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Q: If you cause the cost of drugs to plummet, pharma won't spend money on R&D, right?

"If you cause the cost of drugs to plummet, pharma won't spend money on R&D, right?" This was a question from another anonymous post, but at least they were friendly this time.

Before I answer this question fully (since I think I've alluded to it in other blog posts), I want you to take a step back and ask yourself a question: Why do drug companies make drugs?

The first and feel-good answer is because they want to help people. I think this is the case for bench research. Having befriended a pharmacological PhD in the past, I can honestly report that bench researchers really do want to make medications to improve the human condition. And yes, research and development – clinical trials, the cost of design and execution, etc. – are expensive.

But most drug companies exist to make money for their shareholders, and they do this through pricing. Now, I recognize that not every medication is a huge success. But for those that are promising – and the pharmaceutical companies have metrics to know which is going to "take off" – they price the medication with cash windfall in mind.

So how does P.S.Y.C.H. effect pharmaceutical development?

A result of a more fair system like P.S.Y.C.H. is the market costs of the medications will be lower strictly through capital market forces. P.S.Y.C.H. doesn't force drug costs down; the market does. But there's nothing to say that individuals can't crowdsource promising research opportunities. In fact, they are already doing that now.

Imagine NIH, NIMH, and university funding where people can actually donate directly to the projects of their choice because they can finally afford to. Remember: without having to pay insurance premiums that you'll never use, you'll have a couple spare dollars to throw toward research that is dear to you.

I think government is critical for a functional society. But having government "allot" funding to basic research might not be the best idea. After all, they're too busy running other things like national defense, etc. Instead, let the boards of the state general health funds decide how much of the GHF money goes to research in that state. Or have the boards vet good proposals to present to their constituency, and let the people vote on where the money goes. For economies of scale, boards from different states can collaborate and pool their resources.

When you change the current health care paradigm, the possibilities for creative, economical, and varied research are endless. Think outside the box.

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