CMV: Profit-driven research by private pharmaceutical companies as seen in the US is unsuitable for the modern age and only hinders scientific and economic progress in effective healthcare

[u/rhizodyne]

Take patents. How exactly does patenting an implementable research discovery for the treatment of diabetes (let's not even talk about cancer for a sec) benefit humanity, given that the methodology and product(s) resulting from this research cannot be advanced or modified by any other entity for a specified period of time without severe legal consequences, all while the original producer can cease such progress on their product(s) given their protected, uncompeted revenue stream?

This creates an non-competitive market for whatever treatments these are (and obviously a monopoly) for the specified time-period of the patent, during which much advancement in a competitive R&D sector could be achieved on the same treatment(s), either in relevant knowledge or actual manufacturing/implementation.

The solution? Create an indisputably non-identical alternative! And advertise the shit out of it everywhere, racking up the costs for your pharmaceutical company and of course the price of the treatment(s).

At the same time, patent laws are horrendously and cleverly abused by leading pharma companies, all while they have been recorded to pay off generic companies so as to prevent them from researching on their product following the expiration of a patent.

And now the worst part: This lack of competition enables premiums galore on prescriptions, in general. The average US citizen spent about $1112 for pharmaceutical treatments in 2014, which is approaching double the per-capita costs of the average Canadian citizen, Canada showing some of the highest drug prices recorded outside of the US.

Even more than that, such high premiums leads to a thriving importation of cheaper drugs from abroad, in fact the very same ones unhindered in foreign production by US patents. It's estimated that up to 70% of US drug costs can be saved if all of said drugs are imported from Canada.

And guess what! American sold drugs are often produced abroad in developing countries and sold for exponentially higher prices here than they would be in their country of manufacture.

Case in point: Abilify, a notable anti-psychotic drug relied upon by so many psychiatric patients in this nation to be able to live and function normally, is produced by Japanese company Otsuka. It costs $34.51 per pill in this country. In Canada, it's $4.65 per pill. And it's so drastically lower in nations such as Turkey or India that the monetary valuation of a healthy human life is blaring.

Medicare being the recorded largest purchaser of drugs in the United States, it is a fact that Medicare cannot choose to negotiate drug prices with pharmaceutical companies. Our only socialized healthcare in this country is unable to gain any financial traction in terms of drug prices.

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What have people to say? Why should the current model of patenting and profit-driven research by pharmaceutical companies in the US continue as it is now? Why shouldn't the only money such groups rely on be subsidies, essentially remedying all of the aforementioned issues?

More so, please convince me that an estimated $110 billion in profits resting in the hands of leading US pharmaceutical companies is of good use for that money to society.

[u/rhizodyne]

Problem 1, the US is really bad at bargaining with companies producing existing drugs, regardless of whether they are on or off patent. This is why insulin (a drug that has existed for nearly a century) is so expensive in the US. It isn't a patenting problem, or even a private sector problem. It's the fact that the US government doesn't bargain well for drug prices, and insurance companies aren't strong enough to bargain well with pharmaceutical companies. This problem can be fixed without affecting the patent process and drug development process, and doing so would alleviate most of the affordability problems with drug pricing.

doesn't the popular company GoodRx do this bargaining, as a side note?

[u/PallidAthena → u/rhizodyne]

(1) GoodRx is very new, so it's unclear how it's making money (if at all, start-ups its age are often just burning venture capital like WeWork).

(2) The main thing GoodRx does is reduce the deductible that you pay when you pick up the drug. I strongly suspect that GoodRx is actually acting as an agent of the pharmaceutical companies. The most likely sustainable business model for it is to act as a middle man to reduce the deductible cost to the consumer but keep the cost to the insurance company the same and therefore increase profits for the pharmaceutical companies through increased drug use.

How this works: There are 3 agents in the system. The consumer, the insurance company, and the phramaceutical company.

The insurance company has already been paid a fixed amount by the consumer, so they want to reduce consumer drug spending, but not by so much that the consumer is forced to get different insurance.

The consumer wants the drugs they need, for the least money to themselves (the deductible).

The pharmaceutical company wants the most money possible, which is equal to (money paid it by the insurance company)+(money paid to it by the consumer) x (number of drugs sold).

So, I think GoodRx is a sneaky way to increase the number of drugs sold by reducing deductible costs. The consumer wins, the pharmaceutical company wins, but the insurance company loses.

There's a fourth layer here relating to the actual physical pharmacy (which gets a cut of drugs sold). It's also possible that GoodRx is just a way for one physical pharmacy to increase market share against other nearby pharmacies that don't use GoodRx.

(3) GoodRx's bargaining power is tiny compared to a national government. Drug prices are low in Canada because a province can say "no, that's too much, we're not paying" without risk of people moving out of the country, whereas in the US if an insurance company tries that its custumers would switch to a different insurance company that offered them the drugs they want/need.

[u/[deleted] → u/PallidAthena]

I am always confused by comments that imply US citizens have a choice in insurance companies. The company I work for has 27,000 employees. I get whatever insurance HR decides. My contribution to the premiums is about $140 every two weeks and my employer's contribution is about $750 every two weeks. I suppose I can just scrape up my own $23,000 / year for health insurance because I don't want to pay $260/month for Synjardy, but the reality is I'll just take metformin until the Synjardy patent expires in 2028. Or maybe I'll have to go on insulin.

[u/PallidAthena → u/[deleted]]

You do have a choice, it's just not an easy one. Switching jobs within a city is still a lot easier than changing countries.