The dangers of price controls

[foxcreek9]

From WSJ

In April the FDA approved Padcev along with Merck’s immunotherapy blockbuster Keytruda as a first-line bladder cancer treatment after a trial showed the combination shrank or eliminated tumors in 68% of patients. New trial results reported last week showed the combination cut mortality by half. The first-line designation will greatly expand the population of patients who benefit from Padcev.


Seagen also planned to study whether Padcev could help patients with an earlier-stage nonmuscle-invasive version of the disease, which makes up 75% of newly diagnosed bladder cancer cases. But Mr. Epstein said at last week’s Prix Galien USA conference that Seagen “killed the program” because the return on investment wouldn’t be worth it.


That’s because Padcev will become eligible for the law’s price controls in 2030, shortly after a new indication might eventually be approved. “Why should we do it?” Mr. Epstein asked. Approval “would come so late in the life cycle that there will be no economic return from doing it.”

The IRA makes medicines eligible for Medicare price controls seven years (for small molecule drugs) and 11 years (for biologics) after approval. This shifts the cost-benefit analysis for studying new potential indications for existing treatments. Why spend hundreds of millions of dollars and several years conducting trials that won’t yield a return on investment?

 

[Fermion]

I have pretty much stopped investing in pharma after realizing how little protection there is for the IP.

 

[razztazz]

It's not price controls, it's the attitude and business position of those controlling the process that's killing it.

 

[Exchme]

Very hard to comment without venturing into politics, so I will simply say that this is perfectly predictable.

 

[anethum]

Somehow the rest of the developed world is able to control drug prices without drug companies crying about it. By not doing the same in the US, American taxpayers and consumers are essentially subsidizing the rest of the developed world. Drug companies will need to stop relying on the American public to contribute disproportionately to their profit margins.

 

[foxcreek9]

Somehow the rest of the developed world is able to control drug prices without drug companies crying about it. By not doing the same in the US, American taxpayers and consumers are essentially subsidizing the rest of the developed world. Drug companies will need to stop relying on the American public to contribute disproportionately to their profit margins.

Yes and no. Yes, the US has been subsidizing many drugs but many of the newer drugs are not available in Europe, at least for a period of time. So other countries just do without many new life saving options.

This is all fine, until you need it.

https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2795755

 

[Fermion]

Somehow the rest of the developed world is able to control drug prices without drug companies crying about it. By not doing the same in the US, American taxpayers and consumers are essentially subsidizing the rest of the developed world. Drug companies will need to stop relying on the American public to contribute disproportionately to their profit margins.

Well, there is a reason for that.

"the US leads in the discovery of approved drugs, by a wide margin (118 out of the 252 drugs). Then Japan, the UK and Germany are about equal, in the low 20s each. Switzerland is in next at 13, France at 12, and then the rest of Europe put together adds up to 29. Canada and Australia put together add up to nearly 7, and the entire rest of the world (including China and India) is about 6.5, with most of that being Israel."

https://www.science.org/content/blog-post/where-drugs-come-country

 

[OldShooter]

Ok, they won't do that drug. They will do some other drug. That's what they do. This may lead to the greatest good for the greatest number.

 

[Fermion]

Ok, they won't do that drug. They will do some other drug. That's what they do. This may lead to the greatest good for the greatest number.

Which is all well and good until your child or spouse need the drug for a disease that only affects 10,000 people worldwide.

 

[foxcreek9]

Ok, they won't do that drug. They will do some other drug. That's what they do. This may lead to the greatest good for the greatest number.

So they really aren't developing new drugs, with new capabilities, just repackaging for profit?

 

[OldShooter]

Which is all well and good until your child or spouse need the drug for a disease that only affects 10,000 people worldwide.

... and if pharma develops a drug for those 10,000 people then they won't be developing the drug that some different cohort of 10,000 needs.

It's a resource allocation problem.

So they really aren't developing new drugs, with new capabilities, just repackaging for profit?

There will inevitably be a mix, since the drug companies are motivated by ROI. A unique new drug that can be developed at a cost below the revenue stream it is expected to generate is probably going to be more attractive than developing a copycat generic for a market that is very competitive.

Note this is Economics 101, not politics.

 

[Sunset]

The open checkbook by Medicare is simply not sustainable.

Maybe in the old days when drug CEO's had more morals, but now there have been CEO's that just buy the rights to a drug and jack up the price by 1,000's of percent.

One such example is Martin Shkreli, the former CEO of Turing Pharmaceuticals, who raised the price of Daraprim, a drug used to treat parasitic infections, from $13.50 to $750 per pill overnight in 2015.

"Through the first three weeks of January, drugmakers raised prices on 985 products."
..... "GE Healthcare imposed the largest price increase, 26% for Omnipaque, a drug people take before undergoing imaging tests such as CT scans. "

https://www.usatoday.com/story/news/health/2023/01/30/drug-price-increases-2023/11084913002/