The $84,000 Cure, Ctd

A reader writes:

I’m a pediatrician with a background in healthcare consulting prior to med school, and I’m with you on drug costs. People take this view like it’s “blood money” because the companies sell it for $10 in Egypt. That’s not blood money; that’s charity.

Screen Shot 2014-04-27 at 12.53.49 PMFor all the innumerable flaws in our healthcare economic model, we are the engine of pharmaceutical development. The fact that the US market will bear those costs drives funding for essentially everything, such as, for instance treatment for Hep C (which is not really a disease of the rich and famous, and will never have much sales volume in the US).

They come up with these drugs, and price them (often highly, I’ll admit) based on what the market will bear. They then essentially give it away in countries where the market will not bear that (Egypt) or sell it in bulk volumes to healthcare systems who negotiate a better rate with their size (Europe). It’s only our fractious and ridiculous healthcare system that prevents us from negotiating better rates a la Canada and our Euro friends.

Then people like to heap abuse on Pharma for coming up with boner bills and hair regrowth formulas. They do this in utter ignorance of HOW those drugs were discovered. For example, Viagra?

Anti-hypertensive research, erections being a unanticipated side effect. Rogaine? Anti-hypertensive research (hair growth is a side effect). Latisse? Glaucoma treatment (with a side effect of sexy eyelashes).

These drugs came out of treatment research, and have the added benefit of making people happier. There is almost no original research (only refinement) going into any lifestyle drug besides male birth control (which I would argue is a FANTASTIC public health drug) and female arousal (which is a bit more ambiguous).

Sure, the prices look like highway robbery. But so many of these drugs fail miserably, either not working, or for less tolerable side effects than glorious eye lashes. And they all cost insane amounts of money to research, and even the failures advance science. Not to mention the financial awards really incentivize research into practical applications of new discoveries in university and public labs. It’s a lot easier to take a risk in an academic setting with the possibility of a pot of gold at the end of the rainbow.

Another refocuses on the pill that started the thread:

A little context on Sovaldi, as I happened to be discussing this last night with a friend who works at Gilead in San Francisco (the same company that makes Truvada). Gilead paid $11 billion to Pharmasset just for the molecule that the Sovaldi drug is based on. That was before developing and marketing the drug, getting FDA approval, and everything else that goes into making a drug fit for distribution. An eleven figure outlay just to start the process of hopefully developing a drug.

Another reader:

The issues around drug pricing are real. However, Sovaldi is a relatively poor place to pick a fight. The drug will make a significant and legitimate impact on the Hepatis C virus (HCV). The clinical data have been impressive, and it has already spurned on competition from other pharmas. For example, a collaboration between AbbVie and Enanta has yielded a regimen that is as impressive as Sovaldi (and arguably a tick better in certain subsets). They are filing for approval and expected to be on the market. They’ve also signaled that they will undercut Sovaldi’s price tag. In this situation, the market is working as it should, triggering competition, innovation, and pricing pressure.

Also, for these types of small molecules (rather than biologics), I wish that those outraged by the prices would acknowledge one long-term outcome: these drugs will eventually go generic. When they do, the cost of “curing” HCV for the population as a whole will drop significantly. That’s a good place to be, in my opinion. Gleevec, a relative wonder drug for a form of leukemia, is due to go generic very soon. The only impact on society will be a decrease in costs.

As for the view that these companies are gouging patients and society through drug prices: perhaps, as I can’t necessarily confirm or deny. However, I do believe that society is willing to accept high prices initially, provided that they are part of a pact wherein the manufacturer uses the profits for new and novel initiatives. In the case of Sovaldi, the drug maker Gilead has not violated that pact. As you know, they’ve been a long-time leader in the development of novel HIV drugs. And now they appear to have taken those profits and made a large impact in the lives of those with HCV.

But another proposes a different means of innovation:

Why can’t we have an medicinal X-Prize?  Granted, the sums required would be much larger.  But how hard would it be for our own government, or preferably a consortium of developed countries, to pitch in and structure a competition along the lines of “first company to develop a cure for ___ disease will receive a lump sum payment of $5 billion, and the second company will get $2 billion.  Entry into the contest requires developing company to release into the public domain any and all patent rights associated with the treatment.”

Now, those numbers are huge. But let’s say it costs $10 billion in prize money to get that Hepatitis C drug.  Considering that 350,000 people a year die of the condition, that’s about $14,000 per life saved. In just a year. Even in the United States, the number is 15,000 annual fatalities with an estimated 2% of the population carrying the virus (according to the Wiki machine).  What is the cost to our healthcare system of a couple million people needing decades of medical surveillance and intervention for an untreated condition?  What is the cost to our economy of many many people being less able to work and contribute?  Somebody smarter than me could run the actual numbers, but even if we just focused on the costs to the US economy and let the rest of the world ride for free, I’d be surprised if the ROI wasn’t massively positive.

Another adds:

After paying out the prize money, the U.S. government would demand any other country that wanted to use the drug pay a % of the prize equal to the country’s percentage of GDP.  At a quarter of the world’s economy, the U.S. could end up paying as little as $5 billion of the $20B prize.

(Photo: A Solvadi pill)