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0 pointswpasc7y ago0 comments

What troubles me about insulin prices is that raising prices can simultaneously be used to satisfy shareholders with growing profits AND be used to fund new drugs (revenue from existing drugs obviously must fund the creation of new drugs). I am a little worried that if strict financial controls are put in place, then the companies will just turn into cash cows for existing drugs because a limit has been put on the profitability of new ones.

I believe we need to trudge further and further because even though we are creating new therapies that are wildly expensive, we are moving closer to truly cost effective therapies and best-in-class therapies. Though, we are certainly not there yet.

If someone can explain to me that my fears are unjustified about price controls diminishing capital invested into new treatments, I'd happily join the chorus of people calling for price controls in medicine (US citizen here with a chronic disease treated by TNF inhibitor which can cost 30K+ a year but through employer insurance, I pay nothing except for a copay which the manufacturer pays for).

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dragonwriter7y ago

> What troubles me about insulin prices is that raising prices can simultaneously be used to satisfy shareholders with growing profits AND be used to fund new drugs (revenue from existing drugs obviously must fund the creation of new drugs).

That's not obvious at all; there's no reason creation of new drugs couldn't be financed by raising capital through either debt or equity issues, which are then paid back, in effect, by the profits from the drug itself; in fact, a fair amount of drug development is funded that way, because it's done by startups which are acquired by major firms, if at all, only after doing much of the development work; obviously, that's how every firm’s first drug is financed.

It may be that firms want to eventually shift business models, so at some point they take their existing stake of drugs and body prices so instead of paying off their own development, they are doing that and paying forward development, and after that switch to internal financing, but there is no reason that is obviously a necessity.

wpascOP7y ago

Fair reply, and thank you for replying. While I agree the funding mechanisms you mentioned certainly must exist, I imagine things like unexpected delays for a given therapy or complications with a clinical trial (not with the medicine but with some procedural stuff) must happen. Times where existing room in revenue streams is vital for the development.

Secondly, if a publicly traded company already has a significant amount of equity in the hands of the public, issuing too much debt can mess with the balance sheet, right?

I hear you though, I still worry that price controls is attacking the issue in the wrong way. I don't know all the specifics, but I feel like protections to competition would be a better way to ensure the competitive market?

This is an area I'd really like to understand more from a non-partisan perspective, especially understanding the current nature of which countries actually do develop the most drugs. But every piece of information I find on this subject has a partisan bent. Anyone got a source they'd recommend?

menckenjr7y ago

At some point, medications like insulin should be de-patented so that they're in the public domain.

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