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Obama and the 'Drug Killer'

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  • John Williams
    http://www.forbes.com/opinions/2008/10/30/obama-drug-medicine-oped-cx_ch_1031hooper.html Obama And The Drug Killer Charles Hooper 10.31.08, 12:00 AM ET One
    Message 1 of 11 , Oct 31, 2008
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      http://www.forbes.com/opinions/2008/10/30/obama-drug-medicine-oped-cx_ch_1031hooper.html

      Obama And The 'Drug Killer'
      Charles Hooper 10.31.08, 12:00 AM ET

      One of the unpleasant things I do as a consultant is recommend
      that pharmaceutical firms halt the production of uneconomical new
      medicines. I'm a drug killer.

      If American voters hand Barack Obama the presidency and a
      filibuster-proof Democratic Congress, I'll be doing a lot more of this
      unhappy work.

      Say a biotech company is developing a new drug for breast cancer. My
      consulting firm, Objective Insights, looks at the financial value of
      the project. If the expected value--probability-adjusted value--of
      the project is negative, we suggest discontinuing development. Often,
      millions of dollars have already been spent.

      A lot of new medicines are tossed into the trash for reasons that
      have nothing to do with safety and efficacy. We have helped kill
      drugs for brain cancer, ovarian cancer, melanoma, hemophilia and
      other debilitating conditions. It breaks my heart. But we would never
      recommend that a company knowingly lose money unless some other crucial,
      nonfinancial objective was being achieved.

      The economics are daunting. A study by Joseph DiMasi, an economist at
      the Tufts Center for the Study of Drug Development in Boston, found
      that the cost of getting one new drug approved was $802 million in 2000
      U.S. dollars, or $1.02 billion in 2008 dollars. Most new drugs cost
      much less, but his figure adds in the expense of each successful drug's
      prorated share of failures.

      .....

      As I wrote in the Concise Encyclopedia of Economics: "What complicates
      the picture is socialized medicine, which exists in almost every country
      outside the United States and even, with Medicare and Medicaid, in the
      United States. Because governments in countries with socialized medicine
      tend to be the sole bargaining agent in dealing with drug companies,
      these governments often set prices that are low by U.S. standards. This
      comes about because these governments have monopsony power--that is,
      monopoly power on the buyer's side--and they use this power to get good
      deals. These governments are, in effect, saying that if they can't buy
      it cheaply, their citizens can't get it."

      Drugs are not too expensive in the U.S.; they're artificially cheap
      elsewhere. It's also not much of an exaggeration to say that new drugs
      are developed for, and as a result of, the American market because of
      its pricing flexibility.

      Every person benefits when drug companies have an incentive to invest
      in the public good of pharmaceutical research and development. But each
      individual government looks out for its narrow interests--for one, to
      negotiate a low drug price for its own citizens and let people in other
      countries pay the high prices that generate the return on research and
      development investments.

      Each government, in other words, has an incentive to be a free
      rider. And that's what many of them are doing today. The temptation
      in this country, especially among liberals, is to stop Americans from
      bearing more than their share of drug development by having the U.S.
      government set low prices. But if Americans try to get a free ride,
      there might not be a ride at all. There will certainly be fewer new
      drugs on the market.

      If Obama is elected, I'll be killing a lot more drugs. And neither you
      nor your physician, whose preferences are insignificant in the eyes of
      the government, will have any choice in the matter.




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    • Andrew Crystall
      ... No, that s just a good argument for compulsory publishing of all drug studies (a very good idea being pushed on lots of other grounds as well), and a
      Message 2 of 11 , Nov 1, 2008
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        On 31 Oct 2008 at 12:48, John Williams wrote:

        > http://www.forbes.com/opinions/2008/10/30/obama-drug-medicine-oped-cx_ch_1031hooper.html
        >
        > Obama And The 'Drug Killer'
        > Charles Hooper 10.31.08, 12:00 AM ET

        No, that's just a good argument for compulsory publishing of all drug
        studies (a very good idea being pushed on lots of other grounds as
        well), and a strict "develop it or lose it" policy on the IP of
        drugs.

        AndrewC
        Dawn Falcon

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      • Bryon Daly
        On Fri, Oct 31, 2008 at 3:48 PM, John Williams ... So the claim here is that Americans are almost solely subsidizing the drug development costs for the entire
        Message 3 of 11 , Nov 1, 2008
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          On Fri, Oct 31, 2008 at 3:48 PM, John Williams
          <jwilliams42@...>wrote:

          >
          > http://www.forbes.com/opinions/2008/10/30/obama-drug-medicine-oped-cx_ch_1031hooper.html
          >
          >
          > As I wrote in the Concise Encyclopedia of Economics: "What complicates
          > the picture is socialized medicine, which exists in almost every country
          > outside the United States and even, with Medicare and Medicaid, in the
          > United States. Because governments in countries with socialized medicine
          > tend to be the sole bargaining agent in dealing with drug companies,
          > these governments often set prices that are low by U.S. standards. This
          > comes about because these governments have monopsony power--that is,
          > monopoly power on the buyer's side--and they use this power to get good
          > deals. These governments are, in effect, saying that if they can't buy
          > it cheaply, their citizens can't get it."
          >

          So the claim here is that Americans are almost solely subsidizing the drug
          development costs for the entire rest of the world? And by posting this, I
          assume you think this should remain status quo? Wow, you must really enjoy
          spreading our wealth around! Welcome to the liberal democratic elite! :-)


          >
          > Drugs are not too expensive in the U.S.; they're artificially cheap
          > elsewhere. It's also not much of an exaggeration to say that new drugs
          > are developed for, and as a result of, the American market because of
          > its pricing flexibility.
          >

          And yet the drug companies still sell those under priced drugs in those
          countries? Can't they just not sell them there if a fair price isn't met?
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        • John Williams
          Bryon Daly ... That is an odd way to phrase it. I would have paraphrased part of the article as, Americans are subsidizing drug
          Message 4 of 11 , Nov 1, 2008
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            Bryon Daly <lintman@...>


            > So the claim here is that Americans are almost solely subsidizing the drug
            > development costs for the entire rest of the world?

            That is an odd way to phrase it. I would have paraphrased part of the article as,
            "Americans are subsidizing drug development costs for other countries." With
            subsidize being used in the sense of "to aid or promote".

            > And by posting this, I
            > assume you think this should remain status quo?

            No, in an ideal world I would like to see everyone move towards a more
            free system.

            > And yet the drug companies still sell those under priced drugs in those
            > countries? Can't they just not sell them there if a fair price isn't met?

            Drug development is an industry with high fixed costs. Once those fixed,
            or sunk, costs have been committed, the drugs are sold for the price that
            the market will bear. According to the expert who wrote the article, the
            more socialized markets settle on a lower price than the less socialized
            markets. If all markets were socialized, then all the prices would be lower.
            Then companies would not be able to justify committing the fixed costs
            on future development of some drugs, and some drugs would not be
            developed.




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          • Doug Pensinger
            ... What if there were government incentives/grants to develop the pharms? It seems to me that the free market does a poor job in this regard; emphasizing
            Message 5 of 11 , Nov 3, 2008
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              John Williams wrote:

              > Drug development is an industry with high fixed costs. Once those fixed,
              > or sunk, costs have been committed, the drugs are sold for the price that
              > the market will bear. According to the expert who wrote the article, the
              > more socialized markets settle on a lower price than the less socialized
              > markets. If all markets were socialized, then all the prices would be lower.
              > Then companies would not be able to justify committing the fixed costs
              > on future development of some drugs, and some drugs would not be
              > developed.

              What if there were government incentives/grants to develop the pharms?
              It seems to me that the free market does a poor job in this regard;
              emphasizing stuff like boner pills because they're wildly profitable
              and in recycling previously developed drugs with slight adjustments in
              formulation or in combination with other drugs. There is a huge
              disincentive to develop something like a cure for the cold because
              over the counter remedies are a hugely profitable industry.

              Doug
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            • Andrew Crystall
              ... Frankly, sounds like a reasonable use of cash. Offer money for drug development with the caveat that any compounds developed would be jointly owned by the
              Message 6 of 11 , Nov 3, 2008
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                On 3 Nov 2008 at 21:48, Doug Pensinger wrote:

                > John Williams wrote:
                >
                > > Drug development is an industry with high fixed costs. Once those fixed,
                > > or sunk, costs have been committed, the drugs are sold for the price that
                > > the market will bear. According to the expert who wrote the article, the
                > > more socialized markets settle on a lower price than the less socialized
                > > markets. If all markets were socialized, then all the prices would be lower.
                > > Then companies would not be able to justify committing the fixed costs
                > > on future development of some drugs, and some drugs would not be
                > > developed.
                >
                > What if there were government incentives/grants to develop the pharms?
                > It seems to me that the free market does a poor job in this regard;
                > emphasizing stuff like boner pills because they're wildly profitable
                > and in recycling previously developed drugs with slight adjustments in
                > formulation or in combination with other drugs. There is a huge
                > disincentive to develop something like a cure for the cold because
                > over the counter remedies are a hugely profitable industry.

                Frankly, sounds like a reasonable use of cash. Offer money for drug
                development with the caveat that any compounds developed would be
                jointly owned by the drug company and the government, or if the drug
                company backed out from that drug, they'd have to transfer the rights
                entirely to the government.

                AndrewC
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              • John Williams
                ... I don t want them doing that with my money! ... It seems to me the government does a poor job in this regard. I don t want a bunch of politicians deciding
                Message 7 of 11 , Nov 4, 2008
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                  On Mon, Nov 3, 2008 at 9:48 PM, Doug Pensinger <brighto@...> wrote:
                  > What if there were government incentives/grants to develop the pharms?

                  I don't want them doing that with my money!

                  > It seems to me that the free market does a poor job in this regard;

                  It seems to me the government does a poor job in this regard. I don't
                  want a bunch of politicians deciding which drugs to spend my money on.
                  I'm perfectly capable of deciding for myself.

                  > There is a huge
                  > disincentive to develop something like a cure for the cold because
                  > over the counter remedies are a hugely profitable industry.

                  Which is more than counter-balanced by the immense incentive of making
                  a fortune by selling a cure, usurping all the profits from the various
                  symptom alleviators. It seems more likely that people who talk about
                  cures for the common cold don't really know what they are talking
                  about and underestimate the complexity and difficulty of the
                  situation, than that there is collusion to not develop such a drug in
                  order to keep selling symptom alleviators.
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                • Andrew Crystall
                  ... Well, that narrows down your profession nicely, Dr. Williams. AndrewC _______________________________________________
                  Message 8 of 11 , Nov 5, 2008
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                    On 4 Nov 2008 at 7:42, John Williams wrote:

                    > > It seems to me that the free market does a poor job in this regard;
                    >
                    > It seems to me the government does a poor job in this regard. I don't
                    > want a bunch of politicians deciding which drugs to spend my money on.
                    > I'm perfectly capable of deciding for myself.

                    Well, that narrows down your profession nicely, Dr. Williams.

                    AndrewC
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                  • Curtis Burisch
                    ... Talk about confrontational behaviour, Andrew -- did you forget your coffee this morning? Have another valium and try get some rest, huh? As for the
                    Message 9 of 11 , Nov 5, 2008
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                      Andrew Crystall wrote:

                      >> > It seems to me that the free market does a poor job in this regard;
                      >>
                      >> It seems to me the government does a poor job in this regard. I don't
                      >> want a bunch of politicians deciding which drugs to spend my money on.
                      >> I'm perfectly capable of deciding for myself.

                      >Well, that narrows down your profession nicely, Dr. Williams.

                      Also wrote:

                      >Sorry Julia, but bullshit. It's precisely the same - attacking someone
                      >because they don't agree with your views. If religion, lack of religion,
                      >politics, creed, colour or whatever is used by the criminal as their
                      >excuse is quite, afaik, irrelevant.

                      Talk about confrontational behaviour, Andrew -- did you forget your coffee
                      this morning?

                      Have another valium and try get some rest, huh?

                      As for the militant Athiest -- he could just as easily have been Muslim or
                      Christian. Basically, he's just a nutcase. His beliefs don't really come
                      into it.

                      C

                      Grumpy and tired Maru


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                    • Andrew Crystall
                      ... Um, confrontational? I m pretty happy right now actually. Something about a nation seeing sense in who they elected. Anyway... I m not shy about speaking
                      Message 10 of 11 , Nov 5, 2008
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                        On 5 Nov 2008 at 10:58, Curtis Burisch wrote:

                        > Andrew Crystall wrote:
                        >
                        > >> > It seems to me that the free market does a poor job in this regard;
                        > >>
                        > >> It seems to me the government does a poor job in this regard. I don't
                        > >> want a bunch of politicians deciding which drugs to spend my money on.
                        > >> I'm perfectly capable of deciding for myself.
                        >
                        > >Well, that narrows down your profession nicely, Dr. Williams.
                        >
                        > Also wrote:
                        >
                        > >Sorry Julia, but bullshit. It's precisely the same - attacking someone
                        > >because they don't agree with your views. If religion, lack of religion,
                        > >politics, creed, colour or whatever is used by the criminal as their
                        > >excuse is quite, afaik, irrelevant.
                        >
                        > Talk about confrontational behaviour, Andrew -- did you forget your coffee
                        > this morning?

                        Um, confrontational? I'm pretty happy right now actually. Something
                        about a nation seeing sense in who they elected.

                        Anyway... I'm not shy about speaking my mind, and I've been very
                        clear on the issue of people allowing their predudice to dictate how
                        they feel about events simply because the word "religion" is involved
                        (There's a lot of people out there who just shut down their higher
                        brain functions when its mentioned).

                        Do I really need to give my standard spiel on tolerance on Brin-L?

                        Poking Dr. Williams is just sport. I freely admit to troll baiting,
                        with the "whatcha gonna do about it?" subscript. As I've said before,
                        this community is waaay too tolerant of that sort of thing. I do it
                        with people I find narrow minded and intollerant. If I was wrong to
                        label them that I end up appologising pretty quickly. Ain't happened
                        in a long time.

                        AndrewC

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                      • Alberto Monteiro
                        Your heard it first from me! Joe the Plumber 2012 for the GOP!!! :-P Alberto Monteiro _______________________________________________
                        Message 11 of 11 , Nov 5, 2008
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                          Your heard it first from me!

                          Joe the Plumber 2012 for the GOP!!! :-P

                          Alberto Monteiro

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