[thedoc (OP)]

Tim Nelmes asked the Naked Scientists:
   Chris,
As a listener from an engineering background with little science knowledge, I find the podcasts absolutely engrossing.
We often hear about the cost of cancer drugs being so high as the drug companies need to recoup the cost of their research and investment. We also hear about the fantastic research work done by charities such as Cancer UK and the often encouraging results of trials. As the charities do not produce the drugs, then I assume that there is a 'handover'  to the drug companies. If so, then  with the extensive research already done, why are the commercially available drugs so expensive or am I missing something?
Tim Nelmes
Coventry
What do you think?

[exothermic]

We also hear about the fantastic research work done by charities such as Cancer UK and the often encouraging results of trials. As the charities do not produce the drugs, then I assume that there is a 'handover'  to the drug companies.

Being from the US,  I am unfamiliar with Cancer UK but it doesn't look like they are involved with drug development at all. They mention "medicine optimization" but that's a far cry from drug development:

"http://www.pharmacyresearchuk.org/training-and-events/download-our-reports/

"Pharmacy Research UK funds research into the practice of pharmacy – we are interested in how and why people access pharmacy services, what pharmacies do, and what happens to patients as a result of this care."

~

[exothermic]

why are the commercially available drugs so expensive or am I missing something?

Greed....  Greed....  and more greed:

www.cbsnews.com/amp/news/martin-shkreli-style-drug-price-hikes-are-everywhere/

~

[chiralSPO]

Greed certainly plays a role, but the costs of drug development are also absurdly high while the success rates are very low. Teams of dozens of researchers work to synthesize multiple potential targets on the mg-g scale, while other teams study the effects in cell lines (looking for activity and toxicity). Once a suitable target is found, another team figures out how to make it on the 10-100g scale so they can test on animals. If they see good activity and acceptable side effects/toxicity then they have to figure out how to make it (and purify it) on the kg scale, which may involve building a pilot plant, and they are ready to start testing in people.

All-in-all this process can take 10-20 years and involve hundreds or thousands of people, and cost tens or hundreds of millions of dollars (if not billions). And most drug candidates are never approved for use in humans. So imagine that a company spends $1000000000 developing three drugs, and only one of them reaches the market. How much do they need to charge to recoup losses (and possibly turn some profit) if 1% of the population will need to take 100 doses in their lifetime? What if 0.001% of the population needs to take it 5 times in their lifetime?

[exothermic]

Greed certainly plays a role, but the costs of drug development are also absurdly high while the success rates are very low.

So imagine that a company spends $1000000000 developing three drugs, and only one of them reaches the market. How much do they need to charge to recoup losses

Recoup who's loses?  The money doesn't come out of pocket under normal circumstances.

The overwhelming majority of biomedical research [in the US at least] is funded, and there is no justification for the astronomical financial burden on patients

"In a Journal of the American Medical Association (JAMA) study published in January 2010, the largest study to date to attempt to quantify U.S. funding of biomedical research by the pharmaceutical industry, government and private sources, researchers estimate that U.S. biomedical research currently stands at about over $100 billion annually."

https://www.thebalance.com/who-funds-biomedical-research-2663193

~

[chiralSPO]

Recoup who's loses?  The money doesn't come out of pocket under normal circumstances.

The overwhelming majority of biomedical research [in the US at least] is funded, and there is no justification for the astronomical financial burden on patients

"In a Journal of the American Medical Association (JAMA) study published in January 2010, the largest study to date to attempt to quantify U.S. funding of biomedical research by the pharmaceutical industry, government and private sources, researchers estimate that U.S. biomedical research currently stands at about over $100 billion annually."

https://www.thebalance.com/who-funds-biomedical-research-2663193

~

Yes, and if you read the next sentence in the article, it is clear that the industry is paying about 2/3 of that $100B/yr.

...U.S. biomedical research currently stands at about over $100 billion annually.

The pharmaceutical industry is the largest contributor towards fundingresearch, funding over 60 percent. The government contributes to about a third of the costs, with foundations, advocacy organizations and individual donors responsible for the remaining investments...

So yes, between the US govt (mostly NIH) and charities, about $33B/yr is spent on pharmaceutical research outside of the pharmaceutical companies, but it is very misleading to say that a majority (let alone overwhelming majority) of research costs are not paid for by pharma, because last I checked 2/3 is a (super)majority.

[chiralSPO]

Please note: I am not claiming that there are no problems with the cost structure of medical research or the financial incentives of drug discovery and marketing. The pharmaceutical industry is definitely rife with greed and largely seeking their own profit over the benefit of others -- but please find me an industry that cares first for the benefit of mankind and then checks the balance sheet. (the closest I can come up with is the education industry, which is only technically not-for-profit, but somehow they seem to find some very creative work-arounds)

[evan_au]

Cancer UK .... Pharmacy Research UK

Try: http://www.cancerresearchuk.org/

Dr Kat Arney who presents the Naked Genetics podcast also works for Cancer Research UK.
http://www.thenakedscientists.com/HTML/about-us/who-are-we/people/kat-arney-1/

[exothermic]

Yes, and if you read the next sentence in the article, it is clear that the industry is paying about 2/3 of that $100B/yr.

So yes, between the US govt (mostly NIH) and charities, about $33B/yr is spent on pharmaceutical research outside of the pharmaceutical companies, but it is very misleading to say that a majority (let alone overwhelming majority) of research costs are not paid for by pharma, because last I checked 2/3 is a (super)majority.

"The taxpayer not only shells out at the pharmacy but often plays a critical role in funding these drugs in the first place. In other words, the public pays twice.

Although the pharmaceutical industry justifies routine overcharging by pointing to the huge, and uncertain, costs of research, the truth is that the government historically took, and continues to take, the greatest risks.

Since the 1930s, the National Institutes of Health has invested close to $900 billion in the basic and applied research that formed both the pharmaceutical and biotechnology sectors, with private companies only getting seriously into the biotech game in the 1980s.

Big Pharma, while of course contributing to innovation, has increasingly decommitted itself from the high-risk side of research and development, often letting small biotech companies and the NIH do most of the hard work. Indeed, roughly 75% of so-called new molecular entities with priority rating (the most innovative drugs) trace their existence to NIH funding, while companies spend more on "me too" drugs (slight variations of existing ones.)

But if Big Pharma is not committed to research, what is it doing? First, it is well known that Big Pharma spends more on marketing than on R&D. Less well known is how much it also spends on making its shareholders rich. Pharmaceutical companies, which have become increasingly "financialized," distribute profits to shareholders through dividends and share buybacks designed to boost stock prices and executive pay. The taxpayer not only shells out at the pharmacy but often plays a critical role in funding these drugs in the first place. In other words, the public pays twice.

Although the pharmaceutical industry justifies routine overcharging by pointing to the huge, and uncertain, costs of research, the truth is that the government historically took, and continues to take, the greatest risks."

www.latimes.com/opinion/op-ed/la-oe-1027-mazzucato-big-pharma-prices-20151027-story,amp.html

[alancalverd]

All capitalist economics is greed-driven. It also happens to be particularly effective at innovating and abandoning things that don't work. Everybody makes a living by supplying stuff that other people need (or think they do).

I used to work in the National Health Service and now work mostly in the private healthcare sector. The significant difference is that we have competitors instead of layers of strategic management and politics,so we have to be a lot more agile and offer a better service to stay alive.

I'm currently involved in a project on both sides of the business: the public sector service has been hampered all along by politics and turf wars despite our treatment being amazingly effective and cheaper than the current alternative, whilst our private patients are queuing outside the door and going home happy.   

Now if only there was some way the poor could exercise as much choice as the rich, I'd be very content. But there would be an awful lot of redundant middle managers!

[zx16]

I get lots of letters from "charities", asking me to send them some money.

But I throw the letters away, because I think that my money would most likely end up not in any "charity", but only in the pockets of the people who are sending out the letters.

Am I being too cynical?

[exothermic]

Greed certainly plays a role, but the costs of drug development are also absurdly high while the success rates are very low.

Yeah,  but you know there's a problem when the price for an EpiPen goes from $97 to $600, or Daraprim's $13 per-tablet to $750 per-tablet.... and more companies are following suit.

[zx16]

Do we need all these "drugs" anyway, like EpiPen and Daraprim,  These names sound very contrived, as if the manufacturers made them up, just to fool people into paying money for them.

Do they really contain anything necessary for human health.  Can't we get by without them, or are they the modern equivalent of the old "SnakeOil".

I suppose they might appear to work in some cases, but couldn't that be due to simple placebo-effect, rather than anything in the actual ingredients.

[chiralSPO]

Do we need all these "drugs" anyway, like EpiPen and Daraprim,  These names sound very contrived, as if the manufacturers made them up, just to fool people into paying money for them.

Do they really contain anything necessary for human health.  Can't we get by without them, or are they the modern equivalent of the old "SnakeOil".

I suppose they might appear to work in some cases, but couldn't that be due to simple placebo-effect, rather than anything in the actual ingredients.

Having seen someone's life saved by use of an epipen, I am convinced that it is not merely placebo (who knew shellfish could be so dangerous?!?) That said, it is also ridiculous that such a thing could be priced at $600. It's freaking epinephrine, in a slightly fancy syringe!!

In my opinion, the entire healthcare industry (at least in the US) has been built into a very complicated and inefficient and expensive monster. It's not just the pharmaceutical companies (though they certainly play a role), but also the way the health insurance, hospitals, medical device suppliers ($90 gauze squares anyone?), regulating agencies etc. operate:

There is a need for regulation to prevent swindlers and corner-cutters from hurting people, but the regulations also set up a system that has so many redundancies and competing watchdogs/rules that inefficiencies are rampant.

We need to have insurance so that the least fortunate are not left to die in the streets, but knowledge that that insurance companies are footing the bill also leads to huge price markups.

There needs to be high quality control and protection of intellectual property, but too little competition leads to insanely high prices.

It's hard to put a price tag on a life, but given the current state and trend of technology, I think there are very few conditions that cannot be treated or prolonged indefinitely with enough $$$$$$$. Who gets to decide when the money can be better spent elsewhere?


So there you have it. Neither free market nor highly regulated industry are capable of providing "fair" and "efficient" healthcare. Oh well...

[Colin2B]

Having seen someone's life saved by use of an epipen, I am convinced that it is not merely placebo (who knew shellfish could be so dangerous?!?) That said, it is also ridiculous that such a thing could be priced at $600. It's freaking epinephrine, in a slightly fancy syringe!!

We know a number of people whose life has been saved by one of these. However, $600 is indeed ridiculous - they are available here for around £45 (although if the pound drops any lower it could indeed be $600!) - however, anyone at risk of a serious reaction can get one free on our national health service.

[Watermelon]

If everyone complaining about expensive drugs and the greed of Big Pharma puts $100 in a collaborative fund then people can develop their own medications and sell them at production cost.

[zx16]

If everyone complaining about expensive drugs and the greed of Big Pharma puts $100 in a collaborative fund then people can develop their own medications and sell them at production cost.

That's an intensely seductive and appealing idea. It would find its place in a non-Capitalist world where no-one is interested in profit.  Where if someone develops an effective medication, they give it out to everyone, free of charge.  Unfortunately, most human beings don't seem to behave in such an altruistic way. Only some do. I mean, suppose that after years of intensive research, you eventually succeed in finding an effective cure for cancer.

Will your first thought be:

A. "Ah, now I can benefit humanity." or:

B. "Jeez, after all that hard work, now I can make bloody millions out of it!"

Doesn't the difference between A and B, distinguish Science from mere money-grabbing Capitalism?

[evan_au]

like EpiPen and Daraprim,  These names sound very contrived, as if the manufacturers made them up

Spot On!

Every country has some form of "Trademark" legislation, which allows a company or individual to register a name for their product - and which forbids others from using a name that might be confused with the registered name.

This gets very difficult if you want to use the same name in multiple countries, as the name must currently be unused in all those countries (and not too similar to any name currently used in those countries). Add in the requirement that the name must not be rude, crude or offensive (potentially across multiple languages) and you have a difficult problem for the Marketing department.

So "contrived" is probably a good description.

By the way, trademark law can be taken too far - some years ago, one large US company attempted to trademark the lower-case "i", when put in front of any other word. Fortunately, this application was struck down, and distinctiveness is now more strongly enforced.

[Watermelon]

That's an intensely seductive and appealing idea. It would find its place in a non-Capitalist world where no-one is interested in profit.  Where if someone develops an effective medication, they give it out to everyone, free of charge.  Unfortunately, most human beings don't seem to behave in such an altruistic way. Only some do. I mean, suppose that after years of intensive research, you eventually succeed in finding an effective cure for cancer.

Will your first thought be:

A. "Ah, now I can benefit humanity." or:

B. "Jeez, after all that hard work, now I can make bloody millions out of it!"

Doesn't the difference between A and B, distinguish Science from mere money-grabbing Capitalism?

Well if we are all as greedy as Big Pharma then we have no right to complain about it. Just swallow it quietly!

Another thing you can do is look at alternative treatments. Herbal remedies are more than just myths, and although they are not quick-fixes, they can make better long-term solutions to many health conditions.

There is a huge defamation and degradation war by Big Pharma against the natural treatment/supplement industry and consumers are buying into it. They just want the 'FDA-approved' stuff.