$1,000-a-day miracle drug shocks U.S. health care system

[Eug]

Hayabusa,

Basically, you're trying to justify huge, huge profits by big pharma. What the doctors and even the regulators are saying is that yes, big pharma deserves profits, but it should not be price gouging like this company is doing. And I agree.

And a lot of that is due to our healthcare system. Canada has single payer, we don't. Another huge factor is we have the ability to pay. The biggest issue is we don't have good measures for price control in the US, outside of medicare.

Therein lies the problem. No good way to reign in pricing in the US. Hence the companies try to milk the US. It's interesting, because even when the development of the drugs is outside the US (eg. in Europe), the pricing in the US is usually higher.

 

[uclaLabrat]

Yes they can. I have a question for you. If a drug costs a billion dollars to make (and in this case it's probably more) and you have a million people who will be treated with it (as an example), how much needs to be made per person to break even?

Edit: I haven't included the costs of failed investigations, which probably amounts to a very very great sum, but let's leave that out.

Here are the numbers that the industry tends to go by:
http://www.google.com/url?sa=t&rct=...4MOVXNxRS6gG8Lg&bvm=bv.63934634,d.aWc&cad=rja

 

[halik]

Here are the numbers that the industry tends to go by:
http://www.google.com/url?sa=t&rct=...4MOVXNxRS6gG8Lg&bvm=bv.63934634,d.aWc&cad=rja

whoops wrong thread

 

[Harabec]

Think of it this way. You pay a lot because you CAN, and you save lives all over the world while you're at it by making sure they can get the drug, too.

It may be good or bad, depending on how you see things.

 

[Hayabusa Rider]

Yes, I don't.

It's a tough problem. If you limit what drug companies can charge you open a can of worms since they use what they make on the successful drugs to pay for the unsuccessful ones.

On the other hand many of the drugs are actually developed by small companies and purchased by the big companies since they have the testing and marketing ability the small companies don't.

Thank you for being honest. "I don't know" is a perfectly reasonable response and frankly refreshing.

I submit a possible alternative, but it goes against convention so it's not easy to get without considerable public pressure.

I posted something quite a while back in the "discussion" forum about some bright people wanting a way to work around IP and providing drugs for poorer nations suffering from HIV or perhaps malaria.

In essence the idea was to establish an internationally funded agency which would be run by those familiar with what is needed and how to make new medicines. A reach facility would be established without political or corporate interests. Whatever came about would be free of profit motive. The funding being ongoing does not need to recoup expenses. Indeed the point is eliminating them as well or a great deal. The results are licensed and all rights retained.

There, a basis for an alternative paradigm which I've thought about and could work. The thread is probably still in "discussions".

 

[uclaLabrat]

Hayabusa,

Basically, you're trying to justify huge, huge profits by big pharma. What the doctors and even the regulators are saying is that yes, big pharma deserves profits, but it should not be price gouging like this company is doing. And I agree.



Therein lies the problem. No good way to reign in pricing in the US. Hence the companies try to milk the US. It's interesting, because even when the development of the drugs is outside the US (eg. in Europe), the pricing in the US is usually higher.

What you're missing is the main argument. It's not price gouging if it's in fact cheaper than the alternative. If patients have to take less effective drugs for longer periods of time, and then are still forced to undergo a transplant, how much do you think that costs? Is a transplant more expensive than $84K? You bet it is. How many transplants will this drug reduce the need for? How about liver cancer incidences? This drug is probably a bargain comparatively, which is why they came up with that price. Sure, they can make that profit for pennies on the dollar in terms of operational costs, but they spent 10 years or more, investing ridiculous amounts of capital, to get to that point.

And in 10 years or less, the cost will plummet as generics come to the market. This is actually what the patent system was designed to do, promote innovation and reward risk, then benefit the consumers at large.

 

[DisgruntledVirus]

It's expensive and risky to develop new drugs, so if you have a smash hit on your hands, of course you're gonna try to make the most out of it. The drug really is that good and at the moment, the only real competitor is Medivir's Olysio, which costs $66K and requires Interferon and Ribavarin.

Sovaldi is sold at a highly reduced price in developing countries ($70-130 for 12 weeks), but they have to make their money somewhere and that somewhere is the developed world. Sucks, but still, Gilead's product is awesome, the competition is limited and the demand is high.

The pill probably costs less than a cent to produce, but the research costs are very high. Billions of dollars. Some research end up in excellent drugs, some research goes out with the trash.

This.

Drugs are stupid expensive to go through the trials for approval, and have a low approval rate. This is an excellent video describing the problem in an easy to understand way, and a pretty interesting solution.

http://www.ted.com/talks/roger_stein_a_bold_new_way_to_fund_drug_research

 

[uclaLabrat]

Sure I get why a France or even a Mexico would have this standard. But if I am running some big pharma company worth billions you think I could find some banana republic that is willing to be guinea pigs for cheap healthcare and lined pockets.

It seems like that is a really good way for one of these countries with no real economic advantages or resources to stand out from the crowd. Make your nation the nation of medical innovation, where all these rich westerners fly to and drop tons of tourist money to take your experimental drugs.

Pfizer and I think Merck tried that in the 90s with malaria drugs in countries like Zimbabwe and got raked for it by the FDA and other humanitarian organizations. Those countries actually have fairly sophisticated (albeit fragmented) clinical infrastructure with good doctors. But there was a lot of controversy about exploitation and they got creamed.

 

[Eug]

What you're missing is the main argument. It's not price gouging if it's in fact cheaper than the alternative. If patients have to take less effective drugs for longer periods of time, and then are still forced to undergo a transplant, how much do you think that costs? Is a transplant more expensive than $84K? You bet it is. How many transplants will this drug reduce the need for? How about liver cancer incidences? This drug is probably a bargain comparatively, which is why they came up with that price. Sure, they can make that profit for pennies on the dollar in terms of operational costs, but they spent 10 years or more, investing ridiculous amounts of capital, to get to that point.

And in 10 years or less, the cost will plummet as generics come to the market. This is actually what the patent system was designed to do, promote innovation and reward risk, then benefit the consumers at large.

Of course it's price gouging.

Just because something is cheaper than the alternative does not make it not price gouging.

The patent system is indeed built to promote innovation and reward risk, but what the doctors and regulators are saying in this particular case is that the company has taken it too far.

And like I said before, I agree.

I also think some in big pharma may be getting nervous, because if the regulators decide to do something about it, it will hit everyone, not just this one company.

That's why I suggested earlier in this thread that had they priced things at say $50000 or maybe even $69000 per full course, people wouldn't be complaining so much.

 

[Hayabusa Rider]

Hayabusa,

Basically, you're trying to justify huge, huge profits by big pharma. What the doctors and even the regulators are saying is that yes, big pharma deserves profits, but it should not be price gouging like this company is doing. And I agree.



Therein lies the problem. No good way to reign in pricing in the US. Hence the companies try to milk the US. It's interesting, because even when the development of the drugs is outside the US (eg. in Europe), the pricing in the US is usually higher.

I'm not justifying anything. I'm explaining how the real world works. There are certain costs associated with any venture which are not dismissed. The costs of research anywhere exist, and if they are done in Europe, but the reimbursement for those were not met by Europe they will be passed on.

No where in any of my arguments have I said that drug companies are saints. Indeed far from it, but people tend to run off the rails and not understand the basic principles at play. If you are in Canada or Europe you are the wealthy. If you don't pay what is required AND affordable treatment in terms of what can be paid by poorer nations is given then those costs MUST be passed on to the US or nations like us or research ends. Period.

So we have a thousand dollar pill. Just what do you think the costs would be if not making a lot of money for those who own the company would be?

 

[Hayabusa Rider]

That's why I suggested earlier in this thread that had they priced things at say $50000 or maybe even $69000 per full course, people wouldn't be complaining so much.

So tell me just what the price should be and what are the costs considering everything necessary to keep this company solvent and productive? I mean all the things like failed costs that this company incurred? The money they need to have moving forward?

Give me a cost and how you know what they are.

 

[Eug]

I'm not justifying anything. I'm explaining how the real world works. There are certain costs associated with any venture which are not dismissed. The costs of research anywhere exist, and if they are done in Europe, but the reimbursement for those were not met by Europe they will be passed on.

No where in any of my arguments have I said that drug companies are saints. Indeed far from it, but people tend to run off the rails and not understand the basic principles at play. If you are in Canada or Europe you are the wealthy. If you don't pay what is required AND affordable treatment in terms of what can be paid by poorer nations is given then those costs MUST be passed on to the US or nations like us or research ends. Period.

So we have a thousand dollar pill. Just what do you think the costs would be if not making a lot of money for those who own the company would be?

Wrong again. You have again missed the point. The point is the pricing is not reflective of the costs. The pricing is reflective of what they think they can profit through price gouging.

It's easier to price gouge in the US than it is in say the UK or Canada (both first world countries), so they don't price gouge as much in the UK and Canada. Yet, in both countries they still make massive profits.

So tell me just what the price should be and what are the costs considering everything necessary to keep this company solvent and productive? I mean all the things like failed costs that this company incurred? The money they need to have moving forward?

Give me a cost and how you know what they are.

Hey, how about 35000 UK pounds for the drug? Cuz that is the price in the UK, and that's less than US$60000.

 

[Aharami]

Dammit, I owned GILD stock for about two years-through failure after failure and mediocre performance. Finally dumped it when it slightly edged past my original purchase price. Looks like I would have made a 50%+ profit if I held on another year.

haha same

 

[CPA]

So instead of paying $84,000 for treatment here, buy a ticket to Egypt ($1500), stay for 3 months in a nice apartment ($3000), and get fully treated ($900). Pocket the $78,600 difference and enjoy your vacation.

This. There are plenty of people that go to Canada and Mexico for drugs that are cheaper and there are plenty of people who come to the US for medical treatment because it's better.

The key to this story is, though, that even at $1K/day, the overall cost is cheaper than other courses. Yet, the article barely mentions that, it focuses on the short-term cost. But, that doesn't surprise me because that's how this society functions - short-term vision rather than long-term. No surprise that Congress is only considering the $1K/day cost.

 

[Slew Foot]

i see an expansion of medical and dental tourism in Americas future

 

[uclaLabrat]

Wrong again. You have again missed the point. The point is the pricing is not reflective of the costs. The pricing is reflective of what they think they can profit through price gouging.

It's easier to price gouge in the US than it is in say the UK or Canada (both first world countries), so they don't price gouge as much in the UK and Canada. Yet, in both countries they still make massive profits.


Hey, how about 35000 UK pounds for the drug? Cuz that is the price in the UK, and that's less than US$60000.

http://www.innovationmanagement.se/...-peter-druckers-five-deadly-sins-of-business/

See number 3.

 

[Eug]

http://www.innovationmanagement.se/...-peter-druckers-five-deadly-sins-of-business/

See number 3.

You'd have to be pretty naive to think that the 35000 UK pound pricing is cost driven pricing.

 

[HumblePie]

And THIS is the type of reason of why healthcare is so damn expensive in the US. It is the price gouging that companies can get away with. When you allow for profit at any level for healthcare, you get this. When you have patients that have no choice but to either go broke or die... most will take poverty over death. Getting more people on health insurance is a side problem to the real problem of health care costs in the US.

When a good or service is a requirement and not an optional purchase for a given population, regulation over prices is a must. I don't care how much someone charges for a Duck Dynasty beach towel, but I do care how much someone charges for a life saving medicine/practice that has no real alternative for patients.


But as jpeyton pointed out, if I needed this drug I would certainly do my research and go to whatever country I needed to go to in order to minimize the cost. If I was a health insurance company I would be sending people to one of those countries, pay for the expenses for 3 months there, and save a crap ton over the current prices for that drug being charged here in the states.

Side note though, this is old news. I was hearing about this on NPR a month or more ago at least.

 

[Hayabusa Rider]

Wrong again. You have again missed the point. The point is the pricing is not reflective of the costs. The pricing is reflective of what they think they can profit through price gouging.

It's easier to price gouge in the US than it is in say the UK or Canada (both first world countries), so they don't price gouge as much in the UK and Canada. Yet, in both countries they still make massive profits.


Hey, how about 35000 UK pounds for the drug? Cuz that is the price in the UK, and that's less than US$60000.

Basically you have a belief, have no basis for it, don't know the relevant points as to pricing or profit, or pretty much anything else other than the cost per unit. You don't take into consideration any other factors of reality, but you don't like it one bit.

OK, you don't like it. Fair enough, but that's all you've demonstrated.

 

[Newell Steamer]

Anything less than $1,000 a day is communism.

 

[PingviN]

The key to this story is, though, that even at $1K/day, the overall cost is cheaper than other courses. Yet, the article barely mentions that, it focuses on the short-term cost. But, that doesn't surprise me because that's how this society functions - short-term vision rather than long-term. No surprise that Congress is only considering the $1K/day cost.

It isn't though. You get Ribavirin/Interferon combo for about $25.000. That's a 48 week treatment (24 weeks Interferon, 48 weeks Ribavirin).
Sovaldi is $84.000 for 12 weeks, but you also need to take Interferon or Ribavirin (depending on genotype), that adds a couple of thousand dollars.

Chance of success is much higher with Sovaldi, but even if you hit 90% cure rate, it's more expensive. Even if you take productivity from being able to get back to work earlier, it's more expensive. However you cut it, it's more expensive. It's also more comfortable to go through for the patience, but in terms on money, it's more expensive.

 

[ImpulsE69]

Come on guys, pharm ppl gotta live too! Geesh, why are you all so anti-capitalism?? ;p

/sarcasm

 

[Blackjack200]

So tell me just what the price should be and what are the costs considering everything necessary to keep this company solvent and productive? I mean all the things like failed costs that this company incurred? The money they need to have moving forward?

Give me a cost and how you know what they are.

Let me jump into the conversation and start by saying I am not against profits, and even substantial profits by pharmaceutical companies and the medical industry in general.

That being said, the continued solvency and productivity of Gilead is not my concern, and the amounts they are charging for this drug are obscene.

Let's draw an analogy. A hospital in a decaying urban area is failing financially. One day, a wealthy man is wheeled into the ER in cardiac arrest. The ER doctors save the man's life, and charge him $1 million, arguing that substantial institutional overhead and this man's ability to pay mean that if the hospital is to remain solvent and productive, they need to charge some people huge amounts. Would anyone defend this practice as fair?

If Sovaldi was not a lifesaving drug... if it was like Viagra or Propecia or something, I would have no problem with them charging as much as they liked. But people with Hepititus C have no reasonable alternative, and people will spend unlimited amounts to save their lives.

As for the specific method to determine the price of the drug, I think it's pretty straightforward. Make the drug companies establish a research/testing/approval/production cost that is attributable only to that drug, and then allow them to apply a multiplier to that cost that bakes in subsidies for failed projects, and profits to shareholders. Drug companies that are well managed and generate good drugs consistently will still outperform other drug companies, and those that do not can't just charge obscene amounts for their good drugs to subsidize their poor management.

 

[videogames101]

i've always wanted to visit egypt

 

[uclaLabrat]

You'd have to be pretty naive to think that the 35000 UK pound pricing is cost driven pricing.

I didn't imply that it was, you posted that you wonder why companies don't price drugs based on their production and development costs. That's why.