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Fwiffo 26 May 2015 01:54 PM
56%

The salaries of researches. The cost of computers time and lab equipment to search throught various compounds. The salaries of people running animal and human clinical trials to demonstrate feasibility to consumption. Biolologist and other reseraches involved with biomimicry for nature reverse engineering. Salaries of chemists of making up a chain of reactions that can effectively produce the end molecyle (same for coming up with the candidate compounds)(you make up the molecyle from parts but which parts do you combine first and from which start compounds do you aquire them?). These are all things that need to be done once per pill type but do not need to be additionally done when making more pills.

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ChristianKl 26 May 2015 05:34 PM
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A pharma company might have 100 prospective drugs. It spends 70 million on to research each of those drugs. That an investment and the money could also be invested elsewhere. That means that money is supposed to earn interest, maybe 8% per year.

Then 5 drugs make it through clinical trials. One of them won't get used in practice because there's a better competitor. 3 drugs make 1 billion. 1 drug makes 15 billion.

Then you come along and say that's unfair because that 15 billion in sales drug only had 70 million development costs.
You don't factor in the interest that the money can earn over the 10 to 15 years between investment and return.
You don't factor in the fact that the success has to cross finance all those failed drugs.

As a result you completely remove any incentives of investing money into the risky prospect of investigating new drugs.

100 * 70.000.000 * 1.08^(12.5) = 18.318.714.055

That means the numbers of this example roughly work out so that the company get's their research costs back. In practice the company also has other costs, so the drugs that make it to market have to make even more money.

In reality big pharma companies aren't that confident today that they get that return, so they buy back shares and layoff of scientists. You don't solve that problem by making them earn less money with their blockbuster drugs.

http://pipeline.corante.com/ is a good blog if you want to learn about how drug development works.

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Fwiffo 27 May 2015 03:34 AM
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I don't think you get an accurate picture of my stance. I am saying that the customer gets off cheap because they only pay for the drug that made it through when they should also participate in the costs of the drugs that didn't made it throught so that some of them could make it throught. Whether a drug that made it through is used by a lot of people or a few people doesn't change the cost of how much it cost to try all these drugs. When you sell a pill with fixed per pill price the return on it doesn't have the same structure as the costs of making it. This is bad in 2 ways. Either it is strcuturally too low in which case economic sense is not guranteed. If it is strcturally too high drug companies have the license to print money.

That is if the market worked so that the public sphere would buy rights to certain molecyles from the private sphere the reward/cost structures would be much more closer. But instead a molecyle right makes you eligble to sell individual pills. It could also make sense that all people that are sick in some decease collectively buy the right to the molecyle that cures it. However now when more people get sick in that decease the worth of the molecyle right increases that is the sum that people in total pay for the cure is increased. However the salaries of the researchers are not retroactively raised. One could argue that the system is designed so that the researchers are paid a salary that corresponds to an expected number of people that will get sick that will benefit from their research. But this number can be high or low and the drug company takes the hit or reaps the benefits of the estimation. That is if not enough people get sick money is not taken away from researchers but the company goes bankcrypt. If too many people get sick the company dwells in profit.

The current way of assigning economical responcibility is ... read more


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ChristianKl 27 May 2015 06:47 AM
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However we could assign ecnomical responcibility to more accurately represent resource benefitting. But this would mean that the labourers and customers would become exposed to investment risk.
That would be bad because the customers have no domain knowledge to judge different investment decisions against each other.

You want the risk to be with a person who has knowledge instead of the person who doesn't.

Central planning is bad.

You might end up paying only a standard customer fare even if you are the only customer. It can be argued this isn't super ideal and you as a customer have benefitted from the custom of giving a pill a fixed price that stays relatively constant over the lifetime of the pill.
That line of reasoning again shows ignorance of the real world.

1) The lifetime of the pill is largely longer than the lifetime of the patent.
2) Pills for rare diseases that affect only a small number of people can be priced higher in today's system.

You refer to risk management as the rationalization why the current prices are okay.
I want prices that are high enough to justify the development of new drugs. I want more scientists to be employed in developing new drugs, not less.

In capitalism people making profits isn't bad.

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Fwiffo 27 May 2015 07:56 AM
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There would be different coupling between risk and gain. Customers would still choose between what products they opt into so it would still be distributed planning and not centralised (what made you read me that I was suggesting such?).

the point 1) refers to patenets but the point that it is commenting isn't referring to any patents. If the customer is the only user irregardless whether any patents are even formed the situation arises.

For 2) you need to make this decisions pill by pill and if a pill that is planned to be a rare low volume pill ends up selling better than expected the company just quietly reaps the benefits. That is this decision can be made wrongly.

I also find it interesting about resisting a more market mechanic responsive price system over subjectively set prices as being too economy ignorant.

I care that there is enough money to pay wages to scientist. I do not care whether fixing prices high is the ideal means to that end. I care about the total money accumulated not whether the per pill price is so or so (in order for this to matter you need the other economic infrastructure to work in a certain way).

I am not arguing that less scientist should be employed. If you are reading me as supporting that please explain how you do so. In fact I want it more recognised as being involved in the service of people not only as a vechicle for a risk takers greed. Risk deters utilization. The value of a reserach should not be dependant on some money lord putting fate into it but the resources and time used to produce it.

I am not arguing as being part of capitalism. There are many mechanisms where fighting profits in capitalism are seen as good. Competetion is a profit minimization scheme. Monopolies are seen as giving undue market power. The capitalist analysis of profit might ultimately be inadequate.

While I will discuss points ... read more


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ChristianKl 28 May 2015 07:00 AM
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Customers would still choose between what products they opt into so it would still be distributed planning and not centralised
You haven't said what you mean with "customers".

Patients certainly don't know which drugs they will need in 10 to 15 years.
By the time they actually make a decision to get a drug the drug is already developed.

For 2) you need to make this decisions pill by pill and if a pill that is planned to be a rare low volume pill ends up selling better than expected the company just quietly reaps the benefits.
There no reason to assume insurance companies to be quiet. Insurance companies an decide that fewer people will get the drug financed.


I am not arguing that less scientist should be employed.

I'm not saying that you say that.
No, you are arguing for a policy that result in less scientists getting employed without being aware of the consequences of that policy.

You said that prices stay constant that's not true due to patent expiration. There are also other market events that can change prices.

The value of a reserach should not be dependant on some money lord putting fate into it but the resources and time used to produce it.
Without anybody putting money into the research there's no research.

Cost-plus is in general no way to get efficient allocation of capital. It encourages the waste of resources. It doesn't incentivise incentivise to work on products that are likely to hit market.

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Fwiffo 28 May 2015 08:09 AM
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Drug companies would still speculatively develop the drugs. The patient would buy it at the same point as now from the shelf of a apotek/prescribed by doctor. There need not be consumer involvement before that point.

People that get insuramce expect to get medicated when getting sick. If there are no competing drugs a insurance company can't combat a too high price point without endangering its duties. That is if a game A costs 60$ and game B costs 60$ both have a development budjet of 1 million but if game A has 10 million players and game B has 1 million players it is hard for customers to realise that game A rips them off harder than game B, ie one could easy fall for the fallacy that both cost "1 game" and either they are both rightly priced or both incorrectly priced. A could sell 6$ per game to make even while B would have to sell at 60$ to make even.

Prices stay constant on the order of weeks. They don't update daily or in real time for most products.

Who puts their money in could be somebody else than the money lords. The money lords need to get their income from sales anyway so while not expose customers more directly to the responcibilyty their power over the economy yields?

If you think this policy leads to less scientists I would benefit from being explained why you think it does so.

What is the better standard standard if it is not cost-plus? Aren't labourers paid proportional to the effort they exert? I think it still encourages to work on products that are likely to hit market because if the speculative product doesn't get any customers you are stuck with you being the only benefitor of your developments wherearas if people opt in it frees resources for the next speculative development project. That is the activiy of not producing for personal use but for it's market value still makes sense. The difference would be that ... read more


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ChristianKl 28 May 2015 08:17 PM
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As I said above a drug has to earn more money than the development costs of that drug. It's development also has to for other failed drugs because most drugs fail.

As a wrote above. At a cost of 70,000,000 for developing a new drug you aren't making even if you get 70,000,000 for that drug. You need to get billions for those drugs that are successful to make even.

>There need not be consumer involvement before that point.

Then someone else has to pay before that point and invest money. Money that wants to earn interest. Who makes that investment decision in your idea?

Aren't labourers paid proportional to the effort they exert?
That's what Marx said. It's wrong. Labors get payed a market rate. More skillful people get payed more for the same amount of effort than less skillful people.

Cost-plus is how the military ends up with $7,600 coffee makers and $436 hammers when those items are much cheaper on the free market.



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Fwiffo 29 May 2015 04:55 AM
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The development of the failed drugs can be recognised as a development cost of the successful drugs. That is saying that if compensation budjet of 1 million is too low a return on a drug instead of giving a blank check on how much a drug compensation can be worth we could try a 10 million compensation budjet.

The money that is not strictly required for the parts but just to motivate the person to do the job would be listed as an explicit "motivation cost". That is it would be explicit right on the outset that the compensation would be somewhat more than the true development costs would be. However how much so would be agreed beforehand where we can compete offers against each other directly and not go throught a process of them quesstimating price points on where they want to lie on the greed/agreeableness axis.

Speculative producers would be motivated by this "motivation cost" margin. The amount of profit on the table would be more explicit and certain increasing predictability. It could also support a newish kind of scheme of unspeculative production where the product is sold (or should I say financed) before the production starts. The current nearest analog is that instead of guessing that people would buy that you hear talk that people would like to buy a product. Then taking on the loan isn't subjectively that risky to you as you are personally more convinced taht the product will sell if people complain about the lack of the product even when the product isn't even in existence yet.

Usually labourers get a set amount of money monthly. They don't get one amount of money one month and a different amount of money the next. That is pay rises and lowerings are things that happen 2-5 times over the employement career of a person not every month. Working for a company provides shielded against the fluctutaions of the economy while market situation is ... read more


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ChristianKl 29 May 2015 07:01 AM
64%

However how much so would be agreed beforehand
Agreement by whom? You said that the customer is only making his decision when it comes time to get the drug.

Is he supposed to time travel back in the past and make an agreement about the price?

The issue with overpriced military things is that costs are covered regardless of the magnitude of them. That is there exists no pressure to minimise the "plus" part of the compensation.
Okay, it seems you are not familiar with the term cost-plus.

It's basically that the company get's it's expenses covered and an additional % percent.
The main point is that there no pressure to minimize expenses if you pay a company for their expenses instead of paying them based on the value that their product produces.

Having a fixed price thus isn't cost-plus, because the price is independent of the cost. More importantly an employee is managed to work on the priorities that his employer finds important.

High end AAA+ games also contain a lot of thing extraneuos to the core gameplay.
Using games that run on very different economics as an analogy doesn't help your case.

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Fwiffo 29 May 2015 08:55 AM
53%

If there are multiple otherwise comparable speculative projects the customer would opt in to the project with smallest total budjet as that would have the smallest eventual price. If a project isn't opted in because of the total budjet is too high the producer can lower their motivational cost part. However they are not going to accept negative profits (ie actual costs incurred is the price floor). Similarly if you have 900 customers each willing to pay 1000$ but your total cost with motivation factored in would be 1 000 000$ if the motivational part is 200 000$ you might be tempted to just lower the budjet to 900 000$ and take only 100 000$ as profit if you think that no new customers will show up. Or you can wait on whether sitting on the product makes people ready to cough up that 1111$ to make it work as a million budjet project. As a customer I have the option of waiting whether enough people that are similarly ready to cough up 1000$ show up or whether I can't afford to wait and I am willing to pay more to have the product right now. But even if I am not willing to wait if those people show up I will end up paying the same as if I had waited.

This removes a conflict of interest where a customer ready to pay much doesn't mean that he will automatically be charged more (if people of warying readyness level are willing to pay for a product they will each only be charged the same price which is likely determined by the readyness of the customer whos readiness is the lowest vs the readiness of the hypothetical soon to be discovered customer). Under the current system if you are too loose with your money you might end up paying more for the same product you could have had for cheaper by just by refusing a high price. I don't know whether it is a principle that should hold but I view it as a good property that all customers pay the same price for the ... read more


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ChristianKl 29 May 2015 02:01 PM
66%

If there are multiple otherwise comparable speculative projects the customer would opt in to the project with smallest total budjet as that would have the smallest eventual price.
Time travel it is?
Otherwise who's making that decision? Who decides what happens to be "comparable speculative projects"?

You are also indicating that you want that one of the projects isn't funded. I want to have multiple companies working on developing cancer drugs. I want more drug development. Every company that believes that it can successfully develop a drug that can cure people and raise the required capital should work on it.

If you think that there are addional difference that are essential to the analysis it would be proper to explicitly state them

I already did state that a lot of drug development results in drug that don't work on a technical level. A decent gaming studio on the other hand nearly always produces a running game.

A game doesn't need 10 to 15 years development time.

Drugs don't have customers in the same way as video games do. Drug purchasing decisions are a combination of the decisions of government regulators, insurance companies, doctors and patients.

Things that I haven't already said:

Patients are willing to pay any price to stay alive. They often opt for expensive treatment choices when cheaper one's are available.

Game choice depends on aesthetic preferences in a way that drugs don't.
I don't know whether it is a principle that should hold but I view it as a good property that all customers pay the same price for the product

I'm not sure that's compatible with what you argued above.

In any case it's a bad idea. There no reason why a Kenyan should pay the same price for an AIDS drug than a US citizen. It's okay if a pharma company sells a drug at a higher price in affluent countries to ... read more


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Fwiffo 29 May 2015 04:32 PM
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No, it's not time travel. There is still speculative production going on that is started by the producer to make him money without direct involvement with customers. I am not trying to stipulate that production would be started at any other time it is started now, or that customers would be involved at a different time. What I am stipulating that the size of the compensation would be known sooner by the producer and that the price that customers have to eventually pay be known later than commmitment time and what factors affect the size of the compensation. The amount of customers as such does not affect it. The comparable projects means that people have a finite amount of meony and that if they can get a need filled with one project that thee opt-in to they don't need to fullfill it with another project as likely if they hadn't (ie buying a car from one manufacturer makes you less likely to buy one from their competitors, you are getting only 1 car and not 2 (or if you are getting multiple cars you are not getting more cars just because there happens to be multiple car manufacturers)). Meaning that a decision to not opt-in makes sense occasionally (so you can opt-in to another thing).

I think you will still hold that not every company that can secure funding for their drug development project should automaticallly be guaranteed to be profitable (in partcular extreme economical irresponcibilty leads to bankcryptcy). Or maybe you think that every company should be funded but not all loans need to be paid back? For market choice to exist there needs to be those that get picked and those that get not picked. I mean to not increase the amount of financial ruin but in order to block really bad products there needs to be a clear signal that some things are not worthwhile. If loan givers are supposed to block bad products by not giving funding there needs to be ... read more


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ChristianKl 29 May 2015 06:28 PM
66%

You still haven't said who makes a decision to finance the drug in your ideal system and when they do it.
I think you will still hold that not every company that can secure funding for their drug development project should automaticallly be guaranteed to be profitable
Again in over 90% of the cases an attempt to develop a drug doesn't result in a working drug.
It's something that you keep ignoring. Most attempts at developing drugs fail.
Failed drugs aren't supposed to be profitable.

On the other hand successful drugs are supposed to be profitable. Especially when the drug helps a lot of people. (Drugs for rare genetic diseases with only 1000 people who suffer from the disease are debatable)

That said with a less than 90% rate of success, nobody will give you a loan.
They might give you venture money. Venture money wants to earn a lot in the case the product is successful.
The person that you ask for money can estimate the probability of making a profit and then decide whether to give you money. That's capitalism at work.

The other way drug development is funded is that a pharma company reinvests their profits. To do that their old drugs have to make money and the have to calculate a positive return for the investment. If the don't estimate a positive return they buy back shares to give the money to the shareholders.

The funding decision is made by the person risking the money. They have an incentive to be smart about backing the right projects.
There are internal builds of games that just are not fun

If the FDA doesn't approve a prospective drug than no drug hits the market.
There no entity approving games, that has a similar effect.

If an approved drug doesn't get prescribed that's similar to a game not finding customers because it's not very fun. ... read more


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Fwiffo 13 June 2015 10:37 AM
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I do have said that the developer of the product will make it to turn in a profit. What I disagree with is the structure of the payoff. I do think it is important to have drugs be successfull be attractive. If there were some amount that the funder would set as the amount of money they would like to receive as compensation I would be pretty happy. However such deals are not really made but the prize is a percentage of ownership that could in theory entitle one to to an infinite amount of perpetual profit. If the bidding would start high and go down as the need to make the money non-speculative became more urgent that would be better. Now the value starts low and ramps up.

What I want is make the expected return more stable by cutting out variance on the payoff. On one hand I cut out selling at a loss but then I also cut out the vanishing chance of absurdly big payouts. Now with prise of the product keeping steady as long as it sells the compensation starts too small, passes a region of reasonable return and then lives happily in the overcompensation land. While I am happy admit that what is reasonable compensation is a subjective thing so I can't point out a spesific point where it definetely has gone into overcompensation. However given any fixed level it will be passed if sales continue. And I know that no thing is literally worth an infinite sum of money. Thus there is a point where the fair compensation has been collected and the burden on the collective customerbase should not be increased anymore.

I didn't realise that the 100% return roof is really small when one considers venture investment type situations. However the height of the ceiling isn't super central just that there is one. Similarly that limited companies were developed that people could be couragerous enough to put only a finite amount of money on the line so that the bankcryptzy ... read more


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ChristianKl 15 June 2015 10:07 AM
64%

The idea that a funder sets an amount of money they would like as compensation means that the deal needs a counterparty. That counterparty has to exist in the moment the founding decision is made.

Your proposal presents no suggestion of who that counterparty should be besides patients who travel back in time.

And I know that no thing is literally worth an infinite sum of money.
Insurance companies don't pay infinitive sums of money for a product but pay for the value that the product creates.

Even through Sovaldi is expensive it's cheaper than the alternative treatment. The time limit of the patent also creates a situation where the drug doesn't provide infinitive sums of money.

What I want is make the expected return more stable by cutting out variance on the payoff.
Yes, and that's a bad goal. It's basically the communist goal of central planning.

You don't optimize for maximizing the created value but try to design the system differently.

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Fwiffo 7 July 2015 01:38 AM
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The counterparty would be the maker of the product that gets the money from the funder. They don't give the money for free but want a right for money generated by sales. Instead of having a open-ended check they get one with a roof.

You can also set a price for a product without the supermarket customer being present at the time the shelf price is set.

The time limit on the patent is an acknowledgement that the scheme is insufficient for long timescales.

If I pay a lot for the same product I haven't received any more value. There is a difference on the money that needs to be collected to make a drug worth the effort and the superstardom of raking in profits beyond that. Making it only moderatestardom could still preserve making good drugs being more money generating than okay drugs thus preserving the incentive structure without taxing the customer base needlessly. Wouldn't it be good that a superior drug be favoured in price that customers were intencivised to use better value giving drugs instead of "settling" for bad drugs? That is having the highest grade drug be most per unit cost means that the system tries to make you choose anything but the best and thus doesn't optimise for the value deliverable.

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ChristianKl 10 July 2015 12:07 PM
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If I pay a lot for the same product I haven't received any more value.
Do to the way placebo effects works that's not even true.

Wouldn't it be good that a superior drug be favoured in price that customers were intencivised to use better value giving drugs instead of "settling" for bad drugs?
You still think that you can simply change the system without effecting drug development. That's not true.
The time limit on the patent is an acknowledgement that the scheme is insufficient for long timescales.
It's only an acknowledgement that you need to pay a certain amount of money.

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Fwiffo 7 July 2015 01:48 AM
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I probably don't want to eliminate the variance but currently there are efffects that needlessly increase it. The probability of a good invesment is made out of a big chance of little to no money and a somewhat small chance of a very big amount of money. It would be better if the "paying part" of the probability woudl be a bigger chance of a more moderate return (with the same expected return). The failure related "no return" part probably needs to stay.

Mostly the issue whether a successful product rakes in a good chunk of money or a ludicrious amount of money is not that dependent on the "technical" success of the product but the ownership and licensing of the related rights.

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Fwiffo 7 July 2015 01:54 AM
52%

If you have two companies that offer a product for cost-plus you have incentive to select the company that offers it for less expenses. Competition at work.

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ChristianKl 10 July 2015 11:52 AM
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No, you don't know the expenses at the time you make the purchasing decision.

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Fwiffo 10 July 2015 03:05 PM
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In the context we are talking about we do know the expenses beforehad or if we join the pool after the product is already complete we definetely know what it costed.

Even if you didn't know the (exact) costs if both producers tell you what kind of production process they are going to use it is easy to favour one of them if it seems economically superiorly efficient. More roundabout but still prevents runaway costexplosions as you get unselected if you totally lack budjet discipline.

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ChristianKl 11 July 2015 09:44 AM
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More roundabout but still prevents runaway costexplosions as you get unselected if you totally lack budjet discipline.

In the real world government projects frequently cost more money than initially planned.
That's the reality. You might think that, reality should be different, but that's the world in which we live and it's useful to understand why reality is the way it is.

If you don't understand the status quo your suggestions to change it are useless.



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Fwiffo 11 July 2015 10:27 AM
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The goverment projects are done with the understanding that if the money is really needed it will be given.

The suggestion is to make a contract that would require the promised product be delivered with the agreed budjet. It is understood to include what the deliverer reasonably needs to have a buffer for unexpected costs already in it. In case of underestimation that will eat up into his motivation compensastion (what could also be called profit). At the very extreme the deliverer is demanded to make the product even if it would cost him more than the agreed budjet (ie negative profits). If needed the buyer could demand the delivery of the product via trial. That is there is 0 need for the buyer to agree for budjet raises. Thus the agreed budjet is likely to be an overestimation but not overtly or runaway so and would be more binding than the kinds of budjets that you refer.

If these guarantees would be targeted at changing price to be payed adversly it would be business as usual. However here the guarantee on the price to be payed is only indirect. Because the budjet is not allowed to raise and the buyer has not committed to pay unless his share is under an agreed sum the buyer can expect his share to drop but never to raise (if purchases can't be canceled (ie there is no leaving pool only joining it) which we might want to do just so that this guarantee can be given (if we are not already doing so for other reasons for example that the product is digital)). While the cost can drop it can never go negative which makes it inherently impossible to be a pyramid scheme while it can seem similar (ie you only get the product out, you are never getting more money out than you put in).

This is a different kind of arrangement than is currently practised. While what is currently done can be used to argue analogously with this if it is applicaple in this case it ... read more


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ChristianKl 11 July 2015 04:34 PM
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The suggestion is to make a contract that would require the promised product be delivered with the agreed budjet. It is understood to include what the deliverer reasonably needs to have a buffer for unexpected costs already in it.

No, that's a government contract given for a fixed price and not cost-plus.

You can't constantly change what you advocate and expect that your proposal makes sense.

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Fwiffo 12 July 2015 01:29 AM
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You attributed that my proposal is cost-plus and that cost-plus is bad. Now that you have eplained to me in detail why cost plus is bad I can more easily point out that my proposal lacks those properties thefore is not cost-plus and all reservations based on those are unwarranted. I never argue that cost-plus would be good.

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ChristianKl 12 July 2015 02:07 AM
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A model where you pay someone a fixed price that's get determined by a market is fundamental different than paying someone based on their cost.
You did argue that you want people being paid based on the cost that they have to pay to provide the service.

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Fwiffo 12 July 2015 05:41 AM
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Now when we do mass proudction we have a project that produces many units then we sell the units with a relatively fixed price. I try to argue that instead of negotiating about the price of the unit we should focus on negotiating the price of the project and the unit price should be a derivative of the project price.

I will try to be more clear and explicit what the argument about cost is in a reply to this post (long text starts to be little off point).

The new thing is that when we are buying products that are mass produced instead of buying just one item we should buy a share of that mass production that entitles us to that one item. a small share off a big project is going to be comparable in magnitude to just buying the item directly, but multiples of shares lead to less absurd results than multiples of single item buys.

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ChristianKl 12 July 2015 08:16 AM
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Nobody knows the true price of a project before it's completed.
An investor can guess the price and then make an investment based on his guess. The market then pays good investors for the risk they take with their investments.

The technical cost of a drug that heals a disease with 1,000 people might be the same as a the cost of a drug that heals a disease with 100,000 people.
There nothing wrong with market forces pushing the investor to invest into the drug that cures more people and thus provides more value.

In the real world we still want to have some people tackling rare diseases and reward them for it through paying more for the drug via our health systems but there no real problem with market incentives to direct capital where it helps the most people.
At the moment the US for example discusses the CURES act that will extend patent protection for rare diseases by 6 months and provide other incentives.

You still haven't proposed an actual mechanism. Without an actual mechanism you have no basis to be confident that an implied mechanism designed based on your thoughts would provide an improvement because you can't analyse it well enough to find pitfalls.

Saying that the BigPharma company which finances the development of it's own drugs should negotiate with itself about the price of the project is pretty senseless.

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Fwiffo 12 July 2015 05:43 AM
56%

Suppose that there are 10000 people on group A and 10000 people on group B. Both groups are sick and want a pill developed for their sickness. Now suppose that a enterpreneur comes up with a plan to serve group A that makes him about even or nets him a profit of a scale of whatever is reasonable. Then the enterpreneour learns of group B. He might need to do the drug development all over again if they have a different disease. However if the pill that worked for As works also for Bs he might charge Bs as if he had to do the drug development all over again but actually just give them the pills ment for group A. If the general justification for pills to cost what they do is to cover the effort making them this kind of arrangement bypasses that. That is the enterprenour can charge group B a bigger price if he lies about the need to do additional research. On the other hand it might genuinely be the case that the A pills don't work. Thus there is a question of whether it is really required or not. The enterprenous migth end up collecting a fair price for 2 researches when he has infact done only 1. And that amount is very likely to be an unfair price for 1 research. That is if the information asymmetry about the production methods used (additional research or not) then Bs would not consent to the same prices (and possibly As too). That is for As it is presented that a pill costs 1/10000th of a research project. The same claim for Bs they would agree with the information asymmetry and disagree with it removed. That pills in general require research and that is why they cost what they cost is insufficent to guarantee decent prices. It needs to be infact this pill having used research for the argument to carry through. The error is similiar as if a company would buy a new hammer for every nail that needs to be hammered. I don't care how cheap you get the hammers if you ... read more

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Fwiffo 7 July 2015 02:37 AM
52%

Labourers work for a pretty fixed monthly wage. If a company makes a good profit in a month it doesn't mean a worker gets paid more in that month. They are also paid according to their job description usually also so that people with the same job have same pay.

Imagine a theather that can seat 300. If in some showing there is only 250 tickets sold and 50 empty seats some pirate minded person migth sit on an empty chair and not pay because "he is not stealing from anybody" as all the 250 paying customers get exactly what they would have gotten if he were not there. The theather owner might say that he needs to pay althought he might sell him a ticket at a discount to not let the extra capacity go to waste. However the actors propably get paid exactly the same whether there are 250 or 251 paying customers as they will do what they have trained for anyways in the same exact manner. If the theather production is the cooperation of all the theather owner and the actors why do the sales income affect the money the theather owner gets but not what the actors get? That is any argument that the theather owner part should not be a constant "pay" could be leveraged to argue that neither should any actors income be constant. The actors will get paid for what they do, not what they do sells for. The theather owner may try to pay wages lower than what the actors net him in average. One way of doing this is keep the wages in line with the average actor pay but rack in more profit than the average theather does by for example selling more or more expensive tickets. Thus the actor can be isolated from the economical value they provide despite their wage being modulated by average actor wages.

Contributionistic answer would be that "you enjoy it, you particiapte in funding it" so the "pirate" being the 251st audience member should lower the other 250 audience members ticket ... read more


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VoiceOfRa 28 May 2015 12:35 AM
65%


Customers would still choose between what products they opt into so it would still be distributed planning and not centralised (what made you read me that I was suggesting such?).


When would this happen? Before a customer gets the rare disease he has no reason to opt into that particular development program. After he get said disease it's likely to late for him to benefit from starting a research program.


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Fwiffo 28 May 2015 03:46 AM
55%

Even now drugs are developed beforehand before it is sure that they will be compensated.

For more traditional goods it is possible to have the good produced but not let the customer have it until the price per good has dropped to an accetable level for an individual to give up.

For rare diseases waiting isn't going to be an option so the per customer price is going to be pretty astronomical. However because the pact means that the price will retroactively go down as more people get that disease what the patient has to pay up front isn't what it will ultimately come cost him. It can be likened to a bail where instead of getting all of it back you get most of it back. Here the non-optimal nature of the diseases helps alliviate the problems it causes.

Here I do come to see that it isn't super ideal for a patient to be burdened with a million range price within their lifetime while the drug company would see all their money when the first patient is served. That is it is a good feature of the current system that the compensation doesn't happen instantly and to the full amount. A hybrid model could look like this: 0.5 million per patient until clinical trials are covered, after price drops under 0.1 million research salaries start to get covered, for price points under 80 000$ manufactoring gets covered, after 60 000$ advertising gets covered after 50 000$ the motivational cost of the organization (profit) would be covered that can at most be 100% of the other costs and need in any case be a before agreed upon fixed sum. After 50 000$ all of the costs would be compensated and additional customers opting in would just alleviate existing customers burden. The hybridization might have the effect that per product reported marketing costs would be higher making a form of progressive taxation where there is compensation transfer from the good sellers to the ... read more


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