> At the end of the day, a $2B pharma company is still going to doggedly pursue a 20 year monopoly on a potential $1B drug, even if it otherwise would have been a $1.5B drug
The problem is they don't know it's a $1B drug instead of a dud until they've actually done the research, and most of the candidates fail. And since the successes have to cover the failures, if the successes make less money, they can't cover as many failures and you don't get as many attempts.
> Moreover, the vast majority of waste in healthcare is with hospitals, administrators, surgeons, insurance companies, and doctors, not the pharmaceutical industry.
It is certainly a multifaceted problem and there is plenty of inefficiency that could be improved. Not just healthcare, but also the plague of zoning rules that inflate real estate costs in cities. Which is where hospitals are for legitimate reasons, but hospitals not only need a lot of real estate, they also then have to pay salaries there that allow their (already expensive) staff to live within reasonable distances.
And the subsidy issue isn't just drugs, it's also technology. A lot of the "hospital" cost goes to equipment, which is the same subsidization of international R&D as drugs -- other countries with price controls not paying their share of the cost.
Which is why cost comparisons to socialized systems in other countries are so uninformative. Not only are they not paying their share of R&D, they typically have lower real estate costs, lower salaries across all industries, lower (and this one surprises a lot of people) taxes if you count "health insurance" as a tax, and it goes on.
There is a lot of pure inefficiency in the US healthcare system -- the level of bureaucracy is madness -- but a lot of its costs are also external to the system itself and symptomatic of healthcare being at the intersection of several independent sources of price inflation that each have to be addressed on their own terms.
The problem is they don't know it's a $1B drug instead of a dud until they've actually done the research, and most of the candidates fail. And since the successes have to cover the failures, if the successes make less money, they can't cover as many failures and you don't get as many attempts.
> Moreover, the vast majority of waste in healthcare is with hospitals, administrators, surgeons, insurance companies, and doctors, not the pharmaceutical industry.
It is certainly a multifaceted problem and there is plenty of inefficiency that could be improved. Not just healthcare, but also the plague of zoning rules that inflate real estate costs in cities. Which is where hospitals are for legitimate reasons, but hospitals not only need a lot of real estate, they also then have to pay salaries there that allow their (already expensive) staff to live within reasonable distances.
And the subsidy issue isn't just drugs, it's also technology. A lot of the "hospital" cost goes to equipment, which is the same subsidization of international R&D as drugs -- other countries with price controls not paying their share of the cost.
Which is why cost comparisons to socialized systems in other countries are so uninformative. Not only are they not paying their share of R&D, they typically have lower real estate costs, lower salaries across all industries, lower (and this one surprises a lot of people) taxes if you count "health insurance" as a tax, and it goes on.
There is a lot of pure inefficiency in the US healthcare system -- the level of bureaucracy is madness -- but a lot of its costs are also external to the system itself and symptomatic of healthcare being at the intersection of several independent sources of price inflation that each have to be addressed on their own terms.