From: Tim Bates (tbates@karri.bhs.mq.edu.au)
Date: Mon Feb 22 1999 - 00:57:37 MST
John Clark said
>Tim Bates tbates@karri.bhs.mq.edu.au Wrote:
>>The enormous bulk of this cost is for regulatory compliance and
>>marketing
>>Ditch the regulations and hte cost is minimal
>
>I hate the FDA as much as anyone but that is a huge exaggeration.
I wonder if we could get some facts and figures on this? I will try and
do some research on line.
>The average
>non generic drug company spends more than twice as much on
>research as a computer company of the same size.
First, there are very few computer companies the size of a pharmaceutical
company. Second, most computer companies are commodity producers.
A relevant comparison group would be microsoft or apple.
Third, research spending is not relevant to the relative cost of
regulatory compliance relative to research spending. I do not deny that
Roche spends a lot on research, i merely note that they also do a hell of
a lot of spending purely for compliance.
>FDA or no FDA, any big
>company that is not suicidal had better make damn sure that it's product
>doesn't kill more people than it saves.
Actually, that it kill anyone at all. That is another regulatory cost:
the FDA regulators could care less about cost benefits, they focus almost
exclusively on costs. They also outright ban drugs which have as their
purpose raising the norm rather than meliorating a disability.
Anyhow, to the point: i believe that merely keeping product safety data
secret (beyond outcome disclosures) would provide a substantial buffer
against generics.
>>Critically, you ignore the power of branding. If what you say was
>>correct, Philip Morris would not be the 100 billion dollar company
>>which it is. Nor would Coca Cola.
>The minimal thing in the drug business is not research but manufacturing. If
>Coca Cola cost 10$ a can and generic cola cost 10 cents a can then Coca Cola
>would be dead as the dodo. Price disparities of that magnitude are
>possible in
>the drug business.
That is simply not true. The marginal cost of manufacturing a generic is
identical to the marginal cost of manufacture by the originator.
>>In a non-patent & non-FDA world, without having carried out product
>>safety tests for themselves, any generic rip-offs would expose
>>themselves to product liability.
>Why reinvent the wheel? If a reputable drug company conducts safety tests
>there is no need to repeat them.
The need to repeat them is that the data from the safety tests may be
kept trade secrets.
>Besides, I can make this stuff in my garage,
>go ahead and sue me, you can't get blood out of a turnip.
That is my main point: the big companies can adopt a Philip Morris or
Unilever or Coca-Cola advantage: i will buy from the large conglomerate
simply because of their size.
>>Get rid of the FDA and the barrier to generics would raise
>>substantially.
>I'd love to dump the FDA, but I don't follow you here.
>
>>Well, many of us might argue that cheap drugs by the tonne is a good
>>thing.
>I would argue that nothing but the same old drugs we've been using for 50
>years is not a good thing, regardless of their price.
Research by the Rand institute shows clearly that the FDA and not patent
enforcement are what is responsible for reduced competition and decreased
drug diversity. In absentia patents, you can bet that i would be up for
more hours in the middle of the night trying to better my last product,
just like microsoft programmers are. You can bet that i would be rich
too, just like those same programmers are. your only protection is the
idea you have today. Yesterdays Laurels cannot be sat upon.
>>The Cisco chair simply believes that patents are not the way to do
>>business.
>Even with all their patents I can't build a router as good as Cisco's and
>sell it at 1% of their price.
But Lucent can and that is the competition: no you and me in our labs,
but companies worth more than many countries.
v.best
tim
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