
Cancer Doctor Leading the Attack on Astronomical Drug Prices - datashovel
http://www.bloomberg.com/news/articles/2015-06-01/this-cancer-doctor-is-leading-the-attack-on-astronomical-drug-prices
======
shiven
Whenever something like this comes up, R&D is held up as the "cost center",
whereas initial discovery (hit) or optimizing it into a "lead" molecule is a
fraction of the cost of turning out a "drug", even manufacturing is a
comparatively small expense. The majority of the cost lies in the clinical
trials process. That is where a potential drug can fail and take everything
down the drain. That is why the "fail-early, fail-fast" mantra has been
ingrained into big pharmacy like gospel truth. However, there is no reliable
predictor of "late stage" clinical trial failures for a candidate drug
molecule. And trials can fail from a drug having statistically insignificant
improvements in a group of target patients, all the way to, having a high (how
high?) propensity for adverse effects in the patient group.

So, the solution? More fundamental research to explore indicators of late
stage failure, coupled with "cheaper" clinical trials to justify a lower
development cost that is enforced by legislation to bypass greedy
execs/shareholders. Now, those "cheaper" trials, that is whole 'nother can-o-
worms for a different thread, because it involves our willingness, as a
society, to accept such risks as are part of the discovery process.

~~~
3pt14159
Also don't forget to take into account the price insensitivity of some buyers.

If I had a pill that could save 1 million people I wouldn't price it at $100,
since I'd only make $100m. If I price it at $1m per pill, only 100 people
could afford it, so that also only makes me $100m. But if I price it at say,
$100k, I can get about 300k people to pay for it, which nets me $30b.

This is all aside from how much the drug cost me to make.

~~~
swalsh
This is a real scenario... it's called sovaldi, and it basically cures
hepatitis c. Except it costs $80k for the full course. There are around 100
million people (globally) who have the disease.

~~~
skadamat
Few things:

\- Usually drug prices are dropped / negotiated with foreign governments for
developing countries \- Drug price often starts high but drops as government /
FDA criticizes and once they milk health insurance companies to pay for it

It's not an ideal system at all, but just wanted to correct the notion that
the prices start high and stay that way / poor people don't get access to it!

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blazespin
The problem is not the high cost of drugs, the problem is the lack of R&D into
processes and drugs that are not patentable. Like Stem Cells or Vitamin C. I'm
not saying that these have any medical value, it's just no one is willing to
invest because there is no ROI. What might be interesting is force everyone to
buy life insurance and then have the life insurance industry underwrite the
R&D.

~~~
btilly
Not just lack of R&D. After expenses for FDA clinical trials is $150 million+.
Nobody can afford that if they don't have a patent letting them recoup
expenses.

My go to example for this is
[http://en.wikipedia.org/wiki/Helminthic_therapy](http://en.wikipedia.org/wiki/Helminthic_therapy).
That is the treatment of autoimmune diseases by infecting people with
parasites which suppress your immune system in a targeted way for their own
protection. I personally know someone who successfully treated his Crohn's
disease with hookworm for 5 years and counting now, and the main problem he
has is that if he ever needs antibiotics he needs to get reinfected because
antibiotics will kill the hookworm.

But it is illegal to receive this treatment in the US because the FDA has
never approved it.

~~~
lg
a company did conduct clinical trials of a helminthic therapy for crohn's, it
didn't do well: [http://www.drugs.com/clinical_trials/coronado-biosciences-
ha...](http://www.drugs.com/clinical_trials/coronado-biosciences-halts-phase-
ii-crohn-s-trial-16305.html)

~~~
btilly
Thank you for that information.

I note it wasn't hookworm, which is what helped my friend.

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rodgerd
New Zealand's Pharmac has generally been quite successful in keeping costs
down, which is of course why it's under constant attack by the US State
Department and is likely to be required to be effectively destroyed when New
Zealand signs up to the TPPA.

~~~
jordanthoms
Pharmac works fairly well in NZ - although it's not nirvana, there still are
issues around what drugs they fund (Pharmac provides the drugs they select at
cheap prices, but if they choose not to fund a drug because they don't
consider it cost effective enough, you have to pay full price yourself).

However, I'm not so sure it's a good model for the world or for the US market,
because it's actually quite selfish. NZ is able to get drugs cheap because the
US consumers are paying extremely high prices which cover the development
costs. If everyone was buying drugs at the price we pay in NZ, there would be
far less incentive to develop new drugs.

With NZ being such a small market we can get away with it without having any
impact on the development of drugs, but we're lucky that the Americans are
picking up the development tab for us and we would have a problem if they
stopped doing that.

~~~
bkor
> NZ is able to get drugs cheap because the US consumers are paying extremely
> high prices which cover the development costs.

Any source for this? I heard quite often that the marketing budget is more or
less the same as the development cost. Further, a lot of the costs is burdened
by others.

Seems like you assume that there's a reason that the costs are so high or must
be so high. Could be a easy "can get away with it".

There's been numerous explanations that e.g. companies force more expensive
medicine than needed. E.g. cheaper is available, but to get a unique medicine
from the company, you also are forced to get all the expensive stuff that they
have.

~~~
Symmetry
The marketing budget is really high but the two biggest contributors to that
are teaching doctors how to use drugs and handing out free samples of
otherwise very expensive drugs. The first is necessary and the second isn't
what most people outside of accounting would think of as a cost. Advertising
is only a fraction of drug marketing costs.

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bcoates
Headline doesn't match article: Saltz's beef is with the US spending too much
on the very sick, which is getting in the way of truly universal health care
coverage for the generally healthy.

He wants the US government to use its market power to discourage the progress
of ever more expensive treatments until we solve the problem of getting
everyone access to affordable health care.

~~~
kefka
We all have "access", as in I can potentially drive a car down to the upper
end cancer facility in Indianapolis or the Mayo clinic in Chicago.

"Is it affordable?" is a whole different question. And simply put; No.

~~~
jfoutz
Access usually means obtain. For example, if i hand a person a calculus book,
have i given them access to knowledge of calculus? If they can read, yes. If i
hand another copy to a blind person, have i given them access to the knowledge
of calculus? Not really, no. If my intention is access to knowledge of
calculus, i need to take extra steps. Maybe a brail version, maybe just read
to them.

I think you might be fuzzy because of login prompts. Technically you're using
computer resources. clearly i have access to the machine in some way.
Similarly, i have access to the Mayo clinic. I can walk in and talk to people.
But, with the computer i can't get to the good parts, i can't open files.
Also, with the hospital, i can't get to the good parts, i can't get healthcare
without extra stuff.

This isn't a slight against the clinic, I know they do charitable work. I
think they charge so much, in part, to offset the costs to those who can't
pay.

~~~
kefka
However, access can be compared to areas that which do not have it.

For example, if I was in northern India and get injured, I do not have access
to emergency room care. Nor do I have access to a hospital. I may have access
to a local doctor, but (s)he may have very limited tools and even less amount
of drugs to work with.

If I am injured in this country, I do have a reasonable access to emergent
care. But the costs are exorbitant to the point that many people default on
those bills.

And then I would also go to the argument that there is no informed consent on
the bills for treatments. We, as a public, are supposed to go in for a problem
and choose the appropriate solution with no regard for cost. Our solution is
that we then get the "bill we deserve". There is no breakdown for "issue X is
average cost Y".

In choosing what treatments can potentially cause harm, we have the idea of
informed consent. We cannot make a choice, medically speaking, unless we know
both the pros and cons of said argument. This somehow, does not transfer over
to harms of money and reduction on standard of life.

That's criminal.

(And yes, I chose the Mayo clinic because they are a top of the line medical
center. And they charge for it as well, when the client can bear it or has
good insurance. I also know they do a great deal of charity work.)

------
Toine
Starts with a culture shift : society should care about its citizens health.
It's just not the case in many countries, especially in the US. I guess the
maths are simple : keeping more people alive and healthy is less profitable
for the people involved..

~~~
Fuxy
Keeping it's citizens alive, healthy and able to work is very profitable for a
country since more able bodied citizens means a better economy.

Most companies only care about how much insurance they have to pay and their
bottom line they have no reason to keep an eye on the big picture.

If an employee gets sick for too long or dies they will just fire him/her and
get someone else to replace them.

The citizens health is a big picture thing that only a government has the
incentive of maintaining.

~~~
_yosefk
"Incentive"? Really? You mean a president looking to be reelected for another
4-year term has an _incentive_ (as opposed to a moral imperative) to prevent
future illness in people who're 20 today where the symptoms will become
visible 30-50 years down the road?

What is that incentive, and how is it stronger than the incentive to create
jobs or lower prices _right now_ for people who vote today by allowing some
environment-destroying industry to expand, said expansion being the cause of
future illness (a hypothetical or maybe not entirely hypothetical example)?

~~~
Swizec
> What is that incentive

Those people are and will be paying the pensions of the current voting
population.

QED.

~~~
taki1
Or even simpler: these are not people from the Government perspective. We are
talking about tax payers here. You'd rather have more taxpayers than less,
right?

If a Government needs to spend $100k in tax payer money to save somebody's
life and this somebody pays back $200k in taxes, this is good business, isn't
it?

~~~
_yosefk
But the people who're governing young taxpayers now will no longer be
governing those taxpayers when they get older and will suffer from diseases
caused by today's policies - policies which will raise the standard of living
of the same taxpayers today. And a future government will simply blame past
governments for the problem (rightfully, though not very usefully.)

"The government" (why the capital G?..) as an organization might have an
incentive to protect taxpayers' health but individual people making up said
government do not have the same incentive. I think they call it the agency
problem.

(Some people go as far as advocating benevolent dictators with a hereditary
right to rule; of course in reality few dictators are benevolent, and a
hereditary right to rule prompts people to kill off ruling families. I
conclude that setting up incentives such that everything works out smoothly is
rather damned hard.)

~~~
taki1
> But the people who're governing young taxpayers now will no longer be
> governing those taxpayers when they get older and will suffer from diseases
> caused by today's policies

That's definitely a problem. Problem with democracy though and not capitalism.
The policies are designed to have 4 year lifespan because elections are held
every 4 years. Actually, it is quite a big flow when you think about it.
Politicians are not only incentivized to look short-term at their policies but
also to design them in the way where long term negative effects are desirable
if one can be sure that the opposition party will take over after next
elections.

That's why Western democracies are watching places like China carefully where
you can design long-term policy and still benefit from capitalism. I believe
that the main reason behind the US to introduce more and more authoritarian
policies (i.e. militarization of police force) is because they see that it
works well for China. I mean marrying soft authoritarian form of government
(like in China) with capitalism might be superior (economically and socially
more effective) compared to having liberal democracy combined with capitalism.

------
erbo
The problem is not just with cancer drugs, it's with drugs of _all_ types.

There's a scorpion antivenom that routinely costs $12,000 or more per vial in
the United States. That _same_ antivenom, with the same level of purity, is
available over the counter in Mexico for $100/vial. [1] Yet, if you were to go
there, fill your trunk with scorpion antivenom, then bring it back to the U.S.
and try to sell it at a 100% markup (which would be a pretty sweet profit for
you, but would also drive the cost _way_ down), the Feds would confiscate it
and likely throw you in _prison._

The drug Sovaldi, a treatment for hepatitis C, costs $85,000 for a course of
treatment in the U.S., and only $1,500 in India. This has one executive coming
up with insane plans like docking a cruise ship carrying the drug in
international waters off Miami, and ferrying U.S. patients to the boat to be
treated. [2]

Of course, there are laws on the books that allow pharmaceutical companies to
get away with these prices...because, if there weren't, these would be
_felony_ violations of the Sherman and Clayton Acts.

 _Real_ health care reform would involve wiping those special protection laws
off the books and taking legal action against the companies engaging in these
practices, with prison sentences for the people involved. Unfortunately, what
we've wound up with is a "Patient Protection and Affordable Care Act" that
neither protects patients nor makes care affordable.

[1] [http://www.nydailynews.com/news/national/arizona-woman-
feeli...](http://www.nydailynews.com/news/national/arizona-woman-feeling-
pain-83-046-bill-anti-venom-drug-seeking-medical-treatment-scorpion-sting-
article-1.1152754)

[2]
[http://www.bloomberg.com/news/articles/2015-06-01/hepatitis-...](http://www.bloomberg.com/news/articles/2015-06-01/hepatitis-
cruise-india-trips-among-plans-to-save-on-1-000-pill)

------
Neil44
Prices are high because of long and expensive development times, massive
amounts of regulation, very high risk and relatively short patents to recoup
these costs. Not to mention the costs of the other 5 drugs that failed final
trials. Demand is also understandably very high. I do think there should be
harder discussion of cost/benefit though to bring some sanity into the system.
What else could be done with that money, rather than a marginal outcome for
one person? It's a hard conversation. This is especially relevant in something
like the NHS where direct tradeoffs must be made.

~~~
bayesianhorse
That's simply not true. Yes, development costs are high, but not that high.

The real reason the drugs are priced so high is that people/insurers pay it. I
wouldn't even call it a free market, since the patent protection is involved.
Essentially it is extortion. Eventually we might get a situation where drug
companies raise costs for patented drugs, not only cancer ones, slowly to the
breaking point where even less people can afford insurance anymore. Why
wouldn't they? The insurers are very disinclined to refuse life saving
treatments to their patients.

With biologicals the cost of actually producing the drugs can be high. The
only way to bring that down is to drive forward the necessary technology.

~~~
NeutronBoy
> since the patent protection is involved

While I'm no fan of software patents, why would I spend billions developing a
new drug when I can wait for somebody else to do it, then just copy it?

~~~
robbiep
Because these drugs are mostly monoclonal antibodies, you have to actually
develop your own. You can work out what the target is, but because the
antibody has extremely high specificity for a specific target, and is high
molecular weight, you can't just synthesise it, you need to grow it (An
absolutely fascinating process in and of itself)

There have been examples of other drug companies targeting the same target as
an existing high value monoclonal antibody drug, however I am aware of at
least one example where the 'knockoff' monoclonal antibody actually had
harmful effects compared with the original.

The only way you can actually copy the drug is to steal a cell from their
lineage and produce your own

~~~
drjohnkasanders
I am interested to learn about the case with the knockoff having harmful
effects. Could you guide me in the right direction?

~~~
robbiep
Off the top of my head it was a VEGF antagonist, so avastin knockoff. I'll try
dig up the paper when I'm off mobile

~~~
robbiep
So I have just spent about half an hour looking.

I honestly can't remember where this knowledge comes from. My feeling is i
learned it on my oncology term 12 months ago. It may have even been a
ipilimumab biosimilar. Unfortunately google is mostly saturated with success
stories and papers relating to monoclonal antibodies and wherever I heard
about the writeup of the failure has vanished into the nether-regions of
google.

Apologies. If anything comes up, put a contact email in your details and i'll
reach out to you.

------
unchocked
It's an interesting plan from a game theoretic perspective to set an explicit
upper price for drugs(in dollars per year of lfe or whatever). It certainly
changes the price negotiation for drugs in the pipeline, and ultimately
informs the incentives of drug development going forward.

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gggggggg
I might be wrong as I don't know how to in detail read financial statements,
but at the end of the day if they were making too much money (and by to much I
mean unproportional) it would be obvious there would it not?

I work in the medical industry and can say I don't know any poor doctors. Even
socialists. And maybe they are rich compared to their individual r&d in study,
I am not saying I support $200k a year for drugs, but shouldn't this be part
of a bigger question.

~~~
_Wintermute
The researchers in R&D are making significantly less than your typical
clinician. It's not a career path you take if you're prime motivation is money
(or job security).

------
Keyframe
"Cancer Doctor" \- really?

~~~
drjohnkasanders
Oncologist. But 'cancer doctor' is a term more people would know instead of
'oncologist'

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rollthehard6
Personally I don't think we can truly call ourselves civilised whilst we
persist in valuing our fellow humans' health and their very lives in terms of
financial currency.

~~~
IndianAstronaut
This routinely happens everywhere on the planet. We could protect our citizens
from being in car accidents, getting murdered, etc. But those all cost money,
and we have made a decision to not spend more money(to hire lots of police, to
build lots of public transport) to prevent those deaths.

