4 ms·

Lilly says weight loss drug cuts heart failure risk by 38% in trial

6 points by pizza 2y ago

pfdietz 2y ago
There are now five drugs in this class approved by the FDA, so competition should be driving down costs soon, perhaps delayed by temporary shortages and as trials are done with each to show efficacy in various situations.
- avidiax 2y ago
  I doubt that competition will drive down cost. The cost of switching between drugs is that you have to spend several hundred dollars to see your doctor, plus follow up appointments. You then have to get accustomed to the new side effect profile, and evaluate if it is worth the savings. And that assumes that your doctor is even willing to switch you, which they might if there were a large price delta. These drug manufacturers know what price the market will bear, and will charge as high a price as they can.
  - toomuchtodo 2y ago
    https://www.wired.com/story/glp1-ozempic-wegovy-semaglutide-compounding-pharmacies-hims-reflexmd-alan-meds-henry-ro-getthinmd/ https://www.wired.com/story/glp1-ozempic-wegovy-semaglutide-... ("It’s Shockingly Easy to Buy Off-Brand Ozempic Online, Even if You Don’t Need It") Doesn't apply to some drugs in the space, but broadly speaking, between online telemedicine mills and compounding pharmacies, accessibility is increasing.
    - brianwawok 2y ago
      It’s like $100-$150 to buy from a compounding pharmacy. Why would anyone pay $1000-$1500 for the same thing?
      - avidiax 2y ago
        Your insurance might pay $1,000+.
  - pfdietz 2y ago
    The logic you are using would suggest competition doesn't work. But we see it work in all sorts of industries. Are you suggesting the drug makers are colluding? That's blatantly illegal. If you have evidence of that, go to the government immediately.
    - avidiax 2y ago
      I think they are tacitly colluding. To price your drug, start with the price that a monopoly would charge. If you are the 2nd entrant, copy the first entrant's price. Adjust the price slightly depending on the relative differences. If your drug is easier to administer, has fewer side effects, is more effective, charge a slightly higher price, or vice-versa. Is your market share lower? Lower your price slightly. Higher? Raise your price slightly. Aim for 1/N market share, and punish any firm that tries to achieve an "unfair" market share. Remember insurance will pay almost any price, so don't get too greedy and spoil it for everyone.
      - pfdietz 2y ago
        > Higher? Raise your price slightly. And that's the part that makes no sense. Why would any individual competitor there aim for 1/N market share, rather than as much market share as they can get? On the margin, the incentive is always to reduce price enough to take market share from one or more of the others.
        credit_guy 2y ago
        Not OP, but allow me to chime in. What you say makes perfect sense, but the healthcare market has serious frictions. A lot of people pay only a fraction of the sticker price because their health insurance pays the rest. Let's say Eli Lilly charges $1000 per pen and the user pays $25 (not an atypical number). If Eli Lilly cuts the price by 20%, the user will see monthly savings of $5. The insurance company will pay $195 less, and in time maybe, because of the competition, might reduce premiums. Most likely not, because this is just a tiny component of a humongous basket of goods and services that eventually drives the setting of the premium. Of course, a lot of users pay sticker price, and those will absolutely like to pay $200 less per month. But the marginal profit and loss equation for Eli Lilly will show a massive loss: they get a 20% loss on all their current paying users but start seeing some profit on the new users attracted by the lower price. Let's say the cost to manufacture one pen is $200 (including the capital amortization) so at $800 the profit is 300%. But the new users are too few, so overall they end up losing money. And this equation works at any other discount price, at 5%, at 10%, at 50%.

6 points by pizza 2y ago

There are now five drugs in this class approved by the FDA, so competition should be driving down costs soon, perhaps delayed by temporary shortages and as trials are done with each to show efficacy in various situations.

avidiax 2y ago
I doubt that competition will drive down cost. The cost of switching between drugs is that you have to spend several hundred dollars to see your doctor, plus follow up appointments. You then have to get accustomed to the new side effect profile, and evaluate if it is worth the savings. And that assumes that your doctor is even willing to switch you, which they might if there were a large price delta. These drug manufacturers know what price the market will bear, and will charge as high a price as they can.
- toomuchtodo 2y ago
  https://www.wired.com/story/glp1-ozempic-wegovy-semaglutide-compounding-pharmacies-hims-reflexmd-alan-meds-henry-ro-getthinmd/ https://www.wired.com/story/glp1-ozempic-wegovy-semaglutide-... ("It’s Shockingly Easy to Buy Off-Brand Ozempic Online, Even if You Don’t Need It") Doesn't apply to some drugs in the space, but broadly speaking, between online telemedicine mills and compounding pharmacies, accessibility is increasing.
  - brianwawok 2y ago
    It’s like $100-$150 to buy from a compounding pharmacy. Why would anyone pay $1000-$1500 for the same thing?
    - avidiax 2y ago
      Your insurance might pay $1,000+.
- pfdietz 2y ago
  The logic you are using would suggest competition doesn't work. But we see it work in all sorts of industries. Are you suggesting the drug makers are colluding? That's blatantly illegal. If you have evidence of that, go to the government immediately.
  - avidiax 2y ago
    I think they are tacitly colluding. To price your drug, start with the price that a monopoly would charge. If you are the 2nd entrant, copy the first entrant's price. Adjust the price slightly depending on the relative differences. If your drug is easier to administer, has fewer side effects, is more effective, charge a slightly higher price, or vice-versa. Is your market share lower? Lower your price slightly. Higher? Raise your price slightly. Aim for 1/N market share, and punish any firm that tries to achieve an "unfair" market share. Remember insurance will pay almost any price, so don't get too greedy and spoil it for everyone.
    - pfdietz 2y ago
      > Higher? Raise your price slightly. And that's the part that makes no sense. Why would any individual competitor there aim for 1/N market share, rather than as much market share as they can get? On the margin, the incentive is always to reduce price enough to take market share from one or more of the others.
      - credit_guy 2y ago
        Not OP, but allow me to chime in. What you say makes perfect sense, but the healthcare market has serious frictions. A lot of people pay only a fraction of the sticker price because their health insurance pays the rest. Let's say Eli Lilly charges $1000 per pen and the user pays $25 (not an atypical number). If Eli Lilly cuts the price by 20%, the user will see monthly savings of $5. The insurance company will pay $195 less, and in time maybe, because of the competition, might reduce premiums. Most likely not, because this is just a tiny component of a humongous basket of goods and services that eventually drives the setting of the premium. Of course, a lot of users pay sticker price, and those will absolutely like to pay $200 less per month. But the marginal profit and loss equation for Eli Lilly will show a massive loss: they get a 20% loss on all their current paying users but start seeing some profit on the new users attracted by the lower price. Let's say the cost to manufacture one pen is $200 (including the capital amortization) so at $800 the profit is 300%. But the new users are too few, so overall they end up losing money. And this equation works at any other discount price, at 5%, at 10%, at 50%.