Open Norway: Plasma cell aimed treatment with daratumumab in ME/CFS - Haukeland University Hospital

[Utsikt]

I think the main question is if the really expensive drugs will still get made. Pharma companies have to spend billions, not only on the drugs that eventually make a profit, but on plenty that never make a dime. If they have to sell these billion dollar drugs at market prices that might not allow them to even recoup their investment, why would they waste time on researching those novel drugs?

Maybe through some mechanism, government could run the whole operation as a public service. But as it stands currently, I'm guessing there just wouldn't be money or incentive to spend billions gambling on new drugs without patents.

Pharma typically spend between 15-30 % of their revenue on R&D, and those numbers are probably inflated by every accounting trick known to mankind. And if JE is right about them spending loads of money on obvious dead ends (partially due to the low incentives to make their existing drugs obsolete), I suspect that the real cost is much, much lower.

Economists like to talk about getting paid extra for taking risks. But they never tell you that they have no plans to bear the costs if the risks materialise, especially not the shareholders.

 

[Jonathan Edwards]

I think the main question is if the really expensive drugs will still get made. Pharma companies have to spend billions, not only on the drugs that eventually make a profit, but on plenty that never make a dime. If they have to sell these billion dollar drugs at market prices that might not allow them to even recoup their investment, why would they waste time on researching those novel drugs?

This is the storyline pharma like to give. They don't need to spend those billions on other drugs. Much of the expenditure is on devising very slightly more attractive looking versions of an existing drug that is going out of patent. Ranitidine is the classic example. Roche spent millions on developing ocrelizumab solely to get over the patent issue on rituximab. Really expensive treatments are often devised in academia. CAR-T cell therapy is hugely expensive and I think has been pushed forward in universities.

If it is in the public interest to generate new drugs then why not do that in universities and train up scientists in the process? It would provide a massive teaching base for students. As it is scientists in the pharmaceutical industry not only do not teach students but deliberately say nothing about what they are doing. How can tha be good for scientific progress?

 

[forestglip]

Economists like to talk about getting paid extra for taking risks. But they never tell you that they have no plans to bear the costs if the risks materialise, especially not the shareholders.

I don't understand this part. The risk is that a drug doesn't work and makes no money. They can't choose to not bear the cost of making no profit.

 

[forestglip]

If it is in the public interest to generate new drugs then why not do that in universities and train up scientists in the process? It would provide. massive teaching base for students. As it is scinetists in the pharmaceutical industry not only do not teach students but deliberately say nothing about what they are doing. How can tha be good for scientific progress?

Agreed, that sounds like a much better world.

 

[Braganca]

Why so? I spent my life trying to find ways to treat people, without any financial incentive beyond drawing my usual salary. People have used the treatment I developed, off label, for dozens of diseases. Nearly all drugs for RA were lying on the shelf in drug companies until an academic decided to pick them up and try them for RA.

the particular product that I’m an investor in did sit on a shelf for 25 years after discovery by an academic. It’s a startup so — the team don’t have other salaries. The team and investors took financial risk up front to develop a drug that won’t have revenues for nearly a decade after some of us invested. (If we succeed — most biotechs fail). It wouldn’t get done any other way in today’s capital environment. it’s taking many tens of millions to get this far and it’s a tiny company doing things frugally and fueled also by a few people’s personal passion for the disease. Not sure how you are arguing against current reality of the industry?

What you say about wastage in big pharma is absolutely true, and adds a huge amount to the development that is often written off as a loss and can waste many years bc of poor decision making and execution. But small biotechs can only take a drug product so far. They have to partner w these lumbering bureaucratic corporations for financing, manufacturing and distribution.

 

[Jonathan Edwards]

It wouldn’t get done any other way in today’s capital environment.

That puzzles me because so many of the biologic drugs did get developed in academia. Maybe in this case there was no motivation, but if people are prepared to put money into drug development because they have family members affected why not put it in to an academic unit? If it is for a rare disease it seems unlikely that there would be big profit returns?

I guess I my live in a different 'capital environment'.

 

[Utsikt]

I don't understand this part. The risk is that a drug doesn't work and makes no money. They can't choose to not bear the cost of making no profit.

They write off the losses for tax reasons, and get massive grants from the government because «it’s expensive and risky to develop drugs». They also buy up and shelve competitors that might hurt their existing line-up. So their risk exposure is really low (I see how it was inaccurate to say that the risks never materialise - they do but are offset by other measures).

At the same time, the upcharge because of how much they’ve allegedly spent on the drug and how risky it was, and due to expensive lobbying efforts to allow patent rules that provide them monopolies.

 

[Braganca]

That puzzles me because so many of the biologic drugs did get developed in academia. Maybe in this case there was no motivation, but if people are prepared to put money into drug development because they have family members affected why not put it in to an academic unit? If it is for a rare disease it seems unlikely that there would be big profit returns?

I guess I may live in a different 'capital environment'.

The early trials for our product were done by academics so the institutions were paid for the rights they owned, I don’t think most academic institutions are in the business of running and financing phase 3 trials tho..? They’re involved as sites and paid as a partner.

The larger investors are not due to family reasons — they’re there for the return. It’s not a rare disease. High risk business so high return or potential total loss, or somewhere in between. In the case of loss, yes it can be written off and for HNW finance managers or big pharma writing off $50M is part of business as @Utsikt says. More than 80% of what’s been invested in our company to date is a write off by lead investors or partner companies who stepped back.