
$1,000 Hepatitis Pill Shows Why Fixing Health Costs Is So Hard - wallflower
http://www.nytimes.com/2014/08/03/upshot/is-a-1000-pill-really-too-much.html
======
georgewfraser
Hepatitis C is a nasty disease that primarily affects people on the fringe of
society. Many of these people don't have money, they don't have insurance,
they often aren't good at sticking to complex drug regimens. And yet a bunch
of pharma companies put in big money to develop a cure - not a treatment that
makes it manageable, a cure. These drugs are a bargain and we should all be
amazed and thrilled that this has happened.

~~~
Fuxy
And this is why most companies would rather treat a disease then cure it.

It has been so long since a disease has been cured that the current american
system isn't designed to handle it.

I have to say the European state sponsored medicare looks way superior from
this point of view.

They are not worried about the high upfront cost since every citizen is paying
taxes for that.

Plus they can drive prices down since if the government buys from you you make
a lot of money if it doesn't you have to sell it a lot cheaper for regular
people to buy it with their own money.

It's not perfect it's open to manipulation however it's better that anything a
dynamic corporate sector could offer.

~~~
Brakenshire
> They are not worried about the high upfront cost since every citizen is
> paying taxes for that.

Not only that, but that they can look very clearly at cost vs benefit. With a
citizen, who is unlikely to move anywhere else, you can look at lifetime care
costs and reduced earning ability (at least in the average case), and say
outright that it is sensible to pay $100,000 to save many times that on a
lifetime of ineffective care and reduced potential. You can also look at the
public health impacts - treating one patient might reduce the risk of wider
infection in society, which can also be placed in the cost-benefit analysis.

This is more difficult with American states (because people move between them
much more- the payment comes from one state, but the benefit is spread out),
and more difficult for insurers (because they are subject to much greater
short term pressures, and can't look at wider benefits).

From the article:

“If it is cost-effective from a societal standpoint, it is not necessarily
going to be cost-effective from a health plan standpoint,” said Dan Mendelson,
chief executive of Avalere Health, a health care consulting company.

~~~
rbanffy
> This is more difficult with American states (because people move between
> them much more- the payment comes from one state, but the benefit is spread
> out)

Simple: make it federal. Scale it up until you get controlled borders.

~~~
wernercd
Because the American Federal System handles health care AND borders so well.
_rolls eyes_

As a healthy Veteran, I can say I'm glad I haven't had to dip into my
benefits...

~~~
rbanffy
> rolls eyes

Instead of rolling your eyes, work on a solution ;-)

------
jzwinck
This sentence worries me:

> The United States health insurance system works better for costs that are
> spread out and predictable.

So the insurance companies want to reduce their tail-event risk. It's almost
like they should buy some insurance. And they can do exactly that--it's called
reinsurance.

The entire point of insurance from an individual's perspective should be to
cover unexpected costs. Big costs, not small ones we can pay out of pocket.
But it seems that over time, people have come to rely on their employer-
sponsored plans to protect them from routine expenses like dental cleanings,
eyeglasses, etc. That's not insurance--that's paying a premium to a middleman
to manage your bills for you.

Insurance ought to be designed specifically for this sort of treatment:
expensive, unexpected, and important.

~~~
vertex-four
> that's paying a premium to a middleman to manage your bills for you.

The thing is, under the current system, it's not even that; it's some sort of
complex mixture of insurance and collective bargaining. The "insurance"
companies pay decidedly less than the rate you'd be asked to pay if you got
any of these treatments, checkups, or whatever else, yourself. Therefore, it's
only logical that you get your insurance company to pay for you.

I've run over this a few times in my head, and there doesn't really seem to be
a feasible way to split up companies between "usual" and "unusual" treatments
- collective bargaining groups vs insurance - in a fair way, and definitely
not one that works out cheaper.

------
shiven
To all those pulling out pitchforks and torches, how do they think these drugs
get discovered and more importantly, proved safe and efficacious for a given
human disease?

Do they have any idea how much it actually costs? Sure, the Shylocks in
"management" are greedy for their pound of flesh (and which industry does not
have those?), but there is a genuine cost to finding these chemical/biologic
agents. The days of Alexander Fleming and Jonas Salk are long gone. Just as
the days of one-off genius chemists/physicists/mathematicians/explorers now
exist only in history books.

Original research & discovery, that is not of mere _academic interest_ , that
yields actual usable products, that people can put _inside_ their bodies, is a
non-trivial investment of manpower and resources that carries excruciating
risk. This ain't some app you can write in your jammies, that can be MVPd by
Tuesday and pitched to VCs over next Sunday's brunch.

As to the public funding of such endeavors, that is a subject for another
post(s), requiring a larger keyboard than the one on my smartphone :P

~~~
harshreality
Have you looked at the pricing structure offered under insurance, vs the
pricing structure offered for the uninsured? Guess who's paying the
$1000/pill? Guess who's not?

If they needed to charge everyone on the order of $1000/pill to recoup
expenses, that would be one thing. That's not the issue, since they are
offering it to most people (who do have insurance) at dramatically lower
prices.

I know HNers are in love with market segmentation, but isn't there an ethical
problem with using price to segment a market for treatment for serious medical
problems based on who has insurance and who doesn't?

It's been a while since the first thread on this, but I'll just quote from the
sovaldi website:

 _We believe that cost should not be a barrier to receiving treatment. That’s
why the makers of SOVALDI offer a co-pay coupon. If you are eligible, you may
pay no more than $5 per co-pay._

 _The SOVALDI co-pay coupon program will cover the out-of-pocket costs of your
SOVALDI prescriptions after you pay the first $5 per prescription fill, up to
a maximum of 20% of the catalog price of a 12-week regimen of SOVALDI. The
coupon can be applied to up to 6 fills_

So, if your health insurance pharmacy coverage were 80/20, instead of paying
your end (20%) out of pocket, you'd pay $5 per fill. So you're paying very
close to $0 per pill, instead of $1000. Well, ignoring your deductable, which
might be significant, but the obamacare max is $6350, so that's an order of
magnitude cost decrease for the Sovaldi prescription even if you have no other
out of pocket healthcare costs that year.

The only remaining, meaningful question is: _how much are insurance companies
paying Gilead per pill_?

~~~
UnoriginalGuy
I've said it before and I'll say it again, one of the opportunities
"Obamacare" missed out on was capping the level of discount insurance
companies can get relative to the uninsured (both from hospitals but also from
drug companies).

Right now the typical discount falls between 50% and 90% depending on the
treatment and agreements made. If "Obamacare" had capped insurance discounting
to something like 35-40% (which is still perfectly reasonable) we would have
seen uninsured patient's costs drop between 10% and 60%.

As it stands Hospitals and drug companies know that insurance will negotiate a
discount so they just increase the cost to compensate. Instead of something
costing 3K with a 0% discount, it is 4.8K with a 60% "discount." If
discounting were scrapped altogether it would be a huge "win" for almost
everyone (e.g. reduced management overhead at hospitals, uninsured patients,
et al).

The only party who wins by the current discounting culture is the insurance
companies as it acts as a giant "lock in." Even if you're wealthy and can
afford your own treatment insurance still makes sense as you'll get a huge
discount not otherwise available.

~~~
Gustomaximus
To take it further, would it be so bad to have a rule that hospitals have
stick to their own openly set rate cards (no discounts or rebates etc)? This
way the playing field is significantly leveled for people and companies.
Hospitals can openly compete with each other but not in behind the scene
deals.

------
2bthrowaway
Just fired up a throwaway to comment here. I've been taking this medication
over the past 3 months and finished about a week ago. A test a month ago
showed I was already cured. This drug is good. Really really good. Side
effects were minimal in my case and absolutely worth it.

I only skimmed the article but knew what it was about right away just from the
headline. With healthcare, my copay per month was originally 200. My employer
gutted my health insurance midway through treatment and my 2nd and 3rd months
were quoted to me at a 2000 a month. I spoke with the specialized pharmacy and
told them I couldn't afford that. They got me approved for a program that
brought my cost of the Sovaldi down to 5 a month. The secondary medication
(Ribasphere) to go with it was a little more expensive, but I forget how much.

Either way, I would have gladly paid the 2000 a month for this cure. Cost
wasn't even a factor to me. If it came down to having to take out an 80K loan
for it, I would have. My health is more important and the peace of mind
knowing I've been cured is indescribable.

I'm open to questions since I've been dealing with this over the past 6
months.

~~~
refurb
Was the program that helped you with your co-payment run by Gilead? Seems like
they will cover all co-pays over $5/month.

[http://www.gilead.com/responsibility/us-patient-
access/suppo...](http://www.gilead.com/responsibility/us-patient-
access/support%20path%20for%20sovaldi)

~~~
2bthrowaway
I'm pretty sure it was. I didn't have to apply directly. My specialty pharmacy
handled it for me.

~~~
lotsofmangos
[cue jingle]

------
msandford
Classic case of value-based pricing rather than cost-based pricing. From that
perspective they've priced it quite competitively.

But when their costs to manufacture are small and the process by which they
develop drugs is so byzantine and opaque it's easy to see how people could get
outraged.

I wonder how long before someone gets the bright idea to claim eminent domain
on drug (or other) patents for the sake of medicare. Pay the drug company back
R&D, maybe 2x R&D and then let people start making generics.

I'm not sure it's a good idea because it might well reduce investment in new
drugs (developing drugs is like VC, you fail a lot and occasionally hit it out
of the park) and that would be a bummer. But I could see it happening.

~~~
EpicEng
This ignored the fact that the company which develops a successful drug is
also developing drugs which will fail. That costs money too, and the successes
have to cover the failures.

That said... pharma companies are pretty greedy entities. I know a certain ex-
pharma rep closely and she's no fan of her former employers. I can dislike the
greed, but I can't blame a company for trying to make a profit.

~~~
markdown
> I can't blame a company for trying to make a profit.

10% is a profit. 50% is a profit. Heck even 100% is an understandable profit.
You can and should blame them for screwing humanity over and above what is
reasonable.

~~~
viggity
No. What screws humanity over is a system where nobody is incentivized to
producing new drugs. If it is so effin' easy, you do it. Go ahead. Raise the
hundreds of millions of dollars and promise your investors "you know, we're
only going to make twice your money back". Its not that simple. I'd rather
have the option and have it be expensive as hell than not having the option at
all.

~~~
anon1385
Research doesn't have to be funded by investors looking for a profit. Lots of
medical research is funded by governments and non-profit organisations. For
some diseases that is where the vast majority of funding research comes from.

------
bigtunacan
If you treat rather than cure, in the case of a transmitted disease such as
Hep-C, eventually you have no remaining market share since the disease is in
essence eradicated.

In this light it makes sense that Sovaldi costs so much. Gilead needs to get
back their research costs and make as much profit as possible while there is a
market for their product. A lot of these profits are going back into their
research costs for HIV; this is the next disease they are trying to cure.

Even with a genetic non transmittable disease, such as Type 1 diabetes (which
I have), there is less profit to be made with a cure and so there is a need to
charge more for the product.

Right now I have to pay monthly for 2 forms of insulin, needles, testing
supplies, hormones, pain killers. Due to the long term circulatory, liver, and
kidney problems that come with this I can look forward to increased costs from
additional medications and treatments over time (think blood thinners, ace
inhibitors, dialysis). On top of this there is all of the cost for recurring
labs and other medical testing that I have to go through on average about once
every 3 months.

So yeah; give me one big expensive cure and a healthier future to look forward
to and I will take that any day over "managed treatment" and control programs
that will still lead to poor life conditions for me in the long run.

~~~
pkulak
Exactly. These guys have essentially cured a major _viral_ disease. If they
are wallowing in cash because of it, that's fine with me. Even if my premiums
go up 2%. If the public sector is not going to do the work, there needs to be
incentive for private corporations to lay out the millions required to advance
medicine. We can't have near-zero public funding and then get all pissy when
miracle cures are expensive.

And this is very close to "miracle cure". I had Hep C when I was younger
(blood transfusion) and I went on interferon and ribavirin, which was 6 months
of daily (maybe twice daily, can't remember) shots. And I was told that there
was still a very good chance that I would never be "cleared". And sure this is
$1000 a pill, but that six months of shots was not cheap either. Probably at
least half.

~~~
tim333
Congrats to them to for curing a major disease but some bits of the economics
seem a bit odd - initial research cost about $14m paid partly by tax payers.
Gilead spends "tens of millions" to put it through trials and then it gets
sold, partly back to the same tax payers, for about $84k * 3 million = ~
$200bn.

( [http://www.bostonglobe.com/business/2014/05/31/costly-new-
he...](http://www.bostonglobe.com/business/2014/05/31/costly-new-hepatitis-
treatments-curing-patients-but-straining-health-care-system-
finances/SmBE9NoUESxjfgphfqvXKL/story.html) )

~~~
bigtunacan
Did you read that whole article, or just skim it?

The piece where I am assuming you got your numbers from...

"Federal grants and Pharmasset’s research outlays on Sovaldi totaled more than
$14 million, but Gilead spent tens of millions more to shepherd the drug
through clinical trials."

That is only a tiny fraction of the cost invested by Gilead on this drug. If
you read the whole article you would see that Gilead took a big risk and paid
$11B to purchase Pharmasset before this drug had been approved so they could
bring it to market. Their total cost is well over that by now.

Now add to this the fact that when a pharmaceutical company makes a new
"wonder drug", the other big pharma companies get right to work on make
workable variants so they can get a piece of that pie.

Take a look at GILD on Yahoo Finance sometime and you will notice they are
remarkably flat lately despite great profit margins, P/E, etc... This is
because investors are worried long term. A variant product could destroy the
profitability; now add to that the government wants to get involved and start
regulating the prices on this thing. PFFH

------
InfiniteRand
Just to throw something out there, maybe for important cures to diseases, the
government should just pay a one time purchase of the patent and make it
public domain (or something like that). I imagine the price of the patent
would be extremely high, but it might be a simpler way of dealing with things
than regulating the price. And given the direct and indirect costs of
regulation (such as lobbying, counter-lobbying, etc.), it might be worthwhile.

~~~
refurb
You have a point. Pharmasset (where the drug was discovered) was bought by
Gilead for $11B a couple years ago. The gov't could have been a bidder,
purchased the company and sold the drug at cost. It certainly would have ended
up much less expensive for them.

~~~
runeks
Well, any company could have done that. That's investing. The question is what
effects it will have on the market if the government starts acting as an
investor.

I'm sure the government's investment department would be visited by a lot of
lobbyists, for example.

~~~
dfxm12
The government (via the FDA) approves drugs for use. The government being able
to approve drugs and own drug companies (while still competing with the
private sector) seems like a conflict of interest.

------
bkohlmann
Did anyone else notice the last two paragraphs which basically said "oh by the
way, competition is already here, so this is not a long term issue, and costs
will rapidly decrease.". Which basically defeated the entire hand wringing
nature of the article!

~~~
refurb
I'll be honest with you, the price of these drugs is not going to come down
with competition. Rarely do drug companies ever compete on price. Usually, the
only time you do is if you have an inferior drug.

If Medicaid/Medicare were smart, they'd put out a tender when the competition
arrives. Go to both companies and say "We're will to buy enough drug to treat
1 million HCV patients, what can you do for us."

------
lotsofmangos
Available on NHS, though.

[http://www.ukmi.nhs.uk/applications/ndo/record_view_open.asp...](http://www.ukmi.nhs.uk/applications/ndo/record_view_open.asp?newDrugID=5502)

[http://www.pharmatimes.com/article/14-04-16/NHS_England_to_f...](http://www.pharmatimes.com/article/14-04-16/NHS_England_to_fund_hepatitis_C_drug_Sovaldi.aspx)

~~~
refurb
I think the reason why Gilead's drug is causing such an uproar is because it
_is_ worth the money, yet governments are tired of healthcare costs always
going up.

A short summary of the issue: In the past HCV had terrible treatments. You
would have to take interferon (makes you feel like you have the flu) for 8-12
months. Plenty of patients took their chances on their disease not getting
worse. Even if you stuck it out, the cure rate was maybe 50%. The total cost
of therapy? Around $80K (for most patients, others were much more expensive).

Gilead comes out with a wonder drug Solvaldi (it truly is revolutionary). You
still have to take interferon, but only for 12 weeks. If you do tough it out,
there is a 90% chance you're cured. The price? A little more than than the
$80K of the previous treatments.

Honestly, if you think about it, for a little more money, society is get a
_much_ greater benefit. So what's the big deal?

Well, because this drug works so well and has much better side effects, all
those HCV patients who before said "I'll wait and see if HCV gets worse" are
now saying "cure me!". There are millions of HCV patients in the US, so if we
tried to treat them all right now, it would bankrupt the system.

I can tell you exactly what will happen with Sovaldi and the newer drugs being
launched later this year: governments and insurance companies will say "no,
unless you are very sick, you're not getting this drug". It will still cost
the same to cure everyone, but it'll just take longer.

Now, if you were Gilead, what would you do? Especially if competitors were
coming? I know what I'd do, I'd go to Medicaid and Medicare and say "lets make
a deal, I'll give you 50%, 60%, 70% off if you agree to let everyone get
treated this year". The gov't would have to pay out a lot in one year, but
they'd be getting a deal and Gilead would get their return.

~~~
avalaunch
Just a little correction: you don't have to take interferon with Sovaldi. A
lot of doctors are off label prescribing both Sovaldi and Olysio together.
Olysio was actually approved to treat HCV a few weeks prior to Sovaldi but
wasn't quite as effective in trials. The bulk of the revenue Olysio is
generating (which is still quite a lot) is coming from doctors prescribing it
alongside Sovaldi. The cost for both together is about $150k but the cure rate
goes up a little bit and there are virtually no side effects because the
patient no longer has to take interferon.

~~~
refurb
You are correct! I think Sovaldi's label has with and without interferon, but
standard treatment often includes it.

Later this fall Gilead and Abbvie will be launching all oral combinations, so
interferon will pretty much be gone by end of 2014.

------
sytelus
This article seems to single out an odd outlier. Sure there are super
expensive drugs like these but on average major components of health care is
not drugs but hospital and doctor's fees. My 1 hour visit to emergency room
costs $2500 in which single injection was administered that was under $100.
Rest of the charges were simply for "services" provided by hospital. I once
calculated average hourly charge for doctors using other examples I was aware
of and it came out to around $1000 for every hour per doctor spends with you
plus $100 for each nurse for each hour they have to attend you. Price
component for drugs on average is negligible in most ordinary treatments.

The problem with US health care is invisible for-profit conglomerates that
controls and owns major health care facilities across the country. There
ridiculous charges works because consumers don't care because they don't pay
out of pocket majority of expense in lot of cases. So all these conglomerates
have to do is to make sure laws allow them to charge 3X-4X fees like above to
have amazing margins.

One way to solve this issue in US is to promote non-profits to operate health
care facilities. This can be done by government subsidies and grants in the
same way they are provided to universities and research community. There are
200 major cities in US. If we want to build 2 great non-profit hospitals in
each cities, it would cost 2 X 200 X 0.5 = $200 billion even at the higher
end. If we spread this out to 5 years, it's less than $50 billion per year -
drop in the bucket for current health care bugets. These hospitals can then
charge 2X-3X _lower_ amounts to drive the price down. Without introducing non-
profit competition to for-profit organization we are in same situation where
operating systems are controlled by one commercial company and there are no
open source alternatives resulting in redicluously high prices and stagnated
innovation.

------
forca
I have what some would consider strong opinions on health care.

\- First, all medical and pharmaceutical companies should be non-profit.
Health care is a basic human right, not a privilege reserved for those who can
cough up the sick prices for treatment.

\- The government should run all medical schools so doctors graduate without
debt. You serve for 10 years as payment for the schooling. After this, you are
free to pursue other goals.

\- Pharmaceutical companies should hold no patents, no trademarks. Companies
should be merged so their collective brain trust can solve the world's medical
woes. Non-profit company results. R&D payed for by taxpayer money.

I severely dislike for-profit business in general, but more so when medicine
is concerned. Human beings always should trump profits. Always. Doctors should
become doctors to solve problems, not enrich themselves.

Sadly, I have several medical conditions which need repair, but even with
insurance, I cannot afford the co-pays, upfront deductible costs, and other
sick for-profit BS I would need to meet in order for my insurance to kick in
at 100%. I have seriously toyed with moving overseas simply for tax-payed
health care.

I'm in IT (non-profit), make OK money, but I refuse to enrich the for-profit
system. I simply do without, because it's sick when your insurance costs equal
1/3 of your paycheck.

------
bluthru
Socializing research for major diseases seams like a no-brainer to me since
the end goal is so well-defined. It's not a question of "do you want the
budget hepatitis vaccine or the deluxe hepatitis vaccine?", it's simply one
vaccine. The demand is also well-defined: people will spend virtually anything
to live a healthy life.

The polio vaccine was funded by federal money, which it allowed it to be
reproduced freely.

~~~
Jedd
Other than 'some people might not be so wealthy' I haven't heard any good
arguments against a given country moving all pharma research over to a
government agency. (Most arguments are emotional / political / historical /
naively optimistic about the current situation.)

~~~
bluthru
Also: information sharing. If private companies are competing for a hepatitis
cure they're not sharing their advancements, which could inhibit the speed of
discovery. That sounds like a public health issue to me.

------
mhb
Drug Costs and High Prices - Here We Go Again:

[https://news.ycombinator.com/item?id=8129695](https://news.ycombinator.com/item?id=8129695)

------
tdonia
If this debate interests you and you want to learn more about it, you should
get in touch with me. Check my profile for my email address;
[http://contextmatters.com](http://contextmatters.com) is the company I work
for and here was a post our analysts wrote about Sovaldi:
[http://www.contextmatters.com/sticker-shock-in-drug-
pricing-...](http://www.contextmatters.com/sticker-shock-in-drug-pricing-are-
we-missing-the-bigger-picture/)

We're systematically collecting data on this exact conundrum - how much is a
treatment that was, until recently, infinitely expensive worth? there's a
whole lot of room for smart people to make a difference.

------
xenadu02
I believe around 1/3 to 1/2 of all medical R&D in the US is paid for by the
government; if we had an actual program in place to ensure the government kept
a financial interest in these things (instead of just giving it away), we
could choose to either lower prices or recoup funds, or some mixture of both.

This is nothing new; the railroads were built with massive federal subsidies
and guarantees (making Ayn Rand's hard-on for railroads hilariously
misguided). Especially the trans-contitental railroad which was seen as a
massive risk and almost entirely funded by US federal government loan
guarantees. The US Interstate highway system and the internet were funded
initially by the government as well.

~~~
jandrewrogers
It is about a third. The US government is effective at funding early research
but quite poor at funding development, and they ignore some valuable areas of
research for reason of political optics. Development tends to be where almost
all the expense is incurred. In practice, there is a hand-off between
government and industry in the transition from research to development because
it plays to their respective strengths. Most of the research done by the
government, like all such early research, turns out to be medically worthless
during development.

Looking at it like a startup, the expected annual return on biomedical R&D if
you have a huge portfolio is something like 10% even with the unrecovered
government investment. In other words, better than investing in an S&P index
fund and worse than broadly investing in early stage tech. Without the early
government investing at a loss, it might not even be worth the money of the
private sector to follow on for the development compared to other things they
could be investing their money in.

------
waingake
It seems to me that in certain industries profit motive doesn't mesh with the
public good. Isn't there a need for a publicly funded pharmaceutical agency
that develops drugs for the public good in an open source manner?

~~~
refurb
Where would the money come from?

Right now the NIH's budget is $30.1B. US pharmaceutical companies invest
$48.5B in 2012. Note, that's only R&D expenditure, not all the capital costs
(e.g. Pfizer spent $1B for a manufacturing unit in Ireland; the drug failed
due to safety).

~~~
Jedd
> Where would the money come from?

Same place it does now - the end user. But the money would cover research,
development, trials, data mining, treatment, etc. It would not be used to
mislead medical practitioners, patients, or government officials.

> Right now the NIH's budget is $30.1B. US pharmaceutical companies invest
> $48.5B in 2012. Note, that's only R&D expenditure, not all the capital costs
> ...

US-centric may not be the best way to come at a discussion about health costs
(no disrespect - just it's not typical in the world stage, and you'd be hard
pressed to find someone that considers it best practice).

How does that R&D component stack up against the industry's Sales and
Marketing budget? (Hint - less than admirably.)

~~~
refurb
I think the US is a good example since _most_ pharmaceutical R&D is done in
the US. Also, the NIH has a pretty beefy budget. For other countries, the cost
of running their on pharma companies would be _much_ more burdensome.

To answer your first point, you're saying that the cost of R&D would still be
born by the end-user (patient). What's the benefit then if it's not saving
money?

If you think a gov't run company would not pull some of the same stuff the
private ones do, I'd have you take a look at some of the corruption that goes
on at public companies. A gov't run company might not be for-profit, but
someone there has budgets and revenue numbers to meet. The motive to cut
corners doesn't disappear when it's run by the gov't.

And why shouldn't a pharma company have a sales and marketing budget? Do you
think your doctor has time to sit down and analyze all of the clinical trial
data? Getting in front of a doctor and touting the benefits of your drug
sounds like a good thing to me. Sure, some sales reps use slimy tactics, but
overall educating physicians doesn't sound like a bad thing.

~~~
__P
If it was not 'for-profit' and public. It could be shared more freely. Meaning
you'd ideally have a global effort towards drug R&D. This would easily dwarf
any number the current US pharmaceuticals invest, or the NIH budget. Advances
would be shared and make the cost of an advance cheaper.

Also if it were open (globally) countries could be the checks and balances for
each other.

And no, pharma don't need marketing. Marketing is always used to trick people
into buying things, or to create brand awareness, it's never about the good of
the recipient. Dr's could simply have a database where they look up drugs and
supporting material (i.e pull information rather than push marketing).

~~~
rlanday
Marketing is solely about tricking people into buying things? What about
informing people of goods and services they might want but didn’t know about?

~~~
rlpb
> What about informing people of goods and services they might want but didn’t
> know about?

If marketing didn't exist, this need could easily be fulfilled by
organizations acting on behalf of the buyers. Consumer buying guides and
professional industry-specific journalists publishing reviews are examples.

~~~
rlanday
Yeah, and we can replace capitalism with a more efficient centrally-planned
economy. In theory.

------
jasonwocky
> But in America’s health care financing system, people tend to change
> commercial insurance whenever they change jobs, lose Medicaid coverage when
> financial circumstances change, or leave the commercial market altogether
> when they become eligible for Medicare at age 65. That means one company
> will be stuck footing the big bill, and another will probably reap the
> benefits of a healthy liver 20 years later.

>“If it is cost-effective from a societal standpoint, it is not necessarily
going to be cost-effective from a health plan standpoint,”

/sigh. Can we have a public option for health insurance already, please?

We have a pharma company not playing by the normal, "gentlemen's rules of the
game" that backload costs. Instead, they've got a great cure and are going
with the "fuck you, pay me" model. Which, fine, more power to them. I really
have no trouble with it. However, unfortunately, it doesn't play well with our
current racket of employer-based health insurance.

~~~
undata
> Which, fine, more power to them.

Really? We as a society have the knowledge necessary to cure a person's
illness and yet they go untreated.

In the absence of IP legal protection, this would be a non-issue.

~~~
rayiner
The more you turn medical research into a noble endeavor with no chance of
making money, the more you're going to drive brilliant people to Wall Street
and Silicon Valley companies instead.

The company that developed this sold to Gilead for $11 billion (less than a
WhatsApp) after 13 years. Why would Gilead even buy the company if they could
copy the drug for free? And why spend 13 years building this company with no
hope for an exit? Especially when drug development is incredibly risky. For
every success like this, there are many companies that fold with nothing to
show after burning eight or nine figures of capital.

~~~
fludlight
Pharmasset lost a total of $325mm during those 13 years before their exit.
Then Gilead spent an additional two years and an undisclosed sum bringing it
to market.

------
Mz
This kind of thing is becoming increasingly common. The latest "wonder drug"
for cystic fibrosis costs some crazy amount (like $300,000 annually) and I
believe it works for about 5% of people with CF -- though, in this case,
testing can determine beforehand if it will work for you because it basically
works for people with specific alleles. Here is one of many articles on the
topic: [http://www.independent.ie/lifestyle/health/cf-wonder-drug-
ka...](http://www.independent.ie/lifestyle/health/cf-wonder-drug-kalydeco-
sanctioned-after-deal-on-price-29026121.html)

Part of the problem is the mental models behind our concept of "health care."
Everyone who is looking for a new drug (and I don't just mean researchers --
it is a broad cultural phenomenon and patients are equally guilty) or miracle
cure tends to have their blinders on with regards to more effective but less
splashy treatment modalities.

------
thejdude
I find it insane that the US created this monster of a health insurance
system, forcing people to purchase their health insurance through their
employer.

So far, this looks a major PITA for employees, because (correct me if I got
this wrong) a new job with a new insurance policy meant that all (chronic)
diseases you may have had in the past would not be covered by your new policy.

Now this time there is also a problem that affects the insurance companies -
they might not profit from the cured liver (a cured client is a cheaper
client), but they'll have to pay for the cure.

Seriously: NOBODY wants to switch insurance every five years. Why not get rid
of this stupid requirement and allow people to shop for health insurance on a
free market? Your health and your insurance is nobody's business, especially
not your employer's.

~~~
maxxxxx
I think that employer based health insurance is the real problem of the US
system. It sets up all incentives the wrong way.

------
bakhy
Something smells here... The drug is taken in a short period of time, and
cures the disease, thus killing the existing business model of selling
treatment for a very prolonged period of time. Since this means lost revenue
from the old treatment, the new drug, the cure, gets priced high enough to
somewhat compensate? or, (economics - as exact as spitting into the wind)
priced just high enough to still be cheaper than the old, long term option,
regardless of costs of development (which are presumably lower)?

~~~
Shivetya
because tinfoil hats aside, these companies are in it to make money by saving
the lives of people. Living people buy other products these companies sell to
maintain their lifestyles. one eventuality is having drugs that you want to
take because they extend the youthful and productive period of you life.

plus all these new cures and treatments further along their knowledge and
ability which means the process continues and eventually they can chip away at
the big problems in medicine.

and lets be honest, there are people working their both in the labs and the
executive level who want to feel they did good and some want the recognition.

this story
[https://news.ycombinator.com/item?id=8131808](https://news.ycombinator.com/item?id=8131808)
gives me hope that nothing is beyond their eventual reach

------
thefreeman
Disregarding the price issue, one of my main takeaways from this is that it is
another issue that completely wouldn't exist if we had a single payer system.

They said that the cost of treatment isn't really that out of line with other
treatments insurance covers. The issue is that the payment is completely front
loaded. Because of this, combined with the frequent changes of insurance in
the U.S., you end up with one insurance company footing a giant bill for a
customer who may end up switching providers in a year.

------
FollowSteph3
The problem with completely free health care is that there's no incentive to
be healthy. In other words if you smoke etc it has no negative impact to you
financially. So there has to be some kind of balances to check for things like
this. This drug is a very bad example but a lot of the arguments are for free
health care and research, and this is one of the big issues with that...

~~~
CodeMage
Just out of curiosity, how old are you? I'm not trying to be confrontational
-- I'm genuinely curious, because you sound like someone who hasn't had
anything worse than a flu so far.

Here's an incentive to be healthy: medicine is not magic. It's not like I can
opt to do all sorts of unhealthy stuff and just keep paying a certain sum to
live a completely normal life.

For example, you mention smoking. I smoked for 5 years, one pack a day on the
average. After a while, I was coughing my self to sleep at night. There's no
pill or treatment that will fix that magically and allow you to keep smoking.
Only quitting made it go away.

------
steve-howard
Apologies in advance for the off topic, but what the hell is with that web
site? I double-click a term on the page to highlight it for a search and it
changes the font size. I move my mouse to the left because that's where I put
my tabs and a menu pops out. They're trying to be clever but it's just
incredibly frustrating.

------
guard-of-terra
3.1 million ill?

I guess that US should just buy a billion pills with huge discount and then
distribute those as they please.

------
zanny
It is almost like using artificial IP rights to prop up supermassive R&D and
then letting the company charge whatever they want for "their idea" is not the
most sane business model.

~~~
refurb
They certainly don't "charge what they want". There are multiple examples
(particularly in the EU) where the government says "no, we're not going to pay
for that".

If you have a better idea on how to reward pharmaceutical R&D, I'm all ears.

------
tzs
I think it is things like this that get some people wondering about the
prices.

US: 3.2 million people with Hepatitis C. Price $1000/pill.

Egypt: 12 million people with Hepatitis C. Price $10/pill.

~~~
refurb
This is what I don't get.

Drug companies get shit on when they charge a high price in developing
countries. When they create a program that offers drugs at prices that are
much more affordable, they get shit on as well.

I see the difference in price as a good thing.

~~~
Scoundreller
They also get shit on for creating treatments for diseases that you have to
pay for for the rest of your life.

Then they come up with a cure that you only need to take for a short time,
works for most patients and has few side effects, and they get shit on again.

Best to keep coming up with $xxx/year therapies that you have to take for the
rest of your life and only benefit a few percent of people that take them.
(Statins for primary prevention, I'm looking at you).

------
zaphar
I was kind of hoping for an article that did an actual analysis of why the
pill was priced at $1,000. R&D, Regulatory Risk, Cost of manufacture that sort
of thing.

I was disappointed.

------
conover
I often wonder if people even read the articles. Yes this drug expensive
upfront. Why is it expensive? Unknown. Does its development process justify
its expense? Unknown. Is this drug a potential cure versus a lifetime of (more
expensive) maintenance treatment? Likely. Are there competitors coming to
market soon (as someone else mentioned)? Most likely

Edit: Larger costs spread over the long term are more palatable than lesser
costs compressed into a shorter term. Humans are bad at estimating scale.

------
RexRollman
The cycle of greed keeps healthcare prices high.

~~~
josu
"The cycle of greed" also created a drug to cure a chronic disease, keep that
in mind.

~~~
waingake
The cycle of greed wasn't needed to develop the polio vaccine. This was
publicly funded, historically more advances in medicine are made by people
interested in science and the public good rather than corporate profit.

~~~
danielweber
The polio vaccine was fairly easy to discover. Give someone a weakened or dead
version of the polio virus, and they develop antibodies, and they don't get
sick when exposed to the full virus.

We are past the age when one guy running a small lab can just decide to cure
something. It's going to take lots of money and lots of researchers and lots
of false leads to find each new thing, and even after that there are going to
be lots and lots of tests.

------
arunc
Drug companies don't want us well, they want us as a life-long customer.

~~~
DanBC
How is that relevant to an article about a short course of treatment that
cures people of a life long disease?

------
ck2
No, it's not hard at all. You imprison the people making it cost that much for
corruption.

They are entitled to profit if you want to argue for that, they are not
entitled to destroying society.

$80,000 for hepatits cure is only the start if you let them get away with
this.

~~~
refurb
Wait a second! The older therapies, which people happily paid $80K for (but
only cured 50%) of the people were OK, but now this company creates a drug
that cures 90%+ and it's corruption? I don't understand.

~~~
hga
And if this is such a good idea, why shouldn't it have been done earlier? That
would save us another tiresome discussion, for this drug would have never been
developed.

