I think one of the failings of the pharma industry is to incorporate both, production and R&D. If R&D would be done in the public sector and its results freely available industrial pharma could compete on an even level concentrating on churning out medication in huge numbers at the lowest price possible and piggy-backing on companies that actively do R&D based on national laws that allow you do produce generica wouldn't be possible.
Of course, this is no silver bullet. There is no guarantee that research in the public sector is going to be as effective as in the private sector. Which makes me wonder why medical research is so unevenly distributed between the academic world and the industry in the first place.
The government is okay at funding initial research but has a poor track record at effective development, and development is where you find almost all of the cost in the process of creating new drugs. This is the elephant in the room. The initial research is sexy but it is also relatively inexpensive and (partly) immune to the political process.
Basically, you can't count on politicians to properly and effectively fund hundreds of different billion-dollar long-term programs, many of which will be expected to produce nothing. Because the life cycle of development spans several elections, every program is at the whims and mercy of whoever happens to be in charge of the program at any point in time. One of the reasons military R&D is expensive is because of the constant stopping and starting, changing priorities, and legislatures from one term to the next trying to redirect money into their districts. For government R&D, funding tends to follow fashion, not what would be the best allocation over the long term.
I've been there and done that. Government funding research can work out reasonably well. Government funding development is a disaster that takes twice as long and costs (at least) three times as much because it is subject to the whims of Congress. The constant stopping and starting of R&D projects, sometimes with unfunded year-long gaps in the middle, make it difficult to keep a team together (the beltway government R&D companies exist in part to mitigate this employment risk for people that work on government R&D).
There can be safe-guards against funding gaps, which are already in-place in some universities (e.g. at least in some parts of Europe). While funding is allocated by politicians the exact distribution of that funding is done on another level. Those levels have their own version of politics, of course, but the closer the people that administer funds are to the actual domain of spending the likelier it is to get informed decisions.
Also, current existing research grant programs could be scaled to fit the size that development requires. I wouldn't trust a politician to manage research money directly, so another layer of indirection could help.
pharmaceutical research is an extremely expensive, long term process. it could never get the same kind of funding in a public 'open source'-like setting that it could get in a setting where its treated as IP and is given the opportunity to create economic profits.
society is notoriously bad as innovating when there is no profit motive. the pace of the 'march of science' due to curiosity and dedication to the betterment of mankind is, unfortunately, glacial. thats not to say there isn't somewhere in between, but when we have this discussion, we have to appreciate the role that money plays in innovation--something people at HN might be able to appreciate.
Total pharmaceutical R&D costs by the big 20 in 2010 were $96bn. That doesn't seem too much to raise globally, given that the NHS alone spends £10bn on branded drugs each year.
It's also worth noting that there are ways of splitting up the research/production integration that exists at the moment while preserving the profit motive for research. I have seen prize funds touted as one way of doing this. There are some other interesting systems as well - see the proposal by Kremer in this article: http://cdn.intechopen.com/pdfs/24647/InTech-Innovative_propo...
This makes sense in the same way it makes sense in every other industry. They need to recover all of their sunk costs within a few years and marketing greatly increases rate of uptake and overall sales. Marketing frequently provides a positive return on investment, and in cases where the window to make a profit is short it is essential.
It would be silly to invest marketing dollars in R&D if none of the developed products were able to return the cost of R&D within the patent window due to slow market uptake. The idea that these are independent or that marketing is a waste of money relative to R&D is pernicious and incorrect.
It may apply in other industries, but medicines are different. You have the whole medical school system to do your "marketing". There are scientific publications galore.
For life-saving drugs, customers aren't swayed by "marketing" at all: if they have a condition that can be helped by the drug, they will go for it, marketing be damned.
I know we like to jump to analogies in these forums ("digital music" == physical stuff; "no password" == unlocked door; etc.), but some situations are unique. I would like to think that the pharma industry, particularly the critical drugs section, is unique.
The medical school system and journals is too slow for a new drug. By the time new doctors have enough influence, the drug is out of patent, and you can't count on every doctor to follow up journal articles about every new drug.
(I also recall hearing that advertising costs are stuffed into the inflated R&D claims, but it's hard to really know how much, due to lack of transparency.)
Yeah, I know. Thankfully computing and the Internet was developed with private funds... no... wait, it wasn't.
I don't disagree with you that a profit motive is a powerful force, but there reaches a point where greed causes more damage than good. Pharma is the prime example.
The infrastructure was done with public funds. People making something useful out of it was done in the private sector almost exclusively. In fact, the government is now one of the biggest threats to the internet.
It turns out that pressure to keep patentable information private for potential profit slows the rate of progress in biotech.
See http://money.cnn.com/magazines/fortune/fortune_archive/2004/... for an example of how much things improve when scientists are forced to share data. They wouldn't have done it if Mike Milken hadn't forced the issue. But he wanted to live enough to do so, and the result saves several thousand lives each year.
Of course, this is no silver bullet. There is no guarantee that research in the public sector is going to be as effective as in the private sector. Which makes me wonder why medical research is so unevenly distributed between the academic world and the industry in the first place.