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A Warning On Drug Pricing From Bill Gates
Townhall.com ^ | July 12, 2016 | Phil Kerpen

Posted on 07/12/2016 11:54:55 AM PDT by Kaslin

One of the most popular punching bags on the presidential campaign trail this year is America’s bio-pharmaceutical industry. Bashing drug companies was telegraphed early on as a key Democratic strategy to shift the blame for the failure of Obamacare to contain health care costs away from the Democratic/insurance industry alliance that wrote the law. Unfortunately, their policy proposals, designed to suppress drug prices, are likely to cause far more harm than good.

Consider efforts by President Obama, supported by Hillary Clinton, to undermine the market-based pricing in Medicare Part D to pay for other government spending. My organization joined 25 other prominent free market groups on a letter to Congress opposing Obama’s effort to repeal provisions of Part D that prohibit government price-setting and requiring pharmaceutical companies to “rebate” up to 40 percent of their drug sales.

Much like previous efforts, forcing providers of innovative new medicines to turn money over to Washington politicians or embed government-imposed costs in the price of drugs is a de facto tax. When you tax something you get less of it, which makes taxing medical innovation among the worst things the government could possibly do.

Bill Gates, the world's most prodigious philanthropist in the health space, was recently asked by Bloomberg's Erik Schatzker how we should control costs so that new miracle drugs “aren't just available to the rich and the well-insured.”

“I think the current system is better than most other systems one can imagine,” Gates replied. “I mean curing hepatitis C. This is a phenomenal thing and now you have multiple drug companies competing in terms of the quality and the price of that offering.”

“The drug companies are turning out miracles and we need their R&D budgets to stay strong. They need to see that opportunity,” Gates continued. “For things like Alzheimer’s, they can reduce medical costs so dramatically and improve the human condition, and the pharmaceutical companies have been great partners of our foundation. When we need help in doing science they are unique in what they can do.”

His point about R&D budgets is crucial. Developing new cures is staggeringly expensive, far beyond the capabilities of even the world’s largest philanthropic foundation. The total cost and time of bringing a single new drug to market is now $2.6 billion, per the Tufts Center for the Study of Drug Development, and averages 10 years of development.

Part of that is because of high regulatory compliance costs, and streamlining the FDA approval process should be a priority. But part of it is just the nature of the business which includes a staggering near 90 percent failure rate for each new medicine researchers attempt to create.

A few years ago the great Milton Friedman joined 100 economists to explain it clearly: “Drug price controls are more difficult to remove than other price controls. Controls on oil and other products often tend to be limited or short-lived, as voters eventually object to the resulting shortages and distortions. The effects of drug price controls, however, are far more difficult to observe because they mainly affect medicines that haven’t been invented yet.”

Bashing drug companies resonates politically because many voters are skittish about the idea that the development of life-saving medicine should be organized around the profit-motive, as if some sort of governmental or philanthropic model might better serve society. It’s an understandable impulse, but as Gates explained, it’s wrong and risks undermining the incentives to develop cures – with tragic consequences.

Whatever its shortcomings, the American bio-pharmaceutical system is “better than most other systems one can imagine” – and needs to be defended against politically motivated attacks.


TOPICS: Culture/Society; Editorial; Government
KEYWORDS: billgates; pharmaceutical
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1 posted on 07/12/2016 11:54:55 AM PDT by Kaslin
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To: Kaslin

Gates is right on this (and I *never* say Gates is right about much of anything).


2 posted on 07/12/2016 11:57:58 AM PDT by MortMan (Let's call the push for amnesty what it is: Pedrophilia.)
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To: Kaslin

We will have full on deathcare.....Rx meds will only be for the ruling elite, us little people won’t get any.


3 posted on 07/12/2016 11:59:22 AM PDT by ColdOne (poochie... Tasha 2000~3/14/11)
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To: Kaslin

They need to better explain to folks how drugs sold her in the US cost much less in other countries around the world, for the same drug.


4 posted on 07/12/2016 11:59:59 AM PDT by DonaldC (A nation cannot stand in the absence of religious principle.)
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To: Kaslin
“The drug companies are turning out miracles and we need their R&D budgets to stay strong. They need to see that opportunity,” Gates continued

Well said.

5 posted on 07/12/2016 12:00:10 PM PDT by plain talk
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To: MortMan

I also am AMAZED that Gates showed some common sense here............


6 posted on 07/12/2016 12:00:29 PM PDT by fishtank (The denial of original sin is the root of liberalism.)
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To: Kaslin
Bill Gates nailed it.

The Obama Administration and the Democrats want to demonize and shake down the pharmaceutical industry which is one of the few truly functional industries we have left.

Obama has really hurt the industry and their are lots of closings, liquidations and cut backs taking place .

We are on the threshold of a new era of miracle cure type products drug treatments that may revolutionize health care and drastically cut health care costs.

We should be pushing this but instead we are killing one of the last goose the lays the golden egg we have left that we have not already killed .

7 posted on 07/12/2016 12:01:38 PM PDT by rdcbn ("If what has happened here is not treason, it is its first cousin." Zell Milleraereh)
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To: ColdOne

Oooooohhh, you’re so right.

Let’s see how Venezuela or Burma or Sweden develop and finance their pharmas.... they’re soooooo much smarter than we are.

/SARC


8 posted on 07/12/2016 12:02:16 PM PDT by fishtank (The denial of original sin is the root of liberalism.)
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To: DonaldC

You mean the fact that other countries, by law, are subsidizing their health care on the backs of America’s industry, which is paid for by American customers?

The US should deduct the differential per dose times the number of doses sold in each country from its foreign aid budget for that country, including sending invoices for those countries who do not get enough US foreign aid to cover the difference.


9 posted on 07/12/2016 12:04:26 PM PDT by MortMan (Let's call the push for amnesty what it is: Pedrophilia.)
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To: Kaslin

Gates is no dummy. Any populist movement that could turn on the pharma industry like this would no doubt have Windows in its sights next.


10 posted on 07/12/2016 12:06:16 PM PDT by Buckeye McFrog
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To: Kaslin
I was all riled up to bash Gates but this time he's right.

No price controls: Initially expensive but production ramps up and it becomes cheap and plentiful soon.
Price controls: Prices are pegged at legal max for a long time and shortages linger with it.

11 posted on 07/12/2016 12:09:18 PM PDT by BitWielder1 (I'd rather have Unequal Wealth than Equal Poverty.)
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To: Kaslin
I'm being priced out of one medicine prescribed $20.00 per pill. This price is recent, not at or near the time the medicine was released. Another medicine I take has gone up $40.00 per prescription for each of the last 3 months. The pharmacist does not know why.

None of these price increases represent development costs as the medications have been on the market for quite a while and any amortization costs should remain the same.

The price increase are probably pure greed. Do not give me the free market crap as a consumer has no bargaining power against "Big Pharma." Price controls must be imposed. The Free Market crap applies to wheat and other homogeneous products NOT unique items. Price controls must be imposed.

12 posted on 07/12/2016 12:10:38 PM PDT by AEMILIUS PAULUS
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To: AEMILIUS PAULUS

“Price controls must be imposed. “

I’m not a big fan of price controls but you are right, the pricing scheme via free market seems broken in the US. The only time a drug will drop to something affordable is when the patent runs out and other makers jump in. Look at Nexium, it went from a few hundred a month to $40, or something like that.


13 posted on 07/12/2016 12:14:30 PM PDT by DonaldC (A nation cannot stand in the absence of religious principle.)
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To: DonaldC

I am not a big fan of price controls. However, the flaw in the “Free Market” model is the simple fact the consumer has no bargaining position against “Big Pharma,” the product itself is unique and often is needed by its users to save their life. The aforementioned facts leave the field wide open to human greed. The high cost of R&D can be met by extending the amortization period.


14 posted on 07/12/2016 12:20:57 PM PDT by AEMILIUS PAULUS
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To: Kaslin
Unfortunately, the narrative does not fit Democrat's class warfare way of explaining all things.

Encouraging medical R&D and reducing regulatory burdens would sound like “corporate bailouts” to the Democratic party masses.

15 posted on 07/12/2016 12:26:11 PM PDT by Robert357 (D.Rather "Hoist with his own petard!" www.freerepublic.com/focus/f-news/1223916/posts)
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To: Kaslin

WE DONT NEED ANYONE TO EXPLAIN THAT socialized anything is no good... central planning is always a failure
free markets work...


16 posted on 07/12/2016 12:45:47 PM PDT by zzwhale
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To: AEMILIUS PAULUS

The reason drug prices are going up so crazily is that big pharma is trying to get the maximum profits they can in expectation of future massive government regulation—and some companies temporarily have a government protected monopoly position because government regulation on new or improved drugs have raised ridiculously high barriers to entry.

In such an environment price controls will be the equivalent of banning the drug from the market.

So this is not a free market vs price control choice you have here.

Some suggestions for the real world:

(1) Dosage control—yeah the doc says you need the full dose, but maybe a half a dose or a quarter of a dose can address the issue. Do research, get a second opinion, etc.

(2) Natural alternatives—do the research, and remember you do not have to do all or nothing. Sometimes lowering the dose in combination with a natural solution can meet your needs.

(3) Most important—have a heart to heart with your doctor. If they will not engage you on this topic find another doctor.


17 posted on 07/12/2016 12:46:37 PM PDT by cgbg (Epistemology is not a spectator sport.)
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To: rdcbn

“Obama has really hurt the industry and their are lots of closings, liquidations and cut backs taking place .”

-

Obama has hurt EVERYTHING except BLM and radical Islam.

.


18 posted on 07/12/2016 12:49:40 PM PDT by Mears (Afrocentrism is "the invention of tradition"-----Hobsbawm)
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To: Kaslin

“The total cost and time of bringing a single new drug to market is now $2.6 billion, per the Tufts Center for the Study of Drug Development, and averages 10 years of development.”

That’s 20,000 man-years of $130,000/year/person labor.


19 posted on 07/12/2016 1:08:30 PM PDT by Brian Griffin
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To: Kaslin

“For things like Alzheimer’s”

The best thing I’ve found for memory is table sugar, $1.86 for four pounds at Wal-Mart.

Eggs are a modest second-best and meat has very modest positive effects on memory.


20 posted on 07/12/2016 1:11:13 PM PDT by Brian Griffin
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