> Bayer Chief Executive Officer Marijn Dekkers called the compulsory license “essentially theft.”
He's a bit mixed up. Government enforcement of your temporary monopoly is a privilege. Failing to give you the privilege you think you deserve is not the same thing as stealing from you.
Without this "privilege" a company has no incentive to develop anything new, leave alone anything that requires massive R&D investments. What India did is it effectively said that they don't want to participate in the development of new drugs, so their stance on this matter is frankly quite ludicrous.
Try this for a comparison - Germany declares that all software sold in their country should be priced at $1 or less. Would you still be talking about software companies being crybabies for objecting this? Doubt it.
The scientists who develop such drugs generally do not do it to make billions of dollars. Their salaries usually are in the 6 figures and I see no evidence that fewer drugs would be developed if society paid for development through universities and nonprofit research centers.
There are other incentives in life other than money.
That would be worth exploring, but the cost of developing a drug is astronomically high: "The average drug developed by a major pharmaceutical company costs at least $4 billion, and it can be as much as $11 billion." http://www.forbes.com/sites/matthewherper/2012/02/10/the-tru.... The most expensive part is Phase III Clinical Trials, and it's growing: "We examined drug development in four major public health areas and discovered that for any given drug on the market, typically 90 percent or more of that drug’s development costs are incurred in Phase III trials." http://www.manhattan-institute.org/html/fda_05.htm
No university or nonprofit has that kind of budget, and even if they did, they are unlikely to take on the risk of a failed drug.
Pharmaceutical companies typically spend more money on advertising than drug development which leads me to think that the patent system isn't that necessary to the overall profitability.
It really is not that simple in real life. That's a decent write-up of how advertising is supposed to work for your disruptive yet novel startup, but pharmaceuticals is a more complicated animal.
Drugs are things that people "need". If no drug companies advertised, people would still go to their doctors with problems, and doctors would still prescribe medication when necessary (you have some degree of advertising prompting doctor visits, but for the important stuff, and in a system where people are not afraid of the monetary cost of going to a doctor, they'll be going anyway).
However currently all drug manufacturers must advertise their products because their competitors advertise their competing products. Anyone who doesn't advertise will be left behind as patients request the drug that they saw on TV. No company wants to be the company that doesn't advertise.
Well, they're picking the drugs that they can sell the most of -- i.e. the ones that will benefit the most people. That's not a bad thing.
However, the cost of human trials are still a problem. Because of the costs, drug research to treat rare diseases aren't going to get funded by anyone.
The last time I got an Rx, the doctor actually made the decision along with my insurance company (at least how much they'd pay).
So you're saying that drug advertising is pulling the wool over the eyes of the entire industry so that they give patients nothing more than placebos?
Most drugs, even those that offer a benefit over current therapies, don't sell themselves. Physicians need to learn about new drugs, have an opportunity to try them before you ever see widespread use.
Consider that the cost may be astronomically high because it's possible to make marginally more. It's entirely possible that the same level of drug research can be done for much less money.
For instance, with patents there is an incentive to find a solution first. This probably raises the cost of research because (a) pharmas spend more time researching alternative medicines with different compounds with the same effect as existing drugs simply to get around pre-existing patents and (b) pharmas spend more money to rush research to patent it first.
Also, if clinical trials are the problem, India appears to be willing to help.
Exactly, drug research is science and should be treated as such. Other scientific discoveries are not patentable and we don't have problems with lack of scientists willing to do their jobs for university salaries.
For me the notion that someone can claim a right to a chemical compound that has positive effect on our bodies is absurd. It's like Einstein patenting e=mc^2 and asking nuclear power plants to pay him.
> But there aren't other ways to fund drug research.
Yes there are; public money and normal sized salaries for scientists doing the public research for the public good. Granting monopolies to private corporations is hardly the only way to achieve things. Scientist's aren't in science for the money, science generally pays shit anyway; they're in it for other reasons.
Yes, because publicly funded research institutes have enough money to cover multiple drugs in development (a majority of which will fail), clinical trials, and manufacturing, etc...
There are legitimate problems with the current system, such as Pharma typically doesn't produce drugs for rare diseases - there just isn't enough money in the market to justify the lost opportunity costs. Publicly funded research is supposed to help those instances where the economic incentives aren't there.
This can lead to a perverse switch in motive. Instead of trying to help patients who legitimately need help to trying to get as many people to buy a drug as possible, regardless of need. But in case you haven't been paying attention - public funding for science isn't exactly growing. So if we want to see some of these next generation cancer drugs with small markets, you need to have the ability to charge large amounts.
But the public institutes just aren't equipped or financed well enough to handle it on their own.
> Yes, because publicly funded research institutes have enough money to cover multiple drugs in development (a majority of which will fail), clinical trials, and manufacturing, etc...
I didn't say they did; I'm saying they should. Medicine as a business is immoral IMHO, and a good half of this county agrees with me. We want public healthcare, not private healthcare because money is a perverse incentive when it comes to health.
> But the public institutes just aren't equipped or financed well enough to handle it on their own.
Agreed, but they should be, and if we want to see a better healthcare system that does more for the general public rather than just the rich, they'll need to be. The free market is not the correct solution for healthcare/medicine. Medicine is a communal good and should be funded by and available to the whole community.
I think you forgot to finish that sentence with "currently in any wider use".
The current system has become a few spots, take a look at the debate about cherry-picking clinical trials to get new drugs approved, requirements for pre-registration and the non-functional oversight of the same ...
Perhaps trying new ways to fund drug research can be a part of revitalizing the system?
Academia has a spotty track record when it comes to drug development. They don't have the money to put into lots of potential drugs, so they aren't able to test the breadth of targets that a Bayer would be able to. For all of the problems that Pharma has, they have been able to bring a lot of new drugs to market pretty efficiently.
other incentives like what? The only thing I can think of as a reasonable incentive would be to create something that heals the sick but... ohhhhhhhhhhhh..
Seriously though I want to stab that guy. Maybe we should ask the scientists who put in the real work who they think should have access to the drugs.
I'm sure I'm being very pedantic here, but the "no incentive" argument has always bothered me. Saving a life is an incentive. Satisfying intellectual curiosity is an incentive. So the company does in fact have incentives to develop something new without this "privilege." The may have a strongly decreased financial incentive, but that is very different from no incentive.
You must be kidding. Developing a new drug can easily cost hundreds of millions of dollars. Also note that majority of drug development efforts (>90%) fail, thus each successful drug has to pay for its own development cost as well as the failed ones.
And no, you can't pay for the costs with "satisfying intellectual curiosity"
That article is about promotional budgets, which is at least subtly different than advertising budgets. For instance, it includes $15.9 billion in samples (which are certainly promotional, but giving patients free drugs does not immediately jump to mind when you say advertising).
Do you mind explaining what's wrong with having advertising budgets? Remember that investment into marketing is tested with the same yardstick as R&D investments - revenue generated per dollar invested. If marketing isn't effective then it won't be done.
Keep in mind that marketing drugs is a purely American thing; in most other countries with sane healthcare policies you can market awareness of a condition but not a drug to treat the condition. Doctors should be the one helping a patient decide which medication is best for their situation, not some ad exec.
No, I'm not kidding, I was simply pointing out that there are other incentives besides financial. I never said intellectual curiosity would pay the bills just that I felt claiming 0 incentive wasn't completely correct. Something along the line of no financial incentive, or greatly reduced financial incentive is better.
Ok. You do realize that each stage of the drug development process is very expensive right? You'll need money for lab mice, clinical trials etc.
How do you suggest intellectual curiosity be fulfilled with no money?
Drug development is fundamentally different from software. There is just no way to do it (either by public or private institutions) without a lot of money.
You have no idea how much it costs to keep a mouse colony fed, taken care of, given veterinary care, etc... and then there's the breeding and genotyping, and treatments. And if they die, you need a pathology report. Mice get expensive fast. These are usually very well engineered mice strains that cost a lot of money just to develop in and of themselves.
And that doesn't even cover their plans for world domination.
I think you can house up to 5 mice in a cage, and it wouldn't be uncommon for a reasonably sized lab to have a colony of around 200-300 mice. So you'd have maybe 75-100 cages (males you house at a lower rate). So your daily rate at OSU is on the order of $75-100. At other institutions, it can cost as much as $1 per mouse. And this is just for housing them. You start getting to real money, real fast.
Err, what?! Companies don't exist to save lives or explore intellectual curiosity. They exist to make money. Therefore we do have a responsibility to try and make the profit motive line up with more humanistic motives.
A strongly decreased financial incentive is disincentive in a system where
1) Equipment and the necessities of life cost money, to say nothing of opportunity cost. Even the most ascetic lab rat can't eat good feelings and intellectual curiosity.
2) If you're looking to raise capital, E(ROI)>0 makes it 100x easier to raise 100x as much capital (perhaps this is exaggerating, but capital markets are MUCH larger than charity markets).
> Without this "privilege" a company has no incentive to develop anything new
How much are they developing vs how much are they marketing? A lot of pharmacological studies are preformed by public universities and an insignificant amount of money that many think goes to "research" instead goes to "do you have <made_up_disease>? talk to your doctor about <our_new_drug?>" type commercials and other marketing.
> Try this for a comparison - Germany declares that all software sold in their country should be priced at $1 or less.
If that software will end up saving lives, then it should be sold for $1 or less and the government should develop/buy it/fund it.
Or how about another comparison. Open source software is priced at $0. Are people writing it? Why? They shouldn't according to your logic. So maybe someone will bother developing and researching life saving drugs without being granted monopoly on its distribution.
Finding the chemical is a very small part of the cost. Try setting up animal tests, phase I clinical trial, phase II clinical trial, phase III clinical trial, years of follow up, hiring people to put together documents to get regulatory approval, post market monitoring of the drug, getting information about your drug to physicians...
But it is also not infinitely cheaper. It involves time commitment. Large projects are thousands and thousands of man months, and you can download and build it by paying $0. People seems to be willing to spend a significant amount of time for something that is distributed for $0.
It is effectively infinitely easier. Hackers don't need multi-year studies, trials and FDA approvals before pushing code to Github. The fact that there are no "open source drugs" should give you a hint that the analogy you're trying to draw is fundamentally flawed.
I personally would love to see all software be given away for free. Put all the code on GitHub in the public domain. That's the world I work towards. There'd be just as much money to be made, only it would be spent on actually employing workers and getting stuff done and not on fighting over licenses and intellectual "property".
The patent laws of the US are responsible for Bayer's business model, and in a lot of ways it's a good tradeoff. But it's not the only possible way to figure this stuff out, nor is the money the only possible incentive.
Anyway, it's not like Bayer wasn't aware of India's patent laws. They are still going to make billions on this drug, regardless of what India does, and they can spend that money bribing its government officials to change their patent laws. Don't worry, it'll all work out in the end.
If that happened much software would just move to the (arguably worse) service model where programs won't work offline or run on your local machine, and if the server shuts down you lose everything.
> Without this "privilege" a company has no incentive to develop anything new
While that is true about companies it is not true about people. There are numerous people who do research into specific medical conditions for reasons other than money. While I'm not saying Crowley didn't make a fair shake of money with his companies
There was a clear motivation to save his own, and other children's lives.
Would companies stop entirely or would not for profits arise in their place?
I think it's disingenuous to imply that there is no other way that medical research could ever happen.
One also has to examine the moral dilemma faced in this situation. Respect international intellectual property laws and quite literally allow millions to die OR "steal" the drug?
Now run the dilemma again but it's your own child.
Is it right? Would you do it?
Free software movements point to the probability that software would likely still exist in a world where it was declared that all software should be priced at ${arbitrary}.
I feel like the truth is far more nuanced than you're allowing for here. There's far more than money on the line and if I were the one dying of a $65,000/year cancer I'd also struggle to respect the international laws that were willing to consign me to death if the profit on the materials was in the 99% range.
I never though I'd see someone on HN extol the virtues of a pharmaceutical company executive and Republican!
No doubt that there are more incentives than just money, but you do realize that John Crowley is filthy stinking rich from the sales of his company to Genzyme, right?
> I never though I'd see someone on HN extol the virtues of a pharmaceutical company executive and Republican!
Ha ha I appreciate your comment (and if it's sarcastic/funny it's actually hilarious)
But otherwise it's Ad hominem. I'm presenting him as a more nuanced human than just than just a guy who sold a company for $200M (http://newsok.com/novazyme-example-of-promise/article/275860...) and who's name gets floated as a possible (R) candidate (but who doesn't take on the role).
Perhaps he's one of the numerous Republicans who are dissatisfied with the entire radical wing. I don't know anything about that. Maybe the reason he repeatedly chose not to run or accept an appointment is he wasn't radical enough. After all, many do say that even Reagan wouldn't make it in today's Republican party.
Making a founder's share of $200M is probably fair payoff for saving all those children's lives (potentially ~10,000 cases in the USA)... especially when compared to a share of $1B for enabling the absoloute clusterfuck of idiocy that is TUMBLR.
Do Zuckerburg, Brin and Graham deserve the same derision for also being filthy stinking rich? Do all other motives get thrown out the window when they get a life changing payday?
Anyways, the sum of a person is more than their net worth and their political affiliations. I'm sure there are a handful of good people who are also Republicans.
I get where you're coming from, but I think what my point is is that you can have altruistic intentions and get filthy stinking rich in the process. In fact, you can be nothing but a greedy pig and still do good in the world.
If someone develops software that can directly save a life, then yes, it should be affordable by literally everyone.
The same applies for medicine. If you are with-holding drugs that can literally cure cancer but require you to cough up, say, $50,000, then I sincerely hope a hell exists for you because that is straight-up unapologetic evil.
If R&D is that expensive and you need to recoup costs, then the government should fund the research of such drugs.
No matter what the circumstances however, you don't get to restrict access to a drug that cures cancer based on financial capability and somehow take the moral high ground.
I think something that hasn't been mentioned is how much they spent to develop the drug, and how much they expect to recoup.
If someone has to take a drug for 3 years and pays 195,000 dollars, and there are tens of thousands of patients, they can certainly price it lower than that.
If the price per year is 1950 (3%) and a million people are using the drug, that that 1.95 billion dollars. Per Year.
That is a fair point, and I do think the drug industry should be rewarded for making a product that saves lives.
If we were making the comparison to the software industry again we wouldn't make that same comparison, we would just have the people close up shop and start another startup when their product fails and they fail to pivot.
I guess the analogy just starts falling apart there.
That's what India is doing it's allowing other businesses to step in and compete in production of the drug. If the original drug company can't compete then that's not the governments fault.
Obviously that isn't what you mean though, your talking about the competing from start to finish of a drug, well lets say a company invests in producing an equivalent cancer drug that doesn't infringe on the original patent. Now we have these two drugs that are effectively the same and they both compete and the price lowers down to the point were they are both making enough profit to support their business without over the top profits on that drug. Congratulations you've got to the point that the Indian government wants and all it took was a huge investment in an otherwise redundant drug.
Since the Indian government can't force the company to sell the drugs at the appropriate price they have to rely on the threat of letting other companies sell the drug at an even lower price and hope the company plays ball. The whole point behind intellectual property is that both the creator and the public benefit, if the public isn't benefiting then they will not respect intellectual property.
I wonder how much of that money is spent on the actual R&D and how much goes to the fancy looking offices, management, administration, marketing? When you can dictate the prices of course you'll set them as high as possible and than pump up the expanses, but with a bit of real competition I'm convinced you could significantly cut the prices and still make some money.
I would. Financing development with monopoly on making copies is ridiculous unenforcible idea when anybody can make a copy for anybody at near zero cost with use of equipment posessed by almost anybody. It should be abandoned as fast as it can be with all its legislative luggage. Setting max price of software copy would be awesome step in the right direction.
If they're going to price the drugs so high in India that no one can afford them, what is India getting out of the deal? All property rights (but especially intellectual property rights) are essentially a trade between the government, and indirectly the people. For real property, the Government gets tax and increased economic activity (leading to more tax) in exchange for agreeing to arrest anyone who uses your property without your permission. For intellectual property, the trade is that citizens get to use new and useful things, and there is more economic activity, in exchange for the government agreeing to arrest anyone who copies your product without permission. If the citizens can't get the new and useful thing, why should the government stop anyone who copies it?
Germany declares that all software sold in their country should be priced at $1 or less
It would be OK if this were known in advance; software developers could decide whether the absence of future German revenue meant they should (i) not develop a German version and/or (ii) not develop a product at all (as the non-German revenue would not be sufficient).
Changing the goalposts after development decisions are made is different.
You could say the same thing about anything anyone owns.
For government read society.
Drug companies risk a lot of money in research.
The prospect of reward is why they do it
Society has determined that it's a good thing (for society) to reward certain types of risk takers.
Take that 'privilege' away and society will suffer.
Although I'm sure there has to be more to this story. If Bayer wasn't going to sell the drug in India (since it wasn't made for Indians) has that 'privilege' been taken from them? They still have monopoly rights elsewhere in the world.
It does make me wonder why, in an attempt to capture more revenue, it isn't being released and priced locally in the Indian market? I'm guessing fears of re-export degrading sales in the western world?
Different societies have determined different things. Indian society in particular has determined that reducing this reward to risk-takers in order to widen access to drugs is a worthwhile trade.
Arguably the monopoly is intrinsic: pharma companies have the pre-existing ability to hide the product of their R&D, e.g. by only selling it in closed clinics, or by obfuscating pills with thousands of inert ingredients ("DRM for wetware"). In this view, monopoly rights are granted to extract the social benefit of public disclosure. (And "disclosure" still minimal and ineffective: pharma is massively secretive about their research -- rationally -- which certainly isn't globally optimal).
And the goverment by the virtue of having tanks and jets and soldiers has intrinsic monopoly to decide what are the rules that have to be observed to even be allowed access to the market of given country.
The companies can move to another country. One with more nuclear bombs! And force the people from the other country to travel if they want the treatment.
Yes, you can migrate to country with fewer rules and not operate on other markets. Like a brothel with underaged prostitutes that people from other countries travel to to buy services disallowed on their native markets.
In practice it doesn't work that great. Stronger countries with richer customers tend to use their leverage and have more rules. It definitely works for illegal products but I doubt it would work for goods that are legal but coming from manufacturer who's illegal. Goods would got cloned by legal manufacturers pretty quick if they were so good they'd be worth traveling for.
What is "theft" other than something that only exists in the context of government enforcement of an artificial privilege?
And is this privilege particularly artificial relative to others we accept readily? Most people believe that people should have the privilege to own land. Yet if you think about it, land possession is far less deserving of the government's protection than a drug formula. This drug is something Bayer created, that didn't exist before. Land is something that nobody created, that people simply claimed (in the U.S., those who "own it" derive their ownership from dispossessing Indians), that will continue to exist long after everyone who claims to "own it" is long dead. Why is land more deserving of an artificial government monopoly than a drug formula?
Does the concept of possession exist because we have laws concerning theft? Or do laws concerning theft exist because we have a concept of possession?
Lawless animals have concepts of possession, even the concept of possession of land. The difference between humans and animals is that we have codified our social standards and generally do not have to resort to violence or direct threats of violence to resolve disputes over possession or territory.
Animals recognize possession and dispossession, which are simpler than ownership and theft. The basic difference is that ownership is a possessory interest backed by society's willingness to enforce that interest on the owner's behalf, using violence if necessary. This kind of arrangement does not exist in nature. Society creates the distinction between possession and ownership. It does also codify it, but codification isn't the heart of what's different.
> Wolves do not recognize "ownership" of land, because a weaker wolf cannot appeal to the community when dispossessed of land by a stronger wolf.
A powerful wolf "owns" the best parts of a kill (whether or not they possess it) because their social system values the traits that makes a wolf powerful. Their system for determining the legitimacy of a claim involves violence, or more typically the threat of violence. Modern humans have different social values than wolves and would not consider "I am bigger than you, and male, therefore it is mine" to be a legitimate argument.
Regardless, ownership, narrowly defined as a legal (and therefore necessarily human) concept, is a red herring. Theft, the concept being discussed, exists in systems that have concepts of possession even if we dismiss the possibility that they have a concept of ownership. A beta can certainly steal from an alpha male.
If you define theft as something that can only exist in the presence of a value system that modern humans respect, and then claim that therefore only modern humans can have a concept of theft, then you are doing nothing but making an uninteresting tautological argument. I am asking you to consider the possibility of theft in systems with value systems dissimilar from your own. This includes the concept of theft in human value systems that are dissimilar to those currently codified in our laws.
Governments can take your land through Eminent Domain if it is shown to benefit society as a whole.
Also is the government "taking" the drug, or just not extending monopoly patent rights for it? Also even patents (in the US) have a provision that they be reasonable licensed in exchange for gaining the temporary monopoly.
Governments can take your land through Eminent Domain if it is shown to benefit society as a whole.
By the United States Constitution, in the United States such a taking must be with compensation (reasonable, market-based compensation). And the same is true in most democratic countries with an independent judiciary. (This is notably not true in China, which is why seizing land from peasants is a favorite way for corrupt local officials to enrich themselves.)
Correct, I called out the provision that patents must be licensed at a reasonable rate in the attempt to draw the parallel with the reasonable market rate compensation for eminent domain, but left that portion out by accident. Thank you for calling it out.
And governments have to pay compensation at market price for your land.
Look, I don't think Bayer will complain at all if India (the country) pays for the drug used by patients in India, like the health systems in UK and Canada. Bayer's complaint is that India doesn't compensate the company.
May be I am over reacting, but I feel that he has no respect for the laws of the country where he wants to do business. I am sure Bayer knew how the patent system in India works before they entered the market.
Maybe I'm missing some history, but I don't think that Bayer ever wanted to enter that market. He doesn't want to do business in India.
This basically says that if you aren't in the Indian market or aren't offering your product for a price that India agrees with, your IP protection is meaningless.
This starts to get murky from an ethical point of view because we are talking about a cancer medication, and I doubt that software IP would fall under the compulsory licensing. But, cancer drugs are expensive to develop. Bayer should absolutely be afforded some IP protection to recoup the costs of developing the drug. Otherwise, they'll just stop; or more likely, just increase the prices elsewhere around the world.
I'm sure that Bayer isn't as concerned with losing the Indian market for the drug. But rather, they should be more worried about the Indian generic version of the drug hitting the international market.
> This basically says that if you aren't in the Indian market or aren't offering your product for a price that India agrees with, your IP protection is meaningless.
That seems reasonable. Why should we expect India to grant privileges to a company that wants nothing to do with India? They are giving India no reason to give a shit.
If Bayer has an issue with Indian generics getting into countries that it does have an interest in doing business in, then Bayer can appeal to those countries to block the import of those generics.
" or more likely, just increase the prices elsewhere around the world."
Are you saying they will make more money by increasing prices around the world? If so, why wouldn't they do that regardless of India's decision? They basically ignore supply/demand curves until India makes them angry? Or are you making some weird argument where they have to raise their prices in the face of medical tourism as opposed to the lowering everyone usually assumes?
Let's say the drug cost $1 billion to develop (factoring all of the other drugs that failed that they also need to pay for). Now they price that out so that they can recoup that $1 billion over the lifetime of the patent, plus a reasonable profit (remember these are public companies). Let's say that they want to sell the drug in India, and expect to get $50 million out of that market.
Now, since India is no longer a market for the drug, the amount of money that Bayer needed to make from India needs to be made from the rest of the world. That's $50 million more that the rest of the world will need to spend to subsidize India.
Even worse - what happens if the Indian generic form of the drug hits the international market? Now Bayer needs to recoup even more from the remaining international patients/insurance.
Or, what happens if patients from wealthier countries start going to India for treatment instead of staying home? Even more that Bayer needs to charge the rest of the world.
They need to make a profit to finance their next drugs in their pipeline.
The cost savings in medical tourism are usually attributed to lower labor and facility costs, not necessarily cheaper drugs.
Sorry no. They don't price things so they can recoup a fixed amount + a reasonable profit. Do you really think they say hmm we could price it a little higher and make more but we'll just stick to a reasonable profit. Likewise do you think consumers say, wow they spent a billion dollars developing this, therefore I am willing to pay them ($1 billion + 20% reasonable profit)/(total number of units sold)? That's not how supply and demand works. Drug companies price it to make the most on it regardless of any sunk costs. Why would thyley choose to make more or less money based on whether they are currently angry at India? They will always choose more or the shareholders can actually sue the board for abandoning their interests.
Over the long term... yes, they do try to recoup the costs of developing a drug and a reasonable profit. I was deliberating simplifying things.
Over the short term, the costs of developing a drug are a sunk cost that has already been financed using the profits from the previous round of drugs. They try to get as much out of the market as they can with their current lineup of drugs so that they can pay for the pipeline that is developing the next round. Over the long term over many drugs on the market, they are hoping that they are able to make a reasonable profit. They have to recoup the costs of developing each drug (including the ones that failed before getting to market). And to satisfy shareholders, they try to make as much profit as they can.
The amount that Pharma charges is based on a variety of factors, but you're right that it is largely what the market will bear in the presence competing drugs. For a cancer drug, the amount is whatever the insurance companies will pay. And that amount is always negotiated. The market will determine what is reasonable.
However, they still have a giant research and development machine that must be financed. If they aren't making enough on their current drug lineup, a company either needs to charge higher prices or slim down their drug development pipeline.
Yes that's all I've been saying. So sure, the future pipeline gets slimmed because of lowered expected returns.
There might even be further decreases to productivity of the research pipeline due to economies of scale (investigating one drug may make you stumble on a cure for something you weren't even looking for). Or there might be significant diminishing returns to more pharm industry research, because of the dependence on advances that only come through basic biology research. So it is hard to say which outcome is optimal.
Nothing in economics says that the money generated through monopoly prices due to patents is an optimal amount for drug research and development. And why chose 20-year patent terms rather than 30? Or 10? It's just kind of a system we've thrown together haphazardly.
Through NIH we fund more than half of drug research and basic biology research largely outside of the patent system. India funds research as well that we take advantage of, and India provides the early education for a very significant proportion of our graduate-student/pharm-industry-researcher population.
In practice, any monopoly (which is what patents provide, though in reality upwards of 20% of pharm research is just wasted on researching patent workaround processes and drugs to break the monopolies of competitors, adding no new functionality) will try and price discriminate. E.g. low-income people can get coupons for prescription drugs in the US and pay way less than high-income people, though it will be less relevant once we have near universal insurance coverage.
So, in the presence of patents and import/export restrictions/tariffs, the companies would end up charging much less on average per-pill in India and other low-wage countries than in the US in order to maximize profit. This means that though we give India a subsidy, it doesn't cost us much in lost revenue relative to the number of people in India who get a benefit.
> This starts to get murky from an ethical point of view because we are talking about a cancer medication, and I doubt that software IP would fall under the compulsory licensing. But, cancer drugs are expensive to develop. Bayer should absolutely be afforded some IP protection to recoup the costs of developing the drug. Otherwise, they'll just stop; or more likely, just increase the prices elsewhere around the world.
If they wanted to make money in the Indian market and be afforded IP protection, they could've priced the drug reasonably. Surely a smaller profit is better than no profit?
That Indian generic sold elsewhere would be subject to patent licenses active elsewhere, payable to Bayer. If people try to get it across borders without paying the license, customs are generally quite helpful with collecting such contraband.
I'm personally against IP and I don't think he has a right to the temporary monopoly. If the government shut down all patents, I don't think he'd be right to call it theft.
Still, perhaps he has some sort of point. The way he government selectively disables this provision has a tinge of dishonesty about it. Perhaps it could be argued he has the right to an equal monopoly protection relative to others.
The same way it did before we introduced the absurd notion that someone can own an idea. Innovation will flourish as constraints are removed and expensive stuff will shift to public funding or crowd funding rather than private funding. Rich people trying to make a killing is hardly the only place to find money these days.
Intellectual property is about much more than patents. Are you seriously saying that if I copy your work directly (eg source code) and rebrand it, I'm not doing anything wrong? Just innovating?
I'm saying we've pushed the notion of IP too far when I can't see your work and duplicate it on my own without running foul of some bullshit patent. I'm fine with the general idea of copyright, but not it's implementation. But software patents, hell no. Patents on drugs, hell no, patents on processes to make those drugs, maybe, but not on the drug itself. People should be free to reverse engineer anything without violating the law. Reverse engineering should never be illegal.
Ideas should not be own-able. Your software is not an idea, it's an implementation of an idea, you should get some protection of your implementation, nothing more. If someone else can do it better, or at all, they should be able to.
Ideas are not property, copying an idea is not theft.
That's a nice feel-good rhetoric but "ideas" worth protecting don't pop up spontaneously in the shower. They are the end product of a long, costly and risky process. They cost time, money, effort, skills and other resources to develop and (more to the point in this case) convince government organizations that they are safe and effective to be available to the general public. IP is the tool we have to compensate those that take up this huge cost and risk. Feel free to suggest alternative realistic compensation models but until then, enforcing IP is the lesser evil compared to disincentivizing the discovery of such "ideas" in the first place.
And that's a nice bunch of bologna based on the false notion that telling other people they can't do something increases innovation. This very website is proof of the opposite as are most website because it's quite a simple and well known fact that most software violates someone's IP. The web is what it is today because that IP is not enforced, but held in reserves to be used in a mutually assured destruction capacity by the big guys in the industry.
If IP were actually enforced, much of the Internet wouldn't exist. Innovation comes from the free flow of ideas, science has proven this time and again. IP disincentivises real innovation because it prevents people from building upon and improving other people's works. All this innovation you think IP is giving us pales in comparison to what we'd likely have without it.
What you aren't acknowledging is that business doesn't need artificial monopolies to take big risks and make big profits off big ideas because those things aren't necessarily easily copyable anyway. The money necessary to manufacture things is generally more than enough to put up a massive barrier to entry to allow them to profit off their ideas. Job Schmoe isn't going to suddenly take down Intel because Intel wasn't allowed to patent a CPU design because their advantage isn't the design, it's the fab process and how expensive it is. The same applies to drugs or practically anything else.
If your big innovation is so easy to copy that you require an artificial monopoly to make it profitable, then it doesn't deserve to exist. If your business relies on forbidding other people from doing something, your business doesn't deserve to exist.
Sure. The basic macroeconomics of IP: If ideas are not rivalrous or excludable, any company who tries to recoup upfront development costs will be out competed: someone who didn't pay upfront costs can afford to sell the innovation at a lower price. This will remove incentives for idea production.
The solution is broadly to introduce an element of idea exclusivity. Patents is one way to do this. Without patents, in my hypothetical world, we'd see some combination of other measures (eg. more trade secrets, private exclusivity deals, aggressive branding---note I don't hate trademarks) and we'd also see less ideas being produced.
This economy would then have to go on with less idea generation and more friction in protecting innovations. This is based on my best understanding of the issues.
We need an alternative mechanism to fund medical research. Granting artificial monopolies aka patents isn't cutting it, and it's getting highly unethical.
Given that what we currently have isn't a free-market approach at all I wonder why we couldn't just fund it directly, via taxes. The cost could be shared between countries AND the research could be directed. The companies could be pure R/D labs, leaving the manufacturing to others.
I think it's really hard to say. The efficiency provided by companies trying to make money can't be overlooked. They make every attempt to reduce costs and increase development speed, and it's possible that in the long run, things are better.
Also, if research is publicly funded, it would probably tend to focus on whatever the public is more aware of. Public awareness of diseases doesn't do correlate well to the severity of the problem. For instance:
Companies are also motivated by profits. This can create a perverse incentive to focus on treatment methods and ignore prevention/cures. They might also focus more on problems that effect "rich" people (blood pressure, cholesterol, weight loss, depression) while ignoring things that kill many poor people like malaria.
> They make every attempt to reduce costs and increase development speed, and it's possible that in the long run, things are better.
My point is that research companies should focus on discovering how the human body works and reacts to different substances, not how to create the drug efficiently. Their output should be scientific knowledge (and we would pay them for that), not industrial processes. That can be left to manufacturing companies, operating in a mostly-free market (but with quality regulations) and all that.
> Also, if research is publicly funded, it would probably tend to focus on whatever the public is more aware of. Public awareness of diseases doesn't do correlate well to the severity of the problem.
True. But profitability isn't really the same as the severity or "ethical" importance either, and that's how things are today. Directly funding research is how things are done with particle physics for example.
One group that would benefit from cheap patent-free drugs is health insurers. It would probably be worthwhile for them to fund development, except they have a public goods problem. Insurers who didn't contribute could freeload off those who did.
Recognizing that, Bernie Sanders introduced a bill a couple years back, taxing insurers for patent-free drug development. To keep the government from picking research projects (which it tends to do very conservatively), it would fund prizes instead of funding research directly.
>One group that would benefit from cheap patent-free drugs is health insurers.
Um...exactly the opposite. Under the ACA "the minimum percentage of premium health plans must spend on health care is 85 percent for large groups and 80 percent for small groups and individual policyholders."
So, if an insurance company spends $65,000 on a drug, they get 65k/.85 or $76,470 in premiums, earning $11,470 in profit.
If the drug only cost $10,000 the profit would just be $1,764.
The more expensive drugs are, the more money health insurers make. Health insurers are harmed by cheap patent-free drugs.
You're completely ignoring the other half of the insurance business which is selling plans to employers and individuals. Insurance companies can't just raise premiums willy-nilly without incurring the wrath of the big employers.
Every single insurance company director I've ever talked to HATES the current pricing of drugs.
Hmm. Hadn't updated my view to account for the ACA.
That could be a problem for healthcare costs in general, in markets where competition among insurance companies is limited. I bet we end up changing that provision sooner or later.
Why not both? Why can't we increase government funding without banning companies from doing their own research (or at least profiting from it?) It's very unlikely two labs would discover the exact same drug and then patent it so no one else can use it. And creating the maximum amount of investment in medical research seems like a good idea.
I think one thing that India has got right is the patent system. As I understand, you can't patent as product in India, you can only patent the process. Thus multiple companies can have multiple process patent on the same product. This actually encourages innovation and keep prices low (especially for drugs). $65,000 is extremely expensive considering that the average annual income in India is a mere $2000.
Am I missing something because I'm not sure that a lot of new drug research is coming out of India. It would be great if there was because we could probably double the amount of new medicines.
It's convenient for drugs that have already been discovered and validated, but the difficult part of making a drug is not the chemical process to produce it, but knowing which chemical to produce in the first place. Knowing where to tap with the hammer, if you will.
If you want there to be no patents for drugs, that's an argument to make, but this type of "patent" is just a fig leaf for not having patents at all.
While that is one way of looking at it. It also encourages other companies to put in effort in finding different processes to produce the product. Whether the amount of effort involved is substantial or not is a different matter, but the end result is that drugs are very cheap in India (as it should be). Companies try to make money at scale and not by squeezing their customers dry.
My dentist recently told me about 2 drugs which are essentially the same. The drug made by the foreign company costs Rs. 200 (approx $4). On the other hand the India generic version costs Rs. 30 (approx 50cents).
> My dentist recently told me about 2 drugs which are essentially the same. The drug made by the foreign company costs Rs. 200 (approx $4). On the other hand the India generic version costs Rs. 30 (approx 50cents).
Well, sure. All the hard work's already done for the company making the generic version; even complex syntheses are trivial by comparison with the staggering amount of effort required to find and validate an effective new drug.
OTOH, The bureaucracy in the patent application process is a sorry state of affairs. The US PTO normal applications are processed faster than India PTO expedited applications.
Went digging through for past articles. This has been a long-running situation. For context, Nexavar was patented in India in 2008 (it's first FDA approval, for advanced liver cancer was granted in 2007, a process started in 2004). According to this article [1] from last year, Bayer was running a program that gave ~70% of Nexavar users a 90% discount from their in India market rate ($5500 USD monthly). The generic maker sells at $176 monthly, and per licensing fees, pays Bayer 6% of net sales.
Also, about the nature of the drug. It's basically a treatment of last resort. The initial study that granted it FDA approval for in advanced liver cancer showed a 3-4 month increase in median survival time compared to placebo (remember, this is with cases that have exhausted other options). Further studies show some greater synergistic effects combined with other treatments. Also, in a study with a smaller population, and slightly different subtype of liver cancer showed an overall median survival time of 26 months (it's unclear to me from reading the abstracts how the baseline conditions of the two trial's patients compare, so it's difficult to directly compare their results).
I know most people will oppose this, but what about the massive financial investment that Bayer took in development that the Indian company Natco didn't take. Surely Bayer should get some sort of payback.
As long as we're talking about what ought to be: Should the model we have be incentivizing the recoupment of investments using the threatpoint of death to extract maximum resources from choiceless "customers"?
However we do it, the answer to "how much will it cost?" when it comes to medicine needs to stop being "how much do you have?"
Nuclear weapons are arguably necessary with a nuclear armed neighbor they've regularly been at war with, and the space missions have the potential to make profits for India.
The US funds space missions with folks dying for want of medical care, but people don't tend to complain about that.
I'm not sure funding their NHS is going to do all that much good when the drug costs multiple times the per-capita income of Indians.
This is misleading; if the gains you obtain by having a nuclear and space program in the long term are greater than not having them and investing somewhere else, then the rational choice is to have them even if you're poor.
I agree that recoupment of investment is not a right, and as such laws are not here to help with that.
I think there's a key difference between the threat of death from a disease vs. say the threat of death at a robber's hand. Do you agree? If not, is it immoral/extortion whenever someone is charged money for a necessity?
The difference becomes some what less when the moral entity in question says to the dying in want of that necessity "I could charge you less for this and still survive myself, but I won't", and especially more so when they use government regulatory capture to make sure that no one else is allowed to either.
"Survive" and "innovate" aren't the same thing; if pharmaceutical corporations did what you suggest here they should, we'd just be hearing about how evil it is that they don't develop new drugs any more because of all those evil profiteering CEOs.
It's just my socialist Utopianism showing. I'm saying that I hope that there's an alternative path to innovation that isn't innovation by the rich for the rich only. It's probably working about as well as can be expected under the current parameters, but damn it has some ugly warts now and again.
I'm just an armchair historiographer, but it seems to me that more or less all innovation is "by the rich for the rich only" -- at first. Pharmaceutical research, in its modern form, is a very young field; give it fifty years to grow up and figure out what the hell it's doing, and things may well look a lot more equitable.
They absolutely should be compensated - they always had the option of licensing it in India, or simply pricing it appropriately and benefit/reaching a much much larger market and make it up on volume. They decided to do neither.
If the article is accurate, he doesn't want to sell in that market. I'd struggle to justify not letting somebody else do that for this sort of product when they have a law like this.
He doesn’t want to sell in that market at the price that the government would fix. If they can charge the same price than in USA then he will be happy to do business there.
"At a daily dose of 4 tablets, this comes to $5,637 per month,"
"..is for western patients who can afford it"
Oh the irony, at least in the US. How many can actually pay $5,637 per month out of their own pockets if not for health insurance which is mostly subsidized by your employer if you are lucky enough to have a job. On the other hand, India is still more of a "I pay you out of pocket, how much do you charge" system.
Having said that, I am not necessarily saying that protecting your IP/inventions is a bad thing. But before you start comparing countries/markets, make sure you have enough knowledge of how a particular market operates.
Now that the ACA is in force, you don't need an employer. Just go on the healthcare.gov or your state's equivalent, buy a plan with no worry about pre-existing conditions, and get a max annual out-of-pocket of several thousand dollars. If your income is low enough you'll even get your premiums subsidized.
(But personally I'm against pharma patents. There are ways to solve public goods problems other than turning them into private goods.)
America is certainly nowhere near the top of Developed western countries, so maybe they're not even talking about Americans when they say "..is for western patients who can afford it"
It would be nice if you were less vague, so we could have a reasonable conversation about cost of living, incoming, savings, disposable income, et cetera.
As it stands, you've provided a dearth of information.
I'm not sure what exactly the history of this product is, but my guess is it's a treatment that:
1) Cost a shitload to research
2) Is only applicable to a handful of patients
If this is true, then I don't see what else they should do. If they aren't allowed to sell it at the price they want, then perhaps the research wouldn't have been funded in the first place?
This is one hell of a hit piece. I'd love to see the actual quote from the CEO since this has gotten ZERO press in the mainstream media. I'm assuming he meant the drug was priced for westerns who could afford it, not that the company would prefer if Indians with cancer would just die.
The thing that makes me laugh about the IP struggle going on in India is that Indian companies who have developed their own generic versions have often priced their drugs not much lower than what western companies have[1]. This isn't about providing access to medicines (since many western companies, including Bayer, have patient assistance programs that offer free drug to Indians), this is about protecting and supporting the Indian pharmaceutical manufacturers.
[1] Biocon just launched their biosimilar version of Genentech's Herceptin. Genentech's price in India is $1,366 per month while Biocon's is $933 per month, still well out of the reach of most Indians.
Legalities of all this aside, these comments perpetuate many of the worst stereotypes of major pharmaceutical companies. This will not be smoothed over lightly.
This is the same company that sold off their stock of HIV contaminated medicine to hemophiliacs in Asian and Latin America in the mid 1980s while a newer version was sold to western patients.
India's setting a great precedent by granting exclusive rights granted by a patent only in combination with a requirement that the result be reasonable.
I think this kind of tweak to the patent system should be extended beyond medical life-or-death kind of products.
Our society grants these exclusive rights under certain conditions, because as a society we believe doing so benefits us all. There is no inherent natural right to have a patent (unlike what this bozo seems to believe), it is an artificial construct humans made up to improve society.
There is no reason we shouldn't tweak the parameters of patentability and the benefits received on an ongoing basis.
If United States patents can be discarded at will by global markets, it creates serious intellectual property concerns for research and development groups in the US.
Without a possible profit incentive, what will incentivize drug companies to spend billions on cancer medication or other research if the compound will be lifted from them the next day and sold at pill cost, not compounded R&D cost?
It's definitely in US interests (both public and private sector) to strengthen the value of a US patent and US patent law globally.
Why would a government not argue in favor of this?
Pretty simple to deduce. Bayer is probably a pretty big donor to various politicians. I wouldn't be surprised if high-level US officials have tried to pressure Indian officials with other things to make sure this works for American companies.
They've done it time and again with copyright law.
So much of what America produces is intellectual property. If India wants to take it without paying, when then America should stop buying Indian products.
The problem is both sides are being assholes here. Bayer is charging WAY to much for the Indian market, but the compulsory license is way too cheap.
Utterly ridiculous statement and you're clearly showing you're lack of understanding of the industry. The latest research I saw had 2/3 of new drug developed at both biotech and pharma companies. Only 1/3 came from academic settings and that only includes discovery of the lead, which is about 1/10th of the work required for a new drug and at a cost of a about 1% of the total for R&D.
> "It takes about 10-15 years to develop one new medicine from the time it is discovered to when it is available for treating patients. The average cost to research and develop each successful drug is estimated to be $800 million to $1 billion. This number includes the cost of the thousands of failures: For every 5,000-10,000 compounds that enter the research and development (R&D) pipeline, ultimately only one receives approval."
Direct statements indeed. The honesty is refreshing, even if it will naturally be countered for weeks by PR. It's interesting to gain some insight into how this sort of person views the world.
Basically, what Bayer is asking is for India to enforce US patent law and to not enforce Indian patent law (which allows this exception). It doesn't help that Bayer's CEO comes off as extremely racist: '“We did not develop this medicine for Indians”.'
The first journalistic source to report the statement,[1] an article published by Bloomberg Business Week, includes the statement near the end of a general article on patent protection in India. Both the reporter and editor who put the story together are based in India and (at a wild guess, based on their names) are perhaps citizens of India. This sort of national policy issue, of course, often results in different countries coming up with differing laws. Then the countries have to resolve differences about their laws in negotiations when they look at overall trade between their countries. And that (nothing particularly nefarious) is all that is involved in the United States negotiating with India about this issue.
I'm very glad that somebody is developing new medical treatments (both drugs and medical devices). All of that work is very expensive, and much of it results in products that never turn a profit. I can't think of any social justice reason why my childhood best friend, a first-generation college graduate from a working class family, who now develops medical devices, should have to work for free. Nor can I think of any social justice reason why anyone who needs effective medical treatment should be without it, in general, but until new medical treatments are invented, wishing doesn't make that so. India's approach to compulsory licensing on non-negotiated terms for new treatments developed outside India may be very politically appealing in India, but it's not completely clear that that is the best national policy for responding to the grave health problems[2] that still exist in India.
AFTER EDIT: I see some wild karma swings on this comment, so feel free to tell me what you really feel about this comment. India, of course, would have no objection to how drug companies market drugs if only it had a country full of companies that are already innovating affordably to solve all the health problems of India.
He's a bit mixed up. Government enforcement of your temporary monopoly is a privilege. Failing to give you the privilege you think you deserve is not the same thing as stealing from you.