>It costs a quarter to manufacture each pill but the
>manufacturers charge several dollars for that pill.
What are the manufacturing costs for software?
What are the manufacturing costs for software?
Our whole racket is based on pricing our services on value while pricing our cost of goods on production inputs.
It's not "fair" to let other industries do that right?
But how much do you value being alive? The "value" of a lifesaving drug is essentially unbounded, most people will pay anything to stay alive. That's one of the reasons healthcare is an edge case where the typical rules of capitalism don't work.
So yes, it is unfair to have some industries price their products based on "value".
> But how much do you value being alive? The "value" of a lifesaving drug is essentially unbounded, most people will pay anything to stay alive. That's one of the reasons healthcare is an edge case where the typical rules of capitalism don't work.
> So yes, it is unfair to have some industries price their products based on "value".
The problem with that logic is that taken to the extreme it means that everyone is entitled to every possible treatment, regardless of cost, and the rest of society must be the one that bears it.
If a treatment exists to extend the life of a terminally ill person for 1 more day at a cost of $100K should the rest of us pay for it? How about $1M? The numbers are purposely ridiculous but it's not that far out of reality.
At some point you need to draw the line and make the (not fun) decision of what's in and what's out.
I'm convinced the bulk of this could be solved with some common sense planning:
- Create an opt-in single payer plan at the federal level
- Use the existing Medicare booking codes for identification and list prices for covered treatments (prices to be paid to service providers)
- Service providers could opt in or out of the plans but couldn't do so on a per patient basis (i.e. similar to Medicare)
- Only include medication and treatments that are out of patent protection
- Only include medication that has at least N providers (was going to put three but may not exist for all generics)
Anything else would be purely out of pocket and not covered by the plan. Fyi, that last one means that if we started today, you'd have access to everything up to approximately 1997. I'm not a doctor and honestly don't know much about the medical field, but I'm pretty sure that pre-1997 medications should cover the vast majority of healthcare use cases.
I'd also propose a ban on drug marketing, which would reduce about half the costs.[1]
I don't think that excluding monopoly drugs will work. First, the industry has made significant progress in the past two decades, so for most major diseases, the leading treatment was patented within the last 20 years. Second, drug companies have little incentive to make direct competitors, and R&D effort is better allocated in areas with unmet medical need. Third, unpatented cures are already cheap, so by market size, almost all drugs are monopolies.
Over a third of the $333B pharmaceutical market[2] can be attributed to:
- Antibody drugs, $100B revenue and growing, almost all after 1997. E.g. Herceptin for HER2+ breast cancer, Humira for arthritis, Avastin for many cancers.[3,4]
- The cure for Hepatitis C is patented until 2028, and currently has $20B revenue.[5,6]
Disclaimer: I've worked in the industry.
[1] http://blogs.sciencemag.org/pipeline/archives/2013/05/23/ano...
[2] http://trade.gov/topmarkets/pdf/Pharmaceuticals_Executive_Su...
[3] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4622599/
[4] http://www.prnewswire.com/news-releases/antibodies-market-no...
[5] http://www.pharmacompass.com/patent-expiry-expiration/sofosb...
[6] http://www.pharmacompass.com/radio-compass-blog/top-drugs-by...
The HepC treatment, while remarkably effective, would bankrupt most healthcare programs if they were forced to pay the retail price.
And if you take your idea to the extreme, then every person should have access to every type of medical care regardless of the value offered?
https://www.channel4.com/news/drugs-life-breast-cancer-nice-...
https://www.nice.org.uk/news/article/kadcyla-too-expensive-f...
NICE (National Institute for Health and Care Excellence) sets the guidance on the QALY (Quality Adjusted Life Year) at between 20000-50000GBP for a year's worth of a single drug treatment.
Of the drugs that they approve for coverage the annual regimen has to be under a threshold of 50000GBP or it may not be covered by the NHS.
But that 20000-50000GBP is per drug per person, someone could be on multiple drugs and treatments simultaneously for much more than that and they'll be covered.
"the U.S. Office of Management and Budget puts the value of a human life in the range of $7 million to $9 million" [1]
[1] https://www.theglobalist.com/the-cost-of-a-human-life-statis...
One data point from my experience:
- developer time to prepare, document a build, release notes
- build engineer to submit, check build, co-ordinate
- build machine hardware
- build machine OS license
- cryptographic signing hardware
- QA engineer time to test
- QA automation engineer's time to set up tests and maintain them
- QA test suite of machines for compatibility matrix
- technical writer for documentation
- distribution infrastructure / CDN
- support calls for new version
Another data point from my experience:
- about 2 minutes of developer time
- gratis open source build infrastructure
Its really not like they arrive one morning to the office, mix a few chemicals in a test tube, file a patent and then start selling them.
it's not- it doesn't matter- they're all the costs of getting a product to market and sustaining it.