Late Saturday Night Drifts

Some where in another world (Minneapolis to be precise), I did work for a managed pharmacy benefits plan that was owned by United Health Care but was sold off to SmithKline Beecham  (now GlaxoSmithKline).  This was during the “Hillarycare” debates.  I know a lot about this because one of our VPs was on her panel and one of the hearings was held there.  I honestly thought that the DOJ would call the merger thing off because it was an appalling example of a vertical monopoly.  That didn’t happen.

During the mid nineties,  Big Pharma wanted their hands on the ability to call the plan formularies for defined benefit plans and stack them with their drugs.   All of them were scrambling to buy managed drug plans from Insurance Companies at the time.  Managed pharmacy benefit plans basically meant a windfall for any drug listed on the formulary.    Big Pharma  had a plan and I was privy to the business deal which was to  just tweak some chemical formula enough to call something a new drug, get it subject to a new patent, stick it on a formulary, and watch the profits roll in.

Don’t even get me started on how erectile dysfunction drugs made their way to formularies.  The race for profits is frequently a race to a place with nonexistent ethics.  So, based on the short amount of time I witnessed that situation, I took my fees and ran to New Orleans.  I couldn’t say much then because I was at a level where I was silenced by the merger negotiations and the SEC.

So, why do I mention that now?  Because, this doesn’t surprise me at all. Drug development is a business model and any one who thinks otherwise is sadly mistaken and most likely sadly at the bottom of the food chain and uninformed. Important drugs are not discovered because there is basically no money in it and there will never be any corporate money invested in it.

Public Health is part and parcel of the Public Interest.  The parable of Erectile Dysfunction Drugs may have a different ending if this policy actually sees the light of day.  Fortunately, it’s not completely up to the whims of creationists who hate science.  This move recognizes that the profit motive doesn’t always drive the correct priorities for society.  It only drives the correct money flows for something in high demand at particular time.  Rich people with a flaccid penis and a fear of wrinkles are driving the market.  So, what about Public Health?

The Obama administration has become so concerned about the slowing pace of new drugs coming out of the pharmaceutical industry that officials have decided to start a billion-dollar government drug development center to help create medicines.

The new effort comes as many large drug makers, unable to find enough new drugs, are paring back research. Promising discoveries in illnesses like depression and Parkinson’s that once would have led to clinical trials are instead going unexplored because companies have neither the will nor the resources to undertake the effort.

The initial financing of the government’s new drug center is relatively small compared with the $45.8 billion that the industry estimates it invested in research in 2009. The cost of bringing a single drug to market can exceed $1 billion, according to some estimates, and drug companies have typically spent twice as much on marketing as on research, a business model that is increasingly suspect.

The National Institutes of Health has traditionally focused on basic research, such as describing the structure of proteins, leaving industry to create drugs using those compounds. But the drug industry’s research productivity has been declining for 15 years, “and it certainly doesn’t show any signs of turning upward,” said Dr. Francis S. Collins, director of the institutes.

There’s another idea worth considering.  There are many drugs that are in the public domain.  There are many folks on medicare and medicaid plans.  There are also veterans.  Why not have the government offer to help start up small firms around the country that will produce those drugs at a minimal cost and reasonable profit with big time orders from all these government plans?  The idea is just to save money on drugs going to those covered by public health programs and create manufacturing jobs in places that need them. Many old drugs are just as effective as their minimally tweaked but patented counterparts that are advertised and marketed into a high profit set up per the nifty Big Pharma Business model.   Why pay for maximum profits to a market filled with a few greedy oligopolies when you can promote some nice little business all over Main Streets of American instead and Public Health instead and stir up a few jobs in the process?

Let the competition for government contracts really begin!

So, it’s an Open Thread, but that’s an article and a policy worth some discussion.

12 Comments on “Late Saturday Night Drifts”

  1. TheRock says:

    Obumble’s White House proposed this billion dollar research fund, right? I don’t trust it.


    Hillary 2012

  2. Dario says:

    Competitiveness is the keyword, not competition. The government wants Americans to compete with Chindia labor costs.

    • dakinikat says:

      That’s a zero sum game eventually. Look at NIKE which is the prime example of a scum of the earth corporation. They’ve been moving their manufacturing contracts to the lowest common denominator since they started production. Vietnam is the latest country that is getting fed up with them. That can only last so long.

      So, what if government, with it’s huge buying power gave its bids to small manufacturers of products as long as the set up IN country. No government bids to any one that has part of the production chain out of country. That would stop at least some of the vertical outsourcing. The horizontal is fine. I mean, Chinese need to buy some American goods so it makes since for that to exist. It’s the vertical outsourcing and re-importation that’s a menace.

  3. TheRock says:

    This is why Healthcare should not be a for profit entity. I’m actually siding with the drug companies here. There is no reason for a company to be any more ethical than it has to be in order to turn a profit. We don’t get mad at Lexus for producing cars to expensive for the lower class, do we? It takes a government or demand to drive a company in a certain direction. It isn’t financially feasible to cure many of the new diseases. It IS profitable to manage those diseases with long term care or charge and overcharge for the unneeded (eg Viagra).

    We are so f*^(*d.

    Hillary 2012

    • dakinikat says:

      The deal is to let them have the erectile dysfunction drugs but don’t protect their marketshare with a patent. Let them be for profit and don’t give them any subsidies or protections then. Make sense? They should not have it both ways. Protect and subsidize the public health things only.

      • TheRock says:

        Yes it makes sense, and yes I agree. Because it makes sense, and would benefit the most people is why your suggestion would never be implemented by this admin.


        Hillary 2012

  4. On a tangent here and this isn’t a big deal, but… the portmanteau Chindia still doesn’t work for me. It sounds like a hipster fusion restaurant. Houston has one of those called Indika (India+Americas). Not a huge fan. Fusion can be good, but hipster fusion is not my thing.

  5. cwaltz says:

    I have mixed feelings about pharma. Not everything about second generation drugs is bad. Alot of improvements on side effects and drug regimen improvements by reformulating the half life have come as a result of them dickering with original formulations.

    That being said without patents we might see more collective work from the scientific community however I’m not sure it’d be great for the people who have to produce the actual medications. As it stands they are exposed to lots of noxious dust in production and this would spur companies to cut labor costs to produce products for less. Great for the consumer but less great for employees.

    I really am not super informed on the NIH but I know that lots of research is already helped along by the government. NMCSD did a variety of clinical trials and blind studies when I was there. Everything from determining whether using Ancef pre op was good protocol for same day surgeries (as opposed to no meds just plain bag of fluid)to investigationals which were strictly handled from the main pharmacy.

    • dakinikat says:

      Laws on intellectual property are difficult to get right. They’re supposed to exist to protect the high cost of research and development. However, if you’re spending your research and development funds on advertising and developing ‘lifestyle drugs’, I still question if that deserves special government protection and subsidy. Some how, some distinction needs to be made between developing antibiotics and cancer drugs and developing yet another wrinkle cream that needs a prescription. The incentives are messed up at the moment which typically happens when you have oligopolies, government protections, and a strong demand for things that aren’t really useful. Every time I see an ad for erectile dysfunction all I can think is there goes the funds that were supposed to protect R&D for cancer drugs. The market for limp dick drugs appears to be profitable but the profits aren’t going to R&D in other areas. It’s going to advertising and marketing. That’s a pretty good indication of a failure of public health policy if they’re trying to get them to develop a better antibiotic.

  6. Peg says:

    I like your idea, Dak. I have no expertise in the field, but here’s a little story. When Viagra first came out, I worked in an outpatient pharmacy in a veterans medical center. The Dept. of Vet. Affairs took the position that e.d. was not life-threatening, and the VA would not provide Viagra (it was $10 a pill at the time). The phones started ringing, and guess who was calling. Wives. They were pissed that the VA would not provide it.

    Calling e.d. meds ‘lifestyle’ drugs is one thing, but living with a guy who has diabetes, or is old (!) and a crank, was no picnic for these wives, their own needs aside. The VA eventually relented, and
    allowed, I think, 2 pills a month. I like to think some women’s lives were made easier!

    • dakinikat says:

      I’m not sure how women’s lives would be made easier and I’m not sure I really want to know either. lol!!! Frankly, I think our funds would be better spent if we gave them a copy of Lady Chatterly’s Lover and pointed them in the direction of a young gardener!!!! 😉