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Comment by abeppu | Hacker News Reader

> The cost, however, is steep — the list, or wholesale, price is $3,960 a month, or more than $47,500 a year. The list price for the one-time initiation dose is $5,490.

Median income in the US is ~$31K apparently. So even in a rich country, this is like 50% more than the income of a typical person.

My understanding is the funding for the trials was partly from NIAID. This seems like yet another case where public funds are used for research, but a company ends up with the ability to dictate pricing.

I'm glad that this works and that there is another, more convenient and effective treatment option. But shouldn't we have some setup where if tax dollars pay for the research, the government should own a share of the IP commensurate with their funding level, and should then be able to have some say in pricing?

Or, if you think that the government itself shouldn't own IP for a product on the market, can we create an independent non-profit which receives ownership, and whose charter aligns with actually treating as many people as possible?

I'm not saying that when real, innovative work happens, pharmaceutical companies shouldn't get some meaningful return on the money they put in. But when the public supports the work, we shouldn't get nothing.

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> My understanding is the funding for the trials was partly from NIAID.

I have no particular insight into the pricing of this drug, but in general, NIAID funding doesn't get anywhere close to the level of investment needed to bring a drug to market (NIAID's total budget is something like $5Bn. A single drug can easily require that much money to go to market).

Moreover, it isn't a bright-line distinction between public and private funding: if a novel drug is developed (entirely privately) against a target for which academic researchers once received public funds, does it count as public funding? There's a huge gray area in between. Nearly all drugs can be characterized as "publicly funded", if you look hard enough.

Rules like this sound great, but in practice, they'll lead to perverse incentives (like drug companies completely avoiding targets from the academic world, in the previous example). Nobody rational wants to spend billions of dollars doing late-stage development and clinical trials to be torpedoed by a researcher who took a small amount public funding decades prior.

> I have no particular insight into the pricing of this drug, but in general, NIAID funding doesn't get anywhere close to the level of investment needed to bring a drug to market (NIAID's total budget is something like $5Bn. A single drug can easily require that much money to go to market).

According to [1] "the estimated median capitalized research and development cost per product was $985 million, counting expenditures on failed trials." That billion dollar figure is risk adjusted per product meaning that's the cost of all R&D and clinical trials against the number of products that hit the market. A lucky startup can pull off a successful trial for a few hundred million (i.e. Sofosbuvir), if not tens of millions for an orphan drug.

The most expensive ("oncology and immuno-modulatory drugs" which are similar in complexity to HIV therapeutics) come in at a median of $2.8 billion and a mean of $4.5 billion but only because of an extreme outlier, Dupixent, which cost over $6 billion to develop. Dupixent costs $40k/year and has a much larger target market than this HIV treatment (IIRC on the order of 10 to 100x). This HIV injection is far more likely to be discounted in the developing world so the sticker price likely reflects that too.

A $5 billion a year budget can go very far and the people should get the rewards for taking the risk, especially for a disease like HIV that has significant quality of life impacts on vulnerable populations.

[1] https://jamanetwork.com/journals/jama/article-abstract/27623...

Genuinely curious - why do these drugs cost so much? Can we make it cheaper? I know there’s a lot of hit & miss and that the cost of the drug also covers the misses, but it feels like we should be able to do this for millions, not billions.

https://www.pcisynthesis.com/want-to-know-why-early-drug-dev...

and

http://sitn.hms.harvard.edu/flash/2020/modern-drug-discovery...

are decent reads.

Mostly it's the complexity of the compounds involved, the supply chain, and regulatory costs.

And the the time value of money. see my sibling post.

It has to do with the time value of money and long development timelines. Here is a great blog post from a scientist trying to find investors for drug to cure his wife's terminal disease.[1]

>it takes a hundred dollars of drug revenue 17 years from now to motivate someone to invest one dollar today. No wonder drugs are expensive.

That is a 10,000% return on investment required to break even.

http://www.cureffi.org/2019/04/29/financial-modeling-in-rare...

It genuinely takes a massive amount of labor using mostly highly paid professionals like doctors, nurses, and research scientists. Even before any trials start, the support materials for a premarketing application for a drug are usually in the thousands of pages and include clinical trial protocols that describe minutiae like how blood samples will be drawn so data is comparable between hospitals. Then you have to find participating hospitals, PIs, and patients which means lots of negotiation and patient screenings and TV/radio/web advertising. Then you have to manufacture the drugs in small to medium quantities. Then you have to actually run the trials which means paying a lot of people and most if not all of their medical care related to the clinical trial.

Phase I trials, for example, are usually carried out under constant medical supervision and push the dosage as high as they can until 50% of the cohort will no longer tolerate it. That alone is usually thousands or tens of thousands per day per patient.

By the time you get to phase III where you have hundreds to thousands of patients, you're shelling out up to $1k per patient for the incentive and $100-1k per checkup for the length of the trial. A 1k person phase III can easily cost tens of millions in labor just to administer the drug and collect samples once a month for a year. Data provenance and normalization is important so a not insignificant chunk of this time is largely unavoidable paperwork.

And getting FDA approval is not the finish line. It's just the start of the roll-out. Now employ teams of reps to get the drug covered by every commercial insurance company and all Medicare/Medicaid parties so that patients have access to this life-saving treatment, get policies and authorization forms and billing codes created and implemented. Do outreach to make sure doctors and patients even know that a drug has been approved and how it compares to existing options.

Yeah, $5Bn may be a bit of an exaggeration, but it's not off by an order of magnitude; this review, based on data from Eli Lilly, put the fully capitalized R&D number at $1.8Bn in 2010:

https://www.nature.com/articles/nrd3078

(one can certainly quibble over the "cost of capital" assumptions these days, but the model isn't wildly wrong.)

> That billion dollar figure is risk adjusted per product meaning that's the cost of all R&D and clinical trials against the number of products that hit the market.

Yes, but as you know, you can't simply separate the successful products from the ones that fail. The former pay for the latter.

> A lucky startup can pull off a successful trial for a few hundred million (i.e. Sofosbuvir), if not tens of millions for an orphan drug.

Sure, one can always hit the lottery. But unlike startups (where the N-independent-failures model works OK), drugs don't make it to market without a deep-pocketed company willing to set huge piles of money on fire in the final phases.

Your other comment below does a good job of explaining why trials are insanely expensive...which is why lucky startups almost never run their own. So you're dependent on a system where deep-pocketed mega-corporations need to exist simply to get the drugs on the market, and they are reliant on massive returns to take the risk in the first place.

Globally there are ~50 new drugs per year. Total public and private spending on drug R&D hits ~190B per year. So even including government and charity donations your only up to 4 billion per drug. Private companies nominally cover ~60% of that dropping their investment to ~2.3 billion per successful drug.

However, that’s overly generous as a great deal of tax breaks etc indirectly subsidize that 2.3 Billion. So, it’s true drugs are expensive on average to create, larger numbers tossed around are generally intentionally misleading.

This is not a bad back of the envelope analysis. Forbes did one a while back that looked at 10 year R&D spend and then 10 year approvals (to account for the delay). Numbers vary wildly between companies.

But one thing to keep in mind is using your number, there are plenty of drugs that get approved that only have a few billion in sales over their lifetime. So either break even or not even breaking even. It’s a massive blockbusters like Lipitor ($10B in sales per year) that pays for all the mediocre drugs.

I think the issue people have is the public spends about 1.4 trillion on patented prescription drugs per year globally which is more than 10x what drug companies are spending on R&D. Especially when manufacturing and distribution is such a small fraction of this cost.

While time value of memory explains some of that it’s still a huge discrepancy. Advertising etc make up the difference and while cost effective for the company, their harder to justify as a fraction of drug prices. Especially when over prescription is so harmful due to side effects and adverse drug interactions.

"A $5 billion a year budget can go very far and the people should get the rewards for taking the risk, especially for a disease like HIV that has significant quality of life impacts on vulnerable populations."

This requires the starting axiom that profits are more important than human lives with respect to global public health. This is something that we as humans can decide, not some law of nature.

Big pharma's lobbying to enshrine IP rights by embedding them in the WTO has led to untold deaths from lack of access to medications in the developing world.

This Citations Needed podcast on "Vaccine Apartheid" contains much interesting information, even if you don't agree with the headline.

https://citationsneeded.medium.com/episode-129-vaccine-apart...

On a purely technical note, it's interesting to think about why it's cheaper to do the R&D to put a rocket into orbit than to develop a new therapy. Why does cutting-edge lab equipment cost $100k - $1M? This supply chain seems ripe for disruption.

>I'm glad that this works and that there is another, more convenient and effective treatment option. But shouldn't we have some setup where if tax dollars pay for the research, the government should own a share of the IP commensurate with their funding level, and should then be able to have some say in pricing?

>Or, if you think that the government itself shouldn't own IP for a product on the market, can we create an independent non-profit which receives ownership, and whose charter aligns with actually treating as many people as possible?

The current model of government funded research is like backing a Kickstarter because you want to see the product made, but get no direct benefit. It is made because we as a people think the world will be better off with the product, than without, and are willing to pay to make that happen.

I think government co-venture is also great option, as long as it is negotiated up front and we can keep political corruption out of it. However, the question then becomes if drug development will dry up once the the government has locked down all the IP and nobody wants to partner with them.

I think another good model would be seed support for independent non-profit pharmaceutical(s) charted to balance reinvested profits with social benefit (without government owning the IP). The question and risk here becomes one of oversight and accountability.

Well, thanks to the US government, the very rare immune mediated neurological disease I have was discovered in the early 2000s, at the Mayo Clinic, via NIH grant funds.

Because of the disease, I had uncontrollable orthostatic hypotension (low blood pressure when sitting/standing up), and I was passing out multiple times a day. I also was diagnosed with multiple types of arrhythmia.

If it were not for the US government, I would not be alive. I am a dual US|EU citizen, and while being American is naturally a huge part of my identity, I would not be afraid to renounce my US citizenship. The only reason why I do not is because the US literally saved my life and others with the disease I have, worldwide.

> can we create an independent non-profit which receives ownership, and whose charter aligns with actually treating as many people as possible?

There is a proposal for such an entity: https://en.wikipedia.org/wiki/Health_Impact_Fund

Independent non-profits trying to fight for individuals in a capitalist-driven society seems to be doomed to fail. An depressing example; Insulin and how the inventors made sure to make the the process available to anyone;

> The patent would not be used for any other purpose than to prevent the taking out of a patent by other persons. When the details of the method of preparation are published anyone would be free to prepare the extract, but no one could secure a profitable monopoly.

How did that go? 1,000% price increase, accounting for inflation. (US numbers)

Edit: Removed rant-driven generalization and miss-information regarding legal obligations.

Thanks for checking me. I get to upset reading these things.

> where corporations and their boards are legally bound to maximize profit, ignoring morals for profit.

Where is this true? It’s not even a definable legal standard.

You are definitely correct and thanks for pointing it out. Generalizations and miss-information doesn't help at all.

I obviously need to go out for a walk before I comment on these type of news. It's super exciting but also extremely depressing since the ones who'd need this the most likely wont afford it.

The FDA approves ~40 drugs a year. If you want 40 new drugs a year, it unfortunately will cost somebody something to coordinate the large number of professionals over many years required by a modern development effort. Few drugs have been developed successfully on good intentions.

I find excitement in the fact that we have found a way to get new treatments and cures. Other systems have been tried that weren’t so successful at pumping out new tech.

Could you elaborate a bit about which other systems have been tried, that weren't as successful?

I’m not familiar and it’s a complex topic. My knowledge comes from following the reforms in China and picking up bits and pieces of history. The overarching impression I’ve gotten is that a lot of ideas you can think of have been tried before in some capacity.

The USSR had a Ministry of Medical Industry and I think Japan might have gone with a bounty model? You can probably find more info.

Where everything falls over is that it’s just such a long journey from point A to B, where A is “a chemist has found something” and B is “an entire patient population is taking the drug.” There are a lot more steps than you’d think, and any alternative system needs to do well at each step due to the wildly varying incentives between participants.

As a toy thought experiment not based on real-world events, suppose the government has just paid a $500 million bounty for new Drug X that otherwise wouldn’t have been developed. The government now owns Drug X. Okay, great. But doctors aren’t prescribing it. So the government creates a Ministry for Doctor Education that tells clinicians what to prescribe. But the Ministry for Doctor Education develops its own goals and forgets that it’s supposed to help out the pharma bounty program in marketing new drugs. In the meantime, the government is outbid in manufacturing Drug X, and its contracted manufacturers are exporting Drug X overseas, so the government nationalizes the manufacturers. But then the manufacturers forget that they’re supposed to work on novel drugs and decide only to take on low-risk work. Etc. etc.

It just empirically works to have a tech transfer model where a set of entities gets rich by taking a drug on the entire journey into the bodies of thousands/millions of patients.

Does anyone actually end up paying the 47,500 a year for the drug or is this some sort of gimmick on the part of the drug company when they negotiate reimbursement rates with CMS or other payers?

I'd imagine this cost would generally be borne by insurers or a government health care body.

I don't think either insurers or government health care bodies end up paying the sticker price. They usually have a contracted rate with the pharma companies that is less. Also, pharma companies have patient assistance programs which usually offer major discounts. I really don't know how effective this is and hhow many individuals get stuck with the full bill.

So is the sticker price rarely paid?

The standard brand name combination pills come to nearly $20,000 a year for the public insurers in Canada. They really do pay that much.

This is a fair point. Negotiated rates are usually lower and the cost should be spread across a pool of insured people, not all of whom have conditions that require ongoing high-cost therapies. Other comments in this thread also point out that there are alternative HIV treatments from Gilead and others that cost less. If the demand is not there for the new monthly injectable, ViiV will suffer for mispricing its own drug.

> So even in a rich country, this is like 50% more than the income of a typical person.

Generic versions of expensive American drugs tend to be released by Indian pharmaceutical companies into developing countries after a while.

They do it after the patent expires.

Not always, the cancer drug lenalidomid (Revlimid) is around 20 000$ for 21 pills in the US, the indian generica is around 200$.

India does not allow patents on pharmaceuticals.[1] As a result, they have an excellent market for generics, but new medicine is 6-8 years behind the rest of the world.

https://link.springer.com/chapter/10.1007/978-981-13-8102-7_...

This is a brand new treatment. All things that are the product of cutting edge research and are difficult to get to market will be expensive.

I'm taking an orphan drug that was approved in 2002/3 and costs more than this per month and last I checked the company that developed the drug was still in the red.

This idea that drugs should be cheap and accessible the moment they are approved is incompatible with economic reality. You need a system with a profit motive so that many people and investors are motivated to invest their lives, careers and money in that market so we get progress year after year.

This is a trolley car problem. On one track are all the people you can save in the present by making something immediately accessible to all regardless of the economic reality of those that produced the drug. On the other track all the the people that you can save long term by having an economically viable industry that can continue making advances that save lives in perpetuity.

> This idea that drugs should be cheap and accessible the moment they are approved is incompatible with economic reality.

I know that orphan drugs are lifesaving and it is life-and-death for the people who do and don’t receive them, but this is generally not true, including for orphan drugs. I know because I have 2 rare immune mediated neurological diseases affecting my peripheral nervous system and I take an orphan drug (blood product) known as subcutaneous immunoglobulin.

Soliris, one of the world’s most expensive drugs, costing ~$600,000/year in countries with “socialized medicine” is estimated to cost less than 1% of that price to produce, as in less than $6,000/year. This is from industry insiders who have technical experience. Not only that, it is estimated that 80-90% of the work was discovered on public, government funds. See at 11:30 https://youtu.be/0uYCw5EDX8U

I have a background in applied science and I agree that this is the general ballpark case for orphan drugs, based on reading patents.

> The cost, however, is steep — the list, or wholesale, price is $3,960 a month, or more than $47,500 a year.

Remember though that this is a replacement for an existing drug therapy, not something totally new. Does anyone know how much the daily pills cost per month?

It looks like conventional treatment is between 400$ and 1500$ per month.

3k month sounds about right for a chronic condition.

Many many people pay at least this to stay alive. That said , Universal Health Care is needed for stuff like this to work. At 3k a month it makes the most sense to try and emigrate to a better country.

That doesn't scale. If you push the cost of healthcare to other countries when it becomes too expensive instead of fixing the system in the country where you live then every other country with a better system's healthcare will collapse as well.

Vote to improve the system where you live and make sure that your representatives realize that it could be them or their relatives in your situation.

Quite a few countries have restrictions in this anyway, so whether it would even work in individual cases is another matter, for instance, here is Canada's provision:

https://www.canada.ca/en/immigration-refugees-citizenship/se...

You could also buy a 10$ bus ticket

https://khn.org/news/americans-cross-border-into-mexico-to-b...

Before long they'll be smuggling insulin rather than cocaine if it isn't already happening.

They already do.

People buy insulin off Craigslist, in a way that is similar to a drug deal, because they cannot get it elsewhere. They sit in the car while their “insulin dealer” brings them the insulin from Mexico/Canada and they pay them in cash.

See: https://youtu.be/VLwDvK0j4DQ

Words fail.

From all my research, I've come to the conclusion that while there are things that are broken about the US system, it's not as fundamentally broken as people make it out to be.

Let's say there are two variables you can optimize for, X and Y, and that there are tradeoffs between optimizations such as optimizing for X often reduces Y and optimizing for Y often reduces X.

The problem with the popular discussion today is that no one ever acknowledges what the US system does well. They only talk about what it does poorly. If you don't acknowledge what it does well, it's trivially easy to come up with solutions that address the things it does poorly, but often at the expense of creating a new replacement that now does poorly at the thing that the previous system did well.

In the US, the system is remarkably effective at optimizing for financial incentives. The replacement system many people argue for will likely lay waste to optimizing for financial incentives. This doesn't come without a cost however. Eliminate the financial incentives and you will at minimum get less of two very important things: (1) investment by companies and capital markets in R&D, and (2) investment in a career in the field of drug R&D by individuals deciding what career to pursue. The loss of one or both would be devastating to the development of novel treatments in perpetuity.

As a general heuristic, I've found it valuable to figure out what a system does well before I propose a solution to replace it. If I can't articulate what a system does well, it's typically a sign that I don't yet understand the system well enough and don't understand what that system's designers were optimizing for when it was first implemented. This heuristic is applicable to all pretty much all systems, not just health care.

This comment is in very start contrast with the sibling thread regarding insulin. If a common drug like that is price gouged to the point that people will do street deals on unverified product then things are about as fundamentally broken as they are going to get, fancy discussions about optimizations and trade-offs can be discarded by simply looking at the available evidence.

> At 3k a month it makes the most sense to try and emigrate to a better country.

Countries won't let you in if you're going to cost taxpayers too much. For example, New Zealand won't let you emigrate there if you have serious psoriasis, since treatment can cost thousands of dollars/month.

For biologics, sure, but steroid creams are the standard treatment and work quite well, and are much cheaper - maybe $100/year.

I used "serious psoriasis" when I should have used "severe psoriasis". If your psoriasis is treatable with steroids and methotrexate, it isn't all that severe.

But psoriasis wasn't the point. Expensive treatment that's expected to be ongoing is.

> 3k month sounds about right for a chronic condition

My god, what a horrible way to look at life.

I believe that the government does own a portion of the IP.

If you read patents filed by defense contractors and pharma/universities they often say something like this "This invention was made with Government support under Contract no. F29601-03-C-0191 awarded by the Air Force Research Laboratory, Kirtland AFB, N. Mex. The Government has certain rights in the invention."

https://patentimages.storage.googleapis.com/f9/bc/b9/dd132ea...

So then why is the government letting the company reap so much of the benefits of their IP?

It depends on the contract made between the government and the developer before funding was issued.

So that when they want more research done, companies do not reply with: "you screwed us last time, NO THNX BYE"

Basically the same reason that "I changed the deal, pray i do not change it further" is a strategy that works at most once.

If, as a company, you have the option of charging $X if you accept gov’t funding or 400% * $X, doesn’t that sound like a great way to disincentivized taking govt funding?

And as others have said gov’t funding tends to be a small fraction of total cost of R&D.

And the funding tends to come very early - some professor is researching a new anti-viral and stumbles across a new molecule. It’s still several hundred million and a decade or more away from market.

It's been authorized in the EU since last year [0] and I bet it'll be partially or completely reimbursed by health insurances.

0: https://www.ema.europa.eu/en/medicines/human/EPAR/rekambys#p...

In contrast, the napkin estimate for the cost of a year's worth of HIV drugs (latest generation integrase inhibitors) was 20K as of around 2 years ago, for western countries. Dolutegravir became generic, but prices likely won't change dramatically (specifically in western countries).

Great interview on problems with intellectual property rights in the drug market. https://www.youtube.com/watch?v=u6OpapwQOks

I worked for a drug distributor a long time ago and the joke for AWP (average wholesale price) is that is stood for Ain't What's Paid. Almost all drugs were negotiated down to 70-80% of AWP.

In the US most HIV drug manufacturers have coupons or other voucher programs that patients can use the reduce the price by a lot.

This video by Noam Chomsky on science funding explains this better than I can: https://www.youtube.com/watch?v=Av96iIRa0f8

There is a substantial percent of the population whose yearly medical care costs exceed their income.

For example, about 7% of the world’s population collectively has some sort of a rare disease, which is theoretically treated with orphan drugs. There are also people who chronically live with cancer who end up living quite a long time. Diabetes, (type 1 or type 2) with or without complications, is quite expensive in the US.

I personally have 2 rare immune mediated neurological diseases affecting my peripheral nervous system. The only medication that has kept me in pharmaceutical remission is subcutaneous immunoglobulin (intravenous immunoglobulin did not work), and I have tried 10 different treatments plus combinations of them. When I was living in the US, my private commercial insurance paid, under contract (not the amount that was being billed which was much higher!), $100 per gram. In other words, they were paying $23,500/month for my blood product or $282,000/year.

In Europe, where I live now, the price goes for 40 Euro (about $50/gram).

Anyways, you should watch this, “The World’s Most Expensive Drug” (which it no longer is), which is quite revealing: https://youtu.be/0uYCw5EDX8U

Alexion (a pharma company) started the trend and now the have drugs that cost millions per year over, that are required over the course of a lifetime: https://www.nytimes.com/2019/08/25/health/drug-prices-rare-d...

There is a good documentary on it (requires a Hulu subscription): https://www.nytimes.com/2019/08/23/the-weekly/rare-diseases-...

Anyways, the prices of these drugs are an insult to the intelligence of a lot of scientists and (formal) engineers.

I also have type 1 diabetes, and because of my training in electrical engineering, I could tell by reading patents on analog insulin patents that a 10 mL bottle of insulin cost somewhere between $1-$10 to produce. Turns out that it costs between $3-$6 to produce. At its worse, in the US, it cost $350 per 10 mL vial for analog insulin.

Anyways, the best way of dealing with this situation is by having even the most disabled people working to offset these prices, along with having universal healthcare with price controls. Unfortunately worker protection against discrimination in the US is very poor and when your health benefits are tied to work then it just does not work. Patent law also needs to be reformed, and if the prices are obscene and unjustifiable, then they should be seized.

Or to approach the same issue from the other direction: Does public funding for research of this type self-sabotage, if it enables pharmaceutical companies to set pricing at a level which meaningfully limits the use of the results of that research?

How exactly are is big pharma limiting the result of that research? Anyone can use the research.

If the patents relating to likely avenues of that research are tied up, it makes it much harder.

How can you patent if there is open prior art?

You patent the necessary later steps, not the prior art itself. Companies have a pretty good method.

What is "prior art" when we're talking about profiting off of research if not the necessary steps to do something?

Anyone can’t use the research. Bayh-Dohl Act basically passes ownership of any IP to the person who received the grant.

https://en.m.wikipedia.org/wiki/Bayh–Dole_Act

The cost, however, is steep — the list, or wholesale, price is $3,960 a month, or more than $47,500 a year. The list price for the one-time initiation dose is $5,490.

Supporting a subculture that's heavily into anal sex is extremely expensive.

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