Novartis increased the price by about $5k a year. That's insane, I don't think this should be legal. How come there are no laws that keep the prices of medication under control?
https://lifescivc.com/2019/12/venturing-a-perspective-on-the...
I don’t even know how I feel about that, but Novartis as a whole is a shitty company. Quit a year after their buyout because they completely ruined what was once a great place to work.
Counterpoints?
But there is another factor which IMO is important: The domestic spend on pharmaceuticals. The US healthcare system seems to be more pharmaceutical friendly. Yearly US spend on pharmaceuticals alone is about $330 billion [2], while yearly EU spend on "medical goods", which I assume to include pharmaceuticals, seems to be only €120 billion [3].
So pharmaceutical spend per capita is also about 1:4 when compared to the EU, not just R&D.
As production usually follows consumption (which is why e.g. every US and EU car producer has domestic factories in China), one could also argue that the high US health care costs are the reason why so many US pharma companies exist.
[0] https://www.healthaffairs.org/do/10.1377/hblog20170307.05903...
[1] https://www.vfa.de/download/the-pharmaceutical-industry-in-g...
[2] https://www.actuary.org/content/prescription-drug-spending-u...
[3] https://ec.europa.eu/eurostat/statistics-explained/index.php...
Factors that could reduce such spending without impacting research output include:
* Lower costs (e.g. salaries for early career researchers don't have to be as large to cover their university debt).
* More research done in publicly funded universities or other research institutions (including where a pharma firm funds a project).
* Better cooperation between companies (e.g. Research Council joint programmes).
* Better controls against overspending on dead-ends (cultural or legal).
* Different reporting on what, exactly, counts as "R&D" spending (e.g. does everything a researcher does at work count as Research? Does maintenance of research facilities count?)
I'm not saying that all of these represent the actual difference. I'm just saying that using spend in a given sector as a proxy for output seems a bit odd.
The generic alternative costs about $9000 a year, so it's clearly a difficult drug to manufacture and supply. And 100k a year makes a great headline, but what does the average consumer actually pay? 100k a year is the starting point for negotiations for insurance companies not the price they pay. Wikipedia says the NHS (UK) is getting it for about 30k USD and the average in the US was 85k USD
https://en.wikipedia.org/wiki/Imatinib
Plus, Companies profit or die based on revenue and costs, not prices alone. Since only about 6000 people a year get the main form of Leukemia this drug was developed to treat, it's pretty niche. Assuming all 6000 people are diagnosed in time and all are treated with this drug and all pay the 85k (or their insurer does), that gets you $510m a year.
But wait! We already said it costs about 10k for the generic. So when you take that off, the gross profit is $450m (per year for the US market).
Multiply that up by the 10 year average use span and you get 4.5bn a year and a 10 year patent gives you 45bn. Very juicy!
Except that developing a new drug costs 5-10bn USD
https://en.wikipedia.org/wiki/Cost_of_drug_development
And the success rate is something like 38% from Academia to Approval. So if you spend 7bn each on three drugs, it's cost you 21bn to develop the one that gets approved.
So about half of that juicy 45bn is gone just on development costs. Plus you're investing in development for a product that won't sell for maybe a decade and you need to factor in the risks (that none of your drugs work, that someone else beats you to market, that a better drug comes along, that some other treatment cures the disease you're targeting, that your drug works but turns out to be toxic in some other way and you have a huge lawsuit to settle).
Suddenly, if I were an investor, that 85k average price suddenly looks ok but not amazing. And remember, the price hasn't been 85k the whole time, it was 24k (or rather it was whatever insurers negotiated below 24k) in year one.
1. The generic for Gleevec (imatinib mesylate) costing $9k
2. Gleevec costing $100k retail
Neither of which have been true since Gleevec went generic (sensationalist reporting). Brandname imatinib mesylate costs $9-12k depending on insurance. You can get a rebate card that lowers that to around $200. Generic it's around $100-150 for a month's supply.
I really dislike pharmaceutical practices, but there are systems already in place that will allow actual "consumers" (patients, not hospitals and other orgs) to pay a reasonable price for the medication they need.
This really is no different than the Shkreli debacle.
And that's the point here: developing drugs is expensive and risky. So you need a big potential profit to do it. That means big revenue. Big revenue and small numbers of users means high prices.