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I'm confused, they say it was priced at $1 million because that was what they felt the drug was worth compared to the ongoing therapies needed to keep these pat

I'm confused, they say it was priced at $1 million because that was what they felt the drug was worth compared to the ongoing therapies needed to keep these patients alive. Ok fine. But once it became clear no one was going to pay that price, wasn't there some lower price that would still earn them a profit?

joe_the_user 5y ago
It's a matter of principle. Perverse principle but principle: "Why would we? [lower the price] Pricing shouldn't be a political decision. It should be a rational decision based on merits and values," he said. "Hundreds of millions of investor money has gone into the company, and if there is no return for those investments, there will be no new drugs because nobody's going to do that in the future, right?"" Which is to say that you have an investor group that expects to either be paid or they'll take their medicine away and the public be damned. Or perhaps a perverse process. The system is how you get new, actually amazing drugs. The system is also how actual health care has become really terrible in the US in particular.
- nine_k 5y ago
  Buying the rights on drugs like this, and more important expensive drugs, an license them under a freedom-protecting license (similar to GPL) could be a major application of charity funds.
  - s1artibartfast 5y ago
    You would still have to raise several hundred millions of dollars of funding to reconduct development and clinical trials for the drug after securing the IP. Clinical trial data and manufacturing know how cant be leveraged from the original approval. It is incredibly difficult to get investors to fund a second round of development for a product that made it to market and still failed. You might say this is an opportunity for the government to step in as investor, but they have little interest, knowing that they could use the same money to save many more lives in other areas.
- s1artibartfast 5y ago
  The investors didn't want to risk throwing more good money after bad. No other companies were interested in buying the drug and it required more costly trials and upkeep. You drop the price and buyers are even less interested, meanwhile the costs keep coming in. I think the mistake people are making is assuming the drug was in a position to be revenue positive at a lower cost when it wasn't.
spoonjim 5y ago
There's also the very small market for the drug. There's a lot of administrative and logistics cost in making a drug available on the market. If they could sell 1,000 doses a year they would have found a price that worked.
dodobirdlord 5y ago
Probably not, the article mentions that the genetic mutation effects about two or three people out of a million, so that’s ~20,000 doses required to cure everyone in the world. The vast, vast majority of those people are going to be people without insurance or government provided healthcare that would ever pay enough to make a difference, so they’ve got to recoup their entire R&D expenses selling the 2,000-3,000 doses required to treat the combined population of the first world, and then maybe provide it for ~free to the rest of the world where there’s no chance of making any money anyway, as is generally the case with all expensive drugs. If they cave and sell it at a price that doesn’t recover their R&D costs (mentioned in the article to be hundreds of millions of dollars), then that’s that, they’ve just lost all of that money. If they sit on it there’s at least a chance that someone in future might pay them for it.
- bryanrasmussen 5y ago
  >If they cave and sell it at a price that doesn’t recover their R&D costs (mentioned in the article to be hundreds of millions of dollars), then that’s that, they’ve just lost all of that money. If they sit on it there’s at least a chance that someone in future might pay them for it. sure a chance in that it is not impossible the same way that a talking centaur with the ability to blow up planets with its mind is impossible, but given what we know about economic reality it is practically impossible that the million dollars per patient will be paid. There's a saying that one should not throw good money after bad, in this case it would seem they are refusing good money because it won't cover the bad. Also tax writeoffs exist, so I'm not sure what that R&D actually cost them?
  - dodobirdlord 5y ago
    > There's a saying that one should not throw good money after bad, in this case it would seem they are refusing good money because it won't cover the bad. They are a drug development company, marketing their drugs to national government health services and private insurance companies. This is an iterative game, in game theory terms. Caving and selling at a loss just guarantees that counterparties will refuse to buy at the stated price next time too, and wait for them to cave and sell at a loss. Sitting on the drug until the parents expire and losing the entire investment rather than selling at a loss has the benefit of proving seriousness in future price negotiations. And the article mentions that the ongoing care costs for someone with this disorder is hundreds of thousands of dollars per year. In the years since they refused the $1M price tag in an attempt to drive a hard bargain, the national governments and private insurance companies have no doubt spent more than $1M per patient they refused to buy a dose for. Hardly seems like planet-destroying centaur levels of implausibility that they may eventually come around to the idea that $1M was actually a perfectly reasonable price, given the circumstances. > Also tax writeoffs exist, so I'm not sure what that R&D actually cost them? I think you have some major misunderstandings about what tax writeoffs are and how they work.

joe_the_user 5y ago

It's a matter of principle. Perverse principle but principle: "Why would we? [lower the price] Pricing shouldn't be a political decision. It should be a rational decision based on merits and values," he said. "Hundreds of millions of investor money has gone into the company, and if there is no return for those investments, there will be no new drugs because nobody's going to do that in the future, right?"" Which is to say that you have an investor group that expects to either be paid or they'll take their medicine away and the public be damned. Or perhaps a perverse process. The system is how you get new, actually amazing drugs. The system is also how actual health care has become really terrible in the US in particular.

nine_k 5y ago
Buying the rights on drugs like this, and more important expensive drugs, an license them under a freedom-protecting license (similar to GPL) could be a major application of charity funds.
- s1artibartfast 5y ago
  You would still have to raise several hundred millions of dollars of funding to reconduct development and clinical trials for the drug after securing the IP. Clinical trial data and manufacturing know how cant be leveraged from the original approval. It is incredibly difficult to get investors to fund a second round of development for a product that made it to market and still failed. You might say this is an opportunity for the government to step in as investor, but they have little interest, knowing that they could use the same money to save many more lives in other areas.
s1artibartfast 5y ago
The investors didn't want to risk throwing more good money after bad. No other companies were interested in buying the drug and it required more costly trials and upkeep. You drop the price and buyers are even less interested, meanwhile the costs keep coming in. I think the mistake people are making is assuming the drug was in a position to be revenue positive at a lower cost when it wasn't.

spoonjim 5y ago

There's also the very small market for the drug. There's a lot of administrative and logistics cost in making a drug available on the market. If they could sell 1,000 doses a year they would have found a price that worked.

dodobirdlord 5y ago

Probably not, the article mentions that the genetic mutation effects about two or three people out of a million, so that’s ~20,000 doses required to cure everyone in the world. The vast, vast majority of those people are going to be people without insurance or government provided healthcare that would ever pay enough to make a difference, so they’ve got to recoup their entire R&D expenses selling the 2,000-3,000 doses required to treat the combined population of the first world, and then maybe provide it for ~free to the rest of the world where there’s no chance of making any money anyway, as is generally the case with all expensive drugs. If they cave and sell it at a price that doesn’t recover their R&D costs (mentioned in the article to be hundreds of millions of dollars), then that’s that, they’ve just lost all of that money. If they sit on it there’s at least a chance that someone in future might pay them for it.

bryanrasmussen 5y ago
>If they cave and sell it at a price that doesn’t recover their R&D costs (mentioned in the article to be hundreds of millions of dollars), then that’s that, they’ve just lost all of that money. If they sit on it there’s at least a chance that someone in future might pay them for it. sure a chance in that it is not impossible the same way that a talking centaur with the ability to blow up planets with its mind is impossible, but given what we know about economic reality it is practically impossible that the million dollars per patient will be paid. There's a saying that one should not throw good money after bad, in this case it would seem they are refusing good money because it won't cover the bad. Also tax writeoffs exist, so I'm not sure what that R&D actually cost them?
- dodobirdlord 5y ago
  > There's a saying that one should not throw good money after bad, in this case it would seem they are refusing good money because it won't cover the bad. They are a drug development company, marketing their drugs to national government health services and private insurance companies. This is an iterative game, in game theory terms. Caving and selling at a loss just guarantees that counterparties will refuse to buy at the stated price next time too, and wait for them to cave and sell at a loss. Sitting on the drug until the parents expire and losing the entire investment rather than selling at a loss has the benefit of proving seriousness in future price negotiations. And the article mentions that the ongoing care costs for someone with this disorder is hundreds of thousands of dollars per year. In the years since they refused the $1M price tag in an attempt to drive a hard bargain, the national governments and private insurance companies have no doubt spent more than $1M per patient they refused to buy a dose for. Hardly seems like planet-destroying centaur levels of implausibility that they may eventually come around to the idea that $1M was actually a perfectly reasonable price, given the circumstances. > Also tax writeoffs exist, so I'm not sure what that R&D actually cost them? I think you have some major misunderstandings about what tax writeoffs are and how they work.