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On February 09 2017 07:21 KwarK wrote:
When you have investments with very high upfront costs, but very low marginal costs for additional sales, you get counter-intuitive situations.
If a product costs $1,000,000 (for the factory) + $1 per unit to produce then if you have 1,000 customers in a region then they each need to be willing to pay $1,001 for you to break even. If there are 500 potential customers in another region, all willing to pay $500 for it, well, you'd still be technically making a loss on those. At 1500 customers you've got total costs of $1,001,500/1500 = $668/unit. So in theory every sale you make at $500, you lose $168 on. But as long as the different regions aren't able to trade your product then it doesn't work like that at all. If they're willing to pay $500 for it, well, that's $499*500 in profit right there.
Sunk costs and marginal costs are strange, but having the NHS buy your drugs, even at a "loss" is still beneficial for the drug companies. And that additional revenue stream allows them to produce drugs that would otherwise not be cost efficient. They cannot allocate such a high portion of the overhead to the British consumer as they can to the American consumer, but they can still allocate some.
The problem is that this is all backwards facing, or, its a choice to be made after you've already sunk the cost. The issue is incentivize people to make those sunk cost investments. Things like Harvoni are not viable without the higher priced American market.
On February 09 2017 07:25 LegalLord wrote:Show nested quote +On February 09 2017 07:10 Logo wrote:On February 09 2017 07:03 LegalLord wrote:
Frankly, I don't think we have a particularly good pharmaceutical R&D system as it is. You speak as if we're preserving something good but that's just not the case. Unless you have some specifics in mind for improvements, it sounds a bit like the classic "throw everything out and it'll be better next time" type of argument that usually ends up with everyone realizing the difficulty of the problem after they try starting over. The difficulty in part is why the system is bad in the first place. Not that there aren't things that could be vastly improved, but it's a difficult industry. It's not exactly the sort of industry that you can just predict results for and the day to day costs of the R&D is quite high. The way I see it, running medicine as a business is a flawed idea in and of itself - and that extends to pharmaceuticals. I'd run it more as an academic enterprise more akin to the national labs system - which, incidentally, do some fairly decent work on medical devices.
On February 09 2017 07:56 LegalLord wrote:Show nested quote +On February 09 2017 07:49 Logo wrote:On February 09 2017 07:25 LegalLord wrote:On February 09 2017 07:10 Logo wrote:On February 09 2017 07:03 LegalLord wrote:
Frankly, I don't think we have a particularly good pharmaceutical R&D system as it is. You speak as if we're preserving something good but that's just not the case. Unless you have some specifics in mind for improvements, it sounds a bit like the classic "throw everything out and it'll be better next time" type of argument that usually ends up with everyone realizing the difficulty of the problem after they try starting over. The difficulty in part is why the system is bad in the first place. Not that there aren't things that could be vastly improved, but it's a difficult industry. It's not exactly the sort of industry that you can just predict results for and the day to day costs of the R&D is quite high. The way I see it, running medicine as a business is a flawed idea in and of itself - and that extends to pharmaceuticals. I'd run it more as an academic enterprise more akin to the national labs system - which, incidentally, do some fairly decent work on medical devices. Yeah, I don't fundamentally disagree with that, but there are some problems there too so it wouldn't be a catch all, I would be worried about the ability of an academic based solution to be flexible and responsive enough to respond new innovations and health concerns or properly scale the amount of resources on different issues (I'd be a bit worried about an academic solution pushing the # of people on a problem well past the point of diminishing returns). Not that I think it's a bad idea, I just think it's a tricky situation. I'd also be curious about solutions that involved, weaker IP laws, and better incentive for generic medicines once the patents expire. An academic system would mostly just turn market incentives into a competition for grant money. I would not be particularly happy with such a dependency but perhaps some costs could be offset through making deals for exclusive production rights. It wouldn't be a very simple solution, in that government ventures are beholden to budgets, rather than profits. The fundamental problem of private pharmaceutical R&D is that it's concerned with profits rather than public health. The incentives are all wrong here, and it simply would be better for the government to do that R&D. And since the government is ultimately the final arbiter of quality on new pharmaceuticals, perhaps this kind of approach would allow them to skip an expensive step in the process.
The idea of an academic/governmental pursuit for pharma runs into a few main issues, some of which already exist (like the international free rider problem), but mostly it boils down to a Hayekian information problem. I dont see any proposed solutions to problem of deciding what should be developed without a profit motive at the moment.
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On February 09 2017 08:11 GreenHorizons wrote:Show nested quote +On February 09 2017 07:57 Plansix wrote:On February 09 2017 07:42 LegalLord wrote:On February 09 2017 07:36 GreenHorizons wrote:On February 09 2017 05:27 LegalLord wrote:On February 09 2017 05:19 Simberto wrote:On February 09 2017 05:04 LegalLord wrote:On February 09 2017 04:36 KwarK wrote:On February 09 2017 04:25 LegalLord wrote:On February 09 2017 04:19 Trainrunnef wrote:
[quote]
The problem is that it isn't all that obvious that its the last year of death until they are dead. Some people do recover and live on for an extra few years after expensive medical intervention. I wouldn't want to be in the shoes of the person who makes the call on whether its this patient's last year or not.
EDIT: Often that quality of life may not even be worth the cost but in some cases they are and without the privilege of hindsight how would you make that decision. Yes, that gets into the "death panel" issue. But often, it should be possible to see that the chance of a patient living a somewhat healthy life past a certain point is so small that it's better just to ease them towards death. To be fair, though, perhaps we could use a medical staff with more affinity towards mathematics towards that end. American MD's are notoriously bad at math. Death panels are a non issue. They're just a scare word for rationing. Nobody would expect their insurance coverage to outbid every other insurer to fly the best doctors in from around the world, and to hell with the cost. The insurance provider has already decided ahead of time which treatments they are willing to pay for and which they are not. Rationing is an inevitable part of any system in which demand outpaces supply, there is a finite supply of healthcare and, until people stop dying, an infinite demand for it. Your insurance provider has looked at how much money they get and has decided an appropriate ration of healthcare to provide you with. If you need more than your ration, well, you're shit out of luck there. It's the same thing that "death panels" do, only death panels are much better at resource allocation and aren't trying to maximize their profits. Which brings me to yet another issue: the way that certain emergency costs are left unpaid because of death or bankruptcy, which adds a further strain on the emergency medical facilities in the country. Which is why you need a public payment system for healthcare. That solves that problem, too. I personally would like a universal healthcare system. But Americans would never get behind that because "socialism." But they already are. It's not Americans that have to be convinced, it's our government. http://www.gallup.com/poll/191504/majority-support-idea-fed-funded-healthcare-system.aspx Good old "conservative Democrats" that were worried about the fallout of the public option. Its amazing what 6 years and the pending threat of being denied for pre-existing conditions will do for public opinion. Is it though? From February 2009: Show nested quote +Americans are more likely today to embrace the idea of the government
providing health insurance than they were 30 years ago. 59% say the
government should provide national health insurance Source
That is a compelling poll, but I'm not sure that directly translates to the 60 votes in the senate that they needed to pass the bill at that time. And opinion polls tend to drop once the program exists. Same with approval ratings for people after they announce their run for office. Opinion polls are valuable tools, but not prescriptive of what action should be taken.
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On February 09 2017 08:18 Plansix wrote:Show nested quote +On February 09 2017 08:11 GreenHorizons wrote:On February 09 2017 07:57 Plansix wrote:On February 09 2017 07:42 LegalLord wrote:On February 09 2017 07:36 GreenHorizons wrote:On February 09 2017 05:27 LegalLord wrote:On February 09 2017 05:19 Simberto wrote:On February 09 2017 05:04 LegalLord wrote:On February 09 2017 04:36 KwarK wrote:On February 09 2017 04:25 LegalLord wrote:
[quote]
Yes, that gets into the "death panel" issue. But often, it should be possible to see that the chance of a patient living a somewhat healthy life past a certain point is so small that it's better just to ease them towards death.
To be fair, though, perhaps we could use a medical staff with more affinity towards mathematics towards that end. American MD's are notoriously bad at math. Death panels are a non issue. They're just a scare word for rationing. Nobody would expect their insurance coverage to outbid every other insurer to fly the best doctors in from around the world, and to hell with the cost. The insurance provider has already decided ahead of time which treatments they are willing to pay for and which they are not. Rationing is an inevitable part of any system in which demand outpaces supply, there is a finite supply of healthcare and, until people stop dying, an infinite demand for it. Your insurance provider has looked at how much money they get and has decided an appropriate ration of healthcare to provide you with. If you need more than your ration, well, you're shit out of luck there. It's the same thing that "death panels" do, only death panels are much better at resource allocation and aren't trying to maximize their profits. Which brings me to yet another issue: the way that certain emergency costs are left unpaid because of death or bankruptcy, which adds a further strain on the emergency medical facilities in the country. Which is why you need a public payment system for healthcare. That solves that problem, too. I personally would like a universal healthcare system. But Americans would never get behind that because "socialism." But they already are. It's not Americans that have to be convinced, it's our government. http://www.gallup.com/poll/191504/majority-support-idea-fed-funded-healthcare-system.aspx Good old "conservative Democrats" that were worried about the fallout of the public option. Its amazing what 6 years and the pending threat of being denied for pre-existing conditions will do for public opinion. Is it though? From February 2009: Americans are more likely today to embrace the idea of the government
providing health insurance than they were 30 years ago. 59% say the
government should provide national health insurance Source That is a compelling poll, but I'm not sure that directly translates to the 60 votes in the senate that they needed to pass the bill at that time. And opinion polls tend to drop once the program exists. Same with approval ratings for people after they announce their run for office. Opinion polls are valuable tools, but not prescriptive of what action should be taken.
My point was that public opinion on medicare for all wasn't dramatically different when Democrats abandoned it. It had majority support then, it has majority support now, and of course Democrats want to try to defend the ACA (which has majority opposition) instead. Despite Kwiz's protests, still looks like a categorically dumb idea.
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I try not to correlate public opinion too much with how votes would go. 90 percent of people support gun background checks for example but good luck getting that through congress.
also 70 percent support funding planned parenthood 70 percent ish believe climate change is real etc.
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United Kingdom13775 Posts
On February 09 2017 08:18 cLutZ wrote:Show nested quote +On February 09 2017 07:21 KwarK wrote:
When you have investments with very high upfront costs, but very low marginal costs for additional sales, you get counter-intuitive situations.
If a product costs $1,000,000 (for the factory) + $1 per unit to produce then if you have 1,000 customers in a region then they each need to be willing to pay $1,001 for you to break even. If there are 500 potential customers in another region, all willing to pay $500 for it, well, you'd still be technically making a loss on those. At 1500 customers you've got total costs of $1,001,500/1500 = $668/unit. So in theory every sale you make at $500, you lose $168 on. But as long as the different regions aren't able to trade your product then it doesn't work like that at all. If they're willing to pay $500 for it, well, that's $499*500 in profit right there.
Sunk costs and marginal costs are strange, but having the NHS buy your drugs, even at a "loss" is still beneficial for the drug companies. And that additional revenue stream allows them to produce drugs that would otherwise not be cost efficient. They cannot allocate such a high portion of the overhead to the British consumer as they can to the American consumer, but they can still allocate some. The problem is that this is all backwards facing, or, its a choice to be made after you've already sunk the cost. The issue is incentivize people to make those sunk cost investments. Things like Harvoni are not viable without the higher priced American market. Show nested quote +On February 09 2017 07:25 LegalLord wrote:On February 09 2017 07:10 Logo wrote:On February 09 2017 07:03 LegalLord wrote:
Frankly, I don't think we have a particularly good pharmaceutical R&D system as it is. You speak as if we're preserving something good but that's just not the case. Unless you have some specifics in mind for improvements, it sounds a bit like the classic "throw everything out and it'll be better next time" type of argument that usually ends up with everyone realizing the difficulty of the problem after they try starting over. The difficulty in part is why the system is bad in the first place. Not that there aren't things that could be vastly improved, but it's a difficult industry. It's not exactly the sort of industry that you can just predict results for and the day to day costs of the R&D is quite high. The way I see it, running medicine as a business is a flawed idea in and of itself - and that extends to pharmaceuticals. I'd run it more as an academic enterprise more akin to the national labs system - which, incidentally, do some fairly decent work on medical devices. Show nested quote +On February 09 2017 07:56 LegalLord wrote:On February 09 2017 07:49 Logo wrote:On February 09 2017 07:25 LegalLord wrote:On February 09 2017 07:10 Logo wrote:On February 09 2017 07:03 LegalLord wrote:
Frankly, I don't think we have a particularly good pharmaceutical R&D system as it is. You speak as if we're preserving something good but that's just not the case. Unless you have some specifics in mind for improvements, it sounds a bit like the classic "throw everything out and it'll be better next time" type of argument that usually ends up with everyone realizing the difficulty of the problem after they try starting over. The difficulty in part is why the system is bad in the first place. Not that there aren't things that could be vastly improved, but it's a difficult industry. It's not exactly the sort of industry that you can just predict results for and the day to day costs of the R&D is quite high. The way I see it, running medicine as a business is a flawed idea in and of itself - and that extends to pharmaceuticals. I'd run it more as an academic enterprise more akin to the national labs system - which, incidentally, do some fairly decent work on medical devices. Yeah, I don't fundamentally disagree with that, but there are some problems there too so it wouldn't be a catch all, I would be worried about the ability of an academic based solution to be flexible and responsive enough to respond new innovations and health concerns or properly scale the amount of resources on different issues (I'd be a bit worried about an academic solution pushing the # of people on a problem well past the point of diminishing returns). Not that I think it's a bad idea, I just think it's a tricky situation. I'd also be curious about solutions that involved, weaker IP laws, and better incentive for generic medicines once the patents expire. An academic system would mostly just turn market incentives into a competition for grant money. I would not be particularly happy with such a dependency but perhaps some costs could be offset through making deals for exclusive production rights. It wouldn't be a very simple solution, in that government ventures are beholden to budgets, rather than profits. The fundamental problem of private pharmaceutical R&D is that it's concerned with profits rather than public health. The incentives are all wrong here, and it simply would be better for the government to do that R&D. And since the government is ultimately the final arbiter of quality on new pharmaceuticals, perhaps this kind of approach would allow them to skip an expensive step in the process. The idea of an academic/governmental pursuit for pharma runs into a few main issues, some of which already exist (like the international free rider problem), but mostly it boils down to a Hayekian information problem. I dont see any proposed solutions to problem of deciding what should be developed without a profit motive at the moment.
Profit is an utterly terrible predictor of public welfare, which is the deeper issue here. It is, for example, much more profitable to sell decades' worth of pills than to develop a one-off cure to a specific problem. We also get disgusting issues like the EpiPen matter.
I would honestly rather the issue of where to focus medical R&D efforts be decided by a committee of experts rather than by profit incentives. Decisions by committee are rarely looked upon positively but in this case it would make sense since it would support the proper incentive of improving public welfare.
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On February 09 2017 08:35 Karis Vas Ryaar wrote:
I try not to correlate public opinion too much with how votes would go. 90 percent of people support gun background checks for example but good luck getting that through congress.
also 70 percent support funding planned parenthood 70 percent ish believe climate change is real etc.
That's the point. Congress doesn't represent their voters, they represent their contributors. That's how you get 90% support for something in the country, but less than 50% in congress.
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U.S. Supreme Court nomineeNeil Gorsuch told a Democratic senator he foundDonald Trump’s comments "disheartening" and "demoralizing" when the president criticized the judiciary over a federal court order that blocked his immigration ban.
SenatorRichard Blumenthal of Connecticut told reporters about Gorsuch’s comments after meeting privately Wednesday with Trump’s first U.S. high court nominee.Ron Bonjean, a spokesman aiding Gorsuch in the confirmation process, confirmed Blumenthal’s account of their conversation in an e-mail and said Gorsuch "used the words disheartening and demoralizing."
Yahoo
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United Kingdom13775 Posts
On February 09 2017 08:36 Doodsmack wrote:Show nested quote +U.S. Supreme Court nomineeNeil Gorsuch told a Democratic senator he foundDonald Trump’s comments "disheartening" and "demoralizing" when the president criticized the judiciary over a federal court order that blocked his immigration ban.
SenatorRichard Blumenthal of Connecticut told reporters about Gorsuch’s comments after meeting privately Wednesday with Trump’s first U.S. high court nominee.Ron Bonjean, a spokesman aiding Gorsuch in the confirmation process, confirmed Blumenthal’s account of their conversation in an e-mail and said Gorsuch "used the words disheartening and demoralizing." Yahoo
Yes, even our friend xDaunt doesn't tend to condone personal attacks on judges from Trump and denounces them. Being the SCOTUS nominee won't change that.
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United States42695 Posts
On February 09 2017 08:18 cLutZ wrote:Show nested quote +On February 09 2017 07:21 KwarK wrote:
When you have investments with very high upfront costs, but very low marginal costs for additional sales, you get counter-intuitive situations.
If a product costs $1,000,000 (for the factory) + $1 per unit to produce then if you have 1,000 customers in a region then they each need to be willing to pay $1,001 for you to break even. If there are 500 potential customers in another region, all willing to pay $500 for it, well, you'd still be technically making a loss on those. At 1500 customers you've got total costs of $1,001,500/1500 = $668/unit. So in theory every sale you make at $500, you lose $168 on. But as long as the different regions aren't able to trade your product then it doesn't work like that at all. If they're willing to pay $500 for it, well, that's $499*500 in profit right there.
Sunk costs and marginal costs are strange, but having the NHS buy your drugs, even at a "loss" is still beneficial for the drug companies. And that additional revenue stream allows them to produce drugs that would otherwise not be cost efficient. They cannot allocate such a high portion of the overhead to the British consumer as they can to the American consumer, but they can still allocate some. The problem is that this is all backwards facing, or, its a choice to be made after you've already sunk the cost. The issue is incentivize people to make those sunk cost investments.
Not at all. You can know ahead of time that you're going to be selling at different prices in different regions and allocate the overhead between them accordingly. Any time you have an increase in sales over the marginal cost you get an overall reduction in the overhead allocated to each unit, even if some units are sold at a loss given total cost including sunk costs. Like I said, this is counter-intuitive, but it's still true.
Imagine you have a car and you're planning a road trip that will cost $50 in gas. You've currently got two people who want to go to that destination and each of them value getting there at $20. $50 > 2*$20, trip cancelled, nobody goes. But you still have two empty seats in the car. If you can find another guy who values getting there at $10 then you should still give him a seat, despite the fact that $50/3 = $17 and $17 > $10. And now our road trip is on. Find a fourth guy who values getting there at $1 and he gets a seat too. As long as they can't sell each other tickets you're good to go.
Your argument is that the first two guys are subsidizing the other two. It's true from one perspective, they're paying a disproportionately large share of the gas. But your conclusion, that the guy with $10 and the guy with $1 are holding back the road trip, that's completely false. Until you let them chip in gas money for seats there was no road trip.
You can use this argument forwards as well as backwards. It doesn't matter whether you've already started the road trip or not. Even if you're still in the planning stage of the road trip you still factor in all four of them. Those extra $11 from the other two passengers are critical to the decision making process. You may be making a loss on them but the road trip isn't happening without them.
The profits from sales over marginal cost, even if they're losses when compared to total cost, are still relevant. And accountants know this, and they take them into account when deciding where to allocate R&D money. Collective buyers who use their purchasing power to negotiate rates between total cost and marginal cost can still be allocated R&D overhead and still increase the overall R&D budget available to a project. Dealing with those collective buyers makes R&D a better prospect, not a worse one, even if they must sell the drug at a loss. Additional passengers is always more gas money.
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I mean, the main problem I always see with a healthcare "market" is that the function of markets is such that you get lots of stuff, with some shiny new tools and you get older less good stuff and the rich people get the former while the poor people, if they're lucky, get the latter.
That's somewhat reasonable with cars (I have no problem with rich people driving better cars than poor people). It's somewhat disgusting with healthcare where a market basically says "rich people deserve to live longer than poor people," especially since there are so many mechanisms that make rich people live longer than poor people even if a market economy wasn't doing so.
When poor people get crappier healthcare or die at higher rates, that's a sign the market is doing its job but because people don't like to think that's what their system does they try to apply band-aids and hideously deform the market.
And as soon as you try to start squeezing out the market in healthcare provision, you end up having to squeeze out the market in healthcare R and D and supplies and devices simply to keep things reasonable (witness the hideous evils Trump spoke of of "Medicare price-fixing").
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On February 09 2017 08:36 GreenHorizons wrote:Show nested quote +On February 09 2017 08:35 Karis Vas Ryaar wrote:
I try not to correlate public opinion too much with how votes would go. 90 percent of people support gun background checks for example but good luck getting that through congress.
also 70 percent support funding planned parenthood 70 percent ish believe climate change is real etc. That's the point. Congress doesn't represent their voters, they represent their contributors. That's how you get 90% support for something in the country, but less than 50% in congress.
Saying something in the polls =/= having a national opinion.
If you don't show up to vote for your senators then you have zero opinion on a matter.
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On February 09 2017 08:36 GreenHorizons wrote:Show nested quote +On February 09 2017 08:35 Karis Vas Ryaar wrote:
I try not to correlate public opinion too much with how votes would go. 90 percent of people support gun background checks for example but good luck getting that through congress.
also 70 percent support funding planned parenthood 70 percent ish believe climate change is real etc. That's the point. Congress doesn't represent their voters, they represent their contributors. That's how you get 90% support for something in the country, but less than 50% in congress.
What we are trying to say is that public opinion poll also does not represent the specific state demographics that were the hold out votes back then. There were two hold out democrats in the Senate if I remember correctly. They most of the other 58 on board for whatever.
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Specifically the hold out was Joe Lieberman.
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On February 09 2017 08:51 Plansix wrote:Show nested quote +On February 09 2017 08:36 GreenHorizons wrote:On February 09 2017 08:35 Karis Vas Ryaar wrote:
I try not to correlate public opinion too much with how votes would go. 90 percent of people support gun background checks for example but good luck getting that through congress.
also 70 percent support funding planned parenthood 70 percent ish believe climate change is real etc. That's the point. Congress doesn't represent their voters, they represent their contributors. That's how you get 90% support for something in the country, but less than 50% in congress. What we are trying to say is that public opinion poll also does not represent the specific state demographics that were the hold out votes back then. There were two hold out democrats in the Senate if I remember correctly. They most of the other 58 on board for whatever.
Is the same explanation being used for universal background checks?
On February 09 2017 08:53 Nevuk wrote:
Specifically the hold out was Joe Lieberman.
And Ben Nelson who went on to work for the National Association of Insurance Commissioners as CEO. I guess it's fine to chalk it up to circumstances, but where was the anger from elected Democrats about their own party stopping what Americans actually wanted for their healthcare.?
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On February 09 2017 08:35 LegalLord wrote:
Profit is an utterly terrible predictor of public welfare, which is the deeper issue here. It is, for example, much more profitable to sell decades' worth of pills than to develop a one-off cure to a specific problem. We also get disgusting issues like the EpiPen matter.
I would honestly rather the issue of where to focus medical R&D efforts be decided by a committee of experts rather than by profit incentives. Decisions by committee are rarely looked upon positively but in this case it would make sense since it would support the proper incentive of improving public welfare.
I just simply do not see how that could end up turning out well. As someone who worked in a medical devices lab, the current government grant process is...really abysmal. Honestly, I'd need a series of whitepapers describing a potential system to even begin to be convinced it would work moderately well.
On February 09 2017 08:43 KwarK wrote:
Not at all. You can know ahead of time that you're going to be selling at different prices in different regions and allocate the overhead between them accordingly. Any time you have an increase in sales over the marginal cost you get an overall reduction in the overhead allocated to each unit, even if some units are sold at a loss given total cost including sunk costs. Like I said, this is counter-intuitive, but it's still true.
Imagine you have a car and you're planning a road trip that will cost $50 in gas. You've currently got two people who want to go to that destination and each of them value getting there at $20. $50 > 2*$20, trip cancelled, nobody goes. But you still have two empty seats in the car. If you can find another guy who values getting there at $10 then you should still give him a seat, despite the fact that $50/3 = $17 and $17 > $10. And now our road trip is on. Find a fourth guy who values getting there at $1 and he gets a seat too. As long as they can't sell each other tickets you're good to go.
Your argument is that the first two guys are subsidizing the other two. It's true from one perspective, they're paying a disproportionately large share of the gas. But your conclusion, that the guy with $10 and the guy with $1 are holding back the road trip, that's completely false. Until you let them chip in gas money for seats there was no road trip.
You can use this argument forwards as well as backwards. It doesn't matter whether you've already started the road trip or not. Even if you're still in the planning stage of the road trip you still factor in all four of them. Those extra $11 from the other two passengers are critical to the decision making process. You may be making a loss on them but the road trip isn't happening without them.
The profits from sales over marginal cost, even if they're losses when compared to total cost, are still relevant. And accountants know this, and they take them into account when deciding where to allocate R&D money. Collective buyers who use their purchasing power to negotiate rates between total cost and marginal cost can still be allocated R&D overhead and still increase the overall R&D budget available to a project. Dealing with those collective buyers makes R&D a better prospect, not a worse one, even if they must sell the drug at a loss.
The point I'm making is that the $17 guys would be disappearing. In your analogy.
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On February 09 2017 08:53 Nevuk wrote:
Specifically the hold out was Joe Lieberman.
He was always the wet blanket of the democratic party. But being elected in super loaded CT will do that to you.
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United Kingdom13775 Posts
On February 09 2017 08:56 cLutZ wrote:Show nested quote +On February 09 2017 08:35 LegalLord wrote:
Profit is an utterly terrible predictor of public welfare, which is the deeper issue here. It is, for example, much more profitable to sell decades' worth of pills than to develop a one-off cure to a specific problem. We also get disgusting issues like the EpiPen matter.
I would honestly rather the issue of where to focus medical R&D efforts be decided by a committee of experts rather than by profit incentives. Decisions by committee are rarely looked upon positively but in this case it would make sense since it would support the proper incentive of improving public welfare. I just simply do not see how that could end up turning out well. As someone who worked in a medical devices lab, the current government grant process is...really abysmal. Honestly, I'd need a series of whitepapers describing a potential system to even begin to be convinced it would work moderately well.
I agree that it would probably have to come with a useful reform of the, quite frankly, broken system of academic grant allocation.
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United States42695 Posts
On February 09 2017 08:56 cLutZ wrote:Show nested quote +On February 09 2017 08:35 LegalLord wrote:
Profit is an utterly terrible predictor of public welfare, which is the deeper issue here. It is, for example, much more profitable to sell decades' worth of pills than to develop a one-off cure to a specific problem. We also get disgusting issues like the EpiPen matter.
I would honestly rather the issue of where to focus medical R&D efforts be decided by a committee of experts rather than by profit incentives. Decisions by committee are rarely looked upon positively but in this case it would make sense since it would support the proper incentive of improving public welfare. I just simply do not see how that could end up turning out well. As someone who worked in a medical devices lab, the current government grant process is...really abysmal. Honestly, I'd need a series of whitepapers describing a potential system to even begin to be convinced it would work moderately well. Show nested quote +On February 09 2017 08:43 KwarK wrote:
Not at all. You can know ahead of time that you're going to be selling at different prices in different regions and allocate the overhead between them accordingly. Any time you have an increase in sales over the marginal cost you get an overall reduction in the overhead allocated to each unit, even if some units are sold at a loss given total cost including sunk costs. Like I said, this is counter-intuitive, but it's still true.
Imagine you have a car and you're planning a road trip that will cost $50 in gas. You've currently got two people who want to go to that destination and each of them value getting there at $20. $50 > 2*$20, trip cancelled, nobody goes. But you still have two empty seats in the car. If you can find another guy who values getting there at $10 then you should still give him a seat, despite the fact that $50/3 = $17 and $17 > $10. And now our road trip is on. Find a fourth guy who values getting there at $1 and he gets a seat too. As long as they can't sell each other tickets you're good to go.
Your argument is that the first two guys are subsidizing the other two. It's true from one perspective, they're paying a disproportionately large share of the gas. But your conclusion, that the guy with $10 and the guy with $1 are holding back the road trip, that's completely false. Until you let them chip in gas money for seats there was no road trip.
You can use this argument forwards as well as backwards. It doesn't matter whether you've already started the road trip or not. Even if you're still in the planning stage of the road trip you still factor in all four of them. Those extra $11 from the other two passengers are critical to the decision making process. You may be making a loss on them but the road trip isn't happening without them.
The profits from sales over marginal cost, even if they're losses when compared to total cost, are still relevant. And accountants know this, and they take them into account when deciding where to allocate R&D money. Collective buyers who use their purchasing power to negotiate rates between total cost and marginal cost can still be allocated R&D overhead and still increase the overall R&D budget available to a project. Dealing with those collective buyers makes R&D a better prospect, not a worse one, even if they must sell the drug at a loss. The point I'm making is that the $17 guys would be disappearing. In your analogy.
If you're referring to the $20 guys, doesn't apply. We're talking about negotiated national monopolies. These are captive markets without the ability to trade with each other. The $20 a seat guys benefit, previously they were in a car with $40 of gas money from the two of them, now they've got $51 of gas money. More passengers bringing more gas money is always better (assuming you have room for them), even if the gas money they're bringing is below the total cost divided by the passengers. Gas money = R&D money. More customers buying over marginal cost = more R&D money. Collective bargainers that say "I'll bring another 50 passengers, but we're only paying $3 a seat" still increase the R&D budget and still fund research that wouldn't be possible without them.
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There was pretty significant blowback against the Dems. Many viewed it as the establishment fucking up.
But in 2009 a Senator making one policy decision the base disagreed with was not sufficient reason to scream "crush them in their next primary" so there you are.
Blowback just meant something different before the hyperpartisan social mediasphere came to dominate both parties.
Edit: It's kind of like the difference between JJAbrams Star Trek and original Star Trek. Or maybe original Star Trek is like the 90s, TNG is like the 00's, and 08-12 is like the TNG movies and after that we have AbramsTrek. It just kept getting more hypercharged.
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On February 09 2017 08:54 GreenHorizons wrote:Show nested quote +On February 09 2017 08:51 Plansix wrote:On February 09 2017 08:36 GreenHorizons wrote:On February 09 2017 08:35 Karis Vas Ryaar wrote:
I try not to correlate public opinion too much with how votes would go. 90 percent of people support gun background checks for example but good luck getting that through congress.
also 70 percent support funding planned parenthood 70 percent ish believe climate change is real etc. That's the point. Congress doesn't represent their voters, they represent their contributors. That's how you get 90% support for something in the country, but less than 50% in congress. What we are trying to say is that public opinion poll also does not represent the specific state demographics that were the hold out votes back then. There were two hold out democrats in the Senate if I remember correctly. They most of the other 58 on board for whatever. Is the same explanation being used for universal background checks? Show nested quote +On February 09 2017 08:53 Nevuk wrote:
Specifically the hold out was Joe Lieberman. And Ben Nelson who went on to work for the National Association of Insurance Commissioners as CEO. I guess it's fine to chalk it up to circumstances, but where was the anger from elected Democrats about their own party stopping what Americans actually wanted for their healthcare.?
They were angry. The progressives tried to primary Joe Lieberman and failed. He left the party. I can't remember what happened to Ben Nelson, but bet there was some blow back.
The ACA is likely going to pave the way for single payer down the road to fix its problems. Assume it doesn't get destroyed by this congress. But that is looking less and less likely as the house and senate realize they cannot deliver that unicorn they promised.
On February 09 2017 09:01 TheTenthDoc wrote:
There was pretty significant blowback against the Dems. Many viewed it as the establishment fucking up.
But in 2009 a Senator making one policy decision the base disagreed with was not sufficient reason to scream "crush them in their next primary" so there you are.
Blowback just meant something different before the hyperpartisan social mediasphere came to dominate both parties.
The death of Ted Kennedy and the election of Scott Brown made them slam the bill through. I bet if it went longer it might have ended in single payer, but I could be wrong.
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EPT
