Page 3 of 3 [ 38 posts ]  Go to page Previous  1, 2, 3

Antrax
Veteran
Veteran

User avatar

Joined: 23 Feb 2019
Gender: Male
Posts: 1,396
Location: Midwest

25 Jul 2019, 10:37 pm

The_Walrus wrote:
Not sure that this is a strong argument. For one thing it seems somewhat circular - healthcare spending is high because the US funds a lot of research, and the US funds a lot of research because healthcare spending is high. It also doesn't really add up - healthcare products are sold globally, so they needn't be developed in their primary market. For example, China is the world's largest economy, but a small economy like Switzerland attracts more top biomedical R&D by your measure.


It's an observation of the paradigm, rather than an argument for its continuance. Understanding why the system is in the state it is in. I'll try to explain more clearly my observations.

1. A certain amount of biomedical advancement is performed by large biomedical companies. Like all companies these companies need to make a profit and are doing so at a rate comparable to other successful companies in other industries.

2. A large percentage of these companies revenues comes from the U.S. which not only is a large economy, but is also paying relatively more for the products of these companies.

3. While overall cost is high, due to economies of scale marginal cost is significantly lower, and since the U.S. health system is footing the bill for a large percentage of these costs, these companies can charge significantly less in other countries while still maintaining healthy profit margins.

Conclusion: Lowering U.S. prices to match the rest of the world is not possible without one of two things happening. Prices are raised elsewhere, scaled cost such as R&D are decreased and biomedical advancement slows.

Now perhaps saying that the companies are in the U.S. due to this phenomenon was a stretch, although it makes sense if a business is more lucrative in a certain market that more business will be drawn to that area.


_________________
"Ignorance may be bliss, but knowledge is power."


auntblabby
Veteran
Veteran

User avatar

Joined: 12 Feb 2010
Gender: Male
Posts: 90,507
Location: the island of defective toy santas

25 Jul 2019, 10:47 pm

we need to stop subsidizing the rest of the world then, even if those big corps get into a snit and say "ok, no more medical advances for YOU!" this business of punishing americans so that other nations can have more affordable meds is for the birds. besides, the dirty little secret is that uncle sam underwrites much medical research in this country at least. the big pharma just monetizes it for their own benefit.



Antrax
Veteran
Veteran

User avatar

Joined: 23 Feb 2019
Gender: Male
Posts: 1,396
Location: Midwest

25 Jul 2019, 11:01 pm

auntblabby wrote:
we need to stop subsidizing the rest of the world then, even if those big corps get into a snit and say "ok, no more medical advances for YOU!" this business of punishing americans so that other nations can have more affordable meds is for the birds. besides, the dirty little secret is that uncle sam underwrites much medical research in this country at least. the big pharma just monetizes it for their own benefit.


I haven't made any recommendations yet as I've only written 2 parts of my musings. Just defining the problem. The value judgments will come into play.

I wouldn't write off the part the companies do in bringing advances to the masses. Even if a company is just figuring out how to mass produce a drug that was developed in a publicly funded lab that is a vital and challenging part of development. Scale-up is not trivial, especially when you have to meet 6 sigma purity standards.


_________________
"Ignorance may be bliss, but knowledge is power."


Antrax
Veteran
Veteran

User avatar

Joined: 23 Feb 2019
Gender: Male
Posts: 1,396
Location: Midwest

25 Jul 2019, 11:42 pm

Part 3: The Libertarian's Lament. Should the FDA be Abolished?

Parts 1 and 2 can be found on page 1 of this thread.

Anyone who knows my posting history on Wrong Planet knows that I'm a big believer in the optimization capabilities of free markets and the profit motivation. I belief most aspects of life are best regulated by freedom. However, I don't believe in universal application of principles. Almost any universal rule is an oversimplification, and "The free market is always right" is an oversimplification that many of my fellow libertarians take too far. If there's an area of life where I seriously doubt the free market, this is it.

Many libertarians will argue for the abolition of the FDA. The arguments in favor are that by providing a costly and time-consuming approval process to verify the efficacy of a treatment and that it does not do harm, the FDA delays life-saving treatments from reaching the general public and disincentives work towards such treatments. The argument against is that, without the FDA useless or harmful substances will be falsely advertised as cures, or perhaps worse legitimate treatments with harmful side effects will be sold before their harmful effects are known. The historical example of this is the Thalidomide catastrophe in which millions of children were born with birth defects due to an unknown harmful effect of a legitimately effective morning sickness treatment.

Both arguments have merit and it's honestly impossible to say which side is correct. My hunch says that a completely unregulated medical treatment market is a bad idea. That snake oils salesmen will prevail over legitimate treatments as medical problems create a desperation that clouds the rational actions that free markets rely on. That said I have to wonder if we've swung to far in the other direction.

Source: https://www.sciencedirect.com/science/a ... 2X1600036X

The average approval time for an FDA drug application is an astonishing 12 years. For a life-saving treatment that's 12 years that people die without receiving it. The estimated cost of concept to market is 1 billion dollars. This is a steep activation barrier and contributes greatly to the inordinate cost of healthcare. It's also why patented new treatments are virtual monopolies. When costs are high, and people can't afford treatments, people die.

In part 2 I covered the importance of value judgments. Do we want a system in which new medical advancements are rigorously and expensively tested before they reach the people? Or do we want a system in which access is greater, but safety a little less certain? If we relax regulations, people will die. If we don't relax regulations, people will die. Which is better? I honestly couldn't say.

My assessment is that the regulation is probably too stringent right now, but that going to complete deregulation would be a disaster.


_________________
"Ignorance may be bliss, but knowledge is power."


auntblabby
Veteran
Veteran

User avatar

Joined: 12 Feb 2010
Gender: Male
Posts: 90,507
Location: the island of defective toy santas

25 Jul 2019, 11:49 pm

whatever the theories may be, the fact remains that the rest of the west is doing something right, and we are NOT doing something right, we in fact are not doing much of anything right.



The_Walrus
Forum Moderator
Forum Moderator

User avatar

Joined: 27 Jan 2010
Age: 24
Gender: Male
Posts: 6,533
Location: Reading, England

26 Jul 2019, 3:09 pm

Antrax wrote:
The_Walrus wrote:
Not sure that this is a strong argument. For one thing it seems somewhat circular - healthcare spending is high because the US funds a lot of research, and the US funds a lot of research because healthcare spending is high. It also doesn't really add up - healthcare products are sold globally, so they needn't be developed in their primary market. For example, China is the world's largest economy, but a small economy like Switzerland attracts more top biomedical R&D by your measure.


It's an observation of the paradigm, rather than an argument for its continuance. Understanding why the system is in the state it is in. I'll try to explain more clearly my observations.

1. A certain amount of biomedical advancement is performed by large biomedical companies. Like all companies these companies need to make a profit and are doing so at a rate comparable to other successful companies in other industries.

2. A large percentage of these companies revenues comes from the U.S. which not only is a large economy, but is also paying relatively more for the products of these companies.

3. While overall cost is high, due to economies of scale marginal cost is significantly lower, and since the U.S. health system is footing the bill for a large percentage of these costs, these companies can charge significantly less in other countries while still maintaining healthy profit margins.

Conclusion: Lowering U.S. prices to match the rest of the world is not possible without one of two things happening. Prices are raised elsewhere, scaled cost such as R&D are decreased and biomedical advancement slows.

Now perhaps saying that the companies are in the U.S. due to this phenomenon was a stretch, although it makes sense if a business is more lucrative in a certain market that more business will be drawn to that area.

All fair comments as usual.

I think one issue the US has is insufficient risk pooling. Yes, health insurance pools risk, but that risk is borne by private individuals acting as a collective. I don't think this brings down the marginal cost enough when it comes to critical healthcare, I don't think it is generous enough with coverage of somewhat obscure chronic conditions, and I think it generates a lot of waste on elective healthcare. I would like to openly acknowledge at this stage that I might be totally wrong here and I wouldn't design a policy this way.

I didn't understand Obamacare at the time, but basically at its core it was a very bureaucratic way to try and solve this issue by forcing greater risk pooling.

While I generally think markets are usually a very useful tool for producing efficient distribution of resources, I think the nature of healthcare is such that it works on a level where humans cannot properly conceptualise the risks and cost/benefit ratios and so forth, and even if we could then we wouldn't have time or inclination to do the research properly. Insurance companies can do some analysis on behalf of their customers, but are still subject to the irrationality of their customers - if people decide that they want a plan which covers essential oils and homeopathy and treating viral diseases with antibiotics then that's going to distort the market for everyone. But take out the profit margin and ask the government to put some skin in the game and suddenly actual resources get dedicated to decision making. Amongst other things, this reduces the risk of wasting money on "me too" drugs (nothing to do with the social movement) and worse, "me again" drugs. It's not perfect by any means, but it's a darn sight better than leaving it to the market.

Another issue with a purely market-based system is that it incentivises individuals to lie in order to bring down their insurance premium. This leads to inadequate resource allocation. Contrastingly, if government is providing healthcare, then individuals have no real incentive to lie - there is no benefit to receiving treatment that you do not need.

On deregulation - I think "twelve years" is an exaggeration for the most useful drugs, which can undergo accelerated approval to be rushed to market. But there are definitely improvements that can be made in this area. One big one is to not require multiple approvals for a drug - if it has been approved in a similarly stringent market, like the EU or Japan or Canada or Australia, then it should be approved in the US as well by default. (Incidentally, if the UK sets up a separate regulatory regime after Brexit then this could be the long-sought benefit of Brexit!) Certainly regulation of some sort is necessary because a totally deregulated market would give customers no way to tell a safe drug apart from a dangerous one - FDA approval is an important signal of quality. And even mild deregulation can lead to situations like thalidomide, which caused 5,000 deaths and a further 5,000 birth defects in only 4 years.

Would strongly recommend anyone with an interest in pharmaceutical regulation read Bad Pharma by Ben Goldacre.



RetroGamer87
Veteran
Veteran

User avatar

Joined: 30 Jul 2013
Age: 31
Gender: Male
Posts: 9,331
Location: Adelaide, Australia

28 Jul 2019, 8:34 am

auntblabby wrote:
we need to stop subsidizing the rest of the world then...

No you don't. Think of it as a noble sacrifice.


_________________
The days are long, but the years are short


auntblabby
Veteran
Veteran

User avatar

Joined: 12 Feb 2010
Gender: Male
Posts: 90,507
Location: the island of defective toy santas

28 Jul 2019, 8:57 am

RetroGamer87 wrote:
auntblabby wrote:
we need to stop subsidizing the rest of the world then...

No you don't. Think of it as a noble sacrifice.

more like falling on my sword on command from on high, while the rest of the world points and laughs in derision.