This is old hat. The USA's process for pricing drugs is totally in service of the drug company - even that much is obvious to mercenary financiers like Shkreli.
The deeper problem is that we aren't getting newer better drugs. Once a blockbuster like Humira happens, it seems to kill off the field. This is mostly because you need to spend a lot to do a massive trial to show your Humira 2.0 is better, with no guarantee it will actually be better. The economics are very hostile. Pharma tends to do smaller trials with their new drug in more select populations eg those not responding to Humira, and therefore end up having a much smaller market if the drug works.
Drug pricing should be re-engineered to encourage more development rather than the opposite. If better alternatives exist then pharma obviously won't be able to charge extortionate prices.
Does the original patent apply if the compound is sufficiently different to warrant a new patent? That seems strange to me, but I know nothing about patent law.
Once the original patent is expired, you can do whatever you want with it. Evergreening can’t lfsvent you from creating a generic version of the original patented drug. But demand for the generic might be limited if the new version of the drug is better. (People don’t want to be stuck taking an inferior version of a drug.)
Exclusivity is extended with patents covering new formulations, manufacturing processes, alternative dosings, injection devices, risk evaluation and mitigation strategies... When the molecule itself becomes “free” to copy, there may be still several patents more or less enforceable that prevent competitors from entering the market. Often the validity of patents is decided in court (see Copaxone for a recent high-profile case study).
> Once a blockbuster like Humira happens, it seems to kill off the field.
Actually what kills the field is effective drugs losing exclusivity. While the best-in-class treatments have patent protection R&D investment in the same therapeutic category is less risky than when you have to come up with something much better than the unexpensive generic/biosimilar already available.
Source? My casual understanding of American pharmaceutical R&D is the majors drive profits into acquiring successful biotech companies, which in turn drives investment in a thriving biotech industry (which tends to do the early-stage research). This model pushes economic gains to research risk takers and lets the majors focus on marketing and distribution, a decent division of labour.
Humira really is a life-changing drug - but it is offensively, eye-wateringly expensive. Each auto-injector pen costs approx. £500; and I have to take one every 2 weeks. To put that in perspective, that's a cost of about £1000 per month - which is considerably more than my mortgage. My house costs less than my medical treatment.
Fortunately for me, I live in the UK, where the NHS is able to help absorb these costs. In the US, I guess they aren't so lucky - if I lived there, my Humira treatment would financially destroy me - and probably my entire family, too. It's morally reprehensible for a company to have access to such a life-changing treatment and then proceed to charge such disproportionately vast sums of money (certainly, far beyond the cost of R&D).
I suppose you could say that instead of crippling its patients physically (like their medical problems do), Humira cripples its patients financially - and I'm not sure that's a great deal better.
> In the US, I guess they aren't so lucky - if I lived there, my Humira treatment would financially destroy me - and probably my entire family, too.
What makes you say that?
Either private insurance would cover it, or Medicaid (for low income people) or they essentially give it away to uninsured people through a non-profit foundation. (AbbVie Patient Assistance Foundation)
I'm not especially familiar with the structure of the US health insurance system, but I think that the lower costs mentioned on the page you linked largely depends on either receipt of considerable amounts of state aid, or having pretty high-quality insurance.
Certainly, if you were to flick through various forums for those with Crohn's disease (e.g. [1]), you'd find many stories of people paying hundreds (or even thousands) of dollars for a month's Humira treatment.
Under current law (the ACA), the maximum annual payment would be $7,350 (on top of monthly insurance premiums).
That's for the lowest benefit, qualifying ACA plans and assuming the prescription is covered. The "cash" price is ~$4000 a month (https://www.goodrx.com/humira ) so even the lowest benefit plans are kicking in quite a bit of support (but probably also negotiating the price down quite a bit).
This is how the payment structure was explained to me when i started taking the drug. Ultimately i pay $5/mo, my insurance pays some amount, and Abbvie i guess pays the difference. I'm not sure what set of circumstances leads to people paying higher prices, given the info the commenter above linked to.
Counterpoint: in the US my employer-based insurance paid for it, while in the UK the NHS refused to cover it. I was also covered in France and Germany, so the UK is the odd one here.
the price the NHS will be able to negotiate will be a lot lower too
a natural result of the having an organisation that represents 65 million, backed up by leading researchers, instead of each individual completely on their own
Actually, I don't think that's quite correct. The specialists that prescribed me the Humira treatment were quite keen to impress upon me the cost of the drug - i.e. that it "costs the NHS over £400 per pen" (and this was back in 2015). Of course, this is purely anecdotal but I'm inclined to believe the source as they've no motivation to mislead me.
I think your mortgage/rent should be lower instead of the drug. Why do people think giving $ to landlords is better than scientists/doctors/researchers/business ?
Bearing in mind that accommodation is quite frequently the single largest outgoing in many people's finances (i.e. commonly approx. 30% of income), do you really think that the cost of medical treatment should exceed this? Do you really think that medical treatment should be an individual's single largest outgoing cost?
As for giving money to scientists/doctors/researchers, that isn't really the case either. See [1] - the cost of prescription medication appears to be largely determined by "what the market will bear", rather than how much a drug costs to research and develop.
I think medical treatment SHOULD be the largest cost. Do you really think something else is more important ? At least non-sick people will have money this way.
I understand, what the market will bear. But that's for everything ? (market bearing rents in sf)
Still, drug companies are more prone to invest their $$ in drugs compared to landlords, don't you agree ?
Of course I'm not ok with spending 30% on rent + 30% on meds. But it's more insane that we do on rent, I think (or move house and commute 2 hours, waisting your life)
I'm trying to fathom your point. Regardless of how much rent or mortgages cost, do you think it's acceptable or fair for individuals with chronic illnesses to bear the cost of a treatment which would cost them more than their rent (i.e. an additional cost which healthy people wouldn't have to pay?). That sounds like a pretty bad deal if you ask me - not only would one have to deal with a chronic disease, one would also have to budget for a (very considerable) additional expenditure which healthy individuals wouldn't have. At the end of the day, that is what makes the price of Humira unfair and immoral - its ability to severely financially disadvantage its patients (by being priced disproportionately compared to the cost of R&D / production).
Now, if you're talking about spreading the cost of all medical care across the entirety of the working-age population (essentially, national insurance) - that's a more sensible proposition. In fact, that's (broadly speaking, of course) what the NHS does in the UK - and the system works quite well.
Perhaps the NHS shouldn't - not paying for Humira would essentially obliterate AbbVie's UK market, which would make a considerable dent in their profits... I guess that would probably make them re-think their pricing structure!
However, presumably the treatment is "worth" the NHS paying for it - even if it is massively overpriced. I can't really pass comment on their medication choices.
> It's morally reprehensible for a company to have access to such a life-changing treatment and then proceed to charge such disproportionately vast sums of money (certainly, far beyond the cost of R&D).
I don’t really understand. If there is a moral obligation to help cure other peoples’ diseases, shouldn’t it be even more morally reprehensible to spend billions on things like TV serieses, cell phones, and social media websites, which could’ve been used to cure diseases instead? By your logic, isn’t Apple like the most evil company in the world, because they spend billions of dollars that could be used for drug research on making iPhones instead? Why is it somehow worse to make a profit curing people, than to make a profit not curing people?
Because the profit made by "curing people" is actually done by keeping others from curing people, via aggressive patenting, FUD over generics, lobbying against legislation that would make prices reason able...
There's also the fact that public health is not a simple economic market, where customers can simply not buy your product. In a lot of cases, it is a life or death situation, and real human have to be treated, so it should be considered a public service.
> Because the profit made by "curing people" is actually done by keeping others from curing people, via aggressive patenting
It’s not like the treatment was just out there until AbbVie monopolized it. Chron’s disease was medically characterized in 1932. Anyone could’ve come along and developed this treatment and gave it away for free or cheaper.
> lobbying against legislation that would make prices reason able...
That just begs the question of what’s “reasonable.” What single payer does is create a monopsony (single buyer situation). Obviously it lowers prices, that’s what monopsonies do. But like it’s counterpart, the monopoly, it’s economically inefficient.
Can you propose another way of financing the cost of drug discovery, research and testing for safety? The current system works reasonably well but if all you’ve got is outrage I would prefer at least outrage and a plan.
Read the findings from [1] - it appears that in a very considerable number of cases, there's actually a disconnect between the cost to research, develop, and produce a drug - and the price that's charged to customers (or insurance). The conclusion is that the price is mostly determined by "what the market will bear", rather than much else. This suggests (to me, at least) that in cases of a particularly expensive drug like Humira, a large proportion of the profits are not reinvested into R&D.
I suggest reading a microeconomics textbook. In the absence of price controls price will be set such that supply equals demand. It does not surprise me in the slightest that a drug that people really, really need and that is still under patent protection is very, very expensive.
Prices are what makes supply equal demand.
Blockbuster successes, massive profit makers are what pays for all the many, many failures of drug development. There’s quite a bit of research on the economics of drug development but the thing that I find the most convincing is that the big drug companies aren’t exceptionally profitable. They’re pretty much in line with what you’d expect of multinationals of their size, 10% or so profit on revenue per year. Scientific publishers like the accursed Elsevier earn supernormal profits, 33%.
It appears that net profit (for AbbVie, at least) tends to sit quite comfortably between 20-30% most years - 24.27% last year, and hitting almost Elsevier-like levels (~32%) in 2009 [1]. That smells like profiteering to me.
Add to that their particularly hostile approach to patent applications (100+ on Humira alone), and to me it appears that AbbVie perhaps has a vested interest in stifling innovation and charging large amounts of money for their products "because they can".
That’s about the same profit margin as Google and Facebook and Apple. Are they “profiteering?” Saying that the “reasonable profit” for drug companies should be lower than tech companies, say 15%, is economically equivalent to saying we should impose a 50% tax on drug company profits. Which would be nuts. You tax products you want less of (cigarettes, sugary drinks) not ones you want more of.
Call me when AbbVie is listed with Roche, Novartis, Pfizer or GlaxoSmithKline as one of the big pharmaceutical multinationals. A relatively small company having a blockbuster success and returning huge dividends to shareholders is why people are willing to invest in biotech/pharmaceutical startups at all. Every biotech startup formed around one drug that gets serious funding burns at minimum a decade of man years and at the beginning most of those man years are going to be researchers with doctorates. Absolutely nothing gets to market with that little investment and most of these companies fail.
The point about the pharmaceutical sector’s profit margins is about the sector more than it is individual companies. Minnows that make supernormal profits expand and as they expand their profit margins decline because they use up the most profitable opportunities and move on to less profitable ones until there’s nothing left. This last bit never actually happens because things change fast and general equilibrium is never reached but that’s the tendency. Large profit margins attract competitors and in the meantime allow those enjoying them to grow.
Re: “Profiteering”
According to the theory of neoclassical economics, anti-price gouging laws prevent allocative efficiency. Allocative efficiency refers to when prices function properly, markets tend to allocate resources to their most valued uses. In turn those who value the good the most (and not just the wealthiest) will be willing to pay a higher price than those who do not value the good as much.
I’m not asserting that you’re drawing the line in the wrong place. I’m asserting that you’ve got the arrows backwards. Curing people and charging too much is >= not curing people at all.
Humira doesn't cure diseases; it only treats them. Many drug companies have stopped funding cures because biologics like humira are just too profitable. Why charge a one time fee when you could bill someone for life?
That’s oft-repeated but makes no sense. If you develop and patent a treatment, then that necessarily means that the cure—if it exists—is out there and unpatanted, for some other company to develop and sell. There is an economic incentive for them to do so, because a cure is obviously more valuable than a treatment. It would be very weird if you could somehow make a treatment more valuable than a cure by changing how you charge for it. By that logic, companies would never sell cars, only lease them.
Yes as a chronic kidney disease patient I am glad I am in the UK id quite possibly be dead if I lived in the US.
BTW before my transplant a single one of my meds (phosphate binder) was around £500 a month god only knows what serverlamer costs in the states - let alone the cost of my transplant.
My girlfriend has lupus - diagnosed at eight. The lupus destroyed her kidney by her fourteenth birthday. She got a transplant at sixteen. Her transplant was covered by her mom's insurance with the rest of the costs falling onto our state's medicaid because she was a minor and her mom, an RN, was not well to do. Her medications were also covered by her mom's health insurance and picked up by our state's medicaid program.
She and her mom moved to another state when my girlfriend turned seventeen, so from that point it was her mom's insurance picking up the medication. She and I started dating when she turned eighteen. At that time, all of her drugs, including anti-rejection medications, were $5 per 90 day supply at the local pharmacy under her mom's insurance.
Her mom lost her job when she was 21, so my girlfriend lost her insurance and was unable to afford COBRA. My girlfriend did not qualify for medicaid in this new state because she was not a minor, pregnant, or considered disabled by the federal government despite not being able to work with the lupus. At this time, our best option for her medications were discount mail order pharmacies, which cost $1000 per 30 day supply, which we could barely afford with my computer programmer salary, as I could not add her to my insurance due to us not being married.
For awhile, she was on PCIP and then a plan made available on the ACA exchange. Her premiums were $400 per month, and that made her prescriptions $20 per 90 day supply. So it brought the costs from $1000 per 30 day supply to about $450 per month, counting insurance. We managed to make this work for a few months before I was laid off from my programming gig and lost my insurance.
We moved back to the state she moved from due to a job offer. She still did not qualify for medicaid, but my new job allowed me to add someone to my insurance if we were married or domestic partners. So we got a domestic partnership, and her drugs now again cost $5 per 90 day supply.
So I've been with someone on both sides in America - good insurance, no insurance, basic insurance, and then good insurance again. We really need to find a better system. We've survived by luck and really tight financial planning.
I had some swelling in my legs and chest pains recently and had to make a trip to the ER. It was very difficult to weigh the threat of the symptoms against the potential cost of an ambulance ride and emergency care, and it occurred to me at the time how ridiculous it would be if I were sitting around performing cost benefit calculations before calling the police or the fire department. I've really been thinking hard about whether I want to continue living in the US as I age.
> My girlfriend did not qualify for medicaid in this new state because she was not a minor, pregnant, or considered disabled by the federal government despite not being able to work with the lupus.
What state was this in? In Maryland, a single individual is Medicaid eligible up to an income of $16,600/year. There are 18 states where non-disabled, non-pregnant adults are not covered by Medicaid. That's not an "America" problem, it's a problem with those states and their voters.
I'd rather not say which exact states, but she was non-pregnant and not considered disabled by the state or the federal government despite applying for it, having the statements of her doctors, and having had a kidney transplant, chronic pain that prevented sitting and standing, blood clots, and lupus. So in the eyes of the state, despite having no income, she was not eligible for medicaid. They did tell her that if her kidney started to fail again then they _might_ consider her disabled, but she shouldn't expect another transplant because you typically only get one.
She was recently determined medically disabled by the federal government and now just needs to get through the financial eligibility steps.
I think that's a problem with the USA the fact that your rights and statutory benefits vary by where you live would be an anathema in any other first world country.
I wonder what’s the reason for the downvotes. This was a purely factual comment directly addressing the parent’s point of “quite possibly [being] dead if [he or she] lived in the US”.
Kidney failure is in fact the best example of the
US government stepping in to provide universal coverage for a life saving treatment (even though it requires copays, but there are also patient assistance programs to help with that; see below).
A different question is that the system has many issues, see for example [0] and the recent figth between private insurers and dialysis clinics due to the assistance provided by charities which are funded by the dialysis companies that help patients to pay for commercial insurance (reimbursement from private payors is much higher, even though most patients are on Medicare they are not profitable).
I take Remicaid, which has technically been on the market longer than Humira and still requires me to go in to an Infusion Center to get hooked up to an IV for 2hrs every 8 weeks. The ‘full price’ cost of my treatment: $16,000 just for the Remicaid.
They have a co-payment plan that, for the most needy, would effectively make the drug free. For me, my insurance gets billed a few thousand and I would have a $250 copay, which they pay.
It makes me wonder though, has anyone ever paid the full price, or is it just astronomically high to maximize the ‘charitable’ deduction side of their business?
I can't speak for the US, but I've been told by the clinical specialists at my local hospital that Humira cost £400+ per pen (this was back in 2015). I don't think that AbbVie can offset any of that price as a charitable donation, so I guess that price must be what they actually charge.
Note that the list price in the US is way higher than that (over $2000). But list prices are not actual prices (the average discount may be around 25% for Humira).
I haven't had to pay full price. But, last year I had to pay 20% of the cost. It gets out of control fast since I have to take Remicade every 4 weeks. I was on the hook for about $6000. My bill was cut down because I qualified for charitable funds from my hospital.
It's shocking to see the bill before insurance pays it's share. I was getting bills for $25k. !!!
AbbeVie runs what is called a co-pay assistance program where they pay the difference between your insurance coverage and your copay. So they book a sale at full-price, paying (full price - (amount covered + $5 )) and they get to deduct the money they payed to themselves as a "charitable contribution".
Which is so many flavors of shady. For a drug that costs literally pennies per dose to manufacture.
It’s perhaps analogous to how list prices for college tuition aren’t necessarily reflective of what people actually pay.
It’s a complex system and the price increases are used in part to negotiate with the intermediaries like PBMs.
Biologics are a special case also due to complexities in how they (and biosimilars) are regulated, manufactured, and exclusivity periods they are granted. They certainly are not a few cents a dose to make.
Not a satisfying answer, and apologies for that, but it’s difficult to traverse with anything approaching brevity.
Not the same professors salary and other costs rise with inflation a drug once developed and a production line is in place does not face the same cost increase
Drug company employee salaries and overhead also keep pace with inflation, better than academic salaries. I don’t understand your point.
A biologic production line requires extensive upkeep: it is a living product. Costs all around are higher. There are also Phase IV activities to consider.
Bottom line, all else being equal, biologics cost more than small-molecule drugs to make and distribute.
I don’t have specific knowledge on Humira or its biosimilars, but $40 is more reasonable.
To be specific, Humira was developed from research by BASF Bioresearch (bought by Abbott) and a research consortium in the UK, so credit to the UK taxpayers is warranted; I’m not sure about the US side.
Nevertheless, government sponsored research largely does not cover the development of the drug, and those costs are somewhere in the hundreds of millions USD range on up.
Funny how everybody is always in favor of shadiness when it benefits the causes they like, and against other forms.
For instance, when it became clear that the tax reform threatened universities using funds "to be paid to PhD students" to their own general fund ... the protests against that on hacker news were deafening.
Your comparison is hugely unfair. The accounting nonsense for universities "paying" themselves for a PhD student's tuition is ridiculous but it's not classified as charity.
But there it actually makes sense - they are in fact teaching courses to graduate students, providing them with library access, etc. If a grant wants to support an extra grad student for a professor, it has to cover that stuff and calling that stuff 'tuition' is reasonable. It's only unreasonable to call it "income" for the student, which is a fiction that's inconsequential outside of the university itself (and the alternative universe where the tax change took place).
It's not limited to AbbVie either, I get Xolair injections for chronic hives and Genentech uses a similar program. I assumed they were making a profit from the insurance-covered portion of the cost and used the program to maximize the number of people taking the drug. That idea in itself is pretty "clever" but if they also get to call the program-covered portion a "charitable contribution" then that is really something special.
This would certainly prevent new expensive drugs from entering the market. Unfortunately, it won’t result in new cheap drugs entering the market (something that the current system provides, despite all its problems, after a few years).
That’s expropriation. If you have a rough idea of the target market, growth rate and you know how much longer the patent will last you can upper bound and lower bound the loss of the intellectual property holder.
If you want patent free medicine I suggest at least looking at what medical research looks like without the possibility of supernormal profits on some drugs to make up for the losses on all the many, many other drugs that don’t make it. One plausible model would be how the Soviet Union did drug development but I know very little about that bar that the pschopharmacologicals in Russia etc. are in some respects quite different from those used in the West.
I think an interesting solution to consider is a sort of drug bounty program run by the government. Right now, companies put up their own capital to fund drugs, and get a big payout (via patent exclusivity) if they succeed. This is a bit problematic, because regardless of the expense of the cost to develop the drug, it is in the interest of the drug companies to charge as much as possible for the longest amount of time to maximize return on investment (personally why I think there are so many long-term treatments for diseases like HIV rather than full-on vaccines). But if the government were to say “we will give $X billion to the corporation that provides a drug that meets Y conditions, with the caveat that that drug will then be sold for $Z per course of treatment or immediately go generic”, then public health policy could direct certain aspects of drug discovery, and lead to more affordable outcomes. There are still issues with this sort of plan, but I think it has the potential to be workable.
TL;DR Humira is protected by over 100 patents, covering how it's produced etc. That's partially what's preventing other companies from coming up with a replacement, despite the main patent having already expired.
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[ 3.1 ms ] story [ 133 ms ] threadThe deeper problem is that we aren't getting newer better drugs. Once a blockbuster like Humira happens, it seems to kill off the field. This is mostly because you need to spend a lot to do a massive trial to show your Humira 2.0 is better, with no guarantee it will actually be better. The economics are very hostile. Pharma tends to do smaller trials with their new drug in more select populations eg those not responding to Humira, and therefore end up having a much smaller market if the drug works.
Drug pricing should be re-engineered to encourage more development rather than the opposite. If better alternatives exist then pharma obviously won't be able to charge extortionate prices.
1. Patent a drug 2. Make inconsequential changes 3. Patent it again 4. Repeat
I don't have any first hand experience in the industry so I don't know if this is a serious problem. I don't even know if it has a name!
Actually what kills the field is effective drugs losing exclusivity. While the best-in-class treatments have patent protection R&D investment in the same therapeutic category is less risky than when you have to come up with something much better than the unexpensive generic/biosimilar already available.
Source? My casual understanding of American pharmaceutical R&D is the majors drive profits into acquiring successful biotech companies, which in turn drives investment in a thriving biotech industry (which tends to do the early-stage research). This model pushes economic gains to research risk takers and lets the majors focus on marketing and distribution, a decent division of labour.
Fortunately for me, I live in the UK, where the NHS is able to help absorb these costs. In the US, I guess they aren't so lucky - if I lived there, my Humira treatment would financially destroy me - and probably my entire family, too. It's morally reprehensible for a company to have access to such a life-changing treatment and then proceed to charge such disproportionately vast sums of money (certainly, far beyond the cost of R&D).
I suppose you could say that instead of crippling its patients physically (like their medical problems do), Humira cripples its patients financially - and I'm not sure that's a great deal better.
What makes you say that?
Either private insurance would cover it, or Medicaid (for low income people) or they essentially give it away to uninsured people through a non-profit foundation. (AbbVie Patient Assistance Foundation)
https://www.humira.com/humira-complete/cost-and-copay
Certainly, if you were to flick through various forums for those with Crohn's disease (e.g. [1]), you'd find many stories of people paying hundreds (or even thousands) of dollars for a month's Humira treatment.
[1]: https://www.healingwell.com/community/default.aspx?f=38&m=22...
That's for the lowest benefit, qualifying ACA plans and assuming the prescription is covered. The "cash" price is ~$4000 a month (https://www.goodrx.com/humira ) so even the lowest benefit plans are kicking in quite a bit of support (but probably also negotiating the price down quite a bit).
a natural result of the having an organisation that represents 65 million, backed up by leading researchers, instead of each individual completely on their own
As for giving money to scientists/doctors/researchers, that isn't really the case either. See [1] - the cost of prescription medication appears to be largely determined by "what the market will bear", rather than how much a drug costs to research and develop.
[1]: https://jamanetwork.com/journals/jama/article-abstract/25456...
I understand, what the market will bear. But that's for everything ? (market bearing rents in sf)
Still, drug companies are more prone to invest their $$ in drugs compared to landlords, don't you agree ?
Of course I'm not ok with spending 30% on rent + 30% on meds. But it's more insane that we do on rent, I think (or move house and commute 2 hours, waisting your life)
Now, if you're talking about spreading the cost of all medical care across the entirety of the working-age population (essentially, national insurance) - that's a more sensible proposition. In fact, that's (broadly speaking, of course) what the NHS does in the UK - and the system works quite well.
However, presumably the treatment is "worth" the NHS paying for it - even if it is massively overpriced. I can't really pass comment on their medication choices.
I don’t really understand. If there is a moral obligation to help cure other peoples’ diseases, shouldn’t it be even more morally reprehensible to spend billions on things like TV serieses, cell phones, and social media websites, which could’ve been used to cure diseases instead? By your logic, isn’t Apple like the most evil company in the world, because they spend billions of dollars that could be used for drug research on making iPhones instead? Why is it somehow worse to make a profit curing people, than to make a profit not curing people?
There's also the fact that public health is not a simple economic market, where customers can simply not buy your product. In a lot of cases, it is a life or death situation, and real human have to be treated, so it should be considered a public service.
It’s not like the treatment was just out there until AbbVie monopolized it. Chron’s disease was medically characterized in 1932. Anyone could’ve come along and developed this treatment and gave it away for free or cheaper.
> lobbying against legislation that would make prices reason able...
That just begs the question of what’s “reasonable.” What single payer does is create a monopsony (single buyer situation). Obviously it lowers prices, that’s what monopsonies do. But like it’s counterpart, the monopoly, it’s economically inefficient.
"If you're in the health sector don't prey on sick people" is as good a place as any to draw that line.
What's your point? That since phone companies don't try their best to cure the world, nobody should do it?
[1]: https://jamanetwork.com/journals/jama/article-abstract/25456...
Prices are what makes supply equal demand.
Blockbuster successes, massive profit makers are what pays for all the many, many failures of drug development. There’s quite a bit of research on the economics of drug development but the thing that I find the most convincing is that the big drug companies aren’t exceptionally profitable. They’re pretty much in line with what you’d expect of multinationals of their size, 10% or so profit on revenue per year. Scientific publishers like the accursed Elsevier earn supernormal profits, 33%.
Add to that their particularly hostile approach to patent applications (100+ on Humira alone), and to me it appears that AbbVie perhaps has a vested interest in stifling innovation and charging large amounts of money for their products "because they can".
[1]: http://financials.morningstar.com/ratios/r.html?t=ABBV
The point about the pharmaceutical sector’s profit margins is about the sector more than it is individual companies. Minnows that make supernormal profits expand and as they expand their profit margins decline because they use up the most profitable opportunities and move on to less profitable ones until there’s nothing left. This last bit never actually happens because things change fast and general equilibrium is never reached but that’s the tendency. Large profit margins attract competitors and in the meantime allow those enjoying them to grow.
Re: “Profiteering”
According to the theory of neoclassical economics, anti-price gouging laws prevent allocative efficiency. Allocative efficiency refers to when prices function properly, markets tend to allocate resources to their most valued uses. In turn those who value the good the most (and not just the wealthiest) will be willing to pay a higher price than those who do not value the good as much.
https://en.m.wikipedia.org/wiki/Price_gouging
BTW before my transplant a single one of my meds (phosphate binder) was around £500 a month god only knows what serverlamer costs in the states - let alone the cost of my transplant.
My girlfriend has lupus - diagnosed at eight. The lupus destroyed her kidney by her fourteenth birthday. She got a transplant at sixteen. Her transplant was covered by her mom's insurance with the rest of the costs falling onto our state's medicaid because she was a minor and her mom, an RN, was not well to do. Her medications were also covered by her mom's health insurance and picked up by our state's medicaid program.
She and her mom moved to another state when my girlfriend turned seventeen, so from that point it was her mom's insurance picking up the medication. She and I started dating when she turned eighteen. At that time, all of her drugs, including anti-rejection medications, were $5 per 90 day supply at the local pharmacy under her mom's insurance.
Her mom lost her job when she was 21, so my girlfriend lost her insurance and was unable to afford COBRA. My girlfriend did not qualify for medicaid in this new state because she was not a minor, pregnant, or considered disabled by the federal government despite not being able to work with the lupus. At this time, our best option for her medications were discount mail order pharmacies, which cost $1000 per 30 day supply, which we could barely afford with my computer programmer salary, as I could not add her to my insurance due to us not being married.
For awhile, she was on PCIP and then a plan made available on the ACA exchange. Her premiums were $400 per month, and that made her prescriptions $20 per 90 day supply. So it brought the costs from $1000 per 30 day supply to about $450 per month, counting insurance. We managed to make this work for a few months before I was laid off from my programming gig and lost my insurance.
We moved back to the state she moved from due to a job offer. She still did not qualify for medicaid, but my new job allowed me to add someone to my insurance if we were married or domestic partners. So we got a domestic partnership, and her drugs now again cost $5 per 90 day supply.
So I've been with someone on both sides in America - good insurance, no insurance, basic insurance, and then good insurance again. We really need to find a better system. We've survived by luck and really tight financial planning.
What state was this in? In Maryland, a single individual is Medicaid eligible up to an income of $16,600/year. There are 18 states where non-disabled, non-pregnant adults are not covered by Medicaid. That's not an "America" problem, it's a problem with those states and their voters.
She was recently determined medically disabled by the federal government and now just needs to get through the financial eligibility steps.
“Perhaps no other Federal Government program can lay claim to have saved as many lives as the Medicare end stage renal disease (ESRD) program.” https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4194691/
Kidney failure is in fact the best example of the US government stepping in to provide universal coverage for a life saving treatment (even though it requires copays, but there are also patient assistance programs to help with that; see below).
A different question is that the system has many issues, see for example [0] and the recent figth between private insurers and dialysis clinics due to the assistance provided by charities which are funded by the dialysis companies that help patients to pay for commercial insurance (reimbursement from private payors is much higher, even though most patients are on Medicare they are not profitable).
[1] https://www.propublica.org/article/in-dialysis-life-saving-c... [2] https://www.barrons.com/articles/insurers-press-dialysis-cla...
They have a co-payment plan that, for the most needy, would effectively make the drug free. For me, my insurance gets billed a few thousand and I would have a $250 copay, which they pay.
It makes me wonder though, has anyone ever paid the full price, or is it just astronomically high to maximize the ‘charitable’ deduction side of their business?
It's shocking to see the bill before insurance pays it's share. I was getting bills for $25k. !!!
AbbeVie runs what is called a co-pay assistance program where they pay the difference between your insurance coverage and your copay. So they book a sale at full-price, paying (full price - (amount covered + $5 )) and they get to deduct the money they payed to themselves as a "charitable contribution".
Which is so many flavors of shady. For a drug that costs literally pennies per dose to manufacture.
Pennies per dose for a biologic?
It’s a complex system and the price increases are used in part to negotiate with the intermediaries like PBMs.
Biologics are a special case also due to complexities in how they (and biosimilars) are regulated, manufactured, and exclusivity periods they are granted. They certainly are not a few cents a dose to make.
Not a satisfying answer, and apologies for that, but it’s difficult to traverse with anything approaching brevity.
A biologic production line requires extensive upkeep: it is a living product. Costs all around are higher. There are also Phase IV activities to consider.
Bottom line, all else being equal, biologics cost more than small-molecule drugs to make and distribute.
And consider that most of the research on which Humira, Embrel etc. came from was sponsored by the US Taxpayer.
To be specific, Humira was developed from research by BASF Bioresearch (bought by Abbott) and a research consortium in the UK, so credit to the UK taxpayers is warranted; I’m not sure about the US side.
Nevertheless, government sponsored research largely does not cover the development of the drug, and those costs are somewhere in the hundreds of millions USD range on up.
For instance, when it became clear that the tax reform threatened universities using funds "to be paid to PhD students" to their own general fund ... the protests against that on hacker news were deafening.
But yes, this is pretty shady.
Say, your employer demanding access to the tools you need for your job. That desk chair ? 20$/month. Computer ? 200$. Screen ? Another 30$.
That would be just peachy wouldn't it ? Oh wait. That's illegal by law.
If you want patent free medicine I suggest at least looking at what medical research looks like without the possibility of supernormal profits on some drugs to make up for the losses on all the many, many other drugs that don’t make it. One plausible model would be how the Soviet Union did drug development but I know very little about that bar that the pschopharmacologicals in Russia etc. are in some respects quite different from those used in the West.
https://www.bloomberg.com/news/articles/2017-09-07/this-shie...
TL;DR Humira is protected by over 100 patents, covering how it's produced etc. That's partially what's preventing other companies from coming up with a replacement, despite the main patent having already expired.