When it comes to the cost of developing a drug, which is what we’re talking about, complexity is quite relevant. You can list all kinds of inventors and innovators from the past, but the cost of developing CONTEMPORARY technology, medicines, medical procedures, diagnostic tools, etc. is enormous. If it would’ve cost the 1928 equivalent of a billion dollars to develop penicillin, I’m pretty sure Alexander Fleming wouldn’t be a Nobel laureate today.
In the US we spent about $95 billion a year on medical R&D. At least in 2003, I don’t know the figure for 2012. Normally R&D spending goes up with time but with the economy collapsing, I really don’t know what we spend now.
Of that 2003 figure, $40 billion was from public sources and $55 billion from private sources.
If we had UHC that was as efficient as Europe at 11% of GDP, then our medical spending would be 1.6 trillion a year instead of the 2.5 trillion we spend now. That $40 billion in private spending could easily be recouped from the $900 billion in savings.
But there is no way of telling what would happen to medical R&D.
Japan, Taiwan, Singapore and South Korea are all considered leading biotechnology R&D countries and all have UHC.
Reduced spending on pharmaceuticals could lead to less R&D. However, again, there is no reason why the savings couldn’t be used to fund more public R&D into pharma.
Really? I though we were talking about “stifling innovation.”
You make a couple of assumptions.
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We will continue to have the same bloated, expensive health care system we have today, which will always require the same amount or more money to function. In other words, the existing system will produce no innovations that result in more efficient, effective solutions. In effect, a self-stifling system.
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You assume that all innovation must stem from the existing system, particularly the pharmaceutical companies. As another poster points out, maybe if some of the money was moved from pharmaceutical company funded research, to independent research, that might produce more innovations than we are seeing now.
You still seem to be fixated on the notion that more expensive=better, even though this has been disproven all over the world. Why is that?
You forgot entire continents filled with Socialists also enjoying longer life expectancy. LOL.
Fwiw, if and when the US finally comes to its healthcare senses, the world will just have to innovate about how to innovate.
Hope you’re enjoying your insulin!
I love the argument that your high drug prices, (you’ve set up a system that lets drug companies hose you, it’s not anyone else’s fault!), somehow subsidize our low prices.
We just have a system to stop drug companies from reaming us. Yes, it’s that simple. We negotiate as one large unit, instead of as an individual. You should try it maybe?
You still seem to be fixated on the notion that more expensive=better, even though this has been disproven all over the world. Why is that?
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I KNOW that what I’m saying isn’t the lease bit confusing. If it costs a billion dollars to develop just one new drug, then it stands to reason a drug company has to make a lot of money to keep up that kind of research and development. If the U.S. is easily the largest healthcare consumer in the world AND pays significantly more for each pill and procedure, it further stands to reason that curbing that spending will affect the amount private industry will be able to put into future development. That’s not to say that money can’t come from another source or we can’t develop a different model for such development. But, it is a rational starting point for this debate.
I make neither of the assumptions you list. Far from assuming we “will continue to have the same bloated, expensive health care system we have today”, I’ve clearly acknowledged that a successful UHC would reduce bloat. But, since a lot of that bloat translates into income for drug and equipment manufactures, which then translates into more development, it’s worth discussing how we compensate for any potential loss of innovation. That is the purpose of this debate.
I’ve also not assumed “that all innovation must stem from the existing system.” I’m interested in discussing possible alternatives because I know we’ll have to find them eventually.
Again, I’ve made no such argument and you seem to have missed the point of what I have said. We don’t know if more expensive=better. What we do know is that the more expensive U.S. system has poured enormous amounts of cash into the companies, both here and abroad, that develop new drugs and treatments. The efficacy of public healthcare abroad is a different issue than the money necessary to fund development. If it turns out the profits offered by the U.S. market has been vital to healthcare innovation, then all countries have benefited. Is that the only way to do things? Hopefully not. Those here who have suggested alternatives understand the framing of the debate.
Have you considered that maybe the reason you can negotiate lower costs is because U.S. consumers are making up the difference? What happens if we’re no longer footing the lion’s share of the bill? It’s not your low negotiated/mandated rates that provide these companies with the billions they spend on development. Unless that money comes from somewhere else or a new system for development is created, simple economics dictate that lower revenue means less money to invest in research.
It’s an anomaly I’ve noticed and remarked on many times during the endless discussions about the US health system vs the rest of us. The very same people who are against a system like ours, where tax dollars fund everyone’s access to medical care because they object to subsidising every fatty-no-exercise-McReckless-driver, are ok with paying inflated drug prices (compared to the rest of us) because they believe Americans are subsidising drug research for the rest of the world.
Why are they ok with subsidising drugs for everyone else, but not medical care for everyone else?
This goes hand-in-hand with the same people objecting about funding other people’s health care, but then patiently explaining to us that treatment is so expensive because hospitals recoup the losses from treating emergency patients who can’t pay by jacking prices up for those who can. -head explodes-
If a rich community overpaying for medical care drives profits, and this drives innovation, then let’s make a deal:
The 1% get a small chunk of the USA, let’s say Long Island. That territory will be cordoned off from the rest of the country, and blockaded. Those who live there will be free, free as birds, to spend as much as they want on health care. Want to pay $7000 for a bottle of aspirin? You’re free to do so. Medical service providers and insurers will be tripping over themselves to part you from your money. The rest of the country will get socialized medicine, like the rest of the Western World.
And here’s the key. 1% of the USA have 50% of the wealth and over half of the income. We can insure the other 99%, install price controls, and settle down to being a middling-rich country, and the drug companies can make all their profits off the free zone of Long Island, more than enough to fund innovation.
This is an interesting point because the NHS is in a constant state of innovation and has been all my life. In fact, I think you have to put the low admin costs of the NHS down to innovation - literally incessant demands for greater and greater ‘backroom’ efficiencies in order to release more of the funding for front line services. The two are inextricably linked in every meeting - and in that system there is no prospect of increasing charges to, say, paper over a structural reluctance to deal with inefficiencies.
Of course, politicians will tell you exactly the opposite when they want to reduce funding but they, typically, have never been near an NHS hospital - even when ill.
In terms of medicine research, I note this organisation wasn’t been mentioned, nor has this model of funding - and it’s really pretty significant:
Fwiw, the org has put in a bid to buy the entire London Olympic Park for £1 billion cash - it operates on a meaningful level.
No, what you’re saying isn’t the least bit confusing. It just contains some unstated assumptions and has the appearance of a stalking horse for the drug companies.
One of those assumptions is that the current cost of developing new drugs cannot be lowered.
Another is that the proliferation of new drugs is generally good for the public health.
Your premise reminds me of the claim some politicians make that if we raise taxes it will kill jobs because the “job creators” will have less incentive to create them. This is hogwash, for a variety of reasons.
To your general argument about the high cost of pharmaceutical development:
Once automobiles were so expensive that only wealthy people could afford them. They were very complex pieces of machinery that required highly skilled designers, engineers and machinists to produce and maintain.
Then a guy named Henry Ford figured out how to make them cheaply enough so that common people could afford them.
What makes the pharmaceutical industry immune from this kind of innovation?
No I haven’t. I’m stating that the status quo means it costs a billion dollars to bring a drug to market. The debate here, among other things, is if and how that can improved.
In general, more innovation in drug creation is better than less. I can understand how the current focus on making insignificant changes to existing drugs is less advantageous than focusing all your research on truly new medications, but the government can’t dictate to private companies how they spend their research dollars. If you’re thinking of situations where new drugs weren’t properly tested and resulted in doing more harm than good, well that’s a separate issue. In those cases, the additional testing necessary would’ve caused the drugs to cost even more.
Comparing drug creation to manufacturing efficiency is like comparing apples to airplanes. A better comparison would be to consider what it costs to design and develop a new automobile, which is orders of magnitude more expensive than the development work that went into the Model T. If you’d like to offer any suggestions for how the painstaking research, chemistry, testing and trials of new drugs can be streamlined, I’m all ears. Continuing to make superficial and myopic comparisons to completely unrelated inventions from 100 years ago isn’t going to cut it.
All of your responses still strike me as special pleading for the pharmaceutical industry. Somehow, what they do has no precedent or similarity to any previous commercial enterprise and therefore cannot be compared in any way. I find this very hard to accept.
Similarly, you have rejected all cost comparisons of the U.S. health care system to others in the developed world, because, somehow, America is unique and can’t be compared to other countries.
No special pleading at all. I know we HAVE to find a better model for drug development, for a host of reasons. The first, I believe, is to address the fairly logical assumption that price controls or lower negotiated rates will hit the bottom lines of these pharmaceutical companies and, thus, their R&D budgets. The similarity to other commercial enterprises is that it requires a degree of complexity that far exceeds its predecessors in the field. A new drug takes 15 years to develop. Penicillin, by contrast, was discovered largely by accident. Drug development is advanced science, and that takes time… lots of it. The low-hanging fruit in drug discoveries is long gone.
It is unique compared with socialized medicine around the world. That’s why it’s the subject for so much debate among politicians and regular people. There are no mandated cost controls, no government-driven bulk purchasing, very little regulation of consumer advertising which increases pressure on doctors to prescribe more costly name brand drugs. And that’s just drugs. Diagnostic procedures are over-prescribed and cost double or more than what they cost in other countries.
Have you considered a guy who gets hosed on a car isn’t subsidizing the guy who gets a better deal, he’s just making the lot owner richer? But I’m sure you’re right, the cost difference can’t possibly be explained away as simply as, we purchase for 30million people, y’all choose to purchase as much, much small individual groups. Do you know anything about the marketplace, at all?
And, again, you’re not paying the lion’s share of anything, you’re just willingly getting reamed. Go check out the advertising budget of the drug company of your choice. Doesn’t come cheap and pretty much accounts for the cost differential. Well, if you add in the sky high guaranteed profits that reaming a whole country provides.
Really, you don’t think our 30million consumers matter to their bottom line? Now add in the other UHC nations.
Utter nonsense, their profits are in no fear of dropping as long as people continue to age and old men want boners.
Yet another misguided analogy. It’s not about the guy who sells the car but about the guy who makes it. If the guy who makes 20 cars gets $1,000 for half of them, then $2,000 for the other half, that’s $30,000, right? Well, if market conditions change and he suddenly can only get $1,000 for all 20, that leaves him with $20,000. That would be $10,000 less. Who can put more money into research and development: The guy who makes $30,000 off of 20 cars or the guy who makes $20,000 off the same 20 cars? Why are you having so much difficulty grasping this concept?
If the U.S. spends less on drugs it won’t necessarily cause your prices to go up, but it will leave manufacturers with less to spend on production. How do we compensate for that? Welcome to the debate.
Now, if you’d like to suggest that a pharmaceutical company in a highly competetive industry will put the same amount of dollars into research and development regardless of how much profit they make, I’m all ears. It would, of course, run contrary to most corporate practices.
When you pay the most for something, regardless of the reason, it is by definition the lion’s share.
You absolutely just made that up. It’s already been clearly established that Americans pay more for virtually every dose and every test than other countries, regardless of advertising. Stop just throwing crap up to see what sticks.
I’d love for you to show me where I suggested non-U.S. consumers don’t matter to the bottom line, 'cuz I sure don’t remember writing that. The point I’ve made and proven is that the American market simply matters more, a lot more. Why? Because we pay more for our drugs, a lot more. You see, to a large corporation more money is better than less money, especially when it’s a lot more.
The premise of the debate is to discuss what impact less revenue for drug and equipment manufacturers would have on innovation. I never expected there would be so many who don’t grasp the basic connection between profits and expenditures. If U.S. healthcare expenses fall into line with the rest of the developed world it will very obviously mean less revenue for those who make drugs and equipment. Less revenue means less money for product development. So, how do we make up the difference? (Stop pretending there won’t be a difference to make up.)
Is this really so hard to understand?
For you, apparently it is.
The guy making the car is profiting, and able to continue making cars regardless of who he sells to. His costs don’t get ‘subsidized’ by someone over paying. He’s making a profit on the guy who got a good deal, and a killing on the guy not smart enough to. One is not ‘subsidizing’ the other. The system isn’t in danger of falling to pieces because the guy overpaying wises up.
:dubious::rolleyes:I’m out.
No, that poster is not making things up:
Advertising, Research and Profits in the Drug Industry
Martin S. Feldstein
Southern Economic Journal
Vol. 35, No. 3 (Jan., 1969), pp. 239-243
Published by: Southern Economic Association
Article Stable URL: http://www.jstor.org/stable/1056535
The Kefauver Committee’aroused national interest by pointing critically to the high rates of
return on capital that are earned in the drug industry, the large proportion of sales revenue
spent on selling costs and the relatively low level of research expenditure.
I guess we have a different idea of what constitutes proof. How have you proven this?
Also, regarding your continued contention that the high degree of complexity excuses the drug industry from comparison with other enterprises regarding innovation, how about this:
The Large Hadron Collider
Annual Review of Nuclear and Particle Science
Vol. 61: 435-466 (Volume publication date November 2011)
DOI: 10.1146/annurev-nucl-102010-130438
The Large Hadron Collider (LHC) is the most complex instrument ever built for particle physics research. It will, for the first time, provide access to the TeV-energy scale. Numerous technological innovations are necessary to achieve this goal. For example, two counterrotating proton beams are guided and focused by superconducting magnets whose novel two-in-one structure saves cost and allowed the machine to be installed in an existing tunnel.
Is that complex enough to merit comparison with your peerless drug industry?
In my view, you are arguing from a position of foregone conclusions and are not willing to consider the criticisms of your position.
Several of the posters seem to be assuming that higher spending on healthcare must automatically translate to higher R&D spending.
But as I pointed out upthread, an awful lot of the extra americans spend, goes on admin costs, insurance company profits, excessive healthcare worker’s salaries and excessive testing. By comparison, the amount spent on R&D is trivial.
In fact, you could argue the exact opposite case. That because of all the overhead, pharma profits are being depressed because the system is stressed and they can’t set their portion of the price as high as they’d like.
In the UK we have one of the highest gasoline prices in the western world. It would be ridiculous to argue that our high spending on gasoline means more R&D by oil companies, primarily because most of the money doesn’t go to the oil company (it’s 60% tax for a start).
Ok, think about this; Canada is a wealthy first world nation, with 30 million plus people, all with insurance coverage, the economy is a even a tad healthier than your own.
Exactly what kind of big stick, do you think they have, that they are able to kowtow a giant, multinational drug company into giving them discounted drugs?
Seriously? That seems plausible to you?
It’s not hard to recognize you’re not subsidizing anything, you’re just getting reamed.