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Comment by trowawee | Hacker News Reader

American taxpayers contributed at least $70m to the development of this drug[0] and our reward is to be gouged by Gilead. It's the exact same shit they've pulled with Truvada[1] and it's grotesque.

[0]: https://www.citizen.org/article/the-real-story-of-remdesivir... [1]: https://www.nytimes.com/2018/07/16/opinion/prep-hiv-aids-dru...

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This is actually pretty much the dumbest argument if you take just a moment to think about it.

Imagine some drug that costs $100 million to develop and that the most it can earn in the market is $70 million at a price of $1000. Okay, but then the government thinks it's really important to provide, so it's going to subsidize the development to the tune of $40 million. The drug company could then spend $60 million for development and earn $70 million. Over the typical drug development and sales lifetime, that's actually a quite mediocre return, but let's not worry about that.

But wait, the government paid 40% of the development cost. Why the fuck should that company be able to charge $1000, they should only be able to charge 60% of that, they should charge $600. Well, then they are fucked because they are right back at the same equation for whether it is profitable to work on that drug.

In general, with a moment's thought, any intelligent person will realize that expecting discounts on products based on how much the development was subsidized by the government completely obviates the entire point of subsidies.

$70M is a fraction of what it has taken to get Remdesivir to the point where it is today. The argument that government is paying twice for drugs is usually deeply misleading, though in this case it did sponsor some trials. Usually government funds pay for understanding biology and pharma pays for figuring out how to drug those findings. It’s a symbiotic process, and depends on drug discovery being a lucrative business.

All this said, Pharma has abused its position and pricing power. Remdesivir is an ok but not amazing drug, and pricing it this high is bad policy. Part of what they are doing is protecting their flank. Pricing it too low would cause people to say, “see! You CAN price drugs low, let’s make you price other things lower.” This is immoral reasoning but it’s part of the logic.

Drug pricing is super complicated, it’s worth understanding more deeply. Remdesivir is a weird case, and should be viewed in a larger context. See this post as a great place to start with further links within:

https://blogs.sciencemag.org/pipeline/archives/2019/12/11/ar...

(Conflict declaration: I founded a biotech)

Thanks for this. I knew at a distance how the pharma industry worked, but this filled in a lot of the gaps.

It typically costs ~$2B to develop a new drug. Taxpayer contributions are practically negligible.

Has anyone checked the $2B or is this what pharma tells?

Here's what our government says about it: https://www.ncbi.nlm.nih.gov/books/NBK50972/

Derek Lowe has an article about it that might help.

https://blogs.sciencemag.org/pipeline/archives/2017/10/18/dr...

How much did the Fed spend buying Gilead's bonds?

And how much more/less effective is Remdesivir compared to the generic Dexamethasone anti-inflammatory?

If you think Remdesivir is not effective you could simply choose to not take it.

They are not really comparabale as they are indicated at different points in the disease progression.

This ~$2B is an estimate that factors in the positive feedback loop high prices create.I'd expect minimal costs to achieve the same results to be one to two orders of magnitude less.

P.S. I worked for J&J once, seen their inefficiencies first-hand.

I briefly worked for GSK. It's not like the inefficiencies are limited to only US companies because they can charge more. Nor have I seen the public sector run any more efficiently or effectively (and it's often worse). The reality is that it takes a very large organization to develop a drug and large orgs tend to be run inefficiently.

> It's not like the inefficiencies are limited to only US companies because they can charge more.

US companies cannot really charge more than European companies [+]. They all charge more in the US and less elsewhere.

[+] In general, there are also cases where the same drug is marketed by a US company in the US and a non-US company in the rest of the world.

The US companies inherently had a home field advantage. Yet non-US companies were willing to jump through the hoops to follow the US drug funding model. If their original funding and development mechanism were sufficient or better, why go through the trouble? Why did all of them do it?

I don’t understand what are you referring to. Big pharma companies are multinationals that will adapt to the regulatory requirements and commercial practices of the different markets where they want to operate. Why would European companies renounce to be present in the principal drug market?

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