4 ms·

It's a little different than that. The first drug, Solvadi, was developed by the company Pharmasset. Pharmasset did get some government grants to develop Solv

by nemo 12y ago

It's a little different than that. The first drug, Solvadi, was developed by the company Pharmasset. Pharmasset did get some government grants to develop Solvadi, though the cost to develop the drug was much higher than the amount of the grants. Gilead paid a massive amount to buy out Pharmasset with the plan of recouping the elevated buyout costs by charging a huge sum for Solvadi. They could have paid much less to buy out Pharmasset and charged far less for the drug, but chose profit over any other interest. Pharmasset had been planning to sell Sovaldi (and the new drug) for a tiny fraction of what Gilead is now charging. The new drug, Harvoni, is a refinement of Sovaldi Pharmasset was working on. While Gilead is already fairly close to recouping their buyout money, they are charging even more for Harvoni. The costs are being taken from the public in that many Hep. C patients are too poor to have insurance so Medicaid is giving a huge amount of cash to Gilead, though the initial research grants were only around $1 mil.

Scoundreller 12y ago
I think the price of a drug is decoupled from the cost of developing/acquiring the rights to that drug. Whether a drug cost $1 or $1 billion to develop, the seller/marketer will try to charge whatever the market can bear to maximize revenue (which could still result in a loss). They aren't trying to recoup $1.1 or $1.1b respectively, they're going for the max in either case.
- refurb 12y ago
  A good friend of mine works in pharmaceutical pricing and this is exactly how works. You price to what the market will bear. The "market" includes physicians, insurance companies, the gov't and patients.
refurb 12y ago
While Gilead is already fairly close to recouping their buyout money, they are charging even more for Harvoni. What do you mean? They paid $11B for PharmAsset. Then they had to spend more money to get Sovaldi through phase 3 clinical trials, then they had to spend money to get ready to launch the drug, etc, etc. Right now they've made ~$10B on Sovaldi. That's gross, not net. Take out all the costs of those sales and it's like around 30-50%. So they've made $3-5B in profit, but spent $15B-$20B to get the drug to market. They aren't even close to breaking even yet.
- nemo 12y ago
  Being something like 25-30% of the way there this soon seemed fairly close to me, given the rate of revenue.

by nemo 12y ago

Scoundreller 12y ago

I think the price of a drug is decoupled from the cost of developing/acquiring the rights to that drug. Whether a drug cost $1 or $1 billion to develop, the seller/marketer will try to charge whatever the market can bear to maximize revenue (which could still result in a loss). They aren't trying to recoup $1.1 or $1.1b respectively, they're going for the max in either case.

refurb 12y ago
A good friend of mine works in pharmaceutical pricing and this is exactly how works. You price to what the market will bear. The "market" includes physicians, insurance companies, the gov't and patients.

refurb 12y ago

While Gilead is already fairly close to recouping their buyout money, they are charging even more for Harvoni. What do you mean? They paid $11B for PharmAsset. Then they had to spend more money to get Sovaldi through phase 3 clinical trials, then they had to spend money to get ready to launch the drug, etc, etc. Right now they've made ~$10B on Sovaldi. That's gross, not net. Take out all the costs of those sales and it's like around 30-50%. So they've made $3-5B in profit, but spent $15B-$20B to get the drug to market. They aren't even close to breaking even yet.

nemo 12y ago
Being something like 25-30% of the way there this soon seemed fairly close to me, given the rate of revenue.