Comment by travisp | Hacker News Reader

Comment by travisp | Hacker News Reader

Parent Full thread

It's great that there are some new antibiotics, but I don't get this claim that "big pharma" won't develop new cures and only manages chronic conditions.

First, it's factually false. There are now multiple Hepatitis C cures for a formerly chronic (and eventually fatal) disease, let alone all the other chronic conditions that pharmaceutical companies have cured or diminished. And "big pharma" companies have gotten to the same stage as these teams with antibiotics.

Second, it doesn't even make sense unless you treat "big pharma" as a single monolithic entity. In reality, it's many many companies, including startup pharmaceutical companies, all competing against each other. I don't think of bacterial infections generally as chronic conditions in the first place, but if one company makes money on a drug that manages some chronic bacterial infection, there's no reason that another company would be worried about taking away profits from the first company.

Also, the government immediately put price controls on the Hepatitis C cure even though it was already going to be offered at a cost that was way below the lifetime treatment cost of the previous standard of care. This was predictable, of course, but it's weird to blame the pharma companies.

I can easily afford $4000 per month on a mortgage for 30 years. I cannot afford a one-time cash payment of $1M to buy the same house, even though it's "way" less than the lifetime cost of the mortgage.

Essentially no individuals are paying this, regardless. The price controls I am talking about are for medicaid (to which many non-Medicaid prices are indexed).

The argument is that antibiotics are not going to be a attractive target for any pharma, big or small. If you develop a new antibiotic that kills resistant bacteria effectively, it's going to be an antibiotic of last resort, heavily regulated and rarely used. Less profitable. Without government interventions to incentivize development of new antibiotics, I don't believe we'll see pharma take on the challenge alone.

Meanwhile, we've seen that Hep C cures can be (extremely) profitable. See also Luxterna (gene therapy for inherited blindness).

“Big Pharma” specifically refers to a tiny number of huge companies that spend vast sums of money on marketing and buying tiny drug companies and almost nothing on groundbreaking research.

That’s not to say they do nothing of value. A giant companies they are naturally risk averse and aim to maximize shareholder value. Which means their focus is simply on low hanging fruit with still pays dividends.

Developing Cialis and Levitra for example after Viagra was relatively low risk and simply good business. Similarly we have a silly number of drugs that are almost but not quite Morphine. Having options has real value and expanding the range of treatments for common issues improves people’s lives.

For every new drug that starts in academia, a pharma has optimized that molecule / biological to maximize efficacy and reduce toxicity, always incurring major expense to do so, 90% of the time ending in failure.

Like most 'successes', new drugs arise due much more to grunt perspiration (and regulation) at a pharma, than due to inspiration by a genius inventor — despite what industry outsiders may want to believe.

That optimization generally starts in tiny biotech companies not the industry behemoths. What they lack is less research prowess than the ability to efficiently market to doctors. Thus the win/win of the big guy’s constantly buying up other companies.

Granted, the equilibrium is generally for small companies to try and sell early when some risk still exists.

almost nothing on groundbreaking research

You do realize that Pharma companies have the highest R&D spend of almost all industries? And nearly 80% of new molecular entities (breakthroughs) come from biotech/Pharma?[1]

Just the top ones have total R&D spend of almost $40B.

And no, that doesn’t include marketing costs. That’s separate.

Saying that big Pharma doesn’t contribute to new drugs is completely false.

[1]https://blogs.sciencemag.org/pipeline/archives/2010/11/04/wh...

The Development part of R&D has little to nothing to do with research. Thus you can’t equate R&D spending to Research spending. Companies have gone so far as including what is best described as marketing expenses as R&D.

Further, I excluded most companies from the definition, you need to defend them not the industry.

Say startup company develops drug A that will compete with big pharma drug B which is making billions a year, and envisions it to make 7 billion in the next 5 years. An internal analysis from big pharma calculate drug A could wipe out half of that =2.5 billion. Big pharma buys out the startup for a billion, close them down indefinitely. Couldn’t that happen?

Getting a drug to market is horrifically risky all the way up through approval (and still somewhat risky post approval). ~1/1000 compounds get to market and ~1/100 drugs make it from Phase 1 (first in human/safety) to sale. By the time the odds are decent that a drug will get approved, the sponsoring company will have sunk much of the ~$1 billion it takes to get all the way across the line.

At that point the valuation of said startup is going to be approaching the expected life time value of the drug (less a discount for risk of a late failure and the time value of money). Any acquirer might as well finishing getting the drug and its new patent protection the rest of the way to market.

Drugs only get about 10 years of market time on patent, because drug candidates are patented before they go through clinical development. So this hypothetical drug company might patent the acquisition and start putting it through clinical trials to have something on deck when the original one goes generic

Seems like Big Pharma would make more money selling the superior startup drug they now owned.

That startup won't have the couple hundred millions needed to get the compound through clinical in the first place. So, what they do is they team up with "Big Pharma" (I hate that dog whistle) and get royalties.

For the pharma corp. it makes sense as the new antibiotic will also take market share from the competition, so they have a net gain. If they project to lose 2.5bn on their existing drug, spend 1bn for purchasing the startup and make 7bn on the new drug, why on earth would they buy the startup to shut it down?

Reply on news.ycombinator.com