--- Dan Minette <[EMAIL PROTECTED]> wrote: > My numbers indicate that about 20% of the cost of > drugs goes into > development, cost and production, and that the rest > is systematic overhead.
I can't comment on this much (for obvious reasons). I think 20% is a little low, though. > I really don't disagree with you concerning the > problems inherent in > demanding cheap AIDs drugs, one way or another, we > need to pay for the > research and development. But, putting my rational > advisor hat on, I'd > argue that a successful drug company should do no > real breakthrough > developments. Rather, is should focus on developing > patentable small > variations in the chemical compound already used. > Look for small > advantages, and then market the heck out of them. > The development risks > are minimal, as are the market risks. Indeed, from > what I've read, this is > the model drug companies are going to. Its not that > they wouldn't market a > cure; its that, when ideas are pitched, the low risk > higher gain ideas will > get the money first. There is certainly a lot of truth to this - that is the way drug companies are going. I think, though, it has more to do with how incredibly hard drug development has become. A truly revolutionary and innovative new drug wouldn't _need_ to be marketed nearly as much, and so could become much more profitable...but no one is having much success getting those new drugs. Pfizer, the largest drug company in the world, is famous for the effectiveness of its sales force, not its R&D. That being said, it's possible to vastly underrate the importance of those small changes in the molecules. One example would be Lipitor, Pfizer's uberdrug. Lipitor is the largest drug in the world (it will cross the $10BB threshold this year). It is not a particularly innovative drug - the first statin was Merck's lovastatin, but then you had Pravachol (pravastatin), and Zocor (simvastatin). All of those are fairly close to lovastatin - they're all HMG-CoA reductase inhibitors with fairly similar mechanisms of action (pravastatin is fat soluble, the others water soluble, but they're all pretty similar). Anyways, so then Warner-Lambert discovered atorvastatin, and Pfizer bought Warner-Lambert pretty much solely for Lipitor and turned it into what it is today. So Lipitor is almost the perfect example of a small molecular change drug that you market the hell out of - it was, I think, the _fifth_ statin - lova, prava, fluva, simva, and finally atorva. I can't remember whether Baycol (cerivastatin) came out before Lipitor or not. Anyways, the point of all this is that Lipitor is a small tweaking of the molecule, and it's not terribly innovative. Except...Lipitor is _twice_ as effective as its major competitors. It's only a small molecular change, but it's hugely more powerful and more effective. In fact, as PROVE-IT just demonstrated, its superior power has really significant medical effects, and ASCOT has shown that it has really powerful benefits for diabetics as well. Incidentally, as a public service announcement - if you're a diabetic and you read this, _you have to be on a statin if you can tolerate them_. It doesn't matter what your cholesterol count is. Without rewarding those small molecular changes - we wouldn't have gotten Lipitor. All of that being said - there's certainly an innovation problem. I don't think it's necessarily because of economic calculations (as I said above). But that innovative role is now being taken over by the biotech startups. One reason (in my judgment, the most important reason) that the biotech startups get VC funding so easily is precisely because of the vast financial reources of big pharma - because the exit strategy of a lot of VCs is having the company they fund being bought by a pharmaco, which can use its production capabilities and sales force to market the innovative new drugs that they develop. So even if the economics dictatted marginal adjustments, as you say, that helps to stimulate innovation a great deal. > This type of overhead grates on people. I can't > prove that it isn't > necessary. Maybe attempts to lower the overhead > costs will just raise > costs. However, I do know that the US spends much > more per capita on > medical costs than do other developed countries. > without a corresponding > superiority in measurements of the health of the > population. Part of it may > be that we pay for the drug development for the rest > of the world. But, I > also think there is tremendous inefficiency in our > system. I think we > could do better. > > Dan M. I have no doubt that we can do better, I just don't think that pharma is the place to do it. First, while I don't remember the exact figures, pharma only accounts for about 10% of medical spending in the US. So it doesn't necessarily seem like the best place to cut. Other countries cut medical expenses by doing things like holding down doctor's salaries, minimizing elective procedures, and having rational tort systems - any and all of those would probably do a lot more to cut health care costs than going after pharma. ===== Gautam Mukunda [EMAIL PROTECTED] "Freedom is not free" http://www.mukunda.blogspot.com __________________________________ Do you Yahoo!? New and Improved Yahoo! Mail - 100MB free storage! http://promotions.yahoo.com/new_mail _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
