Rational Drug Pricing | Hacker News Reader

Rational Drug Pricing

huffingtonpost.com

21 pointsdhilbarroshan11 comments

There's good reason to blame FDA regulations for problems with the Daraprim debacle. Even for approved, out-of-patent drugs, it's still expensive to get a new generic instance approved, and for drugs that have few users like this, it's just not worth it for a new supplier to get it.

Generic drugs don’t need the excruciatingly drawn-out safety and efficacy studies required of new brand-name medications, but they do need to pass a bioequivalency study proving that their drug is absorbed the same way as the original. ... it’s just too hard to start making a generic medication. If all you want to do is synthesize an active ingredient in powder form, and you’re not too concerned about staying on the right side of the law, it costs pennies and takes however long you need to FedEx something from China. If you also want FDA approval, it costs $2 million and takes two years.

Remember, Daraprim is used by about 10,000 people per year, and before the recent Turing price markup, it cost $13.50 per pill x eighty pills per treatment. 10,000 x 80 x $13.50 = about $10 million per year, of which maybe $5 million was profit. That means you have to capture a big chunk of the Daraprim market before it’s worth trying to get yourself approved to make Daraprim; the FDA is essentially telling pharma companies to “go big or go home”. Nobody wanted to go big, so they all went home.

In the absence of this barrier, it would be easy for small boutique companies with a couple of chemical engineers on hand to spend a few weeks manufacturing a few thousand doses of the drug whenever it was necessary to meet demand. This is how the supplement and nootropic industries work right now, and nootropics are dirt cheap

- http://slatestarcodex.com/2015/09/24/the-problems-with-gener...

(and if you don't read SlateStarCodex regularly, this is a good time to start)

I think this is completely wrong. The NIH funding is already the way it is. There was no special offer for Gilead. For people to come after the fact, and state that we know what is a reasonable profit is the height of arrogance and greed.

Gilead did something that was once considered far off - they created a CURE for Hepatitis C. Because they created a cure, we are infinitely better off in that regard - before there were 0 people getting reliably cured, now there is a number greater than 0 getting reliably cured of hepatitis C.

In 20 years, the patent will expire and whoever wants to can make this for free if they want.

I propose the following compromise. Let the government create and fund a biomedical research lab for creating new drugs. The process for drug approval should be the exact same as for everyone else. Any drug that the government's lab discovers and gets approved can be given away or whatever the government wants. Any drug not discovered by them, they should let the companies that actually discovered the drug set the prices.

This is hacker news created by YCombinator. Will a VC fund a startup whose best case return is 10x investment? Would we rather have more money/effort invested in curing disease or making "sharing economy" apps? I think companies that do save lives should have outsize rewards. For government to step in and try to change that would be killing the goose that lays the golden egg.

Even countries that have strong drug price negotiation schemes are only getting modest discounts for Hepatitis C drugs; they're willing to pay because even at full price it's more expensive for someone to slowly die of liver failure than a course of Sovaldi that will cure them in a month.

The regulatory failure is the VA system being unwilling to pay for it (assuming that's true), not the perfectly reasonably priced drug that's cheaper than alternative, less effective treatments.

I often disagree with Jeff Sachs, but I find his argument here highly persuasive.

- There is no reason the US should be giving away IP for free

- The US Government should use its purchasing power as a check against the drug companies

- Drug companies should be able to reap profits, but profits at a 10-20x P/E not 100x

Pfizer's PE with morning was 22.28. Gilead's was 10.21.

Would love a source on the Gilead numbers.

How about here: http://finance.yahoo.com/q?s=GILD

Says it's 10.20 as I enter this.

I'd thought previous poster was providing the P/E for the specific HCV drug used in the HuffPo piece. Which is what was being implied should be kept lower then 100x in this thread.

Perhaps, but I would take that metric to be ridiculous, because the company cares about it across it's entire portfolio, in this case 21 products it's currently selling (https://en.wikipedia.org/wiki/Gilead_Sciences), looks like they do some very early stage/general research, products like Tamiflu they evidently had to license to get to market (reduced profit for them), products which have expired or soon to expire patents, and all their failures, past and future.

At least one of which is implied in the Wikipedia article, also see their current pipeline, some of those are going to fail, and at the end their 22 failures to date. 1 in Phase III trials ($$$, efficacy, the most expensive), 5 in Phase II (fairly expensive, I think), 5 in Phase I (certainly not "cheap").

It sure looks like they're doing the right thing with their science and medicine, their founder was motivated by having contracted deng fever, which is untreatable (besides of course supportive measure). Clearly the right thing to do is to beat them up the few times they hit it out of the ballpark with a "100x" success, that'll teach them and the other drug companies!

> There is no reason the US should be giving away IP for free

This times a million. If you fix that, most of the drug problem goes away here in the US even if you don't start letting Medicaid bargain.

I don't necessarily agree with the specifics or the numbers in this article, but I think something like this could be reasonable. As always though, the devil is in the details.

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