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Indian Gov't Uses Special Powers To Slash Cancer Drug Price By 97%

Soulskill posted more than 2 years ago | from the opening-a-can-of-worms dept.

Medicine 556

suraj.sun sends this quote from the Times of India: "In a landmark decision that could set a precedent on how life-saving drugs under patents can be made affordable, the government has allowed a domestic company, Natco Pharma, to manufacture a copycat version of Bayer's patented anti-cancer drug, Nexavar, bringing down its price by 97%. In the first-ever case of compulsory licensing approval, the Indian Patent Office on Monday cleared the application of Hyderabad's Natco Pharma to sell generic drug Nexavar, used for renal and liver cancer, at Rs 8,880 (around $175) for a 120-capsule pack for a month's therapy. Bayer offers it for over Rs 2.8 lakh (roughly $5,500) per 120 capsules. The order provides hope for patients who cannot afford these drugs. The approval paves the way for the launch of Natco's drug in the market, a company official told TOI, adding that it will pay a 6% royalty on net sales every quarter to Bayer."

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Just keep in mind the tradeoff (5, Insightful)

elrous0 (869638) | more than 2 years ago | (#39341539)

I know I'm going to burn karma for saying this (wouldn't be the first time), but do keep in mind that the R&D costs for developing these drugs is paid from the profits these companies make. Now, maybe governments themselves should be doing the development instead of for-profit companies, maybe the drug company profits are too high, and maybe Bayer were dicks to charge that much for a drug in a poor country. But if you're going to keep the system as-is, you had think long and hard before you just start ripping patents left-and-right. It may be politically popular, but you can't have your cake and eat it too.

If you're going to say "X company doesn't get to patent its drugs" you need to come up with a replacement for the money that X company put into its research and development. If the government wants to serve its people this way, that's fine, but they also have an obligation to pony up the money for their own R&D program (and not one that just does knockoffs of existing drugs). Because without that profit motive from those patents, the drug companies sure aren't going to be developing anything new.

Re:Just keep in mind the tradeoff (5, Insightful)

Anonymous Coward | more than 2 years ago | (#39341589)

1. Most drug company expenditure is on marketing;
2. Most drug research is academic;
3. They can settle for less profit;
4. If they won't settle for less profit, someone else will be prepared to take their position in the market.

Problems solved.

Re:Just keep in mind the tradeoff (4, Insightful)

cpu6502 (1960974) | more than 2 years ago | (#39341813)

1. Advertising actually save money because it encourages more sales.
2. Academic research is funded by drug companies and other corporations.
3. They don't make that much profit. I don't see Bayer in the top 100.
4. Doubtful. No company sells at a loss. Bayer would just avoid India completely, and not release their patented drugs until 10-20 years later (after they recover their initial R&D investment).

Re:Just keep in mind the tradeoff (5, Funny)

Microlith (54737) | more than 2 years ago | (#39341893)

1. Advertising actually save money because it encourages more sales.

Thus, advertising gives you cancer. QED.

Re:Just keep in mind the tradeoff (0, Troll)

cpu6502 (1960974) | more than 2 years ago | (#39341951)

I guess I have to spell it out. You develop a new pill called Viagra. It costs $1000 a pill but you don't advertise it, so very few people buy it and the cost remains $1000 a pill.

Then you decide to advertise it on TV, radio, and the net and within a year you're selling to over 10 million customers. Thanks to economy of scale, the price per pill drops to $1. Therefore advertising actually saved money (rather than waste money as the great-grandparent post claimed).

Re:Just keep in mind the tradeoff (4, Insightful)

Hatta (162192) | more than 2 years ago | (#39342109)

No amount of marketing can change the number of people who need a drug. That is fixed. If the number of sales is less than this number, that can be fixed by educating doctors. If the number of sales is greater than or equal to the number of people who need a drug, more marketing just leads to overprescription. Whatever savings you're imagining here are subsidized by encouraging people to take drugs they don't need. That's bad all around.

Re:Just keep in mind the tradeoff (0)

Anonymous Coward | more than 2 years ago | (#39342149)

Let's see:

(a) I spend nothing not to buy a drug I don't know about. Total cost: $0.

vs.

(b) I spend $1 per pill for years worth of drugs I wouldn't have "needed" had I not known I had XYZ Syndrome. Total cost: More than $0.

So, how does advertising drugs save me money?

Re:Just keep in mind the tradeoff (1)

networkBoy (774728) | more than 2 years ago | (#39341967)

/win

Re:Just keep in mind the tradeoff (1)

Intropy (2009018) | more than 2 years ago | (#39342107)

California already knew that.

Re:Just keep in mind the tradeoff (5, Insightful)

Anonymous Coward | more than 2 years ago | (#39341907)

1. Yes, because advertising for cancer drugs increases demand. In what universe?

2. And at a pittance compared to government funding. Plus they demand tax cuts for doing it, so...net loss.

3. Because that kind of comparison is valid, even if it were true.

4. So let's see, Bayer is going to pursue profits from medicine by sitting on their hands instead of taking a lesser cut? At what price? The lives of human beings? You're not defending them, you're indicting them for gross indifference manslaughter. You've made them criminals.

Re:Just keep in mind the tradeoff (0)

TheCouchPotatoFamine (628797) | more than 2 years ago | (#39341939)

Your point 3 is like saying that a car thief (yes! a car analogy, almost!) isn't so bad because he wasn't one of the top 100 most prolific thieves of the year. Your other points aside, that sort of logic - apologist - gets to me since it tries only to win the argument, not provide reasoning. Are you being a devils advocate? Or do you actually think that? Bayer's biggest thing was heroin, and its stayed about the same ever since... drug dealers by anyone's measure.

For the truly wondrous, healing breakthroughs - well, i want industry to be well incentivized, but if "Academic research is funded by drug companies and other corporations" alone, or even predominantly then I am upset. You're telling me we just fought a senseless war and could have invested more money in basic lifesaving research then those companies all, combined?

I only wish "War on Disease" was a catchy as "War on Drugs". Bravo, India.

Re:Just keep in mind the tradeoff (1)

mosb1000 (710161) | more than 2 years ago | (#39342031)

Bear in mind that clinical trials are carried out by these corporations. They aren't cheap. And they don't always play out.

Nonsense! Capital will flee (5, Insightful)

unassimilatible (225662) | more than 2 years ago | (#39342011)

If they won't settle for less profit, someone else will be prepared to take their position in the market.

Who is "they"? Spoken like a guy who doesn't own stocks. Scare investment capital from drug companies, and it won't go elsewhere in the market - it will go to Exxon and Apple! Buh-bye, private R&D!

Government will never give out free gas and iPhones, so my investment dollars will go there.

Re:Just keep in mind the tradeoff (4, Insightful)

Anubis IV (1279820) | more than 2 years ago | (#39342027)

1. Most drug company expenditure is on marketing

Simple fix: Ban drug advertisements. That's the way it used to be and the way it should've stayed, since there is no valid reason why consumers should be the target of drug marketing when they shouldn't even have any say over their prescriptions.

Bonus: No more hastily spoken disclaimers regarding dry mouth and constipation at the end of every other commercial.

Re:Just keep in mind the tradeoff (2)

medcalf (68293) | more than 2 years ago | (#39342089)

Sure, someone else will take teir position on drugs already invented. But who's going to invent the next drug? When the risk is billions of dollars, lawsuits, ruined reputations and dead or maimed people, and the reward is making money only until the drug is reverse engineered (maybe a couple of years), then who will take risks on anything but the safest bets? You see the good now (cheaper known drugs) but not the cost later (fewer new drugs).

Re:Just keep in mind the tradeoff (3, Insightful)

Artraze (600366) | more than 2 years ago | (#39342125)

> Most drug company expenditure is on marketing;

On the other hand, advertising, by definition, increases profits or it's a waste of money. Thus, advertising actually _decreases_ individual costs because they sell more units and can thus amortize the overhead costs (which are the primary costs) across more units.
For example, suppose your overhead is $1000, which cores things like labs, employees, trials, and other failed drugs and the cost to manufacture is $1. If you only sell 100 units, you must charge $11/each to break even. Suppose you then spend $200 on advertising and sell an additional 100. Now your break-even price becomes $7/each. The advertising money actually reduced the unit cost.

Now, I suppose you could argue that they're greedy and will still charge $11/each, but that's blatantly ignoring the basic economics that set the price in the first place. After all, they could be charging $20/unit to start, but the idea is that the 'greed' is an overhead cost, not a unit cost, and therefore also amortized across the units.

A viable argument is that on a macroeconomic scale, this increases the overall cost of healthcare because the drug price does factor in some advertising money. To this I have to say: whatever. That just get's too hard to trace. For advertising, if that ad money isn't in your drugs, it's in your Pepsi. Medically, the drug does some good (kinda part of the approval), maybe those people that missed it had much more costly problems because they didn't know the drug existed and had complications with their un/poorly treated condition.

> 2. Most drug research is academic;

Regardless of the truth in this (hint: it's rather limited), most cost is in bringing the drug to market. It's not as if these hypothetical academics make the compound, solve the engineering issues to produce it, and run all the trials. At best they find the drug compound, and usually it's more the mechanics, leaving the drug company to find the molecule that actually exploits that mechanism without killing people. Oh, and then develop the manufacturing process and run years of trials.

> 3. They can settle for less profit;

I guess. Given how much a crap shoot drug development can be, it's hard to define what exactly 'profit' is. Because often times it's just money to pay for the next year's research when income is down.

> 4. If they won't settle for less profit, someone else will be prepared to take their position in the market.

This is blatantly false. If this was the case then the Indian company would have done that, right? But no, they let Bayer do all the real work and are just spitting out chemicals. Hell, they probably are copying Bayer's manufacturing process as well, right off the friggin' patent. No wonder it's so cheap for them.

Finally, regarding your point 3 in particular, let us not forget the elephant in the room:

LIABILITY

If/when this drug is discovered to be doing something bad, who's responsible? This mindless manufacturer? I'm betting not. The Indian governement? HAHAHA. Bayer is the one at the end of the barrel and they won't have any 'excessive profits' to pay damages with. Woohoo!

Re:Just keep in mind the tradeoff (0)

Anonymous Coward | more than 2 years ago | (#39342127)

Actually...

1) Most drug company expenditure is on CLINICAL TRIALS. The average cost of Phase 3 trials alone is over half a billion US dollars for a given drug.

2) Most drug research is academic but research alone doesn't tell you if a drug is truly safe and/or effective, only that it has potential.

3) Yes, they can settle for less profit.

4) Someone else will take their position only if there is a similar drug with similar safety/efficacy whose patent is owned by another company and has gone through the very expensive and time consuming process of clinical validation in order to ensure that said safety and efficacy is high enough to meet the guidelines set forth by the appropriate regulatory commissions. Guidelines which have been established to protect consumers from snake oil salesmen who used to sell radioactive water as tonics capable of curing all ailments.

Re:Just keep in mind the tradeoff (2, Informative)

ClintJCL (264898) | more than 2 years ago | (#39341601)

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies. Only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). It sounds like you read the conservative cliff notes on the issue.

Re:Just keep in mind the tradeoff (5, Insightful)

elrous0 (869638) | more than 2 years ago | (#39341665)

Well apparently the academic institutions, small biotechnology companies, and NIH are motivated by profit too, or they would be putting the drugs into the public domain, wouldn't they?

Re:Just keep in mind the tradeoff (1)

zlives (2009072) | more than 2 years ago | (#39341689)

+1 if i could

Re:Just keep in mind the tradeoff (1)

bartosek (250249) | more than 2 years ago | (#39341781)

Again somewhat true. Academic research is largely funded by private companies, in exchange for exclusive rights to the fruits of the research.

Re:Just keep in mind the tradeoff (0)

Anonymous Coward | more than 2 years ago | (#39341949)

See State funding, Federal funding (NFS grants), angel investors, and philanthropists for each of those entities. Public Domain and profit? Devil's in the details, and is grey grey grey depending on each.

Academia? More than you'd think (4, Interesting)

Sycraft-fu (314770) | more than 2 years ago | (#39341987)

Since the public has decided they do not wish to pay more taxes to education, public funding has been getting slashed over and over. So we turn to the only place we can: Companies. They are willing to give money to fund research. However they own the results when they do that.

If you don't like that I'm afraid universities will need more public funding and that means higher taxes.

Re:Just keep in mind the tradeoff (1)

Empiric (675968) | more than 2 years ago | (#39342111)

I think we have to draw a distinction between the costs to have a product -first- (with the corresponding IP lock-out opportunities), and the costs of producing and selling a product per se.

Developing a current Intel processor was costly. To produce the performance equivalent 10 years ago, would probably have required R&D expenditures equivalent to the whole world's GDP. Which price point would it be ethical to mandate paying (via IP laws, as that's the only reason a company would have the "need" for it "first"), given that hypothetical?

Or, to perhaps put it another way... was the discovery of aspirin inevitable, even if it happened 5 years later on humanity's knowledge curve, at much lower cost?

Re:Just keep in mind the tradeoff (2)

HairOfTheBambit (1281718) | more than 2 years ago | (#39341699)

I've head this both ways, but never seen the proof either way. Can anyone show me where they are pulling the stats for "Drug companies spend more on XXX than YYY"

Re:Just keep in mind the tradeoff (3, Insightful)

CensorshipDonkey (1108755) | more than 2 years ago | (#39341701)

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies.

If this is actually true, I'd like to see some figures or at least a link.

Re:Just keep in mind the tradeoff (2, Informative)

Anonymous Coward | more than 2 years ago | (#39342013)

There you go:

http://www.sciencedaily.com/releases/2008/01/080105140107.htm

If you don't like it, demand they open their books and settle the question once and for all. Or ask the blondes going into doctors offices how much they make.

Re:Just keep in mind the tradeoff (1)

Anonymous Coward | more than 2 years ago | (#39342099)

Novartis spent 2.5 billion on R&D last Q
the sam Q they spent roughly 4 billion on marketing
they had net sales of 14 billion
so they spent about 18% on R&D

Re:Just keep in mind the tradeoff (4, Informative)

nedlohs (1335013) | more than 2 years ago | (#39342105)

http://www.sciencedaily.com/releases/2008/01/080105140107.htm [sciencedaily.com]

of course 56% of those marketing dollars are "samples" according to http://www.medicine.mcgill.ca/MJM/issues/v08n01/orig_articles/barfett.pdf [mcgill.ca] . Which end up being drugs for uninsured poor people at the doctor's discretion, when I was uninsured and jobless in the US the doctor gave me samples of some antibiotics, for example.
 

Re:Just keep in mind the tradeoff (5, Informative)

StandardDeviant (122674) | more than 2 years ago | (#39342137)

The public drug companies are required to file financial reports with the SEC, which generally detail their budgets (at least to a sufficient level of granularity for this discussion). EDGAR is one avenue of getting at them (10-Q for example for quarterly reporting). But yeah, he's not lying, R&D expenditures are not the majority line item for most large pharmaceutical companies. If anything, Big Pharma has been on the whole aggressively cutting R&D over the past few years.

Just for one concrete example, here's Pfizer's 10-Q from late last year:
http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?TabIndex=2&FilingID=8236559&companyid=5709&ppu=%252fDefault.aspx%253fcompanyid%253d5709%2526amp%253bformtypeID%253d13 [edgar-online.com]

Click into "Financial Statements" there. I think the given figures are in units of "millions," so they spent about $2.1Bn on R&D during the given quarter, compared to $4.6Bn for "Selling, informational and administrative expenses" (which probably includes marketing) and $3.7Bn for "Cost of sales" (not sure, might be raw materials and manufacturing?).

Re:Just keep in mind the tradeoff (1)

smi.james.th (1706780) | more than 2 years ago | (#39341717)

I don't disagree with you but can you cite any examples?

Re:Just keep in mind the tradeoff (3, Informative)

punker (320575) | more than 2 years ago | (#39341823)

While it's true that the big pharmaceutical companies don't develop most of their own drugs, they do pay for the R&D done by the small firms. More importantly though, they tend to be what takes the drugs out of the lab and into a usable form. They primarily handle the drug safety (i.e. drug trials), manuafacturing, and marketing (because it's no good if the doctors don't know about it). They're just later in the chain, but they have done their work to create the drugs. If the Indian people/government paid for the work done prior to it being acquired by Bayer, then maybe you can justify setting the price so low for the work they did. But if not, it's just a straight ripoff. They better hope they know everything about the drug, because Bayer certainly won't be looking to help them.

Re:Just keep in mind the tradeoff (1)

geckipede (1261408) | more than 2 years ago | (#39341957)

Drug safety and the manufacturing process are not trivial items, and they are certainly a critical part of the process for bringing a drug to market. (Lab processes for making a substance are usually horribly inefficient, wasteful, slow, dangerous... very flawed. I know very well how huge a task it is to find a usable manufacturing method)

... but marketing a drug is a tricky subject. Doctors are in theory supposed to be highly knowledgeable impartial experts who will judge a drug on its merits - experts that the patients can trust to prescribe them the right stuff when needed - but in practice it seems that doctors are just as vulnerable to marketing as everybody else. Bad drugs can easily be promoted to common use above cheaper or safer equivalents, just by paying for lots of adverts.

Re:Just keep in mind the tradeoff (2)

Filip22012005 (852281) | more than 2 years ago | (#39342151)

Often, they buy small companies after the drug's been proven effective. The smaller companies can't afford large saftey studies, manufacturing and marketing. Many small companies take the risks.

Re:Just keep in mind the tradeoff (1)

Bill, Shooter of Bul (629286) | more than 2 years ago | (#39341839)

R&D is a small part of the budgets for *some* big drug companies, like Purdue Pharma. In fact, they're the bastards that invented modern drug marketing. R&D is expensive and difficult requiring really smart people and luck. Marketing is cheaper and more successful. Purdue pretty much just tweaks existing drugs to get a new patent on it, and then takes all the doctors out for daily lunches.

Re:Just keep in mind the tradeoff (3, Informative)

sycodon (149926) | more than 2 years ago | (#39341913)

I have a relative with a PhD working at a drug company doing drug development. We have had many conversations about her work and how it may eventually end up on the market. Her single department has a budget of over a millions dollars a year just for the people and facilities and supplies (yes, you have to buy all the shit to do the experiments with). They have about 20 different departments focusing on different kinds of drugs.

Now add on top of that all the trials which are well known to require upwards of a hundred million to conduct, review, and have certified by the feds.

So, your assertion that R&D for a new drug is a small part of budgets is misleading.

But, I will say that the reformulating of a drug and making small changes is complete crap and should be disallowed.

Re:Just keep in mind the tradeoff (2)

networkBoy (774728) | more than 2 years ago | (#39342067)

But, I will say that the reformulating of a drug and making small changes to get awarded a patent is complete crap and should be disallowed.

FTFY.
Doing derivative work on a drug to make it better (cheaper, more effective, less side effects, etc.) is a good thing, and I suppose there is a grey line where a patent may be reasonable, but in general, yes I agree with you.
-nB

Re:Just keep in mind the tradeoff (0)

Anonymous Coward | more than 2 years ago | (#39342123)

So, your assertion that R&D for a new drug is a small part of budgets is misleading.

All you've told us is that they spend upwards of $100 million/year on their 20 departments and drug trials. The original claim is that the majority of the budget is allocated to marketing (you changed the claim!). Without knowing that budget, the $100 million figure doesn't prove anything.

Re:Just keep in mind the tradeoff (0)

Anonymous Coward | more than 2 years ago | (#39341919)

http://www.annualreport2010.bayer.com/en/bayer-annual-report-2010.pdfx

Bayer (in 2010) spent about 9% of its earnings on R&D. It made about 4% of its sales in profit, after taxes.

Re:Just keep in mind the tradeoff (2)

Baloroth (2370816) | more than 2 years ago | (#39341971)

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies.

I wouldn't call ~$1 billion USD a "small" cost by any measure whatsoever. Primary source [nature.com] (PDF Warning), secondary Wikipedia [wikipedia.org] source. Note that these costs do not include post-launch (which I think it is safe to assume "marketing" falls under) costs, only that of the R&D to get to market approval. And while it depends on the circumstances, a lot of drug research at academic institutions is actually funded by corporations, not the government. Drug research is prohibitively expensive and requires 10+ years in most cases for the drug to reach market. You can't get investment for that from tiny startup companies.

Even the lowest boundary for drug development costs is $55 million: nowhere near something a small biotech company could afford (not by my definition of "small" anyways) out-of-pocket with no ROI for 10 years.

Re:Just keep in mind the tradeoff (0)

Anonymous Coward | more than 2 years ago | (#39342003)

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies.

<< citation needed >>

Something credible please. Sicko does not count.

My request is genuine. PHDs and HPLCs are very expensive. So are decade long double-blinds.

Citation please (3, Insightful)

unassimilatible (225662) | more than 2 years ago | (#39342079)

Only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH)

Nice general talking points there, now how about some proof in the form of cites?

Besides, it's utterly pointless to say one does more than the other. How about encouraging as much funding you can going toward lifesaving drug research, instead of private sector capital fleeing to oil companies and tech?

Re:Just keep in mind the tradeoff (1)

demonbug (309515) | more than 2 years ago | (#39342095)

Somewhat wrong. Research and development (R&D) is a relatively small part of the budgets of the big drug companies. Only a handful of truly important drugs have been brought to market in recent years, and they were mostly based on taxpayer-funded research at academic institutions, small biotechnology companies, or the National Institutes of Health (NIH). It sounds like you read the conservative cliff notes on the issue.

R&D expenditure varies pretty widely. Bayer appears to be one of the worst in R&D to marketing ratio; according to their 2011 Annual Report [bayer.com] they spent about 3 billion Euros on R&D and 8.8 billion Euros on "selling" (excludes manufacturing costs). On the other hand, Roche [roche.com] was pretty evenly split between R&D and marketing, with about 8 billion Swiss francs on each. Bristol-Meyers Squibb [corporate-ir.net] put about $4.5 billion into marketing and $3.5 billion into R&D.

So yes, drug prices tend to be inflated and a lot of the expense goes to marketing. However, they are also spending a lot on R&D - generally 10% - 25% of income. I won't argue that drugs shouldn't be cheaper - they absolutely should be - but claiming that the pharmaceutical companies don't spend money on research and have no associated costs to recover above the cost of manufacturing the drugs is just plain ignorance. It is certainly worth discussing how drug research and development should be paid for, but India unilaterally deciding to ignore patents without providing any way of funding new research simply isn't sustainable if everyone does it.

Re:Just keep in mind the tradeoff (2)

sohmc (595388) | more than 2 years ago | (#39341605)

Or even worse, they won't bring the drug to unfriendly markets, making it so that only the people who can afford to go out of the country to receive treatment.

It's not bad karma. It's bad business.

Re:Just keep in mind the tradeoff (3, Insightful)

sjames (1099) | more than 2 years ago | (#39341871)

If they choose not to market a drug in India at all, I guess the government will save a lot of deliberation when they approve a local company to make the generic. It's not like they can't figure out how it's being made.

Re:Just keep in mind the tradeoff (-1)

Anonymous Coward | more than 2 years ago | (#39341623)

ssdfs

Re:Just keep in mind the tradeoff (3, Funny)

zlives (2009072) | more than 2 years ago | (#39341643)

I wonder: On the opposite side, if the drug companies no longer develop new treatments; would a non profit based entity (govt, charity) do the work? and if they would then perhaps that is whats best for humanity?

Re:Just keep in mind the tradeoff (1)

Anonymous Coward | more than 2 years ago | (#39341669)

How about this:

If drug companies move their labs and staff to India to take advantage of far cheaper resources, cost of living, and less restrictive research laws, they need to give back to the billions of people upon whose backs those savings are made possible.

If they don't want to do business there, come back to the USA and lobby to go to war against countries that do things they don't like. After all that's the American way.

Re:Just keep in mind the tradeoff (0)

Anonymous Coward | more than 2 years ago | (#39341675)

Because without that profit motive from those patents, the drug companies sure aren't going to be developing anything new.

That only applies to drugs where there is a market for them - a big enough market where they are assured their ROI goals.

In other words, if the disease doesn't have many suffers, they will not develop a drug for it regardless of the human suffering.

Then you have drugs where the company spends hundreds and hundreds of millions of dollars because they know they'll make a killing but it really doesn't save lives - like Viagra. Quality of life? You know that a HUGE percentage of folks who use Viagra are also smokers? And smoking is the #1 cause of male impotence. That's right, billions of dollars could be saved every year on hard on drugs alone if cigarettes where eliminated.

Medicine is one of those areas where I honestly think that the free market system causes more harm than good.

Re:Just keep in mind the tradeoff (1)

elrous0 (869638) | more than 2 years ago | (#39341799)

Well, I think you've made a good case for why the government should be doing its own R&D and not relying on Pfizer. But I bet if you asked the Indian government to put their money where they mouth is, you would be greeted with silence. It's that way even in the U.S. Everyone bitches about drug prices, but then they turn around and elect politicians who have no damned intention of funding drug development through the government.

Re:Just keep in mind the tradeoff (1)

i.am.delf (1665555) | more than 2 years ago | (#39341683)

Don't forget this. http://apps.who.int/medicinedocs/en/d/Js6160e/6.html [who.int] Look at table 4.3. The only markets that matter are the US and western Europe. Everywhere else is peanuts in comparison. The US, Europe and Japan collectively pay for the vast majority of the world's drug R&D through both government grants, venture capital and big pharma research.

Re:Just keep in mind the tradeoff (1)

Anonymous Coward | more than 2 years ago | (#39341687)

I'm sure they more than make up for any R&D costs lost by taking subsidies and not paying any taxes.

Re:Just keep in mind the tradeoff (1)

betterunixthanunix (980855) | more than 2 years ago | (#39341691)

if you're going to keep the system as-is

I'll just throw in a vote for "let's change the system and not keep it as-is."

Re:Just keep in mind the tradeoff (2)

SaroDarksbane (1784314) | more than 2 years ago | (#39341713)

Just like Apple needs patents on rounded corners for smartphones, or it will never be able to recoup all the money it put into market research? Aspirin still sells like hotcakes, and I'm pretty sure the patents on it expired long ago.

Patents cause industry to stagnate, aren't necessary for innovation, and get people killed. They are a great way to enrich huge corporations, though, who can keep out competition of every sort by having the cash to keep the FDA in their pocket.

Re:Just keep in mind the tradeoff (2)

SJHillman (1966756) | more than 2 years ago | (#39341727)

I believe a big portion of the expense, at least in the US, isn't so much the R&D as the time it takes to get something to market. Some drugs take decades of trials and government approval after the initial R&D just to prove it's safe. Having to wait this long to market a product is a major factor in driving the cost up. There's a large time lag between the initial investment and when you see any profit from it, so the profit needs to be fairly considerable to make it worth developing in the first place.

Re:Just keep in mind the tradeoff (0)

Anonymous Coward | more than 2 years ago | (#39341853)

um those trail and approval are the D part of R & D, so yes it is the R&D

Re:Just keep in mind the tradeoff (-1)

Anonymous Coward | more than 2 years ago | (#39341731)

Karma here sucks ass. When you speak your mind, you lose Karma. It's sad in my opinion. Personally I like your comment.

That argument is empirically false in this case. (5, Insightful)

langelgjm (860756) | more than 2 years ago | (#39341733)

That argument does not work in this situation. Bayer had priced the drug so high in India that it was clear they had no interest in serving the Indian market. I'm on a listserv for this type of information, and someone close to the issue noted that "Last year Bayer sold 493 boxes of 120 tabs of Sorafenib in India. That was enough for about 49 people, in a country with a population of 1,210,193,422."

Any money Bayer was making in India off this drug was a rounding error compared to the lucrative North American and European markets. Furthermore, Bayer argued to the Indian court that the Indian population did have access to the drug through an infringing version produced by Cipla, while at the same time Bayer was suing Cipla for patent infringement, trying to get their product off the market.

Given the 6% royalty rate that NATCO has to pay to Bayer, I wouldn't be suprised if Bayer ends up making more money with the compulsory license than before.

Re:That argument is empirically false in this case (1)

zlives (2009072) | more than 2 years ago | (#39341851)

Bayer could just lower the price to match NATCO and still take 6% from them on top... if they cared!

Re:That argument is empirically false in this case (1)

Mr Z (6791) | more than 2 years ago | (#39341999)

And in either case, cancer patients in India get access to the drug at reasonable prices. Let's not forget about the cancer patients in this, shall we?

Re:Just keep in mind the tradeoff (0)

Anonymous Coward | more than 2 years ago | (#39341745)

Why not outsource some of the trials? There's a local company that does testing for various drugs and medications and they frequently advertise upwards of $2000 for two-weekend studies. That's just the money that they're paying the college kids to show up, take the meds/placebo, and sit around the facility for the next few days. It seems like this could be done in a more cost-effective manner in a place like India where participants could be paid less, among other cost-saving measures.

You do make a good point that there could be some unintended consequences from this. For starters, the major pharmacutical companies are probably yelling at Congress to do something about this. How long until we have some kind of ACTA-like treaty that applies to medication? We could get rid of the individual companies and have the government handle research, but that still doesn't necessarily change things. Why should one or two countries subsidize the cost of finding new medicines?

Or get "creative" with things (1)

RobertLTux (260313) | more than 2 years ago | (#39341783)

1 allow companies to do Human testing under gov contract (this kills the liability part mostly) so that R&D is cheaper
2 don't require retesting of the components of a multipart drug ( the paperwork will refer back to the original tests) just because you are combining them DO FINAL TESTING ON THE COMBO (skip the animal testing parts go directly to human trials)
3 fast track new formats of drugs (Profican now in Liquigel format!!)
4 allow companies to cut deals for exclusive early rights to the "generic" version (okay for 10% of the take we will allow you to make the Generic for Profican 2 years early)

im sure that all sorts of very Profitable Things can be drawn up

Re:Or get "creative" with things (1)

Anonymous Coward | more than 2 years ago | (#39342049)

allow companies to cut deals for exclusive early rights to the "generic" version

They already do in the US. When a drug patent expires, they can register to be an exclusive generic producer [wikipedia.org] . Some companies have registered and not produced the generic version to pad out their brand name version's sales.

Re:Just keep in mind the tradeoff (1)

DarthVain (724186) | more than 2 years ago | (#39341805)

They get around this by paying royalties on profit to the patent company.

Bottom line, R&D done by the west sold to the west is too cost prohibitive for most other countries. This is not limited to drugs or R&D either. This is why a copy of music, DVD, or Windows 7, or whatever costs X in the USA, and Y in say India. They simply cannot afford X, period. Those that due make up maybe 0.000000001% of the country (3 people apparently). So the reduce the price.

In this particular case the Government is allowing another company to make a generic version of the drug to sell for a profit within India (which breaks a patent really), so long as 6% of their profit goes to Bayer the company that did the R&D and has the Patent to the brand name drug. This way Indians get to have drugs and Bayer still gets paid. Otherwise realistically Indians do not get drugs and Bayer makes nothing anyway.

The only risky part of this business, is if people start "exporting" the generic drug out of the region and into a region that Bayer does sell the expensive brand name drug, in which case they would most certainly loose money (figuratively sort of) and market share. This would be the same as that DVD from China coming back to the US for sale. At least they could try to region code the things etc... Drugs, not so much.

If history has taught us nothing, if you make en expensive drug and divergent markets there will be smuggling. At least in this case the profiteers can have a bit of moral high ground as they might be saving western poor peoples lives with cheap cancer treatments, VS feeding some addicts habit. Anyway should be interesting to see what happens. This already happens to a certain extent, however 97% is a heavy savings, and temptation for smugglers.

Re:Just keep in mind the tradeoff (5, Informative)

tonywong (96839) | more than 2 years ago | (#39341807)

If you read the article it does give the circumstances of the ruling. I would be inclined to agree with you on principle, but from the article:

Economist and intellectual property expert James Love said, "The Bayer price of Rs 34,11,898 per year ($69,000) is more than 41 times the projected average per capita income for India in 2012, shattering any measure of affordability. Bayer tried to justify its high price by making claims of high R&D costs, but refused to provide any details of its actual outlays on the research for Sorafenib, a cancer drug that was partly subsidized by the US Orphan Drug tax credit, and jointly developed with Onyx Pharmaceuticals. Bayer has made billions from Sorafenib, and made little effort to sell the product in India where its price is far beyond the means of all but a few persons."

This is in direct contravention to the WTO TRIPS agreement:

Under Section 84, a compulsory licence to manufacture a drug can be issued after three years of the grant of patent on the product, which is not available at an affordable price. Under the World Trade Organisation TRIPS Agreement, compulsory licences are legally-recognized means to overcome barriers in accessing affordable medicines. This is the first time in the history of the Indian Patents Act, 1970, that the provision under Section 84 has been invoked.

Mod parent up, please... (1)

morningstar8 (234758) | more than 2 years ago | (#39341989)

Mod parent up, please, +1 informative.

Re:Just keep in mind the tradeoff (1)

theArtificial (613980) | more than 2 years ago | (#39342097)

Ah very informative. Thanks!

Re:Just keep in mind the tradeoff (1)

sjames (1099) | more than 2 years ago | (#39341837)

It's also worth noting that a drug you can't afford is a drug that doesn't exist for any practical purpose. Even worse is if the price is such that you can either choose death without it or live but plunge your family into grinding poverty it will not likely recover from.

Re:Just keep in mind the tradeoff (1)

Krishnoid (984597) | more than 2 years ago | (#39341935)

... maybe Bayer were dicks to charge that much for a drug in a poor country ...

Good point --

FTA:

"The Bayer price of Rs 34,11,898 per year ($69,000) is more than 41 times the projected average per capita income for India in 2012,

To put more familiar numbers on this, that would be comparable (using the naive assumption of a multiplier) to $2E6/year assuming a per-capita income in the US of $50k/year. How would a comparable situation play out in the US? I'm guessing they'd negotiate a reimbursement with large insurers to make it sane for people to buy?

Re:Just keep in mind the tradeoff (1)

WilCompute (1155437) | more than 2 years ago | (#39342009)

So, just to throw a wrench into the mix, yeah, it might be nice to throw some money at a company for doing a job, a the Indian government has no obligation to fund a company that exist solely as an entity in another country. In fact, the idea that companies in one country can't copy off of countries in another country is quite ridiculous. Why? Until recently, there has not been enough trade to make it matter.

Remember the first priority of a government is its people. We see again and again that people will get rid of their government when the government does not please its people. This is why we get the government we deserve, because we let it stand.

All governments that implement a patent style system have the power, if not the authority, to take over patents for use for the public good. Yes, it is even built into the authority of the American patent system.

Now, personally, one human life is worth 10billion times the money all companies that have ever existed and will ever exist will ever have total. So I hav no problem with this if, and only if, this results in lives saved. Why? Lets look at the actual consequences. Presumably, if this company can make a profit off of this medicine, then so could Bayer. Bayer will not stop selling the drug at the higher prices elsewhere, unless they are forced to compete by other governments doing the same thing.

Now, will doing this across the board stifle inovation? Not really. If the companies don't do the research, governments will. in fact, governments are usually willing to research diseases that don't have enough sufferers to interest companies to research them.

Re:Just keep in mind the tradeoff (1)

amicusNYCL (1538833) | more than 2 years ago | (#39342045)

Because without that profit motive from those patents, the drug companies sure aren't going to be developing anything new.

This sums up my distaste for the pharmaceutical industry in general. I hate the fact that potentially life-saving drugs only ever see the light of day if there is profit potential. Any drug company could create enormous goodwill by distributing groundbreaking new drugs for low costs in developing countries, or even in poverty-stricken populations in developed countries, but you don't see much of that. And pharmaceutical ads even manage to beat out local law firm and car dealer ads for the honor of worst commercials on television.

In short, I like the fact that a government is willing to step on a pharmaceutical patent in the name of helping their population. Maybe Bayer would realize that if their prices were lower their volume would skyrocket. Anything to appeal to their sense of greed.

Re:Just keep in mind the tradeoff (0)

Anonymous Coward | more than 2 years ago | (#39342101)

I seem to recall that Canada has similiar rules for enabling generic drugs (which is why for a while there, the Canadian Pharmacy (really Chinese counterfeits masquarading as Canadian) business was booming.) I see this happening with India too.

I'm not going to shed any tears over drug companies not profiting on drugs, if you've seen how these things are marketed (Oxycotin for example) they are designed to get customers addicted and pay pay pay forever. I'd rather see generic drugs pay process cost +FRAND royalties of not more than 100% the cost to manufacture. Eg it costs 1$ per pill to make, the company with the patent can charge no more than 1$ on top of the original 1$.

It should be split between "prevention" and "treating symptoms" Anything that is preventative should absolutely be made, patents be damned. Anything that is effective, patents be damned. Just make the drugs and figure out how much to pay the patent holder later.

Outside of drugs, no, I don't think it's generally a good idea to just steal IP because the IP holder is unreasonable. There is a certain aspect of quality control that you don't really want compromised when it comes to drugs since it may kill the patient or induce cancer or whatever.

Domestic use only, I presume (5, Interesting)

OldGunner (2576825) | more than 2 years ago | (#39341627)

The issue with compulsory licensing would get very muddy if Natco Pharma is allowed to export the medication outside of India's borders.

Re:Domestic use only, I presume (2)

i.am.delf (1665555) | more than 2 years ago | (#39341721)

I'm sure if they tried to export this drug they would be seized as counterfeit or unapproved.

The problem being what? (1)

betterunixthanunix (980855) | more than 2 years ago | (#39341749)

If other countries want to maintain Bayer's profits, let them. Why should the Indian government forbid Natco from exporting the drug to those countries that are willing to import it?

Re:The problem being what? (2)

elrous0 (869638) | more than 2 years ago | (#39341945)

For one thing, you would lose the moral high ground of being able to say you were doing it for the good of your people, not just for the profits of selling the knockoff. For another thing, this would probably violate a stack of trade agreements.

Yes, and domestic production only, too (2)

langelgjm (860756) | more than 2 years ago | (#39341803)

Yes, it's for domestic use only. It also has to manufactured domestically, which is why this type of agreement doesn't work in smaller countries without adequate manufacturing capacity for pharmaceutical products (e.g., most of Africa).

Cheap knock offs (1)

Digital_Quartz (75366) | more than 2 years ago | (#39341809)

Expect it to get muddy quickly, even if Natco Pharma is not allowed to export the medication. I suspect we will quickly see the Natco version smuggled out for sale on foreign shores, and I also expect we will see counterfeit versions claiming to be smuggled Natco which may or may not even come out of India (and may or may not contain cancer fighting drugs.)

W00t (1)

NicknameAvailable (2581237) | more than 2 years ago | (#39341645)

Go Vishnu!

Companies will stop selling New drugs in India (0)

cpu6502 (1960974) | more than 2 years ago | (#39341677)

Not immediately but that will be the eventual result. Bayer and others won't waste their time patenting drugs in India if they are unable to recoup their R&D costs (i.e. they won't sell at a loss). Instead India will get the new drugs 10-20 years later after the initial R&D has been paid-off by EU and US and RF customers.

Re:Companies will stop selling New drugs in India (4, Insightful)

Maximum Prophet (716608) | more than 2 years ago | (#39341797)

If a drug has been patented, and made it's way through FDA approval, it's chemistry is well known, and any decent lab will be able to make it. Not selling in a market is only cutting off the nose to spite the face. They will continue to sell in that market, because rich people will still pay for it rather than the generic.

R&D are sunk costs. *Any* sales over your fixed production costs results in profit. If you want to maximize profit, you sell. (Of course, as others have pointed out, you have to make sure none of the low cost sales gets resold to someone in another country. YMMV)

Re:Companies will stop selling New drugs in India (2)

betterunixthanunix (980855) | more than 2 years ago | (#39341815)

Or India will just produce its drugs domestically, using its intelligence service to procure samples of high-priced drugs in other countries.

More likely, though, the WTO and the USA will attack India for "stealing" and threaten India with various trade sanctions as retribution for this action. We would not want the Indian government to work for the benefit of its citizens at the expense of foreign corporations' profits, would we?

Re:Companies will stop selling New drugs in India (2)

zlives (2009072) | more than 2 years ago | (#39341883)

If its not patented in India, do any laws protect the drug from being patented by another NATCO as theirs?

Re:Companies will stop selling New drugs in India (1)

theArtificial (613980) | more than 2 years ago | (#39341895)

Regarding the patenting of things in India wouldn't an easier route be to have someone look at the patent in the US (or elsewhere)? I understand they're intentionally vague at times, I'm ignorant of patent details in general and doubly so with pharma patents. Failing that what about corporate espionage? One way or another if they're motivated they'll get what they want, much like software pirates, right?

Re:Companies will stop selling New drugs in India (0)

Anonymous Coward | more than 2 years ago | (#39342053)

Apparently they weren't interested to sell in India to begin with and completely priced themselves out of the market. If that's the kind of things that will 'stop', then it doesn't make a bit of difference.

Re:Companies will stop selling New drugs in India (1)

Anonymous Coward | more than 2 years ago | (#39342121)

You don't seem to understand, india does not care if Bayer sells $newdrug there, they simply allow a local drugcompany to produce $newdrug. If Bayer does not want to sell under the conditions in india, fine, all the money goes to the local drugcompany.

there's a reason they're overpricing this drug (5, Insightful)

ruebarb (114845) | more than 2 years ago | (#39341709)

average life expectancy according to an article on the BBC is extended by only 3 months -

http://news.bbc.co.uk/2/hi/health/8367614.stm [bbc.co.uk]

with results like that, you have to overcharge like hell to get your money cause the patients will only be around three more months than usual if they weren't taking the drug -

but if you're desperate and dying anyways, why not blow 2 months salary on a 120 day supply, right? And yet, I have no sympathy for the drug companies - I wonder why....could it be their way of using lawsuits to keep generics off the market for a few extra years while they re-release a "timed" version of their product?

Drug companies are vultures - and I'd love to see more university/public funding of this research for the public interest and less for the profit motive - especially when lives are at stake

Re:there's a reason they're overpricing this drug (3, Informative)

Anonymous Coward | more than 2 years ago | (#39341787)

Wow, so they make you pay almost 6 grand for a 3 month supply of a pill that can't actually keep you alive long enough to take all 120?

Re:there's a reason they're overpricing this drug (2, Interesting)

Anonymous Coward | more than 2 years ago | (#39342047)

why not blow 2 months salary on a 120 day supply, right?

More like 41 years' salary - FTFA: "The Bayer price of Rs 3,411,898 per year ($69,000) is more than 41 times the projected average per capita income for India in 2012, shattering any measure of affordability."

Black Market? (1)

Drethon (1445051) | more than 2 years ago | (#39341759)

If India forces low price and other countries still have higher prices, even ignoring what the company selling the drug thinks, I hope they have plans to control this carefully or I can foresee an increase in legal drug smuggling... Just my $0.02

Drug price arbitrage (1)

langelgjm (860756) | more than 2 years ago | (#39341859)

There are already many, many opportunities for arbitrage in legal pharmaceuticals, but I don't think anyone has hard evidence about how much of a problem in the North American and EU markets this really is. Typically seniors on Medicaid don't buy their drugs out of the back of El Camino that has a bunch of Folexes and Foakleys in it...

Medicare, not Medicaid (1)

langelgjm (860756) | more than 2 years ago | (#39341879)

Sorry, that should be Medicare...

looking out for the little guys (0)

schlachter (862210) | more than 2 years ago | (#39341785)

Nice to see a gov looking out for it's citizens over corporate interests. In the US this would never happen unless it was needed to fight the war on terror.

I realize there are benefits to the Indian gov as well as Indian corps, but it still benefits the people greatly.

Protections (1, Interesting)

theArtificial (613980) | more than 2 years ago | (#39341833)

Realistically what are Bayer's options, how do you combat something like this? Normally things are limited by expertise or manufacturing capabilities, however, India seems to have both of these covered. I'm asking because I'm ignorant and genuinely curious. I don't fault the Indians for wanting to help their people (that's a good thing). This seems to underline the downside of Intellectual Property. I guess the another option would be to keep the formula as a trade secret, but since they didn't this (and most pharma doesn't go this route) there is probably a good reason. I guess one saving grace of the patent system is that if the domestic Indian company tries to sell outside of India there may be problems? Not to single out China, but tons of knock offs come from there too and there is little to be done about it except to all but the largest players.

Re:Protections (5, Informative)

betterunixthanunix (980855) | more than 2 years ago | (#39341885)

Realistically what are Bayer's options, how do you combat something like this?

Buy off some Indian politicians and get that government back in-line: get that government to stop working for the benefit of its citizens, and to start working for the benefit of foreign corporations.

Re:Protections (3, Insightful)

theArtificial (613980) | more than 2 years ago | (#39342001)

Thanks for the quick reply. You make it sound very noble especially the foreign corporation bit. Your argument is: ignore everything everywhere when it benefits the citizens? Please, I'm not a defender of corporations, but surely you must see that this is a slippery slope?

Well, considering the price of ganja has gone down (-1)

Anonymous Coward | more than 2 years ago | (#39341841)

...everyone should be able to afford cancer treatment!

Drugs are like software (3, Interesting)

Maximum Prophet (716608) | more than 2 years ago | (#39341979)

Any decent chem lab can reproduce almost any drug given the patents and FDA approval documents. (Some drugs are difficult or perishable) People are responding that the big pharm companies will leave these markets, but if they do, it's unrelated to this.

R&D are sunk costs. *Any* sales over your fixed production costs results in profit. If you want to maximize profit, you sell.

What this might do, is limit the number of new drugs in the pipeline, but even that isn't a given. It's possible that (most) every good idea is being worked on, and all the great scientists are working on them. Once you've reached idea saturation, more money in a system just increases profits to the shareholders.

Wait, wait, I hear people yelling. If there's more money given to the shareholders, then they will invest in venture startups, and many more great new drugs will be discovered. Maybe. It's also possible that too much money in the drug company ecology will just lead to more viagra clones if not "snake oil" type products. More money might lead to more advertising, causing people to misuse drugs they don't really need.

I have a very rare disease... (4, Funny)

bmajik (96670) | more than 2 years ago | (#39342025)

...that can only be cured by the heavenly touch of Natalie Portman's hand upon my forehead.

Without this treatment, I fade in and out of conciousness, slowly losing body weight, muscle mass, and organ function. I have only 6 months to live if I do not get the treatment I need.

I've asked Mrs. Portman many times if there is a way she could lay her hand upon my forehead for the prescribed 8hr sessions 3 times a week. I've offered her all of my money. I've sold my home and my surviving family members have taken up disreputable work.

Alas, she refuses to lower her price, she has told me that she will not help me even if I pay her 1 million dollars per week!

I emplore you, caring people of the modern world. Please won't you save me?

I desperately need Natalie Portman's healing hand to save my life. But I cannot afford the outrageous prices she is demanding.

Can't someone do something?

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