Originally Posted by
thegodfather
Bo, let me fill you in a little bit here.
Their profits are not "large" relative to their investment. Their profits are large in number, but their margins are not. The cost of bringing a drug to market, and getting it through Stage 1,2, and 3 clinical trials is enormous. Let me give you an idea as to why, interestingly enough government is AGAIN the problem here, not private industry.
A patent on a novel drug/substance is 12 years. The clock starts ticking from the moment that drug is patented. For every drug that makes it past all of the testing and clinical trials, there are 10 that the company was researching and spending money on teams of biologists,chemists,biochemists,and PhDs to develop and test at the same time. Those 10 other novel drugs, all aimed at treating the same condition, likely failed to make it past various stages of the development process over time. The typical time it takes to bring a drug to market is about 8 years. It typically costs about 800 million dollars in R&D to bring one drug to market. That accounts for 8 years of research and development on several drugs, of which one will make it past all animal testing for efficacy, dosage, etc, and then finally get granted FDA approval.
Why is this significant? Because it means that the "evil" drug companies typically only have between 3 and 5 years to recover all of their initial investment from 500million to 1 billion dollars, and THEN, and only THEN to turn a profit, as all companies in business wish to do. If a company succeeds with a drug and it is successful, the rewards can be great! The company gets to turn a good profit, it employs thousands of people, and not only that, it benefits the lives of millions of people not just in the United States but in other countries around the world.
What is the point of all of this? The INCENTIVE of being able to reap an unlimited amount of profits is what DRIVES companies to make such a huge investment into unknown novel substances to treat diseases in humans. Without the possibility of a great payoff, medical innovation would move at a snails pace, if not halt completely. What country is responsible for the VAST MAJORITY of research and development of new novel drugs, medical devices, and medical procedures? The United States. Why is this the case? Because of our unique health care industry where companies are free to turn huge profits for their share holders. It may not bode well with many people that yes, these companies actually make a profit, like any other business in the world. But people must understand that it is these profits which drive these innovations.
If we eliminate the ability for the private sector to reap huge profits, or if we penalize them and tax them, we will see the pace of medical innovation slow. From time to time academic institutions make a discovery but the place is slow and arduous, and if it is left solely up to academic institutions working off of NIH grants (Bureaucrats in Washington with no medical education deciding which institutions get grant money, and which medical conditions and drugs are worth researching) then people will die. They will die because the pace of medical innovation will come screeching to a halt, and drugs and medical procedures that may have saved thousands, hundreds of thousands, and millions of lives will either never be developed, or will be developed at a pace 10 times as long as at present in our quasi-free market health care system.
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