Yes, this is a big deal, the company I work for, Ro, has an insurance checker product that will let you compare out-of-pocket costs for different versions,
It's sticker price is still pretty high, but who knows what that means for actual pricing in practice. Daily injecting is much less appealing however and the weight loss level is lower.
I am a Ro customer and unable to get a refill because the refill form is broken. Every time I send a message to the support system a different person responds, and none of them seem empowered to actually solve the problem (i.e., give me a refill even if I share all of the information the refill form asks for).
Not great service for $150/month tbqh. All I wanted was to continue on my current dose instead of titrating up and now I have no prescription at all because the chat support people canceled my old prescription without submitting a new one.
Semaglutide and other similar GLP-1 agonists is actually one of the easier things to synthesize, and is not new. Industrial synthesis has been happening for decades because of its use in bio research
You still need the weird acid at position 2 and the side chain at 20. Are those easy to make? It's been a while since my courses on this, but my impression would be no.
this paper (https://pubs.acs.org/doi/10.1021/acs.joc.8b03001) outlines a few general peptide chemistry concerns, found it interesting - if slightly outdated. But Novo's process will be old, and optimized out the wazoo: they will have a bunch of sub-optimal factories from way back then, and an army of process chemists swarming over the best way to scale any method to the moon and back for new ones being built.
Basically (IMHO), the bottleneck will not be in the synthesis of peptides as described in the recent litterature, it will be in industrial plant design and chemical process optimization (I think they have to do batch processes also, which is hard to do at scale efficiently)
It doesn't look like there's any shortage in the actual raw chemical, though. So the only thing the artisanal suppliers would add would be distribution.
But it seems like legal distribution tends to outcompete illegal distribution in many cases.
Perhaps the artisanal suppliers would have a chance, if they could undercut the price further.
The Novo patent has various expirations coming up and is under attack. The compounding loophole has been around for a long time. Novo didn’t create or discover the peptide. They did take it through FDA for a medical indication. They charge too much.
They didn't discover GLP-1, that was a century-long collaborative effort. But they did figure out the modifications necessary to make it medically useful.
Web searches suggest 8129343 is the most important one and this expires in December 2031. (Acylated GLP-1 compounds. Abstract: Protracted GLP-1 compounds and therapeutic uses thereof.)
8536122 expires March 2026. (I have the exact same title and abstract for this so maybe they're really the same title and abstract or I'm bad at web search.)
9278123 expires December 2031. (Solid compositions comprising a GLP-1 agonist and a salt of N-(8-(2-hydroxybenzoyl)amino)caprylic acid. Abstract: The present invention relates to solid compositions comprising a GLP-1 agonist and a salt of N-(8-(2-hydroxybenzoyl)amino)caprylic acid and their use in medicine.)
> Did you know: the slang term “based” originally comes from the free base form of a drug (as opposed to the salt). I am not making this up.
Not the term as it's used today. That usage has died out so thoroughly that most people today aren't even aware of it. The modern slang term, meaning "virtuous," was invented just a few years ago as an intentional antonym of "debased," and is entirely unrelated. (I've seen a blog post where the author either invented the term or was trying to popularize it, but I can't find it now and Google is rather unhelpful in trying to search for it.)
The way I heard it Lil B the Based God didn't think based as slang for stoned or generally messed up was right and initiated using it to mean awesome. Based on that it comes from the drug term
I'm not sure I've ever seen it used in that sense. In my experience it seems to be a term mostly used by rightwing people to describe someone who has strongly rightwing views and is unapologetic about expressing them.
Thanks for introducing the trans debate to this thread. It is often challenging to introduce random irrelevance into a debate, but that had the smooth technique of patient dedication and practice. Well done.
Now if only that ketone-bearing side chain had had a nitrogen rather than an oxygen, then cis-trans differences would have been more imineable to the main topic. :-)
I dunno, if a community repeatedly tries to claim that it's word-definitions are objective facts and everybody else's word definitions are delusions, I don't think "reality-based" is a great way to describe it.
I don't think biologists are in the business of claiming definitions are facts either. But even if they were, "woman" isn't one they'd be likely to have much truck with: the word you are probably looking for is "female."
At the risk of following a debate about drug funding down a very strange rabbit hole, I thought there was a pretty strong consensus that when we say 'woman' we mean 'adult female human', and none of the debates I've seen about whether someone is a woman have been about whether they were human or adult, so I think that the current debate about the definition of woman functionally boils down to the definition of 'female', which I think you agree biologists do have views on.
It's used more often by right-wingers, but you shouldn't define a word solely by the group it is used by. It is more general than right-wing views, and is used outside of that.
I'm not sure I'd say it means 'virtuous' precisely. More 'directly getting to the point without dressing it up'. Not rude, and it is often used for something that is culturally considered daring to say. (Which explains why right leaning people tend to use it more, as they have an increasing belief that they're not allowed to simply say certain topics).
It's often used for agreement, but not always. It is just sometimes used that way, because people tend to use positive terms for people they agree with even if it could be applied more generally.
I think you're running into that you don't have much interaction with weak right leaning people if you think it is only used for espousing strongly rightwing views. I see it in techie circles at times too, from people who definitely aren't modern rightwing even if they're also not modern leftwing.
I've seen liberals use it, too, the same way they use various Trumpisms like "sad" or "many such cases." It's gone past tongue-in-cheek all the way around and is just normal slang now.
With the web around, I don't think that competing etymologies are reasonable. They're probably BOTH (or all) true. Some folks will have one source, some another, and a few will have heard it from multiple sources.
If the government awarded large (say eleven-figure) rewards to pharma companies for their development, under the condition that the pharma companies then release the drugs open-source, then we've incentivized drug discovery while letting the free market set low prices that make drugs more affordable for everyone. Even more important for (to pick an obvious example) TB drugs.
Because as we all know, the government is really good at determining the value of things. And there's no way whatever process is implemented to dole out these awards will be subject to pressure by special interest groups.
Once again, I am struck by the fact that there is no a priori reason that rationalism has to be so dominated by witless free marketers and reflexive conservatism, except that the high priests of rationalism have forbidden anyone from harshly interrogating WHY so many people in the space are witless free marketers and reflexive conservatives.
Prizes as an alternative to patents has a literature associated with it. Basically, it's a good idea. Obviously the disadvantage is that we're not used to doing it so a lot of things could go wrong. But in theory it is a lot more efficient.
A free market would be legendary for drugs. No FDA, the companies simply must be certified by a body the insurance companies trust. So if your regulations are excessive, go knocking on the doors of insurance companies with a different certification body. This is how quite dangerous steam boilers were regulated and has been suggested for nuclear by Jack Devanney
Some form of support for affordability would be good, such as health care accounts where you get x amount a year that carries over. This lovely idea was only suggested as an alternative to Obamacare. It's almost like waiting for the other shoe to drop is too late to go shopping for better shoes (or some better metaphor)
I think a mechanism for replacing patents has the stated problems, though it might be net good, I just expect actual government choices to screw up the market anyway so we can proceed to massive direct subsidization
Free marketism as an overarching philosophy sucks. 'People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices' (and Smith's proposed workaround of abolishing the guilds does almost nothing to help). But conversely with dirigisme you risk a Lysenko getting to the top of the Department of Big Pharma.
Hahah. You may occasionally want to sit back and examine the evidence - it very strongly supports the idea that markets result in better outcomes than bureaucratic and government decisions.
The reflexive part they're referring to isn't the support of free markets as a result of the premise that growth is good. The reflexive part is the idea that economic growth is always the most important (or only) consideration. But why should this be? I've never heard anyone provide evidence that economic growth is always the best priority. Even if you accept a 100% utilitarian ethical system, why should one believe that economic growth is the best way to create utility?
Separately, patents aren't a free market. I think a lot of people forget this, because they feel so fundamentally. But they're literally the opposite, they're a monopoly enforced by the government. All of the economic arguments about the efficiency of a free market go completely out the window the moment patents are involved.
You're putting a lot of words into the writing of someone who has said nothing of the sort themselves. Patents are property rights. We can discuss whether or not they are optimal for incentivising innovation. However, he isn't discussing patents. He is making an ad hominem attack against criticism his ridiculous proposal - to replace markets with govt adjudication of value - is getting.
Not a free market economist, but the best argument I've heard is that economic growth provides the most financial opportunities for the most people, opportunities that they need to make a living. The most ideologically motivated statements of this position typically ignore costs, esp. externalities. Include that caveat, and it's a reasonable approximation/rule of thumb.
It is probably because libertarianism is a beautifully simple theory, like pure math. Saying 'free markets are generally good, except in the case of X, Y and Z' just lacks that platonic simplicity, even when it actually describes the world better (like applied math).
M. Tabarrok explains Milei's statement: "Don't let socialism advance. Don't endorse regulations. Don't endorse the idea of market failure. Don't allow the advance of the murderous agenda. And don't let the siren calls of social justice woo you."
That and it's the least social of the four quadrants--the government doesn't regulate you socially or economically--so it's appealing to introverted nerd types (which to be clear is most of us here, myself included).
There definitely are different political philosophies that appeal to different personality types.
The other thing about libertarianism is it's not very compassionate, but it's not very hateful either--it's not anti-gay or anti-trans. So it can appeal to LGBT nerds.
Somehow all of that intuitively wholesome mind-your-own-business on the social side goes right out the window as soon as actual self-identified libertarians form actual organizations. It’s very frustrating.
Yes probably all Libertarians will know of some things like policing that can't be done by free markets alone. But I think the fewer of such things your economic theory contains, the more simple and beautiful it will look.
Also, perhaps the concept of having only the really obvious things (military, police, courts) handled outside the free market might be a good Schelling point. Even if a government run health care system actually works best, allowing that exception will make it easier for people to demand the next thing nationalized.
Doubt it has much to do with rationalism -- how many readers here are rationalists? -- but rather because of this site's proximity to Marginal Revolution in blogosphere space. Even Less Wrong was spawned from the blog of a George Mason economist. In fact, I started reading you because MR-promoted economist Adam Ozimek (Modeled Behavior) promoted your writing. Lots of orthodox econblog readers in these parts. That's likely WHY.
I've thought a lot about this, since I share your lack of faith in markets, though not to the same extent-- I prefer a Scandinavian-style social democracy to full socialism, which has done poorly where tried. I think it's bottom-up rather than top-down, though.
Really, rationalism's short on high priests these days. I haven't seen Scott banishing that many communists, and I doubt enough people take Yudkowsky seriously anymore for him to have much effect in this regard.
What I do think is it's mostly sociological. If you've read Scott's bit on Gray Tribe, Red Tribe, and Blue Tribe, rationalists are sort of a Gray Tribe that's a deviant form of the Blue Tribe that leans libertarian (anarcho-capitalist for fans of European terminology) rather than liberal or social-democrat. As such they have a lot of things in common with your usual Blue Tribe (urbanized, high concentration of LGBT albeit mostly ace, bi, and trans and mostly male) but lean further right on economics, probably due to higher incomes, and right on some social issues such as feminism, probably due to being mostly male and neurodivergent, which puts you at a particular disadvantage when 'unwanted advances' constitute misconduct or assault--if you can't tell when you're wanted, the only way to be safe is never to make an advance. There are other issues and I'm sure people here can speak to them.
(No, I don't think those are the only groups in existence, but they're the ones relevant here.)
Most people who lean left on economics these days will also lean left on cultural issues and be very intolerant of anyone who doesn't pass all the litmus tests, so too much presence here looks bad among other progressives. I think the socialists and social democrats don't want to be seen here more than they get chased off.
There are the socially-right, economically-left Compact magazine types, and you'll notice there are at least a few tradcaths around.
If you read Tara Isabella Burton's Strange Rites (which I recommend!) the three new spiritual paths pretty much correspond to the Blue, Gray, and Red Tribes.
In short, this place has bad mojo among leftists, so they tend not to be here. So there's less challenging of free markets.
The problem is that NO concentration of power can be trusted. This is not only government, but also labor unions, corporations, police departments, etc. Each will tend to become controlled by those more interested in advancing their own power at the expense of the function they are ostensibly created to address.
This is the problem that "balance of power" between sections of the government was created to address. It hasn't been exactly successful in that, but it's been a lot better than some approaches.
The "free market" is another approach, but it's one that isn't even meta-stable without an outside power enforcing a levelish playing-field. Unfortunately, the outside power generally acts to favor some parties over other parties. But it's only that outside power that allows things like "property rights" to even be defined.
Eliezer still has a good amount of effect when he writes a blogpost, he just does it way less often.
> but lean further right on economics, probably due to higher incomes,
And because rationalism attracts the same people who like elegant theories like economics.
Socialist thought has less solid explanations for how various parts of society should function (and parts of it are very against discussing the topic, which people who are rationalists will automatically dislike, but obviously not all socialists/marxists are like this). We can put the reason rationalists pay less attention to such for various reasons, because of explanatory style, because of inertia, because of there not being as much advancement in socialist understanding due to not having as much power / research time as capitalist economics, etc.
I prefer to look at track records--socialism's is downright awful, but pure laissez-faire capitalism like in the Gilded Age and early Industrial Revolution tends to produce instability as well. It does still generate wealth, which is useful in the development of a country, but ultimately tends to be self-destructing. Of course, if it evolves into a more balanced economy that's more like a self-limiting problem rather than anything particularly bad, at least in the long-term.
We are talking about the relative merits of one government intervention (patent law) over another. As far as I can tell, there are about equally removed from a free market?
The new suggested was explicitly to allow a freer market in drug production.
There's been much writing on the failures of the government to provide good incentives. I think it is *possible* for the government to provide such, but that the amount of cruft we already have is decent evidence that many approaches are very flawed.
Perhaps it'd be better! Perhaps we should even do it right now even though it would transform into some abused payout system from the government to the pharmaceutical companies. (because the short-term benefit is enough, because it might improve society sharply and get us to a better optima even if we lose out on that aspect, because...)
But this isn't reflexive conservatism. This is using existing information of how poor the government is at calibrating prices. If the government is aggressive and pays the pharma company too little, there's less incentive to develop drugs (and we already subsidize these companies to varying degrees). If the government does what it usually does and creates a system that gets captured in <10 years, then we get some very nice benefits at the expense of feeding a megacorp way more money than it was worth.
The incentives of the government paying out do help align it. Your suggestion's problem is ignoring the incentives of the other agents, of which a significant problems that capitalism has had in the past will reappear: regulations, subsidies, and more being abused to ensure a company takes lots of money from people!
I'd love a proposal that went into depth about the topic and how to align incentives and avoid corruption, but I'd need one of 1) reason to believe it will get passed in such a form; or 2) that the short-term benefit is worth the cost of more subtly harming many people.
If the government was competent I'd be a lot more interested in smartly designed incentives. It isn't. Part of the benefit of other countries that implement policies in this area is that they're less corrupt in certain ways, and also that they don't have as powerful organizations trying to exploit them.
Right, because the current scenario is so optimal - hundreds of thousands of people dying of an eminently curable disease because they don't have enough money to spend on drugs that are on patent, while in twenty years similar people will be saved thanks to the utterly arbitrary quirks of modern patent law. Truly, the best of all outcomes.
it might well be the case both that the current situation is very bad and that another, different situation, would also be very bad! i don't have a position on your specific proposal, but this is not a convincing response whatsoever.
I think it is a reasonable response - there are two methods available, with different problems. It’s at least worth investigating and maybe even trialing the other to see if it is at least complementary if not an overall improvement.
I doubt his "solution" is something that could just be trialed. Say the government picks a drug to try this with. People get this drug cheap. People who need other drugs clamour for the """""trial""""" to be expanded to their drug. And of course you can't reverse the trial on any of these "trial" cases because these people will lose their cheap drugs and the politicians will look really bad. It's not really a trial or investigation if the result can only go one way.
seems plausible ie in the worlds where the company couldnt charge a lot for development, the drug isn't developed yet, so no one got it as opposed to some
Yeah, I think we should be more like other rich countries and have the government pay part of the cost one way or the other. What can you do, most of the people here really believe in free markets causing dynamism and all that. Every place has its local ideology.
But other rich countries don't have the government pay any significant fraction of the drug's *development* cost. They just cover the marginal cost of manufacture and distribution with a modest serving of profit, and say to themselves, "Gee, isn't it great that American consumers are paying for the development of all these wonderful new drugs?"
And it is great, for them. And it's OK for the pharmaceutical industry. But if we (I assume meaning the United States) decide to "be like other rich countries", then *nobody* is paying the cost of developing new drugs, and pretty soon we stop getting new drugs.
I'm annoyingly tempted to suggest we should do something quite different: make it illegal to sell any drug to anyone in the United States, unless you offer it for sale to any American who wants it at a price no more than say 25% greater than the *lowest* price that they offer in any other rich country. Not because it will make drugs any cheaper in the United States, but because it means the freeloaders get cut off and that feels good - doubly good when some anonymous dude is telling me that he wants us to all be freeloaders as well.
I've heard that from a few people. Frankly I don't believe anything the businessmen say-- they're a necessary evil, and they'll say anything they have to keep making money. A lot of economists strike me as sort of like the Catholic Church in the middle ages, inventing reasons for the people on top to stay on top.
But I would actually agree with you--if these are American companies, why are we letting them rip off our own people? Let's use the government to knock down prices for Americans and hopefully some of these fat cats will have to send their kids to public school. If the Euros have to pay more for their drugs, that's a plus too.
EDIT: also, seriously? Offended by the honor of pharmaceutical companies being besmirched?
And who is likely to have more say in determining those numbers? Consider how quickly you were able to come up with benign sounding terms to serve as fig leafs for expropriation. Now imagine how much better determined politicians could do it, especially given the bad rep of Big Pharma companies.
Property tax assessment and eminent domain are older than the Constitution. In fact, taking private property for public use is provided for in the Constitution:
"[...] nor shall private property be taken for public use, without just compensation."
In other words, fair and lawful systems for doing this have been in the process of refinement for the entire span of US history.
I like how you couldn't even contest that this is really just expropriation.
>fair
Yea, my point is that the government would have more say in what's considered 'fair'. It's hard to imagine a policy that would be more harmful to drug development than making eminent domain a routine part of it. I can't wait to invest billions of dollars to develop drugs that the government will force me to sell for a """fair""" value.
Scott said,
>Their style is more to crush drugs before they ever come out, before anyone knows what they’re missing.
Like rent control, people can't miss what they don't know. People can't miss drugs that aren't developed.
Wouldn't the pharma lobbyists that currently fight to keep drugs under patent forever just pivot to fighting to make sure that every drug that gets purchased by the government gets purchased at a 999X mark-up? You'd have the same level of corruption and graft, but it would all be resolved at once instead of over the span of 20 years.
>there's no way whatever process is implemented to dole out these awards will be subject to pressure by special interest groups.
> You'd have the same level of corruption and graft
Even if you're right, you'd need a much better result than "the status quo, but different" to justify the risks and costs of administrating his proposal.
I think the better result most people were pointing out would be then the government could distribute the medicine to people at generic prices. Which would be a pretty huge result.
Resolving it all at once seems like it would actually have benefits - for example, you can start building production for generic drugs 20 years earlier than you otherwise could.
And maybe you could come up with a semi-objective measure for which patents to buy, like basing it off of Medicare expenditures? "This drug currently costs Medicare $X million per year, and we'll save $Y million if we can buy the patent and genericize it 20 years ahead of schedule" feels easier to evaluate than "this drug helps a lot of people."
Well, patents are literally a government-granted monopoly, and I assume we all know the Econ 101 case against monopolies by now? So it becomes a matter of which kind of economic inefficiency is worse in practice, and that's an empirical question I don't know the answer to.
Make the government issue "research bonds". Spread 1/3 of the investment right away for up-front costs to research groups. 1/3 at milestones. 1/3 for approved drugs.
As opposed to the current non-interventionist approach, where the govt assigns a legally enforced monopoly for an arbitrary number or years to a company whose invention is decided to meet some arbitrary criteria, and then adjudicates any case where the company argues that such monopoly is unlawfully violated?
Like, there is no free market approach here. You can either bite the bullet and end both IP and grants, or debate which kind of govt involvement works better.
Setting the size of the reward can be a challenge. A difficult-to-implement solution that likely only applies for harder to administer drugs (e.g. cancer treatments) is a partial market. Randomly select a potion, say 10 percent, of people for the patent exclusivity to apply to and let the rest get it at cost. Drug company gets paid the profit on the exclusive population as if it was the whole population with government making up the rest (in this case taking the profits on the 10 percent and giving 9x that). You essentially get open sourced drug for majority of population but with the market setting the reward.
Governments are not venture capitalists, that would be pissing the money away. More sense for them to pay 11 figures for the patent or the product when it has come to market. You have just invented the NHS (which however is getting flak today for deciding that an unexciting and side effecty dementia drug is not worth the money).
Not saying the current model is optimal, and I imagine this can work for very common, clearly-defined diseases, like e.g. Alzheimer's, assuming the government has enough of eleven-figure sums just lying around. But it runs into all kinds of problems for diseases having a lot of sub-types, which is really most of them, as well as for the countless rare diseases. You would need a massive government apparatus to correctly price every rare disease and every subtype of a common disease - which involves a lot of research work to identify what those subtypes are, what is the prevalence etc. This does not sound like something a government has any chance to be good at. Another issue that it only works for first-in-class drugs, and there's often a lot of meaningful improvements in followup drugs - reducing side-effects, improving efficiency, better delivery modes etc (although of course equally often follow-ups only exist for the sake of patent busting, and your model resolves that issue).
Right now every company has dedicated teams whose job is to estimate the potential number of patients for a potential new drug, and then how many of those patients will be able to get this drug through whichever complicated messy system governs drug prescription and payments in a given jurisdiction. These teams can benefit from being specialized in a given field of medicine, and also they have skin in the game of estimating the potential market value. I don't think a centralized government agency would work nearly as well.
Another issue is that a huge part of the cost of drug development is going through all the regulatory barriers. If you take the government money and use them in effect to pay the people who are tasked with passing through the barriers that the government has set up in the first palce, it's just subsidizing these people (often former government officials, always PhDs or MDs) with taxpayers money. Just lowering the barriers seems more efficient.
I like the idea in general, though eleven-figure needs justification. Maybe it's too low, with all the hoops one must go through to determine safety and effectiveness using the scientific method. Plus there's always the risk your new drug turns out NOT to be safe or effective, and you've spent tens or hundreds of millions of dollars to determine that.
The FDA could certify open-source drug factories as suitable for making the drugs they choose to make, as oversight.
To a certain extent that is what the Danish government is doing. Novo makes a new drug, they agree on a fair price with the public healthcare system and the government pays this price (at least for life saving drugs). In the end you get a country with cheaper and probably better health care than free market USA.
But I don't see how you would broaden this system out to the entire world. Which government would pay for it? Would the US pay a lump sum for voiding the patent inside the US? If that fair price was based on an assesment of how many doses would actually be sold then it seems to just be a more unpredictable way of what scandinavian welfare systems are doing (it takes a lot more work to figure out how much money a medicine 'would make' compared to just buying each batch at an agreed on price).
And it would be even harder if you tried to make this an international thing. If you pay a company to truly open up their patent, not just in one country, you are opening an eternal can of worms squabbling over how big a slice each government will have to pay...
Are you seriously arguing that the government of a tiny country has a causal relationship to ANY drug developments?
Like it or not, pharmaceutical companies revenue models are ENTIRELY driven by the US, which is the only country that matters for potentially getting a big pay day.
Everyone else is poorer and less willing to pay.
Price discrimination is a wonderful thing for efficiency, but those benefitting from their marginal status should probably not crow to the people paying first class prices.
With all that said, back to Freddie’s proposal: I completely agree it would be a better system to use prizes instead of patents for broad appeal drugs. Unclear to me there’s a way to get there from here, unfortunately.
I agree fully. Americans overpaying for drugs is a big boon for developing new drugs. Though a lot of that money is probably wasted on useless commercials in the US, on getting FDA approval even after having done proper experiments outside the US, on expensive lawyers and lawsuits inside the US, etc. Still a majority of that money definitely ends up getting reinvested into new research.
The same is probably true of hyper expensive american tertiary education. I fully support it, as long as some of the money gets reinvested by the universities into fundamental research.
And the entire world benefits from the the Pax Americana, provided by the US military and paid for by the american tax payers.
Do you envision this incentive model to be structured more like the historical ‘Longitude Prize,’ where specific parameters and goals are set in advance, or as a post-award prize that rewards successful innovations after the fact, regardless of the approach taken? I think the latter approach could offer significant advantages, but would be challenging for governments to implement due to political pressures and the potential for corruption.
I've occasionally wondered why governments don't deal with universally-useful patent drugs by just buying out the patent. "We will give you $BIGNUM to give up the legal monopoly period" (so the market can start doing its thing right away but the creator still gets compensated) seems like it would be worth it in a non-trivial number of cases.
I think there's no free lunch here - if the reward was smaller than the pharma companies get now, they would be less incentivized (and no different from any other price control), and if it were higher, nobody's saving any money. I could be totally wrong though, interested to hear what other people think.
If the left is correct, corporations and their lobbyists are powerful puppet masters who'll be able to milk the public treasury for quadragajillions of dollars for drug patents of all kinds, including pretty worthless ones. If the right is correct, the state will give drug companies an offer they can't refuse and investment will flee drug research, condemning quadragajillions of people to die of Covid-36 or whatever.
Up-front payment roughly equivalent to the net present value of what the company would get from a term-limited monopoly means the developer gets the same reward, at similar cost to the government or insurance company or whatever, but the actual patients don't suffer the deadweight losses associated with that transfer needing to be laundered through conditions of limited supply, inefficient per-dose costs, and corporate counterespionage interfering with publicly-funded research.
Consider monopoly pricing in the absence of price discrimination. You make more total profit if you can keep prices high, but this means less goods sold than a market-clearing price in a free market (and less total surplus than the consumer+producer surplus in a free market. In theory, the gov't can just pay pharma companies the total amount of profits they'd make if they were a monopoly, but still allow them (or other companies) to produce the same amount of drugs as they would in a free market. This increases consumer surplus while keeping producer surplus constant.
(looking up a few graphs for "monopoly pricing" online might be helpful for intuition here)
This is not necessarily true: for example, if GLP-1s were cheaper, then they would be prescribed more, in turn reducing hospitalizations due to heart disease, thus saving money. In the American system, you'd also be saving all the money spent fighting with insurance companies.
It seems like Freddie's idea is to have the government do for pharma what venture capitalists do for tech startups. It works for VCs because they get a massive return from 1 company out of (I don't know) 20 or 50 duds, and so the market incentivizes them to be neither too generous nor too stingy. I guess it's the same dynamic for the present pharma system, where they're picking research projects the same way VCs pick startups, and the massively successful ones pay for the duds.
So the question, in a democracy, would be whether voters can do a better job punishing (and rewarding) the government *both* for being too stingy and for being too generous, than markets currently do at punishing VCs and pharma companies for those things. Or in (for instance) an oligarchy or monarchy, whether the oligarchs / monarch can hand out incentivizing punishments and rewards to the administrators more accurately than markets currently do.
Markets have fewer participants than entire democracies, which is a point against them; but they vote much, much more often (by buying & selling). I don't know how to figure which has more skin in the game, since both markets and democracies can leverage other people's skin and skip out on risking their own. But I think trade-offs are more legible for markets -- because participants are calculating dollars versus dollars, rather than voters, who are calculating (say) the chance of health benefits due to a drug that doesn't exist yet and might never exist versus increasing teacher salaries. Not a very legible comparison.
So I think it's not on the face of it ridiculous to suggest what Freddie is suggesting, in a purely theoretical sense.
I would love to see this specifically done for substances that are already unpatentable, where there is otherwise no incentive to get them approved as treatments. It would be a huge win if doctors could easily prescribe cheap and abundant melatonin for sleep/blood pressure/ulcers or ashwagandha for anxiety. Things that already have approval as supplements can probably skip safety testing, which means costs would be lower (though I believe that is the cheapest bit).
I think that's what public research is doing. The big bottleneck for drug discovery being more often done in public settings is indeed funding (which translates into something akin to technical debt. Inability to hire talent does not help things either). The current way of doing this is: a promising therapeutic target is often identified in the public domain, then the exploitation rights sold for first a startup, then big pharma acquires the startup for the final stretch of the insanely expensive process.
The obvious problem with this is that it would require the government to decide in advance that obesity-curing drugs were good, and I think it's pretty obvious the government would not be able to do that
Use that approach to let the free market set the sale price, but give the patent holder a fixed percentage of the sale price (for a limited time). That way the discoverer is motivated to find a use for the drug. But safety testing HAS to be done by the manufacturer, as different production methods can have radically different safety profiles.
Surely companies develop dozens if not hundreds of drugs for every single one that actually makes bank. How could we which would work before hand? Or so you mean, the government would pay off the patent costs once something had obvious value and demand?
Setting aside the *sui generis* of Covid (in which basically everything was tried all at once) what's your best example of a prize working for drug development?
>Their style is more to crush drugs before they ever come out, before anyone knows what they’re missing.
The same logic applies to policies like rent control. It's much easier for voters to fixate on existing rental prices than the missing supply and higher quality of housing in a parallel universe where their locality didn't implement rent control.
There's a cottage industry of peptide suppliers who sell peptides such as semaglutide as research compunds, for *far* less than the compounding pharmacies (if buying straight from China, can be <1/5 the telemedicine compounded price). It isn't actually $5, but not incredibly far off. Naturally, the quality varies, so there's also online communities that buy samples, have them independently lab tested, and keep records of what suppliers are trustworthy. This is obviously very much illegal (for prescription, patent, etc reasons), so these suppliers are constantly getting shut down.
Some of these telemedicine brands are just doing these two steps themselves (sourcing and testing to find "good" suppliers), and adding the prescription wrapper on top. The raw margins are still quite good, but because of competition, customer acquisition costs are also very high. This, along with "trying to extract as much as possible in the limited window this loophole is open", explains some of the markup.
One other interesting side effect of Chinese suppliers selling direct: whenever excitement around a new drug builds, such as Retatrutide (a triple hormone receptor agonist), there's instant demand from these Chinese producers, even if the drug isn't available at all in the US yet. This is strictly not a good idea from a safety perspective, but does mean ~tens of thousands of additional people are on these drugs.
Finding reliable suppliers capable of supplying a few high-quality batches is one thing. Having a supplier never deliver a seriously contaminated or problematic product is another. Take it from someone who uses a lot of research-grade drugs for sensitive applications. The level of QC/QA that we want for complicated medical products is just always going to 5-10x the cost of the best-effort approach that's used for research-grade.
More and more, I'm having trouble seeing the benefit of the FDA's regulations and the basis for patenting drugs. Is the strongest reason still that, without patents, no one would bother to cure cancer or deal with the obesity epidemic? Or just not enough people would and it would take too long? Or without patents, you'd have trade secrets and bunkers and no one would be able to figure out to reproduce the drugs some sneaky company developed?
>Is the strongest reason still that, without patents, no one would bother to cure cancer or deal with the obesity epidemic?
I mean, the only real reason I strongly believe that Semaglutide is safe and effective is because Novo Nordisk ran a big randomized controlled trial showing that it's safe and effective. They only did that trial because:
1. The FDA wouldn't let them sell their drug until they did.
2. The US government promised them a government granted monopoly (patent) for 20 years.
If we got rid of the FDA and drug patents, then I strongly doubt that Novo Nordisk would spend the money to put the drug through the trial. That's not to say that our current regime is perfect, but I do think we'd have to replace the current regime with something well thought out.
Well, yes, but you'd still have to make a decision about how relaxed an environment you'll accept before no longer trusting the results. For example, I'm probably not going to trust any study results coming out of, say, Somalia. I'm probably comfortable with results coming out of Switzerland.
But if we've already figured out which countries have a regime that is making reasonable tradeoffs, we may as well just change our regulatory rules to match theirs. You still need to do the hard work of figuring out where to draw the line.
It's fine if you don't trust the results. The point is that there are that people that will trust it, and you can see if those people die before trying it yourself.
Actually doing that is often very complicated though. There are people who believe that vaccines kill people because a lot of people die shortly after receiving a vaccine. Conversely there are cases where seemingly safe drugs have to be pulled, because they have some non-obvious side effects that completely flips the cost-benefit analysis. COX2-inhibitors like Vioxx (painkillers) that increased the risk of heart attacks after prolonged use is one example.
We could have cheaper trials that provide just as much evidence about the safety and effectiveness of the drugs as the current ones, but are slightly less safe for the trial participants, and have less unnecessary bureaucracy. From what I understand from earlier posts on ACX and SSC, the amount of safetyism around human experiments is extraordinary. Likely plenty of people would be willing to volunteer for marginally less safe studies, the requirements come from above, from the government.
Right, I agree that the requirements come from the government. And there is immense value in allowing people to voluntarily participate in less safe studies. In particular, I think it should have been legal to run challenge trials for the COVID-19 vaccines during the pandemic. Faster innovation matters.
That being said, making it easier to run less safe trials wouldn't change anything with respect to high drug prices for Semaglutide (the thrust of this article). We've given Novo Nordisk a government granted monopoly on Semaglutide for 20 years (a patent). As Scott has mentioned, the only reason compound versions are available at all is because Novo screwed up and wasn't able to produce enough to satisfy demand even at monopolist pricing levels.
Even with cheaper trials, I don't think corporations would be willing to spend money to do them if we just deleted patent laws and allowed generics to immediately enter the market. So "fixing" high drug prices for patent protected medication is still a tricky problem.
Define a mandatory minimum pay scale for medical trial participants based on the risks involved, with after-the-fact compensation based on some multiple of the difference when it turns out to be more dangerous than anticipated (so there's a clear incentive for companies to err on the side of overestimating peril).
As for recouping development costs, how about funding that through bounties rather than monopoly power? "Whoever can develop and provide some drug with such-and-such qualities (safety, fitness for a particular purpose, etc), proven to the satisfaction of third-party scientists, we promise to buy the first X million doses at $Y per dose, if you agree to put all relevant technical details into the public domain."
Multifunctional wonder drugs might satisfy several bounties at once, or somebody could shortcut R&D costs via simple studies on what else public-domain drugs can do, then fulfill the bounty board's standing order via commodity-futures contract from an established supplier.
Without patents, yeah. Or rather, without patents Big Pharma might still bother to cure cancer but they'll keep the formula a secret for as long as possible. Though I don't know how possible it is to keep a drug's formula a secret: could a chemical lab run it through some kind of analysis and find out exactly what molecules are in it? I don't know, but seems plausible.
So they'll either keep the cure a secret, so that it may take hundreds of years for others to compete with them, or if they can't keep it a secret then they won't bother making it. Once you know what molecules you're looking for it is very easy to start manufacturing them. Why bother putting in money on developing new drugs if all your competitors will get the benefits of your research for free?
Ultimately, if people could access the drug they could characterize it. There are ways to obscure analysis, but my (informed but imperfect) understanding is that they're more of a speed bump than a wall. Of course, if you have people come into your clinics to get the drug I suppose that secrecy might be possible, in theory.
But there's a much smaller market for such treatment, as compared to a bottle of pills.
Perhaps more to the point, if nobody knows what drug you're testing they can't replicate your research. So why would they believe that whatever testing you did is reliable?
"Publish all your results openly, and the government will enforce your rights"
or
"Keep your stuff as secret as possible."
If you're trying to learn how to do something, you would much rather be in world #1. You can just read the patent and see how to develop the thing. You can even do it yourself if you're not giving away the product or result. You can even find a way of improving on the process and patent *that*. (To use it, you need to either license the patent in the meantime, or wait for it to expire.)
In world #2 to get your cancer treatment you report to some injection site to get your drug, and it's mixed in with a bunch of other confusing drugs designed specifically to make it hard to isolate exactly what's going on. They probably have their own side effects, too.
People would still try and cure cancer, but when they fail (as the usually do), they'll still say "we cured cancer!" and sell the elixir at $1500/month or so.
And they'll completely skimp on the testing to find all the side effects, many of them deadly and some of them worse than deadly, so even when they do cure cancer you'll sometimes wish they hadn't. Doubly so if all they cured was morning sickness and leprosy.
And, yes, trade secrets and bunkers for the ones who get it right.
There's certainly room to improve on the FDA, but most people are not going to be happy with the results of "FDA Delenda Est" without a superior replacement in place. And no, you can't just assume that the superior replacement will magically emerge in the drug market.
It could be in shortage for the foreseeable future. I think demand for it will keep ramping up as more and more just plain overweight + obese people find out about it, try it, tolerate it, get good results, but need to stay on it (probably at a 1/4 to 1/2 dose) indefinitely. (Side note: Henry now offers that low-dose maintenance prescription for only $179 month. Kinda crazy that these online compounding portals are successfully innovating faster than the actual big pharma companies). There is so much latent demand for this drug that I doubt Novo could build enough factories to catch up.
Although I am curious how the FDA can measure the shortage, if nobody seems to actually know how many people are taking it via compounding pharmacies.
It's my understanding that the FDA measures the shortage by looking at whether regular pharmacies are able to quickly have their orders for a medication filled through wholesalers. So if everyone switches to compound and the "official" drug is sitting on pharmacy shelves, the shortage is over.
Thanks. So in some sense maybe we should root for more of the scare stories sowing FUD about the compounders, so that plenty of people are too scared to try them?
Well just rooting for public health at an affordable price. The compounders can supply vastly more people without bankrupting society, insurers, employers and therefore employees.
And of course keeping in mind that my "rooting for" the news media to do something will affect it about as much as my rooting for the Mariners has helped them avoid crashing to .500 in the last month.
>Well just rooting for public health at an affordable price.
Well, affordable for anyone that doesn't get scared off by the FUD, anyway.
Personally, I think I want some more ideas about how to reform the system to get better results. Once Novo Nordisk manages to ramp up supply, its drug patents are going to stop generic manufacturers from stepping in and increasing supply of Semaglutide (and thus, lowering prices). So I want to reform the patent system somehow, but I also acknowledge that just deleting patents probably means Novo Nordisk doesn't pay for trials proving that Semaglutide works.
So there's a lot of room for ideas for reform here. And I think that even internet commenters generating ideas could be useful here. After all, policy advisors read internet comments too. ;)
Yeah I'd love to see the patent system reformed too.
At the moment I'm even more sick to death of the insurance industry and system in the U.S., after cycling through 3 employer-subsidized, 2 exchange plans, 2 COBRA extensions, and Medicaid in the last 10 months, I've despaired of any insurer (or insurance-focused provider/pharmacy) ever doing anything except charging me several hundred dollars just to not actually cover anything (insurers!) or for routine tests/checkups/generic drugs (providers/pharmacies). I truly want to burn it all down, it is so so bad.
Everything you say is true, but you're neglecting a rather major caveat that everything you say will be false in a handful of years. If a non-urgent problem can be fixed just by waiting a bit, then it's not really a problem.
From my understanding, Hims/Hers is the biggest player of the online compounders (think they cornered market from compounded minoxidil and ED drugs) and there was a recent FTC inquiry into them that hammered their stock price.
Also, I have a doctor friend we were having brunch with who runs a weight-loss clinic engaged in compounding. I asked her about what happens when they lift the shortage thing and she said it won't matter... For her specifically, she said they will create their own formulation that is a variant on GLP-1; I think she said she would just add some b-vitamin to the GLP-1 that helped the uptake of the semaglutide and that this variant would be fine under current rules.
There's something a little too Peter Thielian about this story where a European drug company develops the successful, safe weight loss drug we've all been waiting 30 effin' years for, but we need the Chinese to make it for us in bulk and then distribute it through this backdoor legal loophole to get around the bureaucracy and not have it cost a an arm and a leg.
Am I correct that the FDA-approved versions are sterile injectables packaged in an auto-injector? Meanwhile these compounded formulations are non-sterile oral dosage forms? Massive difference in cost to produce, especially to comply with all the regulations and controls to aseptically manufacturer sterile pharmaceuticals.
No, the compounders are selling you a small vial of injectable drug plus the syringes and sterile cleansing pads and instructions you need to use this stuff to safely inject yourself. Plus some technical/medical support for people who get confused.
(Some of them ALSO are willing to sell semaglutide in a daily sublingual tablet, but that’s not the main product.)
I am a patent attorney, although I do not practice in the area of pharmaceuticals. I am not aware of any law suggesting that patents do not apply when a drug has a shortage. I've looked but not found any. Compounding pharmacies can get over the hurdles of the FDA due to the drug's shortage, but they should still have patent liability. I don't understand why the drug companies aren't suing the compounders. My best guess is they aren't really in competition, since Eli Lilly and Novo Nordisk is selling every dose they can make, and the compounders are just keeping some future customers on ice for them.
Novo Nordisk may not be able to make more doses than it currently sells, but it could get further profit by charging a license fee to compounding pharmacies, couldn't it?
Though perhaps they do charge a license fee, just less than they charge for their own version, because the compounded pharmacy version usually isn't covered by insurance? And perhaps that's why the compounding pharmacy version still costs much more than the production cost?
My understanding is the patent(s) do not cover what the compounding pharmacies are making. Not sure if that makes the whole "shortage" issue irrelevant or not as I'm not sure if this is an FDA thing.
If one had to pay the retail $1000/month, he or she could finance nice European vacations with the savings from the $100 per month cost in Athens (as of April in direct experience).
I am also a EU Ozempic user and I pay ~€100 per month. It was prescribed to me off-label and I was under the impression that I'm paying full price for the drug (none of it is compensated). Why is it so expensive in the US?
Also because insurance hides the actual cost. People ignore insurance premiums, since they are paid by their employer and/or automatically get deducted from their paychecks. Insurance handles drugs for chronic problems poorly. Insurance is supposed to mitigate risk, but an expense one must pay a set monthly amount for is the antithesis of risk.
I know little about the system, but AFAIUI in many cases they are obligated to cover the drug if it's considered a medical necessity, so they don't have much of a bargaining chip.
Being obligated to buy something (food, clothing, housing) doesn't usually drive prices sky-high. The cause is the monopoly. Imagine a "food monopoly!"
Insurance companies make money by the very nature of insurance: take in money, and pay out most of it to a distributed population. Sure, they control costs as much as they can, but they don't have very good optics in what they are paying for and what the customer received. The customer doesn't provide any help because they often have no idea what is medically necessary, and it doesn't matter anyway since they will pay the same amount either way.
So what to do about rising costs? Increase insurance premiums.
Patent monopolies apply in Europe too. AFAIUI drug companies are generally allowed to charge what they want in European countries too, it's just that the compulsory insurance (which is either a government monopoly or the government regulates what it has to cover) may refuse to cover it if the company charges more than they are willing to pay, and then few people will buy it. But Daniel B wrote that he bought it unsubsidized. I don't know the details though. In some countries there may be outright price controls (i.e. it's illegal to sell for more than the government allows). Also, the deal between the national health insurance and the pharma company might also regulate the price the company charges in the case of unsubsidized off-label prescriptions; and anyway it makes sense to charge a relatively low price in unsubsidized cases as few people could afford it otherwise.
I don't know if this is true, but I have heard that drug companies are happy to under perform in Europe (make a relatively small profit), the prices of which are set with few, big nationalized health care systems, knowing that they can make more bank in the US where private insurers will not band together to negotiate for lower costs as a group.
This is sort of true. In Europe, the price of the drug has to cover the marginal cost of setting up (or at least expanding) the factory, and operating that factory and some overhead expenses and a bit of profit proportional to all that. If that's the highest price a European national health service will pay or allow, well, the drug companies will be making a bit of profit so they'll go ahead and ship the drug to Europe cheap.
In the United States, the price of the drug has to cover all that *plus* the few billion dollars it takes to develop the drug in the first place. And proportionately larger profit, to cover the larger up-front investment. If they can't sell for that price in the United States, then it's not worth the bother of developing the drug and it won't be available to anyone.
What isn't true, is that this has anything to do with private insurance companies. The US private insurance market is dominated by companies larger than any European national health service, willing and able to negotiate for lower prices on a scale that European governments can't match. But the US insurance companies know that if they all hold out for a price much less than $1000/month for drugs like Ozempic, the pharmaceutical companies will stop developing drugs like Ozempic because they can't afford it.
"The US private insurance market is dominated by companies larger than any European national health service, willing and able to negotiate for lower prices on a scale that European governments can't match."
I tried to look up the size of biggest US medical insurance companies, and found this Forbes article that says that in 2021 Kaiser Permanente was the largest with 8 million enrollments, though I don't think "enrollment" equals one covered person here. Is this right?
What are the largest public health insurance institutions in Europe? It would be qutie surprising if none of them were bigger than that.
You could argue that even if they have more covered people, they're still smaller by revenue due to europoors having much less per-capita healthcare spending, but that would still be surprising and it sems to me that looking at number of people is a better metric for estimating negotiation power.
Also, what's the incentive for private healthcare companies to care whether future drugs can be developed?
Yeah, 8 million is way too low for the number of discrete human beings who obtain their health care through Kaiser Permanente. But I can't easily find a better number.
Counting money is easier, and arguably more relevant since we're talking about market power. Kaiser Permanente seems to have a gross revenue of $124 billion. The largest US provider is UnitedHealth, at $215 billion. By comparison, the total budget of the UK National Health Service is £182 billion. At today's exchange rates that comes to $240 billion US, so I was a bit off - I think the dollar was stronger the last time I looked at this. But it's still the case that the biggest US health insurance companies are in the same league as the NHS.
And I think the NHS is bigger than any other single player in Europe. The UK is the largest and richest country in Western Europe save Germany, and German health care is split between the state and a bunch of private health insurance companies. Every nation in Europe does this differently, and I don't want to dive into that mess. But if Spain and Belgium can make Big Pharma come to the table and negotiate, Kaiser and United can do the same.
The difference is, as you note, incentives. If all the health insurance companies in the US could collude on a single policy, they might decide that all this expensive and contentious "drug discovery" stuff is not the way to go, Cynically, a unitary NHS might do the same. Monopsonys tend to be conservative.
But in the US market, each insurance company has to expect that new drugs will be developed, and that they will be priced at traditional US rather than European rates. And they know that all but the most desperate American consumers will want health insurance from one of the companies that will cover the shiny new drugs they keep seeing on TV, so they'd better cover those drugs if they want to keep market share. Which they all do, which means the costs of drug discovery are paid for and the new drugs exist and the cycle is closed.
"they can probably eat the loss" shrimps wrong to me. We've learned cosmetics drugs are great and we need more of them, and this is probably sensitive to galaxy stonks vs only solar system stonks
For Americans, an even more advantageous option is the Canada Loophole. Drug prices in Canada are significantly lower. By having a doctor write a prescription for a GLP-1 (easily obtained through telemedicine) and sending it to a Canadian pharmacy, many pharmacies will have a Canadian doctor review and issue a corresponding Canadian prescription based on the American doctor's script. The pharmacy then fills the prescription and ships the medication to the U.S. This process is entirely legal. It benefits the American doctor, who faces no legal risk since their prescription isn't being filled directly. The Canadian doctor is also in the clear, as they’re simply verifying the American script. Canadian pharmacies enjoy the additional business, and patients receive affordable medication. The only real downside is for the pharmaceutical companies.
That's been difficult to do with Ozempic for the last couple of years, possibly because of the shortage. Most Canadian pharmacies want you to show up in person now. Maybe that will ease when the supply increases.
Is that true for compounding as well? I don't know if they play by the same rules as the states in that dept. I know currently it works with compounding, but I don't know if the Emergency auth going away will affect that.
Now that I don't know. I'd have to go study the relevant subreddits. I know about the brand name because initially I was getting Ozempic from Canada, but then that system stopped working.
Why do pharma companies and Canada allow it? I assume drugs are cheaper in Canada because the Canadian health insurance, as a monopsony, negotiates harder. But couldn't drug companies sell to Canadian pharmacies on the condition that they only sell it (at that price) to members of the Canadian health insurance system and/or Canadian citizens? I'd figure Canada has no reason to ban such contracts, it has every interest in pharma companies making more profit, incentivizing more drug development, as long as it isn't Canadians paying for it.
Based on a simple search, it seems to me that Canadian pharmacies don't accept American insurance, in which case it may be a price discrimination strategy drug companies are OK with: Americans generally buy from Canada if insurance wouldn't cover the drug anyway, in which case they probably wouldn't buy the drug at American list prices anyway.
To add to Ethan's point: No, there is no monopsony, so that can't explain the lower prices.
Canada has two tiers of health insurance: the first tier is public, single-payer, and covers medically necessary services, but not medically necessary consumer products like drugs or devices (unless they're administered in a hospital/clinic---yeah it's dumb and arbitrary). This second category is covered by private insurance for most people, depending on their job.
To explain the price difference for drugs: the government just straight-up imposes price controls.
Pharmaceutical pricing in Canada is weird. Roughly, it's illegal in Canada (as contemplated in the Patent Act) to charge a price for a drug that is, in the opinion of the Patented Medicine Prices Review Board, excessive, and if you do charge an excessive price, you can be fined. This applies to any sale that happens in Canada, regardless of who you're selling it to. In practice, pharmaceutical companies will negotiate with the PMPRB in advance, rather than playing a game of chicken which might result in them getting fined. I understand that this is unusual, and that other countries have different rules, but I don't know any details.
And when a sale does occur in Canada but destined for a US end user, the Canadian pharmacy still makes the usual profit and the Canadian government gets a bite of that in taxes, so why would anyone in Canada want to stop that?
To make Americans subsidize drug development (which benefits Canadians) some more. Though the tax revenue angle is a good point, it likely outweighs the former in the eyes of the Canadian government.
My wife saw a physician yesterday who told her that they would use this loophole if insurance rejected our initial claim for the drug. This feels like the equivalent of going up to the ticket counter wearing a trenchcoat and those glasses that include a plastic moustache, but if it works, it works.
Yes, this is a big deal, the company I work for, Ro, has an insurance checker product that will let you compare out-of-pocket costs for different versions,
https://ro.co/weight-loss/glp1-insurance-checker/
I am also looking forward to see when liraglutide goes generic, it should be another cheaper option.
Liraglutide has just gone generic:
https://ir.tevapharm.com/news-and-events/press-releases/press-release-details/2024/Teva-Announces-Launch-of-Authorized-Generic-of-Victoza-liraglutide-injection-1.8mg-in-the-United-States/default.aspx
It's sticker price is still pretty high, but who knows what that means for actual pricing in practice. Daily injecting is much less appealing however and the weight loss level is lower.
I am a Ro customer and unable to get a refill because the refill form is broken. Every time I send a message to the support system a different person responds, and none of them seem empowered to actually solve the problem (i.e., give me a refill even if I share all of the information the refill form asks for).
Not great service for $150/month tbqh. All I wanted was to continue on my current dose instead of titrating up and now I have no prescription at all because the chat support people canceled my old prescription without submitting a new one.
Might want to tell someone there's a bug on your website:
Your browser is out of date. Update your browser to view this site properly.
I get this error despite being on the latest version of Chrome :Version 128.0.6613.85 (Official Build) (64-bit)
Would the artisanal medicine suppliers from south of the border be able to help, or is the synthesis of semaglutide harder than I think?
"Artisanal medicine" is one hell of a term :D
Not sure how many people would be comfortable getting their semaglutide from a cartel.
Laced with meth for extra effectiveness.
Need some fentanyl to balance it out.
Amphetamines do help with weight loss.
Almost any 'stimulant' does.
Nicotine, caffeine, methylphenidate, etc.
everyone is getting their semaglutide from a cartel!
Semaglutide and other similar GLP-1 agonists is actually one of the easier things to synthesize, and is not new. Industrial synthesis has been happening for decades because of its use in bio research
Have you looked at the chemical structure? This is not some 300Da small molecule or simple peptide.
It's still a pretty simple peptide. I have in fact looked at it. We use it in bio research on a reg basis, as I mentioned
You still need the weird acid at position 2 and the side chain at 20. Are those easy to make? It's been a while since my courses on this, but my impression would be no.
There's lots of complicated stuff we can now make pretty cheaply in specialised factories.
this paper (https://pubs.acs.org/doi/10.1021/acs.joc.8b03001) outlines a few general peptide chemistry concerns, found it interesting - if slightly outdated. But Novo's process will be old, and optimized out the wazoo: they will have a bunch of sub-optimal factories from way back then, and an army of process chemists swarming over the best way to scale any method to the moon and back for new ones being built.
Basically (IMHO), the bottleneck will not be in the synthesis of peptides as described in the recent litterature, it will be in industrial plant design and chemical process optimization (I think they have to do batch processes also, which is hard to do at scale efficiently)
Would they even need to synthesize it? They can probably just buy it from the same China factories as everyone else.
It doesn't look like there's any shortage in the actual raw chemical, though. So the only thing the artisanal suppliers would add would be distribution.
But it seems like legal distribution tends to outcompete illegal distribution in many cases.
Perhaps the artisanal suppliers would have a chance, if they could undercut the price further.
Only a fairly small amount of people are willing to inject black market drugs into themselves.
The Novo patent has various expirations coming up and is under attack. The compounding loophole has been around for a long time. Novo didn’t create or discover the peptide. They did take it through FDA for a medical indication. They charge too much.
They didn't discover GLP-1, that was a century-long collaborative effort. But they did figure out the modifications necessary to make it medically useful.
Agree
Can you explain what the different patents do?
Web searches suggest 8129343 is the most important one and this expires in December 2031. (Acylated GLP-1 compounds. Abstract: Protracted GLP-1 compounds and therapeutic uses thereof.)
8536122 expires March 2026. (I have the exact same title and abstract for this so maybe they're really the same title and abstract or I'm bad at web search.)
9278123 expires December 2031. (Solid compositions comprising a GLP-1 agonist and a salt of N-(8-(2-hydroxybenzoyl)amino)caprylic acid. Abstract: The present invention relates to solid compositions comprising a GLP-1 agonist and a salt of N-(8-(2-hydroxybenzoyl)amino)caprylic acid and their use in medicine.)
I saw that only the injection form is avail. Is the pill form too new, or?
Yes, Henry Meds now offers the pill form, for $249/month. This seems pretty new.
> Did you know: the slang term “based” originally comes from the free base form of a drug (as opposed to the salt). I am not making this up.
Not the term as it's used today. That usage has died out so thoroughly that most people today aren't even aware of it. The modern slang term, meaning "virtuous," was invented just a few years ago as an intentional antonym of "debased," and is entirely unrelated. (I've seen a blog post where the author either invented the term or was trying to popularize it, but I can't find it now and Google is rather unhelpful in trying to search for it.)
I think the only person who really knows is Lil B, the Based God, who was singularly most responsible for the term's spread
The way I heard it Lil B the Based God didn't think based as slang for stoned or generally messed up was right and initiated using it to mean awesome. Based on that it comes from the drug term
Huh, I thought the etymology WAS from freebase (cocaine), but as the opposite of "debased" makes a lot more sense. Thanks.
Yeah, the "freebase" version was the old one that's no longer in use. That etymology did exist in past decades, but it's not relevant today.
Be cautious, I strongly suspect this person is misremembering, making it up, or relying on an inaccurate source.
>The modern slang term, meaning "virtuous,"
I'm not sure I've ever seen it used in that sense. In my experience it seems to be a term mostly used by rightwing people to describe someone who has strongly rightwing views and is unapologetic about expressing them.
So virtuous *and* courageous, then?
I thought it came from grounded, as in the phrase "the reality-based community".
(Of which people who claim that those with Y chromosomes can be women clearly are not members.)
She will be surprised/annoyed/etc to learn that she is not real, according to this definition of “reality”: https://en.wikipedia.org/wiki/Arisleyda_Dilone
Yes, it often comes as a shock.
To whom?
I'm not going to teach you remedial reading comprehension. Find your own tutor.
Thanks for introducing the trans debate to this thread. It is often challenging to introduce random irrelevance into a debate, but that had the smooth technique of patient dedication and practice. Well done.
Ol' 11 and me were jus' havin' a bit o' fun, yer honor. He got me a good 'un.
Now if only that ketone-bearing side chain had had a nitrogen rather than an oxygen, then cis-trans differences would have been more imineable to the main topic. :-)
I dunno, if a community repeatedly tries to claim that it's word-definitions are objective facts and everybody else's word definitions are delusions, I don't think "reality-based" is a great way to describe it.
Biologists?
Which biologists? Doing what? Saying what?
I don't think biologists are in the business of claiming definitions are facts either. But even if they were, "woman" isn't one they'd be likely to have much truck with: the word you are probably looking for is "female."
At the risk of following a debate about drug funding down a very strange rabbit hole, I thought there was a pretty strong consensus that when we say 'woman' we mean 'adult female human', and none of the debates I've seen about whether someone is a woman have been about whether they were human or adult, so I think that the current debate about the definition of woman functionally boils down to the definition of 'female', which I think you agree biologists do have views on.
You probably don't encounter 4chan diaspora very often outside political contexts
(and the real meaning in that sense isn't "strongly rightwing" but "taboo defying", leftypol is not calling people fascists when it calls them based!)
It's used more often by right-wingers, but you shouldn't define a word solely by the group it is used by. It is more general than right-wing views, and is used outside of that.
I'm not sure I'd say it means 'virtuous' precisely. More 'directly getting to the point without dressing it up'. Not rude, and it is often used for something that is culturally considered daring to say. (Which explains why right leaning people tend to use it more, as they have an increasing belief that they're not allowed to simply say certain topics).
It's often used for agreement, but not always. It is just sometimes used that way, because people tend to use positive terms for people they agree with even if it could be applied more generally.
I think you're running into that you don't have much interaction with weak right leaning people if you think it is only used for espousing strongly rightwing views. I see it in techie circles at times too, from people who definitely aren't modern rightwing even if they're also not modern leftwing.
I've seen liberals use it, too, the same way they use various Trumpisms like "sad" or "many such cases." It's gone past tongue-in-cheek all the way around and is just normal slang now.
No, it's from freebase: https://www.dictionary.com/e/slang/based/
Freebase coke -> based (acting like a crackhead) -> people called Lil B "based" -> Lil B decided to reclaim it -> modern use.
Source? I've never even heard of this (likely folk) etymology.
With the web around, I don't think that competing etymologies are reasonable. They're probably BOTH (or all) true. Some folks will have one source, some another, and a few will have heard it from multiple sources.
If the government awarded large (say eleven-figure) rewards to pharma companies for their development, under the condition that the pharma companies then release the drugs open-source, then we've incentivized drug discovery while letting the free market set low prices that make drugs more affordable for everyone. Even more important for (to pick an obvious example) TB drugs.
Because as we all know, the government is really good at determining the value of things. And there's no way whatever process is implemented to dole out these awards will be subject to pressure by special interest groups.
This has merit, except there's a pretty high likelihood that government will mess up more by only disincentivizing pharmacy companies
Once again, I am struck by the fact that there is no a priori reason that rationalism has to be so dominated by witless free marketers and reflexive conservatism, except that the high priests of rationalism have forbidden anyone from harshly interrogating WHY so many people in the space are witless free marketers and reflexive conservatives.
I share your frustration about witless free marketers, but I have no idea what you're talking about wrt high priests...
Prizes as an alternative to patents has a literature associated with it. Basically, it's a good idea. Obviously the disadvantage is that we're not used to doing it so a lot of things could go wrong. But in theory it is a lot more efficient.
A free market would be legendary for drugs. No FDA, the companies simply must be certified by a body the insurance companies trust. So if your regulations are excessive, go knocking on the doors of insurance companies with a different certification body. This is how quite dangerous steam boilers were regulated and has been suggested for nuclear by Jack Devanney
Some form of support for affordability would be good, such as health care accounts where you get x amount a year that carries over. This lovely idea was only suggested as an alternative to Obamacare. It's almost like waiting for the other shoe to drop is too late to go shopping for better shoes (or some better metaphor)
I think a mechanism for replacing patents has the stated problems, though it might be net good, I just expect actual government choices to screw up the market anyway so we can proceed to massive direct subsidization
Free marketism as an overarching philosophy sucks. 'People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices' (and Smith's proposed workaround of abolishing the guilds does almost nothing to help). But conversely with dirigisme you risk a Lysenko getting to the top of the Department of Big Pharma.
Bryan Caplan has doubts about Adam Smith's statement. See: https://www.betonit.ai/p/love-the-game-hate-the-player
Possibly in Smith times, the ways of the ol' guilds were stronger than today.
Weakening guilds did a lot more than nothing:
https://x.com/GaryWinslett/status/1825248976796610758
Hahah. You may occasionally want to sit back and examine the evidence - it very strongly supports the idea that markets result in better outcomes than bureaucratic and government decisions.
Thanks, that's rather what I was saying. You do understand "dirigisme"?
What you were doing was multiplying ten-dollar words while saying nothing: ‘free market bad, but also central planning bad’
What he’s saying is more substantial and less verbose: markets are better than no-market. And he’s right.
The reflexive part they're referring to isn't the support of free markets as a result of the premise that growth is good. The reflexive part is the idea that economic growth is always the most important (or only) consideration. But why should this be? I've never heard anyone provide evidence that economic growth is always the best priority. Even if you accept a 100% utilitarian ethical system, why should one believe that economic growth is the best way to create utility?
Separately, patents aren't a free market. I think a lot of people forget this, because they feel so fundamentally. But they're literally the opposite, they're a monopoly enforced by the government. All of the economic arguments about the efficiency of a free market go completely out the window the moment patents are involved.
You're putting a lot of words into the writing of someone who has said nothing of the sort themselves. Patents are property rights. We can discuss whether or not they are optimal for incentivising innovation. However, he isn't discussing patents. He is making an ad hominem attack against criticism his ridiculous proposal - to replace markets with govt adjudication of value - is getting.
Not a free market economist, but the best argument I've heard is that economic growth provides the most financial opportunities for the most people, opportunities that they need to make a living. The most ideologically motivated statements of this position typically ignore costs, esp. externalities. Include that caveat, and it's a reasonable approximation/rule of thumb.
>Separately, patents aren't a free market.
>But they're literally the opposite, they're a monopoly enforced by the government.
Thank you! I was trying to decide where to inject that point.
( Now, what alternative to compare them with and possibly replace them with, is another question, and a very complex one... )
It is probably because libertarianism is a beautifully simple theory, like pure math. Saying 'free markets are generally good, except in the case of X, Y and Z' just lacks that platonic simplicity, even when it actually describes the world better (like applied math).
M. Tabarrok explains Milei's statement: "Don't let socialism advance. Don't endorse regulations. Don't endorse the idea of market failure. Don't allow the advance of the murderous agenda. And don't let the siren calls of social justice woo you."
https://forum.effectivealtruism.org/posts/STtxTToEQArcthGnh/don-t-endorse-the-idea-of-market-failure
I'd be open to arguments for particular exceptions if they're well made.
Try to look at how the price of healthcare in Scandinavian countries compares with the US.
That and it's the least social of the four quadrants--the government doesn't regulate you socially or economically--so it's appealing to introverted nerd types (which to be clear is most of us here, myself included).
There definitely are different political philosophies that appeal to different personality types.
The other thing about libertarianism is it's not very compassionate, but it's not very hateful either--it's not anti-gay or anti-trans. So it can appeal to LGBT nerds.
Somehow all of that intuitively wholesome mind-your-own-business on the social side goes right out the window as soon as actual self-identified libertarians form actual organizations. It’s very frustrating.
'free markets are generally good, except in the case of X, Y and Z'
Libertarianism says exactly this, Unless you're confusing it with anarchism.
Yes probably all Libertarians will know of some things like policing that can't be done by free markets alone. But I think the fewer of such things your economic theory contains, the more simple and beautiful it will look.
Also, perhaps the concept of having only the really obvious things (military, police, courts) handled outside the free market might be a good Schelling point. Even if a government run health care system actually works best, allowing that exception will make it easier for people to demand the next thing nationalized.
Doubt it has much to do with rationalism -- how many readers here are rationalists? -- but rather because of this site's proximity to Marginal Revolution in blogosphere space. Even Less Wrong was spawned from the blog of a George Mason economist. In fact, I started reading you because MR-promoted economist Adam Ozimek (Modeled Behavior) promoted your writing. Lots of orthodox econblog readers in these parts. That's likely WHY.
I've thought a lot about this, since I share your lack of faith in markets, though not to the same extent-- I prefer a Scandinavian-style social democracy to full socialism, which has done poorly where tried. I think it's bottom-up rather than top-down, though.
Really, rationalism's short on high priests these days. I haven't seen Scott banishing that many communists, and I doubt enough people take Yudkowsky seriously anymore for him to have much effect in this regard.
What I do think is it's mostly sociological. If you've read Scott's bit on Gray Tribe, Red Tribe, and Blue Tribe, rationalists are sort of a Gray Tribe that's a deviant form of the Blue Tribe that leans libertarian (anarcho-capitalist for fans of European terminology) rather than liberal or social-democrat. As such they have a lot of things in common with your usual Blue Tribe (urbanized, high concentration of LGBT albeit mostly ace, bi, and trans and mostly male) but lean further right on economics, probably due to higher incomes, and right on some social issues such as feminism, probably due to being mostly male and neurodivergent, which puts you at a particular disadvantage when 'unwanted advances' constitute misconduct or assault--if you can't tell when you're wanted, the only way to be safe is never to make an advance. There are other issues and I'm sure people here can speak to them.
(No, I don't think those are the only groups in existence, but they're the ones relevant here.)
Most people who lean left on economics these days will also lean left on cultural issues and be very intolerant of anyone who doesn't pass all the litmus tests, so too much presence here looks bad among other progressives. I think the socialists and social democrats don't want to be seen here more than they get chased off.
There are the socially-right, economically-left Compact magazine types, and you'll notice there are at least a few tradcaths around.
If you read Tara Isabella Burton's Strange Rites (which I recommend!) the three new spiritual paths pretty much correspond to the Blue, Gray, and Red Tribes.
In short, this place has bad mojo among leftists, so they tend not to be here. So there's less challenging of free markets.
The problem is that NO concentration of power can be trusted. This is not only government, but also labor unions, corporations, police departments, etc. Each will tend to become controlled by those more interested in advancing their own power at the expense of the function they are ostensibly created to address.
This is the problem that "balance of power" between sections of the government was created to address. It hasn't been exactly successful in that, but it's been a lot better than some approaches.
The "free market" is another approach, but it's one that isn't even meta-stable without an outside power enforcing a levelish playing-field. Unfortunately, the outside power generally acts to favor some parties over other parties. But it's only that outside power that allows things like "property rights" to even be defined.
Yup. IMHO the market should be one of many power centers.
Eliezer still has a good amount of effect when he writes a blogpost, he just does it way less often.
> but lean further right on economics, probably due to higher incomes,
And because rationalism attracts the same people who like elegant theories like economics.
Socialist thought has less solid explanations for how various parts of society should function (and parts of it are very against discussing the topic, which people who are rationalists will automatically dislike, but obviously not all socialists/marxists are like this). We can put the reason rationalists pay less attention to such for various reasons, because of explanatory style, because of inertia, because of there not being as much advancement in socialist understanding due to not having as much power / research time as capitalist economics, etc.
True that.
I prefer to look at track records--socialism's is downright awful, but pure laissez-faire capitalism like in the Gilded Age and early Industrial Revolution tends to produce instability as well. It does still generate wealth, which is useful in the development of a country, but ultimately tends to be self-destructing. Of course, if it evolves into a more balanced economy that's more like a self-limiting problem rather than anything particularly bad, at least in the long-term.
Jeez, why not go ahead and harshly interrogate some of the free marketers posting today? If any high priests show up I promise to bite their ankles.
Huh, where do you see the free marketeers?
We are talking about the relative merits of one government intervention (patent law) over another. As far as I can tell, there are about equally removed from a free market?
The new suggested was explicitly to allow a freer market in drug production.
Are you still fat Freddie? Do the drugs work for you?
There's been much writing on the failures of the government to provide good incentives. I think it is *possible* for the government to provide such, but that the amount of cruft we already have is decent evidence that many approaches are very flawed.
Perhaps it'd be better! Perhaps we should even do it right now even though it would transform into some abused payout system from the government to the pharmaceutical companies. (because the short-term benefit is enough, because it might improve society sharply and get us to a better optima even if we lose out on that aspect, because...)
But this isn't reflexive conservatism. This is using existing information of how poor the government is at calibrating prices. If the government is aggressive and pays the pharma company too little, there's less incentive to develop drugs (and we already subsidize these companies to varying degrees). If the government does what it usually does and creates a system that gets captured in <10 years, then we get some very nice benefits at the expense of feeding a megacorp way more money than it was worth.
The incentives of the government paying out do help align it. Your suggestion's problem is ignoring the incentives of the other agents, of which a significant problems that capitalism has had in the past will reappear: regulations, subsidies, and more being abused to ensure a company takes lots of money from people!
I'd love a proposal that went into depth about the topic and how to align incentives and avoid corruption, but I'd need one of 1) reason to believe it will get passed in such a form; or 2) that the short-term benefit is worth the cost of more subtly harming many people.
If the government was competent I'd be a lot more interested in smartly designed incentives. It isn't. Part of the benefit of other countries that implement policies in this area is that they're less corrupt in certain ways, and also that they don't have as powerful organizations trying to exploit them.
Right, because the current scenario is so optimal - hundreds of thousands of people dying of an eminently curable disease because they don't have enough money to spend on drugs that are on patent, while in twenty years similar people will be saved thanks to the utterly arbitrary quirks of modern patent law. Truly, the best of all outcomes.
it might well be the case both that the current situation is very bad and that another, different situation, would also be very bad! i don't have a position on your specific proposal, but this is not a convincing response whatsoever.
I think it is a reasonable response - there are two methods available, with different problems. It’s at least worth investigating and maybe even trialing the other to see if it is at least complementary if not an overall improvement.
I doubt his "solution" is something that could just be trialed. Say the government picks a drug to try this with. People get this drug cheap. People who need other drugs clamour for the """""trial""""" to be expanded to their drug. And of course you can't reverse the trial on any of these "trial" cases because these people will lose their cheap drugs and the politicians will look really bad. It's not really a trial or investigation if the result can only go one way.
seems plausible ie in the worlds where the company couldnt charge a lot for development, the drug isn't developed yet, so no one got it as opposed to some
Yeah, I think we should be more like other rich countries and have the government pay part of the cost one way or the other. What can you do, most of the people here really believe in free markets causing dynamism and all that. Every place has its local ideology.
But other rich countries don't have the government pay any significant fraction of the drug's *development* cost. They just cover the marginal cost of manufacture and distribution with a modest serving of profit, and say to themselves, "Gee, isn't it great that American consumers are paying for the development of all these wonderful new drugs?"
And it is great, for them. And it's OK for the pharmaceutical industry. But if we (I assume meaning the United States) decide to "be like other rich countries", then *nobody* is paying the cost of developing new drugs, and pretty soon we stop getting new drugs.
I'm annoyingly tempted to suggest we should do something quite different: make it illegal to sell any drug to anyone in the United States, unless you offer it for sale to any American who wants it at a price no more than say 25% greater than the *lowest* price that they offer in any other rich country. Not because it will make drugs any cheaper in the United States, but because it means the freeloaders get cut off and that feels good - doubly good when some anonymous dude is telling me that he wants us to all be freeloaders as well.
I've heard that from a few people. Frankly I don't believe anything the businessmen say-- they're a necessary evil, and they'll say anything they have to keep making money. A lot of economists strike me as sort of like the Catholic Church in the middle ages, inventing reasons for the people on top to stay on top.
But I would actually agree with you--if these are American companies, why are we letting them rip off our own people? Let's use the government to knock down prices for Americans and hopefully some of these fat cats will have to send their kids to public school. If the Euros have to pay more for their drugs, that's a plus too.
EDIT: also, seriously? Offended by the honor of pharmaceutical companies being besmirched?
In a realistic scenario, the government would buy it for its tax-assessed value or its negotiated value.
>tax-assessed value or its negotiated value
And who is likely to have more say in determining those numbers? Consider how quickly you were able to come up with benign sounding terms to serve as fig leafs for expropriation. Now imagine how much better determined politicians could do it, especially given the bad rep of Big Pharma companies.
Property tax assessment and eminent domain are older than the Constitution. In fact, taking private property for public use is provided for in the Constitution:
"[...] nor shall private property be taken for public use, without just compensation."
In other words, fair and lawful systems for doing this have been in the process of refinement for the entire span of US history.
>eminent domain
I like how you couldn't even contest that this is really just expropriation.
>fair
Yea, my point is that the government would have more say in what's considered 'fair'. It's hard to imagine a policy that would be more harmful to drug development than making eminent domain a routine part of it. I can't wait to invest billions of dollars to develop drugs that the government will force me to sell for a """fair""" value.
Scott said,
>Their style is more to crush drugs before they ever come out, before anyone knows what they’re missing.
Like rent control, people can't miss what they don't know. People can't miss drugs that aren't developed.
Eminent domain cases are decided in court, and all reports are that the compensation is fair.
Wouldn't the pharma lobbyists that currently fight to keep drugs under patent forever just pivot to fighting to make sure that every drug that gets purchased by the government gets purchased at a 999X mark-up? You'd have the same level of corruption and graft, but it would all be resolved at once instead of over the span of 20 years.
Like I said:
>there's no way whatever process is implemented to dole out these awards will be subject to pressure by special interest groups.
> You'd have the same level of corruption and graft
Even if you're right, you'd need a much better result than "the status quo, but different" to justify the risks and costs of administrating his proposal.
I think the better result most people were pointing out would be then the government could distribute the medicine to people at generic prices. Which would be a pretty huge result.
Resolving it all at once seems like it would actually have benefits - for example, you can start building production for generic drugs 20 years earlier than you otherwise could.
And maybe you could come up with a semi-objective measure for which patents to buy, like basing it off of Medicare expenditures? "This drug currently costs Medicare $X million per year, and we'll save $Y million if we can buy the patent and genericize it 20 years ahead of schedule" feels easier to evaluate than "this drug helps a lot of people."
The sarcasm here is completely unnecessary and serves only to turn up the heat.
+1
Well, patents are literally a government-granted monopoly, and I assume we all know the Econ 101 case against monopolies by now? So it becomes a matter of which kind of economic inefficiency is worse in practice, and that's an empirical question I don't know the answer to.
The government isn't determining the value. Price discovery is one of the market's most valuable functions.
This doesn't take prizes off the table: you use the price discovery of the market to decide how big the prize should be.
Make the government issue "research bonds". Spread 1/3 of the investment right away for up-front costs to research groups. 1/3 at milestones. 1/3 for approved drugs.
this is an interesting idea I haven’t seen before, is anyone doing longer-form about it?
As opposed to the current non-interventionist approach, where the govt assigns a legally enforced monopoly for an arbitrary number or years to a company whose invention is decided to meet some arbitrary criteria, and then adjudicates any case where the company argues that such monopoly is unlawfully violated?
Like, there is no free market approach here. You can either bite the bullet and end both IP and grants, or debate which kind of govt involvement works better.
Setting the size of the reward can be a challenge. A difficult-to-implement solution that likely only applies for harder to administer drugs (e.g. cancer treatments) is a partial market. Randomly select a potion, say 10 percent, of people for the patent exclusivity to apply to and let the rest get it at cost. Drug company gets paid the profit on the exclusive population as if it was the whole population with government making up the rest (in this case taking the profits on the 10 percent and giving 9x that). You essentially get open sourced drug for majority of population but with the market setting the reward.
> Randomly select a potion
No thanks, I want my elixirs to be carefully chosen :-P
Governments are not venture capitalists, that would be pissing the money away. More sense for them to pay 11 figures for the patent or the product when it has come to market. You have just invented the NHS (which however is getting flak today for deciding that an unexciting and side effecty dementia drug is not worth the money).
Not saying the current model is optimal, and I imagine this can work for very common, clearly-defined diseases, like e.g. Alzheimer's, assuming the government has enough of eleven-figure sums just lying around. But it runs into all kinds of problems for diseases having a lot of sub-types, which is really most of them, as well as for the countless rare diseases. You would need a massive government apparatus to correctly price every rare disease and every subtype of a common disease - which involves a lot of research work to identify what those subtypes are, what is the prevalence etc. This does not sound like something a government has any chance to be good at. Another issue that it only works for first-in-class drugs, and there's often a lot of meaningful improvements in followup drugs - reducing side-effects, improving efficiency, better delivery modes etc (although of course equally often follow-ups only exist for the sake of patent busting, and your model resolves that issue).
Right now every company has dedicated teams whose job is to estimate the potential number of patients for a potential new drug, and then how many of those patients will be able to get this drug through whichever complicated messy system governs drug prescription and payments in a given jurisdiction. These teams can benefit from being specialized in a given field of medicine, and also they have skin in the game of estimating the potential market value. I don't think a centralized government agency would work nearly as well.
Another issue is that a huge part of the cost of drug development is going through all the regulatory barriers. If you take the government money and use them in effect to pay the people who are tasked with passing through the barriers that the government has set up in the first palce, it's just subsidizing these people (often former government officials, always PhDs or MDs) with taxpayers money. Just lowering the barriers seems more efficient.
I like the idea in general, though eleven-figure needs justification. Maybe it's too low, with all the hoops one must go through to determine safety and effectiveness using the scientific method. Plus there's always the risk your new drug turns out NOT to be safe or effective, and you've spent tens or hundreds of millions of dollars to determine that.
The FDA could certify open-source drug factories as suitable for making the drugs they choose to make, as oversight.
To a certain extent that is what the Danish government is doing. Novo makes a new drug, they agree on a fair price with the public healthcare system and the government pays this price (at least for life saving drugs). In the end you get a country with cheaper and probably better health care than free market USA.
But I don't see how you would broaden this system out to the entire world. Which government would pay for it? Would the US pay a lump sum for voiding the patent inside the US? If that fair price was based on an assesment of how many doses would actually be sold then it seems to just be a more unpredictable way of what scandinavian welfare systems are doing (it takes a lot more work to figure out how much money a medicine 'would make' compared to just buying each batch at an agreed on price).
And it would be even harder if you tried to make this an international thing. If you pay a company to truly open up their patent, not just in one country, you are opening an eternal can of worms squabbling over how big a slice each government will have to pay...
Are you seriously arguing that the government of a tiny country has a causal relationship to ANY drug developments?
Like it or not, pharmaceutical companies revenue models are ENTIRELY driven by the US, which is the only country that matters for potentially getting a big pay day.
Everyone else is poorer and less willing to pay.
Price discrimination is a wonderful thing for efficiency, but those benefitting from their marginal status should probably not crow to the people paying first class prices.
With all that said, back to Freddie’s proposal: I completely agree it would be a better system to use prizes instead of patents for broad appeal drugs. Unclear to me there’s a way to get there from here, unfortunately.
I agree fully. Americans overpaying for drugs is a big boon for developing new drugs. Though a lot of that money is probably wasted on useless commercials in the US, on getting FDA approval even after having done proper experiments outside the US, on expensive lawyers and lawsuits inside the US, etc. Still a majority of that money definitely ends up getting reinvested into new research.
The same is probably true of hyper expensive american tertiary education. I fully support it, as long as some of the money gets reinvested by the universities into fundamental research.
And the entire world benefits from the the Pax Americana, provided by the US military and paid for by the american tax payers.
Do you envision this incentive model to be structured more like the historical ‘Longitude Prize,’ where specific parameters and goals are set in advance, or as a post-award prize that rewards successful innovations after the fact, regardless of the approach taken? I think the latter approach could offer significant advantages, but would be challenging for governments to implement due to political pressures and the potential for corruption.
I've occasionally wondered why governments don't deal with universally-useful patent drugs by just buying out the patent. "We will give you $BIGNUM to give up the legal monopoly period" (so the market can start doing its thing right away but the creator still gets compensated) seems like it would be worth it in a non-trivial number of cases.
I think there's no free lunch here - if the reward was smaller than the pharma companies get now, they would be less incentivized (and no different from any other price control), and if it were higher, nobody's saving any money. I could be totally wrong though, interested to hear what other people think.
If the left is correct, corporations and their lobbyists are powerful puppet masters who'll be able to milk the public treasury for quadragajillions of dollars for drug patents of all kinds, including pretty worthless ones. If the right is correct, the state will give drug companies an offer they can't refuse and investment will flee drug research, condemning quadragajillions of people to die of Covid-36 or whatever.
Up-front payment roughly equivalent to the net present value of what the company would get from a term-limited monopoly means the developer gets the same reward, at similar cost to the government or insurance company or whatever, but the actual patients don't suffer the deadweight losses associated with that transfer needing to be laundered through conditions of limited supply, inefficient per-dose costs, and corporate counterespionage interfering with publicly-funded research.
Consider monopoly pricing in the absence of price discrimination. You make more total profit if you can keep prices high, but this means less goods sold than a market-clearing price in a free market (and less total surplus than the consumer+producer surplus in a free market. In theory, the gov't can just pay pharma companies the total amount of profits they'd make if they were a monopoly, but still allow them (or other companies) to produce the same amount of drugs as they would in a free market. This increases consumer surplus while keeping producer surplus constant.
(looking up a few graphs for "monopoly pricing" online might be helpful for intuition here)
> nobody's saving any money
This is not necessarily true: for example, if GLP-1s were cheaper, then they would be prescribed more, in turn reducing hospitalizations due to heart disease, thus saving money. In the American system, you'd also be saving all the money spent fighting with insurance companies.
It seems like Freddie's idea is to have the government do for pharma what venture capitalists do for tech startups. It works for VCs because they get a massive return from 1 company out of (I don't know) 20 or 50 duds, and so the market incentivizes them to be neither too generous nor too stingy. I guess it's the same dynamic for the present pharma system, where they're picking research projects the same way VCs pick startups, and the massively successful ones pay for the duds.
So the question, in a democracy, would be whether voters can do a better job punishing (and rewarding) the government *both* for being too stingy and for being too generous, than markets currently do at punishing VCs and pharma companies for those things. Or in (for instance) an oligarchy or monarchy, whether the oligarchs / monarch can hand out incentivizing punishments and rewards to the administrators more accurately than markets currently do.
Markets have fewer participants than entire democracies, which is a point against them; but they vote much, much more often (by buying & selling). I don't know how to figure which has more skin in the game, since both markets and democracies can leverage other people's skin and skip out on risking their own. But I think trade-offs are more legible for markets -- because participants are calculating dollars versus dollars, rather than voters, who are calculating (say) the chance of health benefits due to a drug that doesn't exist yet and might never exist versus increasing teacher salaries. Not a very legible comparison.
So I think it's not on the face of it ridiculous to suggest what Freddie is suggesting, in a purely theoretical sense.
I would love to see this specifically done for substances that are already unpatentable, where there is otherwise no incentive to get them approved as treatments. It would be a huge win if doctors could easily prescribe cheap and abundant melatonin for sleep/blood pressure/ulcers or ashwagandha for anxiety. Things that already have approval as supplements can probably skip safety testing, which means costs would be lower (though I believe that is the cheapest bit).
I'm skeptical of drug prizes, but your idea seems straightforward enough.
I think that's what public research is doing. The big bottleneck for drug discovery being more often done in public settings is indeed funding (which translates into something akin to technical debt. Inability to hire talent does not help things either). The current way of doing this is: a promising therapeutic target is often identified in the public domain, then the exploitation rights sold for first a startup, then big pharma acquires the startup for the final stretch of the insanely expensive process.
The obvious problem with this is that it would require the government to decide in advance that obesity-curing drugs were good, and I think it's pretty obvious the government would not be able to do that
Use that approach to let the free market set the sale price, but give the patent holder a fixed percentage of the sale price (for a limited time). That way the discoverer is motivated to find a use for the drug. But safety testing HAS to be done by the manufacturer, as different production methods can have radically different safety profiles.
Surely companies develop dozens if not hundreds of drugs for every single one that actually makes bank. How could we which would work before hand? Or so you mean, the government would pay off the patent costs once something had obvious value and demand?
Setting aside the *sui generis* of Covid (in which basically everything was tried all at once) what's your best example of a prize working for drug development?
>Their style is more to crush drugs before they ever come out, before anyone knows what they’re missing.
The same logic applies to policies like rent control. It's much easier for voters to fixate on existing rental prices than the missing supply and higher quality of housing in a parallel universe where their locality didn't implement rent control.
re: actual cost of these compounds.
There's a cottage industry of peptide suppliers who sell peptides such as semaglutide as research compunds, for *far* less than the compounding pharmacies (if buying straight from China, can be <1/5 the telemedicine compounded price). It isn't actually $5, but not incredibly far off. Naturally, the quality varies, so there's also online communities that buy samples, have them independently lab tested, and keep records of what suppliers are trustworthy. This is obviously very much illegal (for prescription, patent, etc reasons), so these suppliers are constantly getting shut down.
Some of these telemedicine brands are just doing these two steps themselves (sourcing and testing to find "good" suppliers), and adding the prescription wrapper on top. The raw margins are still quite good, but because of competition, customer acquisition costs are also very high. This, along with "trying to extract as much as possible in the limited window this loophole is open", explains some of the markup.
One other interesting side effect of Chinese suppliers selling direct: whenever excitement around a new drug builds, such as Retatrutide (a triple hormone receptor agonist), there's instant demand from these Chinese producers, even if the drug isn't available at all in the US yet. This is strictly not a good idea from a safety perspective, but does mean ~tens of thousands of additional people are on these drugs.
Finding reliable suppliers capable of supplying a few high-quality batches is one thing. Having a supplier never deliver a seriously contaminated or problematic product is another. Take it from someone who uses a lot of research-grade drugs for sensitive applications. The level of QC/QA that we want for complicated medical products is just always going to 5-10x the cost of the best-effort approach that's used for research-grade.
Very much agreed. The direct route is in no way safe.
More and more, I'm having trouble seeing the benefit of the FDA's regulations and the basis for patenting drugs. Is the strongest reason still that, without patents, no one would bother to cure cancer or deal with the obesity epidemic? Or just not enough people would and it would take too long? Or without patents, you'd have trade secrets and bunkers and no one would be able to figure out to reproduce the drugs some sneaky company developed?
>Is the strongest reason still that, without patents, no one would bother to cure cancer or deal with the obesity epidemic?
I mean, the only real reason I strongly believe that Semaglutide is safe and effective is because Novo Nordisk ran a big randomized controlled trial showing that it's safe and effective. They only did that trial because:
1. The FDA wouldn't let them sell their drug until they did.
2. The US government promised them a government granted monopoly (patent) for 20 years.
If we got rid of the FDA and drug patents, then I strongly doubt that Novo Nordisk would spend the money to put the drug through the trial. That's not to say that our current regime is perfect, but I do think we'd have to replace the current regime with something well thought out.
On the other hand, maybe we could run trials for cheaper in a more relaxed regulatory environment.
Well, yes, but you'd still have to make a decision about how relaxed an environment you'll accept before no longer trusting the results. For example, I'm probably not going to trust any study results coming out of, say, Somalia. I'm probably comfortable with results coming out of Switzerland.
But if we've already figured out which countries have a regime that is making reasonable tradeoffs, we may as well just change our regulatory rules to match theirs. You still need to do the hard work of figuring out where to draw the line.
It's fine if you don't trust the results. The point is that there are that people that will trust it, and you can see if those people die before trying it yourself.
Actually doing that is often very complicated though. There are people who believe that vaccines kill people because a lot of people die shortly after receiving a vaccine. Conversely there are cases where seemingly safe drugs have to be pulled, because they have some non-obvious side effects that completely flips the cost-benefit analysis. COX2-inhibitors like Vioxx (painkillers) that increased the risk of heart attacks after prolonged use is one example.
We could have cheaper trials that provide just as much evidence about the safety and effectiveness of the drugs as the current ones, but are slightly less safe for the trial participants, and have less unnecessary bureaucracy. From what I understand from earlier posts on ACX and SSC, the amount of safetyism around human experiments is extraordinary. Likely plenty of people would be willing to volunteer for marginally less safe studies, the requirements come from above, from the government.
Right, I agree that the requirements come from the government. And there is immense value in allowing people to voluntarily participate in less safe studies. In particular, I think it should have been legal to run challenge trials for the COVID-19 vaccines during the pandemic. Faster innovation matters.
That being said, making it easier to run less safe trials wouldn't change anything with respect to high drug prices for Semaglutide (the thrust of this article). We've given Novo Nordisk a government granted monopoly on Semaglutide for 20 years (a patent). As Scott has mentioned, the only reason compound versions are available at all is because Novo screwed up and wasn't able to produce enough to satisfy demand even at monopolist pricing levels.
Even with cheaper trials, I don't think corporations would be willing to spend money to do them if we just deleted patent laws and allowed generics to immediately enter the market. So "fixing" high drug prices for patent protected medication is still a tricky problem.
Define a mandatory minimum pay scale for medical trial participants based on the risks involved, with after-the-fact compensation based on some multiple of the difference when it turns out to be more dangerous than anticipated (so there's a clear incentive for companies to err on the side of overestimating peril).
As for recouping development costs, how about funding that through bounties rather than monopoly power? "Whoever can develop and provide some drug with such-and-such qualities (safety, fitness for a particular purpose, etc), proven to the satisfaction of third-party scientists, we promise to buy the first X million doses at $Y per dose, if you agree to put all relevant technical details into the public domain."
Multifunctional wonder drugs might satisfy several bounties at once, or somebody could shortcut R&D costs via simple studies on what else public-domain drugs can do, then fulfill the bounty board's standing order via commodity-futures contract from an established supplier.
Isn't this the status quo, vis trials in India?
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3980544/
Or am I misunderstanding you?
That's interesting.
Its seems to me that even the largest randomized trials are much smaller $$$ than, say, holding the semaglatide patent for 20 years.
Without patents, yeah. Or rather, without patents Big Pharma might still bother to cure cancer but they'll keep the formula a secret for as long as possible. Though I don't know how possible it is to keep a drug's formula a secret: could a chemical lab run it through some kind of analysis and find out exactly what molecules are in it? I don't know, but seems plausible.
So they'll either keep the cure a secret, so that it may take hundreds of years for others to compete with them, or if they can't keep it a secret then they won't bother making it. Once you know what molecules you're looking for it is very easy to start manufacturing them. Why bother putting in money on developing new drugs if all your competitors will get the benefits of your research for free?
Ultimately, if people could access the drug they could characterize it. There are ways to obscure analysis, but my (informed but imperfect) understanding is that they're more of a speed bump than a wall. Of course, if you have people come into your clinics to get the drug I suppose that secrecy might be possible, in theory.
But there's a much smaller market for such treatment, as compared to a bottle of pills.
Perhaps more to the point, if nobody knows what drug you're testing they can't replicate your research. So why would they believe that whatever testing you did is reliable?
The two basic paradigms are:
"Publish all your results openly, and the government will enforce your rights"
or
"Keep your stuff as secret as possible."
If you're trying to learn how to do something, you would much rather be in world #1. You can just read the patent and see how to develop the thing. You can even do it yourself if you're not giving away the product or result. You can even find a way of improving on the process and patent *that*. (To use it, you need to either license the patent in the meantime, or wait for it to expire.)
In world #2 to get your cancer treatment you report to some injection site to get your drug, and it's mixed in with a bunch of other confusing drugs designed specifically to make it hard to isolate exactly what's going on. They probably have their own side effects, too.
People would still try and cure cancer, but when they fail (as the usually do), they'll still say "we cured cancer!" and sell the elixir at $1500/month or so.
And they'll completely skimp on the testing to find all the side effects, many of them deadly and some of them worse than deadly, so even when they do cure cancer you'll sometimes wish they hadn't. Doubly so if all they cured was morning sickness and leprosy.
And, yes, trade secrets and bunkers for the ones who get it right.
There's certainly room to improve on the FDA, but most people are not going to be happy with the results of "FDA Delenda Est" without a superior replacement in place. And no, you can't just assume that the superior replacement will magically emerge in the drug market.
haha nice reference to the spicy baby maker
"Did you know: the slang term “based” originally comes from the free base form of a drug (as opposed to the salt)"
Does nobody remember the classics? Grandmaster Flash and Melle Mel, "White Lines":
https://www.youtube.com/watch?v=NWNykaek3dU
It could be in shortage for the foreseeable future. I think demand for it will keep ramping up as more and more just plain overweight + obese people find out about it, try it, tolerate it, get good results, but need to stay on it (probably at a 1/4 to 1/2 dose) indefinitely. (Side note: Henry now offers that low-dose maintenance prescription for only $179 month. Kinda crazy that these online compounding portals are successfully innovating faster than the actual big pharma companies). There is so much latent demand for this drug that I doubt Novo could build enough factories to catch up.
Although I am curious how the FDA can measure the shortage, if nobody seems to actually know how many people are taking it via compounding pharmacies.
It's my understanding that the FDA measures the shortage by looking at whether regular pharmacies are able to quickly have their orders for a medication filled through wholesalers. So if everyone switches to compound and the "official" drug is sitting on pharmacy shelves, the shortage is over.
Thanks. So in some sense maybe we should root for more of the scare stories sowing FUD about the compounders, so that plenty of people are too scared to try them?
If your goal is to maintain a shortage on pharmacy shelves so that you, personally, can continue accessing the compound version, then yes.
Well just rooting for public health at an affordable price. The compounders can supply vastly more people without bankrupting society, insurers, employers and therefore employees.
And of course keeping in mind that my "rooting for" the news media to do something will affect it about as much as my rooting for the Mariners has helped them avoid crashing to .500 in the last month.
>Well just rooting for public health at an affordable price.
Well, affordable for anyone that doesn't get scared off by the FUD, anyway.
Personally, I think I want some more ideas about how to reform the system to get better results. Once Novo Nordisk manages to ramp up supply, its drug patents are going to stop generic manufacturers from stepping in and increasing supply of Semaglutide (and thus, lowering prices). So I want to reform the patent system somehow, but I also acknowledge that just deleting patents probably means Novo Nordisk doesn't pay for trials proving that Semaglutide works.
So there's a lot of room for ideas for reform here. And I think that even internet commenters generating ideas could be useful here. After all, policy advisors read internet comments too. ;)
Yeah I'd love to see the patent system reformed too.
At the moment I'm even more sick to death of the insurance industry and system in the U.S., after cycling through 3 employer-subsidized, 2 exchange plans, 2 COBRA extensions, and Medicaid in the last 10 months, I've despaired of any insurer (or insurance-focused provider/pharmacy) ever doing anything except charging me several hundred dollars just to not actually cover anything (insurers!) or for routine tests/checkups/generic drugs (providers/pharmacies). I truly want to burn it all down, it is so so bad.
Everything you say is true, but you're neglecting a rather major caveat that everything you say will be false in a handful of years. If a non-urgent problem can be fixed just by waiting a bit, then it's not really a problem.
It seems like there's a fine line between keeping a loophole open and an outright ban.
If thats the metric, sounds like novo could end the shortage by increasing the price.
Seems like a win win for them, should we be very grateful they arent doing the evil plan?
From my understanding, Hims/Hers is the biggest player of the online compounders (think they cornered market from compounded minoxidil and ED drugs) and there was a recent FTC inquiry into them that hammered their stock price.
Also, I have a doctor friend we were having brunch with who runs a weight-loss clinic engaged in compounding. I asked her about what happens when they lift the shortage thing and she said it won't matter... For her specifically, she said they will create their own formulation that is a variant on GLP-1; I think she said she would just add some b-vitamin to the GLP-1 that helped the uptake of the semaglutide and that this variant would be fine under current rules.
There's something a little too Peter Thielian about this story where a European drug company develops the successful, safe weight loss drug we've all been waiting 30 effin' years for, but we need the Chinese to make it for us in bulk and then distribute it through this backdoor legal loophole to get around the bureaucracy and not have it cost a an arm and a leg.
Am I correct that the FDA-approved versions are sterile injectables packaged in an auto-injector? Meanwhile these compounded formulations are non-sterile oral dosage forms? Massive difference in cost to produce, especially to comply with all the regulations and controls to aseptically manufacturer sterile pharmaceuticals.
No, the compounded versions are also injectable, which adds to the risk of using them.
No, the compounders are selling you a small vial of injectable drug plus the syringes and sterile cleansing pads and instructions you need to use this stuff to safely inject yourself. Plus some technical/medical support for people who get confused.
(Some of them ALSO are willing to sell semaglutide in a daily sublingual tablet, but that’s not the main product.)
Thanks for clarifying!
I am a patent attorney, although I do not practice in the area of pharmaceuticals. I am not aware of any law suggesting that patents do not apply when a drug has a shortage. I've looked but not found any. Compounding pharmacies can get over the hurdles of the FDA due to the drug's shortage, but they should still have patent liability. I don't understand why the drug companies aren't suing the compounders. My best guess is they aren't really in competition, since Eli Lilly and Novo Nordisk is selling every dose they can make, and the compounders are just keeping some future customers on ice for them.
Novo Nordisk may not be able to make more doses than it currently sells, but it could get further profit by charging a license fee to compounding pharmacies, couldn't it?
Though perhaps they do charge a license fee, just less than they charge for their own version, because the compounded pharmacy version usually isn't covered by insurance? And perhaps that's why the compounding pharmacy version still costs much more than the production cost?
My understanding is the patent(s) do not cover what the compounding pharmacies are making. Not sure if that makes the whole "shortage" issue irrelevant or not as I'm not sure if this is an FDA thing.
If one had to pay the retail $1000/month, he or she could finance nice European vacations with the savings from the $100 per month cost in Athens (as of April in direct experience).
I am also a EU Ozempic user and I pay ~€100 per month. It was prescribed to me off-label and I was under the impression that I'm paying full price for the drug (none of it is compensated). Why is it so expensive in the US?
Because drug companies here are allowed to charge exactly what people are willing to pay, due to their status as temporary monopolies.
Also because insurance hides the actual cost. People ignore insurance premiums, since they are paid by their employer and/or automatically get deducted from their paychecks. Insurance handles drugs for chronic problems poorly. Insurance is supposed to mitigate risk, but an expense one must pay a set monthly amount for is the antithesis of risk.
The cost isn't hidden to insurance companies, which negotiate as hard as they can.
I know little about the system, but AFAIUI in many cases they are obligated to cover the drug if it's considered a medical necessity, so they don't have much of a bargaining chip.
Being obligated to buy something (food, clothing, housing) doesn't usually drive prices sky-high. The cause is the monopoly. Imagine a "food monopoly!"
Insurance companies make money by the very nature of insurance: take in money, and pay out most of it to a distributed population. Sure, they control costs as much as they can, but they don't have very good optics in what they are paying for and what the customer received. The customer doesn't provide any help because they often have no idea what is medically necessary, and it doesn't matter anyway since they will pay the same amount either way.
So what to do about rising costs? Increase insurance premiums.
Patent monopolies apply in Europe too. AFAIUI drug companies are generally allowed to charge what they want in European countries too, it's just that the compulsory insurance (which is either a government monopoly or the government regulates what it has to cover) may refuse to cover it if the company charges more than they are willing to pay, and then few people will buy it. But Daniel B wrote that he bought it unsubsidized. I don't know the details though. In some countries there may be outright price controls (i.e. it's illegal to sell for more than the government allows). Also, the deal between the national health insurance and the pharma company might also regulate the price the company charges in the case of unsubsidized off-label prescriptions; and anyway it makes sense to charge a relatively low price in unsubsidized cases as few people could afford it otherwise.
I don't know if this is true, but I have heard that drug companies are happy to under perform in Europe (make a relatively small profit), the prices of which are set with few, big nationalized health care systems, knowing that they can make more bank in the US where private insurers will not band together to negotiate for lower costs as a group.
This is sort of true. In Europe, the price of the drug has to cover the marginal cost of setting up (or at least expanding) the factory, and operating that factory and some overhead expenses and a bit of profit proportional to all that. If that's the highest price a European national health service will pay or allow, well, the drug companies will be making a bit of profit so they'll go ahead and ship the drug to Europe cheap.
In the United States, the price of the drug has to cover all that *plus* the few billion dollars it takes to develop the drug in the first place. And proportionately larger profit, to cover the larger up-front investment. If they can't sell for that price in the United States, then it's not worth the bother of developing the drug and it won't be available to anyone.
What isn't true, is that this has anything to do with private insurance companies. The US private insurance market is dominated by companies larger than any European national health service, willing and able to negotiate for lower prices on a scale that European governments can't match. But the US insurance companies know that if they all hold out for a price much less than $1000/month for drugs like Ozempic, the pharmaceutical companies will stop developing drugs like Ozempic because they can't afford it.
"The US private insurance market is dominated by companies larger than any European national health service, willing and able to negotiate for lower prices on a scale that European governments can't match."
I tried to look up the size of biggest US medical insurance companies, and found this Forbes article that says that in 2021 Kaiser Permanente was the largest with 8 million enrollments, though I don't think "enrollment" equals one covered person here. Is this right?
What are the largest public health insurance institutions in Europe? It would be qutie surprising if none of them were bigger than that.
You could argue that even if they have more covered people, they're still smaller by revenue due to europoors having much less per-capita healthcare spending, but that would still be surprising and it sems to me that looking at number of people is a better metric for estimating negotiation power.
Also, what's the incentive for private healthcare companies to care whether future drugs can be developed?
Yeah, 8 million is way too low for the number of discrete human beings who obtain their health care through Kaiser Permanente. But I can't easily find a better number.
Counting money is easier, and arguably more relevant since we're talking about market power. Kaiser Permanente seems to have a gross revenue of $124 billion. The largest US provider is UnitedHealth, at $215 billion. By comparison, the total budget of the UK National Health Service is £182 billion. At today's exchange rates that comes to $240 billion US, so I was a bit off - I think the dollar was stronger the last time I looked at this. But it's still the case that the biggest US health insurance companies are in the same league as the NHS.
And I think the NHS is bigger than any other single player in Europe. The UK is the largest and richest country in Western Europe save Germany, and German health care is split between the state and a bunch of private health insurance companies. Every nation in Europe does this differently, and I don't want to dive into that mess. But if Spain and Belgium can make Big Pharma come to the table and negotiate, Kaiser and United can do the same.
The difference is, as you note, incentives. If all the health insurance companies in the US could collude on a single policy, they might decide that all this expensive and contentious "drug discovery" stuff is not the way to go, Cynically, a unitary NHS might do the same. Monopsonys tend to be conservative.
But in the US market, each insurance company has to expect that new drugs will be developed, and that they will be priced at traditional US rather than European rates. And they know that all but the most desperate American consumers will want health insurance from one of the companies that will cover the shiny new drugs they keep seeing on TV, so they'd better cover those drugs if they want to keep market share. Which they all do, which means the costs of drug discovery are paid for and the new drugs exist and the cycle is closed.
Those numbers look isolated by state.
Blue Cross says they've got 115 million members. Aetna says 22 million.
United Health Care has 44 million.
Some of these numbers overlap with Medicare Advantage.
"they can probably eat the loss" shrimps wrong to me. We've learned cosmetics drugs are great and we need more of them, and this is probably sensitive to galaxy stonks vs only solar system stonks
For Americans, an even more advantageous option is the Canada Loophole. Drug prices in Canada are significantly lower. By having a doctor write a prescription for a GLP-1 (easily obtained through telemedicine) and sending it to a Canadian pharmacy, many pharmacies will have a Canadian doctor review and issue a corresponding Canadian prescription based on the American doctor's script. The pharmacy then fills the prescription and ships the medication to the U.S. This process is entirely legal. It benefits the American doctor, who faces no legal risk since their prescription isn't being filled directly. The Canadian doctor is also in the clear, as they’re simply verifying the American script. Canadian pharmacies enjoy the additional business, and patients receive affordable medication. The only real downside is for the pharmaceutical companies.
That's been difficult to do with Ozempic for the last couple of years, possibly because of the shortage. Most Canadian pharmacies want you to show up in person now. Maybe that will ease when the supply increases.
Is that true for compounding as well? I don't know if they play by the same rules as the states in that dept. I know currently it works with compounding, but I don't know if the Emergency auth going away will affect that.
Now that I don't know. I'd have to go study the relevant subreddits. I know about the brand name because initially I was getting Ozempic from Canada, but then that system stopped working.
Why do pharma companies and Canada allow it? I assume drugs are cheaper in Canada because the Canadian health insurance, as a monopsony, negotiates harder. But couldn't drug companies sell to Canadian pharmacies on the condition that they only sell it (at that price) to members of the Canadian health insurance system and/or Canadian citizens? I'd figure Canada has no reason to ban such contracts, it has every interest in pharma companies making more profit, incentivizing more drug development, as long as it isn't Canadians paying for it.
Based on a simple search, it seems to me that Canadian pharmacies don't accept American insurance, in which case it may be a price discrimination strategy drug companies are OK with: Americans generally buy from Canada if insurance wouldn't cover the drug anyway, in which case they probably wouldn't buy the drug at American list prices anyway.
In most provinces, prescription drugs aren't paid for by the government.
To add to Ethan's point: No, there is no monopsony, so that can't explain the lower prices.
Canada has two tiers of health insurance: the first tier is public, single-payer, and covers medically necessary services, but not medically necessary consumer products like drugs or devices (unless they're administered in a hospital/clinic---yeah it's dumb and arbitrary). This second category is covered by private insurance for most people, depending on their job.
To explain the price difference for drugs: the government just straight-up imposes price controls.
Why doesn't the Canadian government allow companies to sell at higher prices to non-Canadians?
EDIT: Or why don't companies just refuse to sell to non-Canadians in Canada at the controlled prices? Does Canada ban that? Why?
Pharmaceutical pricing in Canada is weird. Roughly, it's illegal in Canada (as contemplated in the Patent Act) to charge a price for a drug that is, in the opinion of the Patented Medicine Prices Review Board, excessive, and if you do charge an excessive price, you can be fined. This applies to any sale that happens in Canada, regardless of who you're selling it to. In practice, pharmaceutical companies will negotiate with the PMPRB in advance, rather than playing a game of chicken which might result in them getting fined. I understand that this is unusual, and that other countries have different rules, but I don't know any details.
And when a sale does occur in Canada but destined for a US end user, the Canadian pharmacy still makes the usual profit and the Canadian government gets a bite of that in taxes, so why would anyone in Canada want to stop that?
To make Americans subsidize drug development (which benefits Canadians) some more. Though the tax revenue angle is a good point, it likely outweighs the former in the eyes of the Canadian government.
My wife saw a physician yesterday who told her that they would use this loophole if insurance rejected our initial claim for the drug. This feels like the equivalent of going up to the ticket counter wearing a trenchcoat and those glasses that include a plastic moustache, but if it works, it works.