7 ms·

Semaglutide retails for $17k USD/year in the US but costs only $60 to make. Perhaps it could be argued that the autoinjectors are "expensive", but not $17k/year

Semaglutide retails for $17k USD/year in the US but costs only $60 to make. Perhaps it could be argued that the autoinjectors are "expensive", but not $17k/year and oral forms are coming online to make this item moot. In limited circumstances, excessive profits cross into the realm of price gouging and shouldn't be allowed by regulatory enforcement.

pfdietz 3y ago
The cost of manufacturing the drug is only relevant if the drug can be discovered and proved effective by the Magic Drug Fairy. Here in the real world, that manufacturing cost is largely irrelevant.
- narrator 3y ago
  This reminds me of P=NP. It's hard to find a sha256 with a given number of leading zeros, but it's super easy to verify. It's hard to make Microsoft Office, or a Pharmaceutical Drug, but easy to see that they work. The confusion is at the root of most economic fallacies.
- willcipriano 3y ago
  > the Magic Drug Fairy. Thats the government funded universities.
  - pfdietz 3y ago
    They do not, in fact, do the hard work of drug development.
  - philipkglass 3y ago
    The universities find compounds that work in cell cultures or mice. They don't currently optimize candidate compounds for use in humans or perform actual human clinical trials. In theory, there's no reason that a government couldn't fund all phases of drug development through final approval and then manufacture new drugs without seeking a profit. But most compounds that work in mice fail in clinical trials, and human testing is a lot more expensive than mouse testing. There would need to be consistent support for such a drug development program even though most attempts will fail and "breakthrough" drugs will arrive irregularly, separated by many years. It is politically difficult to maintain that sort of long term support in a system where voters and representatives are swayed by short-term arguments to cut programs that don't show results.
- vineyardmike 3y ago
  You say all this, while the literal title of the article you're commenting on is "The cost of developing new drugs may be far lower than industry claims". I think this comment perfectly proves that this is relevant. Manufacturing is quite relevant. If the actual cost of "discovered and proved effective" is far lower than claimed, then manufacturability becomes a concern. If the cost of discovery and proven effectiveness is borne by governments and universities, then the manufacturing is the only cost borne by the pharmaceutical companies.
  - pfdietz 3y ago
    The article appears to imply that the direct cost of developing a successful drug is the relevant metric. It isn't; the cost must include the indirect costs of development on drugs that didn't pan out. And the vast majority of drug candidates don't pan out, often in Phase 3 trials where much of the cost has already been sunk. Put it another way: if making new drugs was so cheap and easy, drug companies would be doing that in competition with each other, and prices would be low as a result of that competition.
    - vineyardmike 3y ago
      > if making new drugs was so cheap and easy, drug companies would be doing that in competition with each other They are. There is intense competition and lots of venture capital and research grants to fund research. > prices would be low as a result of that competition. Why? Patents end competition as soon as the research is successful. They have to compete to research the drug - and we see a vibrant competitive market for research - but they don't have to compete to sell the drug. We see this even when there are multiple brands competing to sell generic versions of drugs they didn't discover or spend R&D on. There is simply no market forces to lower medically necessary drug prices. The market is captive (people will die without certain medication), and thanks to patents, there is often no competition for years to allow people to price shop. I can buy ibuprofen or acetaminophen or aspirin for cheap at any drug store, because there is a competitive market for OTC pain meds. There is no OTC market for insulin, and people will die without it. Unsurprisingly, insulin is much more expensive, despite being discovered by a university and being over 100 years old. PreP (prevents HIV) research was entirely funded by US taxes, and the pills costs $2000/mo - despite being available from multiple companies including available as a generic. Why are companies that didn't pay to research the drug (and didn't take US Gov money to research it) charging $2000/mo? The only cost they incurred was manufacturing.
- maxerickson 3y ago
  I bet the manufacturing cost is the largely relevant factor once the patents expire. Which from the perspective of generic manufacturers, the drugs are discovered and proved effective by the Magic Drug Fairy.
  - eitally 3y ago
    Not particularly, but there really isn't much difference between a generic drug plant and a branded factory. Same machines, same kinds of people, basically all the same.
    - maxerickson 3y ago
      Yes, that is why once regulatory exclusivity is removed, the market price tends to be based more or less on the manufacturing cost.
ProjectArcturis 3y ago
Microsoft Office retails for $250 but costs $0 to make. Perhaps it could be argued that installation CDs are "expensive", but not $250, and online downloads make this item moot.
- aaomidi 3y ago
  Is there a difference between Microsoft Office and medication that can help solve an endemic/pandemic of Obesity I wonder? There are times where the government, can, and should drop in and buy the entire IP associated with a medication. This price should be set with a council of various representatives, and it should not be something that the drug manufacturing company can reject. Most of the research here is already partially funded by the tax payer through Government funds of colleges, etc etc anyway. This isn't even something unheard of. The US has the power to unilaterally cancel patents.
  - richwater 3y ago
    > help solve an endemic/pandemic of Obesity I wonder? Solving obesity is free. For the vast majority of people, Ozempic or Wigovy is solving a motivation/discipline problem, not an obesity problem. > This price should be set with a council of various representatives, and it should not be something that the drug manufacturing company can reject. Any other authoritarian ideas? What a great way to destroy innovation.
    - karaterobot 3y ago
      > For the vast majority of people, Ozempic or Wigovy is solving a motivation/discipline problem, not an obesity problem. I'd invert that: on the scale of a population, motivation and discipline are empirically not the cure for obesity. The statistics and the studies are on my side here. I agree that it would be convenient if that strategy, which we've been trying for about 80 years now, suddenly turned out to work. But my guess is doubling down on it wouldn't be any more effective than it has been, so let's take this new approach, which appears to work much better, seriously.
  - 3y ago
deleted 3y ago
[deleted]
adammarples 3y ago
Exactly why "developing" drugs is mentioned
bhk 3y ago
But they need these huge margins to pay for the politicians and media coverage (or absence thereof) that allow them to do what they do.
- hi-v-rocknroll 3y ago
  Martin Shkreli approves because some medications just don't cost enough for the benefits they provide. When we reductively reduce the value of human life to QALY and profits, part of our humanity slips away. PS: I can't currently afford semaglutide but require it to offset the side-effects of mirtazapine. Resting HR: 110(!), BP: 175/95, BMI: 32.0. Perhaps I should find a cheap way to visit France or maybe someone in France would send me a year's worth if I paid them.
  - heavyset_go 3y ago
    > PS: I can't currently afford semaglutide but require it to offset the side-effects of mirtazapine What side-effects? I take the same medication.
    - hi-v-rocknroll 3y ago
      You're lucky then. It's routinely given off-label to elderly people specifically as an orexigenic.
      - heavyset_go 3y ago
        I'm genuinely asking what side effects to look out for, because I don't know.
        hi-v-rocknroll 3y ago
        Anecdotally (since I'm only one person) it caused reduced muscle tone of the large intestine, slight elevation in BP, and weight gain. I tried 17 antidepressants by titrating on and off various ones for 25+ years. It's the only one that led to significant improvement for 3 years with reduced effect for years 4-9 but now I'm barely treading water with it. Skipping a single dose overnight feels exactly like an (alcohol) hangover. PSA: If some is prone to major depression - exercise, going outside regularly, and avoiding alcohol aren't vague suggestions doctors make casually, they're pretty close to life-saving.
0cf8612b2e1e 3y ago
The first pill of a drug costs $1 billion to make. The remainder are all $0.01 a piece.
- willcipriano 3y ago
  900 million or so of the total is used in the most important part of drug safety, share buybacks.
  - ProjectArcturis 3y ago
    Wait, these companies are making PROFITS that they're returning to INVESTORS??? I don't know whether to call 60 Minutes, the FBI, or The Daily Worker.
    - willcipriano 3y ago
      "Free market rah rah rah" "Let's reimport drugs then" "No! The poor drug companies! How could they survive!"
- geysersam 3y ago
  In that sense it's not so different from digital content. Another arena where IP concept from the last century are a bad fit
- itopaloglu83 3y ago
  Sure. The drug companies should be able to recoup their initial investment and also make a healthy profit as well. Nobody expects them to develop and manufacture something for free. However, this must be based on their actual cost and not an arbitrary figure, which in the article was revealed to be roughly $34M real cost compared to $3B as it was advertised for lobbying purposes. What is the best way to protect private ventures but also prevent them from sucking the public funds and the entire population dry? Transparency. Let's see where the money is being spent and compare it with other companies to see what's really happening here. The society doesn't allow vital resources like water, and recently internet be priced at extraordinary numbers, and control how much profit you can make. Maybe there should be even a cap at 100% profit, or 300%, or let's say 500%. But once a company starts selling a life saving drug at 17 thousand times the cost of developing AND manufacturing it, then there's something definitely wrong in that industry and the market must be investigated.
SkyPuncher 3y ago
“But it only costs X” is not a great argument. Most of tech jobs would be gone if things had to be within a fraction of what they cost to deliver. The world runs on value. Coat is simply a limiting factor in the floor that something can be made for.
aantix 3y ago
That's like saying "It took them five minutes to enter these lines of code. Why are we paying them so much!?!?!?"
- jfoutz 3y ago
  We really did this wrong. We should get paid for every time the lines are run.
  - tompccs 3y ago
    That's SaaS
- abecedarius 3y ago
  More directly, like "it costs, like, a penny to download the software to the client, why do we pay so much?" Marginal cost vs. amortized development. (Making a limited point separate from my general opinions of Big Drug, etc.)
- heavyset_go 3y ago
  We can look at what those drugs retail in other countries to see how much price gouging is going on. Turns out it's a lot.
  - aantix 3y ago
    Purchases in the U.S. subsidize those other countries.
- davisr 3y ago
  In your example, if it did take a programmer 5 minutes, and they don't have any real accountability anyway (not like a real engineer), then why _are_ we paying them so much?
- Der_Einzige 3y ago
  SWEs are massively overpaid. News at 11…
heavyset_go 3y ago
I've seen on-patent medications sell for $500 to over $4000 a month for a 30-day supply. Those same medications cost between $20 and $40 in sane countries, and none of them included autoinjectors, they were just simple pills for simple conditions. It was also NIH research and money that lead to discovery of the drugs in the first place.
- ceejayoz 3y ago
  My most recent Skyrizi shot (one mililiter, once every 12 weeks) cost $23,685.03. https://imgur.com/s5q4ZEt https://imgur.com/s5q4ZEt (That three cents at the end kinda made me laugh.) It's about 1/10th that in the UK (not even counting the NHS's "confidential discount"); https://www.spglobal.com/marketintelligence/en/news-insights/trending/FKxchvLCM3q_MQ7m7adK5g2 https://www.spglobal.com/marketintelligence/en/news-insights....

pfdietz 3y ago

The cost of manufacturing the drug is only relevant if the drug can be discovered and proved effective by the Magic Drug Fairy. Here in the real world, that manufacturing cost is largely irrelevant.

narrator 3y ago
This reminds me of P=NP. It's hard to find a sha256 with a given number of leading zeros, but it's super easy to verify. It's hard to make Microsoft Office, or a Pharmaceutical Drug, but easy to see that they work. The confusion is at the root of most economic fallacies.
willcipriano 3y ago
> the Magic Drug Fairy. Thats the government funded universities.
- pfdietz 3y ago
  They do not, in fact, do the hard work of drug development.
- philipkglass 3y ago
  The universities find compounds that work in cell cultures or mice. They don't currently optimize candidate compounds for use in humans or perform actual human clinical trials. In theory, there's no reason that a government couldn't fund all phases of drug development through final approval and then manufacture new drugs without seeking a profit. But most compounds that work in mice fail in clinical trials, and human testing is a lot more expensive than mouse testing. There would need to be consistent support for such a drug development program even though most attempts will fail and "breakthrough" drugs will arrive irregularly, separated by many years. It is politically difficult to maintain that sort of long term support in a system where voters and representatives are swayed by short-term arguments to cut programs that don't show results.
vineyardmike 3y ago
You say all this, while the literal title of the article you're commenting on is "The cost of developing new drugs may be far lower than industry claims". I think this comment perfectly proves that this is relevant. Manufacturing is quite relevant. If the actual cost of "discovered and proved effective" is far lower than claimed, then manufacturability becomes a concern. If the cost of discovery and proven effectiveness is borne by governments and universities, then the manufacturing is the only cost borne by the pharmaceutical companies.
- pfdietz 3y ago
  The article appears to imply that the direct cost of developing a successful drug is the relevant metric. It isn't; the cost must include the indirect costs of development on drugs that didn't pan out. And the vast majority of drug candidates don't pan out, often in Phase 3 trials where much of the cost has already been sunk. Put it another way: if making new drugs was so cheap and easy, drug companies would be doing that in competition with each other, and prices would be low as a result of that competition.
  - vineyardmike 3y ago
    > if making new drugs was so cheap and easy, drug companies would be doing that in competition with each other They are. There is intense competition and lots of venture capital and research grants to fund research. > prices would be low as a result of that competition. Why? Patents end competition as soon as the research is successful. They have to compete to research the drug - and we see a vibrant competitive market for research - but they don't have to compete to sell the drug. We see this even when there are multiple brands competing to sell generic versions of drugs they didn't discover or spend R&D on. There is simply no market forces to lower medically necessary drug prices. The market is captive (people will die without certain medication), and thanks to patents, there is often no competition for years to allow people to price shop. I can buy ibuprofen or acetaminophen or aspirin for cheap at any drug store, because there is a competitive market for OTC pain meds. There is no OTC market for insulin, and people will die without it. Unsurprisingly, insulin is much more expensive, despite being discovered by a university and being over 100 years old. PreP (prevents HIV) research was entirely funded by US taxes, and the pills costs $2000/mo - despite being available from multiple companies including available as a generic. Why are companies that didn't pay to research the drug (and didn't take US Gov money to research it) charging $2000/mo? The only cost they incurred was manufacturing.
maxerickson 3y ago
I bet the manufacturing cost is the largely relevant factor once the patents expire. Which from the perspective of generic manufacturers, the drugs are discovered and proved effective by the Magic Drug Fairy.
- eitally 3y ago
  Not particularly, but there really isn't much difference between a generic drug plant and a branded factory. Same machines, same kinds of people, basically all the same.
  - maxerickson 3y ago
    Yes, that is why once regulatory exclusivity is removed, the market price tends to be based more or less on the manufacturing cost.

ProjectArcturis 3y ago

Microsoft Office retails for $250 but costs $0 to make. Perhaps it could be argued that installation CDs are "expensive", but not $250, and online downloads make this item moot.

aaomidi 3y ago
Is there a difference between Microsoft Office and medication that can help solve an endemic/pandemic of Obesity I wonder? There are times where the government, can, and should drop in and buy the entire IP associated with a medication. This price should be set with a council of various representatives, and it should not be something that the drug manufacturing company can reject. Most of the research here is already partially funded by the tax payer through Government funds of colleges, etc etc anyway. This isn't even something unheard of. The US has the power to unilaterally cancel patents.
- richwater 3y ago
  > help solve an endemic/pandemic of Obesity I wonder? Solving obesity is free. For the vast majority of people, Ozempic or Wigovy is solving a motivation/discipline problem, not an obesity problem. > This price should be set with a council of various representatives, and it should not be something that the drug manufacturing company can reject. Any other authoritarian ideas? What a great way to destroy innovation.
  - karaterobot 3y ago
    > For the vast majority of people, Ozempic or Wigovy is solving a motivation/discipline problem, not an obesity problem. I'd invert that: on the scale of a population, motivation and discipline are empirically not the cure for obesity. The statistics and the studies are on my side here. I agree that it would be convenient if that strategy, which we've been trying for about 80 years now, suddenly turned out to work. But my guess is doubling down on it wouldn't be any more effective than it has been, so let's take this new approach, which appears to work much better, seriously.
- 3y ago

deleted 3y ago

[deleted]

adammarples 3y ago

Exactly why "developing" drugs is mentioned

bhk 3y ago

But they need these huge margins to pay for the politicians and media coverage (or absence thereof) that allow them to do what they do.

hi-v-rocknroll 3y ago
Martin Shkreli approves because some medications just don't cost enough for the benefits they provide. When we reductively reduce the value of human life to QALY and profits, part of our humanity slips away. PS: I can't currently afford semaglutide but require it to offset the side-effects of mirtazapine. Resting HR: 110(!), BP: 175/95, BMI: 32.0. Perhaps I should find a cheap way to visit France or maybe someone in France would send me a year's worth if I paid them.
- heavyset_go 3y ago
  > PS: I can't currently afford semaglutide but require it to offset the side-effects of mirtazapine What side-effects? I take the same medication.
  - hi-v-rocknroll 3y ago
    You're lucky then. It's routinely given off-label to elderly people specifically as an orexigenic.
    - heavyset_go 3y ago
      I'm genuinely asking what side effects to look out for, because I don't know.
      - hi-v-rocknroll 3y ago
        Anecdotally (since I'm only one person) it caused reduced muscle tone of the large intestine, slight elevation in BP, and weight gain. I tried 17 antidepressants by titrating on and off various ones for 25+ years. It's the only one that led to significant improvement for 3 years with reduced effect for years 4-9 but now I'm barely treading water with it. Skipping a single dose overnight feels exactly like an (alcohol) hangover. PSA: If some is prone to major depression - exercise, going outside regularly, and avoiding alcohol aren't vague suggestions doctors make casually, they're pretty close to life-saving.

0cf8612b2e1e 3y ago

The first pill of a drug costs $1 billion to make. The remainder are all $0.01 a piece.

willcipriano 3y ago
900 million or so of the total is used in the most important part of drug safety, share buybacks.
- ProjectArcturis 3y ago
  Wait, these companies are making PROFITS that they're returning to INVESTORS??? I don't know whether to call 60 Minutes, the FBI, or The Daily Worker.
  - willcipriano 3y ago
    "Free market rah rah rah" "Let's reimport drugs then" "No! The poor drug companies! How could they survive!"
geysersam 3y ago
In that sense it's not so different from digital content. Another arena where IP concept from the last century are a bad fit
itopaloglu83 3y ago
Sure. The drug companies should be able to recoup their initial investment and also make a healthy profit as well. Nobody expects them to develop and manufacture something for free. However, this must be based on their actual cost and not an arbitrary figure, which in the article was revealed to be roughly $34M real cost compared to $3B as it was advertised for lobbying purposes. What is the best way to protect private ventures but also prevent them from sucking the public funds and the entire population dry? Transparency. Let's see where the money is being spent and compare it with other companies to see what's really happening here. The society doesn't allow vital resources like water, and recently internet be priced at extraordinary numbers, and control how much profit you can make. Maybe there should be even a cap at 100% profit, or 300%, or let's say 500%. But once a company starts selling a life saving drug at 17 thousand times the cost of developing AND manufacturing it, then there's something definitely wrong in that industry and the market must be investigated.

SkyPuncher 3y ago

“But it only costs X” is not a great argument. Most of tech jobs would be gone if things had to be within a fraction of what they cost to deliver. The world runs on value. Coat is simply a limiting factor in the floor that something can be made for.

aantix 3y ago

That's like saying "It took them five minutes to enter these lines of code. Why are we paying them so much!?!?!?"

jfoutz 3y ago
We really did this wrong. We should get paid for every time the lines are run.
- tompccs 3y ago
  That's SaaS
abecedarius 3y ago
More directly, like "it costs, like, a penny to download the software to the client, why do we pay so much?" Marginal cost vs. amortized development. (Making a limited point separate from my general opinions of Big Drug, etc.)
heavyset_go 3y ago
We can look at what those drugs retail in other countries to see how much price gouging is going on. Turns out it's a lot.
- aantix 3y ago
  Purchases in the U.S. subsidize those other countries.
davisr 3y ago
In your example, if it did take a programmer 5 minutes, and they don't have any real accountability anyway (not like a real engineer), then why _are_ we paying them so much?
Der_Einzige 3y ago
SWEs are massively overpaid. News at 11…

heavyset_go 3y ago

I've seen on-patent medications sell for $500 to over $4000 a month for a 30-day supply. Those same medications cost between $20 and $40 in sane countries, and none of them included autoinjectors, they were just simple pills for simple conditions. It was also NIH research and money that lead to discovery of the drugs in the first place.

ceejayoz 3y ago
My most recent Skyrizi shot (one mililiter, once every 12 weeks) cost $23,685.03. https://imgur.com/s5q4ZEt https://imgur.com/s5q4ZEt (That three cents at the end kinda made me laugh.) It's about 1/10th that in the UK (not even counting the NHS's "confidential discount"); https://www.spglobal.com/marketintelligence/en/news-insights/trending/FKxchvLCM3q_MQ7m7adK5g2 https://www.spglobal.com/marketintelligence/en/news-insights....