4 ms·

Pharma's Bizarre Pricing Shrug

48 points by Amorymeltzer 11y ago

pavlov 11y ago
Gene therapies may cost hundreds of thousands of dollars, or more than $1 million, for one-time treatments. Companies are pouring resources into developing more such drugs, with no real thought to who will pay for them, or how, and no acknowledgement that the current pricing model can't expand infinitely. I wonder if it's reasonable to expect something like Moore's Law for gene therapy? A 1980s Cray supercomputer cost over $1 million. Today the same amount of computing power is available in the cheapest Android phone you can find. If the same trajectory applies for gene therapy, it won't be about finding more million-dollar payers. Only those with the most serious chronic diseases will pay for it now, but in 30 years, all of us will have gene therapy for what today would seem like trivial alterations.
- themartorana 11y ago
  It's absolutely what will happen (see wind, solar energy or anything that has ever caused market shifts) - in fact, it's pretty incredible that the article doesn't acknowledge this. If the argument was about whether or not prices would drop fast enough, that would have been cogent.
  - duaneb 11y ago
    The market for computers seems obvious. The market for gene therapy is less obvious.
    - ianferrel 11y ago
      The market for computers is obvious now because there is a market for computers. The market for computers 40 years ago was far from obvious. Even 25 years ago, most people weren't really sure if this whole internet thing was going to amount to much. 15 years ago, people scoffed at the idea that the future of the internet was mobile phones. Predictions are hard. Especially about the future.
      - notahacker 11y ago
        I'd have thought the market for gene therapy was blindingly obvious compared with the market for computers 40 years ago: theoretical gene therapies being easier to conceive and more fundamental to human quality and length of life than theoretical everyday uses for calculation devices.
        maxerickson 11y ago
        Point mutation diseases impact a relatively small portion of the population. They are trivially addressable if you have a gene therapy that is able to work on arbitrary adult tissue, but it's not that huge a market. I think the largest win is sickle cell anemia, after that cystic fibrosis. Some way of treating obesity with gene therapy would be a blockbuster financially, but biologically we don't really have that worked out so much. (research is ongoing: https://en.wikipedia.org/wiki/Sickle-cell_disease#Gene_therapy https://en.wikipedia.org/wiki/Sickle-cell_disease#Gene_thera... )
        duaneb 11y ago
        I'm pretty happy with my ~50 year life span. I wouldn't spend a dime on gene therapy ever.
    - AnimalMuppet 11y ago
      If gene therapy can keep people from dying, I'm pretty sure there will be a market.
  - bigchewy 11y ago
    you may not be familiar with how healthcare works. There is, generally, almost no price pressure. In fact, consumers of healthcare, because they aren't paying for it, often equate higher price with higher quality so I wouldn't bet on the prices going down
    - killface 11y ago
      but with medical tourism becoming more reliable and trusted, as well as companies hq'd in countries unencumbered by our insistence on patents for biology, it's likely this is where another country takes the "top" spot from the US. China, Brazil, and India all seems like good potentials.
      - DrScump 11y ago
        Medical tourism doesn't work for chronic disease requiring recurring visits/treatments... unless you move there.
        WildUtah 11y ago
        unless you move there It's a big opportunity for Mexico, then. Already home of the most cost effective first world (OECD) universal health care system, Mexico has good facilities right on the US border in half a dozen cities and is popular for eye and dental procedures for US visitors already.
    - chimeracoder 11y ago
      > There is, generally, almost no price pressure. That's not actually true. There's tons of price pressure, but it all happens behind the scenes, and in a way that's invisible to patients. The way payments are structured, downward price pressure on suppliers may even correspond to an increase in the (apparent) out-of-pocket cost to patients. That doesn't mean that the overall amount that the manufacturers are getting paid isn't decreasing, though.
    - HillRat 11y ago
      Health consumers are rarely the customers, though; providers' customers are actually the carriers, and the customers make the market in healthcare. The asymmetry in price signaling between patients and carriers causes, as you point out, weird distortions in the market. (It doesn't help that price transparency for patients is basically zero.)
nonbel 11y ago
Worst case scenario: People will be getting screened earlier and earlier. They will be told they have a horrible disease but there is nothing they can do about it because it is too expensive. The mortality rates from the major killers like heart disease and cancer will drop. This will not be a good sign though. The mortality rates from suicide and poisoning from attempts at self medication will rise. The deaths will just be moved from one to the other category, giving the false appearance of effective and safe treatments.
- x5n1 11y ago
  Viva la Mexico or Canada.
- Scoundreller 11y ago
  Best-case scenario: Alternate markets will pop up to supply the molecules. There are plenty of such markets out there, I doubt patent-ignorance is beyond them.
bmelton 11y ago
Having "seen the light" on Shkreli's actions, I can't help but wonder whether or not I'm missing something or if people are just intent on driving a false narrative into the ground. Yes, he jacked the prices up, but only after getting it on a co-pay schedule, which means that like most drugs, you'll pay your insurance co-pay for it, but not the sticker price. For those without insurance, or who cannot afford it, they've stated (and has been corroborated) that they're happy to give Daraprim away for free. At the end of the day, the cost of the drug to the insured doesn't really go up by a whole lot, and the cost of the drug to the uninsured (but not 1 percenter) has actually gotten cheaper. In the meantime, Shkreli will be able to funnel Daraprim profits into research for the drug to keep it from becoming irrelevant, as it currently will be if left alone because the disease that it prevents supposedly evolves, and if left alone, would eventually slide from 70% effective to 60%, to 50%, etc. Meanwhile, for anybody to which that isn't an acceptable solution, these guys have released an alternative for $1 a pill. It may set back drug-parasitic relations in the process, but it's there, it's cheap, and people won't be dying as a result of the price hike. http://money.cnn.com/2015/10/23/news/companies/imprimis-daraprim-turing-martin-shkreli/ http://money.cnn.com/2015/10/23/news/companies/imprimis-dara...
- programmarchy 11y ago
  You're not considering the long term effects. The extra cost placed on the insurance company will get passed on to the consumer in the form of increased premiums. He's just using the fascist, anti-competitive, anti-consumer U.S. insurance economic model to his advantage. It's scum heaped upon scum.
  - Retric 11y ago
    A dirty secret of the insurance industry is they don't actually want to lower prices. They act like cost plus defense contractors and are happy to maximize any systemic costs that are spread around the industry.
    - abalashov 11y ago
      This. And they see plenty of private lucre for it.
scientes 11y ago
Nothing in this article mentions that National Institutes of Health public-sector funding does all the work in general research before they give a patent to the private sector so that the public pays twice. RT on US public research: https://www.youtube.com/watch?v=kN5_j7Yq9WA https://www.youtube.com/watch?v=kN5_j7Yq9WA (Note I think public funding for science is a good thing, unlike this attack piece by RT, but that is not the point.) Chomsky also talks about how state-sector created the transistor for example at AT&T Bell Labs.

48 points by Amorymeltzer 11y ago

Gene therapies may cost hundreds of thousands of dollars, or more than $1 million, for one-time treatments. Companies are pouring resources into developing more such drugs, with no real thought to who will pay for them, or how, and no acknowledgement that the current pricing model can't expand infinitely. I wonder if it's reasonable to expect something like Moore's Law for gene therapy? A 1980s Cray supercomputer cost over $1 million. Today the same amount of computing power is available in the cheapest Android phone you can find. If the same trajectory applies for gene therapy, it won't be about finding more million-dollar payers. Only those with the most serious chronic diseases will pay for it now, but in 30 years, all of us will have gene therapy for what today would seem like trivial alterations.

themartorana 11y ago
It's absolutely what will happen (see wind, solar energy or anything that has ever caused market shifts) - in fact, it's pretty incredible that the article doesn't acknowledge this. If the argument was about whether or not prices would drop fast enough, that would have been cogent.
- duaneb 11y ago
  The market for computers seems obvious. The market for gene therapy is less obvious.
  - ianferrel 11y ago
    The market for computers is obvious now because there is a market for computers. The market for computers 40 years ago was far from obvious. Even 25 years ago, most people weren't really sure if this whole internet thing was going to amount to much. 15 years ago, people scoffed at the idea that the future of the internet was mobile phones. Predictions are hard. Especially about the future.
    - notahacker 11y ago
      I'd have thought the market for gene therapy was blindingly obvious compared with the market for computers 40 years ago: theoretical gene therapies being easier to conceive and more fundamental to human quality and length of life than theoretical everyday uses for calculation devices.
      - maxerickson 11y ago
        Point mutation diseases impact a relatively small portion of the population. They are trivially addressable if you have a gene therapy that is able to work on arbitrary adult tissue, but it's not that huge a market. I think the largest win is sickle cell anemia, after that cystic fibrosis. Some way of treating obesity with gene therapy would be a blockbuster financially, but biologically we don't really have that worked out so much. (research is ongoing: https://en.wikipedia.org/wiki/Sickle-cell_disease#Gene_therapy https://en.wikipedia.org/wiki/Sickle-cell_disease#Gene_thera... )
      - duaneb 11y ago
        I'm pretty happy with my ~50 year life span. I wouldn't spend a dime on gene therapy ever.
  - AnimalMuppet 11y ago
    If gene therapy can keep people from dying, I'm pretty sure there will be a market.
- bigchewy 11y ago
  you may not be familiar with how healthcare works. There is, generally, almost no price pressure. In fact, consumers of healthcare, because they aren't paying for it, often equate higher price with higher quality so I wouldn't bet on the prices going down
  - killface 11y ago
    but with medical tourism becoming more reliable and trusted, as well as companies hq'd in countries unencumbered by our insistence on patents for biology, it's likely this is where another country takes the "top" spot from the US. China, Brazil, and India all seems like good potentials.
    - DrScump 11y ago
      Medical tourism doesn't work for chronic disease requiring recurring visits/treatments... unless you move there.
      - WildUtah 11y ago
        unless you move there It's a big opportunity for Mexico, then. Already home of the most cost effective first world (OECD) universal health care system, Mexico has good facilities right on the US border in half a dozen cities and is popular for eye and dental procedures for US visitors already.
  - chimeracoder 11y ago
    > There is, generally, almost no price pressure. That's not actually true. There's tons of price pressure, but it all happens behind the scenes, and in a way that's invisible to patients. The way payments are structured, downward price pressure on suppliers may even correspond to an increase in the (apparent) out-of-pocket cost to patients. That doesn't mean that the overall amount that the manufacturers are getting paid isn't decreasing, though.
  - HillRat 11y ago
    Health consumers are rarely the customers, though; providers' customers are actually the carriers, and the customers make the market in healthcare. The asymmetry in price signaling between patients and carriers causes, as you point out, weird distortions in the market. (It doesn't help that price transparency for patients is basically zero.)

nonbel 11y ago

Worst case scenario: People will be getting screened earlier and earlier. They will be told they have a horrible disease but there is nothing they can do about it because it is too expensive. The mortality rates from the major killers like heart disease and cancer will drop. This will not be a good sign though. The mortality rates from suicide and poisoning from attempts at self medication will rise. The deaths will just be moved from one to the other category, giving the false appearance of effective and safe treatments.

x5n1 11y ago
Viva la Mexico or Canada.
Scoundreller 11y ago
Best-case scenario: Alternate markets will pop up to supply the molecules. There are plenty of such markets out there, I doubt patent-ignorance is beyond them.

bmelton 11y ago

Having "seen the light" on Shkreli's actions, I can't help but wonder whether or not I'm missing something or if people are just intent on driving a false narrative into the ground. Yes, he jacked the prices up, but only after getting it on a co-pay schedule, which means that like most drugs, you'll pay your insurance co-pay for it, but not the sticker price. For those without insurance, or who cannot afford it, they've stated (and has been corroborated) that they're happy to give Daraprim away for free. At the end of the day, the cost of the drug to the insured doesn't really go up by a whole lot, and the cost of the drug to the uninsured (but not 1 percenter) has actually gotten cheaper. In the meantime, Shkreli will be able to funnel Daraprim profits into research for the drug to keep it from becoming irrelevant, as it currently will be if left alone because the disease that it prevents supposedly evolves, and if left alone, would eventually slide from 70% effective to 60%, to 50%, etc. Meanwhile, for anybody to which that isn't an acceptable solution, these guys have released an alternative for $1 a pill. It may set back drug-parasitic relations in the process, but it's there, it's cheap, and people won't be dying as a result of the price hike. http://money.cnn.com/2015/10/23/news/companies/imprimis-daraprim-turing-martin-shkreli/ http://money.cnn.com/2015/10/23/news/companies/imprimis-dara...

programmarchy 11y ago
You're not considering the long term effects. The extra cost placed on the insurance company will get passed on to the consumer in the form of increased premiums. He's just using the fascist, anti-competitive, anti-consumer U.S. insurance economic model to his advantage. It's scum heaped upon scum.
- Retric 11y ago
  A dirty secret of the insurance industry is they don't actually want to lower prices. They act like cost plus defense contractors and are happy to maximize any systemic costs that are spread around the industry.
  - abalashov 11y ago
    This. And they see plenty of private lucre for it.

scientes 11y ago

Nothing in this article mentions that National Institutes of Health public-sector funding does all the work in general research before they give a patent to the private sector so that the public pays twice. RT on US public research: https://www.youtube.com/watch?v=kN5_j7Yq9WA https://www.youtube.com/watch?v=kN5_j7Yq9WA (Note I think public funding for science is a good thing, unlike this attack piece by RT, but that is not the point.) Chomsky also talks about how state-sector created the transistor for example at AT&T Bell Labs.