Pharma's Bizarre Pricing Shrug | Hacker News Reader

Pharma's Bizarre Pricing Shrug

bloomberg.com

48 pointsAmorymeltzer37 comments

Worst case scenario:

People will be getting screened earlier and earlier. They will be told they have a horrible disease but there is nothing they can do about it because it is too expensive. The mortality rates from the major killers like heart disease and cancer will drop. This will not be a good sign though. The mortality rates from suicide and poisoning from attempts at self medication will rise. The deaths will just be moved from one to the other category, giving the false appearance of effective and safe treatments.

Best-case scenario: Alternate markets will pop up to supply the molecules. There are plenty of such markets out there, I doubt patent-ignorance is beyond them.

Viva la Mexico or Canada.

Gene therapies may cost hundreds of thousands of dollars, or more than $1 million, for one-time treatments. Companies are pouring resources into developing more such drugs, with no real thought to who will pay for them, or how, and no acknowledgement that the current pricing model can't expand infinitely.

I wonder if it's reasonable to expect something like Moore's Law for gene therapy?

A 1980s Cray supercomputer cost over $1 million. Today the same amount of computing power is available in the cheapest Android phone you can find.

If the same trajectory applies for gene therapy, it won't be about finding more million-dollar payers. Only those with the most serious chronic diseases will pay for it now, but in 30 years, all of us will have gene therapy for what today would seem like trivial alterations.

It's absolutely what will happen (see wind, solar energy or anything that has ever caused market shifts) - in fact, it's pretty incredible that the article doesn't acknowledge this. If the argument was about whether or not prices would drop fast enough, that would have been cogent.

you may not be familiar with how healthcare works. There is, generally, almost no price pressure. In fact, consumers of healthcare, because they aren't paying for it, often equate higher price with higher quality so I wouldn't bet on the prices going down

but with medical tourism becoming more reliable and trusted, as well as companies hq'd in countries unencumbered by our insistence on patents for biology, it's likely this is where another country takes the "top" spot from the US. China, Brazil, and India all seems like good potentials.

Medical tourism doesn't work for chronic disease requiring recurring visits/treatments... unless you move there.

unless you move there

It's a big opportunity for Mexico, then. Already home of the most cost effective first world (OECD) universal health care system, Mexico has good facilities right on the US border in half a dozen cities and is popular for eye and dental procedures for US visitors already.

> There is, generally, almost no price pressure.

That's not actually true. There's tons of price pressure, but it all happens behind the scenes, and in a way that's invisible to patients.

The way payments are structured, downward price pressure on suppliers may even correspond to an increase in the (apparent) out-of-pocket cost to patients. That doesn't mean that the overall amount that the manufacturers are getting paid isn't decreasing, though.

Health consumers are rarely the customers, though; providers' customers are actually the carriers, and the customers make the market in healthcare. The asymmetry in price signaling between patients and carriers causes, as you point out, weird distortions in the market. (It doesn't help that price transparency for patients is basically zero.)

This is changing. In the USA, the increased prevalence of high-deductible health insurance plans tied to HSAs gives consumers a direct incentive to shop around. Of course that only goes so far. Patients with really serious problems tend to hit their out-of-pocket maximum quickly, at which point they no longer feel the price pressure.

The market for computers seems obvious. The market for gene therapy is less obvious.

The market for computers is obvious now because there is a market for computers.

The market for computers 40 years ago was far from obvious. Even 25 years ago, most people weren't really sure if this whole internet thing was going to amount to much. 15 years ago, people scoffed at the idea that the future of the internet was mobile phones.

Predictions are hard. Especially about the future.

I'd have thought the market for gene therapy was blindingly obvious compared with the market for computers 40 years ago: theoretical gene therapies being easier to conceive and more fundamental to human quality and length of life than theoretical everyday uses for calculation devices.

Point mutation diseases impact a relatively small portion of the population. They are trivially addressable if you have a gene therapy that is able to work on arbitrary adult tissue, but it's not that huge a market. I think the largest win is sickle cell anemia, after that cystic fibrosis.

Some way of treating obesity with gene therapy would be a blockbuster financially, but biologically we don't really have that worked out so much.

(research is ongoing: https://en.wikipedia.org/wiki/Sickle-cell_disease#Gene_thera... )

I'm pretty happy with my ~50 year life span. I wouldn't spend a dime on gene therapy ever.

If gene therapy can keep people from dying, I'm pretty sure there will be a market.

Nothing in this article mentions that National Institutes of Health public-sector funding does all the work in general research before they give a patent to the private sector so that the public pays twice.

RT on US public research: https://www.youtube.com/watch?v=kN5_j7Yq9WA

(Note I think public funding for science is a good thing, unlike this attack piece by RT, but that is not the point.)

Chomsky also talks about how state-sector created the transistor for example at AT&T Bell Labs.

Having "seen the light" on Shkreli's actions, I can't help but wonder whether or not I'm missing something or if people are just intent on driving a false narrative into the ground.

Yes, he jacked the prices up, but only after getting it on a co-pay schedule, which means that like most drugs, you'll pay your insurance co-pay for it, but not the sticker price.

For those without insurance, or who cannot afford it, they've stated (and has been corroborated) that they're happy to give Daraprim away for free.

At the end of the day, the cost of the drug to the insured doesn't really go up by a whole lot, and the cost of the drug to the uninsured (but not 1 percenter) has actually gotten cheaper. In the meantime, Shkreli will be able to funnel Daraprim profits into research for the drug to keep it from becoming irrelevant, as it currently will be if left alone because the disease that it prevents supposedly evolves, and if left alone, would eventually slide from 70% effective to 60%, to 50%, etc.

Meanwhile, for anybody to which that isn't an acceptable solution, these guys have released an alternative for $1 a pill. It may set back drug-parasitic relations in the process, but it's there, it's cheap, and people won't be dying as a result of the price hike.

http://money.cnn.com/2015/10/23/news/companies/imprimis-dara...

Where do you think the balance beyond the co-pay is coming from, though? Magical wish-granting insurance fairies?

Sorry for the sarcastic tone, but your argument, as stated by Shkreli himself, seems to think that people believe that the hundreds (or more) dollars a month they pay in insurance premiums has absolutely nothing to do with this. "But your copay will only be $20 and you won't pay a cent more!"

No, you (or your employer, who could otherwise be paying you that money) will be paying -every last cent- of the price rise. Just largely as an amortized monthly premium, not an out-of-pocket co-pay at the time you pick up your script.

Shkreli seems to believe that people would fall for his argument that somehow the balance of the cost of the drug would be paid by ... I don't know who, exactly, hence those magical fairies ... and not by us.

And in a lot of cases, he's right.

Sarcastic tone forgiven, because I was there once too, but it seems like it's mostly liberals and progressives who are upset by this, while conservatives and capitalists more willing to forgive it. That seems backwards to me, as the progressive argument is that costs should be spread throughout society, from the haves to the have nots, and that if this is already the shell game of insurance anyway, it seems silly that Daraprim wasn't already playing it.

Either way, the capitalists had the right of it -- if the price was too high, there's a $1 per pill alternative right now. Assuming that all else holds true, I just don't see the harm here any more than I see the harm in Motorola charging $800 for their top of the line cell phones while Wal-Mart has one for a small fraction of that.

You see no difference between a life-saving medication and a smartphone? No difference? Not even a little bit?

Well, usually insurance companies get some sort of discount on full prices... but the heft of your argument remains valid.

Yes, but probably not a 98% discount.

You're not considering the long term effects.

The extra cost placed on the insurance company will get passed on to the consumer in the form of increased premiums.

He's just using the fascist, anti-competitive, anti-consumer U.S. insurance economic model to his advantage. It's scum heaped upon scum.

A dirty secret of the insurance industry is they don't actually want to lower prices. They act like cost plus defense contractors and are happy to maximize any systemic costs that are spread around the industry.

This isn't really true anymore. The large medical "insurance" companies are increasingly getting out of the insurance business and shifting the risk to employers (self insured plans), patients (high-deductible health plans, HSAs), and providers (ACOs). So the payers don't actually work on a cost-plus basis. They're actually trying to drive down systemic prices as that would bring in more customers and higher volumes for their claims administration businesses.

This. And they see plenty of private lucre for it.

> the cost of the drug to the insured doesn't really go up by a whole lot.

Nonsense. The insured are paying the full inflated price of the drug. The cost is spread around the whole insured cohort, not just the subset that needs this drug.

It's a bare-faced cynical exploit of insurance. No one feels like they are paying more, but in fact huge numbers of people are paying a little bit more for no good reason.

Insurance companies don't care much, since they pass on the costs to customers. Diabolically clever and a terrible waste of money.

What about the many Americans who have HDHP policies and pay everything through their health savings account? Until they hit their $6k deductible, they pay full price.

>Having "seen the light" on Shkreli's actions

What light? Can you point to it?

Certainly. Here are my claims, and links to affirmations.

    *  He jacked the prices up
    I don't think I need a source for that one. 

    * After getting it on a co-pay schedule
    Can't find a handy, direct citation, but it's pretty 
    easy to find in other articles - it was shifted to certain 
    pharmacies and added to copay schedules. 

    * they're happy to give Daraprim away for free.
    http://www.theatlantic.com/health/archive/2015/09/daraprim-turing-pharmaceuticals-martin-shkreli/406546/

    CTRL+F "free to anyone"

    * Shkreli will be able to funnel Daraprim profits into research
    http://fortune.com/2015/09/21/turing-pharmaceuticals-martin-shkreli-response/

    CTRL+F for "research into this disease"

    * if left alone, would eventually slide from 70% effective to 60%, to 50%, etc.
    http://www.telegraph.co.uk/news/worldnews/northamerica/usa/11882281/American-hedge-funder-Martin-Shkreli-increases-price-of-Aids-related-drug-by-5000pc.html

    Toxoplasmosis evolves, and Daraprim is currently toxic.  Moreover, 
    the people that need Daraprim tend to only need it for a very short time, 
    like an anti-biotic.

    * These guys have released an alternative for $1 a pill
    Worth noting, I intended to provide a link in my other post, and in making
    this reply, realize that I failed to do so.  So, caveat: the $1 alternative is 
    being provided by a competitor.  Regardless, here's the source: 

    http://www.usatoday.com/story/money/2015/10/23/imprimis-pharmaceuticals-turing-pharmaceuticals-daraprim/74452030/

It seems the offer of free drugs was a decision made to mitigate the negative PR, not before. At least per all the references I can find. Do you have anything that points to their offering the drug for free (or steeply discounted) that can be dated (article, letter, or at least a claim in a later article or letter) to before the price hike?

You haven't shown any light here; only given a description of events so far.

>CTRL+F "free to anyone"

Complete the context for, " who can't afford it". Do you know where I can find Shkreli's rationing guidelines?

I'm mobile, so apologies in advance for the lack of citation, but as I recall from his most recent open letter, it's free to incomes up to 500% of the poverty line and the uninsured.

All I see is the cold darkness of reality, Bob...

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