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Comment by ggm | Hacker News Reader

And people say that public ownership is "less efficient" than private industry, and less efficient than regulated private industry.

Well.. I don't buy it. Access to drugs and efficient pricing and rationing (because that is what it is) is not working well. It's a massively distorted market.

The public good here would be better served by another model.

Even the "we need these prices to recover our massive sunk costs" part of the argument is bogus. Much good drug design and research is done on the tertiary education and research budget worldwide.

There is absolutely no single-process need to do drug IPR based models, the profit motive is not the only model.

I look to the modern mRNA drug emergence to lead to radical shake up in the cost of production of novel treatments. We're seeing some signs of this, along with other changes in drug models: injectable hypertension treatment is in test. Imagine the impact on the cost basis of a pill-per-day model!

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> We're seeing some signs of this, along with other changes in drug models: injectable hypertension treatment is in test. Imagine the impact on the cost basis of a pill-per-day model!

Tablets are generally dirt cheap to produce. Sterile injectables adds a lot of variables and requirements, both in production and sometimes also in distribution (cold chain?) and administration (directly and sometimes requiring reconstitution).

Maybe if you have an API that’s expensive to produce and has poor bioavailability an injectable might be cheaper.

A long acting injectable antihypertensive will have a place for some, but creates other issues: can’t stop it quickly and hypertension often requires multiple agents to treat.

I wish poly-pills took off :(

honestly what looks to be more promising is the twice a year HIV shot. Truvada and Descovy are not cheap.

in the United States, at least, (and until very, very recently, I believe), PrEP is required to be covered under healthcare; and, services like good rx make Truvada specifically very accessible in price, even free.

In the United States, please look into these services and what your insurance provider does cover because, at least for now, it should be *very* affordable. (between free w/insurance to $30/mo with GoodRX).

I do think that price is higher than I saw the last time I looked it up, but I don't have that search on hand to confirm.

I think the point you’re missing is that many parts of pricing are government regulations.

And the way that the myriad of regulations drive some of this behavior.

A great example is the 340B program. A government regulation requiring manufacturers to offer steep discounts to hospitals.

It’s created all sorts of distortions including the purchasing of pharmacies by hospitals so they can access the discount but charge the full price for the insured.

The US healthcare system is terrible in big part because of regulations.

340B legislation is one of the clearest examples of corruption. I cannot believe anyone can be so stupid, much less two branches of government, to pass something that does nothing but allow for corruption.

Goal: provide poorer people with more access to healthcare and medicine

Step 1: require medicine manufacturers to sell medicines at low cost to medicine retailers if they want the government to buy the medicines via Medicare/Medicaid

Step 2: there is no step 2. There is no requirement for medicine retailers to sell the medicine to end users at low cost.

Result: Medicine retailers arbitrage this by obtaining medicine for cheap and selling it to high prices to insurance, paid for by premium payers. Meaning people with health insurance paying extra so that medicine retailers can earn money…to do nothing.

Great summary.

It’s the perfect example of good intentions and regulations that actually make the system worse, not better.

It’s driven a bunch of community oncologists out of business because they can’t compete with 340B hospitals who can get drug much, much cheaper.

But do patients see any of the savings? No.

Is there a successful healthcare system you'd point to that was achieved via deregulation?

I'm not sure OP was implying any claim that removing regulation would lead to a great healthcare system, just that the US regulations are bad and causing many of the system's problems.

In better-run nations, the healthcare systems are highly regulated, but the regulation is actually (mostly) intelligent and implemented to have a positive effect. For some reason, when the US tries to do regulation, it somehow manages to do a uniquely bad job at it, causing a negative effect.

Maybe it depends who you want to benefit with your regulation - the patient or the provider? Because I'd argue providers seem to make good money within the US regulation.

I'm not so sure about that actually. I think the real winner in the US system is the insurance companies.

Regulations is just a scary word for rules.

There's always rules.

The trick is to fashion a ruleset (game, marketplace) that maximizes for public good (long term).

> The US healthcare system is terrible in big part because of regulations.

The US regulatory landscape is crippled by lobbying and fear of "socialism" -This is completely fixable by a competent regulator.

True. Alas, SCOTUS just overturned The Chevron Doctrine. (Along with their other attacks on the administrative state.) Hard to predict the aftermath.

and that imo is a good thing.

A recent example is the ATF's expansion of the NFA by redefining a dealer from "Someone who makes selling firearms their primary income" to "Makes a profit on a sale"

They effectively made everyone who ever sells a gun privately a felon.

And the ATF is headed by a guy who has zero firearm experience and couldn't even separate the slide off a glock.

Its a perfect example of a bad faith action and we only barely blocked its enforcement. Agencies with chevron were able to railroad whatever politicians wanted with zero accountability.

Since the Bipartisan Safer Communities Act necessitated this rule change, shouldn't you be mad at Congress?

Further (emphasis mine):

"Despite that concern, there have been at least a few overreactions to this rule online, with some commentators making dire proclamations about the criminalization of all private gun sales coming from this rule. That is not exactly what this rule does. Many of these changes apply to administrative and civil actions by ATF, rather than criminal actions. Being sued by the ATF and facing civil or administrative fines would not be pleasant, but it would be less terrible than being in federal prison."

New ATF "Engaged In The Business" Rule (Kinda) Blocked By Judge

https://www.thefirearmblog.com/blog/2024/05/22/new-atf-engag...

I don't have a dog in this fight, so I had no idea what you're upset about. This article was the third hit in my noob search. Apparently you oppose informing the state (CLEO) about private transactions.

Okay.

There are ~430m guns owned privately in the USA. With ~15.5m/year sold (new and used). The updated rule covers, what, ~30,000/year transactions, less than 0.2%.

That's what this whole fight is about? Really? A decades long slap fight over 0.2% of sales?

I'm struggling to think of a hill that I'd personally die on (rhetorically) where the stakes were less than a round-off error.

This is understatement. Inefficiency is certainly a factor in the performance of the amalgamated U.S. health care system. But the fact that it is essentially a multi-tier private system, additional avenues for abuse and corruption are widespread -- particularly when compared against the health care systems of other industrialized countries. The system honestly is only good for the wealthy -- who enjoy 1% preferred treatment, exploit the structure of the system for financial gain, and solidify its presence through aggressive lobbying.

"Efficient" in a corporate context simply means "efficient at making money for shareholders."

It does not automatically mean "better able to serve customers."

And often it means the opposite.

1. Development of a single new drug costs several billion.[0] There are outliers which cost less, but billions is a decent estimate on average.

2. There is continuing need for new drugs: in 2023, FDA approved 55 new drugs [1] not including new indications for existing drugs (which also cost money to achieve).

3. It therefore follows that (in the current regulatory environment) just maintaining the current level of development and approval of new drugs would probably cost over 100 billion per year (possibly not including manufacturing and supply).

4. Drug development is therefore hellaciously expensive, while being high risk (i.e. high risk of failure) and a long-term endeavor.

5. In our current world, the model that has evolved is that this money is raised from investors, entrusted to experts, and if everything goes well, capital plus profit are recouped via drug prices. Payors swap huge up-front costs with an uncertain outcome, for later huge costs with a known outcome.

6. Replacing this model would therefore likely take global collaboration between governments, funding expensive high-risk long-term projects, with the end-goal of (much) cheaper drugs - an end-goal that would likely take a decade to meaningfully realise (importantly, much more than a single electoral term). It would be politically momentous, as it would effectively destroy a significant and established sector of the economy.

7. As much as I like this concept, I simply don't see any evidence that we're even close to ready for such a model of global collaboration and funding. Even when the challenge was urgent and potentially existential (e.g. a global pandemic) the response was often the opposite of collaborative.

8. Interestingly, though, it wouldn't even be very expensive on a world scale. The GDP of (just) the top 20 nations is roughly 88 trillion.[2] 100 billion is barely over 0.1% of that. If you shared the cost by GDP amongst the top 20, US and China would pay a lot, but involved European nations would pay in the region of 2-5 Bn/year.

9. This obviously doesn't deal with the issue of ongoing costs for already-approved drugs...

===

[0] https://www.forbes.com/sites/matthewherper/2017/10/16/the-co... [1] https://www.fda.gov/drugs/novel-drug-approvals-fda/novel-dru... [2] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...

> Drug development is therefore hellaciously expensive,

And yet, drug companies still have outrageous profit margin.

“Profit margin” doesn’t subtract the initial development costs, just current costs. So drug profit margins should be large to repay the billions previously spent in development.

The term is insufficiently specified; there is "Gross Profit Margin" which considers only COGS, so works roughly as you suggest.

There is also "Operating Profit Margin," which would include current R&D costs, which (assuming they are non-declining over time) would account for development costs.

If the company took on debt to develop the drugs, then "Net Profit Margin" would also include the cost of servicing that debt.

Hmm, if for the sake of argument we assume that spend on R&D is kept constant, then profit margin (being money left over after spending on stuff) does indeed account for development costs.

In reality (I think this is your point) there's a big time shift, in that profit earned in 2024 is thanks to R&D spend over the past decade or so. However, the 2024 profit margin would incorporate the 2024 R&D spend contributing towards new drugs and indications over the next decade or so, and with a with a constant R&D spend these would effectively cancel out.

(In reality, of course, R&D budgets do fluctuate.)

Not really, their margins typically wind up comparably with other manufacturing. They just have way way higher costs. Modern drugs are expensive, for a ton of reasons.

See this talk about pharmaceutical finances: https://www.youtube.com/watch?v=3LGqQJFdoWM

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