
When the Patient Is a Gold Mine: The Trouble with Rare-Disease Drugs - cpete
https://www.bloomberg.com/news/features/2017-05-24/when-the-patient-is-a-gold-mine-the-trouble-with-rare-disease-drugs
======
rayiner
This article does a pretty good job of grappling with the fact that you can't
have your cake and eat it too. On one hand the article acknowledges that
treatments for orphan diseases have been successful, and many more have come
out since the Orphan Drug Act was passed, as compared to before when these
diseases were largely ignored. At the same time, it notes that clearly this is
a lot of money to spend on one patient.

There is a tendency to believe that the normal dynamics of markets should be
suspended when the product is "really important." Of course, that's backward.
When the product is really important, the _worst thing_ you can do is turn it
into a low-profit economic ghetto by reducing incentives to invest. At the
same time, when the government takes over the role of the market by granting a
temporary monopoly, there clearly has to be _some backstop_ at work.

The interesting thing to note that the company in the article, Alexion, is not
even an unusually lucrative company. In 2015 its operating income was $536
million on 2.6 billion of revenue, or about a 20% operating profit margin. For
comparison, Alphabet's operating margin is over 25%. Google also does much
better in terms of return on equity and revenue per employee metrics.

~~~
frgtpsswrdlame
>The interesting thing to note that the company in the article, Alexion, is
not even an unusually lucrative company. In 2015 its operating income was $536
million on 2.6 billion of revenue, or about a 20% operating profit margin.

...what. 20% margin isn't good nowadays? And why on earth are we comparing
this company to a tech giant, they're not in the same world when it comes to
how they operate. Of course google's going to look better in a lot of these
terms, it's google (and i'd argue a monopoly). I mean at what point do we say,
actually these biotech companies are plenty profitable? There's so much
handwringing about how if we hurt these companies in anyway then all these
sick people will die. It's just not true. Why don't we take the S&P 500, a
Biotech Index and ALXN and put them on a chart:

[https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&...](https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=Linear&chdeh=0&chfdeh=0&chdet=1495669925719&chddm=624036&chls=IntervalBasedLine&cmpto=NASDAQ:ALXN;INDEXSP:.INX&cmptdms=0;0&q=INDEXSP:SPSIBI&ntsp=0&ei=nRwmWfHyE5vM2AaR9ZuQDw)

Well damn, looks like despite all their huge R&D costs, _only_ 20% margins, so
on and so on they are doing pretty damn well. Honestly, are we looking at the
same chart? These companies are MILKING sick people and we're afraid to
intervene. Markets don't work in life and death scenarios because people would
pay anything. This is a case that begs for regulation and even with it these
companies are going to be just fine.

~~~
tuna-piano
In a world where investors invest in photo sharing apps and social media
websites because of the potential billion dollar payouts - why would you limit
the potential drug payouts without limiting the social media app payouts?

Over time, would limiting the potential profits in life-saving drugs increase
or decrease the number of life-saving drugs developed?

In an economy where people can choose to work in any field, and investors can
choose to invest their money in any field - what better way is there to
allocate the people and money resources than by letting people voice how
valuable something is with their wallets? Do you want to force someone to buy
a third car instead of buying a new drug treatment?

If you understand the invisible hand theory (actually understand it, not just
the everyman's definition) I think it's difficult to (a) argue against in
general and (b) argue against for certain life-saving industries especially.

~~~
frgtpsswrdlame
Actually, horror of horrors, if I could I'd take a giant antitrust bat to
about half the technology sector (which would hurt profits).

I urge urge urge you to reevaluate your understanding of economics as well. I
recently made a book recommendation on here, I'd like to make it again.

23 Things They Don't Tell You About Capitalism by Ha-Joon Chang

Economism by James Kwak

And no it's not at all hard to argue against the invisible hand theory
although I'd really like to not do that here. But just consider how far
physics has advanced since the 18th century, why don't you think economics has
done the same? Just think about what you're actually proposing for a second.
There are no scenarios where the invisible hand works against laypeople? I
think that's incredibly naive.

~~~
kevinnk
I've recommended to plenty of people that they read "Principles of
Macroeconomics" by Greg Mankiw, but weirdly enough no one has. Maybe I just
didn't urge urge urge them enough?

Actually, if you believe economics hasn't changed since the 18th century you
really should read it. Who knows, maybe you'll even reevaluate your
understanding of economics.

~~~
frgtpsswrdlame
Principles is the exact wrong thing for someone casually interested in
economics to read. It's the proliferation of the belief that Econ 101 is "real
econ" when it's anything but. You can get an undergrad degree in Econ and
still have no real understanding of how the economy works. Sure you'll have a
simple model but that model will fail over and over again because it's far too
simplified. That's why I recommend Economism. It's inoculation to Econ 101.

~~~
kevinnk
I don't really care if people understand "real econ" (whatever that means) but
most people haven't even progressed past a folk understanding of economics.
Having at least a cursory understanding of why, e.g., price controls lead to
scarcity is really a requirement to create an informed criticism of any part
of Econ 101. To get to that point, reading through an intro level textbook is
exactly what is needed.

~~~
TheOtherHobbes
Of course absence of price control mechanisms can also lead to scarcity
through bubble mechanisms - which can be tamed through taxes.

Ask anyone trying to buy a house in Vancouver.

Does Mankiw mention this in his "requirement for informed criticism"?

~~~
stupidhn
> _Does Mankiw mention this in his "requirement for informed criticism"?_

Are you honestly asking whether Mankiw discusses supply/demand price effects
in his textbook?

------
ghufran_syed
The company has only 4 more years of patent exclusivity in the US, and 3 more
years in Europe. If there is really SO MUCH MONEY to be made by selling it,
wouldn't we expect other companies to be developing their own version right
now, so they can sell it in 2021. And wouldn't the presence of many different
sellers reduce the price? [1] End result, new drug that benefits patients, at
steadily lower prices... isn't that what we want? Is there some reason to
think that other companies will NOT want a piece of that large pile of money?

I intensely dislike the way pharma companies "buy" the opinions of prominent
doctors and get them to sell their drugs for them. There are many similarly
unethical things that the pharma companies do, but having made a drug that
seems to help patients, and then charging as much as they can for the
_limited_ time that they can does not seem unreasonable.

This econtalk episode [2] on "price gouging" seems particularly relevant, it's
really very entertaining (and educational)

[1]
[https://en.wikipedia.org/wiki/Generic_pharmaceutical_price_d...](https://en.wikipedia.org/wiki/Generic_pharmaceutical_price_decay)

[2]
[http://www.econtalk.org/archives/2007/01/munger_on_price_1.h...](http://www.econtalk.org/archives/2007/01/munger_on_price_1.html)

~~~
makomk
It's a biologic. There are huge obstacles to licensing generic versions of
those in the US, they're quite expensive to produce, and there's a substantial
risk that the original manufacturer will drop the price to the point that the
generic manufacturer can't make their money back or even incentivise customers
not to buy generics: [https://www.reuters.com/article/us-merck-co-britain-
remicade...](https://www.reuters.com/article/us-merck-co-britain-remicade-
idUSKBN18J12Z) In the UK, which is the country that Wikipedia article is
about, generics do somewhat work to drive prices down.

------
theprop
Where did the $850 million to bring the drug to market go? What is that spent
on? The drug or chemical itself is often discovered somewhere else, in say a
university lab financed by the NIH, then licensed to a company. Rarely are the
subjects of testing compensated for being guinea pigs for the drugs. There are
also not that many doctors overseeing the trials.

~~~
spullara
Each person in the clinical trials of which there are at least 3 phases costs
20-30k for most drugs.

~~~
theprop
That's payments to the patient for trying the drugs??

~~~
afarrell
I would imagine that the costs are for:

\- Paying someone to monitor progress

\- Insurance against the possibility that the drug seriously harms them

\- Administration for communicating with them

\- Advertising of the trial to recruit them

\- Paying them cash directly for their troubles

~~~
spullara
This is more like the list of costs. Missing from this list are the doctors
that prescribe and deliver the treatment.

------
JusticeJuice
Serious question - what's stopping somebody reverse engineering the drug /
figuring out how to make it, then producing it for much cheaper? Obviously
it's not legal, but that's not going to stop somebody when they have
potentially 300k a year to save.

~~~
epmaybe
Just off the top of my head, reversing a synthesis reaction seems expensive
without knowing any reaction intermediates. Not to mention that the lawsuit
you would get handed would be a slam dunk case for any lawyer.

That being said, other companies in countries that don't honor patents
definitely do this very thing for chemotherapies and the like.

------
nraynaud
for people interested, there are 4 videos on the topic of orphan drug
legislation here:
[https://www.youtube.com/user/thehealthcaretriage/videos](https://www.youtube.com/user/thehealthcaretriage/videos)

------
y1426i
This is inevitable in a value based economy. And yes, there can be cost based
economies. Something is terribly wrong when greed can legally come in the way
of a sick person and their cure. There are too many solutions to this problem
if you think about it. Government could sponsor all medical research and share
the research to companies to manufacture based on cost based pricing.
Companies can be restricted from increasing price of their drugs beyond what
they were launched with. People should be allowed to freely import life saving
drugs and equipments from other countries. The government has the solution,
what is needed is a will to solve.

------
Mz
I have a rare disease. One of the drugs developed in recent years to treat it
costs about $300k/year and only works for about 5 percent of patients with the
condition. I have made dietary and lifestyle changes to get better for a
pittance compared to what conventional treatment costs. I get called a loon.

But here is what I think about these high priced drugs:

 _Joe was a successful lawyer, but as he got older he was increasingly
hampered by incredible headaches. When his career and love life started to
suffer, he sought medical help. After being referred from one specialist to
another, he finally came across an old country doctor who solved the problem.

"The good news is I can cure your headaches... the bad news is that it will
require castration." You have a very rare condition which causes your
testicles to press up against the base of your spine and the pressure creates
one hell of a headache. The only way to relieve the pressure is to remove the
testicles."

Joe was shocked and depressed. He woundered if he had anything to live for. He
couldn't concentrate long enough to answer, but decided he had no choice but
to go under the knife. When he left the hospital he was without a headache for
the first time in 20 years, but he felt like he was missing an important part
of himself.

As he walked down the street, he realized that he felt like a different
person. He could make a new beginning and live a new life. He saw a men's
clothing store and thought, "that's what I need .. a new suit."

He entered the shop and told the salesman, "I'd like a new suit." The elderly
tailor eyed him briefly and said, "Let's see... size 42 long." Joe laughed,
"That's right, how did you know?" "Been in business 60 years!" Joe tried on
the suit. It fit perfectly. As Joe admired himself in the mirror, the salesman
asked, "how about a new shirt?" Joe thought for a moment and then said
"sure..." The salesman eyed Joe and said "let's see...34 sleeves and...16 and
a half neck." Joe was suprised, "that's right, how did you know?" "Been in the
business 60 years" Joe tried one the shirt, and it fit perfectly. As Joe
adjusted the collar in the mirror, the salesman asked "how about some new
shoes?" Joe was on a roll and said "sure!"

The salesman eyed Joe's feet and said "Let's see... 10-1/2...E." Joe said
astonished, "that's right, how did you know?" "Been in business 60 years!" Joe
tried on the shoes and they fit perfectly. Joe walked comfortably around the
shop and the salesman asked "how about some new underwear?" Joe thought for a
second and said, "sure!" The salesman stepped back, eyed Joe's waist and said
"Let's see... size 36."

Joe laughed, "Ah ha! I got you I've worn a size 34 since I was 18 years old."
"The salesman shook his head, "you can't wear a size 34, it will press your
testicles up against the base of your spine and give you one hell of a
headache."_

[http://jokes4us.com/dirtyjokes/castrationjoke.html](http://jokes4us.com/dirtyjokes/castrationjoke.html)

~~~
TrueGeek
Can I ask what disease you have and what lifestyle changes you made? I
understand if you don't want to share, I'm just curious.

~~~
Mz
I have a form of cystic fibrosis. I have made a long list of dietary and
lifestyle changes. The current best source of information about that is a blog
called Mic Eats.

In a nutshell, people with CF misprocess fats, wind up excessively acid and
wind up with serious malnutrition. I got very picky about the fats I consume,
aggressively addressed the nutrient deficiencies until my body worked more
normally, and I eat a diet that compensates for my body's tendency to become
way too acid.

I also avoid chemicals that bother me, avoid exposure to germs, etc.

I look fairly ordinary these days. It isn't obvious to other people that my
entire life revolves around this. It is sort of like being a kosher Jew who
eats only approved foods and so forth.

~~~
ShannonAlther
Since you actually have CF, it would be trite to point out (but I will anyways
for the peanut gallery) that the mutation in the CFTR gene causes secreted
mucous to be much thicker than necessary. In the lungs, this causes difficulty
breathing, rampant infections, and death by the age of 50 at the optimistic.
Lifestyle interventions are not as helpful as you think in the general case,
and the only reason you didn't die in your crib is because of aggressive
antibiotics use.

~~~
Mz
_Lifestyle interventions are not as helpful as you think in the general case_

Because of people like you treating me like absolute shit on CF lists, I left
all of them some years back. Then someone with classical CF in their 30s whose
number was up tracked me down because they didn't want to die. They follow my
blog and private message me occasionally and thank me profusely for helping
them get healthier (instead of, you know, DYING).

So, like, that's just your opinion, man.

~~~
ShannonAlther
I don't believe I've accused you of anything except being wrong, Mz, and
furthermore your blog notes that you have a rare CFTR mutation, a milder form
of the disease (I only briefly scanned so I may be wrong). That's awesome!
Your quality of life is probably really high compared to the average CF
patient!

But the only intervention that's lifestyle-y that I know of is chest
physiotherapy. I'm glad that the person you found now feels better, but the
data does not support your claim.

~~~
Mz
I claim I am doing something groundbreaking. Your claim amounts to refuting
the idea that anything new can be done, that the outcomes we currently have is
as good as it gets.

 _Despite various publications of results where hand washing reduced mortality
to below 1%, Semmelweis 's observations conflicted with the established
scientific and medical opinions of the time and his ideas were rejected by the
medical community. Semmelweis could offer no acceptable scientific explanation
for his findings, and some doctors were offended at the suggestion that they
should wash their hands. Semmelweis's practice earned widespread acceptance
only years after his death, when Louis Pasteur confirmed the germ theory and
Joseph Lister, acting on the French microbiologist's research, practiced and
operated, using hygienic methods, with great success. In 1865, Semmelweis was
committed to an asylum, where he died at age 47 of pyaemia, after being beaten
by the guards, only 14 days after he was committed._

[https://en.wikipedia.org/wiki/Ignaz_Semmelweis](https://en.wikipedia.org/wiki/Ignaz_Semmelweis)

Hand washing. What a silly idea. Let's just put this guy in a loony bin for
how completely insane he is.

Edit: Also, the person found me. I didn't find them.

~~~
ShannonAlther
> Your claim amounts to refuting the idea that anything new can be done, that
> the outcomes we currently have is as good as it gets.

Poppycock. The Wikipedia page lists a small handful of promising
technologies[0], and there are others not listed there: improvements in organ
transplantation and/or cloning would do wonders. I'm particularly fond of the
idea of synthetic chloride channels that do the work of the CFTR protein.

But the reason that cystic fibrosis is lethal is because of the mucous. The
lethality of the mucous is unrelated to your lifestyle choices, since the
lungs of a CF patient are colonized by bacteria that prefer the different type
of mucous. This sort of thing is exacerbated by fraternizing with other people
who have CF, since they're likely to infect one another.

Over time, the bacteria become resistant to the antibiotics used to treat the
disease. So more antibiotics are definitely in order, although that's not the
be-all end-all. Again, I'm just saying that lifestyle interventions are almost
certainly not effective (I can't even see how).

But there's a critical point in here: sure, Ignaz Semmelweis was laughed at
for positing an unusual theory. But so were tens of thousands of others who
came up with _actually crazy ideas_ , too many to list. All I'm saying is,
just because people disagree with you doesn't mean they're wrong.

[0][https://en.wikipedia.org/wiki/Cystic_fibrosis#Research](https://en.wikipedia.org/wiki/Cystic_fibrosis#Research)

~~~
Mz
You are quoting Wikipedia at someone who HAS CF? Is your knowledge of CF based
completely on reading crap online? Because mine absolutely is not.

 _All I 'm saying is, just because people disagree with you doesn't mean
they're wrong._

And all I am saying is I have heard this kind of dismissive crap from the
"peanut gallery" before. It isn't anything new or novel for people to treat me
in a completely disrespectful, dismissive fashion.

So if that is all you have to bring to this discussion, then I think I am
done. Because it isn't a good faith tactic At All and I have wasted enough of
my life on assholes on the internet who are sure that I am crazy because
REASONS, none of which are at all actually logical or scientific, though that
is what they are typically claiming as justification for just crapping all
over me gratuitously.

~~~
ShannonAlther
I don't believe I've been disrespectful or dismissive at all. I included the
reasons I think you're mistaken, and I've cited Wikipedia because going
through the back issues of the NEJM and the Canadian Respiratory Journal for
citations would take too long to respond in a timely fashion. If you'd like to
explain why you think lifestyle interventions are helpful for other cystic
fibrosis patients, please do! I can also grab better citations, if you
_really_ want.

~~~
Mz
No, you are being dismissive. Maybe you don't see that. But there is no point
at which you have expressed genuine curiosity.

Your assertion that it can't be done and that I merely have a milder form of
CF are simply ways of dismissing the idea and they aren't anything I haven't
heard before. If being contemptuous of me personally and dismissive of 16
years of my life isn't your intent and you are genuinely curious, you are
utterly failing to communicate that.

~~~
ShannonAlther
Then I will ask directly: what lifestlye interventions have you implemented,
and how are they helping you?

Edit: Nevermind, you said it involved dietary change to handle acidosis.
That's great, but is it related to the bacterial problem?

~~~
Mz
In addition to diet, some of the big things are: I do my best to limit my
exposure to plastics, gasoline fumes, etc. I gave up my car and I walk
everywhere. I quit my corporate job and I do freelance writing.

I am an environmental studies major, so it sort of stood out to me that some
of the infections that people with CF get that normal people are not typically
vulnerable to are microbes used to clean up petroleum spills. I came to
believe that CF predisposes people to hanging onto certain kinds of chemicals
and this makes our tissues vulnerable to infections that normal humans don't
typically experience as dangerous pathogens.

Giving up my car helps protect me from exposure to gas fumes and plastic off
gassing, but it also means I walk a helluva lot. Walking does a great many
good things for the body. You breathe better while walking and it moves lymph,
which is how the body cleans its tissues.

Freelancing instead of having a corporate job helps protect me from exposure
to germs and gives me a higher degree of control over my environment.

I have done a whole lot of other things, but those are a few that are, I
think, easily explained and the value should be easy enough to grasp.

I have run some of my thoughts past a man with a PhD in Chemistry and another
man with a PhD in Biology was kind enough to answer some questions for me. He
indicated that given what the CFTR does, my thought that people with CF
misprocess certain chemicals, including metals, is not simply nuts.

~~~
ShannonAlther
I'm more interested in immunology than respirology so I know very little about
CF. Your idea sounds plausible (I'd give credence to the possibility that
reducing stress is part of it, and maybe also the placebo effect), so some day
you might be validated. Thanks for talking!

~~~
Mz
_Edit: Nevermind, you said it involved dietary change to handle acidosis. That
's great, but is it related to the bacterial problem?_

Sorry, I missed this earlier.

If you look up studies on biofilm, there is a connection between acidosis
(and/or inflammation) and antibiotic resistance. Reversing excess acidity
leads to patients becoming sensitive again to a larger variety of drugs.

But there is a lot more to my dietary changes than that. Mucus is a really
significant part of the immune function and people with CF have very salty
sweat. My view is that sweating out salt at high rates also drags other
minerals with it.

The standard wisdom is that people with CF "overproduce mucus" and are
"drowning in their own mucus." One study found that we underproduce mucus and
I believe this is the accurate interpretation for reasons I have outlined
somewhere on my blog. I can find it if you really want to see it.

Salt is a major component of mucus and when you get people with CF producing
proper and healthy amounts of mucus, it reinstates a portion of their immune
system that is typically down. I consumed a particular brand of salt high in
other minerals for some years. It had a significant positive impact on my
health. I also lived near the ocean for a few years. There is a non drug CF
treatment where they nebulize saline solution. It grew out of the observation
that people with CF who surfed had better outcomes.

CF is not really just a lung disease. That is sort of a misconception. It
involves all the mucous membrane systems, including the gut and the
reproductive tract. Malabsorption, difficulty gaining weight and Cystic
Fibrosis Related Diabetes are major elements. Men with CF usually lack a vas
deferens, thus are unable to father a child without intervention. Women often
also have fertility issues.

The gut is about 70 percent of the immune system. So addressing the gut issues
in CF is part of addressing the immune system dysfunction.

The gut gets incredibly out of whack with CF. The high use of antibiotics in
patients with CF very often leads to e coli infections. This is often treated
by removing the large colon. This is, horrifyingly enough, one of the more
common surgeries in the CF community. There is a reason it is called a Dread
Disease, and it isn't just what it does to your lungs.

I have also read up on some of the current research into the gut flora. I
think the terrible state of the gut and the gut flora is a really major
element of the immune problems in CF.

You might be interested in the articles on stunting linked in this post on my
blog: [http://miceats.blogspot.com/2016/09/jalapeno-with-
pepperoni-...](http://miceats.blogspot.com/2016/09/jalapeno-with-pepperoni-
pizza.html)

The blog isn't intended to be easily legible to an outsider as a serious work
on the immune system. There are two reasons for that. I have been harassed by
too many people, so I don't want to position it as a medical blog. It is
intentionally framed as a food blog. Second, I want it to be approachable by
lay people.

The general format is to talk about I have x issue, I am choosing to eat y
food for z reasons. I don't always manage to explain my reasons in every post,
in part because it gets very, very repetitive. I eat many of the same things
over and over for weeks or months for the same reasons. So, the back story on
my thinking is very scattered throughout the blog and hard to find. That is
partly on purpose.

Best.

------
theprop
Great insight into how and why Pharma spends the highest percentage of its
revenues on marketing, more than any other industry.

~~~
theprop
I used to think a "miracle drug" would sell itself...I guess at $350k/year it
needs some help?!

------
jlebrech
Martin Shkreli explained that most of his revenue came from insurance
companies and health services and not the patient directly. He raised the
price of a drug that had better alternatives but those alternatives were too
pricey, bringing it's price up, brought them down too.

