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.
