Somewhere Bernie Sanders is smiling.
But he shouldn’t be.
A recent study (published in JAMA) found that "estimated cost-based prices" for a range of common diabetes drugs were "substantially lower than current market prices" -- and not just in developed countries like the United States, but also in developing ones like India and Bangladesh.
This finding, while technically true, is worse than uninformative. It is misinformative.
One doesn't need a PhD in economics to understand why the literal cost of manufacturing an already invented medicine is low -- or why it's irrelevant to the medication's much higher development costs and risk premium necessary to incentivize development in the first place. By the authors' logic, the price of a Microsoft Office subscription ought to be a nickel annually (instead of $150) because the software code already exists and the prorated electricity cost for cloud computing is minimal.
The authors further suggest that "robust generic and biosimilar competition could reduce prices" -- and that such competition could be facilitated by "a range of policy tools" including "price controls," "compulsory licensing," and a general weakening of intellectual property protections.
Given that the study finds that prices are supposedly unjustifiably high even developing countries with comparative weak IP protections and mandated price controls, the authors are implicitly endorsing a global IP and price control regime that's more aggressive than even India's and South Africa's.
That would eliminate any incentive to ever invest in developing a new drug again. Wiping out the global drug industry is hardly a good way to "enable expansion of diabetes treatment globally."
And, jeez – sloppy peer review!
But he shouldn’t be.
A recent study (published in JAMA) found that "estimated cost-based prices" for a range of common diabetes drugs were "substantially lower than current market prices" -- and not just in developed countries like the United States, but also in developing ones like India and Bangladesh.
This finding, while technically true, is worse than uninformative. It is misinformative.
One doesn't need a PhD in economics to understand why the literal cost of manufacturing an already invented medicine is low -- or why it's irrelevant to the medication's much higher development costs and risk premium necessary to incentivize development in the first place. By the authors' logic, the price of a Microsoft Office subscription ought to be a nickel annually (instead of $150) because the software code already exists and the prorated electricity cost for cloud computing is minimal.
The authors further suggest that "robust generic and biosimilar competition could reduce prices" -- and that such competition could be facilitated by "a range of policy tools" including "price controls," "compulsory licensing," and a general weakening of intellectual property protections.
Given that the study finds that prices are supposedly unjustifiably high even developing countries with comparative weak IP protections and mandated price controls, the authors are implicitly endorsing a global IP and price control regime that's more aggressive than even India's and South Africa's.
That would eliminate any incentive to ever invest in developing a new drug again. Wiping out the global drug industry is hardly a good way to "enable expansion of diabetes treatment globally."
And, jeez – sloppy peer review!
