22 ms·

$1,000 Hepatitis Pill Shows Why Fixing Health Costs Is So Hard

• msandford 12y ago
  Classic case of value-based pricing rather than cost-based pricing. From that perspective they've priced it quite competitively. But when their costs to manufacture are small and the process by which they develop drugs is so byzantine and opaque it's easy to see how people could get outraged. I wonder how long before someone gets the bright idea to claim eminent domain on drug (or other) patents for the sake of medicare. Pay the drug company back R&D, maybe 2x R&D and then let people start making generics. I'm not sure it's a good idea because it might well reduce investment in new drugs (developing drugs is like VC, you fail a lot and occasionally hit it out of the park) and that would be a bummer. But I could see it happening.
  • _delirium 12y ago
    Since patents are entirely created by statute, if the government wanted to do that, wouldn't it be easier just to write in an exception to the law, e.g. giving Medicare usage of medical patents at a fixed-by-law royalty rate? The federal government trying to take back with eminent domain what it created itself seems pretty roundabout.
    • refurb 12y ago
      The gov't kind of already does that for Medicaid. Manufacturers have to offer a 23.1% discount, plus further discounts if prices rise faster than inflation. That's why some drugs have "penny pricing", basically Medicaid pays $0.01 for each unit of drug because of the mandatory discounts.
    • runeks 12y ago
      Exactly. It is the government that hands out the patent in the first place. If we, as a society, don't wish to pay $1000 per pill, we can simply have our governments instate a precondition in granting a patent for a drug, that the government has the right to set a maximum price. Now, the interesting question is: if this were the case -- if acquiring a patent on a drug means that you agree to the government setting a maximum price -- would this drug have ever been developed in the first place?
  • EpicEng 12y ago
    This ignored the fact that the company which develops a successful drug is also developing drugs which will fail. That costs money too, and the successes have to cover the failures. That said... pharma companies are pretty greedy entities. I know a certain ex-pharma rep closely and she's no fan of her former employers. I can dislike the greed, but I can't blame a company for trying to make a profit.
    • markdown 12y ago
      > I can't blame a company for trying to make a profit. 10% is a profit. 50% is a profit. Heck even 100% is an understandable profit. You can and should blame them for screwing humanity over and above what is reasonable.
      • viggity 12y ago
        No. What screws humanity over is a system where nobody is incentivized to producing new drugs. If it is so effin' easy, you do it. Go ahead. Raise the hundreds of millions of dollars and promise your investors "you know, we're only going to make twice your money back". Its not that simple. I'd rather have the option and have it be expensive as hell than not having the option at all.
        • anon1385 12y ago
          Research doesn't have to be funded by investors looking for a profit. Lots of medical research is funded by governments and non-profit organisations. For some diseases that is where the vast majority of funding research comes from.
      • msandford 12y ago
        My dad has worked on pacemakers, defibrillators, left ventricular assist pumps, all kinds of implantables. In this industry they regularly mark up their manufacturing costs 10x-20x because it takes minimum 5-10 years to get something through the FDA. Even if your design is 100% perfect the first time (which they never are). So a $5mm R&D project turns into a $50mm slog through approval and then you get to sell, what a few tends of thousands of units? Let's just say that you could somehow magically sell 50k units. That means you've got to charge $10k per unit just to cover the engineering & approval and stuff and that's before a DIME of profit. So a pacemaker costs $20k not because it's got $15k of raw materials inside of it but because the FDA says that it has to get approved and approval isn't cheap. I'm sure drugs are the same way. It might cost only a few dollars to actually manufacture the ingredients in a pill but the R&D necessary to know WHAT ingredients might have cost $100mm. So even if you sell a million of them they've got to cost $100 each before you take anything else into account. I am not suggesting that it would be OK for the government to basically just take the patents. But it also wouldn't surprise me if they did.
  • tzs 12y ago
    > I wonder how long before someone gets the bright idea to claim eminent domain on drug (or other) patents for the sake of medicare Before doing anything that radical, why not repeal the ban on Medicare negotiating drug prices? The "Medicare Prescription Drug, Improvement and Modernization Act" of 2003, which created the medicare prescription drug program, explicitly prevents Medicare from negotiating prices with the drug companies. The drug companies and the insurance companies decide the prices, and Medicare is stuck with that. This is one of the big reasons Medicare pays a lot more for drugs than the VA does--the VA directly negotiates with the drug companies the prices it pays. There have been attempts to fix this. The House passed a bill in 2007 to do this, but Senate Republicans were able to stop it there. 6 Republicans joined Democrats in supporting it, but that was not enough to get the 60 votes needed to end debate, and the Republicans were ready to filibuster it if necessary. (They really hated it. Senator Cornyn of Texas said it was "a step down the road to a single-payer, government-run health care system"). President Bush promised a veto. President Obama made repealing the ban on negotiation one of the key points of his campaign for 2008, but had to drop it from the ACA to get drug makers on board, and since then there has been no chance of getting such a thing past the Republican House.
    • gradstudent 12y ago
      > (They really hated it. Senator Cornyn of Texas said it was "a step down the road to a single-payer, government-run health care system"). President Bush promised a veto. I don't understand why Republicans have such a raging hard-on against universal healthcare. Pretty much every country that has implemented such a program agrees it is a Good Thing and worth funding through new taxes.
      • markdown 12y ago
        > I don't understand why... If American politicians sported their sponsors logos like nascar drivers do, things would become much clearer.
        • tptacek 12y ago
          The health care industry contributes substantially to both parties, even though the Democratic party supports single-payer. They contributed more to the GOP in the 2000s, but the GOP controlled the government for most of that time and held the presidency. Starting in 2008, health care resumed contributing more to the Democrats, as they did at the start of the Clinton administration. The idea that politicians assume public policy positions because they're captured by donors is sometimes true, but it's incorrect as often as not.
  • qq66 12y ago
    I guess you're only planning on seizing successful R&D through eminent domain? If so, I think most people would use a stronger word than "bummer" to describe the consequently reduced R&D investment. Pharmaceuticals are a major component of the difference between healthcare today and healthcare in 1750.
    • msandford 12y ago
      I'm not planning on it. I explicitly talk about the tradeoffs. I'm more speculating on what happens in politics which is "we do whatever we feel like and make up reasons why it's OK and legal" Which is more valuable: a definite life saved today or a potential life saved in the future? This is the constant struggle of everyone involved in economics. We never know the counter-factuals. Perhaps some drug company is on the verge of an HIV vaccine but because of the eminent domain seizure they stop the program and we get a hep-C cure but lose an HIV cure. That'a a "bummer" or "travesty" or "moral outrage" or whatever you want to call it.
  • belorn 12y ago
    Should the state create incentives for future drugs tomorrow, or enable generic drugs that allow poor people to survive today. Its a moral question, with fairly easy statements: Deny cheaper drugs, and some people die today which could be saved. Allow cheaper drugs, and less future investments might happen outside state sponsored research. Over 30 Billion Dollars, about 1/3 of all biomedical research funding in the US is paid from tax money. The 2/3 that is left is divided between non-profit, hospitals, and drug companies. The one asking the state to grant patents is the drug companies, which is where the VC part kicks in. It is worth talking about if this is a good idea. The sacrifice need to be talked about, openly, and admitted. It would be good to see research that show how the world would look like if that part of the 2/3 which is paid from drug companies would shrink. Maybe ask, experiment and test what happens if the incentive model could use other incentives than state granted patents. Calculate how much wealth society would gain, and could be reinvested into research, if poor people with work debilitating sicknesses was allowed to buy generic and get treated.
    • jimbokun 12y ago
      Probably be cheaper in the long run for the U.S. government to pay all $90B (according to your figure) for all drug research, end drug patents, and non-exclusively license the resulting drug research at a nominal fee to manufacturers.
  • wisty 12y ago
    Australia solved this. It's called the PBS. Basically, an independent board of experts does a cost-benefit analysis on new drugs (note - they don't call it cost-benefit, but whatever). If the drugs are "worth it", then the Australian government massively subsidises them. If they aren't "worth it", then people can still get them, but they cost more. Insurance companies rarely pay for them. Patients can pay for them, but they'll usually find an alternative. Pharma companies then set their prices to a reasonable level. Effectively, you have a monopoly buyer (the government) and a monopoly seller (the patent holder). This is, in theory, far superior to the situation where there's a monopoly seller and a huge number of buyers. Of course, the US is doing God's work, by overpaying for drugs. This effectively subsidises drug research, and allows all the more socialist countries to freeload.
    • lafar6502 12y ago
      funny, how do you think it works in 'socialist' countries? Pharma companies together with the government are giving pills for free? No, there's a national health insurance - a monopoly that is supposed to make rational decisions (in theory), but somehow ends up stuffing big pharma with taxpayer money. Exactly like those damn capitalists in the US
      • danielweber 12y ago
        You obviously set up a strawman by saying that the pills "aren't free." Most countries use their ability to violate patents as a threat to squeeze drug companies down to a price that exceeds their costs on a marginal unit, but less than their costs on an average unit. It makes sense for the companies to go along because something is better than nothing and they still have the US paying full fare. The US cannot get in on this, too, without destroying the drug industry, which depends on revenue from the American customer base. Other systems are possible, but one should demonstrate their effectiveness before destroying the old system. So, yeah, like the grandparent said, the US is "unfairly" subsidizing the rest of the world. It would be nice if other countries shared the load, but the US can't force them.
        • 12y ago
• RexRollman 12y ago
  The cycle of greed keeps healthcare prices high.
  • josu 12y ago
    "The cycle of greed" also created a drug to cure a chronic disease, keep that in mind.
    • lotsofmangos 12y ago
      Only because someone accidentally rode it into a lab. The cycle of greed existed happily for millennia before science started being blamed on it.
    • waingake 12y ago
      The cycle of greed wasn't needed to develop the polio vaccine. This was publicly funded, historically more advances in medicine are made by people interested in science and the public good rather than corporate profit.
      • danielweber 12y ago
        The polio vaccine was fairly easy to discover. Give someone a weakened or dead version of the polio virus, and they develop antibodies, and they don't get sick when exposed to the full virus. We are past the age when one guy running a small lab can just decide to cure something. It's going to take lots of money and lots of researchers and lots of false leads to find each new thing, and even after that there are going to be lots and lots of tests.
  • Igglyboo 12y ago
    The cycle of greed is why pharmaceutical companies spend billions of dollars to create life saving treatments.
• lotsofmangos 12y ago
  Available on NHS, though. http://www.ukmi.nhs.uk/applications/ndo/record_view_open.asp?newDrugID=5502 http://www.ukmi.nhs.uk/applications/ndo/record_view_open.asp... http://www.pharmatimes.com/article/14-04-16/NHS_England_to_fund_hepatitis_C_drug_Sovaldi.aspx http://www.pharmatimes.com/article/14-04-16/NHS_England_to_f...
  • refurb 12y ago
    I think the reason why Gilead's drug is causing such an uproar is because it is worth the money, yet governments are tired of healthcare costs always going up. A short summary of the issue: In the past HCV had terrible treatments. You would have to take interferon (makes you feel like you have the flu) for 8-12 months. Plenty of patients took their chances on their disease not getting worse. Even if you stuck it out, the cure rate was maybe 50%. The total cost of therapy? Around $80K (for most patients, others were much more expensive). Gilead comes out with a wonder drug Solvaldi (it truly is revolutionary). You still have to take interferon, but only for 12 weeks. If you do tough it out, there is a 90% chance you're cured. The price? A little more than than the $80K of the previous treatments. Honestly, if you think about it, for a little more money, society is get a much greater benefit. So what's the big deal? Well, because this drug works so well and has much better side effects, all those HCV patients who before said "I'll wait and see if HCV gets worse" are now saying "cure me!". There are millions of HCV patients in the US, so if we tried to treat them all right now, it would bankrupt the system. I can tell you exactly what will happen with Sovaldi and the newer drugs being launched later this year: governments and insurance companies will say "no, unless you are very sick, you're not getting this drug". It will still cost the same to cure everyone, but it'll just take longer. Now, if you were Gilead, what would you do? Especially if competitors were coming? I know what I'd do, I'd go to Medicaid and Medicare and say "lets make a deal, I'll give you 50%, 60%, 70% off if you agree to let everyone get treated this year". The gov't would have to pay out a lot in one year, but they'd be getting a deal and Gilead would get their return.
    • avalaunch 12y ago
      Just a little correction: you don't have to take interferon with Sovaldi. A lot of doctors are off label prescribing both Sovaldi and Olysio together. Olysio was actually approved to treat HCV a few weeks prior to Sovaldi but wasn't quite as effective in trials. The bulk of the revenue Olysio is generating (which is still quite a lot) is coming from doctors prescribing it alongside Sovaldi. The cost for both together is about $150k but the cure rate goes up a little bit and there are virtually no side effects because the patient no longer has to take interferon.
• zanny 12y ago
  It is almost like using artificial IP rights to prop up supermassive R&D and then letting the company charge whatever they want for "their idea" is not the most sane business model.
  • lotsofmangos 12y ago
    Shh, that's crazy talk.
  • refurb 12y ago
    They certainly don't "charge what they want". There are multiple examples (particularly in the EU) where the government says "no, we're not going to pay for that". If you have a better idea on how to reward pharmaceutical R&D, I'm all ears.
  • forrestthewoods 12y ago
    We could not have artificial IP rights and also not have significant development R&D if you'd prefer. But given those two choices I'll take what we currently have.
  • rlanday 12y ago
    All property rights are artificial. Intellectual property rights make us richer by encouraging people to develop intellectual property, just as physical property rights make us richer by allowing us to own and control the use of physical possessions.
• vonsydov 12y ago
  Well perhaps gilead will spend the money to cure HIV. The government on the other hand will spend it on bullshit road construction projects. Or on wars.
• mhb 12y ago
  Drug Costs and High Prices - Here We Go Again: https://news.ycombinator.com/item?id=8129695 https://news.ycombinator.com/item?id=8129695
• waingake 12y ago
  It seems to me that in certain industries profit motive doesn't mesh with the public good. Isn't there a need for a publicly funded pharmaceutical agency that develops drugs for the public good in an open source manner?
  • refurb 12y ago
    Where would the money come from? Right now the NIH's budget is $30.1B. US pharmaceutical companies invest $48.5B in 2012. Note, that's only R&D expenditure, not all the capital costs (e.g. Pfizer spent $1B for a manufacturing unit in Ireland; the drug failed due to safety).
    • waingake 12y ago
      Taxes obviously. I'd be happy to live in a society where medication research is based on public need instead of profit margin. A drug such as this would save money for the NHS or any other western countries public health system ( bar the USA ) in the long term.
      • refurb 12y ago
        There is nothing stopping the gov't from doing that right now. Unfortunately, most of the drug development efforts by public entities have had a really poor track record.
        • bluthru 12y ago
          >Unfortunately, most of the drug development efforts by public entities have had a really poor track record. Could you quantify this? Is it because they're tackling the very difficult diseases and not the low-hanging (profitable) fruit? The polio vaccine was developed with federal money and was provided for free as a result. There is no way the polio vaccine could have been done more efficiently if the private sector did it.
        • waingake 12y ago
          Oh yes I imagine the pharmaceutical industry wouldn't fight such a move at all, would breeze right in.
• ck2 12y ago
  No, it's not hard at all. You imprison the people making it cost that much for corruption. They are entitled to profit if you want to argue for that, they are not entitled to destroying society. $80,000 for hepatits cure is only the start if you let them get away with this.
  • fiatmoney 12y ago
    You can always wait 20 years until the patent runs out. Or just grant them a shorter patent in the first place. Or subject patent protection, as opposed to trade secret protection (which I don't believe is even a practical option for drugs right now due to the FDA approval process), to certain public-interest pricing restrictions.
    • refurb 12y ago
      You raise a good point. Wonder drugs such as Lipitor are now in the public domain. You can go to Walmart and get a Lipitor Rx for $4/month. Millions of lives have been saved (and will continue to be saved) by drugs that are now in the public domain.
      • nsxwolf 12y ago
        With a Number Needed to Treat of 100, can Lipitor really be considered a "wonder drug"? A wonder for Pfizer's bank account maybe.
        • refurb 12y ago
          Fair point, but also consider the options we have in terms of reducing cardiovascular complications. Most of the other drugs don't work as well and have more severe side-effects. It may not stack up well against other drugs, but for CV disease, it's the best we've got for reducing CV risk.
  • refurb 12y ago
    Wait a second! The older therapies, which people happily paid $80K for (but only cured 50%) of the people were OK, but now this company creates a drug that cures 90%+ and it's corruption? I don't understand.
• bluthru 12y ago
  Socializing research for major diseases seams like a no-brainer to me since the end goal is so well-defined. It's not a question of "do you want the budget hepatitis vaccine or the deluxe hepatitis vaccine?", it's simply one vaccine. The demand is also well-defined: people will spend virtually anything to live a healthy life. The polio vaccine was funded by federal money, which it allowed it to be reproduced freely.
  • Jedd 12y ago
    Other than 'some people might not be so wealthy' I haven't heard any good arguments against a given country moving all pharma research over to a government agency. (Most arguments are emotional / political / historical / naively optimistic about the current situation.)
    • bluthru 12y ago
      Also: information sharing. If private companies are competing for a hepatitis cure they're not sharing their advancements, which could inhibit the speed of discovery. That sounds like a public health issue to me.
    • GhotiFish 12y ago
      Hard to get away from the emotion of it when you're looking at two lines, one which says "Number of people who can afford to pay" and "Price" and picking the point that intersects. I think the most sensible argument here is that there is nothing that is guaranteeing that you are on one particular side of that intercept, despite wherever you currently may be.
    • streptomycin 12y ago
      It's largely the same argument for why it would be bad to nationalize other huge industries.
  • zo1 12y ago
    "Socializing research for major diseases seams like a no-brainer to me since the end goal is so well-defined." It's not as well-defined as you'd think in all aspects. I suppose you've read some of the comments in this thread about R&D costs? Care to suggest how much this new government agency should get per year? Oh, and don't forget, if you don't give it enough funding, then you're an "evil bastard and you want people to die". And if you don't give them enough extra every year, then you're also an "evil bastard and want sick children to die". I don't really mean to say you're an evil bastard or anything. But that is exactly the sort of arguments and public discourse that will crop up if such an agency were ever to be founded. And because "cost" or "profit" is not there anymore to temper the investment vs payout, the agency will end up being a funding black hole of guilt. Sure, giving everyone access to health life is a noble ideal. But as I've said before, illness and death never end and we're fighting a losing game if we intend on beating it with public money. But who knows, maybe if we devote all of society's resources to the problem, we could eventually grant everyone healthy immortality. But we have no idea if/when that might happen.
• bkohlmann 12y ago
  Did anyone else notice the last two paragraphs which basically said "oh by the way, competition is already here, so this is not a long term issue, and costs will rapidly decrease.". Which basically defeated the entire hand wringing nature of the article!
  • refurb 12y ago
    I'll be honest with you, the price of these drugs is not going to come down with competition. Rarely do drug companies ever compete on price. Usually, the only time you do is if you have an inferior drug. If Medicaid/Medicare were smart, they'd put out a tender when the competition arrives. Go to both companies and say "We're will to buy enough drug to treat 1 million HCV patients, what can you do for us."
• shiven 12y ago
  To all those pulling out pitchforks and torches, how do they think these drugs get discovered and more importantly, proved safe and efficacious for a given human disease? Do they have any idea how much it actually costs? Sure, the Shylocks in "management" are greedy for their pound of flesh (and which industry does not have those?), but there is a genuine cost to finding these chemical/biologic agents. The days of Alexander Fleming and Jonas Salk are long gone. Just as the days of one-off genius chemists/physicists/mathematicians/explorers now exist only in history books. Original research & discovery, that is not of mere academic interest, that yields actual usable products, that people can put inside their bodies, is a non-trivial investment of manpower and resources that carries excruciating risk. This ain't some app you can write in your jammies, that can be MVPd by Tuesday and pitched to VCs over next Sunday's brunch. As to the public funding of such endeavors, that is a subject for another post(s), requiring a larger keyboard than the one on my smartphone :P
  • harshreality 12y ago
    Have you looked at the pricing structure offered under insurance, vs the pricing structure offered for the uninsured? Guess who's paying the $1000/pill? Guess who's not? If they needed to charge everyone on the order of $1000/pill to recoup expenses, that would be one thing. That's not the issue, since they are offering it to most people (who do have insurance) at dramatically lower prices. I know HNers are in love with market segmentation, but isn't there an ethical problem with using price to segment a market for treatment for serious medical problems based on who has insurance and who doesn't? It's been a while since the first thread on this, but I'll just quote from the sovaldi website: We believe that cost should not be a barrier to receiving treatment. That’s why the makers of SOVALDI offer a co-pay coupon. If you are eligible, you may pay no more than $5 per co-pay. The SOVALDI co-pay coupon program will cover the out-of-pocket costs of your SOVALDI prescriptions after you pay the first $5 per prescription fill, up to a maximum of 20% of the catalog price of a 12-week regimen of SOVALDI. The coupon can be applied to up to 6 fills So, if your health insurance pharmacy coverage were 80/20, instead of paying your end (20%) out of pocket, you'd pay $5 per fill. So you're paying very close to $0 per pill, instead of $1000. Well, ignoring your deductable, which might be significant, but the obamacare max is $6350, so that's an order of magnitude cost decrease for the Sovaldi prescription even if you have no other out of pocket healthcare costs that year. The only remaining, meaningful question is: how much are insurance companies paying Gilead per pill?
• georgewfraser 12y ago
  Hepatitis C is a nasty disease that primarily affects people on the fringe of society. Many of these people don't have money, they don't have insurance, they often aren't good at sticking to complex drug regimens. And yet a bunch of pharma companies put in big money to develop a cure - not a treatment that makes it manageable, a cure. These drugs are a bargain and we should all be amazed and thrilled that this has happened.
  • mentat 12y ago
    They are also making efforts to make it available in other countries where healthcare is hard to acquire and the disease is widespread for significant discounts.
  • svsaraf 12y ago
    The most amazing thing is the simplicity of the drug in its chemical structure. Anyone with a chemistry background would recognize it as a modification of the RNA nucleotide that you learn in a undergraduate biochemistry course. Every few years people seem to think we've found all of the significant small molecules for human disease - they keep getting proven wrong.
    • prlin 12y ago
      Can you give any background on how they typically discover the chemical structure of new drugs? Or provide a few good pointers?
      • lchengify 12y ago
        I wrote pharma software for a few years focusing on small molecule drug discovery, and did academic research on structural based drug discovery of allosterics. Different companies do it differently, but the customers I had went through a series of steps. I'll try to summarize them briefly here. 1. Target choice: Typically research focuses on a single "target". In small molecules, this is typically a protein that you want to activate somehow to change a biological pathway. For other sub-fields, such as biologics, "target" can mean other things. 2. Iteration / core choice: You start with a small organic molecule "core" that can be the backbone of your drug. Molecules with similar cores can "fit" into similar places, whereas active groups that branch off of the core affect their efficacy. 3. Screening / lead optimization: Pharma companies have libraries of chemical structures, their properties, and how they fit into certain proteins. The idea is to find a molecule with a core that will fit, and active groups that will make the drug 'plug' the active site of the protein. When doing drug discovery, there are all sorts properties you care about, ranging from pka to toxicity. - For many drugs, there is experimental data that is available. For other drugs, experiments must be performed to obtain data. At this stage it basically becomes a data problem for the chemist. Lots of time looking at pivot tables of raw experiment data, 2d molecule structures, 3d structures, computational predictive results, etc. The idea is to to find holes in the data where potential molecules with the right core and active groups could have matching properties, etc. - A lot of it is data based, but a lot of it is also intuitive. - There are other sources of data other than assays (experiments). One of the most useful is X-Ray crystallography images, which are 3D images of molecules in active sites. 4. Discovery Candidate: At some point (hopefully) you reach the stage where you're pretty sure a drug has good properties. This is when you lock down the IP, not just by patenting that molecule, but all other molecules that are similar. Basically "putting it in a box" to start the more expensive animal / human testing. 5. POST-IND FDA approval process. You can read about this here [1], but basically this is where the expensive / time consuming fun begins. Animal tests, efficacy tests on humans, etc. This is pretty expensive but also well defined by the FDA Note that I am far from an expert, some of the people I worked with had done this for decades and would probably correct me and / or point out steps I'm missing. [1] http://www.fda.gov/drugs/resourcesforyou/consumers/ucm143534.htm http://www.fda.gov/drugs/resourcesforyou/consumers/ucm143534...
• conover 12y ago
  I often wonder if people even read the articles. Yes this drug expensive upfront. Why is it expensive? Unknown. Does its development process justify its expense? Unknown. Is this drug a potential cure versus a lifetime of (more expensive) maintenance treatment? Likely. Are there competitors coming to market soon (as someone else mentioned)? Most likely Edit: Larger costs spread over the long term are more palatable than lesser costs compressed into a shorter term. Humans are bad at estimating scale.
• 2bthrowaway 12y ago
  Just fired up a throwaway to comment here. I've been taking this medication over the past 3 months and finished about a week ago. A test a month ago showed I was already cured. This drug is good. Really really good. Side effects were minimal in my case and absolutely worth it. I only skimmed the article but knew what it was about right away just from the headline. With healthcare, my copay per month was originally 200. My employer gutted my health insurance midway through treatment and my 2nd and 3rd months were quoted to me at a 2000 a month. I spoke with the specialized pharmacy and told them I couldn't afford that. They got me approved for a program that brought my cost of the Sovaldi down to 5 a month. The secondary medication (Ribasphere) to go with it was a little more expensive, but I forget how much. Either way, I would have gladly paid the 2000 a month for this cure. Cost wasn't even a factor to me. If it came down to having to take out an 80K loan for it, I would have. My health is more important and the peace of mind knowing I've been cured is indescribable. I'm open to questions since I've been dealing with this over the past 6 months.
  • jzwinck 12y ago
    Do you know how you got the disease?
    • 2bthrowaway 12y ago
      A "friend" that I got into a fight with bit me. He was known to frequent brothels.
      • svsaraf 12y ago
        I'm not saying you're lying...but this is very hard to believe. Hepatitis C passes through blood-based contact almost exclusively (not saliva). There have only been a handful of cases through human bites.[1] [1] http://www.ncbi.nlm.nih.gov/pubmed/7811879 http://www.ncbi.nlm.nih.gov/pubmed/7811879
        • 2bthrowaway 12y ago
          I don't really have anything to prove, this is a throwaway after all. It's certainly something I wouldn't announce publicly. That being said, it was a pretty bloody fight.
• tzs 12y ago
  I think it is things like this that get some people wondering about the prices. US: 3.2 million people with Hepatitis C. Price $1000/pill. Egypt: 12 million people with Hepatitis C. Price $10/pill.
  • refurb 12y ago
    This is what I don't get. Drug companies get shit on when they charge a high price in developing countries. When they create a program that offers drugs at prices that are much more affordable, they get shit on as well. I see the difference in price as a good thing.
    • Scoundreller 12y ago
      They also get shit on for creating treatments for diseases that you have to pay for for the rest of your life. Then they come up with a cure that you only need to take for a short time, works for most patients and has few side effects, and they get shit on again. Best to keep coming up with $xxx/year therapies that you have to take for the rest of your life and only benefit a few percent of people that take them. (Statins for primary prevention, I'm looking at you).
  • lafar6502 12y ago
    So, for the price of Hepatitis in US you get Osiris,Anubis, and Hepatitis in Egypt. And a nice vacation.
• jzwinck 12y ago
  This sentence worries me: > The United States health insurance system works better for costs that are spread out and predictable. So the insurance companies want to reduce their tail-event risk. It's almost like they should buy some insurance. And they can do exactly that--it's called reinsurance. The entire point of insurance from an individual's perspective should be to cover unexpected costs. Big costs, not small ones we can pay out of pocket. But it seems that over time, people have come to rely on their employer-sponsored plans to protect them from routine expenses like dental cleanings, eyeglasses, etc. That's not insurance--that's paying a premium to a middleman to manage your bills for you. Insurance ought to be designed specifically for this sort of treatment: expensive, unexpected, and important.
  • vertex-four 12y ago
    > that's paying a premium to a middleman to manage your bills for you. The thing is, under the current system, it's not even that; it's some sort of complex mixture of insurance and collective bargaining. The "insurance" companies pay decidedly less than the rate you'd be asked to pay if you got any of these treatments, checkups, or whatever else, yourself. Therefore, it's only logical that you get your insurance company to pay for you. I've run over this a few times in my head, and there doesn't really seem to be a feasible way to split up companies between "usual" and "unusual" treatments - collective bargaining groups vs insurance - in a fair way, and definitely not one that works out cheaper.
  • rthomas6 12y ago
    Yes yes yes. I could rant forever about this-- it seems like nobody gets why this is bad. It's like everyone forgot what insurance is supposed to be for. You don't get your brakes fixed with car insurance. You don't re-shingle your house with homeowner's insurance. Why would you get vaccines or routine care with health insurance? The fact that health insurance works like this is doubly bad, because not only does it raise the cost of health insurance, it also raises the cost of healthcare itself because consumers are no longer price sensitive at all. If healthcare consumers at large (that actually have money) were exposed to the price of healthcare, hospitals and doctors offices would be forced to compete on price for more routine procedures. Think about how even complex elective procedures like Lasik or Lipo-suction are comparatively cheap. That's because the providers must compete on price. This could be the case for routine care if healthcare consumers could be exposed to price.
• jasonwocky 12y ago
  > But in America’s health care financing system, people tend to change commercial insurance whenever they change jobs, lose Medicaid coverage when financial circumstances change, or leave the commercial market altogether when they become eligible for Medicare at age 65. That means one company will be stuck footing the big bill, and another will probably reap the benefits of a healthy liver 20 years later. >“If it is cost-effective from a societal standpoint, it is not necessarily going to be cost-effective from a health plan standpoint,” /sigh. Can we have a public option for health insurance already, please? We have a pharma company not playing by the normal, "gentlemen's rules of the game" that backload costs. Instead, they've got a great cure and are going with the "fuck you, pay me" model. Which, fine, more power to them. I really have no trouble with it. However, unfortunately, it doesn't play well with our current racket of employer-based health insurance.
  • undata 12y ago
    > Which, fine, more power to them. Really? We as a society have the knowledge necessary to cure a person's illness and yet they go untreated. In the absence of IP legal protection, this would be a non-issue.
    • rayiner 12y ago
      The more you turn medical research into a noble endeavor with no chance of making money, the more you're going to drive brilliant people to Wall Street and Silicon Valley companies instead. The company that developed this sold to Gilead for $11 billion (less than a WhatsApp) after 13 years. Why would Gilead even buy the company if they could copy the drug for free? And why spend 13 years building this company with no hope for an exit? Especially when drug development is incredibly risky. For every success like this, there are many companies that fold with nothing to show after burning eight or nine figures of capital.
      • fludlight 12y ago
        Pharmasset lost a total of $325mm during those 13 years before their exit. Then Gilead spent an additional two years and an undisclosed sum bringing it to market.
• xenadu02 12y ago
  I believe around 1/3 to 1/2 of all medical R&D in the US is paid for by the government; if we had an actual program in place to ensure the government kept a financial interest in these things (instead of just giving it away), we could choose to either lower prices or recoup funds, or some mixture of both. This is nothing new; the railroads were built with massive federal subsidies and guarantees (making Ayn Rand's hard-on for railroads hilariously misguided). Especially the trans-contitental railroad which was seen as a massive risk and almost entirely funded by US federal government loan guarantees. The US Interstate highway system and the internet were funded initially by the government as well.
  • jandrewrogers 12y ago
    It is about a third. The US government is effective at funding early research but quite poor at funding development, and they ignore some valuable areas of research for reason of political optics. Development tends to be where almost all the expense is incurred. In practice, there is a hand-off between government and industry in the transition from research to development because it plays to their respective strengths. Most of the research done by the government, like all such early research, turns out to be medically worthless during development. Looking at it like a startup, the expected annual return on biomedical R&D if you have a huge portfolio is something like 10% even with the unrecovered government investment. In other words, better than investing in an S&P index fund and worse than broadly investing in early stage tech. Without the early government investing at a loss, it might not even be worth the money of the private sector to follow on for the development compared to other things they could be investing their money in.
  • Houshalter 12y ago
    There are stories of railroads being built by government contract doing squiggly lines and taking the least efficient path possible. They were paid by the mile. There were also many successful private railroads.
• arunc 12y ago
  Drug companies don't want us well, they want us as a life-long customer.
  • DanBC 12y ago
    How is that relevant to an article about a short course of treatment that cures people of a life long disease?
• tdonia 12y ago
  If this debate interests you and you want to learn more about it, you should get in touch with me. Check my profile for my email address; http://contextmatters.com http://contextmatters.com is the company I work for and here was a post our analysts wrote about Sovaldi: http://www.contextmatters.com/sticker-shock-in-drug-pricing-are-we-missing-the-bigger-picture/ http://www.contextmatters.com/sticker-shock-in-drug-pricing-... We're systematically collecting data on this exact conundrum - how much is a treatment that was, until recently, infinitely expensive worth? there's a whole lot of room for smart people to make a difference.
• thefreeman 12y ago
  Disregarding the price issue, one of my main takeaways from this is that it is another issue that completely wouldn't exist if we had a single payer system. They said that the cost of treatment isn't really that out of line with other treatments insurance covers. The issue is that the payment is completely front loaded. Because of this, combined with the frequent changes of insurance in the U.S., you end up with one insurance company footing a giant bill for a customer who may end up switching providers in a year.
• guard-of-terra 12y ago
  3.1 million ill? I guess that US should just buy a billion pills with huge discount and then distribute those as they please.
• sytelus 12y ago
  This article seems to single out an odd outlier. Sure there are super expensive drugs like these but on average major components of health care is not drugs but hospital and doctor's fees. My 1 hour visit to emergency room costs $2500 in which single injection was administered that was under $100. Rest of the charges were simply for "services" provided by hospital. I once calculated average hourly charge for doctors using other examples I was aware of and it came out to around $1000 for every hour per doctor spends with you plus $100 for each nurse for each hour they have to attend you. Price component for drugs on average is negligible in most ordinary treatments. The problem with US health care is invisible for-profit conglomerates that controls and owns major health care facilities across the country. There ridiculous charges works because consumers don't care because they don't pay out of pocket majority of expense in lot of cases. So all these conglomerates have to do is to make sure laws allow them to charge 3X-4X fees like above to have amazing margins. One way to solve this issue in US is to promote non-profits to operate health care facilities. This can be done by government subsidies and grants in the same way they are provided to universities and research community. There are 200 major cities in US. If we want to build 2 great non-profit hospitals in each cities, it would cost 2 X 200 X 0.5 = $200 billion even at the higher end. If we spread this out to 5 years, it's less than $50 billion per year - drop in the bucket for current health care bugets. These hospitals can then charge 2X-3X lower amounts to drive the price down. Without introducing non-profit competition to for-profit organization we are in same situation where operating systems are controlled by one commercial company and there are no open source alternatives resulting in redicluously high prices and stagnated innovation.
• InfiniteRand 12y ago
  Just to throw something out there, maybe for important cures to diseases, the government should just pay a one time purchase of the patent and make it public domain (or something like that). I imagine the price of the patent would be extremely high, but it might be a simpler way of dealing with things than regulating the price. And given the direct and indirect costs of regulation (such as lobbying, counter-lobbying, etc.), it might be worthwhile.
  • refurb 12y ago
    You have a point. Pharmasset (where the drug was discovered) was bought by Gilead for $11B a couple years ago. The gov't could have been a bidder, purchased the company and sold the drug at cost. It certainly would have ended up much less expensive for them.
    • runeks 12y ago
      Well, any company could have done that. That's investing. The question is what effects it will have on the market if the government starts acting as an investor. I'm sure the government's investment department would be visited by a lot of lobbyists, for example.
      • dfxm12 12y ago
        The government (via the FDA) approves drugs for use. The government being able to approve drugs and own drug companies (while still competing with the private sector) seems like a conflict of interest.
    • exelius 12y ago
      The government tends not to buy companies because it has an unfair advantage: the government can just print an extra $11B and acquire companies for basically nothing. But once you start doing buying private companies, you have to actually RUN those companies. The government isn't really very good at that. But the US government is also very bad at negotiating pharmaceutical pricing. The flip side is that most other developed countries in Europe are good at it. So in order to keep their margins and meet financial targets, pharma companies just raise prices on their US customers to subsidize the thinner margins that European governments pay for drugs. It's hard to reform this because the pharma lobby is quite powerful and makes a lot of money off the status quo.
• steve-howard 12y ago
  Apologies in advance for the off topic, but what the hell is with that web site? I double-click a term on the page to highlight it for a search and it changes the font size. I move my mouse to the left because that's where I put my tabs and a menu pops out. They're trying to be clever but it's just incredibly frustrating.
• bakhy 12y ago
  Something smells here... The drug is taken in a short period of time, and cures the disease, thus killing the existing business model of selling treatment for a very prolonged period of time. Since this means lost revenue from the old treatment, the new drug, the cure, gets priced high enough to somewhat compensate? or, (economics - as exact as spitting into the wind) priced just high enough to still be cheaper than the old, long term option, regardless of costs of development (which are presumably lower)?
  • Shivetya 12y ago
    because tinfoil hats aside, these companies are in it to make money by saving the lives of people. Living people buy other products these companies sell to maintain their lifestyles. one eventuality is having drugs that you want to take because they extend the youthful and productive period of you life. plus all these new cures and treatments further along their knowledge and ability which means the process continues and eventually they can chip away at the big problems in medicine. and lets be honest, there are people working their both in the labs and the executive level who want to feel they did good and some want the recognition. this story https://news.ycombinator.com/item?id=8131808 https://news.ycombinator.com/item?id=8131808 gives me hope that nothing is beyond their eventual reach
• thejdude 12y ago
  I find it insane that the US created this monster of a health insurance system, forcing people to purchase their health insurance through their employer. So far, this looks a major PITA for employees, because (correct me if I got this wrong) a new job with a new insurance policy meant that all (chronic) diseases you may have had in the past would not be covered by your new policy. Now this time there is also a problem that affects the insurance companies - they might not profit from the cured liver (a cured client is a cheaper client), but they'll have to pay for the cure. Seriously: NOBODY wants to switch insurance every five years. Why not get rid of this stupid requirement and allow people to shop for health insurance on a free market? Your health and your insurance is nobody's business, especially not your employer's.
  • zaphar 12y ago
    because (correct me if I got this wrong) a new job with a new insurance policy meant that all (chronic) diseases you may have had in the past would not be covered by your new policy. You did get this wrong. By law Insurance companies cannot refuse you coverage for preexisting conditions if you previously had coverage. Just switching plans couldn't lose you that coverage. Also the US does not force people to purchase their health insurance through their employer. You are free to get it elsewhere but usually getting it through your employer works out to be a better deal.
  • maxxxxx 12y ago
    I think that employer based health insurance is the real problem of the US system. It sets up all incentives the wrong way.
• zaphar 12y ago
  I was kind of hoping for an article that did an actual analysis of why the pill was priced at $1,000. R&D, Regulatory Risk, Cost of manufacture that sort of thing. I was disappointed.
• forca 12y ago
  I have what some would consider strong opinions on health care. - First, all medical and pharmaceutical companies should be non-profit. Health care is a basic human right, not a privilege reserved for those who can cough up the sick prices for treatment. - The government should run all medical schools so doctors graduate without debt. You serve for 10 years as payment for the schooling. After this, you are free to pursue other goals. - Pharmaceutical companies should hold no patents, no trademarks. Companies should be merged so their collective brain trust can solve the world's medical woes. Non-profit company results. R&D payed for by taxpayer money. I severely dislike for-profit business in general, but more so when medicine is concerned. Human beings always should trump profits. Always. Doctors should become doctors to solve problems, not enrich themselves. Sadly, I have several medical conditions which need repair, but even with insurance, I cannot afford the co-pays, upfront deductible costs, and other sick for-profit BS I would need to meet in order for my insurance to kick in at 100%. I have seriously toyed with moving overseas simply for tax-payed health care. I'm in IT (non-profit), make OK money, but I refuse to enrich the for-profit system. I simply do without, because it's sick when your insurance costs equal 1/3 of your paycheck.
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• bigtunacan 12y ago
  If you treat rather than cure, in the case of a transmitted disease such as Hep-C, eventually you have no remaining market share since the disease is in essence eradicated. In this light it makes sense that Sovaldi costs so much. Gilead needs to get back their research costs and make as much profit as possible while there is a market for their product. A lot of these profits are going back into their research costs for HIV; this is the next disease they are trying to cure. Even with a genetic non transmittable disease, such as Type 1 diabetes (which I have), there is less profit to be made with a cure and so there is a need to charge more for the product. Right now I have to pay monthly for 2 forms of insulin, needles, testing supplies, hormones, pain killers. Due to the long term circulatory, liver, and kidney problems that come with this I can look forward to increased costs from additional medications and treatments over time (think blood thinners, ace inhibitors, dialysis). On top of this there is all of the cost for recurring labs and other medical testing that I have to go through on average about once every 3 months. So yeah; give me one big expensive cure and a healthier future to look forward to and I will take that any day over "managed treatment" and control programs that will still lead to poor life conditions for me in the long run.
  • pkulak 12y ago
    Exactly. These guys have essentially cured a major _viral_ disease. If they are wallowing in cash because of it, that's fine with me. Even if my premiums go up 2%. If the public sector is not going to do the work, there needs to be incentive for private corporations to lay out the millions required to advance medicine. We can't have near-zero public funding and then get all pissy when miracle cures are expensive. And this is very close to "miracle cure". I had Hep C when I was younger (blood transfusion) and I went on interferon and ribavirin, which was 6 months of daily (maybe twice daily, can't remember) shots. And I was told that there was still a very good chance that I would never be "cleared". And sure this is $1000 a pill, but that six months of shots was not cheap either. Probably at least half.
    • tim333 12y ago
      Congrats to them to for curing a major disease but some bits of the economics seem a bit odd - initial research cost about $14m paid partly by tax payers. Gilead spends "tens of millions" to put it through trials and then it gets sold, partly back to the same tax payers, for about $84k * 3 million = ~ $200bn. ( http://www.bostonglobe.com/business/2014/05/31/costly-new-hepatitis-treatments-curing-patients-but-straining-health-care-system-finances/SmBE9NoUESxjfgphfqvXKL/story.html http://www.bostonglobe.com/business/2014/05/31/costly-new-he... )
• FollowSteph3 12y ago
  The problem with completely free health care is that there's no incentive to be healthy. In other words if you smoke etc it has no negative impact to you financially. So there has to be some kind of balances to check for things like this. This drug is a very bad example but a lot of the arguments are for free health care and research, and this is one of the big issues with that...
  • watwut 12y ago
    I can tell with certainty that getting cancer sux even if they treat you for free. Broken leg, hearth stroke or even flu sux to. So does most diseases and injuries known to humanity.
  • josephschmoe 12y ago
    Shouldn't the consequence for bad decision be being unhealthy? I mean, at least for me, my health is a very significant priority in my life.
  • CodeMage 12y ago
    Just out of curiosity, how old are you? I'm not trying to be confrontational -- I'm genuinely curious, because you sound like someone who hasn't had anything worse than a flu so far. Here's an incentive to be healthy: medicine is not magic. It's not like I can opt to do all sorts of unhealthy stuff and just keep paying a certain sum to live a completely normal life. For example, you mention smoking. I smoked for 5 years, one pack a day on the average. After a while, I was coughing my self to sleep at night. There's no pill or treatment that will fix that magically and allow you to keep smoking. Only quitting made it go away.
• Mz 12y ago
  This kind of thing is becoming increasingly common. The latest "wonder drug" for cystic fibrosis costs some crazy amount (like $300,000 annually) and I believe it works for about 5% of people with CF -- though, in this case, testing can determine beforehand if it will work for you because it basically works for people with specific alleles. Here is one of many articles on the topic: http://www.independent.ie/lifestyle/health/cf-wonder-drug-kalydeco-sanctioned-after-deal-on-price-29026121.html http://www.independent.ie/lifestyle/health/cf-wonder-drug-ka... Part of the problem is the mental models behind our concept of "health care." Everyone who is looking for a new drug (and I don't just mean researchers -- it is a broad cultural phenomenon and patients are equally guilty) or miracle cure tends to have their blinders on with regards to more effective but less splashy treatment modalities.