<story><title>Indian Government uses special powers to slash cancer drug price by 97%</title><url>http://timesofindia.indiatimes.com/india/Govt-uses-special-powers-to-slash-cancer-drug-price-by-97/articleshow/12240143.cms</url></story><parent_chain><item><author>JunkDNA</author><text>I worked in the drug R&amp;#38;D business for over 8 years. I still follow the industry closely. Some things always get lost in these discussions. First, &lt;i&gt;manufacturing&lt;/i&gt; an existing drug is absurdly cheap. Modern industrial chemistry ensures this for all small molecule drugs (note that this is not the same case for the &quot;biologics&quot; which are often fiendishly difficult to make). Almost all the cost in a drug is the manufacturer recouping R&amp;#38;D costs. These costs have been spiraling out of control for 10 years. They are astronomical. A recent Forbes analysis pegs the cost of a new drug with failures of drugs in development folded in  anywhere from $3 billion to $12 billion depending on the manufacturer (excellent context and discussion here: &lt;a href=&quot;http://pipeline.corante.com/archives/2012/02/10/the_terrifying_cost_of_a_new_drug.php&quot; rel=&quot;nofollow&quot;&gt;http://pipeline.corante.com/archives/2012/02/10/the_terrifyi...&lt;/a&gt;).&lt;p&gt;You don&apos;t need to be an industry expert to grok that those numbers are wildly unsustainable. It is not possible to keep spending the amount companies spend to make new drugs. In the past, companies would inflate the price in the USA to make up for reduced prices elsewhere. But with all the recent healthcare reform in the USA, that strategy is ending.&lt;p&gt;To add insult to injury, the vast majority of the most commonly used drugs will lose patent protection in the next couple of years. In the industry they call this the patent cliff. There will not be enough new drugs to offset all the ones that go generic.&lt;p&gt;This move by India is a symptom of the wider drug industry problems. There will be more of these kinds of moves in the future. The industry has been searching for ways to more effectively make drugs and have it not be so expensive. But so far they have been striking out for 10 years running. The current strategy is to lay off most of their r&amp;#38;d workforce and offshore and outsource this part of the business.&lt;p&gt;Somewhere out there, a business model is waiting to be found. Whoever cracks that nut and becomes the Southwest of the drug industry is going to make a fortune.</text></item></parent_chain><comment><author>Alex3917</author><text>&amp;#62;&lt;i&gt;Almost all the cost in a drug is the manufacturer recouping R&amp;#38;D costs.&lt;/i&gt;&lt;p&gt;Actually that&apos;s not true. Big pharma spends twice as much on advertising as they do on R&amp;#38;D:&lt;p&gt;&lt;a href=&quot;http://www.sciencedaily.com/releases/2008/01/080105140107.htm&quot; rel=&quot;nofollow&quot;&gt;http://www.sciencedaily.com/releases/2008/01/080105140107.ht...&lt;/a&gt;&lt;p&gt;They also spend a significant amount of money on government fines due to corrupt practices (i.e. killing people). They are now the single most corrupt industry, paying significantly more fines per year than the entire military industrial complex:&lt;p&gt;&lt;a href=&quot;http://www.citizen.org/hrg1924&quot; rel=&quot;nofollow&quot;&gt;http://www.citizen.org/hrg1924&lt;/a&gt;</text></comment>
<story><title>Indian Government uses special powers to slash cancer drug price by 97%</title><url>http://timesofindia.indiatimes.com/india/Govt-uses-special-powers-to-slash-cancer-drug-price-by-97/articleshow/12240143.cms</url></story><parent_chain><item><author>JunkDNA</author><text>I worked in the drug R&amp;#38;D business for over 8 years. I still follow the industry closely. Some things always get lost in these discussions. First, &lt;i&gt;manufacturing&lt;/i&gt; an existing drug is absurdly cheap. Modern industrial chemistry ensures this for all small molecule drugs (note that this is not the same case for the &quot;biologics&quot; which are often fiendishly difficult to make). Almost all the cost in a drug is the manufacturer recouping R&amp;#38;D costs. These costs have been spiraling out of control for 10 years. They are astronomical. A recent Forbes analysis pegs the cost of a new drug with failures of drugs in development folded in  anywhere from $3 billion to $12 billion depending on the manufacturer (excellent context and discussion here: &lt;a href=&quot;http://pipeline.corante.com/archives/2012/02/10/the_terrifying_cost_of_a_new_drug.php&quot; rel=&quot;nofollow&quot;&gt;http://pipeline.corante.com/archives/2012/02/10/the_terrifyi...&lt;/a&gt;).&lt;p&gt;You don&apos;t need to be an industry expert to grok that those numbers are wildly unsustainable. It is not possible to keep spending the amount companies spend to make new drugs. In the past, companies would inflate the price in the USA to make up for reduced prices elsewhere. But with all the recent healthcare reform in the USA, that strategy is ending.&lt;p&gt;To add insult to injury, the vast majority of the most commonly used drugs will lose patent protection in the next couple of years. In the industry they call this the patent cliff. There will not be enough new drugs to offset all the ones that go generic.&lt;p&gt;This move by India is a symptom of the wider drug industry problems. There will be more of these kinds of moves in the future. The industry has been searching for ways to more effectively make drugs and have it not be so expensive. But so far they have been striking out for 10 years running. The current strategy is to lay off most of their r&amp;#38;d workforce and offshore and outsource this part of the business.&lt;p&gt;Somewhere out there, a business model is waiting to be found. Whoever cracks that nut and becomes the Southwest of the drug industry is going to make a fortune.</text></item></parent_chain><comment><author>tripzilch</author><text>But most of those R&amp;#38;D costs are for getting &quot;FDA&quot; approval. I don&apos;t see why India (or anyone, really) should pay for lining the pockets of the USA&apos;s inefficient and corrupt bureaucratic machinery.&lt;p&gt;Or I could be wrong and those $12B really goes into equipment and lab workers wages, but you won&apos;t blame me for finding it &lt;i&gt;real&lt;/i&gt; hard to believe until I see at least a rough breakdown of how those costs are summed up.&lt;p&gt;From the article: &quot;Bayer tried to justify its high price by making claims of high R&amp;#38;D costs, but refused to provide any details&quot;.&lt;p&gt;That either means they don&apos;t know themselves, or it means that the larger part of the budget got &quot;lost&quot; in requesting approval forms paper pushing greasing cogs and lobbying politicians.</text></comment>