5 ms·

> With respect to concerns about the list price of CDV, past price actions enabled the provision of consistent supply of a product with high carrying costs and

> With respect to concerns about the list price of CDV, past price actions enabled the provision of consistent supply of a product with high carrying costs and very limited purchase volume of 200-300 units per year. The list price of CDV does not reflect the actual cost of the product to hospitals that purchase it, after rebates and other adjustments. Because CDV has a relatively limited shelf life and the minimum CDV purchase requirement for Valeant is roughly 3-5 times higher than recent annual sales volume, we have written down at our own expense approximately half of purchased quantities in the past few years. The company does not generate material revenue from this product, which represents less than 0.01% of our total revenue. (statement by Valeant) A pharmaceutical that is being produced in such low volumes, irrespective of how mundane and cheap the raw chemical may be, cannot be produced cheaply.

maxerickson 10y ago
The real problem is The list price of CDV does not reflect the actual cost of the product to hospitals that purchase it, after rebates and other adjustments. Translated, it means "Some payers are idiots and base their payments on whatever list price we choose.". One of the biggest idiots is the US government by way of Medicare and Medicaid. As far as the production of pharmaceuticals, just the other day I was talking to someone involved on the testing side and they were describing how the latest production techniques let them put everything they need to make a drug in a pretty small room. Basically, you could expect improvements in chemical engineering processes to drive down costs over time.
- grzm 10y ago
  > Translated, it means "Some payers are idiots and base their payments on whatever list price we choose.". One of the biggest idiots is the US government by way of Medicare and Medicaid. This is a very contentious topic with a lot of strong opinions, so I weigh in gingerly. The pharmaceutical industry lobbied for Medicare Part D which prevents Medicare/Medicaid from negotiating prices. One argument for this is that it indirectly provides incentives for drug companies to do research. And I'm sure even that's oversimplifying it. Then again, the particular circumstances aren't actually necessary for the point I'm trying to make. I'm not sure if you think the US government is one of the biggest idiots because they're involved in health care at all or because they're not doing health care right (that's another discussion), but I'd argue they're not idiots: the lawmakers/regulators are responding to their incentives. Whether or not you (or I) agree their incentives align with our priorities is another thing entirely.
  - maxerickson 10y ago
    "idiots" is euphemistic. My ire is directed at the whole arrangement which obviously isn't working very well (our healthcare is expensive and not particularly outstanding, especially when you consider that after all that expense there is still an awful lot of under-served demand). I see it as a choice made by the US as a whole, not simply as lawmakers and regulators responding to incentives. 2 days ago I picked someone who could barely walk up from the hospital. The funding model took discretion away from the doctor, so it was left to the patient to try to decide, through the fog of drugs and their recovery, between paying the outlandish room rate out of pocket and leaving. The idea that "indirect incentives" would seriously be suggested is a great example. Of course indirect incentives will provide a great opportunity to indirectly exploit the system. You want innovation? Pay direct bounties for innovations, contingent on reasonable cost-plus access to the innovation. You want basic research? Pay for it directly.
    - grzm 10y ago
      I agree with a lot of what you're saying. There's a lot of important discussions to be had to figure out a better way we can agree on and get implemented. There's also a lot of anger and frustration which can be reflected in how we talk about it. Unfortunately sometimes that can sometimes get in the way of having the constructive conversations we need to move forward. As for choice made by the US as a whole, I don't agree that's the case, at least not directly. The lack of transparency into relationships between regulators and the industry makes it difficult for the citizenry to make informed choices. We might get bits and pieces, but lack of trust in both each other and sources can make any discussion devolve into a "he said/she said" argument. Indirectly we've made this choice (as a populace over time), in that we've allowed things to get this far. And yeah, direct incentives in the case of health care research would be much more transparent and likely less susceptible to abuse. That said, I freely admit I'm not a public policy expert. Like anything else, there are differences in how things operate when the scale changes. I've found this article useful as providing more ideas on how to think about the health care situation: http://www.theatlantic.com/magazine/archive/2009/09/how-american-health-care-killed-my-father/307617/ http://www.theatlantic.com/magazine/archive/2009/09/how-amer... I'm glad we're seeing more articles in this area, and more discussions. Thanks for being a part of it!
Moshe_Silnorin 10y ago
The nootropics community often have kilograms of very complex novel compounds synthesized in one off batches for far far less than the list price of this drug. Perhaps this could be synthesized on demand.
- barkbro 10y ago
  Keep in mind that the requirements for an IV drug are much higher than those of nootropic enthusiasts. All compontents have to be within a narrow concentration range (consistently, across batches) and very low levels of byproducts are allowed. I'm not saying it's as expensive as Valeant claims, but it might be more expensive than you think.
- aab0 10y ago
  More realistically: just import it from the rest of the world.
- refurb 10y ago
  Production of bulk chemicals is way cheaper than production of pharmaceutical grade drugs. GMP (good manufacturing processes) is a collection of a shit-ton of regulations around testing starting materials, storage requirements, analytical analysis, impurity limits, shelf life, etc).
throwaway2048 10y ago
this smells a lot like apologetics. You can come up with an infinite amount of similar reasons for any complex process. Saying it isn't enough, actual basis/numbers are required to support an argument. The precision required for a small batch of custom ASIC chips greatly exceeds that of a completely standard and easily created compound, for example. Yet you can still get them for around less than $100 a chip even with relatively small orders (say single wafer, maybe 200 chips), if the chip itself is relatively simple. Anyone even remotely familiar with the process can come up with a massive laundry list of impressive sounding constraints and similar that could "justify" them costing $10000 a chip. After all, its literally the most precise form of manufacturing human kind is capable of, it took decades of research, and we are working with structures that are only a few dozen atoms wide, the factories ALONE cost billions of dollars to build, and all this is being delivered, 100% custom to you, surely thats worth a kings ransom! Both industries are pretty much the definition of barrier to entry, with absolutely titanic initial investment required. The difference is one industry is relatively competitive, while the other is full of drug-monopolies that you either pay, or you die.
- ceterum_censeo 10y ago
  > this smells a lot like apologetics. That's hardly my intention here, and frankly, I find the accusation both insulting and offensive. As with many (most?) pharmaceuticals, the cost of the active ingredient doesn't play a large role in the ultimate price. This is a prescription injectable with a volume of 200–300 units per year. It will need to be produced under GMP, and since the volume is minuscule, it's going to be produced using an expensive batch process. Setup/teardown, time, testing, packaging and logistics are going to dominate the per unit cost. It's really, really difficult to predict what the cost would be without more research, but somewhere between the original $950 and the current $27k wouldn't surprise me less than either extreme. (Keep in mind these aren't the ASP) Portraying the entire pharmaceutical industry as one of comfortable monopolies based on the actions of some unlikeable bad actors isn't fair: the majority of the industry defines "cut throat".
  - x0x0 10y ago
    The drug was sold for decades at 1/28th the current price. Do you believe they were losing money hand over fist? Also, this seems like something a compounding pharmacy could make.
andmon2 10y ago
> A pharmaceutical that is being produced in such low volumes, irrespective of how mundane and cheap the raw chemical may be, cannot be produced cheaply. According to their website (http://www.valeant.com/Portals/25/Pdf/PI/CDV-PI.pdf http://www.valeant.com/Portals/25/Pdf/PI/CDV-PI.pdf) CDV is Calcium Disodium Versenate (edetate calcium disodium). Each dose appears to be 1g. It looks like Sigma (the people who supply molecular biology labs with really pure chemicals for experiments) sell 1kg for less than $500. http://www.sigmaaldrich.com/catalog/product/sigma/ed2sc?lang=en&region=ID http://www.sigmaaldrich.com/catalog/product/sigma/ed2sc?lang... Thats a huge markup potential, especially considering that Wikipedia says the FDA approved it in 1953, so it's long out of patent ( https://en.wikipedia.org/wiki/Ethylenediaminetetraacetic_acid https://en.wikipedia.org/wiki/Ethylenediaminetetraacetic_aci...). And, in the UK, the National Health Service used to pay under £8 a dose according to an old copy of the British National Formulary (which is a publication which lists medicines , their uses and prices in the UK).
- ceterum_censeo 10y ago
  If you're going to pull prices off Sigma, at the very least you should quote the USP grade. The cost of a pharmaceutical is not the raw material cost for the API, which is frequently a small fraction of the total cost. The majority of the cost is in meeting regulatory requirements (e.g. GMP production, traceable testing). In the case of this product, a volume of 200–300 units per year is so tiny I would expect the setup/teardown costs for batch manufacture to also play a role. $27k sounds outrageously high, but the original $950 sounds equally outrageously low in light of the volume.
  - andmon2 10y ago
    The Sigma price was purely to give an indication and show that its a relatively cheap and common chemical not something esoteric. IMO, whether its $950 or $27k in the US, that is still outrageously high, considering that in the UK the same drug used to be sold to the NHS for under £8 a dose. In fact, as its out of patent, I'm surprised people don't just point to the price in other countries right away before making excuses for the manufacturer.
totalZero 10y ago
That smells like BS, plain and simple.

maxerickson 10y ago

The real problem is The list price of CDV does not reflect the actual cost of the product to hospitals that purchase it, after rebates and other adjustments. Translated, it means "Some payers are idiots and base their payments on whatever list price we choose.". One of the biggest idiots is the US government by way of Medicare and Medicaid. As far as the production of pharmaceuticals, just the other day I was talking to someone involved on the testing side and they were describing how the latest production techniques let them put everything they need to make a drug in a pretty small room. Basically, you could expect improvements in chemical engineering processes to drive down costs over time.

grzm 10y ago
> Translated, it means "Some payers are idiots and base their payments on whatever list price we choose.". One of the biggest idiots is the US government by way of Medicare and Medicaid. This is a very contentious topic with a lot of strong opinions, so I weigh in gingerly. The pharmaceutical industry lobbied for Medicare Part D which prevents Medicare/Medicaid from negotiating prices. One argument for this is that it indirectly provides incentives for drug companies to do research. And I'm sure even that's oversimplifying it. Then again, the particular circumstances aren't actually necessary for the point I'm trying to make. I'm not sure if you think the US government is one of the biggest idiots because they're involved in health care at all or because they're not doing health care right (that's another discussion), but I'd argue they're not idiots: the lawmakers/regulators are responding to their incentives. Whether or not you (or I) agree their incentives align with our priorities is another thing entirely.
- maxerickson 10y ago
  "idiots" is euphemistic. My ire is directed at the whole arrangement which obviously isn't working very well (our healthcare is expensive and not particularly outstanding, especially when you consider that after all that expense there is still an awful lot of under-served demand). I see it as a choice made by the US as a whole, not simply as lawmakers and regulators responding to incentives. 2 days ago I picked someone who could barely walk up from the hospital. The funding model took discretion away from the doctor, so it was left to the patient to try to decide, through the fog of drugs and their recovery, between paying the outlandish room rate out of pocket and leaving. The idea that "indirect incentives" would seriously be suggested is a great example. Of course indirect incentives will provide a great opportunity to indirectly exploit the system. You want innovation? Pay direct bounties for innovations, contingent on reasonable cost-plus access to the innovation. You want basic research? Pay for it directly.
  - grzm 10y ago
    I agree with a lot of what you're saying. There's a lot of important discussions to be had to figure out a better way we can agree on and get implemented. There's also a lot of anger and frustration which can be reflected in how we talk about it. Unfortunately sometimes that can sometimes get in the way of having the constructive conversations we need to move forward. As for choice made by the US as a whole, I don't agree that's the case, at least not directly. The lack of transparency into relationships between regulators and the industry makes it difficult for the citizenry to make informed choices. We might get bits and pieces, but lack of trust in both each other and sources can make any discussion devolve into a "he said/she said" argument. Indirectly we've made this choice (as a populace over time), in that we've allowed things to get this far. And yeah, direct incentives in the case of health care research would be much more transparent and likely less susceptible to abuse. That said, I freely admit I'm not a public policy expert. Like anything else, there are differences in how things operate when the scale changes. I've found this article useful as providing more ideas on how to think about the health care situation: http://www.theatlantic.com/magazine/archive/2009/09/how-american-health-care-killed-my-father/307617/ http://www.theatlantic.com/magazine/archive/2009/09/how-amer... I'm glad we're seeing more articles in this area, and more discussions. Thanks for being a part of it!

Moshe_Silnorin 10y ago

The nootropics community often have kilograms of very complex novel compounds synthesized in one off batches for far far less than the list price of this drug. Perhaps this could be synthesized on demand.

barkbro 10y ago
Keep in mind that the requirements for an IV drug are much higher than those of nootropic enthusiasts. All compontents have to be within a narrow concentration range (consistently, across batches) and very low levels of byproducts are allowed. I'm not saying it's as expensive as Valeant claims, but it might be more expensive than you think.
aab0 10y ago
More realistically: just import it from the rest of the world.
refurb 10y ago
Production of bulk chemicals is way cheaper than production of pharmaceutical grade drugs. GMP (good manufacturing processes) is a collection of a shit-ton of regulations around testing starting materials, storage requirements, analytical analysis, impurity limits, shelf life, etc).

throwaway2048 10y ago

this smells a lot like apologetics. You can come up with an infinite amount of similar reasons for any complex process. Saying it isn't enough, actual basis/numbers are required to support an argument. The precision required for a small batch of custom ASIC chips greatly exceeds that of a completely standard and easily created compound, for example. Yet you can still get them for around less than $100 a chip even with relatively small orders (say single wafer, maybe 200 chips), if the chip itself is relatively simple. Anyone even remotely familiar with the process can come up with a massive laundry list of impressive sounding constraints and similar that could "justify" them costing $10000 a chip. After all, its literally the most precise form of manufacturing human kind is capable of, it took decades of research, and we are working with structures that are only a few dozen atoms wide, the factories ALONE cost billions of dollars to build, and all this is being delivered, 100% custom to you, surely thats worth a kings ransom! Both industries are pretty much the definition of barrier to entry, with absolutely titanic initial investment required. The difference is one industry is relatively competitive, while the other is full of drug-monopolies that you either pay, or you die.

ceterum_censeo 10y ago
> this smells a lot like apologetics. That's hardly my intention here, and frankly, I find the accusation both insulting and offensive. As with many (most?) pharmaceuticals, the cost of the active ingredient doesn't play a large role in the ultimate price. This is a prescription injectable with a volume of 200–300 units per year. It will need to be produced under GMP, and since the volume is minuscule, it's going to be produced using an expensive batch process. Setup/teardown, time, testing, packaging and logistics are going to dominate the per unit cost. It's really, really difficult to predict what the cost would be without more research, but somewhere between the original $950 and the current $27k wouldn't surprise me less than either extreme. (Keep in mind these aren't the ASP) Portraying the entire pharmaceutical industry as one of comfortable monopolies based on the actions of some unlikeable bad actors isn't fair: the majority of the industry defines "cut throat".
- x0x0 10y ago
  The drug was sold for decades at 1/28th the current price. Do you believe they were losing money hand over fist? Also, this seems like something a compounding pharmacy could make.

andmon2 10y ago

> A pharmaceutical that is being produced in such low volumes, irrespective of how mundane and cheap the raw chemical may be, cannot be produced cheaply. According to their website (http://www.valeant.com/Portals/25/Pdf/PI/CDV-PI.pdf http://www.valeant.com/Portals/25/Pdf/PI/CDV-PI.pdf) CDV is Calcium Disodium Versenate (edetate calcium disodium). Each dose appears to be 1g. It looks like Sigma (the people who supply molecular biology labs with really pure chemicals for experiments) sell 1kg for less than $500. http://www.sigmaaldrich.com/catalog/product/sigma/ed2sc?lang=en&region=ID http://www.sigmaaldrich.com/catalog/product/sigma/ed2sc?lang... Thats a huge markup potential, especially considering that Wikipedia says the FDA approved it in 1953, so it's long out of patent ( https://en.wikipedia.org/wiki/Ethylenediaminetetraacetic_acid https://en.wikipedia.org/wiki/Ethylenediaminetetraacetic_aci...). And, in the UK, the National Health Service used to pay under £8 a dose according to an old copy of the British National Formulary (which is a publication which lists medicines , their uses and prices in the UK).

ceterum_censeo 10y ago
If you're going to pull prices off Sigma, at the very least you should quote the USP grade. The cost of a pharmaceutical is not the raw material cost for the API, which is frequently a small fraction of the total cost. The majority of the cost is in meeting regulatory requirements (e.g. GMP production, traceable testing). In the case of this product, a volume of 200–300 units per year is so tiny I would expect the setup/teardown costs for batch manufacture to also play a role. $27k sounds outrageously high, but the original $950 sounds equally outrageously low in light of the volume.
- andmon2 10y ago
  The Sigma price was purely to give an indication and show that its a relatively cheap and common chemical not something esoteric. IMO, whether its $950 or $27k in the US, that is still outrageously high, considering that in the UK the same drug used to be sold to the NHS for under £8 a dose. In fact, as its out of patent, I'm surprised people don't just point to the price in other countries right away before making excuses for the manufacturer.

totalZero 10y ago

That smells like BS, plain and simple.