Something to keep in mind is the population that typically has chronic Hep C requiring this drug. It's IV drug users who share needles. Think they have $84K? Nope. Think they have insurance? Nope. Guess who pays for it. Oh that's right, it's Medicaid! It's you, the taxpayers. Where is there a large concentration of people that have Hep C? Prisons. Guess who pays for it then? Still you! The prison systems are obligated to provide health care and treatments in accordance with community standards of care, which they do. They have treated many people already who meet the criteria of disease progression to qualify for it. Still think Gilead should be charging this much for it here and not elsewhere?
Actually a significant population in the US was infected by blood transfusion; the US didn't start properly/universally screening blood and taking precautions for hep C until 1992.
This is why there's a spike in infection rate among older people, and why hep C is considered a looming cost crisis for Medicare -- we don't yet know the full extent of the infectious disaster that was unscreened blood, but it's ticking away inside anyone who received a transfusion prior to 1992.
If person A ignores a problem, but person B comes up with an expensive solution to the problem, person B is the monster because he should have come up with a cheap solution. Person A is completely innocent.
Is there a way to take the taxpayer money being spent on medicine that's priced high to recoup the research investment, and shift it to directly funding the research in the first place?
Obviously you'd have to spend a while funding both R&D and Medicaid/etc, while the new drugs are in development and the old ones are still under patent, and I'm sure there's other details I've missed, but it seems like there should be some way to make the system make more sense.
I don't think you could get that to fly politically. While it is true that drugs require high prices to recoup research cost and that drug patents allow drug companies to charge those high prices, they don't just recoup prices. They charge as much as they can. From the point of view of trying to save as many people as possible for the money, that sucks, but from the point of view of encouraging investment in drug companies it is seen as a necessary evil.
I won't try to rehash all of the permutations of ways that might work (just search HN for any discussion of drug companies and patents and you will be able to enumerate them). I suspect that there are ways to improve the present system substantially, but I concede that the problem is much harder than I can solve. Hopefully someone will be able to do it some day.
How does it work in European countries where health care is (mostly) paid for by the government? Do these companies still charge the same prices as in the US?
> Do these companies still charge the same prices as in the US?
The majority of global R&D happens in the US market, even though the entire world benefits from it. So pharmaceutical companies have come to expect to recoup their R&D costs from the US market. Ultimately, this means that European markets benefit from the research without having to shoulder the bulk of the costs from it.
If they couldn't do that here, then yes, they might adjust their business models and try and charge more in Europe and India. But as mentioned above, India doesn't recognize patents, and since the R&D isn't taking place in Europe, there's less of a need to charge the same prices there. And because there isn't one single European market, its more complicated to price drugs there in such a way as to reliably turn a profit (after accounting for R&D) in each individual country than it is in the US, where insurance players are licensed by state but the pharmaceutical market is otherwise roughly uniform across all 50 states.
Companies charge as much as they can, they don't follow some altruistic "we love Europe" plan.
I understand your point though: Of course it's easier to bask in American exceptionalism than facing the truth that corporations rule the US and the only human value they are interested in is the amount of dollars extractable through any means imaginable.
Nobody said anything about altruism, or 'loving Europe'. I don't know where you're getting either of those ideas from.
> Of course it's easier to bask in American exceptionalism
This is hardly a claim of American exceptionalism. It's a non-normative observation about the existing structure of the markets. It is not a statement that this is how it always must be, or that this is how it should be. It is merely a description of what currently is.
Back in NZ, we have PHARMAC, which is basically a centralised drug buyer for the country. It works remarkably well at keeping drug prices low https://www.pharmac.govt.nz/ - though tends to miss some niche stuff.
The Australian Federal government has a Pharmaceutical Benefits Scheme, and U.S. pharmaceutical companies have been trying to undermine it for years.
Sadly for these companies, and fortunate for the vast majority of Australians, it is so popular and successful that any attempt to undermine it puts the government at risk of being turfed out in the next general election.
The Abbott government tried to force through a hair-brained GP co-payment and it was so unpopular that even when it was scrapped they eventually had to replace the Treasurer and Prime Minister for fear of being routed in the next general election.
The drug from the original company is expensive everywhere, what India has is generics, which in their turn might lower the price of the original drug because of the competition. It also lowers the incentive of selling the original drug there at all (and consequently allowing the government to press for agreements). I have some unpopular opinions regarding the subject...
Actually, India basically refuses to recognise patents for a wide variety of pharmaceutical products. For a long time they refused to recognise patents for drugs that combat AIDS and a thriving market for generics sprung up.
There was a lot of posturing and complaining by pharmaceutical companies in the U.S. and the U.S. Government tried to heavy the Indian Government, but to no
avail.
When it became apparent that the Indians weren't going to budge, and with a growing realisation that other nations would ether do the same thing or import their drugs from India, the companies agreed to drastically reduce their prices on "humanitarian" grounds. Now they still make massive profits, just they are less massive than they once were.
This is now happening with academic research.
Nobody will shed any tears because greedy multinationals make a lower profit to ensure less people die from disease. Nobody will weep over Elsevier's reduced earning if it frees up necessary information and research findings so science can progress for the benefit of all mankind.
The entrenched interests of rich, arrogant corporate executives and business owners in first world nations are finally being disrupted by poorer nations who don't care about this group of people. But that's what happens when you gain an attitude on I weaning entitlement - you eventually overreach so far you come undone, and nobody feels any sympathy when it happens.
While I tend to lean more to your side of the argument, the devil's advocate in me has to point out the fact that you leave out the massive costs of research, development, clinical trials / fda approval, etc. that go in to getting a drug to market.
This not to mention all the extra capital needed to fund research into all of the drugs that never make it to market before a company finds something that works.
This ignores the fact that the expensive, risky research is often funded by public money instead of by the pharmaceutical companies. So, the taxpayers pay for the research until it shows progress. Then it gets patented and sold to a large company which sells it back to the public for $1000/pill.
It's a pretty gross abuse of the original idea of patents.
The expensive, risky part of drug development is not the portion that is publically funded. Yay! You've found a compound that appears to shrink tumors when directly applied to them on glass slides.
Now, figure out what the correct dose is, how to get it into a mammal so that it's not metabolized into uselessness, how much you can safely give the mammal.
Now, start again with humans and hope you don't get to the final stage only to find out that it's not as effective as existing treatments or has side effects that will open you up to lawsuits.
Finally, once you've done all that, scale out the production of your compound such that you can prove that every dose meets FDA quality requirements.
To be fair the risky research side is relatively low cost. It's the development part - putting drugs through clinical trials that costs a hell of a lot. And its usually drug companies that pay for that.
Given that people would still die or become very sick from disease, I think that medicine would progress - whether at the same rate, I'm not sure but given Western nations other than the U.S. pretty much all don't have hangups about their government funded health systems, I suspect it wouldn't be all that bad.
If you're going to parrot Marcia Angell, at least get the substance right: They spend more on marketing and administration than they do on R&D. Where "administration" is stuff like IT, HR, etc.
I've never read her work, so I'm hardly parroting her. IIRC I've read about this in a few news articles about pharma finances, and in Ben Goldacre's "Bad Pharma". I don't know whether the marketing/sales figures include administration, but it does appear to be true, and I'd be inclined to think it's bad...
One of the problems with the patent system is that it pushes medical research in the direction of drugs because they are easier to market than alternatives such as knowledge of medical procedures.
There still needs to be incentive to lower the cost. For example, to lower costs of clinical trials, companies can invest more in computer simulations and find other ways to reduce those costs. Also this might also force big pharma companies to collaborate more with each other rather than re creating the wheel.
The future lies in "biologics", which unlike small-molecule compounds, cannot be (that) easily copied/manufactured. Initial and continuous capital costs prevent easy "piracy" and that is where the majority of large-pharam/biotech R&D is headed.
My father is currently under treatment (for around 50,000 EUR)
He's not an IV drug user, never was, most probably it was a dentist who infected him many years ago.
Don't oversimplify things like this, there are lots of situations you aren't thinking about..
He's not oversimplifying. He's not saying that all Hep C patients are IV drug users.
He's just staying that a lot of Hep C care is taxpayer funded, and that Gilead is therefore price gouging the American taxpayer. That your dad is also being price gouged, over in Europe, is just icing on the cake.
Certainly. And it should be just as fair to allow parallel imports of everything. Want to charge more than [retail price B + transport cost B->A + import tax A]? Guess what, the market is going to take care of this for you.
See the import tax that I included in the calculation? IMO this should be the way to solve this from a humanitarian standpoint. If a government wants to solve medical issues of poor countries, it can work together with drug corporations, dictate the price points (i.e. manufacturing+logistics without R&D) for offering these supplies and then protect the own market through import taxes on these products. But the point here is: It needs to be a transparent, i.e. democratic, process. The way it works now is just shady and anti free market.
It should be priced according to ability to pay based on income. The same is the reasoning why the drug is so cheap in other countries, their people can't possibly afford the prices. So it makes no sense for citizens of wealthy countries to have to pay huge markups if they don't have the money. It makes no sense from an economic perspective to force people to go into bankruptcy just because they got sick.
That's only fair if you believe that the seller has the moral right to maximize their earnings. I think that's questionable across the board, but certainly in the pharmaceutical industry.
As in: the idea behind capitalism (the reason we put up with it) is not that price-gouging is some fundamental right we should worship, but because capitalism works. What's that mean? It efficiently allocates resources. How does it efficiently allocate resources? By letting a fluid market with many competing buyers and sellers figure out an appropriate price.
Notably, patents of life-sustaining medicines utterly destroy that cornerstone of capitalism. People can and will pay almost anything to get that drug, so the seller can charge what it wants - that's not capitalism as it's supposed to work, that's a hostage scenario.
I don't know what the best alternative is, but I'm convinced that there are many trivially better solutions to allocating resources to medical research, efficacy testing and production than what we're doing now. Every social network, things like google's pagerank, scientific journal impact ratings - all represent alternative means to determine worth in a competitive fashion; and even competition isn't strictly necessary - for some scenarios plain old raw computation to solve for the optimal solution may be possible nowadays. We're not even trying to improve the status quo.
> Notably, patents of life-sustaining medicines utterly destroy that cornerstone of capitalism. People can and will pay almost anything to get that drug, so the seller can charge what it wants - that's not capitalism as it's supposed to work, that's a hostage scenario.
I don't think it is appropriate to compare a drug company that created a life-saving drug to a hostage taker. And in this scenario it is particularly inappropriate, because they are charging less for the drug than the previous best treatments cost!
Furthermore, there is an alternative here. The patent only covers this one cure. You are welcome to go out and spend $2-3 billion to try to create your own drug. (But that would be pretty risky, wouldn't it? And good luck raising the money if you plan on giving the drug away.)
Right, so in this case there was a tiny modicum of competition, and the smart company selling the drug priced their product appropriately.
However, that does not mean that they (or some other organization) couldn't have developed this drug for less.
The question isn't whether it's better that what came before, the question is whether it's efficient. If there were many buyers and sellers, you'd have some faith that is at least approximately efficient.
But with just one seller, they could recoup their costs many, many times over. That's terribly inefficient - those resources could be better used elsewhere.
And it's quite a bit worse than that - by being so inefficient, you're creating all kinds of perverse incentives. Instead of trying to find and create a worthwhile drug, the aim is to find those drugs with captive audiences. The Martin Shkreli saga illustrates that quite blatantly.
The appropriate benchmark is efficiency, not whether the drug at the offered price is better than nothing.
I think there's some middle ground that could be found here. For arguments sake, how about:
1. A drug company can charge whatever it wants for a drug until some predefined multiple of the cost of developing the drug is recovered.
2. After that point, the patent expires and its up to the free market to determine prices.
Set the multiple of R&D costs high enough that it allows for the low success rate of drug research, and you have a model that still encourages risk taking whilst preventing profiteering.
Also, this proposal means that while the patent is not expired, production is still monopolized.
And there is the issue of testing vs. research. There is an argument to be made that drug development isn't the hard part (or at least not always). The hard part is figuring out how to use the drug, and doing clinical trials to prove efficacy and safety.
E.g. we currently live in the wonky situation where there is little incentive to discover new uses for existing out-of-patent drugs. It's much more worthwhile to find a new drug that does the same thing.
I think patents-as-monopolies are a bad idea. A citation-based subsidy and/or fixed license fee, preferably on a decreasing schedule with a capped or only slowly growing integral would align motives with outcomes more clearly.
I mean, I don't see the problem if research becomes independently specialized from exploitation.
One aspect of the patent system is that the government or non profits or whatever could do drug development, get patents and then give away licensing.
Would doing that put an end to commercial drug development? Or would commercial drug makers continue to seek treatments where they saw opportunities to profit?
Sofosbuvir is a really great test of how we reason about this stuff. The price is high and easy to balk at, but it's cheaper and better than the previous treatment. Cheaper and better are clearly compatible with the profit motive. So we are left with our intuition that the price is unfairly high. I think part of the answer is to look at how medical payments are structured.
The best alternative is really quite simple: public funding for lifesaving medicines. This model also works for the provision of medical care and is used throughout the entire developed world, with one exception.
As far as I know, this is not true anywhere in the world. What drugs out there have had their development and trials fully (or majority) funded by governments, either in Europe or---apropos here---India?
Huge, huge amounts of drug discovery is funded by governments[0] around the world. Pharmaceutical companies step in to fund the trials after the promising results come out. A lot of the trials take place in India under ethically concerning conditions[1].
Capitalism uses a low value of human life for workers compensation and a high value when selling drugs. Perhaps we should force the maximum charge to be their lowest paid worker's income for the period of treatment ...
Capitalism allocates resources efficiently without external forces like patents. Patents are a fix to force capitalism to be more socially responsible with sharing of knowledge.
(1) As someone who was following the market when Gilead paid $11 billion for PharmAsset, it was not a sure thing that it would be first to market or a premier drug. They announced $137/share on November 21 for a stock that opened at $65.49 on November 11. People like to point out how much money Gilead made on the deal, but that is Monday morning quarterbacking on something where they easily could have lost billions.
(2) The article claims Harvoni was acquired. That is not really true. Sovaldi (sofosbuvir) came from the Pharmasset acquisition. Harvoni is a combination of sofosbuvir with ledipasvir, a drug discovered at Gilead.
The combination of the two is a key part of the treatment; sofosbuvir was still taken with interferon (and ribavirin) for genotype 1 HCV, the most common form.
Treatment for genotype 1 HCV, without interferon required ledipasvir. The notion that Gilead contributed nothing scientifically to Harvoni is false; they provided a crucial component to the all-oral treatment of HCV genotype 1.
As someone who was following the market when Gilead paid $11 billion for PharmAsset, it was not a sure thing that it would be first to market or a premier drug.
This is a fantastic point. I remember when Gilead announced their acquisition of Pharmasset. They were ridiculed in the press. How could they be so stupid to pay that much? Many people thought that $11B was as good as gone.
That's the risk involved with drug development. It's like VCs, you spend a ton of money on a lot of investments, most of which fail. Unless you get a few huge winners, it's not a feasible business.
Gilead has developed the first drug since penicillin to cure a major disease and people think the price tag is too expensive.
In the modern world, it's not ideal to create a drug to cure something. Once people are cured they no longer need your drug. That's why we have so many drugs like Lipitor and Viagra that treat symptoms but do not cure.
The "problem" with Sovaldi/Harvoni is that the patient only takes it for ~90 days, and then they're cured.
The drugs are cheaper than regular treatment of Hep C - which ends in liver transplant. Do people think the price tag was just random? No, it's because this is a price at which the taxpayer saves money by curing the disease vs. blood transfusions, liver transplants, lost economic value, etc.
Not to mention that the waitlist for a liver transplant is getting halved as we cure Hep C.
As we slam Gilead the other really evil pharma companies like Pfizer are taking notes and patting themselves on the back for creating drugs whose end goal is to addict the consumer.
I worked for a company that developed some PA criteria for these drugs, I can assure you a lot of debate went into this criteria.. these two specific drugs are probably the most hotly contested drugs. If we sold them at the 84k price tag to anyone that COULD use it, the entire insurance industry would go bankrupt, literally. Not even an exaggeration. While your logic is sound, the drug is cheaper than a liver transplat... not everyone who has Hep C ends up getting a liver transplant. There's a huge gap between the number of people who COULD use the drug (and have a MUCH better quality of life), and the people who are most qualified for it. The drug companies are not doing the government a favor here... sorry.
Another side conversation that's interesting, is who takes the $84k hit. There's sound logic that it's cheaper to give the drug NOW vs paying for surgery LATER... but what if i'm not your insurer when you need it. With obamacare, you can't be denied because of pre-existing conditions... so it's interesting math.
If they aren't very high, the US government could start making the company look like jerks by offering $50 billion for the patent. I'm pretty sure they would be able to calculate a nice return based on a payment like that.
The math works fine for that, there's ~3 million people just in the US to treat, paying $50 billion would save a substantial amount just treating those patients. Of course, we don't run our government based on math that makes sense, so it's a pipe dream.
> the US government could start making the company look like jerks by offering $50 billion for the patent
Pretend you were in charge of Medicare/Medicaid. The NPV of the lifetime care cost of the HepC symptoms of each HepC patient on your rolls is $X. You want to encourage someone to develop a cure for HepC, so you put out a price bid for what you will pay someone who shows up with a cure. What price do you offer?
I don't, there's a lot of people in government trying to make change (Bernie Sanders for one!), any public information that is out there, is probably about as twisted as Enrons finance sheets.
> In the modern world, it's not ideal to create a drug to cure something. Once people are cured they no longer need your drug. That's why we have so many drugs like Lipitor and Viagra that treat symptoms but do not cure.
I don't think that's a reasonable conclusion at all. One of the main reasons we have so many drugs that treat symptoms is because cures are absurdly difficult to find while treatments can be found accidentally (Viagra was originally intended to treat hypertension).
Funding research into cures is funding your own bankruptcy. Pfizer execs would jump a the opportunity for "Pfizer" to be the name of the company that cured cancer. But the reality is, hunting for cures is expensive with little chance of payoff. That's not how you stay in business.
In the modern world, it's not ideal to create a drug to cure something.
The drug companies produce the drugs they can. They are nervous enough about having enough blockbusters in their upcoming pipeline that if they could make something that cures a given cancer, they would.
We've eaten the low-hanging fruit. If any of us went back in time a hundred years we could come up with a polio vaccine just by trying a few times to remember what we learned about it in grade school. Modern diseases that don't have a cure in a pill isn't because someone never thought of doing it; it's because it takes hundreds of scientists doing lots of long trials to find something that improves outcomes by 10%.
This is yet another perverse collision of care and market regulation. Other examples abound. Why do we accept this? Do we even dare think of alternatives?
What if western governments stop enforcing drug development intellectual rights? Not going to happen before hell freezes over, but let's have a short thought experiment.
Quality health care for all would probably blossom thanks to more access to affordable drugs than ever. Drug development would probably slow down significantly without compensating measures. But would that be so bad? Medical research is increasingly a game of diminishing returns... Many but the rarest disease puzzles have been solved already. And the huge profit margins show the current drug development system has proven inefficient handling these rare corner cases. Think https://en.wikipedia.org/wiki/Alexion_Pharmaceuticals . With more patents starting to expire, the existing drug development model will only get more inefficient...
Aren't there more efficient ways to incentivise drug research?
Crazy idea... Bootstrap an open source drug with maecenate and/or public funding, or market an existing generic with a sympathetic history. Make it super easy for people to donate something extra on top of the drug price. Think a tip at the pharmacy, directly to the researcher's drug development budget. Their drug cured them or their loved ones! Put a picture of the research team on the packaging. Show people these researchers are heroes.
> What if western governments stop enforcing drug development intellectual rights?
No new drugs. Pretty simple.
Now you ask, is that a bad thing? well yes, yes it is. Right now, we are running out of (or have run out of) top end antibiotics.
Partly from over use (I'm looking at you America.) mostly from using them to get much higher yields in farm animals (yup, thats right, last line antibiotics are being used on pigs, so they can be packed in much higher densities. )
So what I hear you say? Well TB thats what. There is a resurgence in TB, the white death. Now, you might be content with each lung collapsed in turn, in a vein attempt to cure it[1]. However I'm not.
1 in 3 people get cancer. The survival rates are not good. Loads of people are diabetic. (mainly because they eat shit and are fat(unless its type1 which is genetic))
Opensource model is just bollocks. I don't want to be treated by some drug thats only had patchy test coverage. I don't want to be beholden to some amateur who thought it'd be good to reinvent for the billions time penicillin.
Who is going to pay for the time? its not like you can provide charge for support is it?
No, the way forward is actually having a proper handle on insurance. Here in the UK, drugs are purchased nationally[2] but more importantly you only pay a nominal upfront fee. Its not more expensive, in fact its hovering around 6% of GDP compared to 18% for the US (and with much better care too)
I doubt that. There's no reason why the same research couldn't be academic research.
Global spending on drugs research is only $77 billion a year. Take the 20 richest countries in the world and that's less than $4 billion a year each. That's less than half the UK's EU rebate.
Bingo. The private profit motive isn't the only way to get things done. Two of the greatest scientific and engineering feats of the 20th century, the atom bomb and landing on the moon, were both government run and funded.
Americans brought the end of antibiotics onto themselves.
Even if the world found new antibiotics, their culture is just not amenable to use them responsibly.
How to prevent them from spreading their new diseases to the rest of the world?
Let's follow the advise from their next president and put a wall around their country.
>Quality health care for all would probably blossom thanks to more access to affordable drugs than ever. Drug development would probably slow down significantly without compensating measures. But would that be so bad? Medical research is increasingly a game of diminishing returns...
If that's true then this problem will resolve itself in a decade or so when these drugs go off patent.
I wouldn't call cancer, heart disease, alzheimer's, ageing etc "the rarest disease puzzles", yet I'm not satisfied with the status quo of medical care for these problems.
Don't we get cheap drugs when patents expire? Are you saying we should invalidate all existing drug patents today and cease R&D rather than wait for patents to expire?
I'm conflicted about this article. On the one hand, the pharmaceutical companies gouging ordinary Americans is abominable. Doing something to circumvent their greed is something to support.
On the other hand, if enough people exploit loopholes like this, and the pharma company actually felt a significant drain in revenue, they may decide not to license the manufacture of these drugs in India at lower prices. If $84,000 seems unreasonably high in the US, imagine how out of reach it will be in India, where the cost of living is much lower.
So it's fair for a multi-billion dollar company to exploit the "global market" by farming work out to 3rd world countries...
But not for a customer who is literally dying to take advantage of that same "global market" to save himself?
Like everything else in the global economy, laws are only enforced to protect the strong against the weak, and yet we wonder how all the wealth is accumulating in the hands of the few.
> So it's fair for a multi-billion dollar company to exploit the "global market" by farming work out to 3rd world countries...
That makes sense. It is interesting that when usually there are "anti-globalization" protests shown in the media, the protesters are presented as fringe idiots, violent, with facemasks and so on. Sort of implying "look at these crazies not wanting countries get close to each other, trade and be friends". The truth is globalization is overloaded to apply only to large companies. And usually the more they "globalize" -- the more they create inequality and pain for those at the bottom. So then they also end up increasing border controls, formulate various laws and agreements and ram those through each country's legislature to protect segmentation and control of market.
All evidence I've seen points to a massive reduction of poverty "at the bottom" (the actual bottom, not developed world's bottom) as globalization has increased in the last few decades. On what do you base the claim that it has increased pain?
I didn't take a position one way or the other in my comment. But if anything, I definitely did not support the company. I was more concerned about the billions of people in other countries who will suffer because they will lose access to medicine even more. Some of the comments below pointed out that India had the ability to break patents if the government considered the drugs overpriced, so I'm not sure that's a very valid concern anymore.
I think a way to state this that you can't semantically object to is:
We live in a society in which those who control large corporations argue that it is virtuous to relocate significant portions of the business to locations which are cheaper due to more lax or nonexistent laws protecting workers and/or the environment, and thus consumers back in the US receive the same quality of product but at a lower price thanks to the location-based saving.
This opens up a counterargument that it should just as equally be virtuous to purchase medication from places where the retail price is cheaper due to more lax or nonexistent laws protecting intellectual property claims in pharmaceuticals, by which process consumers back in the US receive the same quality of product but at a lower price thanks to the location-based saving.
After all, protection of workers, protection of the environment and protection of intellectual property are all sliding-scale values; if it's fair for one person to do arbitrage on one of these in order to make money, why shouldn't it be fair for another person to do arbitrage on another?
>We live in a society in which those who control large corporations argue that it is virtuous to relocate significant portions of the business to locations which are cheaper due to more lax or nonexistent laws protecting workers and/or the environment, and thus consumers back in the US receive the same quality of product but at a lower price thanks to the location-based saving.
I don't think this is entirely fair. Some of the lower cost can surely be attributed to lower cost of living in those locations, not necessarily due to more lenient laws.
In that case, it isn't comparable to arbitrage over IP.
"The suicide rate at Foxconn during 2010 remained lower than that of the general Chinese population at the time as well as all 50 states of the United States."
What is the rate of employers whose practices cause a large group of their employees to jump off their building all at once? I can't remember ever seeing that headline in U.S. papers except referring to China and such. Must be rare here.
I wonder what the rate of mass suicide is in general for "all 50 states of the United States" vs Chinese companies like Foxconn.
>large group of their employees to jump off their building all at once?
Didn't happen at Foxconn. They were all on separate days over a few years. Not sure where you got "mass suicide" from. It's not mentioned in the comment you refer to.
Wait, this was apparently misreported to me although it still says wonders about the situation. It was a threatened mass suicide that led to concessions. Over a dozen did jump to death. And the worst part of what I originally received.... curtailing the suicides by installing safety nets instead of better working conditions... did happen.
So, yes, that's unusually bad with not many in the U.S. that can compare. I'll be interested if you know any companies in the U.S. where over ten people have jumped off one roof with company installing safety nets.
I doubt it'll happen in the US because we don't really have workers dormitories for people to jump from and in the US very few people jump for suicides (~2%) vs guns (~56%), suffocation/hanging (~25%) or poisoning (~11%).
Ok, that makes more sense. So, I modify the question to be U.S. workers threatening mass suicide by gun or whatever with a good number at one plant over time. Then, the plant starts taking preventative measures against various suicide equipment instead of investing in working conditions.
You'd probably have to go back a ways to at least the early 1900s I'd guess to get the right combination of horribleness to get that. These days workplace suicides are relatively rare 1-2 per million workers. Also being poor sucks but US workers are waaay more mobile than a rural Chinese person who move into a company town from their home town/village so before they'd get to 'I'll kill myself in protest' they'll probably get to 'I'll change jobs or quit' first.
My university started locking the balcony doors of its library building after a suicider jumped off. Nobody complained that they should have provided better studying conditions for students and left the doors open. It seemed like a completely sensible and thoughtful thing to do to prevent more suicides.
I've been inside Chinese factories and they seem just like factories anywhere else. Americans need to stop imagining China as some giant North Korean slave camp. It's got very low unemployment, a huge middle class and quite reasonable working hours, pay and job mobility, especially for young people like those Foxconn workers. Health and safety is a wash though but that's another matter.
It's the Chinese workers telling us all of this. In most democracies, people just say they don't like the job they have or try to get another one. The stuff we hear about Foxconn et al is unusual. The sources are Chinese over there working at such places and/or immigrating here to U.S. to get away from the stuff. So, we figure it's probably true.
Of course, China could always reduce their media censorship so we can get honest coverage of everything. Then, we might know more. :)
I have a private global (excluding USA) medical insurance that covers costs (no in-patient) up to 1M and it costs me $1k/year. I've been hearing about Obamacare for years and always thought "well, it's good that more people will have insurance". But when my colleagues in US told me what their deductibles on a good insurance plan are (thousands of dollars. my deductibles are $375) I was floored.
The whole medical system in US is broken. This morning I had a strange thought... I need to prepare for trips to US the same way I'd prepare for going to a third-world country: by buying a special medical insurance! It's one of the important TODO items when going to certain countries.
Fun fact: I can get a medical insurance that covers US with deductibles in low hundreds of dollars by doubling my not-so-high premium. As an expat. How crazy it is that I can get a better deal on insurance in US than local people?
Wait. Of course your insurance is cheap, it excludes in-patient care. You know, the most expensive part of medicine.
If it were legal in the US, no in-patient care insurance would be pretty cheap as well. I'll agree not as cheap as ex-US, but a hell of a cheaper than Obamacare plans.
America subsidizes the health care of the entire world. Because such a large portion of health profit comes from the US. If the US ceased to exist then global prices would increase and global research would decrease.
I hear this line repeated a lot on HN (it appears multiple times in this thread even), yet I've never seen a study or any hard evidence for it. How do you know that the massive profits made by drug companies in the US are being reinvested into drug development, and not simply returned to their sharedholders? Do you have any sources for this claim?
Plenty of research on this topic and hard evidence abounds.
Regarding US share of research funding versus the rest of the world, this is well established... Public funding and private profits are the two big US sources of medical research dollars. The NE Journal of Medicine reports that the US funds about half of all global medical research spending, and that's split approximately evenly between public and private funding.
Here's [1] a CBO paper on the topic of pharma R&D spending / reinvestment which is also worth a look. R&D as a percentage of sales ("research intensity") is higher in pharma than almost any other industry, and increased significantly in the 80s and has held constant since then.
Just saw this. Thanks for the link, it was an interesting read. It did feel like the authors leant heavily towards justifying currently spend rather than taking a critical view on it. It also didn't go very deep into R&D spend vs shareholder profit, instead trying to point out all possible places where profit was being over-accounted for and R&D costs were under-accounted.
I'd argue that US practice damages healthcare systems everywhere with the defensive practice of ordering every test and scanning every system to avoid liability. It contaminates thought processes where a 1 minutes pause would generate some level headed thought.
Pharmaceutical companies have an average profit margin of about 17%. That's about the highest by industry in the world. I think it's more accurate to say that America subsidises the profit margins of pharmaceutical companies.
Important to note is that that profit margin is after taking into account that pharmaceutical companies spend more on advertising than they do on research. How about we just take out the profit margin, take out the advertising and give the money directly to universities who already do a lot of the research and then make the results freely available? That way US citizens on HN will still be able to feel superior about subsidising the healthcare of the 'entire world' and everyone will have access to low cost generics.
Right now US citizens are basically subsidizing other countries when it comes to drug revenue via price gouging. I would rather it be done via some other more explicit mechanism (e.g. India government subsidies) rather than at the expense of poor healthcare availability to people in the US.
Considering that Americans consume 75% of the world's prescription drugs, and I think it safe to assume an equivalent amount of non-prescription drugs, I don't think any of this makes much difference. The US is a very strange and unique drug market.
Citation:
"5 percent of the United States is the world's population and consumes 75 percent of the the world's prescription drugs."
That statistic seems a little misleading to me, because very large parts of the world don't consume any prescription drugs at all, because they're too poor to go to the doctor.
Yeah, but that's not going to happen. If a big pharm company doesn't provide India-priced versions of drugs, the Indian government just declares the patent invalid and lets generics produce it for free (yes, this happens).
Yeah, until the US decides that it will retaliate by, for example, adding a 100% import duty to all goods produced in India and no longer supplying visas to Indian citizens.
By the way pharmaceutical companies also free ride on public universities. Research is often done there. Even if it is from grants, it often means professors end up working and spending their time for pharma companies instead of doing other things like teaching students.
Moreover, if our goal is to win hearts and minds and I don't know, promote Democracy (at least that is what the propaganda tells us), isn't providing health saving medication or building hospitals or schools working towards that goal better than say overthrowing their government or threatening to invade.
Going back to Western Europe, I hear it is already possibly to go to Germany (or was it Norway) and attend a 4 year university there for free. Isn't that free riding So they can have our pills and we can go there and not pay $200k in student loans. Globalization and free markets, we learned that was a good thing, right ...
But pharma companies aren't competing in a free market... I can't by (prescription X) from a canadian drug store. So it's not globalized, except for the protectionist patent laws and treaties surrounding them.
It's time to reign in patent protections, specifically regarding extension patents, and bring in compulsory license maximums for prescription medicines. Give drug companies 5 years exclusivity once they react market... after that they can only charge X per day for licensing... imho that should probably be $10/day/prescription, and drop every year.
I'd much rather eliminate patent protections, but they do serve limited value.. the licensing restrictions for medications after 5 years at market is mainly to limit patent protections, while still providing some profit. I didn't say the company couldn't make agreements for higher, or lower amounts via contract arrangement.
Patent protections, in this case, and many others actually exceed the value they provide to larger society, so I'm in favor of limiting them in this case as opposed to removing them entirely. I understand there are a great amount of expense, but that is usually recouped within 3-5 years, and often in medication less than that.
Earlier competition will lead to better pricing structures that are less restrictive over marginalized costs. In effect benefitting consumers.
The key point in the constitution behind copyright and patents are "limited" exclusivity... those limits don't always have to be larger... sometimes they need to be smaller, and some industries aren't the same as others.
By the way pharmaceutical companies also free ride on public universities.
Free ride? You think pharmaceutical companies just come along and pluck the best drugs for free? No, they out-license it from the university and pay royalties.
How else would Northwestern University build a brand new chemistry building from their Lyrica royalties?
Well, it's evidently cheaper for them to get it from a public resource than actually, you know, developing it from their own labs.
So nice for them to be able to pick and choose the successful research while not having to absorb all the other, less interesting research funded with public money.
I don't really get your complaint. The pipeline from basic research to sellable drug generally takes longer than the 20 year patent lifetime. So it's impossible for drug companies to get reimbursed for the entire drug development pipeline. Rather, at a crude level, the process is split in half: first do the basic research (funded by public money), then build on the basic research and demonstrate a viable drug (incentivized by patent-protected drug sales). The value-added by drug companies is substantial regardless of wether you think some other organization could do it better.
Complaining that drug companies are free-riding on public research is like complaining that the local 7-11 is free-riding on the public safety provided by police officers.
Where is your basis for this statement? Pharmaceutical industry profit margins are about 17% which about the highest of any industry. Pharmaceutical companies spend more on advertising than research and development. Looks less like Europe and the rest of the world are free riding and more like the US is being conned.
Sadly most of that money is spent on marketing [1] and most new drugs are just minor tweaks to existing compounds [2], much safer bets than brand new approaches.
First off, no, marketing is not where most of the money is spent. Second, marketing spend has a positive ROI, so they get more money back than they spent.
Lastly, this entire discussion is about a wonder drug that cures a terrible disease and you claim most new drugs are minor tweaks.
Although those two points are interesting and relevant, my statement doesn't conflict with them.
Or are you claiming that Europe isn't meaningfully free-riding simply because new drug development just isn't valuable, and we'd be better off with much less drug research? I think that's a defensible claim, but it's very contentious and should be stated clearly if you believe it.
India can break patents on drugs it considers too expensive. The real danger is if this sort of thing makes drugs unprofitable pharma companies won't spend any money researching drugs to treat uncommon conditions, and the drug will never exist to start with.
We'll get endless varieties of new opioids, blood pressure pills, pecker perkers, and not much else.
I always hear this argument, but never any evidence to back it up. Is it simply regurgitating econ 101? There must be some economic incentive? Any time people die from a disease, that alone creates an incentive for those left living to find a cure.
What econ doesn't teach is that people are not perfectly rational creatures. Just like we will find people who will write code for free, who will make music for free, there will always be people who are searching for cures for the sake of searching for cures.
I don't buy the argument that only Big Pharma who can deliver cures. As the article pointed out, Gilead didn't develop the cure. They bought the company that did.
>There must be some economic incentive? Any time people die from a disease, that alone creates an incentive for those left living to find a cure.
No matter how altruistic you are, as a private company you can't put billions of dollars toward a drug that's going to lose money.
>I don't buy the argument that only Big Pharma who can deliver cures. As the article pointed out, Gilead didn't develop the cure. They bought the company that did.
... which they would not have done without the expectation of a profit.
I don't think anyone is arguing only Big Pharma creates new cures. In fact, most big pharma companies acquire smaller companies for their drugs.
That said, I don't disagree that money is the only motivator. However, good intentions aren't enough to develop a new drug. It takes a hell of a lot of money as well.
If you don't create incentives for private investment, then you need to get that money somewhere else.
I think you should be conflicted for a slightly different reason :-)
Should Americans pay for a disproportionate share of pharma revenue? I for one am so happy for all the medical research that we fund in this country, it is probably the best thing we can possibly do for the world. Of all the American foreign aid and foreign intervention, very little else will compare to the amazing impact of widespread access to Harvoni/Sovaldi in India. That is truly an amazing gift that America is giving to India, and it's made possible exactly by extreme price discrimination.
This is an amazing miracle cure for a deadly disease. My understanding is that it cost a lot of money to develop, and took a lot highly skilled work, and involved a fair measure of risk of total loss. We want wins like this to be rewarded. We want a significant fraction of the dollars this drug earns to ultimately be re-invested in more of this kind of R&D. We definitely want more drugs like Harvoni/Solvaldi coming to market.
So the conflict I have is, when manufacturing is not the bottleneck, you want to get this cure out to people everywhere, but at the same time you can't afford to pay for it all to happen in one year. So you see cases like OP where they won't pay for the treatment until you are showing symptoms. But the cure is so easy, nobody wants to wait for symptoms, and how can you blame them?
Compulsory licensing under TRIPS means that India can allow manufacturing without running afoul of international trade law, though if enough non-Indians started doing this it could cause some headaches due to the "predominantly for domestic use" clause. But in reality there's no way that pharma companies can stop developing countries from manufacturing critical medicines.
It can be solved by extending patents in return for lower prices. Then the government must enforce patents internationally by putting pressure on countries that ignore patents.
Another concern is poor quality from knockoff manufacturers. You can partially solve that by lowering costs because the original product becomes more competitive. You can also try to apply pressure on countries that don't honor patents.
You can complain about the cost, but you can't just make pharma companies sell their products for less because you believe they are too expensive. You need to give them a reason to believe that they can continue to sell a good product and make money off of the research investment they put in. You also need to give them incentive not to make small changes to drugs to renew patents when the original version of the drug might be a better version.
Granted, it is sick when people make an excessive amount of money at the expense of those most in need. But, most of the bad that happens in pharma is due to suboptimal patents and suboptimal patent enforcement.
But stronger patent protection won't improve pricing... competition will. I think we should reduce extension patents to 5 years, and possibly even have compulsory licensing fees ($10 per day, per prescription for the first year, $8 for the second ... 6... 4... down to $2, then $1) for prescription drug patents starting at 5 years. And the penalty for an insufficient patent application for a third party to properly apply within the first 8 years would mean a loss of said patent.
What about drugs that cost more than $10 per day to produce? Hell that's only $3650 per year. How many manufacturing plans can sustain themselves on that sort of revenue, particularly if they are creating a drug for a disease that only affects 1000 patients in the world?
One of the reasons why generic drugs prices jumped so much in the last few years, if because manufacturers said "screw this" and just stopped making the drugs because the margins were so low.
The $10/day was for the licensing to the patent holder, not a cap on the cost of the drug to the consumer. This is about reducing patent protections on drugs to 5 years after market, and compulsory license caps after that, in order to encourage competition, not a price cap over production costs in a free market.
Curious about the last part. How does that work? If they make small changes and get patents based on the new formula, won't other companies be allowed to use the original formula?
I'm guessing somehow both formulae are covered by the renewed patent, but that is wrong on so many levels.
"and the pharma company actually felt a significant drain in revenue, they may decide not to license the manufacture of these drugs in India at lower prices"
But thats the thing. There will be no drain in revenue as they make money in the US by selling for $84K while they make money from the sales in India as well due to licensing agreement (albeit a bit less revenue).
Overall, still a pretty good deal for these pharma companies if you ask me otherwise why would they even do such a deal with India ?
Well, my point was that if everyone decided to source it through India, they will no longer sell anything for $84k. Even if 10% of people did that, their profits will slip enough for them to notice and take action.
Lots of research in the US is university and government lab-based. Even if private sector drug development were cut back, it would not end useful drug development. I suspect the way government and university research is monetized could be improved so that more competition would exist.
Let's say we shut down Silicon Valley and had the government do computer research. You think that would be efficient and effective?
At the end of the day, you need to give smart people a reason to make their lives' work saving lives instead of selling financial products or advertising algorithms. That's not going to happen if going into drug development means topping out at GS-15 in a government lab.
Let's say we stopped exclusive licensing for government funded research. Then, when commercialized, drugs would be available from multiple competing sources. Or the IP could be set free, for generics manufacturers to pick up.
Maximizing rent-seeking doesn't seem like the wisest course of action.
How funny that you mention that, given that the Internet, the very backbone upon so much of the economy moves around, started and developmed mostly as... a military project. Supported by universities and public research.
Sure they did, because corporations are much better at iterative product improvements than at radical, high-risk research projects with no short-term returns. So?
What exactly is "gouging?" The average wedding in the U.S. is almost $30,000. Average new car price is $33,000. Is $84,000 one-time an unreasonable price for a complete cure to a chronic disease?
That's a strawman argument and you know it. A car is financed over 5 years. You can't get financing on pharmaceuticals. The "average" wedding is an equally bad comparison and your figure is wrong - average is actully 26K with majority of weddings under $10k:
It is absolutely reprehensible behavior. If $1,500 is a reasonable price point and profit margin for a company elsewhere in the world then $84K in another part is simply outrageous.
> A car is financed over 5 years. You can't get financing on pharmaceuticals.
As a matter of economics, the value of something doesn't (or shouldn't) depend on how easy it is to get financing for that thing. In fact, your financing example cuts the other way. That $33k new car is actually worth more like $40k to the buyer, because that's how much they pay after financing it. The market shows that people value an average new car at > $40k. So how is it unreasonable to say that the value of a Hep-C cure is at least $84k?
> It is absolutely reprehensible behavior.
Gilead is saving lives. Apple is making money hand over first selling shiny trinkets that nobody really needs. Which is the reprehensible one? What you're basically saying is that a company should make less money for creating products that fundamentally help humanity. That's crazy!
People should be able to get these drugs, even if they can't afford it. That's the difference between iPhones and Sovaldi. But it's the government's job to make that happen--the companies shouldn't be forced to basically be private charities.
Or Gilead is exploiting dying people desperate to save their lives and have enough money to do so, while letting the rest die. And then I'm sure they are lobbying the government to make sure it won't do anything about it.
Meanwhile, Apple is selling luxury products that people can buy if they would like to. And those that can't, survive just fine without one.
So the company that is saving some lives is more reprehensible than the one that is saving no lives? Companies that create life-saving things should be charities, while companies that create things everyone can "survive just fine without" should be richly rewarded. Right? That doesn't seem backwards to you?
It's not like Sovaldi grows on trees, free for the picking, and Gilead came along and fenced-in the trees and now is charging $84,000 for access. It created a cure to what used to be a terminal disease. It should be rewarded in proportion to the value of curing the disease.
Yes, the company that actively prevents people from obtaining life-saving medicine for billions extra in profit is more reprehensible than the company that makes no pretenses about having anything to do with life and death.
Creating the cure was admirable, what it has done with it is reprehensible. It certainly has the right to make a significant profit. But a monopoly on medicine paid for by dying people with no other options does not accurately establish the value of curing the disease.
> Yes, the company that actively prevents people from obtaining life-saving medicine for billions extra in profit is more reprehensible than the company that makes no pretenses about having anything to do with life and death.
So the moral impact of a company's actions depends not on the net good done by that company, but on the "pretenses" it does or does not put on? It's morally better to waste natural resources on frivolities like new iPhones every year, instead of saving some lives (but not all)?
And if it's morally reprehensible to not save a life when you have the power to do so, aren't all of Apple's customers morally reprehensible for buying iPhones? That money could literally save the life of someone in the world that lacks basic necessities.
> And if it's morally reprehensible to not save a life when you have the power to do so, aren't all of Apple's customers morally reprehensible for buying iPhones? That money could literally save the life of someone in the world that lacks basic necessities.
No, the decision to make billions extra in profits on top of the billions they would already be making at the cost of millions of lives is still definitely more reprehensible than someone spending a few hundred dollars more than they otherwise would on an essential device that provides information, communication and entertainment instead of giving it to someone less fortunate.
Apple made $18 billion in profits last quarter. For half of that, they could have saved 2.7 million people from dying of malaria. In one quarter alone.[1] Apple's customers spent about $45 billion on iPhones last quarter. If they had gotten Android phones for half the price (which still provide essential information and communications), they could have saved 5 million children by investing in children's health programs.[2]
If it's reprehensible to have the means to save a life and not do so, then Apple and its customers are reprehensible. This is the natural consequence of your reasoning. The only distinction you can make between Gilead and Apple is that Gilead invented the means of saving lives, while Apple would have to pay someone else to do so. But how on earth does that count against Gilead? Why is Gilead evil for making profits when they could save lives by giving away Sovaldi, when Apple could just as easily save lives by buying Sovaldi for those who need it?
I think we'll have to agree to disagree here. Your argument is totally valid economically, but I'm arguing the morality of it. I certainly don't think all companies and consumers should be providing every surplus dollar to helping others.
If this were a free market system where competition has resulted in $84k being the price at which it makes sense to produce then so be it. Instead, the company can lobby to make sure the government, who we both agree should be involved here for the public good, never gets involved and buy out any company that challenges its monopoly. Then, it can take advantage of global markets for additional profits, while the people who are actually dying can't and have two options - death or debt.
You may or may not have noticed that extreme poverty and hardship doesn't lead to less offspring, in fact the opposite occurs. Look at birth rates between wealthy and poor countries or groups.
Huh? Who said anything about "value"? You are the one who mentioned car pricing not me. My point is that cars are peoples single largest purchases outside of home ownership and for most people the only reason that is even viable is because a source of financing exists.
Why are you dragging iphones and Apple into this? You are way off point.
"the companies shouldn't be forced to basically be private charities." Wow, I don't anybody has ever compared a big pharma company to a private charity before. I had to reread that sentence twice.
How about Martin Shkreli the CEO of Turing Pharmaceuticals who overnight raised the price of an AIDS drug from $13.50 to $750.00 a pill overnight? Is that OK? He shouldn't in your words "be forced to basically be private charity" right?
>As a matter of economics, the value of something doesn't (or shouldn't) depend on how easy it is to get financing for that thing.
When interest on mortgages shrinks the house prices will become inflated. In fact it's smarter to buy a house durng a time of high interest at 400k and later refinance with a lower interest rate than to buy the same house for 800k at a low interest rate without posibility of even cheaper refinancing.
Surely the right to the drug was only worth $11B in the first place because of $84k possibilities at the other end? If it was only ever going to be $1500, that $11B would have been adjusted accordingly.
Yes, for the affluent those are what you typically spend. You clearly have never been seriously ill with a chronic condition. I have to take a drug every six weeks (remicade) that costs $17,000 each time for the rest of my life. I'm 23. Let that sink in. This is the state of affairs in the US. It's horrid, I didn't ask for Crohn's disease, but I'm being punished for it.
I have Cystic Fibrosis. Orkambi is the closest we've been to a cure (treating it at cellular level). Retail: $260,000 a year. However, I pay $15/month. (insurance + manufacturer subsidy). Many of my other medicines (which would cost another $100k+) are similar. I picked one of the better insurance packages (about $375/mo); I pay another $100-200 a month in copays to get $400k or more in medicine.
I'm also in the US. Why is my experience so much different than yours?
I'm sorry you have to take remicade for the rest of your life, but remicade won't cost $17k each time for the rest of your life. Generic versions of remicade are already available in Europe, and will be available in the US not later than Sep 2018 (when the patent expires, but in fact a biosimilar has already been approved by the FDA and could be launched "at risk" at any time).
On the other hand, it's likely that better treatments for your condition are developed in the future and at that point you will complain about how expensive those new drugs are.
must me nice in your bubble that $84,000 as a one time payment is reasonable. normal people can't get a loan for something like this, and obviously don't have cash stored away for something like this, and like the article mentioned, the op won't get covered by insurance even though he's done his part and paid insurance premiums. he clearly had no other options. glad you drive a $33k car. seems like the op doesn't.
Don't misinterpret my point: I think the government should absolutely pay for necessary medical treatment like this.
But, it's important not to confuse what are actually two different inquiries: what is the fair price for a Hep-C cure, and how do we make sure those who need get it. The first is a purely economic question, not a moral one. Otherwise you create a perverse incentive structure: people make lots of money creating things people don't need (a new iPhone model every year), while people make much less money creating things people do need (breakthrough cures).
Medicine in the US is wwaaaaaaaaaaay overpriced. Things that are critical for life needs to be priced at a reasonable flat rate above costs, and conducted with the attitude of public service and human actualization. Let big pharma reap their R&D costs some other way
> Let big pharma reap their R&D costs some other way
How?! You think they should create a social network for doctors? A billion dollars in ad sales is somehow morally better than a billion dollars from saving lives? They're making their money by saving lives, and being criticized for it. You're effectively saying that they shouldn't do any R&D, like the Indian generic drug companies.
Sorry for the exclamation points. I think that you have a particular system of morality, that is more important than saving lives. To me this is like arguing for abstinence-only sex education, which demonstrably does not work. I wish in general people would be more willing to look at data and outcomes.
I don't have a problem with your ideas. I think the vast majority of drug development costs are being borne by industry right now. So when you say "massive step up in grant funding," that might have to be something like a 100x funding increase. And the NIH budget has been flat (when adjusted for inflation) since 2002 [1], so there doesn't seem to be much political will for your suggestions. (And that's bad! Even if you could get your suggestions passed, long-term stagnant government funding for R&D would stall drug development.)
I think your ideas should be implemented first in another country, such as India or somewhere in Europe, so that we can see how well they work before throwing away the baby in the bathwater. Personally, I would prefer more gradual changes here in the US. For example, the cost of running drug trials has been increasing. Big pharma companies like this; going through the drug trial obstacle course is their specialty, and the huge barrier means that small drug companies that do the pre-trial drug research have to go through the big companies to get to market. Reducing these costs would lead to more competition.
Minor correction: the total bill for a liver transplant is more like $700-800K, medical alone (not including personal costs such as loss of productivity or wages).
And more importantly, much like student loans, even if OP was able to get a loan, it prevents him/her from taking other loans - say, for that car.
Economically crushing people (and removing them from normal economic activity by way of crushing debt) hurts the entire economy except for the pharma industry.
The median lifetime earnings in the US is $1.7 million or so [1]. $84 thousand is 5% of that. 5% of all the money you will ever make is a lot, considering that most of that money is already accounted for by college tuition, housing, and transportation. Also consider that this is a lump sum, that you weren't planning for it, and that this may happen in the middle of your life when you've only made a fraction of all the money you will ever make.
I think you need to factor in that it's not the individual personally paying 5% of their earnings, the personal cost is simply one year of your insurance out-of-pocket max. Anyone and everyone should be ready, willing, and able to pay for one year of whatever their out-of-pocket maximum is in order to access a miracle cure for a terminal illness.
The better question is what are insurance companies actually paying and how much should they have to pay? And then we get to the actual reason the drug is priced so high... it's because it is actually less expensive per cured human than all the alternatives. At $84k, this drug is actually saving insurance companies money per-cure.
The problem is that the cure is so damn good that everyone wants it right away, where-as the previous choices sucked badly so only a small percentage of the inflicted even went for it. Exactly how the OP describes, the cure is so good and so free of side-effects, patients want it even before they are showing symptoms of the disease! Of course the insurance companies can't afford to cure the planet of HepC all in one year -- there has to be a way to spread the (lower) cost over time.
Choose not to share ? A lot of times it is difficult to tell and if you have dishonest nurses like the one below [0], what do you then ? Victim blaming is easy but people can get infected not due to their own fault.
The #1 killer in the US is heart disease, but insurance companies cover those medicines quite readily, despite the fact that one can choose not to eat fast food or smoke.
There are many other ways to get hepatitis C. For instance, it is not an unknown phenomenon that drug addicts use needles as a weapon. Errors in healthcare, e.g. needles or blood transfusions.
You're essentially saying it's ok to price out large segments of the population for life-saving medication. This is life or death, not a new Audi versus a used Hyundai. There is an ethical consideration that your analogues ignore.
At some point, the price of a thing is related to the resources a person can bear on a task. People are priced out of better lives all the time - cars, jobs, where they live, what they eat. Its the way society works. To make medicine a special case, with the govt providing infinitely deep pockets, is irrational. Inconsistent with how we run everything else anyway.
Yes I believe studying, working, getting ahead ought to give me and my family a better life. Else what's the point? Its not just a game with points; its survival. Its supposed to work that way. If money doesn't buy the most important things, then we need some new system of exchange that does buy important things.
Look everybody knows it's economics that drives this. That's not the point. We have mechanisms in place that can isolate certain aspects of life and remove them from the capitalist machine.
On a grand scale it's socialized medicine but even on a smaller scale it's health insurance. And it's why hospitals don't kick out a dying person just because they're destitute. What we're talking about isn't "why does medicine X cost $Y?" Most people understand that.
And that's why it's unfair to compare life-saving medication to buying a luxury vehicle.
And insurance isn't ever going to level the playing field completely. Some things are just too expensive. It was asked Why? I know its not a free market. And there's a difference between luxuries and life-saving procedures/medicines. But some things cost a lot, and some folks will be able to afford them and some not. And that's not a mistake or a problem with the system.
Most of the criticism against drug companies is that while they invest x for R&D and actual manufacturing, they earn back at least 100*x in profits. I don't think there are many other industries that allow this to happen.
I'm not entirely familiar with what makes pharma patents that much different from software (you don't really have a monopoly even if you own a software patent), but that's basically what's happening.
Once a company gets a patent, free market rules no longer apply, and they are free to price their drugs as they want.
> while they invest x for R&D and actual manufacturing, they earn back at least 100*x in profits.
If that is true, VC's money will be flooding over pharmaceuticals instead of Silicon valley. This "100x" number probably fails to account for the vast number of failed trials that is all cost and no profit.
Typically quoted values are (in the current market), approx. $2-3B per product brought to market.
Drug development is incredibly difficult -- for very good reasons. The FDA has to be risk-averse in order to protect the health of the public and to prevent harm to be done.
More cynically, the FDA has to be risk-averse because people get much more upset over "this person died because the FDA approved a bad drug" than over "this person died because the FDA didn't approve the drug that would have saved her".
But isn't it worth two or three years of income to save your life? It seems absolutely worth it to me, frankly a much better value than almost anything I spend money on (I mean, Netflix?).
"Average" is just that. There are many car options cheaper than the average, and many wedding options cheaper than the average. There are no other cheaper options for this drug except what the OP did.
Agreed, it makes sense. And people buying it from India is like going to Vegas to get married in a drive-through chapel or going to the judge. Free market doing its thing it seems.
Two of these are things where you have cheaper alternatives, and also the option to not do them at all. The third is something where you must buy this specific thing, or you die. That third thing costs substantially more than most U.S. households make in a year.
I guess the moral issue is that we have medical insurance, we don't have wedding insurance and car purchase insurance. I guess you could argue that the author did have insurance and brought the price down to $6,000... after his liver was diseased.
Eminent domain is not just for land. In extreme cases like this where a profit motive is the only thing keeping us from curing huge numbers of people, the US government should write a single check, take the rights, and start handing out pills.
As far as the company is concerned, that could even be a preferable outcome. Cash now and the marketing benefits to promote its other drugs.
Let's walk through this. Drug develop is mostly funded with private money. Yes, the NIH funds basic research that often support drug research, but private companies fund most of the bill. It's in the hundreds of billions each year.
Now why would they do that? Well, they expect that they'll give a company $500M and it will turn into $2B or $3B. However, most of those companies will fail and the $500M will turn into $0.
So that would mean that the returns on the drugs that are successful need to be really high. What if they weren't? Well, all that private money would dry up pretty dam quickly.
Look at the money going into cancer research. It's a huge amount every year. It's not just because cancer is a terrible disease and affects everyone, it's because the returns on cancer therapy are high.
You could just tell private companies, "stuff it, you don't get to make money" and try and have the gov't do it on their own. Of course you'd need to increase the NIH budget by what? 10x?
Our current system isn't perfect, but it does a dam good job aligning the incentives of people with money and people who need new drugs.
As someone who works at a university and does work for drug trials, I don't agree that they are fully privately funded. They use university staff much of the time, and those staff are not paid market rate. They get equipment hire at academic rates rather than commercial rates too. Just thought I'd add my 2c.
I agree, violently. Protecting the researching company's incentives is hugely important. Otherwise we're getting the current crop of drugs at the expense of future drugs.
Eminent domain requires "just compensation" that courts interpret as fair market value. Since the company that created the drug was recently acquired there's a really easy number to put on it.
I think the government should put a value on every life (or quality adjusted life year, whatever), and offer to pay that much for any drug that saves lives.
From that perspective, $84k per life saved doesn't sound that unreasonable, and creates a huge incentive to develop similar drugs in the future.
But I don't think valuing every life at $84k would be sustainable. And why should the drug company itself get to determine the price, with no upper bound?
Sure. But if they demanded a trillion dollars per pill, the government shouldn't have to pay for it. It would bankrupt the country. They shouldn't be able to set a price and force the government to pay it.
The only reason we have this crazy system is because people refuse to put an economic value on life.
Then nobody would buy it and they would lose their investment.
> force the government to pay it
They can't force the government to do anything. Of course, the government can just take the pills from them, but if they did that, then no more cures would be developed.
> people refuse to put an economic value on life
People do all the time. Every time you (and everyone else) make a decision of risk vs cost vs utility, you do. For example, some cars are safer than others. How does that influence what you'll pay for a car?
You missed the part where insurance companies and government programs are obligated to pay for treatment regardless of costs. A limit needs to be put on this. E.g. spending a million dollars on a treatment that is only decreases the risk of death by 5% puts a $20 mil value on life, which is too high. I don't know what the number should be, but it's something we need to decide.
>Of course, the government can just take the pills from them, but if they did that, then no more cures would be developed.
There seems to be a common misunderstanding of how eminent domain works. The Constitution requires "just compensation", which the courts interpret as fair market value.
The investors and the courts may have very different notions of the fair market value. If it's much less than the investors expect, expect no more cures. Consider that the whole point of the government taking it is the idea that the fair market price is too high.
Also, there are many, many ways the government can take things without just compensation. For example, civil asset forfeiture. They could get the patent declared invalid. Laws and regulations are very complex, there are a lot of levers the government can pull.
Price controls have a very long history of unintended negative consequences. Keep in mind that the cure was developed with the expectation of high profits, and with no cure all the lives at stake would have died.
Suppose a cure for Alzheimer's never happens because price controls were put on the Hep C cure? Are you willing to risk it?
The price will come down after the patent expires. People are better off with a high priced cure than no cure.
Scientists are not profit motivated. Scientists don't work to produce more drugs faster just because the CEO is managing better. This is definitely something that can be funded by the public and should be funded completely by the public on a not-for-profit basis. Then we can no longer make these sort of ridiculous economic arguments.
Then why not make any scientist who discovers any very important drug or therapy into a billionaire. If they are motivated the same way corporations are, then that should super motivate them produce more drugs faster. In fact why don't universities work the same way?
Which drugs are produced by startups? As far as I know most drugs are produced by massive incumbents. The cost and the regulation is too much to do anything else. And as far as I know those incumbents are not turning their researchers that research those drugs into millionaires or billionaires.
I would wager that most drugs are discovered by startups. Pharma has a very well established "farm team" system where venture-backed companies do the compound discovery and complete Phase I and perhaps Phase II trials, then get bought by one of the major players, for exactly the reason you mention -- nobody wants to rebuild the infrastructure to manufacture and sell pharmaceuticals.
However, the founders of those startups are rewarded handsomely for their effort, assuming they are successful.
Scientists may or may not be profit motivated. But you can sure afford a lot more scientists to work on a problem, and give them much nicer labs, and pay for expensive animal and human trials, insurance, etc.
> In extreme cases like this where a profit motive is the only thing keeping us from curing huge numbers of people, the US government should write a single check, take the rights, and start handing out pills.
Yeah, but, as your own link notes, courts (and the constitution) require fair market value for compensation. This doesn't save you any money at all; eminent domain can only have an impact when someone is refusing to sell at the market price. But Gilead is very very happy to sell at the market price. The issue is people upset at what that market price is.
If the US government could come up with the fair market value of the exclusive rights to manufacture Harvoni and Sovaldi, the problem wouldn't exist, because the same amount of money could also just buy all the doses of Harvoni and Sovaldi on the open market.
> As far as the company is concerned, that could even be a preferable outcome. Cash now and the marketing benefits to promote its other drugs.
Oh sure, they'd love for the US government to buy a million doses at $84k each and start handing them out. I don't think that solves any problems though.
Edit: Wait, or is your comment actually just an argument for single payer healthcare, and I'm just being obtuse? If so, my apologies for missing the joke, and I think you're right: The most obvious role for the government is funding universal catastrophic care, and I think this should be a part of that.
Yes, it amounts to single payer healthcare for drugs.
It's different from the government buying individual doses on the market because the current price is set to achieve the fair market value of the drug by treating a small subset of infected patients. Manufacturing costs are so small in comparison, we could treat everyone for nearly the same price.
We could do that. On other hand, we could just pay them the expected market value of the drug when they first invent it then give it to public for almost nothing.
"You can cure cancer with those three drugs? Was going to make tens of billions? Here you go: guarantee of tens of billions of subsidies over next 20 years in exchange for the patent and license for anyone to produce it generically."
Boom! Tens of thousands of lives saved a year. Way better than investing into the TSA. :)
When you say "we pay the market value" and "give to the public for almost nothing", "we" and "the public" are the same group and therefore it makes no sense to make the distinction.
Unless by "we" you mean "the wealthy" and "the public" you mean "the poor", in which case the increased tax that has to be set up for that will just be reverted into the cost of the service/good provided by the wealthy, the wages of their employers, or turn into capital flight, and so forth. In short, you're basically taking money from other areas of people's lives and making them put it into health care. Which could be achieved by themselves by saving, if that's what they wanted to do.
I live in the U.S. if I didn't mention it. Here, we differentiate between the rights of the public as a whole and private individuals. Businesses and I.P. tend to be a form of private property. So, "we" the public can't take what "we" consider private. That's a contradiction.
In this specific case, it's the public paying money to private parties for their property to move into public hands. Then, that public property is manufactured to be distributed to the many, private parties in need that constitute the general public.
The pharmaceutical industry is disgusting me.
Their goal is no more to cure people but to generate that maximum amount of cash for shareholders.
To chose a price point, they don't look at what research has cost, but what people, government aid and insurance are willing to pay for it and choose chose a price that max out the benefit. In developed country it becomes ridiculous.
As a note, when they have to make risky research they put the risk into a spin-off company with investors that share the risk, and this is how you end up with Gilead buying this probably co-founded research company.
OK, let me be a devil's advocate for a minute, before we get the pitchforks once again. Let's remember this:
> Gilead Science was first out the gate, bringing the new hep C drugs Harvoni and Sovaldi to market in 2014 and 2015, respectively. And they worked great: More than 90 percent of patients taking the new drugs saw the hep C virus wiped out in three months, and without the side effects that made interferon treatments so intolerable.
So, Gilead is exactly the company that created these drugs from the very beginning. I'm looking at it this way: in 2013 (situation A), there was no cure ("cure" is a simplification, of course, but for this kind of analysis it's not an important detail.). In 2016 (situation B), there is a cure, but it costs $86k.
Now, the moral question here is very simple: when you change the world (as Gilead did) from situation A to situation B, is it net good or net evil deed? In which world of these two would you prefer to live?
Yes, way to go! There are honest online pharmacies, but finding them is nontrivial. And there are numerous competent generics manufacturers in India. They've captured a large share of the global generics market in recent years.
>Last year, Gilead entered into an agreement with India that would allow Indian pharmaceutical manufacturers to produce generic versions of Harvoni and Sovaldi and sell them in 101 developing countries at "a significantly reduced flat price."
>If you buy Hepcinat from India, Gilead still makes a profit as part of its licensing arrangement, but it doesn't make the unholy profits the U.S. government allows it to get away with.
If for some reason, a poor person needed to pirate software that they couldn't afford in order to save their life, that would be ethical too. But this isn't even comparable, this is more like buying the very same software from an overseas licensed vendor who sells it cheaper.
Surprised no-one has pointed to the real culprit here: the patent system, which allows individual companies to own knowledge like this and sell it at any rate it desires... private taxation by and for the rich, on the rest of society.
There is obviously something unbalanced in the pharma business, and I think it is one of the corner cases where unbridled capitalism fails - perhaps because it is a need, not a want, so it is not discretionary spending.
My instinct is that pharma development should be carried out by universities (the state), so it's benefits can be shared with all citizens.
You can't have "real competition" in the drug industry. While the status of patents is debatable in software (where actual copying is rare), the generics manufacturers are always directly copying from the drug inventors. They don't have the capability to do their own R&D, or often even to develop a lot of the ancillary protocols themselves.
So you either have a regulated market, or massive free-riding, neither of which is "real competition."
You can't have perfect competition in the drug industry, but you can get close. Gilead dropped the price of Sovaldi/Harvoni by almost 30% when Abbvie launched their HCV therapy.
In fact, one of the best way to introduce competition is through "me-too" drugs. You know, the ones everyone complains about.
How much time does it take to analyze the original and copy it, set up for mass production, advertise, etc? Then, how much time until demand shifts from the original to the generic in each market (India, US, etc)?
According to the OP the company was making "billions every quarter" on sales in the US. Considering the research often costs "billions", they should make a profit in the first quarter by selling in multiple markets if it takes around a month until the demand shifts to the generic.
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I really think this article is spot on taking on an issue that I believe will become more and more pressing over time as baby boomers continue to retire.
However, this line felt of out of place:
- "And then there's Gilead. It didn't even develop Harvoni itself; it made a business decision to pay $11 billion to buy the company that did so it could be first to market and reap the rewards, $26 billion worth. There is something obscene about that. A billion-dollar profit would have been a very respectable return on investment, but Gilead is getting much, much more than that"
I mean, why is that obscene? We have seen crazier returns in [insert latest "stupid" app that made billions]. These drugs are difficult to manufacture AND to market. I am sure that if the return would have certain, then the seller would not have sold the company for that amount and would instead reaped the presumed returns.
I think pharma is entitled to big returns because their business is really risky.
I don't know where the answer is. Maybe it is government-driven pharma (yeah like the federal government is ever going to be good at anything), or a SpaceX for Pharma.
Note that a billion dollar profit would be a 3.8% return over the life of the drug (~10 years or whatever is left on the patent). You could literally get better returns with far less risk parking that money in Treasuries.
You're doing the math wrong. The suggestion is not a billion dollar profit on 26 billion dollars of costs. Most of the 26 billion dollars is profit. Chopping the cost tremendously would still leave a healthy profit margin.
As to risk, they bought an already-proven drug. That's not the sort of thing that earns massive returns.
I did do that math wrong, but to be fair, the article is comparing apples and kumquats. $26 billion is how much Gilead has in cash, which has little to do with Sovaldi at this point. $1 billion profit (let's say that's annual, rather than over the life of the drug) on an $11 billion purchase would be less than 10% annual ROI. That's very low for what was still a very risky investment (unapproved drug).
I think in the author's ideal world, the lowered profit for Gilead would mean they aren't rushing to provide Sovaldi a multi-billion dollar profit either. So the price drops well below $11 billion, and you get a solid profit margin without gouging people that need the drug.
I was under the impression most Pharma Companies will give it to you for free if you don't have insurance and can't afford it. Maybe it's different if you have insurance and they won't pay for it.
The article is unfair mentioning Shkreli. He has always offered his drugs for free to anyone that couldn't afford them. It has always been his policy and continues to be so.
I think it was the Insurers and their paid for Politicians that created the stink. To this day I still haven't heard of one person that had to pay the $750.00 a pill but just their co-pay and if they had no insurance they got it for free.
Surprised this drug isn't available for free for those without insurance or is it?
A quick Google search shows that they paid $11 billion for the company that sells the drug(Sovaldi), and earned $1.3 billion off of it[1] in 2016. They make half of that in the US, and something like 10% of it in all places that aren't the US, Europe, or Japan.
That's a 12% return in 2016, which isn't nearly as good as the comments in this thread would have you believe. It's an okay return, but it wouldn't really be a good investment unless they can grow those sales more. It looks like they have had some growth compared to last year, so maybe it will end up working out for them. It's certainly not "100x in profits".
A Google search shows the disease is ultimately hard-to-transmit and preventable[2]. $84,000 seems like a fair price to me for this particular case. Google says the total cost of raising a child is "$245,340", so paying a 30% premium in rare cases doesn't seem unreasonable.
A separate complaint is that the financial industry isn't covering this case well. If you expected your insurance to cover it and they don't, that is an entirely separate issue than the price of the drug. Even if they don't, it seems like there should be a market for people wanting loans to pay for cures: It seems really hard to underwrite such a loan, but it could probably be done.
What does good insurance from a reputable insurance provider that reliably pays out their claims in cases like these cost?
(Edit) I may have misread the earnings report, thinking it was for the previous year rather than the previous quarter. So the percentage is closer to 50%, and a commenter clarified that they also had another product.
[2] Going down the list on one site that lists transmission methods: Don't have sex with weirdos carrying diseases; don't share needles with druggies; go to a licensed upscale commercial tattoo parlor instead of some shady cheap one
> A quick Google search shows that they paid $11 billion for the company that sells the drug(Sovaldi), and earned $1.3 billion off of it[1] in 2016
Well, we are only 1 quarter into 2016, and you are only looking at Sovaldi (when sofosbuvir is also a component of Harvoni)?
Q1 2016 is:
- $1.3B in sales of Sovaldi
- $3.0B in sales of Harvoni
So, that's $4.3B in sales in Q1, a poor man's approximation of multiplying by 4 is $17.2B in sales for 2016 at a gross margin of 87.2%. The profit on drugs that include sofosbuvir as a component in 2016 will probably be over the $11B purchase price.
That starts to get into the realm of being unambiguously unfair. At the very least, they probably should've paid more money for it so that the people who developed the drug could've gotten their share.
Maybe it was just a risky purchase that turned out unexpectedly successful. I've never evaluated a $10+ billion deal, but I imagine I'd be scared of it falling through if I asked for too much.
Or... $11B was a terrible price to pay, and their desire to recoup their shitty investment still shouldn't be allowed to bankrupt people who just want to live.
It's also incredibly obtuse to call $84k a "30% premium" on raising a child. There are so many people who don't (because they can't) spend close to $245k, more that can barely pull it off, and even more that shouldn't have pharma rates kept artificially inflated on their backs.
> It's also incredibly obtuse to call $84k a "30% premium" on raising a child. There are so many people who don't (because they can't) spend close to $245k[.]
Lots of people can't afford gas at $4/gallon, and need to buy gas to get to work. But does that mean the fair price for gas is $2 or $1? Does that mean it's reprehensible to impose a carbon tax that would make gas even more unaffordable for poor people? And when oil was $4/gallon, oil companies were making money hand-over-first. Should we have forced those companies to sell oil at $2 instead?
The answer to these questions is, of course, "no." Making oil artificially cheap would badly distort peoples' incentives, undermine economic efficiency, and harm the environment. Making sure that poor people can still get around is of course an important concern, but one we can solve through the appropriate welfare systems.
> and their desire to recoup their shitty investment still shouldn't be allowed to bankrupt people who just want to live.
The natural response to that is, "Well, okay then - we won't be investing in lifesaving medication development because we'll have to deal with constant cries of 'You're bankrupting people who just want to live!'" We already see this with antibiotics.
Now, boner pills, on the other hand - that's a smart investment. No one will complain if people can't afford boner pills.
Ultimately if we want companies to do research but not be able to charge prices, then the government should be involved. It's like the case with Turing pharma. Everyone's upset at him for buying a (very old) drug for a very rare condition and raising the prices. Yet... why was he able to buy the drug in the first place? Look there, don't blame the person that found a golden penny.
Ignoring any other aspect of your comment, I would highly suggest you to do a bit more research on Hepatitis C before suggesting it only concerns "druggies" and those who "have sex with weirdos carrying diseases." In fact, a large portion of those currently impacted (and especially those who would now be in an acute condition where this drug would most likely be literally life-saving) contracted the disease through hospital blood transfusions before 1992 [1] when there was not a proper diagnostic test [2]. As such, it is a condition that very much cuts across the population and income levels.
[1] "Before 1992, when widespread screening of the blood supply began in the United States, Hepatitis C was also commonly spread through blood transfusions and organ transplants." - http://www.cdc.gov/hepatitis/hcv/cfaq.htm
That does seem like a public health concern. Normally you'd recover damages from a class action lawsuit or similar, but it sounds like it was common practice at the time so nobody was acting negligent. That's just a sad state of affairs.
Gilead - or maybe even Congress/local states in cooperation with Gilead - could get a lot of goodwill by offering the cure for free in a one-time deal to people who:
* Developed Hepatitis C before 1992.
* Had a blood transfusion that likely contributed to the illness
* Can't afford to pay for the cure otherwise. To start with, let's say that you make less than $60k/year to qualify.
* Don't have insurance that would cover it
It seems about as justifiable as when the government steps in to help after a natural disaster.
Gilead was doing that.[1] Hell, most drug companies give free drug for patients who are either uninsured or under-insured (their insurer won't pay for it).
* The article is about someone underinsured who went to India. Why couldn't he get free drugs from Gilead instead of needing to jump through some hoops in India?
* Wouldn't insurance companies just decline to pay for every expensive treatment? Probably customers won't want to go through prolonged legal battles fighting them for $84000 if they can get the treatment for free.
Then again, $1.3 billion in a quarter is only something like 15,500 full-price treatments. The CDC site[1] says there are 3.5 million sufferers. Maybe they expect most people not to pay, so millionaires and some insured will pay.
Absolutely. Possibly millions of people were exposed to HCV through the blood supply before 1992, and many still don't know they were infected. Since HCV may take 20-30 years to show symptoms, it is a potential public health time bomb. We luckily have a tool to defuse it.
For example, essentially every hemophiliac was infected with HCV due to dependence on clotting factor, many also with an HIV co-infection. 80% develop chronic liver disease.
Those populations aside, "youthful indiscretions" or even chronic addiction are not reasons for (potential) death sentences due to lack of effective treatment.
Even more interesting, the California Technology Assessment Forum (CTAF), which reviews the cost effectiveness of new technology, said the $95K price tag for Harvoni was cost effective.[1]
However, they also said that current budgets mean it would only be affordable at half the price.
Interesting that you mention that. Shortly after Gilead launched Harvoni, Abbvie (Abbott's spun out drug unit), launched their HCV drug (Viekira Pak).
Abbvie decided to compete on price and immediately locked in a couple very large insurance companies. Basically, they offered a discount and the insurance company/PBM (Express Scripts) agreed to lock out the Gilead drugs.
This caused Gilead to have a bit of a fit, so they offered a competitive discount and locked in the remaining insurers.
If you look at Gilead's financial statements, you'll see that the average discount went from somewhere around 20% (including mandatory gov't discounts), down to 46%. That means the average price for Harvoni dropped from $75K down to $50K. Almost half of list price.[1]
Interestingly, the average price in the US is now lower than the high end of EU prices.
And people say there is no competition in patented drugs!
I'd say that a 20% ROI on the price of the development of the drug sounds reasonable. But the 11B was NOT the price of development; that would have been much lower. Assuming it was 1B (typical number thrown about), then a profit of 200M per year seems reasonable. Cost of manufacture of most drugs is negligible. Assuming they sell 100M pills/year, charging $10/pill (of $840/dose) seems quite fair.
I think you're just replying to the parent's curiosity, but the talk about fairness seems to hint at wanting the government to regulate how much profit private citizens are allowed to have. That to me seems scarier than anything they've done.
We are talking 20% ROI, year after year, for the duration of the patent (17 years). That's a 22x ROI. Most SV investors would drool themselves into a pool at the thought.
Sovaldi is a unicorn. Returns for VC firms who were early investors in Facebook were 200-100x. Sequoia and Kleiner-Perkins got 160x on Google's IPO. Sequoia's return on Linked-In was almost 30x.
I don't judge the price of the drug in isolation to be fair or unfair. A drug that costs $10 million could be fair in certain cases(if 1000 people had the disease, and it cost $1 billion to develop, then $10 million would be a bargain).
If their earnings within 2-3 years exceeded double what they paid for the drug, I consider this unfair pricing without much further thought. (Edit) After the correction from the other commenter, it looks closer to an 87% margin. So probably they should've paid more for the company to justify charging that much.
> took the pills for 83 days (saving one for possible testing just in case)
I would try to arrange testing before starting therapy, or at least at the point of starting therapy. There are labs that will run the test for a few hundred dollars (and a lot less if you know someone at a university, it could even be an analytical chemists' bachelor degree project).
I guess you could reason they are safe to take regardless. If they are counterfeit, they would likely make them out of sugar or flour not harmful chemicals. It wouldn't be in the best interest of the counterfeiters to make pills that harm or kill the buyer.
I wouldn't bet my life on that. In fact, counterfeit drugs are estimated to kill hundreds of thousands of people a year, in many cases directly, not because they don't provide the necessary treatment. See http://www.cnn.com/2012/07/17/health/living-well/falsified-m...
>Fakes contained chalk, talcum powder, road paint and occasionally dangerous heavy metals, instead of the expensive, hard-to-make medicine.
Not sure if there is one in the USA, however in India the law does impose a maximum price for critical and life saving drugs (hypertension, heart related, diabetes etc.). There is ongoing process for adding some cancer drugs too to this list. I think the key here is that businesses should be allowed to make a 'reasonable' profit.
Our medical and social systems are ill-equipped to deal with cures for widespread diseases, which is what Harvoni and its related drugs are. We are used to paying for disease on time: relatively small amounts of money for periodic treatments that might last a lifetime, however long that lifetime may be. And we (at least in the US) often think more about the value of the treatment to the patient rather than the value of a healthy person to society.
These questions of cost and value go far beyond HCV. It is a popular, medical, and entrepreneurial dream to cure cancer wholesale with a single easy course of treatment. While cancer isn't a single disease, perhaps we should begin asking now how we could assess the value and pay the price for such a "miracle" should a cure for any of the most common cancers be developed.
It is still something different when my health care just pays for it and later talks to me about the costs than when i need to find a way to finance it from the beginning.
I had no side effects either. I did 12 weeks with Ledifos (generic Harvoni), and zero viral load from week 4. I'm SVR4, but still waiting to get SVR12, fingers crossed! :-)
I bought Ledifos in Hyderabad, through med tour agency. The trip cost me just over 2600$, tickets included, and I only paid once in India. The guys are mellow, everything went very smoothly: hotels, doc, prescription, pharmacy, all is done in 3 days (www.cure-hepc.com). I know you can do cheaper if you just buy online, but when you pay online you never know if it's a scam.
I was once prescribed 4 tablets of Albandazole (a drug for worms treatment) just before my health insurance was active on file. The drug was costing over 700$ without insurance and my health center asked if I would like to wait for my student health insurance to show up as active. I said, yes (ofcourse) shocked at the price of the drug (being an international student in US from India). Even after my insurance I paid 35$ co-pay. The same drug costs <1$ in India. Even the co-pay is over 35 times the cost of the drug in India. I was trying to contrast some figures:
Salary ratio: ~5:1 (Software engineer, Google based on Glassdoor);
Albendazole drug cost ratio: ~700:1
I see a good opportunity here build a 40-50 patient facility in touristy place like Thailand. It would cost about $250-350k then charge patients $4500 for a 3 month stay including medicine, food and board. Because of cheap labour and food your expenses won't be more than $20k per month. You would me making a profit with 40% occupancy with 85-95% you could recover your investment in under a year.
> In the United States, there is nothing stopping pharmaceutical companies from charging whatever they think the market will bear.
That is how it should be. The moment government controls prices, it will slow down overall capital investment in invention of new drugs. I think $80k price is perfectly fair given the scenario.
Until Giliad Science invented that medicine the alternative to the medicine was assured death by cancer. Have you ever paid medical bills for cancer ? $80k does sound like a reasonable amount to pay for one's life in a developed country like USA. In India value of life is much less and I am not surprised Indians are willing to pay much less for their life.
Poor Indians are benefiting at the expense of rich Americans. Indian would prefer to die than borrow and buy a $80k medicine.
I think if Americans can save money by offshoring the cheap call centers to India they can also save money by getting their health treatment in India. The thing to remember here however is that if you die in an operation theater in USA your family might get millions in compensation. In India you have to say bad luck and move on. The pills that you buy from India could be nothing but horseshit packaged in wrappers and you can basically do nothing even if you find it out.
US is at the forefront of drug inventions because markets are allowed to function, surely companies are making ton of profits but I suggest you try setting up a company and invent the same drug and sell it for cheaper price. Inventing drugs is like a startup, a giant number of research projects fail, handful of succeed. People remember Facebook and its obscenely rich Zukerberg they don't remember Bozo inventor of JokerBook, a social network for clowns.
It would be good if Americans learn to appreciate what they have rather than complain about everything.
Keep in mind that the potential for huge profits was what motivated private investors to fund development for a cure. Without that, Hep C would still be a death sentence, regardless of how much money you had.
Pharmasset spent in the ballpark of $1 billion developing the candidate that Gilead decided to buy (I'm taking the annual spend on total operations there, rounding up to $100 million and multiplying by 10 to get the $1 billion).
It sort of looks like they have figured out how to have excellent pricing power when they are willing to bid $11 billion for the company. Part of that is probably that looking just at this drug is a facile analysis of the value of Pharmasset (which did more than develop 1 drug, they built expertise in creating antivirals). Of course, the expertise story implies that they don't need to recover the purchase on just this drug.
I guess some of it is the complexity in the medical payments system.
Nobody here is making the pretty obvious point: Yes, it is wonderful to blame the drug companies (who invented the damn cure in the first place!) for greed -- it feels great. But the real important question you have to ask is HOW ON EARTH do they get away with charging $84k for a year of treatment?!?!?!?!
If they are charging this amount of money, it is because someone, somewhere, in some deep and mischievous and evil place inside those big pharma buildings, has crunched a lot of numbers and figured out this is the "correct" price for them to charge for this drug. That is their income-maximizing price. And THAT is what's insane.
Blaming them for "greed" is idiotic. But you have to scratch your head and think of how on Earth the best strategy for them is to sell a product with a price tag that no individual could really afford!!! That's the real mystery, and when you start asking THAT question, perhaps you end up realizing that the answer isn't so clear.
For starters, maybe ingenious strategy devised by our hero in the article, and the Indian government's positions in generic were foreseen by one of the thousands and thousands... upon thousands of lawyers, and business experts, and consultants that these companies hire, so they quickly realized that the name of the game HAS to be that they need to squeeze everything they can out of the U.S. market to make up for the hits everywhere else.
"But wait, no one will be able to afford the drug," exclaimed one novice executive at the pharmaceutical. "Not to worry," the senior counsel said, "we have medicaid in the U.S., and that's where most of our customers will come from. You see, the government will effectively be our client, and since they won't have an option not to offer this treatment, all we need to do is ensure we have amazing terms with this ONE customer and we'll be aaaaaaalllll set." Etcetera, etcetera, etcetera.
Don't blame the pharma companies. We have ZERO competition in many dimensions of healthcare. We have a drug approval process that costs billions of dollars for a single drug to get through, and the academic evidence is quite clear that it is actually killing more people than it is purportedly saving. I had back surgery three years ago, and a line item in my medical bill was "juice - $25." I stayed in the hospital for 19 hours. It cost me $40,000 FOR NO GOOD REASON whatsoever. I also had shoulder surgery overseas, with a Harvard medical-school trained doctor who operates on world class professional soccer players. I was in a phenomenal hospital for two days, in a private room, with nurses checking on me every hour, the works. The sticker price? $7,000. Without a penny of gov't subsidy.
Big Pharma isn't the issue. Our policies towards healthcare are crippling us to no end.
We could make pharma companies be government contractors so the "intelectual property" would be a owned by the state.
That would probably be a bit better than what we have now.
If you remove a bunch of constraints, you can imagine governments paying for country-wide license to the patent, and then individuals just pay enough to cover manufacturing and delivery. I'm not sure if there was any payment that went along with granting India the $1000 price. I know India carries a big-stick of "invalidating" the patent. Sure, they could have just taken the IP for themselves, which basically means Americans just bare a larger share of the overall cost. The fact is that this drug is tremendously valuable for India, so I'm glad they were able to come to some pricing agreement.
Selling those drugs back into the US market clearly goes against the pricing agreement. Based on what I read in those articles about Paul Le Roux, these online drug outfits have way more volume than you might expect, and they apparently can run for a long time before being shut down. This is partly a submarine ad in that sense, even naming sources. You also might expect customs to intercept these packages, but when Le Roux can share the same FedEx account number across all their pill shipments, clearly inspection is expected to be lax. So the result is these pills could actually be pouring back into the country, and hiding within the inventory being sold for consumption actually inside India. It seems like Gilead revenue is strong for now, I don't know if they consider this to be a significant risk.
In some cases insurance will not cover if you are not showing symptoms. But if they do cover it, you will be on the hook for just the out-of-pocket maximum for that year. Any other health care you receive that year will be free, so that could also help justify the cost. But in this case the insurance company didn't want to cover it anyway, so the patient was forced to pursue a gray market purchase. I'm pretty sure Gilead is pushing hard for insurance companies to cover anyone with detectable disease regardless of symptoms, and ultimately that's what we want. There's a huge population that avoided the prior treatments, but would jump on this in a second.
Everyone who has HepC should get this drug. But if we can't afford to cure everyone today, how do prioritize access? And how do you limit access to an FDA approved drug for a diagnosed illness anyway, when the alternatives are more expensive and less effective? Well I guess in some places, like the NY AG is requiring coverage for commercial insurance plans. NYT reports that Medicaid is still denying coverage until the disease has advanced.
We want people to pay the "right" price for this drug, really a miracle cure which is lowering the cost of treatment actually. So how do you price it? The price to the insured patient today will vary based on the financial means of the patient. The revenue to Gilead is negotiated with insurance companies / benefit management companies, and is far below the sticker price.
I actually wouldn't expect that Indian prisons provide any effective medication against hepatitis C. You might get it if you buy it yourself, and bribe the prison staff to allow you to have it.
Sorry: this is not based on any real experience or references, just the overall assessment of how India stands currently.
> You might get it if you buy it yourself, and bribe the prison staff to allow you to have it.
> Sorry: this is not based on any real experience or references, just the overall assessment of how India stands currently.
Jeez, you didn't have time to search but had time to fantasize like a Hollywood script writer hashing out more 3rd world stereotypes? Perhaps we should look at the treatment and hepatitis morbidity rate in our prison system and wonder whether your stereotype may more accurately fit our own prisons rather than Indian ones.
Delhi Prisons have set up an Integrated Counseling and Testing Centre (ICTC) on 10.06.08 in Central Jail Hospital for detecting HIV positive inmates. Targeted intervention for HIV detection in inmates like injecting drug abusers / sexually promiscuous, inmates suffering from STD and inmates suffering from multiple / opportunistic infections. Total number of such inmates, tested for HIV positive test at ICTC from January,2010 to October'2010 were 1399, out of which 27 were tested HIV positive .Further 2254 inmates were tested for HBsAG and out of which 66 were found to be +ve for Hepatitis B.
While the majority of HCV infections occur outside of prison, the disease is still widespread within the prison system as a result of drug injection.[15] According to one Rhode Island prison study, HCV infection was found in 23.1% of the male prison population.[16] HCV prevention proved to be more challenging than HIV prevention because inmates partake in high-risk behaviors such as “front loading” and sharing spoons to prepare drugs like cocaine.[4] The prevalence of these diseases within prisons is a concern because they pose a potential public health risk.
Thank you for correction; grant me at least that I knew I'm commenting based on prejudices.
Note however that I don't view the American prison system as "our" ("mine") either (I'm not from the US).
And still, what I read of Indian prison is just way, way worse than what I read about the American system. Overcrowding, horrible delays in trials, abysmal hygiene. I doubt that the HCV treatment there is very good, despite there being a counseling centre.
"In India, overcrowding has aggravated the problem of hygiene. In many jails, conditions are appalling. At the tehsil level jails, even rudimentary conveniences are not provided. Prisoners in India are not even tested for specific infectious diseases, although all prisoners undergo a medical examination when they begin serving their sentence. No studies of the prevalence of viral infections among prison inmates have been done at a national level. India’s prison manuals provide for segregation of prisoners suspected of having contagious diseases. A few jails have established informal contacts with medical and social organizations for counseling of inmates to prevent the spread of infections."
Your incarceration rate is a different issue from how prisoners are treated (or mistreated), particularly regarding health care in prison.
Over here (Finland), there's a popular meme about "let's put elderly people in prison, so they get a bed of their own, a daily shower, good food and someone to take care of their mental well-being". Even if our old people's care in public institutions is probably one of the better-arranged among nations.
The article is already off to a bad start, assuming the existing therapy they're talking about is Pegetron:
> The interferon-based treatments weren't successful half the time, and the side effects were so debilitating few patients could endure the months-long punishing protocol.
If the success rate is 50%, I would say that's pretty good, especially since we're talking about treatment, not just managing the disease (as we can only do nowadays with HIV). And from the product monograph: "The most frequently reported adverse reactions were mostly mild to moderate in severity and were manageable without the need for modification of doses or discontinuation of therapy. "
But no doubt, the pre-existing therapy sure has a pile of side-effects.
> "The most frequently reported adverse reactions were mostly mild to moderate in severity and were manageable without the need for modification of doses or discontinuation of therapy."
Having gone through two interferon treatments for HCV, one with the most current regimen of pegalated interferon and ribavirin, I can personally attest to this description being ridiculously inaccurate. The OP may exaggerate some, but the contrast with Harvoni is stark.
Headaches, flu-like symptoms, anemia, lethargy, and chemical depression, not to mention high stress on the liver you're ultimately trying to cure, are just some of the lovely side effects of interferon-based treatment, which could last up to 72 weeks. Many people dropped out, many weren't cured. Success rates depended on viral genotype; certainly for some people it was well below 50%. And don't forget the two forms of birth control, since ribavirin basically guarantees birth defects (as if you'd be in the mood).
Harvoni may be expensive, but it and the drugs related to it are unbelievably effective in doing something many thought impossible 10 years ago: curing HCV.
I cleared the virus on the clincal trials with no side effects. Unfortunately, it wasn't soon enough to spare me from a liver transplant. Hopefully the new drugs will reach enough people in time to let them avoid severe liver disease. There aren't enough donor livers to cure, and liver failure is a uniquely crappy way to die.
I know someone who took interferon for Hep C. It permanently damaged the nerves in his extremities to the point where he can barely walk and is in constant pain. It changed his personality, and not in a good way.
There are some reports of side effects of varying degree, but in general Harvoni's side effects are extremely mild.
When I did the trial, my physician indicated that in previous trials, patients couldn't reliably distinguish Harvoni from a placebo. My experience aligns with this statement.
While I was on a 24 week trial (longer than most people today) with ribavirin (which is only used with a minority of patients today), I experienced nothing I could directly attribute to the medication. My viral load dropped to undetectable in six weeks, and has remained so since.
The only place I saw them list side effects was when an article for a newer drug argued for it's use. It was the one for those who'd previously tried interferon.They said it had no sides as opposed to Harvonihttp://www.fiercepharma.com/regulatory/updated-zepatier-beat...
