The price of other hepatitis C drugs is also high:
Harvoni costs $94,500 for a 12-week treatment Mavyret costs $39,600 for a 12-week treatment Zepatier costs $54,600 for a 12-week treatment Technivie costs $76,653 for a 12-week treatment
https://www.healthline.com/health/hepatitis-c/treatment-cost...
Previously, with no cure, HepC patients would have eventually had a liver transplant. Liver transplants cost between $500K-$1M. Of course, it also requires a liver, so many would die waiting for a liver.
As you noted, the drugs have become much cheaper. Mavyret is ~1/2 the cost of Sovaldi, the first drug on the market (replaced by Harvoni). Mavyret actually only has an 8 week treatment, which is an improvement over the 12 weeks of Harvoni.
The competition within these drugs became so fierce that, despite these prices, no new ones are planned (last I read). In fact, one you listed here has been off the market for over a year
https://www.empr.com/home/news/two-hepatitis-c-virus-infecti...
Your statement is true. But it also hints at another problem, which is that the default is to price life saving treatments as high as the market will bear. It's a pricing model in line with extortion, the only exception being that the extortionist doesnt have to threaten to kill you - the virus or whatever condition is already making the threat for them.
I was about to summarize by saying "sometimes a free market can mimick evil" but I just remembered it's not a free market at all. These treatments have government granted monopoly status via patents. That's why they are priced so high.
Where you really have no excuse is the price for old drugs that get bought up by venture capital. Wilson's disease is treated with triethylenetetramine. The price had always been ~ USD 600 for 100 pills until the manufacturer became bought out by Valeant, who then raised it to 20 kUSD for 100 pills. There was the usual protestations by Hillary Clinton and other politicians, but the price is still where it is. Where is the revolution?
The financing model is problematic. Return on investment is much higher and faster in IT, besides there is a mismatch between what the market favours and where future clinical needs are (the antibiotic crisis, neglected tropical diseases).
I'm not opposed to the idea, but I think you'd struggle to make it politically achievable.
And if not, why not? There may be folks who think public research grants shouldn't exist, but since they do, what else would be worthy of such support if not public health research?
Like, you could imagine a system where you don't have a free market at all, the government would directly fund both medical treatment (like in Europe) and medical research (like nowhere right now, but you could imagine nationalizing the drug companies). So then, before the hepatitis-c drug exists, you are paying $500k for each liver transplant, and you try to figure out how much money should be allocated to that drug research program. You'd want to fund it at roughly the expected cost saving, multiplied by the probability that the drug development is successful.
In the actual system, if the drug companies try to develop the drugs, and then charge about the same price as the cost of the previous treatment during the time they hold the patent, then their expected payoff (so how much money they will put into research) is the cost of the previous treatment times the probability that they will be successful---so this high price is basically what we would want to allocate anyway. And if the drugs are paid for by the government, their expected spending over all the drugs is similar to optimal amount of direct research funding.
So the only incentive to do maximal good is more money. And people wonder why I laugh when it's claimed that we live in a civilized society.
The mandated motivation for a corporation is to maximize share value for it's shareholders. That's it, as creepy as it is. CEO's (well "good" sociopathic ones) compartmentalize everyone's jobs so they only do the little bit of bad that they are comfortable with and can distance themselves from the corporate wrongdoings, as a whole.
A singular person, or even a small group of people, have entirely different dynamics and motivations and would, normally, never make these type of decisions themselves. Singularly, they wouldn't be able to run successful multinational, billion dollar corporations either.
It's somewhat unfair to look at a single person who works at one of these companies and say that they are the downfall of society anymore than you could point to a singular person in Roman history and say, "There. That guy. He caused the downfall."
That's actually not the case. It became dogma in the 1980s but there is no legal mandate for this.
I think two big missing factors in your analysis are (1) profit — US drug companies pocketed something around $30 billion dollars this year, and (2) inefficiency - something like $20 billion dollars went into deg marketing in the US for example, which seems to me like almost a complete waste.
And marketing includes things like paying a sales rep to answer doctors questions. Are you saying they shouldn’t do that.
Personnel can be a big chunk as well, since the fully loaded cost of a sales rep can be $400k per year and for primary care drugs, it’s not unusual to have 1,000 reps.
It's a pricing model in line with extortion
This class of HepC drugs (Solvaldi et al) are cures. Not chronic treatments, but cures. The developer only has that one course of treatment to make all the revenue they ever will on that patient.
So what happens when they are told that they can't charge prices commensurate with the result? They'll abandon a cure model for treatments that have ongoing chronic purchases to provide revenue streams over time.
Imagine this category of HepC drugs being marketed as a $999/month regimen for life rather than $50K for a one time cure. They would face far less friction. Happy now, consumers?
This is why new antibiotic research was abandoned, by and large.
That's over 8 times what Viagra pulled in over the past 20 years.
I'm not sure where the line between reasonable profit-taking and extortion lies, but it's probably somewhere south of the GDP of Kuwait.
[1] https://www.kiplinger.com/slideshow/investing/T027-S001-the-...
Ain't regulatory capture and 'release' great?
Contrast that with 8 weeks or less of 1 pill per day (and possibly less), with no side effects, pangenotypic and >95% efficacy for all (including cirrhotic individuals, HIV co-infected, etc)
I’ve talked to people who took it and it was like having the flu for months.
[1] https://www.medicaltourismmag.com/article/hepatitis-c-treatm...
> Go to <any country outside the US> and be treated for <fractional amounts>
You'd likely pay more than a resident/citizen who may not pay or may a token amount. But this full price will still be very small in comparison to US (eg full price of doctor's consultation in France is like 25 EUR).
Even Switzerland which is expensive for Europe in terms of healthcare is cheap comparatively (a simple ER visit might be a few hundreds, not thousands).
> > Go to <any country outside the US> and be treated for <fractional amounts>
For Hepatitis C? Absolutely not. It's way easier for US citizens to access the drugs to cure HCV in the US than it is for, say, British citizens to access it in the UK.
If you want to talk about other conditions, fine, but for Hepatitis C, this statements is patently false.
"Approved treatments" just means "there exists a circumstance under which the NHS will cover them". For starters, the NHS almost never treats patients in acute stages of infection, whereas insurers in the US don't distinguish between acute and chronic infections. The NHS also tries to force patients to use interferon-based treatment first before covering the newer medications. There are ways around that, but it's not simple or easy.
FTFY
FTFY a bit more honestly.
But Hepatitis C. is a virus infects 143 million, which means it even with a $10k profit margin for one in ten here should be at least $1 Trillion profits. A company like BMS do expanding like $20 billion annually. For me all most like they could afford to operate like half of century for just one drug. No way it is sold for almost $100k price for just breaking even.
Correct: Sorry it was Gilead Science developed Harvoni. So $22B revenue minus $8 operating incoming.
That simplified R&D cost calculation. $11B for $3.5 m persons in U.S. and 90% successful rate means R&D cost(merge cost) definitely less than $4k per person.
Current prices are closer to $30,000 or less per dosing regimen.
It's worth noting that, in the US, almost nobody is actually paying those prices. Most insurance plans these days cover HCV treatment, and even insurance companies aren't paying those sticker prices to the pharmaceutical companies when they cover these drugs.
I assume that your healthcare covers this. Otherwise cheap imports are available from India, e.g. https://roidgear.net/hepatitis-c
Here's an article on how the patent did not affect it's price in India: https://m.economictimes.com/industry/healthcare/biotech/phar...
Considering that 40% of Americans can't cover a $400 emergency expense[0], what makes you think they can pay $84,000 for a 12-week treatment?
[0]: https://money.cnn.com/2018/05/22/pf/emergency-expenses-house...
This means that somebody is priced out no matter what. Given the state of American healthcare it's easier to reconcile if you remove the emotional part and view a drug treatment as, say, a television. If I make a 50" television and price it at $500, I accept that some people will not buy it and target my television to my intended market.
What I'm saying is the drug companies are probably fine saying "ok, some people can't afford it, but we maximize profit by selling at a premium to those that can."
All that said, if it's life saving you might be surprised what people can and will do, savings notwithstanding.
Withholding a life-saving treatment has to be criminal in some way.
I just can't imagine a hospital sending people home to die because they can't pay.
https://en.wikipedia.org/wiki/Emergency_Medical_Treatment_an...
The logical thing would be having your insurance negotiating on your behalf ahead of time.
Also "but it's legal!" is not a valid argument in a debate about whether something should be legal.
First, there's survivorship bias. The hospitals that eat the costs of saving lives eventually go under or can't compete with the ones that invest in better doctors, equipment and so on. What you see in the end is lots more hospitals who are willing to withhold life-saving treatments than ones that will treat anyone no matter what. We may in theory want everyone to be treated, but in practice, our market behavior of seeking cheaper treatments and better doctors sways hospital behavior as well.
Second, there's unintended consequences. A hospital going under to save some lives can have disastrous consequences on the rest of the community - non-life-threatening issues turn into fatalities with the hospital gone, leading to more lives lost than if the hospital was "cold-hearted" and "calculating". Hospitals are faced with this moral dilemma every time they do their budgeting.
Third, there's utilitarianism. Is saving one life no matter how costly the way to go? What if you can save two lives for the same price? Is saving an old person's life the same worth as saving a young one's? What about "saving" someone's life but leaving them functionally crippled, vs dealing with non-fatal conditions in people which might bring them back to full function? How should a hospital spend its finite resources?
When you mix in all these concerns with the practicalities of the situation(noone is working with perfect information, and hospital staff often has to make snap judgements), you're bound to get different outcomes, including sending people home to die, depending on how the hospital lands on this balancing act.
It's difficult enough to craft a law to deal with the moral issues, but then you also need to think of the legal issues in enforcing it, and how the enforcement could lead to further unwanted consequences. Then, purely from a utilitarian POV, think about funnelling all the costs of enforcement into a charity - which one is more effective?
However, most if not the entirety of drugs is to cure disease and save lives (or significantly improve the quality of live). There is one market as opposed to a market each for the types of gadgets.
Which is why something as trivial as say a surgical equipment gets priced exorbitantly because without that there’s no “whole functioning gadget” (surgery).
The free market economy doesn’t work in this case.
While I think this is self evident, it depends on your definition of "working."
If we - a I personally think we should - attach a social caveat to capitalism that requires we do what we can for people less fortunate, it fails miserably because we lack a mechanism for fostering unfettered profit while ensuring healthcare is available to all in a reasonable form. No such mechanism may exist, but I think the problem is we keep trying to shoehorn half measures into the current system and expecting a miracle.
In the case of intellectual property/technology you are mistaken. Patents have an expiration. Capitalists are provided a time limited monopoly for the sake of extracting rent in exchange for development of that technology. But after the expiration, it becomes public domain.
In this case, all of the drugs mentioned will eventually run off patent and be available in generic form for very little cost. Future generations will benefit considerably. This is where the moral argument becomes most powerful. Think of the potentially tens to hundreds of billions of people that will benefit from this in the future. Should we stop the pipeline of drug development because some people can't afford it today?
If there are better alternatives, why aren't other countries uses such a model? Why is the US _THE_ powerhouse, followed on by other highly market driven economies?
People "envision" schemes all the time. I prefer to live in a world where my drugs are real, not envisioned.
https://www.healthcare.gov/glossary/out-of-pocket-maximum-li...
If you only have one disease or hospitalization in your life, however, you're rare - this is also extremely unlikely given your chronic Hep C. As an example, the average cost per person in the US, including healthy people, is $10,000 a year, 4,500 more than your insurance cost.
https://www.healthcare.gov/health-care-law-protections/rate-...
Thus, if 5 insurance companies send patients to the same doctor you simply have more overhead.
https://www.propublica.org/article/health-insurers-make-it-e...
https://www.propublica.org/article/we-asked-prosecutors-if-h...
https://www.propublica.org/article/how-to-make-health-insure...
Collecting part of that amount is still profitable because there’s no basis in the actual cost of treatment rendered.
Compare to someone in (poor country) who is lucky to collect a few hundred dollars a year, no one will ever extend that person 84,000 in debt, because they don’t have any chance of making that amount over the course of their entire career.
Ability to pay is significantly different from “savings.”
The $400 emergency expense number is about having savings (extra money in the bank) which is really a complicated issue relating to financial literacy and debt to income ratios. You could have someone making 6 figures living in an expensive house, driving a nice car, who can’t come up with $400 because he’s overextended himself. It’s a question of liquidity rather than ability to pay. If his wages get garnished, maybe he loses the house and has to sell the car, but the medicine still gets paid for.
Prices are often negotiated by health insurers and are pretty much guaranteed to be lower for that reason. Depending on what system you are in, you might never even learn what your treatment cost. Not that you should care.
The issue was really volume. There wasn’t enough money to treat everyone.
When you get the final bill with the “adjustments” and “discounts” it will be far less.
If you signaled to the provider you are paying cash it’s far less.
My physical therapy was $1200 a visit to my insurance provider, and magically $40 out of pocket once my insurance cut off my covered trips.
Imagine having thousands of people on payroll, some working on drug design, some designing experiments to test the drugs, some doing the legal paperwork to get drugs approved etc, and suddenly the patent for your best selling drug expires and your latest drug doesn't work. You're pretty much boned.
> "The median per-drug R&D spending of companies that developed more than six drugs – that’s only 8 companies – was $5.8 billion."
...so that is $5-6B USD per drug DEVELOPED in large companies.
Gilead - maker of Sovaldi/Harvoni for HepC treatment - has been on a development tear of late, and almost certainly falls into that range IMO [2].
For companies that produce fewer drugs - the estimates are between $700M-$1B per drug.
Note these are prices for drug R&D only ("development") - there is no guarantee those drugs developed make it to market ("approval") - Over 90% do not.
edit: source links
1 - https://www.forbes.com/sites/matthewherper/2017/10/16/the-co...
2 - https://en.wikipedia.org/wiki/Gilead_Sciences#2010_to_2019
Edit: I should contextualise this by noting I have basically no experience with pharma so grain of salt blah blah
The basic assummption in cryptography is “assume the target system is already compromised” so i would wager you are partially correct. Its just that its not the whole story, especially if u think that private persons get massssive discounts if they try to privately pay (from reading below comments about quotes to insurance companies vs private people).
Its a sad dynamic thats probably ruining more loves than it should.
My main point is that drug development is more expensive than most realize. Beyond R&D, a lot of that cost is in postmarketing (after approval) safety studies and surveillance- to catch side effects not observed in clinical trials. This process can be made somewhat more efficient as you suggested, but at the end of the day a human is reviewing every side effect report and reporting those back to regulatory agencies etc.
I am not qualified to discuss the economics re: your point on pharma r&d - drug discovery is it’s own thing aside from actual drug development.
(they bought Pharmasset who discovered the drug [1])
US pharma companies are completely out of control, there’s absolutely no reason a 12 week treatment should cost around the mean annual US income. Can’t imagine having to decide to risk my entire financial future to deal with Hep C.
What if it was synthesized in 5,000 steps from pure gold or something?
I’d be open on a success based public funding where IP becomes public domain, but I doubt big pharma would ever pull that trigger.
I’m thankful for modern day drugs, like PReP and PEP (pre and post hiv exposure drugs), vaccines and cancer treatments to name a few, it just sucks that those less fortunate don’t have access yet.
gilead the makers of Harvoni literally made a cure for a previously uncureable disease, You literally have no respect on a tech site of all places, for all the RnD that went into doing that.
As usual the answer probably lies somewhere in the middle.
Is Google/Apple/MS/FB price gouging? Their net incomes are massive.
I'd be hard pressed to classify a situation were a company introduces a new product 80% cheaper than the alternative, and still be guilty of price gouging.
I'm not sure the margins support that allegation. Sovaldi is manufactured by Gilead (which also makes a Harvoni generic). They don't break out drug-specific margin, but http://truecostofhealthcare.org/wp-content/uploads/2014/12/G... and https://www.investors.com/news/technology/can-gilead-withsta... have some food for thought.
A couple things stand out:
1. Their profit margin varies year to year, but in the peak period from 2012-2019 it was 35-55%, averaging ~40-45%. While that's industry-leading for pharma, it's nowhere near high enough to say that their products could be, say, 75% (or even 50%) cheaper. A 20% reduction (very roughly cutting margins in half) wouldn't make it meaningfully more affordable and I don't think most people would describe that as gouging.
2. Apparently it actually cures the disease for many people, so this is a once-and-done treatment. Compared to nearly all other healthcare interventions, curing a life-threating chronic degenerative condition at this price is cheap. (Cost per death prevented of other interventions: https://journalofscientificinnovationinmedicine.org/articles..., https://twitter.com/troyd/status/1195811217056485377)
3. After they cured so many people, there was a much smaller market (success!). Revenue and margin both dropped a lot: https://www.macrotrends.net/stocks/charts/GILD/gilead-scienc...
4. "Gilead Sciences was also unique in that it was the only pharmaceutical company I examined that spent less money on marketing than they spent on research. Gilead’s marketing budget was only 15% of their total revenue."
This seems like a pretty clear example of why looking at revenue and margin like this is not a good way to manage this. Our goal here is clearly to eliminate the market for this product, and everyone ought to chip in to make that happen, not just the people who currently are at risk. The whole funding model is fundamentally broken.
That's a totally reasonable point (and perhaps worth starting a separate top-level reply about), but it's not at all what the GP comment was arguing.
(I'm not sure whether the evidence justifies that claim either, but the claim is a lot stronger than gouging)
Instead, the US both has the largest R&D subsides and the largest drug prices.
No, they acquired Pharmasset, the company that made the cure, for $11.2B. That was a pretty low-risk move. It was already an obvious money maker.
"for all the RnD that went into doing that"
In the 18 months following Sovaldi’s approval, Medicare alone spent $8.2 billion on the drugs...that doesn't include private insurance payments. I imagine the acquisition was paid off quite quickly. Pricing after that was just how much profit they wanted to make.
See these for more detail:
https://www.finance.senate.gov/imo/media/doc/Wyden-Grassley%...
https://www.finance.senate.gov/ranking-members-news/wyden-gr...
While that's by definition true of any pricing decision, there's a lot more to the story: https://news.ycombinator.com/item?id=21883254#21884030
Is there something that’s supposed to be inherently evil in acquiring a company anyway?
Because pharmasset, the smaller company, had forecasted a price of 36000$ for Solvadi. With Gilead buying it out, it was able to reach a third of that price point and that’s a win to me.
Pharmasset discovered Sofosbuvir (Sovaldi), Gilead acquired them in 2011.
Gilead developed Ledipasvir some time after that.
I was contesting the phrase "literally made a cure for a previously uncureable disease". Which is why I called out the acquisition. They literally bought it, not made it.
See the fable the little red hen. It's work ethics.
Before I was a software developer I was in equity research, and one of the companies that we covered was Pharmasset. The whole point of these research companies is to find a winner and be acquired.
I get that it's low risk for the acquirer, but without that big payout the research and trials won't get done by the small companies, who won't be able to raise funding, etc.
I know that's revenue and not profit, but that doesn't even include private insurance, self pay, or sales outside the US.
That's bullshit.
It is perfectly acceptable to know something is wrong without wishing to extemporaneously perform for you.
I hear many people "know something" about health insurance premiums rising too much, blaming ACA for what they "know" are unnecessary increases in premiums to line the pockets of the fat cat insurance company executives.
Except they don't "know" that the ACA provided a mechanism for far more people to get healthcare for far more health issues. And since you don't get more of something for free, obviously the costs have to be paid somehow. And if they looked at the numbers, they would see that healthcare cost increases have slowed dramatically since ACA was effected.
You'll be glad then to hear that very few people actually are.
Those prices that are cited are meaningless - most insurance plans these days will cover the drugs, and even the insurance companies aren't paying those prices to the pharmaceutical companies, because there's such fierce competition among the companies producing HCV drugs that they'll cut deals with the insurer for a tiny fraction of those sticker prices.
US pharma companies are completely out of control