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?
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.
Remember they paid $11B for the right to the drug and they still had to bring it through development.
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.
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.
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.
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.
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.
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.
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?
[1] It costs about $3,300 to save a life from malaria: http://www.techinsider.io/the-worlds-best-charity-can-save-a....
[2] It costs $4,200 to save a child by investing in childhood health: https://www.sciencedaily.com/releases/2015/07/150703072652.h....
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.
I honestly can't tell if you're being sarcastic or not. I hope so...
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?
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.
I'm also in the US. Why is my experience so much different than yours?
(edit: some punctuation)
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.
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
That's easy: they'll just cut R&D and manufacture generics or toothpaste or something that is cheaper.
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.
* massive step up in grant funding to front-load R&D costs so they're paid by the time the drug is out, or
* worldwide medical R&D fund, bounties for individual re-searchable issues, or
* move private R&D to universities, have profits gained pay back R&D, send any extras to researchers, and shutter R&D aspect of private medicine
At least I'm trying to think of alternatives, and not just trying to shoot other commenters down
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.
[1] http://www.aaas.org/page/historical-trends-federal-rd#Agency
Economically crushing people (and removing them from normal economic activity by way of crushing debt) hurts the entire economy except for the pharma industry.
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).
[1] https://cew.georgetown.edu/wp-content/uploads/2014/11/colleg...
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.
[0] http://www.nj.com/healthfit/index.ssf/2015/10/eeuw_nurse_in_...
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.
But again, this is not what we're debating. It's why the "average car price" does not apply.
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.
There's still lots of room for a policy discussion. Can we develop such cures and pay less for them?
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.
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.
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.