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Can you help me understand how you determine the probability?

Well, “10 times” is a guess. So let’s assume some disease serious enough that people will contemplate paying big bucks for it. Product C, the Cure, is taken for one week and you’re cured; product D is taken Daily for the rest of your life (or until a cure is found) which from Big Pharma’s perspective means 10–15 years (let’s say 12.5 years) until the patent expires. How does the maximum price for C differ from D? Well, first of all, let’s think about the U.S. and let’s say the market will bear $10/day, so $300/month and $3652 per year, totaling just over $45,000 over a 12.5-year (652 week)period. The wildcard is, then, what can be charged for C? How practical is it to charge more than $4,500 for the 7-dose packet? Some consumers would have difficulty raising much more money than that, and while an insurance company might be able to pay more, would they readily agree to it, or could they use their size to negotiate a lower price? I would think so.

And then there’s other countries. I know that prescription drugs tend to be cheaper in other countries, but I don’t have a great sense of why this is so except that an entire country has a fairly large bargaining power. It seems plausible that a country’s “drug board” might balk at an immense price for C, more so than the $10 price of D, especially if D has no cures competing with it.

if the companies all colluded then they might prefer to keep a cure off the market. But they don’t collude. They compete fiercely.

I suppose I understand the issue by analogy, filling in the blanks with what I know in other industries. So, I suppose that they ‘collude implicitly’ in the same sense as Big Telecom does. Big Telecoms can keep prices high without any direct collusion; it is “just understood” that nobody wants a price war, nobody wants a big race to build out new technology, and that certain regulations, like byzantine mechanisms for modifying poles, may be costly, but must be staunchly defended because they want to minimize competition, and the regulations are much more costly to potential new entrants in a local market than to incumbents. For the same reason, even though software patents are unnecessary in the software industry, costly to litigate, and a source of risk, big tech companies don’t lobby against them because they have giant portfolios of them and the Goliaths get more power from them than the Davids.

I’m not really familiar with the equivalents to these machinations in the Pharma sector, I just expect based on their reputation that equivalents exist.

Remember, patents become public 18 month after they are filed. So, a year and a half after you file your patents, other companies start working with your patents to do exactly the same thing as you!

I’m a little confused — a patent grants a monopoly, so a competitor cannot simply replicate what’s in it. Also, the patent should contain as little information as possible — if it describes a drug, it wouldn’t say anything more than legally required; it wouldn’t say how the drug was found or what test data was compiled. Perhaps the patent would just state the chemical structure and maybe a few variants that are suspected might work (but equally well might not — patents don’t have to describe an invention that actually works). How would competitors use the patent to develop a different compound that the original company couldn’t predict, yet that also works, with so little information to start from?

Good point…sometimes cures are more profitable than treatments. But you’ve been saying the opposite.

Well, I understood vaccines as neither cures nor treatments. If a person is sick with a disease, giving them the vaccine doesn’t actually cure them, does it? So it’s a third category, which is often as profitable as treatments.

The only question is are they withholding cures in favour of treatments? And I think we can agree here that they don’t

It’s true that I don’t recall any cases of withholding cures. I was thinking they could just keep a cure secret, but you make a good point about patents, since failing to file the patent risks letting a competitor do so instead. And if such conspiracies have happened repeatedly, eventually scandalous stories would reach the press…

But whether they are withholding cures isn’t the only question, because in some cases there may be different ways to tackle an illness, different avenues of research. A company will try to evaluate the probability of finding a cure or treatment down each research path. Sometimes a research path can lead to both treatment and cure but sometimes the path leads to just one thing. My thinking is that in cases where one path is thought to lead to a cure and another path is thought to lead to a treatment (or vaccine, assuming that’s profitable), they will prefer the latter, with the expectation that their competitors will do the same and no one will research the “cure” path except some university guys and their government grants.

What I’m not clear on is why we hold drug companies to a different standard than, say, Microsoft. Profitability is usually considered a good thing for a company; but when drug companies make a profit, we think they’re doing something bad.

Well, for me personally, I don’t really have different standards — I was fairly pissed about Microsoft’s monopolistic behavior, especially 10 to 20 years ago, and I think it was only when Windows 8 came out that they started to learn their lesson. Some elements of the OS were bad for consumers in some ways and even bad for developers, but they seemed to expect that everybody would readily upgrade and subjugate themselves to Microsoft’s will. It backfired; they don’t have nearly the monopoly power they once did, people did not like Windows 8 much, they didn’t upgrade at high rates, and developers were reluctant to build Windows 8 apps incompatible with Windows 7. They continued to pull some dirty tricks with Windows 10 (while partially capitulating to what developers and users wanted), but in other areas of the company they had by then really started acting less evil, e.g. embracing open source in a big way. And it was largely market forces that can explain the transformation, though the push for open source was also an ideological fight, as many individual developers are idealistic and Microsoft has to keep their massive developer base happy as well as, to some extent, their own engineers.

While I look at big companies a bit cynically, I‘m not really angry at them. My problem is more with the government, which insists on using centuries-old patent laws as the primary way of discovering treatments, instead of trying different approaches that might allow better prioritization of research money (based more on need than on wealth of victims), more sharing of research data (avoiding duplication of work between different corporations), and more affordable pricing structures. (Edit: I do get mad at corporations if they start trying to influence the government to keep or expand bad policies, though, and it is frustrating that they consistently don’t lobby for changes that might better align their interests with society’s interests, though obviously “good guy” lobbying could never go so far as to threaten their business’s existence.) I don’t actually have any proposals because medicine is not my area, but I am an inventor at heart and cannot believe that the way we are doing things is the best possible way.

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