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Remdesivir will cost insurers $520 for a single vial. Production cost: 93 cents
- dvhh 6y agoWould the institute pay the research and administrative cost out of its pocket ? while the price difference is outlandish, I do think US health care is in this vicious circle that enables those abuse. And I personally find it unfair to put the fault on Trump's administration ( not a fan of Trump, but I do think that these kind of article erode news source credibility that allows Trump and most virulent right wing supporter to argue that most fake-news source are biased against Trump).
- loktarogar 6y agoedit: nvm
- pravda 6y agoWhy would he step in? The more money Gilead earns, the higher Gilead stock goes. Trump wants the stock market to go higher, so Trump wants to maximize Gilead profits.
- tinus_hn 6y agoThere’s a middle ground and for medication that will be used by millions the middle ground is not a 56000% markup.
- deleted 6y ago[deleted]
- justjonathan 6y agoTalking about production costs of drugs, as an input to price, is as relevant as discussing download cost as input to software prices (or any digital media prices).
- iguy 6y agoEspecially a drug which is so supply-constrained, on the time-scale of the pandemic. Even if you ignore the research cost, what's the right price for the one large batch left over from Ebola, in the time until you cook up another large batch? https://en.wikipedia.org/wiki/Remdesivir#Manufacturing_and_distribution https://en.wikipedia.org/wiki/Remdesivir#Manufacturing_and_d...
- 627467 6y agoCorrect me if I'm wrong: it's only supply constrained due to patent protections, no? Or is there something inherently hard to replicate if a rogue country decided to reverse engineer the drug?
- iguy 6y agoNot an expert but I thought this one was actually hard to make. Or at least, sufficiently different that tooling up a production line would take time & money, so that the big generic guys couldn't just open the taps. (But I could be wrong here.) I thought the big Indian manufacturers already just-about ignored patents, these only restrict what can be shipped to the west.
- Slartie 6y agoIIRC it is well-known how to synthesize remdesivir, so nobody would actually have to reverse-engineer anything, but this stuff is particularly hard to synthesize on an industrial level, with some steps in the process taking weeks to complete without easy ways to speed it up. Also, each step only has a certain yield which is relatively low, so you need to put in a comparatively huge amount of raw material into the first step in order to get a tiny amount of remdesivir out from the last step, months later. It seems a little bit like producing Whisky: you can't just decide now to produce a huge batch of 12-year-old Lagavulin and have it ready next month.
- jseliger 6y agoHere is a longer description: https://www.acsh.org/news/2020/03/26/problem-remdesivir-making-it-14665 https://www.acsh.org/news/2020/03/26/problem-remdesivir-maki.... I believe Gilead's target is 500,000 doses by November. In an ideal world, they'd probably want to sell doses to just about every person with COVID, but they can't, due to supply constraints.
- sukilot 6y agoHN should know better than to accept this headline. Software and data has markup of 10000x unit cost. How much did it cost to create? How many vials will be consumed? How much did others spend on failed drug development?
- deleted 6y ago[deleted]
- codecamper 6y agoit's actually a 5x markup. according to cogs in filings
- xtracto 6y agoYeah but software done with the government money (like grants) should be free . Even if ongoing support is not
- jostmey 6y agoI see two issues being conflated here. The first issue is the outrageous prices for generic drugs. The second issue is the true cost of research. Drug prices have been rising out of control even for generic drugs (think epipens). It seems that competition is not driving down prices of generics. Perhaps it is time for government to break up "big parhma". Perhaps the FDA sets quality requirements so high that competitors cannot meet it, allowing that single manufacture to control prices. The other issue is the true cost of research. The production cost is a fraction of the true cost. Research is expensive. There would be no Remdesivir if we only paid production costs. As a biomedical researcher, I am always on the fence about jumping jobs for something that will pay better. Many investors and techies vastly underestimate the cost of scientific research BY ORDERS OF MAGNITUDE.
- tomohawk 6y agoAdd to that the legal and regulatory costs. Getting a drug approved is very expensive and time consuming. The legal costs to defend the drug and its use in court after release can also be staggering. Most developed countries have the English Rule, which requires plaintiffs to pay the legal costs of defendants if they bring a suit and lose. The US does not.
- javajosh 6y agoI tend to agree that gov needs to step in, however the libtertarian in me also wants to know: why doesn't someone start a business selling this drug for, say, $200 instead of $540? If the answer to that is that the regulatory burden is basically insurmountable thanks to decades of regulatory capture, then yeah, government needs to act. Presumably such a company doesn't need to do any research, or get new approvals! They just need to make the thing and distribute it.
- deleted 6y ago[deleted]
- api 6y agoHere is an idea: anyone can make a generic drug if an independent FDA lab cannot tell the difference between unlabeled samples from the new manufacturer and unlabeled identically packaged samples from a currently approved manufacturer. You would need to do this testing continuously at random, so the FDA could just charge a fee for this. It would be way cheaper than full regulatory compliance.
- raincom 6y agoBlack market rate of Remdesivir in India is $2000 USD.
- AlleyTrotter 6y agoOn the patent owned by fauci Hmm! A method for activating a mammalian immune system patented by fauci and others is used in this drug. A small piece but with millions of immunizations.
- xdavidliu 6y agonot sure if sarcastic, but for other readers, this is false [1]. [1] https://www.factcheck.org/2020/05/fauci-didnt-invent-wont-profit-from-remdesivir/ https://www.factcheck.org/2020/05/fauci-didnt-invent-wont-pr...
- 627467 6y agoI hear a lot of people here focusing on this agenda-setting title but to me this title is as dishonest as when Apple states that "they are the largest tax payer in the world" as a defense for why they shouldn't pay more taxes in Europe. The question being raised is about proportions just like in this case. Weak, headline grabbing, agenda-setting titles are plenty to go around. The true cost of producing a patent-protected product is hard to know as it tends to be part of confidential business information. I think it's fair that people question the cost of monopolies since they draw their status from protections conferred by (patent) law - conferred by the people.
- Proven 6y ago1) No one has to buy it. Who is going to buy this stuff if not the corrupt government officials? 2) Supposedly the government could do it at cost. But where were they when it was the time to invest and invent? Billions were wasted on rescuing zombie companies.
- Nursie 6y agoThe US drug market is out of control. Some time ago a friend I was travelling with had a recurrence of a skin complaint that she would usually treat with a particular product. In the UK it's an over-the-counter med, non-prescription, with a cost of about £7. We were informed in the pharmacy at (I think) a Walgreens that it would be a prescription-only med in the US, and cost $200 for the same product. Is this because insurers can be billed?
- jseliger 6y agoAnother reading is, "The US drug market subsidizes the R&D for the entire rest of the world." One possible alternative to selling new, novel drugs for market prices is not having those drugs at all. We really ought to be thankful that some entities are willing to bear the billion-dollar cost of developing a new drug. https://en.wikipedia.org/wiki/Cost_of_drug_development https://en.wikipedia.org/wiki/Cost_of_drug_development
- CuriouslyC 6y agoYou come off like a shill. The majority of new drug development is the result of publicly funded research. Drug companies mine that research, and in many cases their main contribution is ramming the drug through the FDA approval pipeline. The university will also take a big cut, even though they were given (mostly public) grants to do the research. Drug development is probably one of the best targets for socialization. That would reduce the number of stupid, pointless drugs that get developed. How many billions have been wasted to produce ~20 different anti-depressants, none of which does more than slightly outperform placebo?
- sdinsn 6y ago> The majority of new drug development is the result of publicly funded research. Drug companies mine that research Isn't the entire point of publicly funded research to spur scientific and economic development? Are you proposing that public research should be hidden away so that private companies don't do anything useful with it?
- LordOfRiverRun 6y agoSure, the 2nd, 3rd, 4th, Nth vial cost $0.93 to produce. The first vial cost $2,000,000,000. Don't forget about the other drug research projects that failed and also cost billions in fruitless R&D.
- slyrus 6y agoI thought you wrote "fruitflies" R&D and was thinking 1) why are they hating and drosophila and 2) I don't think flies are really a comon model for Nucs BICBW. But then I reread the word...
- grumple 6y agoHow much of that first vial was paid for by taxpayers? Does a single drug and associated trials really cost billions to develop? That's a year's worth of pay for 10,000 scientists at 200k/year (I suspect this is a rather high rate for most phd researchers). Most research teams are < 10 people [1]. You could fund 500 large research teams working on different drugs for 2 billion for a year. Let's say just one team, that funds them for 500 years. Obviously there are other costs (rent, equipment, materials). But where is that money going? It doesn't seem to be going towards doing the science. It's extremely difficult to find breakdowns of R+D costs - seems to be a tightly held secret at big pharma. 1. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4465944/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4465944/
- ativzzz 6y agoAFAIK, the research done by tax payers is the underlying biology. In other words, researching that protein X is responsible for biological processes A, B, and C and changing X to Y increases A and B but decreases C. Then, it's still the responsibility of pharma companies to figure out how to create a compound that can then safely trigger the change of protein X -> Y
- sdinsn 6y ago> How much of that first vial was paid for by taxpayers? How does being funded by the taxpayers mean anything?
- alanfranz 6y agoWasn't remdesivir extra-hard to produce just some months ago? It seems that this article is conflating the price for its constituents with the price to produce.
- ed25519FUUU 6y agoI spent two months on my last project. It only cost about $4 a month to run (lambda). Can you believe that? My boss and users are getting ripped off!!
- slyrus 6y agoSand is cheap too. What's the price of a Xeon E3? Cheap to make each chip. Those fabs tho...
- ajsharp 6y agoThis is classic example of monopoly pricing. Gilead developed a drug the federal government has minted as special. They can charge whatever they want for it because there's a period of effectively unlimited demand (until a vaccine hits the market), and a very narrow band of supply. Products like this have what you might've learned about in econ 101 as inelastic demand -- the demand for the product remains the same regardless of the price. They know people and/or insurance companies will pay for it, so why not charge whatever they want while they can? Of course, there is a very simple way to bring down the price and reduce the overall cost burden to the economy: a price ceiling. The government could just say, "sorry, you can't bring that drug to market unless it's below X dollars". But the Federal government has been entirely unwilling to exercise its power to enact price controls on drug companies. At the same time, other countries do this all the time, driving up the prices we pay even more. It's insane.
- metiscus 6y agoIn the absence of compulsory production and under the current intellectual property rights scheme, price ceilings cause shortages all other things held equal.
- ajsharp 6y agoIn a more normal market with fixed supply, such as rent control, that's true. Much less so in a monopoly market with largely intellectual property.
- metiscus 6y agoIt's not just intellectual property - it's a capital intensive bioengineering project with probably a half billion or so capex and even more for an outsider to bootstrap.
- ajsharp 6y agoFair enough. Still, there are no supply dynamics here where a price ceiling would cause supply issues.
- pmoriarty 6y agoHow many lives are we willing to sacrifice to prop up a system built around companies making profits?
- sdinsn 6y agoHow many lives are we willing to sacrifice if we remove any reason for people to develop treatments? Profit is motivation for innovation.
- gridlockd 6y agoFour months ago: "Remdesivir is really hard to synthesize" https://news.ycombinator.com/item?id=22783363 https://news.ycombinator.com/item?id=22783363 Not sure what to make of that "93 cent" figure, but it must be marginal cost, which of course means nothing. A thumbtack costs fractions of a cent to make, but only if you have a thumbtack production line sitting around, with materials and operators ready to go.
- paul_f 6y agoAutoCAD: $9,000. Production cost: $0.
- jVinc 6y agoHow big are the rebates? Often the insurers not only get the majority of the price back in kick-backs, they also have more intensive to negotiate a higher price rather than a lower price due to the the kickbacks they get on the price. If you're making more than 2/3 of the profit on a product that you're just passing on to patients, then you're happier when it's more expensive. You can't talk about drug printning in the US without including the entire chain.
- sdinsn 6y agoAnd what was the R&D cost? And what were the regulatory costs? Most medication, aside from medication that uses radioactive isotopes, is very cheap to manufacture. R&D and regulations are not cheap.
- Markoff 6y agois it only me or that Intercept article font is prety much unreadable for others too?