Sen. Bernie Sander's (VT) introduces new bill for drug company patents.

[a completely inoffensive name]

I know Rory_20_uk might be interested in this since if I remember correctly he is involved in the pharmaceutical industry (although in the UK obviously).

But anyway Senator Bernie Sander's has introduced a plan to reduce drug costs down to the actual market level. What is the market level? Well I guess according to him the market level price is what you find typically for drugs that have had their patent's run out and are able to be made under generic labels. These drugs usually cost anywhere from $5-$15 where as drugs that still have patents on them by pharmaceutical companies can be upwards of $100 a prescription sometimes.

Here is the biased article I found this out from:
http://www.alternet.org/drugs/151176...7_solution%29/

And I guess the plan is to institute a small tax to create what is being called a "prize fund" which would buy drug patents up and release them onto the public domain as free and open knowledge able to be used and manufactured by anyone. The savings that the public would get from these cheaper drugs would supposedly have a much more beneficial impact not just fiscally on many Americans but also health wise by increasing access to drugs that are needed due to lower costs.

I wish I could find a more impartial article about it but it is 2:30AM right now, and I really am too lazy to google for 5 min right now, so maybe when I wake up.

I have heard arguments that drug companies need these patents and need to charge large amounts for the drugs in order to fund the necessary amounts of research, development, testing and other stuff that goes into making a mass market drug. However, I have heard arguments suggesting that it isn't exactly like that, one person on another website I lurk posted a link to this:
http://facts.kff.org/chart.aspx?ch=218

A chart of the profitability of pharmaceutical companies compared with the average of all Fortune 500 companies. If someone could explain what makes this chart...bull so to speak that would be awesome because from where I am sitting it seems like Pharma companies could do to charge less on their drugs.

[Tellos Athenaios]

If the fund is intended to *buy* the patents then more power to you if you get it working. Companies are still duly compensated for their work since their patents are bought, but I doubt that they will sell because patents are a lucrative business. Ask the Eastern District of Texas.

[Ice]

If the fund is intended to *buy* the patents then more power to you if you get it working. Companies are still duly compensated for their work since their patents are bought, but I doubt that they will sell because patents are a lucrative business. Ask the Eastern District of Texas.

Well, I'd have no problem forcing them to if they compensate in a fair and equitable manner based on historic/future cash flows discounted at an appropriate rate. I can already smell people who are going to say "Well this will take all incentive away and the companies will not release drugs into the USA!" I don't believe that for a second. This market has over 300 million people and will remain quite attractive as long as the bill is crafted in a way that it still rewards these companies in a fair manner.

As for your second graph, I have no problem with that. The amount of time,work, and energy these companies put into creating these drugs is immense; they aren't even allowed to capitalize current drug research on their balance sheet, and must expense it! Considering the number of failed drug trials that are out there, these companies take an enormous risk in hope of hitting a grand slam.

[Crazed Rabbit]

Well, I'd have no problem forcing them to if they compensate in a fair and equitable manner based on historic/future cash flows discounted at an appropriate rate.

That's almost theft. If they don't want to sell, no one has the right to make them.

CR

[Ice]

That's almost theft. If they don't want to sell, no one has the right to make them.

CR

*shrugs* your opinion... I don't consider it theft if they are compensated. Would paying them a premium say 20% above expected future cash flows change your mind at all?

[Crazed Rabbit]

*shrugs* your opinion... I don't care consider it theft if they are compenstated. Would paying them a premium say 20% above expected future cash flows change your mind at all?

Somewhat - but I very much doubt the government would pay that much. If they have the power to force people to sell, they wouldn't worry to much about giving them a fair price; they'd finagle the system in order to pat the least they possibly could. Any protections written into the bill would get removed over time.

Plus, it sets a horrible precedent - the government can force you to sell anything you own for the 'public good'. And considering the slippery slope eminent domain has careened down, I don't think that's an exaggeration.

CR

[Husar]

Plus, it sets a horrible precedent - the government can force you to sell anything you own for the 'public good'. And considering the slippery slope eminent domain has careened down, I don't think that's an exaggeration.

Well, not much better or worse than corporations letting a lot of people die or live very miserable in order to make more profit.

[Xiahou]

Well, I'd have no problem forcing them to if they compensate in a fair and equitable manner based on historic/future cash flows discounted at an appropriate rate. I can already smell people who are going to say "Well this will take all incentive away and the companies will not release drugs into the USA!" I don't believe that for a second. This market has over 300 million people and will remain quite attractive as long as the bill is crafted in a way that it still rewards these companies in a fair manner.

Well this will take all incentive away and the companies will not release drugs into the USA!

The two paragraphs in your post seem at odds with each other. You don't mind them making buckets of money, but you're ok with them being forced into giving up their patents that they use to make said buckets of money.

If they're going to lose the fruits of their R&D, and be forced to sell new drugs on a thin profit margin, why research new drugs? Just keep making the old ones. The profit margin will be similarly slim, but there's no R&D expense. This isn't the right approach.

[Ice]

Well this will take all incentive away and the companies will not release drugs into the USA!

The two paragraphs in your post seem at odds with each other. You don't mind them making buckets of money, but you're ok with them being forced into giving up their patents that they use to make said buckets of money.

If they're going to lose the fruits of their R&D, and be forced to sell new drugs on a thin profit margin, why research new drugs? Just keep making the old ones. The profit margin will be similarly slim, but there's no R&D expense. This isn't the right approach.

They aren't at odds at all; The vast amount of money the government will provide for the patents and the enromous American market will not take away any incentive. It seems to be a win win scenario for both sides.

As per the article:

This money would come from a tax on public and private insurers. The savings from lower-cost drugs would immediately repay more than 100 percent of the tax.

The drug companies will still be making a nice profit.

[Xiahou]

That makes no sense. Aren't you a numbers guy? If the government is going to pay them the same or more for the patent than the drug company would have made from retaining it, where is the savings?

Mr. Sanders' plan is to soak the insurers with new taxes for these costs... How is that any different from what's happening already? My insurance covers all but the copay on drugs- they'd eat the cost either way. The main difference would be more government meddling and inefficiencies that brings.

This sounds dumber by the minute.

[Ice]

That makes no sense. Aren't you a numbers guy? If the government is going to pay them the same or more for the patent than the drug company would have made from retaining it, where is the savings?

Mr. Sanders' plan is to soak the insurers with new taxes for these costs... How is that any different from what's happening already? My insurance covers all but the copay on drugs- they'd eat the cost either way. The main difference would be more government meddling and inefficiencies that brings.

This sounds dumber by the minute.

You seem to be assuming that companies will still have the same expenses under the plan as they do now; this simply isn't true.

(3) By de-linking research and development incentives from product prices, and by eliminating legal monopolies to sell products, it is possible to induce investments that are medically more important, procure products at low prices from competitive suppliers, radically lower pricing barriers for access to new medicines, reduce wasteful marketing and research and development activities, and [B]dramatically lower the overall costs of acquiring innovation[B], while expanding access to that innovation.

If expenses go down and profit is kept at the same level, the corresponding revenue required to achieve such a profit will also be reduced. In addition, eliminating the current monopoly companies have on these drugs will cause their prices to plunge. I know you like market prices set by competition, right? ;)

The country is projected to spend almost $300 billion on prescription drugs this year. Prices would fall to roughly one-tenth this amount in the absence of patent monopolies, leading to savings of more than $250 billion. The savings on lower drug prices should easily exceed the size of the tax, leaving a substantial net reduction in costs to the government and private insurers.

[Jolt]

Well this will take all incentive away and the companies will not release drugs into the USA!

The two paragraphs in your post seem at odds with each other. You don't mind them making buckets of money, but you're ok with them being forced into giving up their patents that they use to make said buckets of money.

If they're going to lose the fruits of their R&D, and be forced to sell new drugs on a thin profit margin, why research new drugs? Just keep making the old ones. The profit margin will be similarly slim, but there's no R&D expense. This isn't the right approach.

I guess you could look from both sides of the field:

1. The patent remains with the pharmaceutical company, which will rack up enourmous profits over the duration of the patent, based on the price (I have no idea how drug prices are defined in the USA), while that patent's durations continues, a lot of people might/will not have the possibility of buying it.

2. The patent would be allowed to remain within the company until it is proven it has a new and clear benefit and value for the public good (To avoid buying overlapping drugs which are just color and name changes), and then is bought from the pharmaceutical company, and the pharmaceutical company is payed accordingly (For the patent + studied case of the hypothetical profit that drug would give for the duration of the patent). The pharmaceutical company would recieve a load of money in one go instead of over the years, and that all the people would be able to buy the drug on low prices shortly after the buying of the patent. Furthermore, all companies could then use the patent to improve the drug, instead of remaining on one company's hands who would obviously want to extend the drug's life cycle as long as possible.

So not only would it lower prices, but it would most probably make improve the speed of pharmaceutical advances. It is actually an extraordinarily good bill.

[Tellos Athenaios]

That probably will work out. The thing with patents is that their effect is of artificially inflating prices. That was always the case (patent law is designed to do just that by definition) but the problem is that it was designed for a day and age where the idea would be executed on, the lifetime of a patent roughly in line with the time it took to research something, and the concept of patent trolling laughable. The problem is made a lot worse with the fact that sheer incompetence permeates the system: the USPTO for instance effectively relies on US courts to assess the validity of US patents, and the courts in turn assume the USPTO did its homework properly to assess whether or not a patent is valid. That's a system where things like meetings over lunch breaks are patented (IBM), and competitions are held to see who can get the wackiest patent past the USPTO (former SUN).

[rory_20_uk]

Yup, something very interesting for me!

The whole industry requires the "blockbuster" drugs to pay for the others, in effectively cross-subsidies. If these don't bring in billions, where is the money for the companies coming from? What is a "fair" price for the patent? Atorvastatin has raked in $1 Billion a month. Does the government have tens of billions to throw to get this?

Generics are cheaper as the studies required to get a generic license are far, far cheaper and are merely one or two bioequivalence trials as opposed to safety or efficacy ones.

But the American health system has far greater issues than this. People want drugs that are 10 times as expensive, but 10% better, and since it comes from the care plan they get it. In the UK, generics are used as first line treatments and at a population level that is a better approach.