4 ms·

> 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

> 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)
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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

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