14 ms·

$1,000-a-day miracle drug shocks U.S. health care system

48 points by jjoe 13y ago

dia80 13y ago
My questions: 1) How much did it cost to develop? 2) How big is the potential market? 3) How much money will it save society overall for each person cured?
- Retric 13y ago
  1) Is really hard to calculate as you need to look at the ratio of successful to failed drugs not just this single home run. However, drug companies spend more on advertising than research which should give you some ideas for savings.
  - mhb 13y ago
    However, drug companies spend more on advertising than research which should give you some ideas for savings. Right. Because all they have to do is offer the drug in an app store and the world will beat a path to their door.
    - mikeyouse 13y ago
      It's medicine not some trivial app. If you have Hepatitis C, your doctor will prescribe you this drug. Allowing direct-to-consumer marketing corrupts patients and allowing drug companies to lavish doctors with food / drink / entertainment corrupts physicians. I grew up in a medical household, you wouldn't believe the shit these companies do to curry favor. Some of it has been limited but much of it still continues.
      - rayiner 13y ago
        People argue against creating a profit motive by saying "it's medicine, not a trivial app," and then wonder why all the bright kids at Stanford go off to build trivial apps instead of curing diseases. There are lots of things that should be in the public sector, but "it's too important" is a bad criteria to use. Because then all the money will be in doing things that are unimportant.
        mikeyouse 13y ago
        People argue against creating a profit motive by saying "it's medicine, not a trivial app," What in the world does that have to do with advertising? There are literally two countries in the world that permit direct-to-consumer advertising. It is strictly and explicitly banned by the European Union. Somehow I don't think it's harmed the profit motive at Bayer, Roche (who were profitable enough to buy one of the most profitable US pharmaceutical companies), GSK, Novartis, Sanofi, etc. etc. The point isn't that drug companies shouldn't make money, they clearly should. At one point, 97% of the people on earth receiving treatment for AIDS were taking drugs developed by the Chief Scientist that also developed this Hepatitis breakthrough. He deserves to be a billionaire dozens of times over. The point is that it's disingenuous to try to justify the high costs to consumers by blaming R&D spending when the R&D budgets are smaller than their advertising budgets. Pharma advertising is indefensible in nearly all cases. We have actual scientific and cost data that shows, for instance, that before Lipitor was generic, Crestor was more effective at treating high LDLs for a lower cost.[2] No amount of Pfizer sponsorship will change this fact. Allowing them to blanket the air waves and bribe doctors to get Lipitor on the formulary instead of Crestor is an ethical failing we are all responsible for. If Pfizer wants to change people's minds about Lipitor, their advertising should take the form of a sponsored independent study that shows better outcomes for patients on Lipitor. Or they could compete on price. This is how a sensible pharma market would operate. [1] - http://europa.eu/legislation_summaries/other/l21143_en.htm http://europa.eu/legislation_summaries/other/l21143_en.htm [2] - http://www.ncbi.nlm.nih.gov/pubmed/18489494 http://www.ncbi.nlm.nih.gov/pubmed/18489494
    - FireBeyond 13y ago
      Here's a clue: There is only one country in the world where the advertising of prescription medicine to the layperson is allowed. Can you name it? For bonus points, can you name why?
      - Houshalter 13y ago
        Though to defend advertisement a little, it does inform people that there is a treatment for their condition and to go to a doctor.
        FireBeyond 13y ago
        Perhaps. A more realistic view is that "if something is paining or inconveniencing you to the point of discomfort, then you should talk to your doctor". In amongst all the specific ads (which actually, to my mind, are not necessarily a bad thing - think of the 'is drug X not helping with your condition? Recent studies have shown that adding drug B to your existing regime may improve efficiency'), you get oh-so-generic ads. "Feeling 'low energy'? X may be able to help. Ask your doctor if X is right for you!" These days, you can largely assume that most conditions are manageable, if not treatable and that your quality of life should be the driver, not advertising incentivizing you to go to the doctor (and giving you a helpful laundry list of other symptoms that you may or may not have to "aid" the "diagnosis" most convenient to the manufacturer).
        Houshalter 13y ago
        It's not that simple. People with allergies might not know that there is a better medication available. People with restless leg syndrome may just think it's some weird thing unique to them. Depression is a really big one to get people to go to a doctor for. Notice there aren't any commercials for stuff like antibiotics. People are already going to a doctor when they have an infection and other serious conditions. They advertise the stuff that needs advertisement. If it didn't work they wouldn't do it.
        Retric 13y ago
  - rayiner 13y ago
    Many companies spend more on advertising than product development.
  - protomyth 13y ago
    You need to advertising since you have such a short window to get back your research money. Look at this article from 2011 about having to defend high R&D budgets: http://www.reuters.com/article/2011/12/13/us-merck-idUSTRE7BC25120111213 http://www.reuters.com/article/2011/12/13/us-merck-idUSTRE7B...
- protomyth 13y ago
  You forgot, "how many years do they have until the patents run out?". I know of one drug that was running 5 figures a day in clinical trial costs. You need to charge to pay for the drug.
- refurb 13y ago
  The market is absolutely huge. From what I've seen so far, this drug is expected to get revenues of $5-8B in the first year. That is an absolutely incredible number when you consider the best selling drug ever, Lipitor, had total sales of $11B in it's peak year.
  - cschmidt 13y ago
    Something like Lipitor people take forever, so its use will grow over time. This drug cures people, who no longer continue to take it. There must be a big backlog of people with hepatitis C. Once you go through those people, I would expect that the use of the drug will decline, to just be people just contracting the disease.
    - refurb 13y ago
      There is a very large backlog of HCV patients out there with many waiting to for the improved therapies to launch. There is also a huge population of undiagnosed patients as well. You are correct that the patient population will continue to shrink as people are cured, but to give you an idea of the size of the market, if everyone in the US with HCV were treated with this drug this year, it would cost $3 trillion dollars. Total Lipitor revenues over it's entire lifecycle amounted to a little over $100 billion.
- drcode 13y ago
  My only question when I saw this: Why isn't this stock in my portfolio?
- HillRat 13y ago
  Solvadi/sofosbuvir was discovered by Pharmasset, Schinazi and Liotta's lab, which Gilead picked up for a cool $11 billion a few years ago. I believe sofosbuvir was Pharmasset's main IP (I think they had some HIV treatments -- S&I's wheelhouse from their time at Emory -- in the investigational stage, but Hep C was their big product.) There are a couple of things to consider about this. The first is that there are a lot of HCV treatments expected to come online over the next few years, so Gilead has an incentive to jack up the price now while they're the only game in town -- and with $11b in acquisition costs, they need to make their nut back on this. Second, only a very small number of HCV patients are in high-income countries. 6.4% of all HCV victims are in US, EU and Japan, but Egypt alone has up to three times as many HCV patients as the US. (Anyone wanting to go to Egypt for cheap HCV therapy might think twice; poor infection control practices in Egypt's health care system has been implicated as the primary source of HCV infection.) With HCV raging through so many poor countries, it's reasonable to at least discuss subsidizing global access to medications by increasing the rate paid for treatment courses in wealthy countries. The alternative would be direct financial support of global access which, given the current political climate in developed nations, is unlikely to get much traction. I'm certainly not saying that Gilead is operating with humanity's best interests in mind -- few industries are as brutally venal as pharm -- but it seems to me that the tradeoff is something that is at least worth discussing.
fasteddie31003 13y ago
The Elysium future is looking more and more likely to me over a Star Trek future.
- noir_lord 13y ago
  I suspect first we'll have something that looks more like Elysium and then something that looks more like Star Trek. I doubt we'll ever have either extreme (and different parts of the world will likely have different bits at different times). Certainly going to be an interesting 100 years (but when has that ever not been true..).
- crusso 13y ago
  For years we've heard the charge that pharmaceutical companies are little more than parasites creating perpetual users of their drugs rather than curing anything. It's worth noting that this drug company is curing something significant and the fact that they're trying to make a go of a business out of it is a bad thing?
- Houshalter 13y ago
  By the time the future gets here, all of today's patents would have expired long ago. Everything around today will be completely free. Not to mention replicators making manufacturing basically free as well.
ceejayoz 13y ago
$1k/day for three months is $90k. Googling shows the existing interferon treatments cost significant amounts - $15-50k if a quick skim is accurate - and are far less effective. I'd imagine the eventual liver transplants cost far more than $90k too. The math may work out here.
- ecaradec 13y ago
  I wonder if they actually did the same math on purpose to set a price just below current treatments.
  - Jgrubb 13y ago
    If there were any way of settling such a bet, I'd put $100 on that right now.
  - fit2rule 13y ago
    Of course they did this in their pricing/costs calculations, how could they not have - given that 'they' are pharmaceutical executives whose job it is to make as much money per pill as possible. Well, if there is ever a 'place' for the open-Source ethos, medicine is it. Stories like this confirm it for me, anyway.
    - refurb 13y ago
      An open source ethos in pharmaceuticals would pretty much guarantee you'd have a lot fewer new drugs developed. If it costs $500M-$1B to develop a drug, how on earth do you raise that money if some random company can come by and sell the same drug for $5/day because they didn't pay any development costs?
      - fit2rule 13y ago
        If the reason it costs 500millions to develop a drug is because you have to have lots of junkets to pimp the new profitpill to the politicians so they'll let you get a majority of their nation high/dependent on it, then I'm all for a revision to how society 'gets these things done'. surely you can't be relying on that same ol' pimp statement, "sorry man, it cost me a lot to get this stuff, you gotta pay ..", for it is scurrilous to assume that drug dependency doesn't have a profit side.
jere 13y ago
>Perhaps motivated by the high costs to taxpayers, lawmakers are pushing Gilead to explain why it charges so much. It doesn't help that Gilead is offering Sovaldi in Egypt at a 99 percent discount to U.S. prices, or about $900 for a full course of treatment. I wonder how difficult it would be (from a legal perspective) to take a 3 month vacation to Egypt and save almost six figures.
- melling 13y ago
  Medical tourism is already a market. http://en.wikipedia.org/wiki/Medical_tourism http://en.wikipedia.org/wiki/Medical_tourism Now it just needs a new big Silicon Valley behind it. The "Uber" of medical tourism?
  - fennecfoxen 13y ago
    The Law of One Price strikes again!
- fancy_betta 13y ago
  A 3 month vacation to Egypt isn't free. Even if you can live cheaply, you'll still likely have bills that you need to continue paying in the US. I guess this could work if you can sever all financial ties to the US for 3 months and still have enough money to live in Egypt, pay for the medicine, then come back to the US and restart your life.
  - thenomad 13y ago
    You'd need to take a sabbatical from your work in the US, rent an apartment in Egypt, and continue to pay bills in the US. But given that by doing so you'd be saving $83,000, that still sounds like a pretty good deal to me. I'd imagine you can live pretty nicely in Egypt for a lot less than $27,666 per month...
    - ryoshu 13y ago
      It might make sense for insurance companies to pay people travel to and stay in Egypt for the course of the treatment.
goatforce5 13y ago
"It doesn't help that Gilead is offering Sovaldi in Egypt at a 99 percent discount to U.S. prices, or about $900 for a full course of treatment." Time for someone to start selling medical holidays to Egypt. Are there areas of Egypt that would safe/pleasant for a Westerner to spend 90 days for less than $1k/day?
- avar 13y ago
  Even in the most unstable areas of Egypt your personal risk if you take some obvious precautions is orders of magnitude less than continuing to have hepatitis C.
- refurb 13y ago
  You wouldn't need to stay in Egypt for 90 days, you could just go and get a prescription, get it filled and come home.
  - w1ntermute 13y ago
    Is even that necessary? I bet you can buy the drug without a prescription in Egypt, on the black market. Then just set up shop in international waters, off the US coast.
- noir_lord 13y ago
  Loads. You could book into one of the tourist resorts for far less than $1000 a day. I took a quick look at Expedia, You can book the Cairo Marriot for a full month for $3200 ~$5300 multiple that out for 3 months and double for other expenses (flights, visa etc) and it's still a third the price. Craz
- rguldener 13y ago
  According to the article most recipients of the drug don't pay for themselves so I think few would be incentivized by the savings. I am sure there are suitable places in egypt though.
  - swamp40 13y ago
ctdonath 13y ago
Like mortgages and tuition assistance, government-backed insurance leads to ever-higher prices. So long as the cost gets paid, prices will rise to match.
- solve 13y ago
  Part of the problem is that "smart" people, especially technical and scientific people, refuse to believe that prices aren't based on logic and hard facts, but the circular-definition that is markets -- the price is what it is, because people pay it. Let's call it the "religion of tangible explanations." People refusing the more correct although ambiguous explanations, in favor of the BS explanations, just because they have a bunch of tangible logic and reasoning attached to it that makes you feel better.
- andybak 13y ago
  > government-backed insurance Can you therefore explain the cost of health-care in the UK on the National Health Service?
  - omgriffiths 13y ago
    I'm from Australia, so I think our system is similar (single payer type system). Our government won't be offering this drug in the short term. If it is really this good, they will negotiate a deal over time. The advantage of that system is the government can give the company the choice: a) Sell to us for $x, and patients can use for no/low cost b) Go direct, and try to convince patients to pay $y themselves This gives a pretty strong incentive for x << y, and avoids a lot of advertising expense.
refurb 13y ago
This drug is a huge jump forward in the treatment of HCV. Most patients who take this drug will be cured and they won't have to take interferon at the same time, which produces side effects so severe, many patients discontinue therapy. So even though you have an $84K per course price tag, patients given this drug get cured, significantly reducing the overall burden to the healthcare system, especially if they don't need a liver transplant. One of the difficult things in showing value in the healthcare system is that nobody is looking at the overall costs. Hospitals worry about their costs, insurance companies about theirs. So even if a drug saves money overall, you'll often find many healthcare providers saying "no" because it doesn't save them money.
- chrisBob 13y ago
  Sounds like a good argument for nationalized health care to me.
  - mhb 13y ago
    Because you're confident that with that system and its incentives this drug would have been invented? As well as the ones which haven't been invented yet?
    - toomuchtodo 13y ago
      I could say the same thing for for-profit drug discovery.
    - justinreeves 13y ago
      > Because you're confident that with that system and its incentives this drug would have been invented? No way to guarantee this drug would have been invented. However, > As well as the ones which haven't been invented yet? I'm absolutely confident that we will work on curing disease until we no longer have to.
  - omgriffiths 13y ago
    Actually sounds like an argument for getting government out of healthcare, as only the patient can truly care about the end to end efficiency.
cs702 13y ago
The drug does not "cost" $1,000/day. Rather, the manufacturer, Gilead, is selling it at that price in the US. According to the article, Gilead is offering the same drug in Egypt "at a 99 percent discount to U.S. prices, or about $900 for a full course of treatment," and "wants to tier its pricing based on a country's per-capita income. So patients in the U.K would pay about $57,000 ...while Germans would pay $66,000 and Americans are paying $84,000." Inevitably, a black market will develop for this drug, because the arbitrage opportunity is substantial. People who're willing to break the law will buy the drug in Egypt for north of $900 and sell it in the US for a lot less than $90,000. -- PS. Even though the title of the article is linkbait, and the article itself has little content, I found it worth reading, because I learned something new: pharmaceutical companies are selling drugs in developing countries at a 99% discount (!) to developed-country prices. I knew prices were lower in developing countries, but not that low.
- refurb 13y ago
  I'm sure a black market will develop, but it will be pretty limited as the FDA bans the importation of pharmaceuticals unless they have already been approved for import. However, I've read that purchasing a 3 month supply for personal use is allowed, so maybe it will turn out to be something big? However, from what I've read, drug manufacturers but strict limits on drugs produced in low income countries. If there are 500K patients with HCV, the drug companies is going to put a quota on how much is sold. If Westerners start importing it, then that means Egyptians will go without.
  - jrs235 13y ago
    Except, I do believe, there are some countries (I want to say Argentina or Brazil) which do not recognize drug patents and will manufacture the drugs themselves. Edit: India is another country that comes to mind.
    - toomuchtodo 13y ago
      Brazil specifically invalidated Merck's HIV drug patent. http://www.ft.com/cms/s/2/c7d3f1f4-fa78-11db-8bd0-000b5df10621.html http://www.ft.com/cms/s/2/c7d3f1f4-fa78-11db-8bd0-000b5df106...
swamp40 13y ago
Two powerful quotes: >More than half of those with hepatitis C are veterans, prisoners, uninsured or on Medicaid, the New York Times reports. That requires taxpayers to pick up the bill. >It doesn't help that Gilead is offering Sovaldi in Egypt at a 99 percent discount to U.S. prices, or about $900 for a full course of treatment. Tiered pricing by country (from a US company, no less). I'm not sure what to think about this - very complicated ethics. I can sympathize with both sides.
jrs235 13y ago
I wonder if they would adjust their pricing (and which way) if Congress threatened to shorten the life of patents, perhaps particularly on "drugs".
kolbe 13y ago
I at least appreciate the fact that Gilead produced a cure, rather than just a treatment. Medical research has taken a frightening turn in the last decade towards working on treatments that patients will have to take (and pay for) the rest of their life, rather than cures. Already, we're looking at a potential drug-resistant bacteria epidemic thanks largely to the fact that antibiotics are just taken a few weeks at a time. So, at least they're charging $90k to cure Hep C, rather than taking $10 out of your pocket every day for the rest of your life?
- thenmar 13y ago
  Can you provide more info about this? That medical researchers are actively avoiding looking for cures for diseases? It just screams "baseless conspiracy theory" to me. And what do antibiotics have to do with it? As far as I know, antibiotic resistant bacteria are the result of factory farms pumping animals full of antibiotics, and patients simply not completing the full course of drugs once they feel better.
  - kolbe 13y ago
    It was a comment in a Frontline episode[1]. If my memory serves me correctly, one of the top researchers claimed that they could conquor this problem, but nearly every drug company has cut funding for antibiotics research, as it doesn't result in long-term usage. [1] http://www.pbs.org/wgbh/pages/frontline/hunting-the-nightmare-bacteria/ http://www.pbs.org/wgbh/pages/frontline/hunting-the-nightmar...
    - refurb 13y ago
      The biggest reason why drug companies don't invest in antibiotics is because if you come up with the best antibiotic ever, it will never get used because docs will save it for the sickest patients. Hence, you'll never make much money on an antibiotic and likely not even turn a profit.
cryptolect 13y ago
Just have to wait for India to copy it, then visit India for medical tourism. They are one of the few countries standing up against big pharmaceuticals when important medicine is priced out of the reach of average citizens.
bargl 13y ago
Another way to look at the huge price tag to cure 90% ($227 billion) is that this would could eventually give us herd immunity. We could then treat this at a lower cost per year going forward. That thought is mind boggling. While the cost is high in the USA the drug company is basically subsidizing their own distribution to other countries based on the GDP of the buyer. WOW, honestly that sounds like a pretty darn awesome thing to me. That $1000 price tag on those drugs is similar to a $10 price tag per day on other drugs to people in other countries where they make $1 per day. It just makes this drug more attainable for everyone and if that is Actually what they are doing I applaud them. Sure I don't want to pay $1000 per day for this drug, but is it ok for us to drive the cost down relative to our cost of living and make it prohibitively expensive for others? This is also what they did with some of the better drugs for curing MDR TB. I only know that because of the book Mountains Beyond Mountains. Where the better drugs were nearly unattainable for the poorer countries.
- Xylakant 13y ago
  This is a cure, not a vaccine, so herd immunity does not apply. Once you get cured, you can get reinfected. Curing every person suffering from hepatitis C would reduce the potential for infections though.
- revelation 13y ago
  Interesting, I had the exact opposite reaction to that line. There is no "subsidizing their own distribution" here, making the drug is dead cheap and distribution isn't even an item on their budget. No, what this means is they are setting their prices to extract the maximum possible amount of money out of each country. Obviously, the price that will yield the largest profit is not always the highest; if you can get four times as many customers at half the price, you doubled your profit while reducing your price.
  - Houshalter 13y ago
    It pays for the cost of researching this drug (and all the other drugs which failed before making it to market) and it creates an incentive to produce more drugs like this in the future. You don't want drugs to cost so much? Encourage the government(s) to fund or subsidize research. Maybe even lower barriers to entry to getting drugs approved. But no one is forcing you to buy the drug and the patent will eventually expire.
refurb 13y ago
An interesting aside is that Gilead acquired the drug through the purchase of a small biotech company called Pharmasset. They purchased the company for $11 billion dollars and at the time, everyone in the industry though they were absolutely nuts for paying that much. Total sales this year alone are projected at $5-8 billion. [1]http://www.forbes.com/sites/matthewherper/2011/11/21/gilead-could-revive-itself-with-11-billion-purchase-of-pharmasset/ http://www.forbes.com/sites/matthewherper/2011/11/21/gilead-...
rayiner 13y ago
Basically, people are being asked to pay $90k to be cured of Hepatitis-C. About the same price as a Tesla Model-S Signature model. Is this an "unfair" price? I would argue that the value to someone of being cured of Hep-C is if anything greater than the value anyone could derive from driving around a new Tesla.
mindslight 13y ago
This is the flip side of the brokenness of the patent system - even when it ends up working correctly to facilitate research, the results are still a horribly broken game that pits the drug maker directly against the general public interest. Gilead needs some way to fund themselves, but long-shot lottery-like reimbursement based on a monopoly followed by the inevitable politicking to stop Gilead's "gouging" (of which this article is a part of) is not a good system for doing this. Not that I think pure publicly-funded research is the way forward either, especially if we'd like to increase incentives for science. That current system works in spite of its brokenness only because the people who are there truly care about their work - scaling it up would be disastrous. But, especially in this case where the boundaries of ownership arise out of no natural phenomenon, we really need to be smoothing out discontinuities, rather than exacerbating them with simplistic approaches and pretending that the betting wisdom of investors (who by construction are abstracted and out of touch from what's actually going on) will achieve the desired result.
- Houshalter 13y ago
  How is the system broken? This drug wouldn't even exist if they weren't able to charge such a high price for it. And nothing is preventing the government or other organizations from also researching drugs. It's not mutually exclusive and it's unlikely two labs would discover the exact same drug.
  - mindslight 13y ago
    They're charging much more than the cost to develop the drug, because they need to pay for all of their failed attempts (and at this point, the only constraint is when the insurance companies will balk). And if they're able to charge this indefinitely, then they're effectively just extracting rent regardless of how much goes into further research (which you can say that they've earned the right to do this, but that's still what they're doing). I'm certainly not saying they shouldn't be compensated, but taking issue with they way they're compensated. As I said, the problem is that it's an extreme gamble, and the only thing this is conducive to is business gamers and the overhead and blindspots they bring. Since the current reimbursement mechanism completely relies on the utterly artificial construction of the patent system, it's reasonable to believe that the entire model could be redesigned.
conductr 13y ago
Market cap of this company is $110b right now. Insurance companies might just want to band together and buy them.
vampirechicken 13y ago
The shock is in the short term costs, rather than those costs being amortized across the long miserable sickly term of the patients lives. So it's not a show to the health care system, it's a shock to the system of companies who sit between the health care system and the patients, and siphon out money. I don't knoe about your health insurance, but mine would just declare this drug to be 'not on the formulary' and refuse to pay for it, like they did with the newer anti-clotting meds that were more effecting and safer for patients.

48 points by jjoe 13y ago

dia80 13y ago

My questions: 1) How much did it cost to develop? 2) How big is the potential market? 3) How much money will it save society overall for each person cured?

Retric 13y ago
1) Is really hard to calculate as you need to look at the ratio of successful to failed drugs not just this single home run. However, drug companies spend more on advertising than research which should give you some ideas for savings.
- mhb 13y ago
  However, drug companies spend more on advertising than research which should give you some ideas for savings. Right. Because all they have to do is offer the drug in an app store and the world will beat a path to their door.
  - mikeyouse 13y ago
    It's medicine not some trivial app. If you have Hepatitis C, your doctor will prescribe you this drug. Allowing direct-to-consumer marketing corrupts patients and allowing drug companies to lavish doctors with food / drink / entertainment corrupts physicians. I grew up in a medical household, you wouldn't believe the shit these companies do to curry favor. Some of it has been limited but much of it still continues.
    - rayiner 13y ago
      People argue against creating a profit motive by saying "it's medicine, not a trivial app," and then wonder why all the bright kids at Stanford go off to build trivial apps instead of curing diseases. There are lots of things that should be in the public sector, but "it's too important" is a bad criteria to use. Because then all the money will be in doing things that are unimportant.
      - mikeyouse 13y ago
        People argue against creating a profit motive by saying "it's medicine, not a trivial app," What in the world does that have to do with advertising? There are literally two countries in the world that permit direct-to-consumer advertising. It is strictly and explicitly banned by the European Union. Somehow I don't think it's harmed the profit motive at Bayer, Roche (who were profitable enough to buy one of the most profitable US pharmaceutical companies), GSK, Novartis, Sanofi, etc. etc. The point isn't that drug companies shouldn't make money, they clearly should. At one point, 97% of the people on earth receiving treatment for AIDS were taking drugs developed by the Chief Scientist that also developed this Hepatitis breakthrough. He deserves to be a billionaire dozens of times over. The point is that it's disingenuous to try to justify the high costs to consumers by blaming R&D spending when the R&D budgets are smaller than their advertising budgets. Pharma advertising is indefensible in nearly all cases. We have actual scientific and cost data that shows, for instance, that before Lipitor was generic, Crestor was more effective at treating high LDLs for a lower cost.[2] No amount of Pfizer sponsorship will change this fact. Allowing them to blanket the air waves and bribe doctors to get Lipitor on the formulary instead of Crestor is an ethical failing we are all responsible for. If Pfizer wants to change people's minds about Lipitor, their advertising should take the form of a sponsored independent study that shows better outcomes for patients on Lipitor. Or they could compete on price. This is how a sensible pharma market would operate. [1] - http://europa.eu/legislation_summaries/other/l21143_en.htm http://europa.eu/legislation_summaries/other/l21143_en.htm [2] - http://www.ncbi.nlm.nih.gov/pubmed/18489494 http://www.ncbi.nlm.nih.gov/pubmed/18489494
  - FireBeyond 13y ago
    Here's a clue: There is only one country in the world where the advertising of prescription medicine to the layperson is allowed. Can you name it? For bonus points, can you name why?
    - Houshalter 13y ago
      Though to defend advertisement a little, it does inform people that there is a treatment for their condition and to go to a doctor.
      - FireBeyond 13y ago
        Perhaps. A more realistic view is that "if something is paining or inconveniencing you to the point of discomfort, then you should talk to your doctor". In amongst all the specific ads (which actually, to my mind, are not necessarily a bad thing - think of the 'is drug X not helping with your condition? Recent studies have shown that adding drug B to your existing regime may improve efficiency'), you get oh-so-generic ads. "Feeling 'low energy'? X may be able to help. Ask your doctor if X is right for you!" These days, you can largely assume that most conditions are manageable, if not treatable and that your quality of life should be the driver, not advertising incentivizing you to go to the doctor (and giving you a helpful laundry list of other symptoms that you may or may not have to "aid" the "diagnosis" most convenient to the manufacturer).
        Houshalter 13y ago
        It's not that simple. People with allergies might not know that there is a better medication available. People with restless leg syndrome may just think it's some weird thing unique to them. Depression is a really big one to get people to go to a doctor for. Notice there aren't any commercials for stuff like antibiotics. People are already going to a doctor when they have an infection and other serious conditions. They advertise the stuff that needs advertisement. If it didn't work they wouldn't do it.
        Retric 13y ago
- rayiner 13y ago
  Many companies spend more on advertising than product development.
- protomyth 13y ago
  You need to advertising since you have such a short window to get back your research money. Look at this article from 2011 about having to defend high R&D budgets: http://www.reuters.com/article/2011/12/13/us-merck-idUSTRE7BC25120111213 http://www.reuters.com/article/2011/12/13/us-merck-idUSTRE7B...
protomyth 13y ago
You forgot, "how many years do they have until the patents run out?". I know of one drug that was running 5 figures a day in clinical trial costs. You need to charge to pay for the drug.
refurb 13y ago
The market is absolutely huge. From what I've seen so far, this drug is expected to get revenues of $5-8B in the first year. That is an absolutely incredible number when you consider the best selling drug ever, Lipitor, had total sales of $11B in it's peak year.
- cschmidt 13y ago
  Something like Lipitor people take forever, so its use will grow over time. This drug cures people, who no longer continue to take it. There must be a big backlog of people with hepatitis C. Once you go through those people, I would expect that the use of the drug will decline, to just be people just contracting the disease.
  - refurb 13y ago
    There is a very large backlog of HCV patients out there with many waiting to for the improved therapies to launch. There is also a huge population of undiagnosed patients as well. You are correct that the patient population will continue to shrink as people are cured, but to give you an idea of the size of the market, if everyone in the US with HCV were treated with this drug this year, it would cost $3 trillion dollars. Total Lipitor revenues over it's entire lifecycle amounted to a little over $100 billion.
drcode 13y ago
My only question when I saw this: Why isn't this stock in my portfolio?
HillRat 13y ago
Solvadi/sofosbuvir was discovered by Pharmasset, Schinazi and Liotta's lab, which Gilead picked up for a cool $11 billion a few years ago. I believe sofosbuvir was Pharmasset's main IP (I think they had some HIV treatments -- S&I's wheelhouse from their time at Emory -- in the investigational stage, but Hep C was their big product.) There are a couple of things to consider about this. The first is that there are a lot of HCV treatments expected to come online over the next few years, so Gilead has an incentive to jack up the price now while they're the only game in town -- and with $11b in acquisition costs, they need to make their nut back on this. Second, only a very small number of HCV patients are in high-income countries. 6.4% of all HCV victims are in US, EU and Japan, but Egypt alone has up to three times as many HCV patients as the US. (Anyone wanting to go to Egypt for cheap HCV therapy might think twice; poor infection control practices in Egypt's health care system has been implicated as the primary source of HCV infection.) With HCV raging through so many poor countries, it's reasonable to at least discuss subsidizing global access to medications by increasing the rate paid for treatment courses in wealthy countries. The alternative would be direct financial support of global access which, given the current political climate in developed nations, is unlikely to get much traction. I'm certainly not saying that Gilead is operating with humanity's best interests in mind -- few industries are as brutally venal as pharm -- but it seems to me that the tradeoff is something that is at least worth discussing.

fasteddie31003 13y ago

The Elysium future is looking more and more likely to me over a Star Trek future.

noir_lord 13y ago
I suspect first we'll have something that looks more like Elysium and then something that looks more like Star Trek. I doubt we'll ever have either extreme (and different parts of the world will likely have different bits at different times). Certainly going to be an interesting 100 years (but when has that ever not been true..).
crusso 13y ago
For years we've heard the charge that pharmaceutical companies are little more than parasites creating perpetual users of their drugs rather than curing anything. It's worth noting that this drug company is curing something significant and the fact that they're trying to make a go of a business out of it is a bad thing?
Houshalter 13y ago
By the time the future gets here, all of today's patents would have expired long ago. Everything around today will be completely free. Not to mention replicators making manufacturing basically free as well.

ceejayoz 13y ago

$1k/day for three months is $90k. Googling shows the existing interferon treatments cost significant amounts - $15-50k if a quick skim is accurate - and are far less effective. I'd imagine the eventual liver transplants cost far more than $90k too. The math may work out here.

ecaradec 13y ago
I wonder if they actually did the same math on purpose to set a price just below current treatments.
- Jgrubb 13y ago
  If there were any way of settling such a bet, I'd put $100 on that right now.
- fit2rule 13y ago
  Of course they did this in their pricing/costs calculations, how could they not have - given that 'they' are pharmaceutical executives whose job it is to make as much money per pill as possible. Well, if there is ever a 'place' for the open-Source ethos, medicine is it. Stories like this confirm it for me, anyway.
  - refurb 13y ago
    An open source ethos in pharmaceuticals would pretty much guarantee you'd have a lot fewer new drugs developed. If it costs $500M-$1B to develop a drug, how on earth do you raise that money if some random company can come by and sell the same drug for $5/day because they didn't pay any development costs?
    - fit2rule 13y ago
      If the reason it costs 500millions to develop a drug is because you have to have lots of junkets to pimp the new profitpill to the politicians so they'll let you get a majority of their nation high/dependent on it, then I'm all for a revision to how society 'gets these things done'. surely you can't be relying on that same ol' pimp statement, "sorry man, it cost me a lot to get this stuff, you gotta pay ..", for it is scurrilous to assume that drug dependency doesn't have a profit side.

jere 13y ago

>Perhaps motivated by the high costs to taxpayers, lawmakers are pushing Gilead to explain why it charges so much. It doesn't help that Gilead is offering Sovaldi in Egypt at a 99 percent discount to U.S. prices, or about $900 for a full course of treatment. I wonder how difficult it would be (from a legal perspective) to take a 3 month vacation to Egypt and save almost six figures.

melling 13y ago
Medical tourism is already a market. http://en.wikipedia.org/wiki/Medical_tourism http://en.wikipedia.org/wiki/Medical_tourism Now it just needs a new big Silicon Valley behind it. The "Uber" of medical tourism?
- fennecfoxen 13y ago
  The Law of One Price strikes again!
fancy_betta 13y ago
A 3 month vacation to Egypt isn't free. Even if you can live cheaply, you'll still likely have bills that you need to continue paying in the US. I guess this could work if you can sever all financial ties to the US for 3 months and still have enough money to live in Egypt, pay for the medicine, then come back to the US and restart your life.
- thenomad 13y ago
  You'd need to take a sabbatical from your work in the US, rent an apartment in Egypt, and continue to pay bills in the US. But given that by doing so you'd be saving $83,000, that still sounds like a pretty good deal to me. I'd imagine you can live pretty nicely in Egypt for a lot less than $27,666 per month...
  - ryoshu 13y ago
    It might make sense for insurance companies to pay people travel to and stay in Egypt for the course of the treatment.

goatforce5 13y ago

"It doesn't help that Gilead is offering Sovaldi in Egypt at a 99 percent discount to U.S. prices, or about $900 for a full course of treatment." Time for someone to start selling medical holidays to Egypt. Are there areas of Egypt that would safe/pleasant for a Westerner to spend 90 days for less than $1k/day?

avar 13y ago
Even in the most unstable areas of Egypt your personal risk if you take some obvious precautions is orders of magnitude less than continuing to have hepatitis C.
refurb 13y ago
You wouldn't need to stay in Egypt for 90 days, you could just go and get a prescription, get it filled and come home.
- w1ntermute 13y ago
  Is even that necessary? I bet you can buy the drug without a prescription in Egypt, on the black market. Then just set up shop in international waters, off the US coast.
noir_lord 13y ago
Loads. You could book into one of the tourist resorts for far less than $1000 a day. I took a quick look at Expedia, You can book the Cairo Marriot for a full month for $3200 ~$5300 multiple that out for 3 months and double for other expenses (flights, visa etc) and it's still a third the price. Craz
rguldener 13y ago
According to the article most recipients of the drug don't pay for themselves so I think few would be incentivized by the savings. I am sure there are suitable places in egypt though.
- swamp40 13y ago

ctdonath 13y ago

Like mortgages and tuition assistance, government-backed insurance leads to ever-higher prices. So long as the cost gets paid, prices will rise to match.

solve 13y ago
Part of the problem is that "smart" people, especially technical and scientific people, refuse to believe that prices aren't based on logic and hard facts, but the circular-definition that is markets -- the price is what it is, because people pay it. Let's call it the "religion of tangible explanations." People refusing the more correct although ambiguous explanations, in favor of the BS explanations, just because they have a bunch of tangible logic and reasoning attached to it that makes you feel better.
andybak 13y ago
> government-backed insurance Can you therefore explain the cost of health-care in the UK on the National Health Service?
- omgriffiths 13y ago
  I'm from Australia, so I think our system is similar (single payer type system). Our government won't be offering this drug in the short term. If it is really this good, they will negotiate a deal over time. The advantage of that system is the government can give the company the choice: a) Sell to us for $x, and patients can use for no/low cost b) Go direct, and try to convince patients to pay $y themselves This gives a pretty strong incentive for x << y, and avoids a lot of advertising expense.

refurb 13y ago

This drug is a huge jump forward in the treatment of HCV. Most patients who take this drug will be cured and they won't have to take interferon at the same time, which produces side effects so severe, many patients discontinue therapy. So even though you have an $84K per course price tag, patients given this drug get cured, significantly reducing the overall burden to the healthcare system, especially if they don't need a liver transplant. One of the difficult things in showing value in the healthcare system is that nobody is looking at the overall costs. Hospitals worry about their costs, insurance companies about theirs. So even if a drug saves money overall, you'll often find many healthcare providers saying "no" because it doesn't save them money.

chrisBob 13y ago
Sounds like a good argument for nationalized health care to me.
- mhb 13y ago
  Because you're confident that with that system and its incentives this drug would have been invented? As well as the ones which haven't been invented yet?
  - toomuchtodo 13y ago
    I could say the same thing for for-profit drug discovery.
  - justinreeves 13y ago
    > Because you're confident that with that system and its incentives this drug would have been invented? No way to guarantee this drug would have been invented. However, > As well as the ones which haven't been invented yet? I'm absolutely confident that we will work on curing disease until we no longer have to.
- omgriffiths 13y ago
  Actually sounds like an argument for getting government out of healthcare, as only the patient can truly care about the end to end efficiency.

cs702 13y ago

The drug does not "cost" $1,000/day. Rather, the manufacturer, Gilead, is selling it at that price in the US. According to the article, Gilead is offering the same drug in Egypt "at a 99 percent discount to U.S. prices, or about $900 for a full course of treatment," and "wants to tier its pricing based on a country's per-capita income. So patients in the U.K would pay about $57,000 ...while Germans would pay $66,000 and Americans are paying $84,000." Inevitably, a black market will develop for this drug, because the arbitrage opportunity is substantial. People who're willing to break the law will buy the drug in Egypt for north of $900 and sell it in the US for a lot less than $90,000. -- PS. Even though the title of the article is linkbait, and the article itself has little content, I found it worth reading, because I learned something new: pharmaceutical companies are selling drugs in developing countries at a 99% discount (!) to developed-country prices. I knew prices were lower in developing countries, but not that low.

refurb 13y ago
I'm sure a black market will develop, but it will be pretty limited as the FDA bans the importation of pharmaceuticals unless they have already been approved for import. However, I've read that purchasing a 3 month supply for personal use is allowed, so maybe it will turn out to be something big? However, from what I've read, drug manufacturers but strict limits on drugs produced in low income countries. If there are 500K patients with HCV, the drug companies is going to put a quota on how much is sold. If Westerners start importing it, then that means Egyptians will go without.
- jrs235 13y ago
  Except, I do believe, there are some countries (I want to say Argentina or Brazil) which do not recognize drug patents and will manufacture the drugs themselves. Edit: India is another country that comes to mind.
  - toomuchtodo 13y ago
    Brazil specifically invalidated Merck's HIV drug patent. http://www.ft.com/cms/s/2/c7d3f1f4-fa78-11db-8bd0-000b5df10621.html http://www.ft.com/cms/s/2/c7d3f1f4-fa78-11db-8bd0-000b5df106...

swamp40 13y ago

Two powerful quotes: >More than half of those with hepatitis C are veterans, prisoners, uninsured or on Medicaid, the New York Times reports. That requires taxpayers to pick up the bill. >It doesn't help that Gilead is offering Sovaldi in Egypt at a 99 percent discount to U.S. prices, or about $900 for a full course of treatment. Tiered pricing by country (from a US company, no less). I'm not sure what to think about this - very complicated ethics. I can sympathize with both sides.

jrs235 13y ago

I wonder if they would adjust their pricing (and which way) if Congress threatened to shorten the life of patents, perhaps particularly on "drugs".

kolbe 13y ago

I at least appreciate the fact that Gilead produced a cure, rather than just a treatment. Medical research has taken a frightening turn in the last decade towards working on treatments that patients will have to take (and pay for) the rest of their life, rather than cures. Already, we're looking at a potential drug-resistant bacteria epidemic thanks largely to the fact that antibiotics are just taken a few weeks at a time. So, at least they're charging $90k to cure Hep C, rather than taking $10 out of your pocket every day for the rest of your life?

thenmar 13y ago
Can you provide more info about this? That medical researchers are actively avoiding looking for cures for diseases? It just screams "baseless conspiracy theory" to me. And what do antibiotics have to do with it? As far as I know, antibiotic resistant bacteria are the result of factory farms pumping animals full of antibiotics, and patients simply not completing the full course of drugs once they feel better.
- kolbe 13y ago
  It was a comment in a Frontline episode[1]. If my memory serves me correctly, one of the top researchers claimed that they could conquor this problem, but nearly every drug company has cut funding for antibiotics research, as it doesn't result in long-term usage. [1] http://www.pbs.org/wgbh/pages/frontline/hunting-the-nightmare-bacteria/ http://www.pbs.org/wgbh/pages/frontline/hunting-the-nightmar...
  - refurb 13y ago
    The biggest reason why drug companies don't invest in antibiotics is because if you come up with the best antibiotic ever, it will never get used because docs will save it for the sickest patients. Hence, you'll never make much money on an antibiotic and likely not even turn a profit.

cryptolect 13y ago

Just have to wait for India to copy it, then visit India for medical tourism. They are one of the few countries standing up against big pharmaceuticals when important medicine is priced out of the reach of average citizens.

bargl 13y ago

Another way to look at the huge price tag to cure 90% ($227 billion) is that this would could eventually give us herd immunity. We could then treat this at a lower cost per year going forward. That thought is mind boggling. While the cost is high in the USA the drug company is basically subsidizing their own distribution to other countries based on the GDP of the buyer. WOW, honestly that sounds like a pretty darn awesome thing to me. That $1000 price tag on those drugs is similar to a $10 price tag per day on other drugs to people in other countries where they make $1 per day. It just makes this drug more attainable for everyone and if that is Actually what they are doing I applaud them. Sure I don't want to pay $1000 per day for this drug, but is it ok for us to drive the cost down relative to our cost of living and make it prohibitively expensive for others? This is also what they did with some of the better drugs for curing MDR TB. I only know that because of the book Mountains Beyond Mountains. Where the better drugs were nearly unattainable for the poorer countries.

Xylakant 13y ago
This is a cure, not a vaccine, so herd immunity does not apply. Once you get cured, you can get reinfected. Curing every person suffering from hepatitis C would reduce the potential for infections though.
revelation 13y ago
Interesting, I had the exact opposite reaction to that line. There is no "subsidizing their own distribution" here, making the drug is dead cheap and distribution isn't even an item on their budget. No, what this means is they are setting their prices to extract the maximum possible amount of money out of each country. Obviously, the price that will yield the largest profit is not always the highest; if you can get four times as many customers at half the price, you doubled your profit while reducing your price.
- Houshalter 13y ago
  It pays for the cost of researching this drug (and all the other drugs which failed before making it to market) and it creates an incentive to produce more drugs like this in the future. You don't want drugs to cost so much? Encourage the government(s) to fund or subsidize research. Maybe even lower barriers to entry to getting drugs approved. But no one is forcing you to buy the drug and the patent will eventually expire.

refurb 13y ago

An interesting aside is that Gilead acquired the drug through the purchase of a small biotech company called Pharmasset. They purchased the company for $11 billion dollars and at the time, everyone in the industry though they were absolutely nuts for paying that much. Total sales this year alone are projected at $5-8 billion. [1]http://www.forbes.com/sites/matthewherper/2011/11/21/gilead-could-revive-itself-with-11-billion-purchase-of-pharmasset/ http://www.forbes.com/sites/matthewherper/2011/11/21/gilead-...

rayiner 13y ago

Basically, people are being asked to pay $90k to be cured of Hepatitis-C. About the same price as a Tesla Model-S Signature model. Is this an "unfair" price? I would argue that the value to someone of being cured of Hep-C is if anything greater than the value anyone could derive from driving around a new Tesla.

mindslight 13y ago

This is the flip side of the brokenness of the patent system - even when it ends up working correctly to facilitate research, the results are still a horribly broken game that pits the drug maker directly against the general public interest. Gilead needs some way to fund themselves, but long-shot lottery-like reimbursement based on a monopoly followed by the inevitable politicking to stop Gilead's "gouging" (of which this article is a part of) is not a good system for doing this. Not that I think pure publicly-funded research is the way forward either, especially if we'd like to increase incentives for science. That current system works in spite of its brokenness only because the people who are there truly care about their work - scaling it up would be disastrous. But, especially in this case where the boundaries of ownership arise out of no natural phenomenon, we really need to be smoothing out discontinuities, rather than exacerbating them with simplistic approaches and pretending that the betting wisdom of investors (who by construction are abstracted and out of touch from what's actually going on) will achieve the desired result.

Houshalter 13y ago
How is the system broken? This drug wouldn't even exist if they weren't able to charge such a high price for it. And nothing is preventing the government or other organizations from also researching drugs. It's not mutually exclusive and it's unlikely two labs would discover the exact same drug.
- mindslight 13y ago
  They're charging much more than the cost to develop the drug, because they need to pay for all of their failed attempts (and at this point, the only constraint is when the insurance companies will balk). And if they're able to charge this indefinitely, then they're effectively just extracting rent regardless of how much goes into further research (which you can say that they've earned the right to do this, but that's still what they're doing). I'm certainly not saying they shouldn't be compensated, but taking issue with they way they're compensated. As I said, the problem is that it's an extreme gamble, and the only thing this is conducive to is business gamers and the overhead and blindspots they bring. Since the current reimbursement mechanism completely relies on the utterly artificial construction of the patent system, it's reasonable to believe that the entire model could be redesigned.

conductr 13y ago

Market cap of this company is $110b right now. Insurance companies might just want to band together and buy them.

vampirechicken 13y ago

The shock is in the short term costs, rather than those costs being amortized across the long miserable sickly term of the patients lives. So it's not a show to the health care system, it's a shock to the system of companies who sit between the health care system and the patients, and siphon out money. I don't knoe about your health insurance, but mine would just declare this drug to be 'not on the formulary' and refuse to pay for it, like they did with the newer anti-clotting meds that were more effecting and safer for patients.