
A new drug costs $1,125 per pill and is about to break sales records - Libertatea
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/12/19/this-drug-costs-1125-per-pill-and-is-about-to-shatter-sales-records/
======
eliben
Is it only me that finds it depressing that modern journalism would try to
stir a controversy around the drug's price instead of celebrating a new and
better cure for a disease that only had much worse, and no less expensive,
cures in the past?

~~~
RodericDay
If the comment section is to be believed, this was in large part funded by the
government and a good example of "socialized costs, privatized profits". So,
no? It seems perfectly apt.

~~~
nemo
It's a little different than that. The first drug, Solvadi, was developed by
the company Pharmasset. Pharmasset did get some government grants to develop
Solvadi, though the cost to develop the drug was much higher than the amount
of the grants.

Gilead paid a massive amount to buy out Pharmasset with the plan of recouping
the elevated buyout costs by charging a huge sum for Solvadi. They could have
paid much less to buy out Pharmasset and charged far less for the drug, but
chose profit over any other interest. Pharmasset had been planning to sell
Sovaldi (and the new drug) for a tiny fraction of what Gilead is now charging.

The new drug, Harvoni, is a refinement of Sovaldi Pharmasset was working on.
While Gilead is already fairly close to recouping their buyout money, they are
charging even more for Harvoni.

The costs are being taken from the public in that many Hep. C patients are too
poor to have insurance so Medicaid is giving a huge amount of cash to Gilead,
though the initial research grants were only around $1 mil.

~~~
Scoundreller
I think the price of a drug is decoupled from the cost of developing/acquiring
the rights to that drug.

Whether a drug cost $1 or $1 billion to develop, the seller/marketer will try
to charge whatever the market can bear to maximize revenue (which could still
result in a loss). They aren't trying to recoup $1.1 or $1.1b respectively,
they're going for the max in either case.

~~~
refurb
A good friend of mine works in pharmaceutical pricing and this is exactly how
works. You price to what the market will bear. The "market" includes
physicians, insurance companies, the gov't and patients.

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jrapdx3
Two thoughts about these Hep C drugs. First, I agree we should celebrate the
advent of the potential cure for a devastating viral disease.

Second, while the costs are considerable, expense is not out of line with many
other treatments that are not making the headlines. Check into the costs of
renal transplantation. And my wife recently had a cataract replaced, a
commonplace procedure, the final bill was >$5000.

The issue is the _real total_ costs of treating vs. _not_ treating the
disease. It's necessary to take into account the costs of doctor visits,
medications, disability, loss of productivity, increased likelihood of illness
among family members due to stress, among many other factors.

If a patient can be restored to adequate functionality, and after the Hep C
treatment require no more than routine health care, the $84K might in fact be
a bargain.

Until we get it clear that we must consider the true total costs of fully
treating vs. not treating an illness, we will never be able to make rational
decisions about structuring a health care system.

Unless proven otherwise, I'm convinced the system with the lowest _total cost_
is providing care that patients actually need. We only make matters worse by
the focus on "cutting health care costs" vs. reducing the total economic
burden of illness.

~~~
east2west
I appreciate what you are trying to do, but I cannot agree with determining
the cost of a drug based on potential loss of income/productivity. Should the
CEOs therefore get first dips on life saving treatment because they have big
impact on his/her employees? Do patients in developed countries have an
economic right to better treatment first than people in developing countries?
Are some lives worth more than others? I don't think we are ready to go down
this route. Incidentally, a very expensive drug is posing these questions,
implicitly. But explicit statements like yours are not politically practical
or even humane. Ten years ago it was outrageous to hear a nurse to tell a
kid's parents to pay up or watch their only child die.

~~~
Houshalter
That's not what parent comment is arguing at all. But I don't see why not.
Money very likely correlates with value to society and would be a better
heuristic than pure randomness - which is also unfair. Although hopefully it
never becomes an issue of course - these hypothetical situations where we get
to actually choose who lives and dies rarely happen in reality. And obviously
it violates cultural values, so would not be a good idea to actually try to
implement.

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pinaceae
this is such a breakthrough in modern medicine.

this is a CURE of a longstanding disease, a disease which cuts off years of
life expectancy of it victims.

there are more of them incoming, Hep C soon have a multitude of awesome drugs
covering it. competition means drug prices will come down. the current massive
price is a blip. at the very worst until the patent expires.

there is even more, cooler stuff in the pipelines right now. there is a
leukemia drug that goes after a rare form of it - with survival rates in its
patients now at 95+%. think about what this means.

after a glut, modern medicinal research has kicked into high gear. the FDA has
a fast track program now. 10 years from now we'll be living in a very
different world.

~~~
zanny
> 10 years from now we'll be living in a very different world.

Only if you are rich enough to afford it. That is where the outrage comes from
- in most of the world healthcare and a right to life is considered a human
right. In the US, current IP rights and drug policy will enable the
exploitation of anyone who gets any major disease for all their are worth and
then you can hang them out to die without treatment.

It isn't the fault of the drug manufacturers though, they are profit seeking
and work in their investors interests, who gave millions over years or decades
and expect returns. You can and should blame the legal framework that prevents
free market drug manufacturing through monopoly patents that lets people die
because they cannot afford new drugs to cure their ailments.

~~~
philwelch
Do the monopoly patents let people die because they can't afford the drugs, or
do they save lives because they incentivize the research to create the drugs
in the first place?

~~~
kethinov
It's possible for them to do both.

It's also possible to imagine a system that does the good one without the bad
one.

~~~
waps
Research : huge investment required. Very few patients (ie. voters) are
clamoring for it. Very easy to cut as part of public policy.

Treatment : not a huge cost (esp. not per-patient), but has to be bourne a
billion times over. Extremely expensive in total (far, far more than research,
but ...). Even tiny cuts will result in massive protests (see Europe every few
weeks since 2009 or so). Various interests with large amount of people want to
see this cost going up : docters, medical personnel, patients.

Getting public money to do healthcare will result in next to no research, and
ever more, ever less effective treatment. This is not to say there won't be
advancements, just really, really slow ones. Because nobody really sees the
potential (or sees it as bad to some extent, e.g. medical personnel) nobody
will even miss the research. Also, people kind of like that only universities
do the research, but never, ever bring drugs to patients, and only very rarely
do they bring treatments to patients.

Getting private money to healthcare runs afoul of one of the basic axioms of
the free market : choice and competition. In medicine there is, in quite a few
cases, no choice (as illustrated above. Hep C infected ? You have 2 choices :
$100k or $100k, or death of course).

It doesn't seem, economically speaking, that you can do both.

~~~
kethinov
That's not an economic argument, it's a political one. You're saying there's
no political will to publicly fund research at current levels. I do agree with
your analysis of the status quo, but that status quo can change just as soon
as voter attitudes change.

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Mz
This is getting depressingly common. I don't know the answer to this problem.
There is a super expensive treatment for cystic fibrosis that only helps about
5% of the population and is something like a quarter million dollars a year
and is not a cure. People with CF almost never have that kind of money. Unless
they were born into a very wealthy family, having one family member with CF is
such a huge financial and practical burden on the family that most folks with
this in the family are not financially comfortable. Some of them are
incredibly destitute.

I get that these very expensive pills are sort of "miracle cures" and the
price is intended to reflect that fact and cover the high costs of development
and all that, but this is a fundamentally broken system. I don't know what the
world needs to do here, but this is just crazy.

~~~
maxerickson
Some of that cost got funneled back into CF research:

[http://www.cff.org/aboutCFFoundation/NewsEvents/11-19-Expans...](http://www.cff.org/aboutCFFoundation/NewsEvents/11-19-Expansion-
of-Research-and-Programs.cfm)

(I guess you mean Ivacaftor, the Cystic Fibrosis Foundation sold their royalty
rights for $3.3 billion.)

To a large extent, the insurance companies are setting the prices on these
drugs (getting charged whatever the max they will pay). I think part of the
solution might be somewhat counter intuitive, to throw even more resources at
the early stage research, with the hope that there is more competition by the
time things make it to patients.

~~~
Mz
According to other people more in-the-know than I am, the CF Foundation is
basically in bed with big pharma. They are not really looking for better care
for people with CF. They are looking specifically for better _drugs._ So, most
likely, that money is being funneled back into more drug research -- more of
this type thing. I am not so sure that's really some kind of silver lining.

~~~
maxerickson
I posted the cost part of the comment because I was pondering structural
incentives and in that context, found out that particular drug had a
foundation partner. I wasn't necessarily trying to weigh in on the good or the
bad of it.

Short of gene therapy, addressing the defective protein is pretty much going
to be done with drugs, so I don't find it particularly telling that they are
putting resources there. CFF does seem to be involved in clinical care (but
I'm not informed enough to figure out how much of that is self promotion and
how much is substantive).

Anyway, the main point I had intended was that the price isn't just a function
of what the company wants it to be, the buyers have to be willing to pay it
(which sounds gross when talking about health care, but national health
systems and insurance companies do worry some about whether treatments are
worth what they cost).

~~~
Mz
Hey, I am sending you an email.

------
ardit33
Solvadi's patent is being challenged in India. I hope it is not granted, and
generics come on board. A cure would cost about $120 instead of the $64-$80k
will cost in the US.

If India is smart, they can turn it into well organized medical tourism. Come
and see India, get cured, and save $60k.

~~~
melling
Don't they have a valid patent? Why don't you think it should be granted?

~~~
PhasmaFelis
Perhaps they're more concerned about human lives than maximizing corporate
profits. I realize it's not a popular viewpoint.

~~~
melling
If they are concerned then they should do the research. It's pretty lame to
have someone else spend billions of dollars of their money then simply take
their work. Companies wouldn't stay in business with your model, and we
wouldn't get new medicines.

I would greatly welcome another option where governments or the public funded
more medicines then licensed them cheaply.

~~~
junto
Your point is of course correct within the confines of the current market
system. Is the current system moral though? I would argue it isn't. The system
is designed to bolster the rich's coffers (countries) and getting rich people
healthy, whilst poor countries are unable to pay.

These countries can't afford to pay for such investment. The capital imbalance
is just huge.

Here's my take on this: any drug that is developed by country A has to sell
that drug at a rate related to countries B's GDP ratio to A, or allow an open
generic license to country B. Thus, should a firm decide to charge $1000 a
pill in the US, they have to charge a proportionate and fairer amount to a
country like Bangladesh.

Whether better access to health services and drugs, many of these third world
countries would start to move out of the more that they are currently in. Of
course there a huge numbers of variables but I as a share holder would prefer
not to see children dying of diseases that could be prevented if it wasn't
expensive.

Naturally firms like Gilead are going to use market economics to determine the
correct price for each country anyway. Something is better than nothing right?
Generics are more a solution for long running patents, which I'm personally
against when it comes to drug development.

~~~
melling
You aren't offering any solution to other countries contributing to the
development of new medicines.

India developed their Mars mission for $74 million dollars. That's a fraction
of the US cost. Why can't they develop new medicines for a fraction of the
cost? The idea is to increase research at a global level, and have everyone
contribute.

~~~
zanny
I don't think there is an ethical financial model to fund drug research. It
kind of has to be philanthropy to not deny the sick live saving treatment,
especially since those most likely to be chronically ill are also more likely
to be poor.

The only way I could see it working would be to have states guarantee a return
to investors at some fixed rate of the cost to discover a new drug, and then
buy the rights from them and release them public domain so anyone can
manufacture it. But any kind of system like that, involving money taken
through violent taxation and put through a bureaucratic blender of national
politics, is bound for exploitation.

I doubt that in an IP free world all drug research would stop. Those with a
vested interest and the charitable could and would fund their own research.
One thing to consider is that modern drug research is not directed towards
that which is hard or _needed_ , but that which is profitable and wanted. That
is why we see a half dozen erection drugs each year yet there has to be viral
marketing campaigns for ALS research.

~~~
melling
India has the 10th largest GDP in the world.

[http://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_(nom...](http://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_\(nominal\))

They will soon have the largest population, if the don't already. It's middle
class isn't as large as the U.S., but it's growing quickly.

[http://en.m.wikipedia.org/wiki/Standard_of_living_in_India](http://en.m.wikipedia.org/wiki/Standard_of_living_in_India)

Why wouldn't they want to invest into research to cure common diseases?

~~~
zanny
Because those most likely to be infected are those with the least political
influence. Globally, the rich are much less likely to get sick, because they
live in much more sanitary environments, expose themselves to infection less,
and have consistent top tier healthcare to prevent infection.

Thus the people who need it least are those who both have the money to
potentially fund it themselves and the social power to make representatives
care.

------
jeffdavis
This is a bad business plan. Sure, they make a lot of money now, but they are
curing all of their customers. Soon they won't have any left.

Typical shortsighted focus on profits this quarter, without a sustainable
business model.

~~~
adventured
I assume this is a snark comment, but it is a fascinating discussion.

Typically it's claimed big pharma & co. intentionally withhold, avoid
creating, or would never pursue cures because it's not good for business. Then
when they finally produce a cure, people get upset about the price. Short of
being a non-profit or charity, they're damned if they do / don't.

I think if Gilead can input $1 billion for development, and yield $100 billion
on a cure (minus some comparatively modest marketing expenses), that's an
excellent business model. ($80k * 1.x million hep c patients in the US that
get their cure; assuming only a portion of the 3.x million in the US end up
taking Gilead's drugs)

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snarfy
My wife's current medication:

[http://en.wikipedia.org/wiki/Alemtuzumab](http://en.wikipedia.org/wiki/Alemtuzumab)

When sold to treat MS it has a 10000 x markup over the same medication sold to
treat cancer.

~~~
refurb
The reason for this is that you can't have two different prices for two
different diseases when it's the same drug. The company decided to stop
selling it for cancer (they now give it away for free) to optimize for the MS
market.

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rokhayakebe
Does anyone know the cost of development?

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marrone12
For a second, I was hoping this was European and it was 1 and 1/8th dollars.

~~~
geographomics
Funny you should mention that, as in the United Kingdom each pill would only
cost the end user ~29p (about half a dollar) thanks to our National Health
Service capping the price of a prescription.

Interestingly, it 'only' costs the equivalent of $650 per pill for the NHS to
purchase [1], rather than the $1125 cited in the article. I expect it used its
buying power to negotiate a more favourable price - yet another benefit of
this nationalised, socialised health care system.

[1] According to the British National Formulary.

