Well, so the problem is that the "expensive to produce" part has already been done -- R&D, clinical trials, etc.
The incremental cost of actually producing a pill now is probably far, far, lower than $1000, but the pharma companies will want to sell the drug for as much as they think people will pay for it so that they'll have money to produce new drugs.
What I meant was, the cost, including amortization of fixed costs, is still legitimately high (and thus would be expensive for very different reasons from the typical "health care WTF" -- and most health care spending isn't in the form of pharmaceuticals). And expecting high-fixed-cost goods to be priced based on the marginal unit ... is the wrong heuristic to begin with.
I have never got over my visits to North America and seeing endless adverts for prescription drugs - which never actually said what they were supposed to cure. Followed by, of course, a voice quickly firing off the list of side effects.
"Ask your doctor if somthingodin is right for you."
So you might have seen two types of ads. One type will say what the drug does, but if you say that a drug does something, then you have to list the side effects.
Then there's the pure branding ads, where you can say the name of the drug, show pictures of people dancing in forests and playing with puppies, and say "ask your doctor if somethingodin is right for you", without having to spell out the side effects.
So first you learn what the drug does, and all the horrific things it will do to you. Then, when you vaguely remember that the drug helps treat a thing you have, you see the branding ads, and then you talk to your doctor, who, while ethically bound to go over the side effects, is not being monitored by the FDA, and thus will hopefully present a rosier picture than the first ad.
Over the last 10 years, Gilead has spent somewhat more on research than marketing. They still spent a big chunk of change on marketing, though: $9.4 billion.
That being said, presumably they set their marketing budget at a point that maximizes their revenue (i.e. the point at which one more marketing dollar fails to bring in more than one more revenue dollar). Given the fact that the research budget is a fixed cost, obviously it makes sense to spend money on marketing to ensure that there are enough sales to recoup that expenditure and make a profit.
My point is that marketing for medicine is an almost 100% waste for society as a whole. It serves no useful purpose except to move market shares between functionally identical products.
Oh, and a considerable percentage of "research" is really marketing, since its goal is to find minor variations of existing, perfectly effective drugs whose patent protection is about to run out.
>My point is that marketing for medicine is an almost 100% waste for society as a whole. It serves no useful purpose except to move market shares between functionally identical products.
If people could instantly know about which drugs are relevant to them, or doctors meticulously searched the literature for all available treatments for all patients, then alerting the world about the existence of your new drug would be a complete waste. But we don't live in that world.
If pharmas really are offering identical products, that's a problem of creating unnecessary drugs, not marketing per se, and would be exposed when the relevant people make the cost benefit calculation.
My point is that marketing for medicine is an almost 100% waste for society as a whole. It serves no useful purpose except to move market shares between functionally identical products.
Not true at all: Could you sit in an empty, white-walled room and tell us exactly which new drugs will be needed over the next decade and how they will appeal to doctors and different patient groups? Whether they'll be worth developing at all? How existing patients on inferior (or no) treatments will find out about them without you spending a nickel?
According to a 2009 CBO report[1], direct-to-consumer (DTC) accounted for about 1/4 of total promotional spending (not counting the retail value of free samples to doctors, which, if included, would cut the DTC fraction in half). And that apparently doesn't count aspects of "marketing" that are not related directly to promotion (though it's hard to see how CBO or anyone else would draw a clean distinction there). It was also dropping in both relative and absolute terms as the number of new drugs with broad patient appeal tailed off.
Even if you think DTC is worthless or actively harmful, surely there's some value in marketing to (nominally) informed, expert doctors and insurers, unless you think marketing anything is an essentially fraudulent or worthless activity. Would Ford or their potential customers be better off without marketing? What makes drugs any different?
I'm a little confused. Which category in that report represents figuring out what drugs will be needed in the future and whether they're worth developing?
I don't think marketing is either fraudulent nor worthless, but it is a tragedy of the commons these days. People have more than enough tools at their disposal to discover the products they want and need to buy on their own. Marketing by an individual entity is useful and necessary, but the whole field is just pointlessly rearranging the chairs. We'd all be better off if we could somehow all agree to quit it, at least the fluffy parts that convey only emotion and not information.
> That being said, presumably they set their marketing budget at a point that maximizes their revenue (i.e. the point at which one more marketing dollar fails to bring in more than one more revenue dollar).
That's a lot easier to do when they can get the government and other insurers to pay $1000 a pill for their wares that they have marketed to the public.
facilities to produce the medicine don't come cheap, they are not cheap to maintain, so this odd dismissive stance so many make with regards to medicine always annoys me.
the marketing of many drugs is done to convince consumers to pick a named brand over a generic. frankly the small print warnings they have to carry are more frightening than what is on a pack of smokes.
My argument is that it's a net loss for society and a way to produce drugs that does not rquire billions to be wasted on marketing would produce better overall results.
Even if they could produce 1000 complete treatments for less than 1$, they still spend billions of $ to research the treatment. That cost and some profit needs to be covered before the drug is available in bulk from asian companies that piggyback on that research.
Take for example PPIs, they where crazy expensive at first, but are now very cheap. I can only imagine the same will be the result with this treatment.
TOBY
The pills cost 'em four cents a unit to make.
JOSH
You know that's not true. The second pill cost 'em four cents; the first pill cost 'em
four hundred million dollars.
If you want to step up and by the first pill I'm sure they won't have a problem bringing down the costs. It cost them 11 billion to buy the company which did the R&D for this drug.
The incremental cost of actually producing a pill now is probably far, far, lower than $1000, but the pharma companies will want to sell the drug for as much as they think people will pay for it so that they'll have money to produce new drugs.