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Ever wonder why drugs are so expensive? Blame the government

  1. Dec 14, 2006 #1

    ShawnD

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    This came to me when I was doing some routine work yesterday; I work in the QC lab for a drug company which makes drugs for HIV and hepatitis. The lab is under GMP which means everything is tested multiple times and the amount of paperwork involved is staggering.

    When a bulk truck of acetone shows up it needs to be tested for identity (30 minutes), water content (30 minutes), purity by GC (3-4 hours), then checked by another QC person (1 hour), then sent to QA and checked by QA (1 hour). This is what we do for everything that happens. We extensively test all raw materials that come in. Not just 1 sample from the lot but 1 sample from every bag and container in the lot (14+ samples for a pallet, for example). If a test fails, we fill out a report of what happened, why it happen, get it signed by the QC supervisor, get it signed by the QA supervisor, get it signed by the clerk, then we can try the test one more time. Every piece of equipment in the lab is calibrated every single day before use (don't need to calibrate if it's not being used that day). All papers and corrections are manually dated and initialled, which means a single GC report for a sample could have as many 30 signatures on it.

    For the entire plant of roughly 170 people, 30 of them are from QC, at least 20 from QA, and R&D makes up probably about 30 as well. The amount of testing involved under GMP is absolutely ridiculous. If you want to know why your drugs are $30/pill, it's because the government requires that every single bag of every single material has been tested multiple times. Every intermediate has been tested multiple times. Cleanliness of all equipment is tested. Final products are tested even more times with more tests with tighter standards. The cost of time is high, and your drug bill reflects this.
     
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  3. Dec 14, 2006 #2

    Moonbear

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    You might have a different view if that testing wasn't done and contaminated drugs were being passed out to people in the pharmacy, or if very potent drugs had unreliable doses in each pill because QC was sloppy. The reality is that it would cost a lot more in lawsuits and harm to human health if such quality control measures were NOT in place and people became ill from contaminants in their medications or if the medication was ineffective, or worse, harmful, because the doses were varying too much. I would have hoped part of your training there would have included an explanation of why these QC practices are important so the employees would have an appreciation and respect for performing them well.
     
  4. Dec 14, 2006 #3
    In these situation you have to do a risk analysis, if the market wasnt being regulated by the government, I am sure the amount of QC would drop, if the risk assessment deemed that the actually monetary harm of dropping QC would be less than the amount of Money QC costs.

    Due to the fact that the government forces you to have very high QC we will never know the answer to these questions, and to say otherwise is speculation.

    However I dont disagree with having high standards when it comes to these matters, I do not think however you can blame the government for the greed of Drug companies, it doesnt wash!
     
  5. Dec 14, 2006 #4
    Particulary as when the market does function and you have generic drugs available prices can drop enormously. If our free market warriors are serious, they should seek to remove government patent protections from drugs as well.
     
  6. Dec 14, 2006 #5

    Moonbear

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    They have to do the same QC, which just shows that the cost of the QC is not the major cost raising the prices of the drugs.

    And that's when you'd see new drug development grind to a halt. The REAL cost of the drugs is in the R&D, because many more don't make it to market than do. Every drug that makes it to market is helping fund the new drugs in development, that may or may not pan out. Without patent protections, nobody could afford to do the R&D and you'd watch the big companies disappear from the market as the generic companies made all the profit, but had no new drug development programs.
     
  7. Dec 14, 2006 #6
    Completely aggree
     
  8. Dec 14, 2006 #7

    russ_watters

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    There are plenty of analagous situations in other industries you can use for comparison. The problem with a risk analysis of this type is that the risk we're dealing with is generally a once-and-done risk. One bad batch of products could put you out of business. So the analysis is really irrelevant. If the probability of the failure is real and the cost is essentially infinite, then you must fix the problem.

    In engineering ethics in school, the Ford Pinto is a typical test-case. The execs of Ford knew about the fuel tank explosion problems, did a risk-reward analysis of settling the lawsuits vs fixing the problem, and decided it was cheaper not to fix it. But they didn't consider the possibility that a defective product might not sell very well. It was a large part of why Japanese cars took over the small-car market in the US.

    Plane crashes work similarly, which is why such extrordinary measures are taken to prevent them. ...and why Airbus is being short-sighted by not meeting American safety standards on the A380 fuel tank.
     
    Last edited: Dec 14, 2006
  9. Dec 14, 2006 #8
    What concerns me more is that there are people working on that plant with such an attitude towards safety.
    You can have millions of procedures but if the people responsible for performing them have an attitude of "we think it is ridiculous" then I fear it won't help much.

    So how many more people who work there have a similiar attitude as the one you expressed? 10%, 50%, 95%?
     
  10. Dec 14, 2006 #9

    Astronuc

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    The idea behind a patent is that an inventor has a opportunity to recover expenses and to make a living. What would be the incentive to expend a great deal of time, effort (R&D) and cost of inventing if someone who didn't put forth such effort could simply copy someone's work and sell it in competition.

    What if profit were the only motive, so to maximize profit, someone cuts corners which leads to injury or death. If someone dies, it's too late to fix the problem.

    QA/QC systems exist because someone realized that mistakes will be made - human error. Hopefully the mistakes will be minor, and the objective is to avoid major or critical mistakes which would compromise public health and safety.

    I just returned from a technical meeting in which 'Zero Defects' is being promoted. That is well beyond a system that recognizes 95/95 or 6-sigma, where failure might be 1 per million. Of course, who wants to be aboard an aircraft with catastrophic engine or wing failure. But history shows us that it is possible - but hopefully not very often.
     
  11. Dec 14, 2006 #10
    As long as the process is followed, the attitude of the person doing the following is irrelevant. Even if it is: "we think it is ridiculous"
     
  12. Dec 14, 2006 #11
    I completely disagree.
     
  13. Dec 14, 2006 #12
    What is it you disagree with? The fact that it doesn't matter what emotional state you are in while following or process, as long as that process is followed, or something else?

    Its exactly this reason why large mature and typically successful companies, document document document their processes, and procedures, and ensure Mr Grumpy and Mr Happy both follow the process.

    Off course Mr Happy usually is going to be more productive, but that is entirely irrelevant to the process.
     
  14. Dec 14, 2006 #13
    Well let me put it this way, I would not want someone to work in a QC lab of a drug company who thinks that the procedures are "ridiculous".
    You seem to think it is normal but I don't. Someone who works in QC in such a highly sensitive industry should know why the procedures are so stringent if he does not he does not belong there IMHO.
     
  15. Dec 14, 2006 #14
    Russ, bar the cope out speculation at the end (probably of failure is definite cost = infinity), that is exactly why you should risk analysis this sort of situation. You need to see what QC you can live with, if your doomsday scenario was actually true, Nobody would bother investing in Drugs companies, considering at some point they would sell bad drugs, and go bust.. This obviously is rubbish.

    So the risks are irrelevant? If the OP is correct in its assumption that the most costs in Drugs production are from QC, then they are everything. Following your logic, they should test every grain of raw material to ensure they dont get hit by the infinite costs.. Doesnt sounds like a good business opportunity to me
     
  16. Dec 14, 2006 #15
    Why should you care, as long as the process is followed? Would you prefer someone who was really behind the process, but kept taking shortcuts, and was absent minded about it, but had a great attitude? Or someone who thought the process was wrong, but still followed it?
     
  17. Dec 14, 2006 #16
    Well I am not the owner of a drug company, but if I were I would care about the attitude of my employees, especially if the were in the quality control department and especially if it dealt with drugs for human consumption.

    Not sure what your issue is Anttech, why would you want anybody to work in QC in such a sensitive industry with an obviously bad attitude?
     
  18. Dec 14, 2006 #17
    I never said that, I am trying to make you understand that an Attitude, or rather, the emotional state of someone is irrelevant as long as they follow the process. You seem to completely disagree with that stance and I am just wondering why, as it defies logic.

    Anyway, questioning a processes publicly isnt what I would term a bad attitude.
     
  19. Dec 14, 2006 #18

    ShawnD

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    That doesn't seem likely due to the fact that drugs sold as nutritional supplements are generally regarded as safe, while at the same time they are not covered by the FDA, and I can buy a 300g bottle of 99% taurine for $13. The company making that drug still has QC, but their testing is much more relaxed. They'll test the end products for sure, but they may not be required to test everything that went into the reactor. If the purification process actually works (as shown by QC testing), why would you even need to test the starting materials? If I can show my distillation rig produces 100% pure product, why must you ask what was in the boiling flask? It makes no sense.

    Drug patents are in place to assure a brand name company can make money when creating new drugs. It's not just about how many R&D people are on staff, it's about where they are and how much you need to pay them. India vs North America.

    Brand Name
    Believe it or not, Americans are very smart people. Drug companies want this kind of brain power for R&D, so they setup shop in USA, or Canada (close enough). R&D sends work to QC for testing because you cannot get a drug approved by the FDA until you have a huge QC paper trail to back it up, this means QC is also in North America. Everything QC does is watched by QA, so now QA is in North America. Since R&D, QC, and QA are already in this same location, add a production staff and you have a working operation. Let's say about 170 employees with an average pay of $40,000 per year = $6,800,000 payroll

    Generic
    Generic companies do not need R&D, so they setup shop in India; 0 R&D instead of 30. With no R&D to deal with, QC only needs to be 20 instead of 30. Few QC means fewer QA; 13 QA instead of 20. Production staff is the same size to make the same amount of drugs. Total factory size is 123 people. According to our friends at the CIA, https://www.cia.gov/cia/publications/factbook/geos/in.html#Econ $33,900. Scale wages accordingly to get:
    123 x (3400/33900) x (40000) = $493,451 payroll

    India has some sketchy environmental regulations too so we'll just assume the amount of money saved by dumping waste into the river scales the same amount. Based on these rough numbers, the production cost for a brand name company is 14x as high as that for a generic company. Your $30 brand name pill is suddenly $2 and some change, while both companies maintain the same profit margin (as a percent).

    Going back to what I said before, this 14x higher production cost is because base operations are in North America rather than India. The brand name company can't scale down because their staff is required for GMP, and they can't relocate to India because that would make drug approval quite a bit harder.

    Rather than relax drug approval rules (which are in place for a damn good reason), relax the amount of testing that needs to be done on drugs that are already approved by the FDA and other such organizations. This GC and IR testing of methanol before I can use it to clean glassware is just retarded and it encourages outsourcing to India where a guy can do the same mindless work for slave wages.
     
    Last edited by a moderator: Apr 22, 2017
  20. Dec 14, 2006 #19

    ShawnD

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    We can't get a number crunch on the attitude because the turnover is too high. The average age of a QC chemist is about 25. People stay until they have enough practical lab experience to get a higher paying job in the oil field. Even if we didn't have GMP we would still have a second QC check the paperwork, then have QA check it. There are enough new guys around that mistakes are caught on a regular basis.
     
  21. Dec 14, 2006 #20

    russ_watters

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    Well then how about we just remove patent overprotections? 17 years is a long enough time - drug companies don't need to get freebie extensions.
     
  22. Dec 14, 2006 #21

    russ_watters

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    Well that's just it though: you do all this QC to drop the probability of a catastrophic failure to the point where it becomes so small you can bet against it happening. And if you can't do that, then you must take every precaution possible and follow the QC rules as strictly as possible so that if the failure is inevitable, when it happens it doesn't destroy you. Again, the Ford Pinto: had Ford handled it better once they knew about it, it likely would not have had anywhere near the effect it had. How about ValuJet? It sorta exists today as Airtran, but it would probably still exist - despite the crash in the Everglades - had it followed federal safety regulations.

    The key is that the failures may still happen if you do follow the regulations/ethics, but the failure is guaranteed to be fatal if you don't. I didn't make that clear in my first post: if you do follow the QC, the failure may not be fatal, which is why you have to do it.
    You're missing two pretty key points, though: if a company grows and profits for 10 years and then folds due to some stupid mistake, it was probably still worth having the company exist (especially if you were an employee or customer or subcontractor). And if you are a stockholder with a properly diversified portfolio, you will do just fine even knowing that many of those companies in your S&P index fund won't be around when you go to spend your retirement savings. It still makes sense to invest, even knowing there is a high probability of failure because there is an even higher probability of success.
     
  23. Dec 14, 2006 #22
    I was being snarky about patents. However, I do think the drug patent system needs reform.
     
  24. Dec 14, 2006 #23

    russ_watters

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    Suppliments aren't drugs, so the risks (though still real) are much smaller. And a lot of what makes them safe is that they do very little.
     
  25. Dec 15, 2006 #24

    ShawnD

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    Most pills you see at a store like GNC are drugs. They contain things like caffeine, taurine, and ephedrine which are just as dangerous as Tylenol. Contrary to your opinion that they do nothing, overdosing on one of those stimulants is just as bad as overdosing on cocaine. Caffeine is widely known to cause birth defects, and ephedrine was pulled from the market due to rare cases of heart attacks. I'm not sure what taurine can do, but it's probably just as bad as any other stimulant out there.

    The important thing to keep in mind is that it's mainly the potency and dosage that make something dangerous. Drinking a cup of coffee is ok, taking 20 caffeine pills is bad, taking 1 Tylenol is good, taking 20 Tylenol is bad. The chance of a drug related death stemming from impurities seems negligible.
     
  26. Dec 15, 2006 #25
    Russ, conservatism and Risk Analysis are like chalk and cheese, and you prove the point quite nicely. The idea is you reduce the risk to an acceptable level not 0. The people behind the ford pinto, obviously didnt do a good analysis.

    But the Level of QC would be dictated to by the risk analysis, which seems to be what you missed. "How much QC do we need to ensure that the risk to us is at an acceptable level," which could be 50/50 or 0... It depends.
    Interesting school of thought:

    If you invest €1000 into company A at its public offering, then it is profitable for 10 Years, and folds, unless you have moved your money out of that company, you would have lost €1000. So that would be an unsuccessful investment!
    How can something have a high probability of Failure, and an even higher probability of success? I think what you mean is that you have a high probability of Failure, but the reward for a success is Massive. High stakes big rewards. Your scenario = Big risks no rewards.
     
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