Curiosity Over Pride (FYI: To comment, send an e-mail to scifidink@gmail.com)

Thursday, May 13, 2010

Defending the undefendable



Now let me add up front that I certainly do not think of myself as a spokesperson for the Pharmaceutical industry- not that my self image is worth anything. Further, in the interest of complete financial disclosure, my 401k has a total stock market index fund so I guess you could say I have pharmaceutical investments. Again, I have never thought of my index funds in this manner, but this conflict of interest should be highlighted up front.

That embarrassment off my chest, I want to comment on this rather tiring attack on one of the more ugly of the uglies in our world today. We all know them: Big pharm.

They are bad.

Let me further get out of the way that I'll answer "yes" to any and all questions you may have regarding their sleazy sales practices. As I think on this, the makers of Invanz brought the entire emergency department sandwiches from Panera Bread the other day and handed many of us all their plastic logo pens (I think I still have one in a bag somewhere). I ate my entire sandwich.

My bad

That embarrassment off my chest, I want to address a common wisdom known as "do not use an expensive drug when a cheaper alternative is available".

For just like in the last post, where I said: "the sum of the parts equals the whole, yet when you only look at a single part you can easily miss the whole", do any of you see the problem this kind of logic misses?

... I'll admit, it is subtle and easily overlooked. That said, it is not insignificant either.


Hint:

1. Life is lived forwards but understood backwards
2. Price is not the same as cost of production

13 comments:

Thai said...

For comments

Dr John said...

From those charts it appears we are spending too much on healthcare but maybe not enough on drugs.

I have not had a Pannera sandwich in ages. I am both ashamed and envious of you Thai.

Thai said...

Yes, I'm a slut.

I think there was some kind of bottled water and I was really hungry.

Now you know why I'll never criticize Suboxone.

But you have not answered my question as to the flaw in the logic of people who promote this idea.

Look at my hints.

Dr John said...

I am not sure Thai as I am afraid I feel like this is a bit of "guess what I'm thinking".

To me the most obvious flaw in such criticisms or the need for "transparency" is that no one is actually paying for medication themselves. For example Medicaid expenditures for antipsychotic medications jumped from under $1.0 billion in 1995 to over $5.5 billion in 2005. Almost all such psychotropic medication is paid for by a govt. payer.

Pharma through their deceptive sales approaches and disease promotion is mostly ripping govt. and insurance off who both seem to be in some collusion with this approach.

This would all matter a hell of a lot more if people had to reach deeper into their pockets for the pills.They just would not be paying for most of the crap that they are swallowing and such "deceptions" would be a lot harder to pull off.

I do not know this is at all what you are thinking of. Give me another hint.

Tell me what you know about Suboxone and offer me any criticism you feel is just. I am interested in it from your perspective.

Dink said...

"But you have not answered my question as to the flaw in the logic of people who promote this idea"

The drugs could be a lot cheaper if Big Pharm wasn't shelling out the big cash to market the product?

"Pharma through their deceptive sales approaches and disease promotion is mostly ripping govt. and insurance off who both seem to be in some collusion with this approach."

Concur.

"This would all matter a hell of a lot more if people had to reach deeper into their pockets for the pills"

Without the bubble fueled by gov these drugs would have never been created in the first place (for better or worse). A lot of technological advances exist as a serendipitous benefit to irresponsible government spending. I don't like it, it is wholly unsustainable, but I see the chain reaction.

JP said...

Here's the deal with pharmaceuticals:

Patent protection.

My area of expertise. In fact, the one area in which I am any kind of "expert", so says the United States Patent and Trademark Office. I get off the street calls from people all the time asking me to represent them. Kind of like a door to door salesman knocking on your door asking if they can pay you lots of money. ;)

That's it.

Since there is a literally a finite number of effective small molecule drugs, and patent protection is finite, this "problem" is going to solve itself.

My understanding is that the real "profit" work in medicine is shifting toward information technology. Medicine is going to become "industrial" if it continues to develop. Specific treatments for specific individuals through the magic of computer processing.

Pharmaceuticals are a sideshow.

Thai said...

JP, this wasn't the direction I intended with this post but I get your point.

John, I did not intend this to be a "guess what I'm thinking but you make a completely valid point".

... I'll think how to rephrase these in a different way.

Dink, let me be clear that I do not want to seem an apologist for either deceptive practices or any other such behavior, I will never condone such actions.

My focus in this post is around the idea that we should always replace more expensive drugs with cheaper equivalents as the issue is actually a lot more complex that it seems.

FWIW, I do replace them all the time and indeed did just this today for a patient.


Anyway, long answer short: most drug prices reflect investment payback and not actual production costs.

The actual cost to produce a new drug once it is understood and on the market can actually be quite cheap. Indeed many newer drugs are cheaper to produce than their older cheaper equivalent alternatives.

The weird thing to understand from a societal perspective is that once we have spent the money on the R&D of a drug, at that point the money invested becomes "split milk".

Drug companies may want to recover their cost and charge higher prices, but in a way all this really just represents money circulating in the system. It does not reflect society's actual cost to produce the new drug.

But money always looks forward.

If the cost to produce a new drug is cheaper than an old drug, even if the price is greater, then oddly enough from a societal perspective it makes more sense to use the cheaper drug than the other way around.

Think of it as similar to Keynesian economics.

Dr John said...

I don't know about the rest of medicine but so many of the new drugs released have very little R&D. They are "me too" drugs. Lexapro, Invega, Pristiq. These are just a few of the drugs that are minor pharmacological manipulations of old drugs marketed as "new".

Lexapro was one of the most successful drug launches ever despite the fact it was no better than its anantiomer Celexa. Celexa had just gone generic. Forest Labs needed some cash. Whorish or ignorant Drs(depending on your choice of appropriate adjective) where wined and dined and wrote for it like it was PCN on D-Day.

I look at many of the drugs being pimped on TV Thai. It has nothing to do with recouping investment. It is about creating a need where none truly exists with a product that is new but not one bit better than what existed already.

Like I said, I must stick to my area of expertise but in psych there is no rational support for prescribing the drugs being given most of the time and we should be replacing expensive drugs with cheaper alternatives or better yet, no drug at all. Like I have said, if people had to pay for that crap out of pocket almost no one would take it for long.

Thai said...

I hope you understand I agree with this perspective AND that I am coming at this issue from a different viewpoint.

You are looking at it as any rational individual should look at it.

We agree

Now shift your perspective for a moment

Thai said...

It is like the idea of an individual investor purchasing index funds because (s)he really has even greater faith in the collective

His only self interest promotes his belief in the collective

Dr John said...

So are you saying we are all hypocrites because we bash pharma but it is part of all of our collective wealth making engine? Is that the point?

Thai said...

No, not hypocrites at all, far from it. We simply only see one view.

Remember the iPhone example. You have to flip perspective.

Think of this from the perspective of the collective, not the individual.

Thai said...

The collective wants to grow as well

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