Here's the situation for Megan and others who oppose health care reform: there are very many people in this country who are incapable of procuring necessary health care when they desperately need it because of their financial and employment situation.
Again I ask - why do he and others find these people so sympathetic.
And, if they are going to insure these people, they need to start making arguements that are going to appeal to those who don't already agree with them.
Just watched it. Jesus. Mark Schmitt is a nice fellow and I really like him, but I hope next time Megan can debate someone who is better informed on the subject at hand. Schmitt spent half the time stuttering. I've seen him have great bloggingheads sessions, but this was not his day.
So he let Megan get away with, shall we say, some very bold statements. Megan has this ability of saying controversial things with a casual certainty, as if they are the most obvious thing in the world. It's great for debates.
My big problem was with Megan's utilitarian reasoning, which is faulty on several ways. She states that universal health care will end up killing more people in the long run:
It's hard to get innovation without the profit motive... if that [the market] goes away, that leads to a whole set of problems that I think ultimately will starve the innovation (... ) many, many, many more people will suffer than we can possibly save with a national health care system
and
there are 300 million million people in this country right now who are going to die of something we can't cure
Actually:
- many of those people are going to die of something we can cure. There's obviously those who aren't covered and can't pay for treatments (emergency care may catch them too late). But there are also people who die of possibly treatable stuff, like heart attacks or car accidents, before they can reach the hospital.
- for the diseases we can't cure right now, even if we somehow double (or multiply by 50) the money either pharmas or government have for research, people are still going to die of something we can't cure. We may extend life expectancies by a little (or a lot, we don't know), but no amount of research changes this fact. They will have to die from something, unless we're talking about a medical breakthrough that halts aging and makes you immune to fatal accidents. Medical research should be evaluated on how long it can prolong average longevity and quality of life.
More importantly, even if research finds a cure for a lot of today's major diseases, patients are still going to have to pay for them. And the tendency for new medical treatments is to increase medical costs. So we can expect an increasingly lower fraction of the population to support these costs. This reduces the number of future people that will actually be saved by present research, which weakens the utilitarian argument.
There is another problem with this perfect utilitarian view in which we maximize the number of lives saved, assuming future lives are worth exactly the same as present lives. The thing is, NOBODY thinks like that, even if they claim they do. Suppose that, if we were to live without any medical treatments whatsoever and dump all the saved resources in medical research, we would be absolutely sure that we could find very cheap treatments for today's diseases, so that 100 years from now we would save 20 times the number of lives we are able to save now, all under a fraction of the cost. Would we do this sacrifice for future generations?
Of course not. We discount future outcomes, including future human lives. It's not like we don't give a damn and future lives are worthless, i.e., we don't discount them completely. But lives today are undoubtedly treated as more valuable than lives 100 years from now. A sane health policy should reflect the fact that we discount the future.
One more thing regarding the possibility of government bargaining drug prices with pharmas or other entities. Megan speaks as if there is absolute certainty that 1 dollar on pharma profit is going to generate medical research that will surely save more future lives than if that dollar were bargained out to make available drugs cheaper. But we have no idea if this is true or not. Research has an opportunity cost in lives today. The statement is only true if the following inequality holds:
cost of researching future drug + cost of treatment based on new drug / number of years that it prolongs life on average for all treated patients
>
cost of treatment of a present drug / number of years that it prolongs life on average for all treated patients
Maybe you suspect that this relationship holds. But here's the thing - this suspicion is, AFAIK, pretty baseless. It's not just that we have no idea what future research will brings us. That can't be helped. It's that we have no data on pharmaceuticals present research.
Maybe I missed something, but I've never seen a post or comment in this blog that estimated:
- the money that is presently spent on research by pharmaceuticals;
- of the profit earned by pharmaceuticals, the share that is invested in R&D.
Many people in this blog, including our hostess, assume that since markets work so well in other areas, they just have to be more efficient in bringing innovation than government funding. I don't know if that's true or not. But let me suggest it may very well not be. Throughout the 20th century, most of the greatest leaps in innovation were brought either by government funded research or by private companies that ran monopolies, like AT&T's Bell Labs. I'm not talking about the theory of relativity. This includes the origins of the Internet (ARPANET), transistors, the Manhattan Project (well, it was innovation...), penicillin, the structure of DNA, universal Turing machines (the mathematical basis for the computer), radar, the first cheap oral contraceptive, the first heart transplant, etc.
I'm not defending the absurd statement that there is no place for profit and market based competition on medical or other research. Markets have obviously brought us a lot of stuff. But markets seem better at exploring the potential of existing technology and bringing innovation in relatively smaller steps. The reason for this is no mystery: R&D projects in a competitive market have to hold the promise of profitability on a relatively short time horizon. This is often not compatible with the kind of research that causes leaps in innovation. This is true for applied areas, not just basic research.
When it comes to bargaining, government doesn't have to choose between completely eliminating pharma's profit and leaving things exactly as they are. The central question is: what's the marginal impact on research of a reduction in the price of drugs (or doctors compensation, or any other cost in health care) by one dollar? This may not be easy to estimate, but I don't see how discussion on a government plan can be productive without considering this trade-off.
Look, it's absolutely true that there are no guarantees that we will cure all 300 million who are going to die through the magic of medical research, and even if we did, they would die of something else. But if we do nothing, they're guaranteed to die of it.
I'd add one more thing: r&d for new treatments is frequently funded by government, and then turned into for-profit medicine.
Much of the innovation I've seen in both oncology research and with companies we've done due diligence on comes from the public support; the refinement and expense of FDA approval is typically second stage, private level.
Not always, but enough to make the claim that innovation comes from private investment suspect.
There is a world of difference between discovering a target, and turning it into a working drug that can be cost-effectively manufactured. Almost every product produced these days probably partakes in some way of government research, but that doesn't mean that the government would do a good job at making cars or soap.
Discovering the target is the innovation. The rest is business. I go crazy at the claims that to the contrary, they simply aren't based in reality -- or they're based on a partial reality. Take that government-funded research out of the question and a good chunk of the innovation that creates profitable new product disappears. It's a form of corporate welfare that's produced much of the wealth in this nation, and I'm saddened when small-gov pro-business folks fail to recognize the benefit.
No! Benjamin Franklin did innovative electrical experiments. This does not make what Thomas Edison did in building a working lightbulb less innovative. Tehre are all sorts of innovation, and usually more than one kind goes into economic growth.
Almost every product produced these days probably partakes in some way of government research
I did not say the private sector fails to do research, Megan, I said calls for limits in government spending because it dampens innovation are misguided because they fail to consider the amount of innovation that's produced by government spending. And as the quote above shows you believe that government-funded research benefits "almost every product."
My current example? I love the solar technology the armed forces use in the field to power communications equipment. It's based, in part, on defense research. I'd love to invest in a company bringing that technology to market.
I'm greatly relieved the government doesn't bring products to market, else most of my source of income wouldn't exist. But the same holds true of government-funded research; it promotes innovation.
I'm not against the government spending because of the taxes; I'm against the spending because of the price controls it will invite. If we price control the part of the supply chain that produces a cost-effective drug, we will not get new drugs, even if government spending in other sectors produces a lot of potential targets for those new drugs. Goverment research may be discovering awesome new building materials, but New York City still has a housing shortage because of other government actions.
Look, it's absolutely true that there are no guarantees that we will cure all 300 million who are going to die through the magic of medical research, and even if we did, they would die of something else. But if we do nothing, they're guaranteed to die of it.
Sure. But if you discover new treatments, you're going to have to pay for those either. And if they follow the current trend, they are going to be more expensive on average than current treatments.
What I'm saying is that, when you choose to have the government not bargain with pharma because lives will be saved by future treatments, you have an obvious opportunity cost in lives that could saved by present treatments. You don't know the value of this opportunity cost, so you can't say as it's a foregone conclusion that diminishing pharma profit, even by small amounts, pays off on net lives.
zic
Discovering the target is the innovation. The rest is business.
Well, I partially disagree wiht you here. Drug development, especially clinical trials, are very expensive stuff that needs to be done.
Megan
If we price control the part of the supply chain that produces a cost-effective drug, we will not get new drugs, even if government spending in other sectors produces a lot of potential targets for those new drugs.
So why is government funding effective at basic research, but it would be ineffective at drug development? Also, while price controls do disincentive research, bargaining doesn't have to take the form of price controls. It can just eat some of the profit margin of both current and new drugs, which would preserve the incentive to develop new drugs.
Nimed, NIH pays for clinical trials all the time. You want the very best cancer treatment, there's a good chance the trials comparing it to other treatments were paid for by NIH.
It staggers my imagination that we even begin to think private industry pays for all trials. Look up groups like ECOG.
The question is what proportion of total clinical trials, as well as other DD costs, are covered by the NIH. With all this talk about how pharmas are doing the heavy lifting on development costs, I thought it would be negligible.
Megan, I agree, there's plenty of government spending and regulation which screw things up. I've suggested here before that our auto-safety standards are designed to encourage the sale of cars it was profitable for Detroit to sell. If you don't believe me, go try and fit two car seats in the back of your mini. Families with two kids in car seats drive minis in Europe all the time, and we know they're socialists and want to take all the risk out of life.
But if we want good government, we have to recognize where it's benefitted us in a positive way, and ask for more of that kind of government; less of the kind that favors a big, unimaginative company.
Apropos of nothing, Megan, you did not look at all like I pictured you. I had more of an Allison Janney vibe in mind. Probably because you said you were tall once and they used to make fun of her for being tall on the West Wing which came up because of the whole D.C. politics connection...Why am I telling you all of this? Maybe I should just get back to work...
Not sure if it's just a superior "debate" strategy or just your normal conversation style, but it's awesome how everytime you're about to finish a point or pause in a sentence you take a breaht, Mark Schmitt get's ready to reply or he says 4 things and you just steam roll right back over him. But in a such a nice polite way so there's no offense. Mr. Scmitt just blinks his eyes wondering when he can get his point in. And then 2 minutes later its onto a new point and the process repeats. I'm not sure I heard him say more than 10 words until about 33 minutes in. Although I'm still watching and not familiar with the format. Maybe you each take turns dominating on the first/second half...
Why not just spread the existing Medicaid budget thinner?
If you know anybody who works in health-care, they will tell you that Medicaid is significantly better than most private insurances. You'll hear words like "Cadillac," if you're getting the straight stuff.
I can think of no DRG's that Medicaid doesn't cover. For any kind of therapy it's virtually a blank check.
Ask the person you talk to "in your opinion, who gets better health insurance and health care: Medicaid Patients or the people who pay for them via their taxes, but have to settle for private insurance?"
Nobody is screaming that private insurance isn't good enough.
So why not kick Medicaid down to "good enough" and spread it out more?
There are about 42 million people on Medicaid. We need to cover about 30 million more people (ignore the "50 MILLION PEOPLE..." stuff. I don't pay for non-citizens, thank you so much).
So what's stopping Obama, right now, from slicing the pie thinner?
Here's an interesting NY Review of Books article from 2004. It is written by former Editor in Chief of The New England Journal of Medicine.
Highlights:
"...research and development (R&D) is a relatively small part of the budgets of the big drug companies—dwarfed by their vast expenditures on marketing and administration, and smaller even than profits. In fact, year after year, for over two decades, this industry has been far and away the most profitable in the United States. (In 2003, for the first time, the industry lost its first-place position, coming in third, behind "mining, crude oil production," and "commercial banks.") The prices drug companies charge have little relationship to the costs of making the drugs and could be cut dramatically without coming anywhere close to threatening R&D."
"Drug industry expenditures for research and development, while large, were consistently far less than profits. For the top ten companies, they amounted to only 11 percent of sales in 1990, rising slightly to 14 percent in 2000. The biggest single item in the budget is neither R&D nor even profits but something usually called "marketing and administration"—a name that varies slightly from company to company. In 1990, a staggering 36 percent of sales revenues went into this category, and that proportion remained about the same for over a decade.[13] Note that this is two and a half times the expenditures for R&D."
"This is an industry that in some ways is like the Wizard of Oz—still full of bluster but now being exposed as something far different from its image. Instead of being an engine of innovation, it is a vast marketing machine. Instead of being a free market success story, it lives off government-funded research and monopoly rights. Yet this industry occupies an essential role in the American health care system, and it performs a valuable function, if not in discovering important new drugs at least in developing them and bringing them to market. But big pharma is extravagantly rewarded for its relatively modest functions. We get nowhere near our money's worth. The United States can no longer afford it in its present form."
Now, to be sure, the article is not as abundant in sources as I'd like it too be. But I don't know why people just assume that pharma is so efficient at turning profits into innovative research without ever citing any data. I mean, the lack of data on this subject provided either by Megan or commenters is ridiculous compared to other topics.
Let me repeat this: I've never seen a post or comment in this blog that presented even a rough estimation:
- the money that is presently spent on research by pharmaceuticals;
- of the profit earned by pharmaceuticals, the share that is invested in R&D.
"This does not make what Thomas Edison did in building a working lightbulb less innovative": not the best illustration. He lost his patent case, had to cede priority, and bought out his competitor.
Why not do the statistic on the whole list? Yes, U.S. had 10 of the top 20. It's also has 18 of the 50.
The list is kind of fishy. Bayer is supposed to the 3rd larger pharma in the world, and it's not there. One really shouldn't forget the company that made aspirin, methadone and... mustard gas.
And why does it matter that the U.S. has many pharmas in the top 20 anyway? Is this a matter of national pride or something? Of course, if companies in the U.S. are rewarded with the biggest profits, one would expect them to be the largest. What's worrying is that, apparently, the fraction of revenue that goes to research is quite low.
Actually, Nimed, what is curious is that the top 50 only has 47 entries. The US has 20 which is 43%...still high.
Regardless, as I suggested with my JNJ comment, this list is a bunch different companies, with different product mixes.
The US has lots of pharma which is a benefit for the whole world. That's why Canada can buy its drugs cheaply...because of the US.
I've never quite understood the complaint about pharma research vs. marketing. To complain about marketing means you are complaining about information getting to Drs. and to patients. So in the world of the single-payer the government is just going to send a memo to the Drs? Patients will have no information about disease treatments except what their Dr. gives them? Odd.
And the constant complaint about how much $$ people make...Everyone makes too much money...the insurance companies, the drs., pharma.
Pfizer has a smaller profit margin that MSFT, GOOG and about the same as CSCO. And yes, larger than some...so what is your definition of "biggest profits"?
Let me repeat the quote from the former Editor in Chief of The New England Journal of Medicine:
biggest profit means - ...year after year, for over two decades, this industry has been far and away the most profitable in the United States. (In 2003, for the first time, the industry lost its first-place position, coming in third, behind "mining, crude oil production," and "commercial banks.")
The US has lots of pharma which is a benefit for the whole world. That's why Canada can buy its drugs cheaply...because of the US.
I agree. It's true that drug sales in the U.S. are responsible for a disproportionate part of pharma revenues, thus pharma research (not governmental research). But it comes at the expense of less care for Americans, and that shows in the health statistics and medical bankruptcies.
I've never quite understood the complaint about pharma research vs. marketing. To complain about marketing means you are complaining about information getting to Drs. and to patients. So in the world of the single-payer the government is just going to send a memo to the Drs? Patients will have no information about disease treatments except what their Dr. gives them? Odd.
Do you get your medical information from marketing? Do you trust ads to give detailed, unbiased facts about Tylenol and Advil? The truth is patients already get their trustworthy info from physicians. And the rest from the internet.
And there's a difference between no marketing and just less marketing. To quote again:
The biggest single item in the budget is neither R&D nor even profits but something usually called "marketing and administration"—a name that varies slightly from company to company. In 1990, a staggering 36 percent of sales revenues went into this category, and that proportion remained about the same for over a decade.[13] Note that this is two and a half times the expenditures for R&D."
Freddie's comment:
Here's the situation for Megan and others who oppose health care reform: there are very many people in this country who are incapable of procuring necessary health care when they desperately need it because of their financial and employment situation.
Again I ask - why do he and others find these people so sympathetic.
http://nymag.com/news/features/29723/
And, if they are going to insure these people, they need to start making arguements that are going to appeal to those who don't already agree with them.
You should run for Congress.
"..I discuss, well, nearly everything."
Dilettante!
Just watched it. Jesus. Mark Schmitt is a nice fellow and I really like him, but I hope next time Megan can debate someone who is better informed on the subject at hand. Schmitt spent half the time stuttering. I've seen him have great bloggingheads sessions, but this was not his day.
So he let Megan get away with, shall we say, some very bold statements. Megan has this ability of saying controversial things with a casual certainty, as if they are the most obvious thing in the world. It's great for debates.
My big problem was with Megan's utilitarian reasoning, which is faulty on several ways. She states that universal health care will end up killing more people in the long run:
It's hard to get innovation without the profit motive... if that [the market] goes away, that leads to a whole set of problems that I think ultimately will starve the innovation (... ) many, many, many more people will suffer than we can possibly save with a national health care system
and
there are 300 million million people in this country right now who are going to die of something we can't cure
Actually:
- many of those people are going to die of something we can cure. There's obviously those who aren't covered and can't pay for treatments (emergency care may catch them too late). But there are also people who die of possibly treatable stuff, like heart attacks or car accidents, before they can reach the hospital.
- for the diseases we can't cure right now, even if we somehow double (or multiply by 50) the money either pharmas or government have for research, people are still going to die of something we can't cure. We may extend life expectancies by a little (or a lot, we don't know), but no amount of research changes this fact. They will have to die from something, unless we're talking about a medical breakthrough that halts aging and makes you immune to fatal accidents. Medical research should be evaluated on how long it can prolong average longevity and quality of life.
More importantly, even if research finds a cure for a lot of today's major diseases, patients are still going to have to pay for them. And the tendency for new medical treatments is to increase medical costs. So we can expect an increasingly lower fraction of the population to support these costs. This reduces the number of future people that will actually be saved by present research, which weakens the utilitarian argument.
There is another problem with this perfect utilitarian view in which we maximize the number of lives saved, assuming future lives are worth exactly the same as present lives. The thing is, NOBODY thinks like that, even if they claim they do. Suppose that, if we were to live without any medical treatments whatsoever and dump all the saved resources in medical research, we would be absolutely sure that we could find very cheap treatments for today's diseases, so that 100 years from now we would save 20 times the number of lives we are able to save now, all under a fraction of the cost. Would we do this sacrifice for future generations?
Of course not. We discount future outcomes, including future human lives. It's not like we don't give a damn and future lives are worthless, i.e., we don't discount them completely. But lives today are undoubtedly treated as more valuable than lives 100 years from now. A sane health policy should reflect the fact that we discount the future.
One more thing regarding the possibility of government bargaining drug prices with pharmas or other entities. Megan speaks as if there is absolute certainty that 1 dollar on pharma profit is going to generate medical research that will surely save more future lives than if that dollar were bargained out to make available drugs cheaper. But we have no idea if this is true or not. Research has an opportunity cost in lives today. The statement is only true if the following inequality holds:
cost of researching future drug + cost of treatment based on new drug / number of years that it prolongs life on average for all treated patients
>
cost of treatment of a present drug / number of years that it prolongs life on average for all treated patients
Maybe you suspect that this relationship holds. But here's the thing - this suspicion is, AFAIK, pretty baseless. It's not just that we have no idea what future research will brings us. That can't be helped. It's that we have no data on pharmaceuticals present research.
Maybe I missed something, but I've never seen a post or comment in this blog that estimated:
- the money that is presently spent on research by pharmaceuticals;
- of the profit earned by pharmaceuticals, the share that is invested in R&D.
Many people in this blog, including our hostess, assume that since markets work so well in other areas, they just have to be more efficient in bringing innovation than government funding. I don't know if that's true or not. But let me suggest it may very well not be. Throughout the 20th century, most of the greatest leaps in innovation were brought either by government funded research or by private companies that ran monopolies, like AT&T's Bell Labs. I'm not talking about the theory of relativity. This includes the origins of the Internet (ARPANET), transistors, the Manhattan Project (well, it was innovation...), penicillin, the structure of DNA, universal Turing machines (the mathematical basis for the computer), radar, the first cheap oral contraceptive, the first heart transplant, etc.
I'm not defending the absurd statement that there is no place for profit and market based competition on medical or other research. Markets have obviously brought us a lot of stuff. But markets seem better at exploring the potential of existing technology and bringing innovation in relatively smaller steps. The reason for this is no mystery: R&D projects in a competitive market have to hold the promise of profitability on a relatively short time horizon. This is often not compatible with the kind of research that causes leaps in innovation. This is true for applied areas, not just basic research.
When it comes to bargaining, government doesn't have to choose between completely eliminating pharma's profit and leaving things exactly as they are. The central question is: what's the marginal impact on research of a reduction in the price of drugs (or doctors compensation, or any other cost in health care) by one dollar? This may not be easy to estimate, but I don't see how discussion on a government plan can be productive without considering this trade-off.
Ops, that's a
I mean, that's a "
#*%$#!
That should be a "lesser than" instead of a "greater than". Damn html syntax.
Look, it's absolutely true that there are no guarantees that we will cure all 300 million who are going to die through the magic of medical research, and even if we did, they would die of something else. But if we do nothing, they're guaranteed to die of it.
I'd add one more thing: r&d for new treatments is frequently funded by government, and then turned into for-profit medicine.
Much of the innovation I've seen in both oncology research and with companies we've done due diligence on comes from the public support; the refinement and expense of FDA approval is typically second stage, private level.
Not always, but enough to make the claim that innovation comes from private investment suspect.
There is a world of difference between discovering a target, and turning it into a working drug that can be cost-effectively manufactured. Almost every product produced these days probably partakes in some way of government research, but that doesn't mean that the government would do a good job at making cars or soap.
Discovering the target is the innovation. The rest is business. I go crazy at the claims that to the contrary, they simply aren't based in reality -- or they're based on a partial reality. Take that government-funded research out of the question and a good chunk of the innovation that creates profitable new product disappears. It's a form of corporate welfare that's produced much of the wealth in this nation, and I'm saddened when small-gov pro-business folks fail to recognize the benefit.
No! Benjamin Franklin did innovative electrical experiments. This does not make what Thomas Edison did in building a working lightbulb less innovative. Tehre are all sorts of innovation, and usually more than one kind goes into economic growth.
I did not say the private sector fails to do research, Megan, I said calls for limits in government spending because it dampens innovation are misguided because they fail to consider the amount of innovation that's produced by government spending. And as the quote above shows you believe that government-funded research benefits "almost every product."
My current example? I love the solar technology the armed forces use in the field to power communications equipment. It's based, in part, on defense research. I'd love to invest in a company bringing that technology to market.
I'm greatly relieved the government doesn't bring products to market, else most of my source of income wouldn't exist. But the same holds true of government-funded research; it promotes innovation.
I'm not against the government spending because of the taxes; I'm against the spending because of the price controls it will invite. If we price control the part of the supply chain that produces a cost-effective drug, we will not get new drugs, even if government spending in other sectors produces a lot of potential targets for those new drugs. Goverment research may be discovering awesome new building materials, but New York City still has a housing shortage because of other government actions.
Sure. But if you discover new treatments, you're going to have to pay for those either. And if they follow the current trend, they are going to be more expensive on average than current treatments.
What I'm saying is that, when you choose to have the government not bargain with pharma because lives will be saved by future treatments, you have an obvious opportunity cost in lives that could saved by present treatments. You don't know the value of this opportunity cost, so you can't say as it's a foregone conclusion that diminishing pharma profit, even by small amounts, pays off on net lives.
zic
Well, I partially disagree wiht you here. Drug development, especially clinical trials, are very expensive stuff that needs to be done.
Megan
So why is government funding effective at basic research, but it would be ineffective at drug development? Also, while price controls do disincentive research, bargaining doesn't have to take the form of price controls. It can just eat some of the profit margin of both current and new drugs, which would preserve the incentive to develop new drugs.
Nimed, NIH pays for clinical trials all the time. You want the very best cancer treatment, there's a good chance the trials comparing it to other treatments were paid for by NIH.
It staggers my imagination that we even begin to think private industry pays for all trials. Look up groups like ECOG.
The question is what proportion of total clinical trials, as well as other DD costs, are covered by the NIH. With all this talk about how pharmas are doing the heavy lifting on development costs, I thought it would be negligible.
But it seems you're right.
Megan, I agree, there's plenty of government spending and regulation which screw things up. I've suggested here before that our auto-safety standards are designed to encourage the sale of cars it was profitable for Detroit to sell. If you don't believe me, go try and fit two car seats in the back of your mini. Families with two kids in car seats drive minis in Europe all the time, and we know they're socialists and want to take all the risk out of life.
But if we want good government, we have to recognize where it's benefitted us in a positive way, and ask for more of that kind of government; less of the kind that favors a big, unimaginative company.
Apropos of nothing, Megan, you did not look at all like I pictured you. I had more of an Allison Janney vibe in mind. Probably because you said you were tall once and they used to make fun of her for being tall on the West Wing which came up because of the whole D.C. politics connection...Why am I telling you all of this? Maybe I should just get back to work...
Not sure if it's just a superior "debate" strategy or just your normal conversation style, but it's awesome how everytime you're about to finish a point or pause in a sentence you take a breaht, Mark Schmitt get's ready to reply or he says 4 things and you just steam roll right back over him. But in a such a nice polite way so there's no offense. Mr. Scmitt just blinks his eyes wondering when he can get his point in. And then 2 minutes later its onto a new point and the process repeats. I'm not sure I heard him say more than 10 words until about 33 minutes in. Although I'm still watching and not familiar with the format. Maybe you each take turns dominating on the first/second half...
Why not just spread the existing Medicaid budget thinner?
If you know anybody who works in health-care, they will tell you that Medicaid is significantly better than most private insurances. You'll hear words like "Cadillac," if you're getting the straight stuff.
I can think of no DRG's that Medicaid doesn't cover. For any kind of therapy it's virtually a blank check.
Ask the person you talk to "in your opinion, who gets better health insurance and health care: Medicaid Patients or the people who pay for them via their taxes, but have to settle for private insurance?"
Nobody is screaming that private insurance isn't good enough.
So why not kick Medicaid down to "good enough" and spread it out more?
There are about 42 million people on Medicaid. We need to cover about 30 million more people (ignore the "50 MILLION PEOPLE..." stuff. I don't pay for non-citizens, thank you so much).
So what's stopping Obama, right now, from slicing the pie thinner?
Here's an interesting NY Review of Books article from 2004. It is written by former Editor in Chief of The New England Journal of Medicine.
Highlights:
"...research and development (R&D) is a relatively small part of the budgets of the big drug companies—dwarfed by their vast expenditures on marketing and administration, and smaller even than profits. In fact, year after year, for over two decades, this industry has been far and away the most profitable in the United States. (In 2003, for the first time, the industry lost its first-place position, coming in third, behind "mining, crude oil production," and "commercial banks.") The prices drug companies charge have little relationship to the costs of making the drugs and could be cut dramatically without coming anywhere close to threatening R&D."
"Drug industry expenditures for research and development, while large, were consistently far less than profits. For the top ten companies, they amounted to only 11 percent of sales in 1990, rising slightly to 14 percent in 2000. The biggest single item in the budget is neither R&D nor even profits but something usually called "marketing and administration"—a name that varies slightly from company to company. In 1990, a staggering 36 percent of sales revenues went into this category, and that proportion remained about the same for over a decade.[13] Note that this is two and a half times the expenditures for R&D."
"This is an industry that in some ways is like the Wizard of Oz—still full of bluster but now being exposed as something far different from its image. Instead of being an engine of innovation, it is a vast marketing machine. Instead of being a free market success story, it lives off government-funded research and monopoly rights. Yet this industry occupies an essential role in the American health care system, and it performs a valuable function, if not in discovering important new drugs at least in developing them and bringing them to market. But big pharma is extravagantly rewarded for its relatively modest functions. We get nowhere near our money's worth. The United States can no longer afford it in its present form."
Now, to be sure, the article is not as abundant in sources as I'd like it too be. But I don't know why people just assume that pharma is so efficient at turning profits into innovative research without ever citing any data. I mean, the lack of data on this subject provided either by Megan or commenters is ridiculous compared to other topics.
Let me repeat this: I've never seen a post or comment in this blog that presented even a rough estimation:
- the money that is presently spent on research by pharmaceuticals;
- of the profit earned by pharmaceuticals, the share that is invested in R&D.
"This does not make what Thomas Edison did in building a working lightbulb less innovative": not the best illustration. He lost his patent case, had to cede priority, and bought out his competitor.
If we look at the largest pharma companies I think we can all agree there is a pattern:
http://en.wikipedia.org/wiki/List_of_pharmaceutical_companies
The US has about 20% of the world GDP (PPP), but 10 of the top 20 pharma (yes, I know JNJ makes a lot of other stuff)
So given Obama's constant harping on cost controls of healthcare, what will this list look like in 30 years?
Well, here's what the future holds for every treatment that the government gives us:
http://www.news-medical.net/news/2006/10/24/20751.aspx
GDP from:
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
This is a curious comment.
Why not do the statistic on the whole list? Yes, U.S. had 10 of the top 20. It's also has 18 of the 50.
The list is kind of fishy. Bayer is supposed to the 3rd larger pharma in the world, and it's not there. One really shouldn't forget the company that made aspirin, methadone and... mustard gas.
And why does it matter that the U.S. has many pharmas in the top 20 anyway? Is this a matter of national pride or something? Of course, if companies in the U.S. are rewarded with the biggest profits, one would expect them to be the largest. What's worrying is that, apparently, the fraction of revenue that goes to research is quite low.
Actually, Nimed, what is curious is that the top 50 only has 47 entries. The US has 20 which is 43%...still high.
Regardless, as I suggested with my JNJ comment, this list is a bunch different companies, with different product mixes.
The US has lots of pharma which is a benefit for the whole world. That's why Canada can buy its drugs cheaply...because of the US.
I've never quite understood the complaint about pharma research vs. marketing. To complain about marketing means you are complaining about information getting to Drs. and to patients. So in the world of the single-payer the government is just going to send a memo to the Drs? Patients will have no information about disease treatments except what their Dr. gives them? Odd.
And the constant complaint about how much $$ people make...Everyone makes too much money...the insurance companies, the drs., pharma.
Pfizer has a smaller profit margin that MSFT, GOOG and about the same as CSCO. And yes, larger than some...so what is your definition of "biggest profits"?
Let me repeat the quote from the former Editor in Chief of The New England Journal of Medicine:
biggest profit means - ...year after year, for over two decades, this industry has been far and away the most profitable in the United States. (In 2003, for the first time, the industry lost its first-place position, coming in third, behind "mining, crude oil production," and "commercial banks.")
I agree. It's true that drug sales in the U.S. are responsible for a disproportionate part of pharma revenues, thus pharma research (not governmental research). But it comes at the expense of less care for Americans, and that shows in the health statistics and medical bankruptcies.
Do you get your medical information from marketing? Do you trust ads to give detailed, unbiased facts about Tylenol and Advil? The truth is patients already get their trustworthy info from physicians. And the rest from the internet.
And there's a difference between no marketing and just less marketing. To quote again:
The biggest single item in the budget is neither R&D nor even profits but something usually called "marketing and administration"—a name that varies slightly from company to company. In 1990, a staggering 36 percent of sales revenues went into this category, and that proportion remained about the same for over a decade.[13] Note that this is two and a half times the expenditures for R&D."
This was the most lopsided beatdown I've seen in a long time.