Epipens go from $20 to $500 in one year. DR Rand Paul absent on issue

Pharmaceutical Prices, Patents, and the FDA


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August 17, 2015Timothy D. TerrellTags HealthPricesValue and Exchange
In this article by economist Jeffrey Sachs, pharmaceutical company Gilead is taken to task for selling its hepatitis C cure, Sofosbuvir (sold as Sovaldi), at a price of $84,000 per course of treatment. Sachs says that the actual production cost of Sofosbuvir is about $100.
Sachs says that Gilead is "bilking the taxpayer" by charging the government prices far above production costs — and government is probably paying for most of the Sofosbuvir drugs. Sachs further complains that people will die because of Gilead's refusal to cut the price to something more affordable.
Gilead, Sachs says, bought the patent rights to Sofosbuvir for $11 billion in 2011, and took the drug through the last stages of FDA approval, which came at the end of 2013. Gilead made $12.4 billion in 2014 from Sofosbuvir, and Sachs says that first quarter 2015 sales of the drug brought in revenues of $4.6 billion.
Sachs quite rightly points out that patents are relevant to the issue. But he says that patents are "an important tool to incentivize R&D" which have been "abused" by Gilead, and argues that "life and death" patent holders should be subject to price controls by the federal government. He goes on to say that patients who are "denied access" (i.e., can't afford the drug) should sue Gilead for reckless endangerment. And finally, Sachs suggests "public outrage and activism."
In an August 6 tweet replying to me and to a physician who had briefly engaged him on this issue, Sachs said, "No way to regard the current arrangements even crudely efficient or equitable. Killing people senselessly."
Sachs is being somewhat disingenuous in representing the production cost of Sofosbuvir as $100, and the markup as 800 times costs (as he did in an August 7 tweet). There are substantial fixed costs involved in R&D, trials and FDA approval, and the like. Any company incurring those costs expects to recover them by charging an above-marginal cost, and if trade secrets or other features of the market allow them to do so, they will. Sachs’s markup complaint applied elsewhere doesn't make sense — authors of mass market paperback novels (and maybe Sachs himself, the author of several popular books) would also have to be regarded as terrible price gougers because the marginal cost of printing a paperback book is a few cents, while the retail price is $6 to $10. Of course, writing the manuscript is an extremely costly part of the production process. Once that is done, reproduction can be relatively cheap. This is true of a great number of goods and services for which there is a high up-front cost.
Problems with Patents

There are clearly some problems stemming from the intellectual property rules here. The government will prosecute any firm that competes with Gilead in the production of the particular chemical formula Gilead has acquired. Sachs is right, then, that IP is relevant here. But rather than see IP as part of the problem, he defends patents as basically beneficial and proposes using them as a way for a government to beat a company's prices down. In contrast to the widespread notion of most of the public and most policy commentators, it is not at all clear that patents are essential to drug innovation. Even where new drugs could be reverse-engineered and copied, innovation could still be rewarded in a world without patent laws. See, for example, this article by Nathan Nicolaisen. First-mover advantages may be important, as could the inevitable delays in ramping up generic drug production. Nicolaisen mentions a survey of R&D labs and company managers that indicated that they believed trade secrets to be more effective than patents in getting a return on an investment. For a more extensive treatment of a free-market view of IP, see Jacob Huebert's article here, and for an application to a similar issue involving a life-saving drug, see this article by Stephan Kinsella.
The FDA’s Role in Denying Access to Health Care

Sachs — at least in this article — ignores the role of the FDA in causing death and suffering by keeping drugs off the market. When Gilead bought the patent to Sofosbuvir, it was running the risk that the drug would not be approved, or that approval would be delayed so long that the opportunity cost of its initial $11 billion investment would become quite large. Uncertain but potentially large profits after approval may be quite reasonable, given the risk Gilead took on. The FDA itself injects a politicized uncertainty into the drug research, production, and marketing process, and therefore drives up costs.
These costs can appear as death and suffering as well as dollars. The American public tends to think of the FDA as a protector against dangerous side effects, as we saw with Thalidomide decades ago. But how many Americans have died because of lags in approval? A five-year delay in bringing the antibiotic Septra to the US market may have cost 80,000 lives. A lag in the approval of beta blockers may have cost 250,000 lives.1 The FDA's ban on advertising aspirin as an effective preventer of first heart attacks may have caused the deaths of tens of thousands of Americans every year. But because it's easy to identify those harmed by side effects, and difficult to identify who might have been saved by earlier introduction of Septra to the marketplace, the FDA tends to be over-conservative in its regulatory process.
Some Regulation Begets More Regulation

But one of the most interesting features of Sachs's diatribe against Gilead is how well it tracks with Ludwig von Mises's explanation of the natural progression of socialism. In "Middle of the Road Policy Leads to Socialism," Mises points out that a government facing milk shortages from its price controls on milk may add to its initial intervention a second intervention controlling the prices of the factors of production used in milk production, and then — if the government still refuses to acknowledge the fundamental problems of intervention —a third intervention controlling the prices of still other resources. The price system shrinks and is gradually replaced with central planning.
Sachs sees problems with the prices of Gilead's new drug. And I do too — I don't think for a minute that the free-market price of Sofosbuvir would be $84,000 per course.


But rather than attack the State's patent laws directly,



as well as the costly FDA regulatory process and other interventions, Sachs wants price controls on life-saving drugs. This is a well-traveled path toward socialism, and it does not end well.



https://mises.org/library/pharmaceutical-prices-patents-and-fda
 
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To the extent that generics created by reverse-engineering would be produced, this would create an incentive for innovators to continue innovating and at a rapid pace, rather than resting on their laurels.

Actually it would be an incentive for them NOT to innovate. Also, they would have to have aggressive secrecy precautions. All employees would be sworn to absolute secrecy, all scientific research or product development information would be kept under strict lock and key. They would have to build up a huge inventory, pounce on the market, and then quickly move on to something else. They couldn't charge a very high price, because if they did, everyone would just wait a week or two until their competitor came out with the copy cat

Patents originally were put in place to provide for the open sharing of information. Which was thought to be conducive to innovation.
 
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The insurance industry is the 800lb gorilla that is being ignored. Once people are insulated from the price, prices will go up. It's the common denominator.

And think about that phenomenon for a minute. Is there more to it than just not being aware of price? Is it human nature to not question price when something appears to be given for free? Never look a gift horse in the mouth. Is that more than just a quaint saying?
 

Here's an exciting thread on that subject that broke right here on this forum a couple of years ago! ;)

Let's not forget the salient point that the key drug was developed by a small company named Pharmasset. Gilead acquired the company and did not put anything into the R&D for this drug.

And we have the classic Zippy commentary included in this following thread...

Cure for Hep-C suppressed by big pharma
 
I'm pretty sure Ron Paul would laugh at your anti-patent stance

Now that his political ambitions are over... I highly doubt that. Ron might supported limited patent protection for the first year or two for the actual inventor of a product on constitutional grounds.

The main hindrance to American technological innovation is a patent system that rewards people for sitting on ideas and punishes those who create new products. - 2005 Ron Paul Campaign
http://interviews.slashdot.org/stor...ul-Campaign-Answers-Slashdot-Reader-Questions


Jacking the price of the 50 year old epipen and selling them to obamacare?

LOL

members of the Austrian School offer a fairly homogeneous vision:

the vast majority of Austrians reject the idea

that non-scarce goods can be considered property,


and most authors who approach the issue from a consequentialist position are skeptical that intellectual property laws should be retained. Although scholars disagree about the ideal solution to the problems resulting from patent and copyright laws, the results of their empirical studies are similar: a system free of intellectual property would rather lead to different innovations and creations rather than fewer of them.

If the entire Austrian perspective had to be expressed in one sentence, one should not look further than this quote from

Friedrich Hayek’s book, The Fatal Conceit:
…it is not obvious that such forced scarcity is the most effective way to stimulate the human creative process.
http://thelibertarianliquidationist.com/2014/10/12/intellectual-property-and-the-austrian-school/

I think you should read more austrian economics.

Rothbard “[patents are] incompatible with the free market”
http://www.libertarianism.org/colum...lectual-property-rothbard-tucker-spooner-rand

If you take my car, I no longer have it.
But if you “take” a book-pattern and use it to make your
own physical book, I still have my own copy. The same
holds true for inventions and, indeed, for any “pattern”
https://mises.org/library/against-intellectual-property-0




Yeah screw innovation!


=


the stone age ended because we ran out of stones
 
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So basically you are ignoring all of the studies that refute the $50-$186 million number and taking the unsubstantiated estimate of an ultra-left wing group.

Not to mention as I am looking at the articles about this, only 1 in 12 drugs makes it through the FDA approval process.
 
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pretty fucking simple in my eye


FUCK PATENTS


there is absolutely no place for government granted monopolies in a free nation.

this is an original power of article 1, section 8.. im okay with it...
 
this is an original power of article 1, section 8.. im okay with it...

there are three key words in that section relating to patent protection:

"a limited time"

Epipens have been around for over 50 years now, explain to me please how this helps the original developer recover long since recovered R&D expenses?
 
says he who just ignored my Stephan Kinsella link


You are right. I didn't even read it. Though I have watched his talks and seen him interviewed on Stossel.

Okay. So I just opened up your link. It doesn't give a number for the cost to get drugs through FDA approval. It doesn't mention the word drugs once. And it is 70 pages. I don't know what I am supposed to be looking at.
 
Patents have absolutely nothing to do with anything I posted.

However if 55%+ of your R&D cost is borne by tax payers, do you still get to set any price you want?

Maybe if Kruminators 'billions' were actually private money there might be an argument, if it was also in a free market. But its not private money, and its not a free market. Its just abuse.
 
What I want Rand to have a fillibuster over is shit like this.

Retail cost of epinephrine to emergency departments is sub $5. You as a peasant are not allowed to purchase it and a syringe though. You get to buy an Epipen for $500. Or die.

This is stuff that could be making headlines. Instead all anyone can talk about is Trump being a clown, and his campaign not lasting that long.
 
If you really need epi, you could probably pay some street guy $5 to creep up and scare the shit out of you.
 
Epipens are just epinephrine in a fancy self administering package. Epinephrine is generic and quite reasonable. The high price comes from the delivery system that allows for quick and simple administration. While I agree that it's a rip-off, what can one do about it? We always have multiple Epipens here because my wife is so afraid of allergic reactions even though no one in our family has ever had one. I suppose if we ever actually NEED one of these things we will be glad we paid whatever the price was to save our lives. The other "scam" about these things is the expiration date. They give you about a year (I think) and then you have to buy a replacement. While I cannot advise anyone what to do with an "expired" Epipen I would not even have a second thought about using one if needed. Do we really get so easily fooled by a "magic date" printed on the outside of a drug? For the most part it's there to guarantee that the drug company will have many repeat sales at exaggerated prices. I'm not throwing away my $200 2-year-old epipens...
 
The assumption being made is that, in the absence of patents, innovation will not occur. This is wrong -- businesses will still try to take advantage of profit opportunities, and the most successful variety of that product will determine the success of every business producing that product. If a certain company is the best at making something, and by doing so is able to sustain profits, then why wouldn't they be incentivized to keep producing that thing?
 
Is this Ron Paul Forums where we support LIBERTY and FREE MARKETS?
Of is this a closet socialist site where only the nanny state can save us from our competitors?

I honestly can't believe I'm reading this shit here.


Have you not been around recently or have you missed all the Trump and Bernie supporters? And I'm not even getting involved in the patent debate because I can certainly see both sides of the issues. I'd say I'd lean towards anti-patent but I wouldn't be opposed to a short-term patent on certain things, not sure if medicine would be one of them unless I was presented a compelling enough reason.
 
The assumption being made is that, in the absence of patents, innovation will not occur. This is wrong -- businesses will still try to take advantage of profit opportunities, and the most successful variety of that product will determine the success of every business producing that product. If a certain company is the best at making something, and by doing so is able to sustain profits, then why wouldn't they be incentivized to keep producing that thing?

What would you say if one business (Business A) is great at innovation but not very good at production and another (Business B) is great at production but not as great at innovation. What would be the incentive for Business A to continue innovating (the thing they're great at) instead of looking into ways to improve production at the cost of innovation? Should there be an incentive for innovating?
 
What would you say if one business (Business A) is great at innovation but not very good at production and another (Business B) is great at production but not as great at innovation. What would be the incentive for Business A to continue innovating (the thing they're great at) instead of looking into ways to improve production at the cost of innovation? Should there be an incentive for innovating?

Innovation is part of production, by way of entrepreneurship. Producers supply things people want, and in the process are challenged by competitors to find different ways to create more value for their customers. In order to create more value for their customer, they have to differentiate their products from their competitors. They have to be giving them something no one else is; whether or not it's an entirely different good or just a better version of a similar good. Problems people have create an opportunity to solve them and, in return, make a profit. These events are known as profit opportunities. Entrepreneurs are economic agents that provide the function of satisfying needs and wants that hadn't yet been addressed by the market.

The perpetual process of finding new ways of solving problems is fueled by the ability to profit off of these unsolved problems.
 
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YAY, probably raise mandatory insurance premiums another 100 a month, and then that will translate into an increase in GDP, which will translate into keeping the stock market going!!!!!!!!!!!!!! GENIUS......
 
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