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Comment by chefkoch | Hacker News Reader

If all drug companies were a cartel you'd be right, but If a single company could provide a cure they would wipe everyone out of that market and could charge enormous sums. For example BMS had recently a CAR-T therapy approved by the FDA for myeloma, wich is not a cure yet.

But the list price is $419 000.

https://www.fiercepharma.com/marketing/bristol-myers-bluebir...

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The whole premise of the notion is that managing the disease is more profitable than curing it. So it is not the ones who develop a cure that wipe everyone else out of the market but rather the other way around.

Consider a disease has an effective daily pill treatment where each pill costs $.50 to make. Someone comes along with a single pill that costs $1000 to make but cures you. The cure developers have just spent a lot of money on R&D and need to make a profit on the administration of the cure, so they need to price it significantly over their production costs. The established treatment on the other hand has a war chest and can recoup short term losses in the long run, so they can afford to drop their prices or even give it away for free for a limited time. Perhaps some segment of the population will pay a hefty premium just for not having to deal with the hassle of treatment, but most people don't have thousands to spend on such a luxury and will stick with the option they can afford right now, even though it will wind up costing more over the course of their lifetime.

I don't know how it works in the US, but here in Germany i am pretty sure your health care provider has to pay for it.

They can't keep your arm in a cast because fixing it with an operation is top expansive.

I think bringing healthcare insurance providers into an argument about whether there's a cartel of pharmaceutical companies artificially keeping up prices it's really not a good idea. It's possibly different in Europe but I think if you have any experience of the US system it's clear that there's some form of rorting and artificially inflated prices where the health insurance providers are in cahoots with all the providers and are somehow gouging the prices there. if you pay cash right now maybe cost you 300 if you put in your insurance the same thing maybe cost 3000 and then there's even a second order incentive effect where "health care professionals" want to give you these extra treatments if it's going through insurance.

This isn't a question of denying someone service, this is a question of what form the service takes. I am certain your health care provider won't pay 1 million dollars for a different cast design that reduces the time you wear it by 1%, nor should it. In the scenario I'm describing, both options are medically adequate, one is just more convenient but also substantially more expensive. Insurance pays for what you need, but it is quite common to deny claims which are not medically necessary.

In the case of this cancer,the maintainance drug is around $1000 a pill so you get to that million pretty quickly.

Okay, so the insurance company would pay $10 Trillion for one person to receive the cure for that cancer then? Obviously there is a limit.

The fact is that $1000 is not the cost of producing the pill, that is the amount they can charge for the pill while still getting people to pay for it. When there is no competition, and people would die without it, prices get very high very quickly. There is an extremely large barrier to entry for new medicines, and pharmaceutical companies are structured to recoup the massive development costs by charging large sums for inexpensive to produce goods that they have essentially a monopoly over. If it costs billions of dollars to develop a cure, that cure is going to have to be expensive, but a cure administered repeatedly can amortize those costs over many low-cost doses, while a one-time cure can't. Insurance companies are all about spreading costs over time - paying out large sums to large numbers of people all at once is a lot more problematic than smaller, predictable payouts over a longer period of time. It is in their best interest as well for you to manage the disease.

Thank you for this analysis I believe it's making my case more clear.

I agree that's possible, like a form of payments in installments or debt. Which is very common among a portion of the demographic.

It would be good to see some actual economists weigh in on this.

I'm not an economist I kind of wish I was in this debate but I think the point you make is a hard one to refute.

Does national insurance pay for something like that in US? Unless this is paid in taxes, the price is exorbitent.

I don't know yet it was approved some days ago, but i guess yes.

Cancer meds are really expensive, a four month cycle in myeloma ( where most of the time 2/3/4 drugs are combined) can cost more than 250k. Revlimid, a maintainance drug often given for years can cost 20k a month (in India it's $150 a month).

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