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What’s the alternative? This gets tiresome asking because the typically argument is to say “This is crAzYyyy!!!! “ without offering any real solution or input.

What’s the alternative? This gets tiresome asking because the typically argument is to say “This is crAzYyyy!!!! “ without offering any real solution or input. gilead the makers of Harvoni literally made a cure for a previously uncureable disease, You literally have no respect on a tech site of all places, for all the RnD that went into doing that.

nickthemagicman 7y ago
It's straight up price gouging though these companies are doing. As usual the answer probably lies somewhere in the middle.
- lotsofpulp 7y ago
  How do you define gouging? Because a number looks big? Is Google/Apple/MS/FB price gouging? Their net incomes are massive. I'd be hard pressed to classify a situation were a company introduces a new product 80% cheaper than the alternative, and still be guilty of price gouging.
- troydavis 7y ago
  > It's straight up price gouging though these companies are doing. I'm not sure the margins support that allegation. Sovaldi is manufactured by Gilead (which also makes a Harvoni generic). They don't break out drug-specific margin, but http://truecostofhealthcare.org/wp-content/uploads/2014/12/Gilead-Graphs-1.pdf http://truecostofhealthcare.org/wp-content/uploads/2014/12/G... and https://www.investors.com/news/technology/can-gilead-withstand-hep-c-boom-and-bust-or-will-merck-abbvie-win/ https://www.investors.com/news/technology/can-gilead-withsta... have some food for thought. A couple things stand out: 1. Their profit margin varies year to year, but in the peak period from 2012-2019 it was 35-55%, averaging ~40-45%. While that's industry-leading for pharma, it's nowhere near high enough to say that their products could be, say, 75% (or even 50%) cheaper. A 20% reduction (very roughly cutting margins in half) wouldn't make it meaningfully more affordable and I don't think most people would describe that as gouging. 2. Apparently it actually cures the disease for many people, so this is a once-and-done treatment. Compared to nearly all other healthcare interventions, curing a life-threating chronic degenerative condition at this price is cheap. (Cost per death prevented of other interventions: https://journalofscientificinnovationinmedicine.org/articles/10.29024/jsim.2/print/ https://journalofscientificinnovationinmedicine.org/articles..., https://twitter.com/troyd/status/1195811217056485377 https://twitter.com/troyd/status/1195811217056485377) 3. After they cured so many people, there was a much smaller market (success!). Revenue and margin both dropped a lot: https://www.macrotrends.net/stocks/charts/GILD/gilead-sciences/profit-margins https://www.macrotrends.net/stocks/charts/GILD/gilead-scienc... 4. "Gilead Sciences was also unique in that it was the only pharmaceutical company I examined that spent less money on marketing than they spent on research. Gilead’s marketing budget was only 15% of their total revenue."
  - lukeschlather 7y ago
    > 3. After they cured so many people, there was a much smaller market (success!). Revenue and margin both dropped a lot: https://www.macrotrends.net/stocks/charts/GILD/gilead-scienc.. https://www.macrotrends.net/stocks/charts/GILD/gilead-scienc.... This seems like a pretty clear example of why looking at revenue and margin like this is not a good way to manage this. Our goal here is clearly to eliminate the market for this product, and everyone ought to chip in to make that happen, not just the people who currently are at risk. The whole funding model is fundamentally broken.
    - troydavis 7y ago
      > The whole funding model is fundamentally broken. That's a totally reasonable point (and perhaps worth starting a separate top-level reply about), but it's not at all what the GP comment was arguing.
      - lukeschlather 7y ago
        It depends on your definition of price gouging. You're defining price gouging as having the price reflect the marginal cost of the drug. I (and I think GP as well) would define price gouging a little more broadly and say simply that it's setting the price unreasonably high. Since marginal cost is not a reasonable pricing mechanism to achieve the desired goal, It's not a good basis for an argument that the price is reasonable and not gouging.
        troydavis 7y ago
        I think the term for what you're describing is "Supracompetitive pricing": https://en.wikipedia.org/wiki/Supracompetitive_pricing https://en.wikipedia.org/wiki/Supracompetitive_pricing (I'm not sure whether the evidence justifies that claim either, but the claim is a lot stronger than gouging)
  - deleted 7y ago
    [deleted]
lotsofpulp 7y ago
I wonder how many people that complain about healthcare costs would be willing to pay higher taxes for taxpayer funded research for medications and education to increase supply of doctors.
- Retric 7y ago
  Presumably, R&D costs should be shared across all countries rather than individual countries footing the bills. Alternatively a cost benefit from such R&D spending such that US R&D subsidies resulted in free drugs for the US market would be acceptable. Instead, the US both has the largest R&D subsides and the largest drug prices.
  - big_chungus 7y ago
    This requires some IP protection. Even if it's weaker than in America, at least some. Many nations adopt the stance that if it wasn't invented in their nation, screw the other guy, they're taking the IP. Many first-world nations, including Europe and Canada, do this and use the threat thereof to force down prices because their socialized medicine does not provide sufficient funds.
    - thedaemon 7y ago
      Well, they should use a GPL3 license on their drugs then. ;)
    - delfinom 7y ago
      IP protection isn't a big deal for countries sort out to give equal ownership for split funding. We even have every major country from the US,Canada,Europe,India,China, and Russia all working the first full-scale cold fusion reactor via the multi-billion dollar ITER project built in France.
baq 7y ago
Basically any other country than US is a better alternative for the patient financially.
- zwily 7y ago
  How many of these “miracle cures” are developed in the US?
  - jki275 7y ago
    All of them. Then they're sold in the developing world at cut rates, subsidized by the US rates.
  - claudeganon 7y ago
    And how much of that miracle cure development is on the backs of tax-payer funded research? The US would be better off having a fully nationalized and internationally collaborative drug research system.
tyingq 7y ago
"gilead the makers of Harvoni literally made a cure for a previously uncureable disease" No, they acquired Pharmasset, the company that made the cure, for $11.2B. That was a pretty low-risk move. It was already an obvious money maker. "for all the RnD that went into doing that" In the 18 months following Sovaldi’s approval, Medicare alone spent $8.2 billion on the drugs...that doesn't include private insurance payments. I imagine the acquisition was paid off quite quickly. Pricing after that was just how much profit they wanted to make. See these for more detail: https://www.finance.senate.gov/imo/media/doc/Wyden-Grassley%20Document%20Request%20to%20Gilead%207-11-141.pdf https://www.finance.senate.gov/imo/media/doc/Wyden-Grassley%... https://www.finance.senate.gov/ranking-members-news/wyden-grassley-sovaldi-investigation-finds-revenue-driven-pricing-strategy-behind-84-000-hepatitis-drug https://www.finance.senate.gov/ranking-members-news/wyden-gr...
- troydavis 7y ago
  > Pricing after that was just how much profit they wanted to make. While that's by definition true of any pricing decision, there's a lot more to the story: https://news.ycombinator.com/item?id=21883254#21884030 https://news.ycombinator.com/item?id=21883254#21884030
- georgeplusplus 7y ago
  Wrong. Gilead made Harvoni. Pharmasset made Sovaldi. Is there something that’s supposed to be inherently evil in acquiring a company anyway? Because pharmasset, the smaller company, had forecasted a price of 36000$ for Solvadi. With Gilead buying it out, it was able to reach a third of that price point and that’s a win to me.
  - tyingq 7y ago
    Harvoni is a combination of Sofosbuvir (Sovaldi) and Ledipasvir. Pharmasset discovered Sofosbuvir (Sovaldi), Gilead acquired them in 2011. Gilead developed Ledipasvir some time after that. I was contesting the phrase "literally made a cure for a previously uncureable disease". Which is why I called out the acquisition. They literally bought it, not made it.
deleted 7y ago
[deleted]
_jal 7y ago
What gets tiresome is this tactic of declaring that since one does not have a fully documented 5-year plan in a binder, one is not allowed to bullshit bullshit. That's bullshit. It is perfectly acceptable to know something is wrong without wishing to extemporaneously perform for you.
- lotsofpulp 7y ago
  It's not perfectly acceptable to "know something is wrong" when one does not understand the parameters of the problem at hand. Stating that you "know something" doesn't mean you know something. I hear many people "know something" about health insurance premiums rising too much, blaming ACA for what they "know" are unnecessary increases in premiums to line the pockets of the fat cat insurance company executives. Except they don't "know" that the ACA provided a mechanism for far more people to get healthcare for far more health issues. And since you don't get more of something for free, obviously the costs have to be paid somehow. And if they looked at the numbers, they would see that healthcare cost increases have slowed dramatically since ACA was effected.

nickthemagicman 7y ago

It's straight up price gouging though these companies are doing. As usual the answer probably lies somewhere in the middle.

lotsofpulp 7y ago
How do you define gouging? Because a number looks big? Is Google/Apple/MS/FB price gouging? Their net incomes are massive. I'd be hard pressed to classify a situation were a company introduces a new product 80% cheaper than the alternative, and still be guilty of price gouging.
troydavis 7y ago
> It's straight up price gouging though these companies are doing. I'm not sure the margins support that allegation. Sovaldi is manufactured by Gilead (which also makes a Harvoni generic). They don't break out drug-specific margin, but http://truecostofhealthcare.org/wp-content/uploads/2014/12/Gilead-Graphs-1.pdf http://truecostofhealthcare.org/wp-content/uploads/2014/12/G... and https://www.investors.com/news/technology/can-gilead-withstand-hep-c-boom-and-bust-or-will-merck-abbvie-win/ https://www.investors.com/news/technology/can-gilead-withsta... have some food for thought. A couple things stand out: 1. Their profit margin varies year to year, but in the peak period from 2012-2019 it was 35-55%, averaging ~40-45%. While that's industry-leading for pharma, it's nowhere near high enough to say that their products could be, say, 75% (or even 50%) cheaper. A 20% reduction (very roughly cutting margins in half) wouldn't make it meaningfully more affordable and I don't think most people would describe that as gouging. 2. Apparently it actually cures the disease for many people, so this is a once-and-done treatment. Compared to nearly all other healthcare interventions, curing a life-threating chronic degenerative condition at this price is cheap. (Cost per death prevented of other interventions: https://journalofscientificinnovationinmedicine.org/articles/10.29024/jsim.2/print/ https://journalofscientificinnovationinmedicine.org/articles..., https://twitter.com/troyd/status/1195811217056485377 https://twitter.com/troyd/status/1195811217056485377) 3. After they cured so many people, there was a much smaller market (success!). Revenue and margin both dropped a lot: https://www.macrotrends.net/stocks/charts/GILD/gilead-sciences/profit-margins https://www.macrotrends.net/stocks/charts/GILD/gilead-scienc... 4. "Gilead Sciences was also unique in that it was the only pharmaceutical company I examined that spent less money on marketing than they spent on research. Gilead’s marketing budget was only 15% of their total revenue."
- lukeschlather 7y ago
  > 3. After they cured so many people, there was a much smaller market (success!). Revenue and margin both dropped a lot: https://www.macrotrends.net/stocks/charts/GILD/gilead-scienc.. https://www.macrotrends.net/stocks/charts/GILD/gilead-scienc.... This seems like a pretty clear example of why looking at revenue and margin like this is not a good way to manage this. Our goal here is clearly to eliminate the market for this product, and everyone ought to chip in to make that happen, not just the people who currently are at risk. The whole funding model is fundamentally broken.
  - troydavis 7y ago
    > The whole funding model is fundamentally broken. That's a totally reasonable point (and perhaps worth starting a separate top-level reply about), but it's not at all what the GP comment was arguing.
    - lukeschlather 7y ago
      It depends on your definition of price gouging. You're defining price gouging as having the price reflect the marginal cost of the drug. I (and I think GP as well) would define price gouging a little more broadly and say simply that it's setting the price unreasonably high. Since marginal cost is not a reasonable pricing mechanism to achieve the desired goal, It's not a good basis for an argument that the price is reasonable and not gouging.
      - troydavis 7y ago
        I think the term for what you're describing is "Supracompetitive pricing": https://en.wikipedia.org/wiki/Supracompetitive_pricing https://en.wikipedia.org/wiki/Supracompetitive_pricing (I'm not sure whether the evidence justifies that claim either, but the claim is a lot stronger than gouging)
- deleted 7y ago
  [deleted]

lotsofpulp 7y ago

I wonder how many people that complain about healthcare costs would be willing to pay higher taxes for taxpayer funded research for medications and education to increase supply of doctors.

Retric 7y ago
Presumably, R&D costs should be shared across all countries rather than individual countries footing the bills. Alternatively a cost benefit from such R&D spending such that US R&D subsidies resulted in free drugs for the US market would be acceptable. Instead, the US both has the largest R&D subsides and the largest drug prices.
- big_chungus 7y ago
  This requires some IP protection. Even if it's weaker than in America, at least some. Many nations adopt the stance that if it wasn't invented in their nation, screw the other guy, they're taking the IP. Many first-world nations, including Europe and Canada, do this and use the threat thereof to force down prices because their socialized medicine does not provide sufficient funds.
  - thedaemon 7y ago
    Well, they should use a GPL3 license on their drugs then. ;)
  - delfinom 7y ago
    IP protection isn't a big deal for countries sort out to give equal ownership for split funding. We even have every major country from the US,Canada,Europe,India,China, and Russia all working the first full-scale cold fusion reactor via the multi-billion dollar ITER project built in France.

baq 7y ago

Basically any other country than US is a better alternative for the patient financially.

zwily 7y ago
How many of these “miracle cures” are developed in the US?
- jki275 7y ago
  All of them. Then they're sold in the developing world at cut rates, subsidized by the US rates.
- claudeganon 7y ago
  And how much of that miracle cure development is on the backs of tax-payer funded research? The US would be better off having a fully nationalized and internationally collaborative drug research system.

tyingq 7y ago

"gilead the makers of Harvoni literally made a cure for a previously uncureable disease" No, they acquired Pharmasset, the company that made the cure, for $11.2B. That was a pretty low-risk move. It was already an obvious money maker. "for all the RnD that went into doing that" In the 18 months following Sovaldi’s approval, Medicare alone spent $8.2 billion on the drugs...that doesn't include private insurance payments. I imagine the acquisition was paid off quite quickly. Pricing after that was just how much profit they wanted to make. See these for more detail: https://www.finance.senate.gov/imo/media/doc/Wyden-Grassley%20Document%20Request%20to%20Gilead%207-11-141.pdf https://www.finance.senate.gov/imo/media/doc/Wyden-Grassley%... https://www.finance.senate.gov/ranking-members-news/wyden-grassley-sovaldi-investigation-finds-revenue-driven-pricing-strategy-behind-84-000-hepatitis-drug https://www.finance.senate.gov/ranking-members-news/wyden-gr...

troydavis 7y ago
> Pricing after that was just how much profit they wanted to make. While that's by definition true of any pricing decision, there's a lot more to the story: https://news.ycombinator.com/item?id=21883254#21884030 https://news.ycombinator.com/item?id=21883254#21884030
georgeplusplus 7y ago
Wrong. Gilead made Harvoni. Pharmasset made Sovaldi. Is there something that’s supposed to be inherently evil in acquiring a company anyway? Because pharmasset, the smaller company, had forecasted a price of 36000$ for Solvadi. With Gilead buying it out, it was able to reach a third of that price point and that’s a win to me.
- tyingq 7y ago
  Harvoni is a combination of Sofosbuvir (Sovaldi) and Ledipasvir. Pharmasset discovered Sofosbuvir (Sovaldi), Gilead acquired them in 2011. Gilead developed Ledipasvir some time after that. I was contesting the phrase "literally made a cure for a previously uncureable disease". Which is why I called out the acquisition. They literally bought it, not made it.

deleted 7y ago

[deleted]

_jal 7y ago

What gets tiresome is this tactic of declaring that since one does not have a fully documented 5-year plan in a binder, one is not allowed to bullshit bullshit. That's bullshit. It is perfectly acceptable to know something is wrong without wishing to extemporaneously perform for you.

lotsofpulp 7y ago
It's not perfectly acceptable to "know something is wrong" when one does not understand the parameters of the problem at hand. Stating that you "know something" doesn't mean you know something. I hear many people "know something" about health insurance premiums rising too much, blaming ACA for what they "know" are unnecessary increases in premiums to line the pockets of the fat cat insurance company executives. Except they don't "know" that the ACA provided a mechanism for far more people to get healthcare for far more health issues. And since you don't get more of something for free, obviously the costs have to be paid somehow. And if they looked at the numbers, they would see that healthcare cost increases have slowed dramatically since ACA was effected.