MORE ON DRUG PRICING

Guess where

When I first signed on as a Research Advocate with Fred Hutch I was astonished to learn that they carried economists on their staff.  And even paid them!  My astonishment arose from the fact that, although an honor student in economics at Stanford, I couldn’t remember ever learning anything useful.  But now maybe I get it.

The NYTimes article (below) deals with a new study of drug pricing.  New drugs cost us (society) a lot, as is well known.  The conventional defense against charges of price gouging is: drug development is costly, because costs arising from failed drugs must be included.  Critics respond that in fact all the basic research is handed to Big Pharma gratis, by publically funded research outfits (NIH, Fred Hutch, Sloan Kettering, U. W. Medicine, etc.)  As the article (which you should read) makes clear, the case is complicated.  How, for instance, do you calculate costs when a researcher blunders on something patentable, quits to form his or her own company to exploit it,  runs a few small but encouraging trials, and then is bought out by by Big Pharma for enough money to fund the North Korean nuclear program?

So read the article and tell me what you think.

The article ends with the following chilling observation:

When it comes to drug prices, it does not matter what companies spend on research and development, Dr. Kesselheim said.  The price is based on what the market will bear.

https://www.nytimes.com/2017/09/11/health/cancer-drug-costs.html?em_pos=medium&emc=edit_sc_20170912&nl=science-times&nl_art=2&nlid=69247603&ref=headline&te=1