the public sector is going to be as effective as in the private sector. Which makes me wonder why medical research is so unevenly distributed between the academic world and the industry in the first place.
The government is okay at funding initial research but has a poor track record at effective development, and development is where you find almost all of the cost in the process of creating new drugs. This is the elephant in the room. The initial research is sexy but it is also relatively inexpensive and (partly) immune to the political process.
Basically, you can't count on politicians to properly and effectively fund hundreds of different billion-dollar long-term programs, many of which will be expected to produce nothing. Because the life cycle of development spans several elections, every program is at the whims and mercy of whoever happens to be in charge of the program at any point in time. One of the reasons military R&D is expensive is because of the constant stopping and starting, changing priorities, and legislatures from one term to the next trying to redirect money into their districts. For government R&D, funding tends to follow fashion, not what would be the best allocation over the long term.
I've been there and done that. Government funding research can work out reasonably well. Government funding development is a disaster that takes twice as long and costs (at least) three times as much because it is subject to the whims of Congress. The constant stopping and starting of R&D projects, sometimes with unfunded year-long gaps in the middle, make it difficult to keep a team together (the beltway government R&D companies exist in part to mitigate this employment risk for people that work on government R&D).
pharmaceutical research is an extremely expensive, long term process. it could never get the same kind of funding in a public 'open source'-like setting that it could get in a setting where its treated as IP and is given the opportunity to create economic profits.
society is notoriously bad as innovating when there is no profit motive. the pace of the 'march of science' due to curiosity and dedication to the betterment of mankind is, unfortunately, glacial. thats not to say there isn't somewhere in between, but when we have this discussion, we have to appreciate the role that money plays in innovation--something people at HN might be able to appreciate.
The pharma and media industries are so similar. Both lobby governments for passing bills to support their business models. Both rely on questionable extensions to IP rights and make loud noises about how much money they lose on piracy and generics.
There has to be something fundamentally screwed up to have this much conflict of interest between public good and IP rights.
Even when some of these drugs are very expensive to produce and R&D is expensive, some retail prices are in one word greedy.
Looking up a chemotherapy compound priced bulk online will show you how big of a markup these drugs are being sold at. For example: a quick search shows Everolimus costing USD1341.27 per gram to the public bulk, and one retail box of 30 - 0.010 gram tablets costing around 5,000 usd. And I honestly doubt the bulk chemical is being sold at a loss.
Now mind these aren't aspirins, but the only option to a slim chance of living for many people. Ideal for drugs companies since whoever can afford it will pay any outrageous price.
The problem has gotten big enough that now there are counterfeit chemo drugs being sold, and given this chemo compounds may or may not work for everybody it's hard to track them. That is another problem which may be solved by these companies by selling affordable drugs.
This is not _entirely_ relevant, but I would like to illustrate the complexity and cost of the problem. Many large pharmaceutical companies have completely pulled out of the market for developing drugs in one of the three main classes of diseases that affect most Americans: Neurodegenerative diseases (the other two classes being cancer and cardiovascular disease). This is because the cost of drug development is incredibly expensive.
First, suppose we have a drug candidate. Great. This would take many, many years of study of neurons/brain tissue cultures using in vitro techniques (petri dish, etc. out of the native environment). These are great and relatively cheap, but it's difficult to isolate good drug candidates. Eventually, after high throughput screening or whatever other research method is used, a candidate is found. This would (realistically) take many years and require many millions in funding.
Then, once you have this in vitro drug candidate, you have to start testing it in animal systems, starting with simple mice. Animal studies are expensive, because the organisms are essentially disposable. These sorts of studies for neural problems are even more expensive because the animals need to be observed carefully using various research techniques for very extended periods of time, on the order of months to years (since this is the timescale on which most neural disease work). This is obviously both expensive timewise and monetarily.
So our theoretical candidate works in simple animal and in vitro systems. Great! There a lot of drugs that get this far and then utterly fail on human subjects. Assuming that it passes FDA standards for human testing (which, at this point, seems fairly reasonable), human testing will start. The main purpose of Phase I trials is to determine toxicity of the drug in human systems, and to see if it has any significant effect. Let's say ~40 patients are being tested. These 40 (lucky? unlucky?) patients will take the drug, and then be investigated using a variety of techniques to judge the efficiency. One of the standard techniques in neural imaging is the MRI scan. The typical cost to the company carrying out the test is around $3000+ USD per scan carried out. Each patient will need to be scanned many times (let's say 10) over a period of time to determine whether or not the drug had any affect. Compared to other techniques where simpler blood tests or post-mortem tissue analyses can tell the story, this is very expensive. And this is just phase I. Phases II and III expand the number of patients into the several thousands. The cost of drug development for one potential compound for so long (the timeframe can be order of 15+ years) for a very, very small chance (due to the complexity of the field and the few successes so far) of a huge earning is simply unjustified for many companies. Earning back hundreds of millions of dollars of losses back must be done by passing the cost along to the customer.
Note that the patent lifetime on drugs is very short. Nominally, the compound is protected for 20 years. But this is applied for before any clinical trials start, so the effective lifetime is significantly shorter. For a neurodegenerative disease, the effective lifetime of the patent could very well be much sorter than the more "usual" effective lifetime of 7-12 years [1].
Also, as an extra. Organic synthesis is hard. I mean, really, really hard. You have to design a good synthetic pathway, then make sure it works, then scale it up from working in a fume hood, to working in large chemical reactors that can produce it on an industrial scale. I'd like to point people at the synthesis of Tamiflu, the antiviral used against various influenza strains [2]. These are long pathways and accordingly tend to have lower total yields. Drug synthesis is really hard, regardless of the cost of R&D of the drug.
TL;DR: Finding drug candidates is really difficult. FDA clinical trials is really difficult. Making the drugs themselves is really difficult.
For me, issues like this raise the question: Does capitalism still make moral sense in a world where a large proportion of the population is so poor as to be unlikely to participate in the free market during their lifetime? Even at $150 per month, those drugs aren't in any way affordable for most without government funding.
IMHO, the problem with capitalism is that some people want to use it as a complete way to run society, where I believe it is a tool to be used by society. Clearly, as you elude to, socialism is also needed, other wise the military would and should be privatised, along with law enforcement.
I find is odd that capitalist bias countries like to use tax money for huge military commitments, yet go insane at the idea of providing health care for its people.
Capitalism does not make any moral sense what so ever. Its is not supposed to. It is survival of the fittest. It is vicious and heartless. And it is supposed to be. So, socialist type stuff is required to serve other needs.
Of course socialist stuff need capitalist profits to support it, while capitalism needs socialist stuff, like law, to support it.
I think capitalism overall is a good system. Unfortunately, it doesn't work very well with health care due in large part to information asymmetries and moral hazard.
You don't have to ask us: you can ask the scientists (who should be working for subsistence wages, apparently). Of course manufacturing is cheap once the difficult, risky bit - discovery and clinical trials - has been done.
I don't think that this will affect original (western) company. Most people who will choose Indian drug over original, simply can't afford it, even in their dreams. On the other hand, those who can easily afford it, will go for it over "fake" Indian one.
Good news, but over here it wont help. Third parties will turn 76% of the price drop into extra profit for themselves.
The downside of a closed market where everyone is obligated to have health insurance and the health insurance companies have all the power they need.
A nice idea to get something back from such companies is to have them collect data of the patients and gave back to the original company/copyright owner etc.
[+] [-] melling|14 years ago|reply
Somehow, I think we'd all benefit if we could get these companies involved in developing better medicines. Maybe reduce the price by 50% then take that additional pool of money and invest it into research within India, for example.
Another idea...We always hear how great the IIT's are, which I believe they are. Let's turn them into great research universities.
[Update]
It's interesting to see my post get upvoted and downvoted, which most won't see. My suggestions don't really seem that divisive. I simply think getting more people working on the problem with funding from existing sales seems like a better idea than just reducing drug costs. Additionally, I think involving other institutions rather than sending the money back to Big Pharma, might provide different insights into solving the problems.
[+] [-] mnazim|14 years ago|reply
[+] [-] spiffworks|14 years ago|reply
[+] [-] kiba|14 years ago|reply
[+] [-] nhebb|14 years ago|reply
"Cipla, which has 23 oncology drugs in its portfolio, has been able to offer the price advantage because of backward integration and reverse engineering, its chairman Y K Hamied told TOI"
I'm not sure what backward integration means, but the part about reverse engineering implies these are not drugs that they spent a large sum on R&D. It makes the moral hazard of capitalism vs compassion less hazardous when you copy someone else's product.
[1] http://timesofindia.indiatimes.com/business/india-business/C...
[+] [-] jandrewrogers|14 years ago|reply
The very high cost comes from development of a drug candidate, not the initial discovery of a candidate. If you skip the part where they demonstrate that the chemical is effective, efficient, and safe for its intended purpose in large human populations then you are correct. At that point it is just a moderately low-cost chemical manufacturing problem.
However, I only see them copying drugs where someone else spent billions of dollars demonstrating safety and effectiveness. There are myriad drug candidates that no one has proven safe and effective that they are not copying because that would require real investment on their part.
[+] [-] rendezvouscp|14 years ago|reply
[+] [-] demigod|14 years ago|reply
However lifesaving the drugs maybe, this would cause the multinationals developing the drugs to increase costs so they dont lose their R&D investment while the Indian companies make a quick buck on someone else's research.
The goverment should have subsidised the drugs which would have been a balance between capitalism and compassion.
[+] [-] pmr_|14 years ago|reply
Of course, this is no silver bullet. There is no guarantee that research in the public sector is going to be as effective as in the private sector. Which makes me wonder why medical research is so unevenly distributed between the academic world and the industry in the first place.
[+] [-] jandrewrogers|14 years ago|reply
Basically, you can't count on politicians to properly and effectively fund hundreds of different billion-dollar long-term programs, many of which will be expected to produce nothing. Because the life cycle of development spans several elections, every program is at the whims and mercy of whoever happens to be in charge of the program at any point in time. One of the reasons military R&D is expensive is because of the constant stopping and starting, changing priorities, and legislatures from one term to the next trying to redirect money into their districts. For government R&D, funding tends to follow fashion, not what would be the best allocation over the long term.
I've been there and done that. Government funding research can work out reasonably well. Government funding development is a disaster that takes twice as long and costs (at least) three times as much because it is subject to the whims of Congress. The constant stopping and starting of R&D projects, sometimes with unfunded year-long gaps in the middle, make it difficult to keep a team together (the beltway government R&D companies exist in part to mitigate this employment risk for people that work on government R&D).
[+] [-] aggronn|14 years ago|reply
society is notoriously bad as innovating when there is no profit motive. the pace of the 'march of science' due to curiosity and dedication to the betterment of mankind is, unfortunately, glacial. thats not to say there isn't somewhere in between, but when we have this discussion, we have to appreciate the role that money plays in innovation--something people at HN might be able to appreciate.
[+] [-] option_greek|14 years ago|reply
There has to be something fundamentally screwed up to have this much conflict of interest between public good and IP rights.
[+] [-] gaius|14 years ago|reply
[+] [-] checoivan|14 years ago|reply
Looking up a chemotherapy compound priced bulk online will show you how big of a markup these drugs are being sold at. For example: a quick search shows Everolimus costing USD1341.27 per gram to the public bulk, and one retail box of 30 - 0.010 gram tablets costing around 5,000 usd. And I honestly doubt the bulk chemical is being sold at a loss.
Now mind these aren't aspirins, but the only option to a slim chance of living for many people. Ideal for drugs companies since whoever can afford it will pay any outrageous price.
The problem has gotten big enough that now there are counterfeit chemo drugs being sold, and given this chemo compounds may or may not work for everybody it's hard to track them. That is another problem which may be solved by these companies by selling affordable drugs.
[+] [-] anusinha|14 years ago|reply
First, suppose we have a drug candidate. Great. This would take many, many years of study of neurons/brain tissue cultures using in vitro techniques (petri dish, etc. out of the native environment). These are great and relatively cheap, but it's difficult to isolate good drug candidates. Eventually, after high throughput screening or whatever other research method is used, a candidate is found. This would (realistically) take many years and require many millions in funding.
Then, once you have this in vitro drug candidate, you have to start testing it in animal systems, starting with simple mice. Animal studies are expensive, because the organisms are essentially disposable. These sorts of studies for neural problems are even more expensive because the animals need to be observed carefully using various research techniques for very extended periods of time, on the order of months to years (since this is the timescale on which most neural disease work). This is obviously both expensive timewise and monetarily.
So our theoretical candidate works in simple animal and in vitro systems. Great! There a lot of drugs that get this far and then utterly fail on human subjects. Assuming that it passes FDA standards for human testing (which, at this point, seems fairly reasonable), human testing will start. The main purpose of Phase I trials is to determine toxicity of the drug in human systems, and to see if it has any significant effect. Let's say ~40 patients are being tested. These 40 (lucky? unlucky?) patients will take the drug, and then be investigated using a variety of techniques to judge the efficiency. One of the standard techniques in neural imaging is the MRI scan. The typical cost to the company carrying out the test is around $3000+ USD per scan carried out. Each patient will need to be scanned many times (let's say 10) over a period of time to determine whether or not the drug had any affect. Compared to other techniques where simpler blood tests or post-mortem tissue analyses can tell the story, this is very expensive. And this is just phase I. Phases II and III expand the number of patients into the several thousands. The cost of drug development for one potential compound for so long (the timeframe can be order of 15+ years) for a very, very small chance (due to the complexity of the field and the few successes so far) of a huge earning is simply unjustified for many companies. Earning back hundreds of millions of dollars of losses back must be done by passing the cost along to the customer.
Note that the patent lifetime on drugs is very short. Nominally, the compound is protected for 20 years. But this is applied for before any clinical trials start, so the effective lifetime is significantly shorter. For a neurodegenerative disease, the effective lifetime of the patent could very well be much sorter than the more "usual" effective lifetime of 7-12 years [1].
Also, as an extra. Organic synthesis is hard. I mean, really, really hard. You have to design a good synthetic pathway, then make sure it works, then scale it up from working in a fume hood, to working in large chemical reactors that can produce it on an industrial scale. I'd like to point people at the synthesis of Tamiflu, the antiviral used against various influenza strains [2]. These are long pathways and accordingly tend to have lower total yields. Drug synthesis is really hard, regardless of the cost of R&D of the drug.
TL;DR: Finding drug candidates is really difficult. FDA clinical trials is really difficult. Making the drugs themselves is really difficult.
[1]: http://en.wikipedia.org/wiki/Generic_drug [2]: http://en.wikipedia.org/wiki/Oseltamivir_total_synthesis
[+] [-] DanI-S|14 years ago|reply
[+] [-] alan_cx|14 years ago|reply
I find is odd that capitalist bias countries like to use tax money for huge military commitments, yet go insane at the idea of providing health care for its people.
Capitalism does not make any moral sense what so ever. Its is not supposed to. It is survival of the fittest. It is vicious and heartless. And it is supposed to be. So, socialist type stuff is required to serve other needs.
Of course socialist stuff need capitalist profits to support it, while capitalism needs socialist stuff, like law, to support it.
Broadly, that is how I see it anyway.
[+] [-] dcesiel|14 years ago|reply
[+] [-] gaius|14 years ago|reply
[+] [-] te_chris|14 years ago|reply
[+] [-] exim|14 years ago|reply
[+] [-] Freestyler_3|14 years ago|reply
[+] [-] iamgopal|14 years ago|reply
[+] [-] carbocation|14 years ago|reply