10 ms·

Humira’s Drug Formula: Start at a High Price, Go Higher

49 points by stablemap 9y ago

jinpa_zangpo 9y ago
The solution to overpriced patent protected drugs is forced licensing of patents at a royalty rate set by the government.
- kgwgk 9y ago
  This would certainly prevent new expensive drugs from entering the market. Unfortunately, it won’t result in new cheap drugs entering the market (something that the current system provides, despite all its problems, after a few years).
- barry-cotter 9y ago
  That’s expropriation. If you have a rough idea of the target market, growth rate and you know how much longer the patent will last you can upper bound and lower bound the loss of the intellectual property holder. If you want patent free medicine I suggest at least looking at what medical research looks like without the possibility of supernormal profits on some drugs to make up for the losses on all the many, many other drugs that don’t make it. One plausible model would be how the Soviet Union did drug development but I know very little about that bar that the pschopharmacologicals in Russia etc. are in some respects quite different from those used in the West.
- beisner 9y ago
  I think an interesting solution to consider is a sort of drug bounty program run by the government. Right now, companies put up their own capital to fund drugs, and get a big payout (via patent exclusivity) if they succeed. This is a bit problematic, because regardless of the expense of the cost to develop the drug, it is in the interest of the drug companies to charge as much as possible for the longest amount of time to maximize return on investment (personally why I think there are so many long-term treatments for diseases like HIV rather than full-on vaccines). But if the government were to say “we will give $X billion to the corporation that provides a drug that meets Y conditions, with the caveat that that drug will then be sold for $Z per course of treatment or immediately go generic”, then public health policy could direct certain aspects of drug discovery, and lead to more affordable outcomes. There are still issues with this sort of plan, but I think it has the potential to be workable.
Gatsky 9y ago
This is old hat. The USA's process for pricing drugs is totally in service of the drug company - even that much is obvious to mercenary financiers like Shkreli. The deeper problem is that we aren't getting newer better drugs. Once a blockbuster like Humira happens, it seems to kill off the field. This is mostly because you need to spend a lot to do a massive trial to show your Humira 2.0 is better, with no guarantee it will actually be better. The economics are very hostile. Pharma tends to do smaller trials with their new drug in more select populations eg those not responding to Humira, and therefore end up having a much smaller market if the drug works. Drug pricing should be re-engineered to encourage more development rather than the opposite. If better alternatives exist then pharma obviously won't be able to charge extortionate prices.
- remontoire 9y ago
  Reduce costs of getting FDA approval and reduce patent lengths?
  - mcny 9y ago
    I think I read here about the problem of 1. Patent a drug 2. Make inconsequential changes 3. Patent it again 4. Repeat I don't have any first hand experience in the industry so I don't know if this is a serious problem. I don't even know if it has a name!
    - pmyteh 9y ago
      It's called 'evergreening', FWIW.
    - adrianN 9y ago
      What's stopping a third party from doing 2 and 3?
      - celticninja 9y ago
        The original patent.
cnewey 9y ago
Humira really is a life-changing drug - but it is offensively, eye-wateringly expensive. Each auto-injector pen costs approx. £500; and I have to take one every 2 weeks. To put that in perspective, that's a cost of about £1000 per month - which is considerably more than my mortgage. My house costs less than my medical treatment. Fortunately for me, I live in the UK, where the NHS is able to help absorb these costs. In the US, I guess they aren't so lucky - if I lived there, my Humira treatment would financially destroy me - and probably my entire family, too. It's morally reprehensible for a company to have access to such a life-changing treatment and then proceed to charge such disproportionately vast sums of money (certainly, far beyond the cost of R&D). I suppose you could say that instead of crippling its patients physically (like their medical problems do), Humira cripples its patients financially - and I'm not sure that's a great deal better.
- rayiner 9y ago
  > It's morally reprehensible for a company to have access to such a life-changing treatment and then proceed to charge such disproportionately vast sums of money (certainly, far beyond the cost of R&D). I don’t really understand. If there is a moral obligation to help cure other peoples’ diseases, shouldn’t it be even more morally reprehensible to spend billions on things like TV serieses, cell phones, and social media websites, which could’ve been used to cure diseases instead? By your logic, isn’t Apple like the most evil company in the world, because they spend billions of dollars that could be used for drug research on making iPhones instead? Why is it somehow worse to make a profit curing people, than to make a profit not curing people?
  - Majestic121 9y ago
    Because the profit made by "curing people" is actually done by keeping others from curing people, via aggressive patenting, FUD over generics, lobbying against legislation that would make prices reason able... There's also the fact that public health is not a simple economic market, where customers can simply not buy your product. In a lot of cases, it is a life or death situation, and real human have to be treated, so it should be considered a public service.
deleted 9y ago
[deleted]
olefoo 9y ago
For added corruption under the American model: AbbeVie runs what is called a co-pay assistance program where they pay the difference between your insurance coverage and your copay. So they book a sale at full-price, paying (full price - (amount covered + $5 )) and they get to deduct the money they payed to themselves as a "charitable contribution". Which is so many flavors of shady. For a drug that costs literally pennies per dose to manufacture.
- notlob 9y ago
  > For a drug that costs literally pennies per dose to manufacture. Pennies per dose for a biologic?
  - walshemj 9y ago
    But why does the cost increase over time (ignoring say normal inflation eg RPI) especially for a widely prescribed drug.
    - notlob 9y ago
      It’s perhaps analogous to how list prices for college tuition aren’t necessarily reflective of what people actually pay. It’s a complex system and the price increases are used in part to negotiate with the intermediaries like PBMs. Biologics are a special case also due to complexities in how they (and biosimilars) are regulated, manufactured, and exclusivity periods they are granted. They certainly are not a few cents a dose to make. Not a satisfying answer, and apologies for that, but it’s difficult to traverse with anything approaching brevity.
      - walshemj 9y ago
        Not the same professors salary and other costs rise with inflation a drug once developed and a production line is in place does not face the same cost increase
        9y ago
jakub_g 9y ago
Also interesting link within the article: https://www.bloomberg.com/news/articles/2017-09-07/this-shield-of-patents-protects-the-world-s-best-selling-drug https://www.bloomberg.com/news/articles/2017-09-07/this-shie... TL;DR Humira is protected by over 100 patents, covering how it's produced etc. That's partially what's preventing other companies from coming up with a replacement, despite the main patent having already expired.

49 points by stablemap 9y ago

The solution to overpriced patent protected drugs is forced licensing of patents at a royalty rate set by the government.

kgwgk 9y ago
This would certainly prevent new expensive drugs from entering the market. Unfortunately, it won’t result in new cheap drugs entering the market (something that the current system provides, despite all its problems, after a few years).
barry-cotter 9y ago
That’s expropriation. If you have a rough idea of the target market, growth rate and you know how much longer the patent will last you can upper bound and lower bound the loss of the intellectual property holder. If you want patent free medicine I suggest at least looking at what medical research looks like without the possibility of supernormal profits on some drugs to make up for the losses on all the many, many other drugs that don’t make it. One plausible model would be how the Soviet Union did drug development but I know very little about that bar that the pschopharmacologicals in Russia etc. are in some respects quite different from those used in the West.
beisner 9y ago
I think an interesting solution to consider is a sort of drug bounty program run by the government. Right now, companies put up their own capital to fund drugs, and get a big payout (via patent exclusivity) if they succeed. This is a bit problematic, because regardless of the expense of the cost to develop the drug, it is in the interest of the drug companies to charge as much as possible for the longest amount of time to maximize return on investment (personally why I think there are so many long-term treatments for diseases like HIV rather than full-on vaccines). But if the government were to say “we will give $X billion to the corporation that provides a drug that meets Y conditions, with the caveat that that drug will then be sold for $Z per course of treatment or immediately go generic”, then public health policy could direct certain aspects of drug discovery, and lead to more affordable outcomes. There are still issues with this sort of plan, but I think it has the potential to be workable.

Gatsky 9y ago

This is old hat. The USA's process for pricing drugs is totally in service of the drug company - even that much is obvious to mercenary financiers like Shkreli. The deeper problem is that we aren't getting newer better drugs. Once a blockbuster like Humira happens, it seems to kill off the field. This is mostly because you need to spend a lot to do a massive trial to show your Humira 2.0 is better, with no guarantee it will actually be better. The economics are very hostile. Pharma tends to do smaller trials with their new drug in more select populations eg those not responding to Humira, and therefore end up having a much smaller market if the drug works. Drug pricing should be re-engineered to encourage more development rather than the opposite. If better alternatives exist then pharma obviously won't be able to charge extortionate prices.

remontoire 9y ago
Reduce costs of getting FDA approval and reduce patent lengths?
- mcny 9y ago
  I think I read here about the problem of 1. Patent a drug 2. Make inconsequential changes 3. Patent it again 4. Repeat I don't have any first hand experience in the industry so I don't know if this is a serious problem. I don't even know if it has a name!
  - pmyteh 9y ago
    It's called 'evergreening', FWIW.
  - adrianN 9y ago
    What's stopping a third party from doing 2 and 3?
    - celticninja 9y ago
      The original patent.

cnewey 9y ago

Humira really is a life-changing drug - but it is offensively, eye-wateringly expensive. Each auto-injector pen costs approx. £500; and I have to take one every 2 weeks. To put that in perspective, that's a cost of about £1000 per month - which is considerably more than my mortgage. My house costs less than my medical treatment. Fortunately for me, I live in the UK, where the NHS is able to help absorb these costs. In the US, I guess they aren't so lucky - if I lived there, my Humira treatment would financially destroy me - and probably my entire family, too. It's morally reprehensible for a company to have access to such a life-changing treatment and then proceed to charge such disproportionately vast sums of money (certainly, far beyond the cost of R&D). I suppose you could say that instead of crippling its patients physically (like their medical problems do), Humira cripples its patients financially - and I'm not sure that's a great deal better.

rayiner 9y ago
> It's morally reprehensible for a company to have access to such a life-changing treatment and then proceed to charge such disproportionately vast sums of money (certainly, far beyond the cost of R&D). I don’t really understand. If there is a moral obligation to help cure other peoples’ diseases, shouldn’t it be even more morally reprehensible to spend billions on things like TV serieses, cell phones, and social media websites, which could’ve been used to cure diseases instead? By your logic, isn’t Apple like the most evil company in the world, because they spend billions of dollars that could be used for drug research on making iPhones instead? Why is it somehow worse to make a profit curing people, than to make a profit not curing people?
- Majestic121 9y ago
  Because the profit made by "curing people" is actually done by keeping others from curing people, via aggressive patenting, FUD over generics, lobbying against legislation that would make prices reason able... There's also the fact that public health is not a simple economic market, where customers can simply not buy your product. In a lot of cases, it is a life or death situation, and real human have to be treated, so it should be considered a public service.

deleted 9y ago

[deleted]

olefoo 9y ago

For added corruption under the American model: AbbeVie runs what is called a co-pay assistance program where they pay the difference between your insurance coverage and your copay. So they book a sale at full-price, paying (full price - (amount covered + $5 )) and they get to deduct the money they payed to themselves as a "charitable contribution". Which is so many flavors of shady. For a drug that costs literally pennies per dose to manufacture.

notlob 9y ago
> For a drug that costs literally pennies per dose to manufacture. Pennies per dose for a biologic?
- walshemj 9y ago
  But why does the cost increase over time (ignoring say normal inflation eg RPI) especially for a widely prescribed drug.
  - notlob 9y ago
    It’s perhaps analogous to how list prices for college tuition aren’t necessarily reflective of what people actually pay. It’s a complex system and the price increases are used in part to negotiate with the intermediaries like PBMs. Biologics are a special case also due to complexities in how they (and biosimilars) are regulated, manufactured, and exclusivity periods they are granted. They certainly are not a few cents a dose to make. Not a satisfying answer, and apologies for that, but it’s difficult to traverse with anything approaching brevity.
    - walshemj 9y ago
      Not the same professors salary and other costs rise with inflation a drug once developed and a production line is in place does not face the same cost increase
      - 9y ago

jakub_g 9y ago

Also interesting link within the article: https://www.bloomberg.com/news/articles/2017-09-07/this-shield-of-patents-protects-the-world-s-best-selling-drug https://www.bloomberg.com/news/articles/2017-09-07/this-shie... TL;DR Humira is protected by over 100 patents, covering how it's produced etc. That's partially what's preventing other companies from coming up with a replacement, despite the main patent having already expired.