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Old 12-19-2019, 05:16 AM
 
1,386 posts, read 570,967 times
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Quote:
Originally Posted by TwoByFour View Post
The law being passed by Trump is for importing drugs by pharmacies and whole-sellers, which would then be resold in the US. So this is not about personal use.
The grey market in the U.S. for foreign-sourced pharmaceuticals is huge, arbitrage at the customer level. CBP pretends to police this trade, but they can only monitor a tiny fraction of the shipments.
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Old 12-19-2019, 11:24 AM
 
Location: Vancouver
13,322 posts, read 9,311,108 times
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Quote:
Originally Posted by EDS_ View Post
I'm an economist I have a pretty good fix on these things.
"Nevertheless, some former pharmaceutical-company executives say that research costs do not determine drug prices—and they explain how. In his book A Call to Action, Hank McKinnell, a past CEO of Pfizer, wrote under the heading “The Fallacy of Recapturing R&D Costs”:

How do we decide what to charge? It’s basically the same as pricing a car … A number of factors go into the mix. These factors consider cost of business, competition, patent status, anticipated volume, and, most important, our estimate of the income generated by sales of the product. It is the anticipated income stream, rather than repayment of sunk costs, that is the primary determinant of price.
Raymond Gilmartin, a former Merck CEO, once said to The Wall Street Journal: “The price of medicines is not determined by their research costs. Instead, it is determined by their value in preventing and treating disease.”

https://www.theatlantic.com/health/a...opment/585253/
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Old 12-19-2019, 03:00 PM
 
6,047 posts, read 3,246,640 times
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Quote:
Originally Posted by newdixiegirl View Post
Sure, there are of course costs for R&D, but they likely account for a fraction of the huge discrepancy between US and Canadian drug costs for the consumer. To readily accept that as the reason Americans are being ripped off is exactly what the pharmaceutical companies want you to do.

I believe one of the main reasons for the staggering costs of medication in the US is advertising.
False.... When building a financial model for a Pharma company to manufacture a new/improved drug you must look at the entire life-cycle cost of the drug.

https://www.policymed.com/2014/12/a-...inical-de.html

The largest hurdle is R&D including clinicals/trials, FD&A testing process, and post approval validation process. From there you have go forward production & distribution costs (Labor+capital/tooling+raw materials+transportation) then you have SG&A costs (Sales, Marketing, Legal, Finance, etc..).

Finally the company needs to model the success rate to bringing the drug to market " success rate for drugs that enter human trials at 21.5 percent.". If you introduce a similar drug into an existing developed family of drugs your success rate will be higher and a new/developing family the hit rate will be much lower.

The implied margin that a consumer will pay will need to cover the life-cycle costs of all the drugs that come to market along with those that never make it. Little of the actual cost is the direct production costs and marketing costs.
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Old 12-19-2019, 03:05 PM
 
9,033 posts, read 9,668,338 times
Reputation: 7659
Quote:
Originally Posted by Natnasci View Post
"Nevertheless, some former pharmaceutical-company executives say that research costs do not determine drug prices—and they explain how. In his book A Call to Action, Hank McKinnell, a past CEO of Pfizer, wrote under the heading “The Fallacy of Recapturing R&D Costs”:

How do we decide what to charge? It’s basically the same as pricing a car … A number of factors go into the mix. These factors consider cost of business, competition, patent status, anticipated volume, and, most important, our estimate of the income generated by sales of the product. It is the anticipated income stream, rather than repayment of sunk costs, that is the primary determinant of price.
Raymond Gilmartin, a former Merck CEO, once said to The Wall Street Journal: “The price of medicines is not determined by their research costs. Instead, it is determined by their value in preventing and treating disease.”

https://www.theatlantic.com/health/a...opment/585253/

That guy's thesis point is pretty obvious. And I must add I did not claim drug prices were driven in particular by R&D costs.
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Old 12-19-2019, 03:07 PM
 
9,033 posts, read 9,668,338 times
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Quote:
Originally Posted by SWFL_Native View Post
False.... When building a financial model for a Pharma company to manufacture a new/improved drug you must look at the entire life-cycle cost of the drug.

https://www.policymed.com/2014/12/a-...inical-de.html

The largest hurdle is R&D including clinicals/trials, FD&A testing process, and post approval validation process. From there you have go forward production & distribution costs (Labor+capital/tooling+raw materials+transportation) then you have SG&A costs (Sales, Marketing, Legal, Finance, etc..).

Finally the company needs to model the success rate to bringing the drug to market " success rate for drugs that enter human trials at 21.5 percent.". If you introduce a similar drug into an existing developed family of drugs your success rate will be higher and a new/developing family the hit rate will be much lower.

The implied margin that a consumer will pay will need to cover the life-cycle costs of all the drugs that come to market along with those that never make it. Little of the actual cost is the direct production costs and marketing costs.
Game, set, match.
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Old 12-19-2019, 03:49 PM
 
192 posts, read 33,962 times
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I have heard this a million times-SOMEONE HAS TO PAY FOR RESEARCH,since they are US Companies,we pay for their research.
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Old 12-19-2019, 04:42 PM
 
6,047 posts, read 3,246,640 times
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Quote:
Originally Posted by mojo101 View Post
I have heard this a million times-SOMEONE HAS TO PAY FOR RESEARCH,since they are US Companies,we pay for their research.
I'm still not sure you comprehend what this means "pay for research" "US companies" "We pay for their research".

The company could be a German GMBH or English Corp a US LLC or a Canadian family business the simple laws of economics still exist. I also don't think you understand that if a company wants to develop, admin, and sell a drug in the US it has to meet extreme FD&A compliance with multiple phases of approvals. The R&D for drug is "everything". To not understand this is to complete miss everything when it comes to the market and their business model. I'm not sure how to make it clearer.
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Old 12-19-2019, 08:44 PM
 
Location: Las Vegas, NV
1,716 posts, read 1,442,818 times
Reputation: 2061
Quote:
Originally Posted by mojo101 View Post
I have heard this a million times-SOMEONE HAS TO PAY FOR RESEARCH,since they are US Companies,we pay for their research.
That's the thing - often they are not US companies. If a drug is successful overseas and was developed by a foreign company, a US drug manufacturer can buy the US production rights and all that they have to do is get it through the FDA approval process. They have done no R&D whatsoever, but they are cashing in all the same. Abilify, a widely-advertised antipsychotic drug, is an example of this. It was developed by a company in Japan. The US manufacturer also later came up with a second use, as an adjunct with antidepressants, which allowed them to extend their US market exclusivity for several years after it otherwise would have ended.
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Old 12-19-2019, 11:23 PM
 
9,033 posts, read 9,668,338 times
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Quote:
Originally Posted by TimAZ View Post
The grey market in the U.S. for foreign-sourced pharmaceuticals is huge, arbitrage at the customer level. CBP pretends to police this trade, but they can only monitor a tiny fraction of the shipments.
The Chinese sell a world of fraudulent drugs that way too.
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Old 12-20-2019, 11:23 AM
 
3,769 posts, read 1,039,250 times
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Quote:
Originally Posted by TwoByFour View Post
Trump is going to allow some (but not all) prescription drugs to be imported from Canada. I am wondering if this is going to work out in the long run as intended.

Currently the main players in all drugs, Canadian or American are:
- The patent owner of the drug. Most of those are US Big Pharma companies at this point.
- The manufacturer. This may be the patent owner but most US drugs are manufactured in India.
- The pharmacy or whole-seller

In the US, drugs are expensive because the patent owner licenses that patent to the manufacturer at a very expensive rate. That same license to a Canadian manufacturer is much cheaper.

So if Americans will be buying their drugs from the Canadian manufacturer, the patent owner is going to make less money and will respond by charging more for the license to the Canadian manufacturer. Both Canadians and Americans will then pay more. This is going to anger Canadian citizens and Canada will respond by not allowing the export of Canadian drugs to the US. So we are back where we started.

The other situation that can occur is that the Canadian whole-seller just decides to charge a much higher price to an American drug importer than it would do a Canadian pharmacy. That whole-seller is not subject to US laws so can do whatever it wants. I would charge just about the same as a US whole-seller would charge, which means US citizens will not be paying much less for imported Canadian drugs.

In any event, it seems to me that the dynamics of the market will change pricing of Canadian drugs and end up washing away the advantage we will get.

What do others think?
I think you're mistaken on some of the facts. Please note: I've never worked in big pharma, and hence I will defer to anyone who knows better.

In general, the US pharma companies do much of the research and file patents on speculative compounds. Early on, those patents have little monetary value, as the drugs they cover have not gone through either the IND (Investigational New Drug) or the NDA (New Drug Application) process. At the point in time when those patents have little monetary value, they typically are sold to a separate legal entity in a different country -- frequently Switzerland or Ireland or Israel, as an example.

Manufacture of these new pharmaceuticals are not done in India. Manufacture of these new drugs is performed in rigorous regulated facilities in the USA where the regulated entities purchase fundamental chemical building blocks from regulated entities. The pharmaceutical manufacturer goes through the rigorous regulated process of manufacturing intermediate compounds until the final drug candidate is ready.

If the drug successfully passes all the hurdles to become approved by the FDA, manufacturing can be scaled - but every piece is identical to the manufacturing process during the NDA process.

Now, later on, once the drug goes off patent, then the generic companies step in and manufacture in India and elsewhere. They typically do not purchase fundamental chemical building blocks and painstakingly manufacture intermediate compounds until the final drug is ready. They purchase pre-manufactured compounds from opaque 3rd parties & 4th parties and do the final build. That is one reason there sometimes are purity issues with these generics. Because the manufacturing process is not identical to original patented drug, the potency and bioavailability of these generics is different. I believe the hurdle is 60% of the original drug - a relatively low bar.
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