What a great idea! So kewl!
Glenn:
"the United States' stem cell policy may be reaching a tipping point"
I have often thought that perhaps geneticists could define themselves as a religion-- and be protected in the practice of their religion by the freedom of religion act! :)
Alas, that would put paid to federal funding for research...

It's Bjørn Lomborg, not Daniel Lomborg.

thanks mitch, silly error.

"In what may be part of a promising trend, the State of California has formally approved the online sale of Canadian pharmaceuticals "

Whoa. Blog-bias? Why is this a "promising" trend instead of a "threatening" trend, unless one assumes the audience approves?

Quick analogy from a friendly, if opposing, reader: Discriminatory pricing on drugs is like the same practice for plane tickets. Airlines sell cheap-fare tickets to certain customers at the margin; senior citizens, people attending a funeral, military members on leave ...

Since this site is sort of (though not exclusively) a "war-blog" where much of the audience has military background, let's pursue that last notion as example for the whole concept.

Suppose the military "Scheduled Airline Transportation Office" or SATO contracts to buy cheap tickets at the reduced fare price, ostensibly for the intended, military-on-leave, customers. But what if then SATO turns around and sells those same tickets to Priceline.com, Travelocity, etc? SATO might even make money doing so, and offset some of their expenses in utility bills and personnel costs, thereby relieving the taxpayer of that burden. The number of SATO-turned tickets increases, because there are more Priceline customers than military customers. The airlines are carrying the same number of travelers, but the (mostly civilian) customers are paying a lower fare.

How long do you suppose the airlines will continue to support SATO? Will SATOs survive, if the airlines refuse to sell to them? Will the airlines survive if they're forced to sell more tickets at discounted rates? Why would creating such a dilemma be "promising"?

hi pouncer,

thanks for the thoughtful comments. i surely admit that i wrote this report from my own personal perspective, i'm not the ny times after all. heh. please note that i hit several of the items in this report with my own personal bias. perhaps you agree with me in those cases.

on market pricing for the pharma industry and your analogy, i hear what you're saying. but i also know that the pharma industry is the most profitable out of all the industries in this country, and so i think your worries are a bit overblown - the pharmas are in no serious danger. they will survive. i believe that the pharmas very much deserve their high profit margins, after all, they create quite a lot of value for society. but there is a balance to be reached and the price of drugs has skyrocketed in the past few decades. i'll be watching to see how this unfolds.

Killer new gig, Glenn. LiftPort's FAQ serves as a nice primer for elevator technology; we'll see how far they get, but they're thinking in the right direction.

GREAT new addition to Winds! Congrats Joe and Glenn. May I occasionally toss you some relevant bits from the depths of VC land?

And BTW, I'm with 'pouncer'. As common out here in CA, the heart is in the right place, but the mind isn't thinking very far ahead. Yes, pharma is practicing price discrimination that has the effect of loading much of their upfront costs and risk onto the backs of American consumers and employers. It's a problem.

Trying to arbitrage around it, rather than fix the problem, has its own set of issues because of the long term incentive pattern it creates for the industry. Add the arbitrage/greymarketing to actual quasi-expropriation of truly life-saving drugs overseas, and a purely fiduciary manager has to wonder where to invest, given the long leads and capital intensity of drug development.

I'd say the current actual incentives favor pharma going after symptomatic relief of chronic conditions of the well-to-do. If you think they are profit maximizing, that ought to worry you.

Watched many drug ads lately?

Tim,

Of course you can send us stuff! I've added the "discovery" email address, here @windsofchange.net, to make that easier for people to remember. It will go right to Hippercritical.

"I'd say the current actual incentives favor pharma going after symptomatic relief of chronic conditions of the well-to-do."

tim,

i understand the concerns that you raise and they certainly must be considered. i would say that the pharmas are already incentivized to go after the 'chronic conditions of the well-to-do'. how many erectile dysfunction drugs are available now??? so maybe this new state initiative to allow online sales of cheaper drugs may incentivize the pharmas even more to go after the high-profit targets. its all relative.

my response to your point would be that the government is already able to provide the pharmas with the necessary incentives to go after less profitable ventures. we see it at play with the bio-terror vaccines. its called handing over money. and then it becomes all about striking a balance, measuring the cost-benefit. catch my drift?

Glenn - and allergy drugs, and cholesterol control, and... We see eye-to-eye there.

Your proposal in the second para is indeed a potential part of a policy to get out of the jam. My point is that the CA initiative taken alone - without such parallel incentives - gets us deeper into the tarpit. Along with IP expropriation, it's a clarion call to pharma investors that actually curing life threatening diseases is not a good way to make money. Bounties may be a good idea, but their hypothetical existence is no excuse for a half-assed state level initiative.

Not that it's a life or death matter or anything...

Tim, Pouncer,

Back to the SATO example - let us say American society, for whatever reason, has chosen to accept higher air fares for most people in order to subsidize military veterans. That's probably a plausible narrative for the existence of the SATO contracts you describe. But I don't think it is plausible that Americans have agreed to subsidize treatments for the chronic ailments of the Canadian well-to-do, and here your analogy breaks down.

The response, however, will be similar. The potential for arbitrage will lead pharma companies to shut off the discount contracts to Canada, and force Canadians to pony up their fair share (measured on a unit-consumed basis) of the costs of R&D (and FDA approval) factored into the drug prices.

I don't see what principled argument can be made against this process, though obviously it runs against Canadian interests. Tim, you mentioned long-run incentive pattern problems which could arise from "trying to arbitrage around" rather than "fix" the problem. Could you be more specific? To my mind, arbitrage allows for a global market in drugs, with relatively uniform prices except where government intervenes directly (e.g. by buying massive quantities of drugs and distributing them directly to needy users). Wouldn't that be more efficient than government action on top of a non-arbitrage world?

Suppose we reduce the pharmaceutical industry's costs instead of attacking their profits?

The quickest, simplest way to do that would be to remove the FDS's requirements forproof of efficacy. More new drugs would be on the market sooner.

Insurance companies would naturally resist paying for drugs not yet proved to actually help the patient, but it is unlikely they could impose delays greater than the FDA imposes now. Those delays are a large part of the capital costs of new drugs.

The well-to-do and the desperate would test new drugs for efficacy at no cost to the rest of us.

The higher profits would, inevitably, lead to lower prices.

I expect that the benefits predicted by the advocates of drug reimportation will come at a high cost. Basically, you are just importing price controls from socialist countries. When was the last time you remember that price controls worked out in the long run? Expect the destruction of the US base drug industry for starters. Expect a complete restructuring of drug research. How many new drugs have Canadian and Indian drug companies patented lately?

i'm a little surprised that this (cal approval), out of all the items, has dominated the comments section. interesting.

the pharmas will always find new ways to cut costs, like making up new illnesses with already approved cures. whatever it takes, after all. he.

http://www.newamerica.net/index.cfm?pg=article&pubID=911

It might be useful to examine the Russian-Ukrainian theory of the Abiotic origin of petroleum within the earth - like here http://www.gasresources.net/

Over 4000 articles and papers have been published.

We are not running out of oil.

I think the pharmaceuticals cost issue would be better addressed by deregulation, rather than taking advantage of Canada's overregulation. I'm sure Californians would go for a return to price controls on gasoline, too, but that doesn't make it a good idea.

I'd like to see someone address the point that arbitrage encourages uniformity in pricing. That's been my basis for supporting drug re-importation. I'm not against the pharmas charging what the market will bear. I am against personally subsidizing R&D costs for the entire Western world (I'm OK with subsidizing "poor" countries).

This collection is a GREAT idea! Thank you.

If the pharmaceutical companies invent the drug, it's theirs. Whatever pricing mechanism suits them is "just," and if you disagree or feel as though the price you face is too high for the value they create, start your own pharmaceutical company and charge whatever you please.

According to the American Heart Association, >65% of American health problems are elective. Is someone has lived a lifelong healthy lifestyle and is stricken with a non-elective disease, then and only then does he have a moral standing to demand social funding of its treatment. It is not the obligation of pharmaceutical companies to provide uniformity of pricing, or to cheaply extract us from health problems we behave ourselves into.

I suspect the pharmaceutical companies will solve the problem of arbitrage either by dispensing their most valuable drugs at pre-approved stations directly into the patient, and/or engineering drugs so as to work only in the context of unique genetic profiles. Remember: if they're smart enough to create a functional drug in the first place, they're probably smart enough to outwit you in your attempts to avoid paying for it.

"engineering drugs so as to work only in the context of unique genetic profiles."

now that's a scary thought, Jonathan. and we may not be too far off from that point in time when pharmas could possibly do such a thing. but i really don't think that this sinister motive is the force that is driving the field of pharmacogenomics, a field which I intend to write about in the near future. check back again with the next Winds of Discovery report to learn more!

Here I am, going off on a different tack.

I've heard Sol described as a minor variable. Combine that with Earth's orbital variations (the old sod tends to wobble a bit as it circles the Sun), plus the movement of tectonic plates, and naturally things can get climatically hairy.

We happen to be in a time when things could get really hairy. What with a land bound ocean up at the North Pole and a land mass, with a circling current, at the South Pole a combination of a 'weak' Sun plus Winter at just the wrong time in Earth's orbit could make things a tad frosty. Fortunately, while the Sun seems to be 'cooling off', Winter still occurs when we're closest to Old Sol. (Angle of sunlight and all that.)

The Jurassic climate was boring on the other hand. All the major land masses were away from the poles, leaving both spots open water. The water there would get cold, but then sink, drawing warmer water in to replace it. Thus, no freezing, and so a nearly world wide tropical clime. For those of you who enjoy climatic variation it was a tedious age.

Amoxicillin online information.

Info on Levaquin online.