Would the institute pay the research and administrative cost out of its pocket ?
while the price difference is outlandish, I do think US health care is in this vicious circle that enables those abuse.
And I personally find it unfair to put the fault on Trump's administration ( not a fan of Trump, but I do think that these kind of article erode news source credibility that allows Trump and most virulent right wing supporter to argue that most fake-news source are biased against Trump).
Talking about production costs of drugs, as an input to price, is as relevant as discussing download cost as input to software prices (or any digital media prices).
Especially a drug which is so supply-constrained, on the time-scale of the pandemic. Even if you ignore the research cost, what's the right price for the one large batch left over from Ebola, in the time until you cook up another large batch?
Correct me if I'm wrong: it's only supply constrained due to patent protections, no? Or is there something inherently hard to replicate if a rogue country decided to reverse engineer the drug?
Not an expert but I thought this one was actually hard to make. Or at least, sufficiently different that tooling up a production line would take time & money, so that the big generic guys couldn't just open the taps. (But I could be wrong here.)
I thought the big Indian manufacturers already just-about ignored patents, these only restrict what can be shipped to the west.
IIRC it is well-known how to synthesize remdesivir, so nobody would actually have to reverse-engineer anything, but this stuff is particularly hard to synthesize on an industrial level, with some steps in the process taking weeks to complete without easy ways to speed it up. Also, each step only has a certain yield which is relatively low, so you need to put in a comparatively huge amount of raw material into the first step in order to get a tiny amount of remdesivir out from the last step, months later.
It seems a little bit like producing Whisky: you can't just decide now to produce a huge batch of 12-year-old Lagavulin and have it ready next month.
I believe Gilead's target is 500,000 doses by November. In an ideal world, they'd probably want to sell doses to just about every person with COVID, but they can't, due to supply constraints.
I see two issues being conflated here. The first issue is the outrageous prices for generic drugs. The second issue is the true cost of research.
Drug prices have been rising out of control even for generic drugs (think epipens). It seems that competition is not driving down prices of generics. Perhaps it is time for government to break up "big parhma". Perhaps the FDA sets quality requirements so high that competitors cannot meet it, allowing that single manufacture to control prices.
The other issue is the true cost of research. The production cost is a fraction of the true cost. Research is expensive. There would be no Remdesivir if we only paid production costs. As a biomedical researcher, I am always on the fence about jumping jobs for something that will pay better. Many investors and techies vastly underestimate the cost of scientific research BY ORDERS OF MAGNITUDE.
Add to that the legal and regulatory costs. Getting a drug approved is very expensive and time consuming.
The legal costs to defend the drug and its use in court after release can also be staggering. Most developed countries have the English Rule, which requires plaintiffs to pay the legal costs of defendants if they bring a suit and lose. The US does not.
I tend to agree that gov needs to step in, however the libtertarian in me also wants to know: why doesn't someone start a business selling this drug for, say, $200 instead of $540? If the answer to that is that the regulatory burden is basically insurmountable thanks to decades of regulatory capture, then yeah, government needs to act. Presumably such a company doesn't need to do any research, or get new approvals! They just need to make the thing and distribute it.
Here is an idea: anyone can make a generic drug if an independent FDA lab cannot tell the difference between unlabeled samples from the new manufacturer and unlabeled identically packaged samples from a currently approved manufacturer.
You would need to do this testing continuously at random, so the FDA could just charge a fee for this. It would be way cheaper than full regulatory compliance.
Sounds good to me, but I don't think it would fly. It's too reactive. The FDA needs to be able to take proactive steps to avoid mistakes. So, I take your idea and raise you:
Put cameras everywhere in your lab/factory, and give the FDA inspectors 24x7 access to every feed. This is in addition to allowing onsite random inspections, of course.
I mean, as a consumer, this would make me feel warm and fuzzy about buying drugs from that company. I mean, you could even allow the public access to those feeds, as a marketing tool!
> anyone can make a generic drug if an independent FDA lab cannot tell the difference
I see a few problems with this plan
1) Makers would lose interest in research of simple drugs easy to clone or, more probably,...
They would fight back introducing additives in the mix, useless except for the sake of making the recipe much more difficult to copy, or to aim for a product recognizable for the public (i.e viagra must be "blue pills" not green pills, etc, but the blue colorant is in fact useless except for marketing purposes).
2) Because an increase in additives the number of crossed interactions with other medicines would raise exponentially and would be much more complicated to predict in multiple treatments
3) Potential collateral effects and allergies could increase also.
And it creates a system prone to corruption, of course (The makers can be blackmailed by the independent lab).
Research also isn’t priced at just its face value - there’s the opportunity cost of very smart and hard working people making it happen at overwhelming risk of failing.
I think the main bloat is likely regulatory capture - we could start with the question “why can’t I make this drug in my garage” and work through each barrier. Equipment is part of it but the time and expense of navigating extensive regulations, building relationships with bureaucratic agencies, needing legal support, and so on prevents competition. Even if it isn’t as hard as it may seem to deal with all that, the reputation of it being an insurmountable barrier is enough to discourage would-be innovators.
Thing is I don’t want life saving medicine from some guy who just started producing it in his garage last month. Fortunately I can afford the “regulated” dose myself if I had to. Most people can’t though and this is a role of govt, making sure everybody has access to a lifesaving drug _that the govt funded_. The solution isn’t “let poor people use bootleg garage drugs”, it’s the ensure lifesaving medication is priced affordably. This is one of those situations where capitalism by itself isn’t well configured to deal with. This and, say, emergency room visits...
I think that in the case of epipen, the patent is on the drug delivery mechanism - the pen, rather than the epi. There are other competitive products out there but they cannot deliver the drug as efficiently or accurately as the epipen.
1) Taxpayers paid $70.5 million
2) Remdesivir was discovered through a collaboration between Gilead and US Army.
3) Remdesivir received funding from DOD and CDC (for Ebola treatment)
Well, some countries before tried to have a collective ownership of productive assets and it hasn't really worked out: it misaligns incentives all the way down.
But it does reduce the cost of research and development coming out of the company's pocket. That said, in a capitalist society, the production price helps to set where companies will stop making it.
The price is actually set to where profit is highest, meaning it's a function of: how many people will buy at various prices and how much does it cost to produce at various quantities.
One of the strong arguments for single payer healthcare, IMHO.
Single payer healthcare is a separate issue from pharmaceutical companies. In a single payer system, there will just be a single buyer- and a single buyer, AKA a monopsony, is illegal under monopoly laws in the US.
I hear a lot of people here focusing on this agenda-setting title but to me this title is as dishonest as when Apple states that "they are the largest tax payer in the world" as a defense for why they shouldn't pay more taxes in Europe. The question being raised is about proportions just like in this case.
Weak, headline grabbing, agenda-setting titles are plenty to go around.
The true cost of producing a patent-protected product is hard to know as it tends to be part of confidential business information.
I think it's fair that people question the cost of monopolies since they draw their status from protections conferred by (patent) law - conferred by the people.
1) No one has to buy it. Who is going to buy this stuff if not the corrupt government officials?
2) Supposedly the government could do it at cost. But where were they when it was the time to invest and invent? Billions were wasted on rescuing zombie companies.
Some time ago a friend I was travelling with had a recurrence of a skin complaint that she would usually treat with a particular product. In the UK it's an over-the-counter med, non-prescription, with a cost of about £7. We were informed in the pharmacy at (I think) a Walgreens that it would be a prescription-only med in the US, and cost $200 for the same product.
Another reading is, "The US drug market subsidizes the R&D for the entire rest of the world."
One possible alternative to selling new, novel drugs for market prices is not having those drugs at all. We really ought to be thankful that some entities are willing to bear the billion-dollar cost of developing a new drug. https://en.wikipedia.org/wiki/Cost_of_drug_development
You come off like a shill. The majority of new drug development is the result of publicly funded research. Drug companies mine that research, and in many cases their main contribution is ramming the drug through the FDA approval pipeline. The university will also take a big cut, even though they were given (mostly public) grants to do the research.
Drug development is probably one of the best targets for socialization. That would reduce the number of stupid, pointless drugs that get developed. How many billions have been wasted to produce ~20 different anti-depressants, none of which does more than slightly outperform placebo?
> The majority of new drug development is the result of publicly funded research. Drug companies mine that research
Isn't the entire point of publicly funded research to spur scientific and economic development? Are you proposing that public research should be hidden away so that private companies don't do anything useful with it?
The profits from selling drugs in EU is more than enough for the cost of research. The US market prices are higher since the US market has higher sales costs (need to spend more ads and marketing dollars, and need to negotiate with all the insurers etc). Banning prescribed medicine ads and fixing the overly complicated healthcare system would help a lot keeping costs down and it wouldn't affect how much there is left over for research at all.
Yes, because all of Europe isn't doing any research on drugs...
And Japan and the UK and China and so on...
That's an extremely US centric view. The market in the US is inelastic and inefficient. There's a reason why the prices are so high relative to care provided in other western countries.
> Another reading is, "The US drug market subsidizes the R&D for the entire rest of the world."
There's no way that a decades-old, cheap to produce tropical ointment falls under that category. If you feel that a massively high price on generics is some sort of worthwhile cross-subsidy to other things... I'm not sure I agree.
Prescription drugs in the US have weird pricing incentives.
Not a lot of people are paying the list prices. Insurers separately negotiate prices and insured people often pay much less out of pocket (but sometimes not very much less). There are a lot of free/low cost prescription plans that will get you discounts -- some pharmacies will be happy to sign you up for those at the counter. Drug manufacturers generally offer rebate/discount programs to consumers for their expensive drugs in order to drive sales.
It's a mess like most of healthcare in the US. Too little price transparency, too many companies between the patient and the care, too much complexity.
It's because the government can say "this drug shall cost no more than X units of currency" and if that is above marginal cost, it can still makes sense to sell it.
The flip side is that drugs in the US are extra-expensive because the expected recuperation of R&D rests on the US market.
If the US government started doing price fixing, existing drug prices would come down, but new drugs would be less likely to be developed.
On the other hand, much of regulatory burdens that make drug development more costly are also due to the US government.
> It's because the government can say "this drug shall cost no more than X units of currency" and if that is above marginal cost, it can still makes sense to sell it.
Not really for generic, over-the-counter stuff in the UK. Meds that are funded by the public purse and given out on prescription, sure. But £7 is the market price for that over the counter drug in the UK. There's no entity doing price fixing there.
Without better information, I have no way to look into the details of your anecdote, but if it really is a generic drug then the US price probably is that of a brand for which no FDA-licensed competitor exists, likely due to regulatory cost.
If it's over-the-counter in the UK, it might also be the same brand but two different drugs.
It might also be two different drugs entirely, and you just mixed things up.
I suspect the GP has mixed up several things here.
Many drugs in the UK are available “over the counter” in the UK for pennies - next time you’re in Heathrow Airport, if that ever happens again, check out a “Boots” store and you’ll find you can buy Ibuprofen for £0.25 for 24 tablets. I have never seen even a drug such as Ibuprofen for sale in the US for a price remotely comparable.
However, if a GP or secondary care doctor _prescribes_ Ibuprofen and you fulfill it via an NHS-servicing pharmacy, the price is whatever the prevailing rate of the NHS prescription charge is - currently £9.15 - though substantial discounts are available in many situations. Further, a friendly pharmacist will often advise patients not to fill the prescription at all and to buy the over-the-counter equivalent in such cases.
Also in the UK, generic drugs are issued _by default_ where possible, and only if the bioavailability of a particular medicine is important is it considered acceptable to dispense specific brands upon request.
In the UK aciclovir is available over the counter. There are generics available and the major brand of it is Zovirax. Zovirax costs a few pounds (Approx £5 from a quick google). Generics are available for less, I can immediately find one for £4.50. No prescription.
We were quoted $200 as the on-prescription price in the US, and not available otherwise.
Please don't assume I'm confused. (I am sometimes, but please don't assume!)
Aciclovir. Brand name Zovirax. Approximately £5 in the UK when I searched a few minutes ago. Generics are available cheaper. We were quoted $200 and it needed a prescription in New Mexico about 5 years ago. It sticks in the mind because of the disparity.
No, they aren't different drugs.
Maybe it's an outlier, it's just a single data point after all. But there's no government-set price there, there's no government purchasing involved there.
Looks like there's only a single generic brand for topical Aciclovir, which is prescription-only for around $70. Zovirax is not sold in the US.
Being prescription-only of course greatly limits the revenue potential, which a hypothetical competitor would have to weigh against the costly FDA approval.
The over-the-counter alternative would be Abreva, which uses Docosanol instead.
I thought you wrote "fruitflies" R&D and was thinking 1) why are they hating and drosophila and 2) I don't think flies are really a comon model for Nucs BICBW. But then I reread the word...
How much of that first vial was paid for by taxpayers?
Does a single drug and associated trials really cost billions to develop? That's a year's worth of pay for 10,000 scientists at 200k/year (I suspect this is a rather high rate for most phd researchers). Most research teams are < 10 people [1]. You could fund 500 large research teams working on different drugs for 2 billion for a year. Let's say just one team, that funds them for 500 years.
Obviously there are other costs (rent, equipment, materials). But where is that money going? It doesn't seem to be going towards doing the science. It's extremely difficult to find breakdowns of R+D costs - seems to be a tightly held secret at big pharma.
AFAIK, the research done by tax payers is the underlying biology. In other words, researching that protein X is responsible for biological processes A, B, and C and changing X to Y increases A and B but decreases C.
Then, it's still the responsibility of pharma companies to figure out how to create a compound that can then safely trigger the change of protein X -> Y
If they accepted any federal money, they should be subject to federal restrictions on pricing. You don’t get to socialize the costs and privatize the revenue.
Wasn't remdesivir extra-hard to produce just some months ago? It seems that this article is conflating the price for its constituents with the price to produce.
This is classic example of monopoly pricing. Gilead developed a drug the federal government has minted as special. They can charge whatever they want for it because there's a period of effectively unlimited demand (until a vaccine hits the market), and a very narrow band of supply. Products like this have what you might've learned about in econ 101 as inelastic demand -- the demand for the product remains the same regardless of the price.
They know people and/or insurance companies will pay for it, so why not charge whatever they want while they can?
Of course, there is a very simple way to bring down the price and reduce the overall cost burden to the economy: a price ceiling. The government could just say, "sorry, you can't bring that drug to market unless it's below X dollars".
But the Federal government has been entirely unwilling to exercise its power to enact price controls on drug companies. At the same time, other countries do this all the time, driving up the prices we pay even more. It's insane.
In the absence of compulsory production and under the current intellectual property rights scheme, price ceilings cause shortages all other things held equal.
It's not just intellectual property - it's a capital intensive bioengineering project with probably a half billion or so capex and even more for an outsider to bootstrap.
No, it's a classic example of a expensive product (due to R&D costs) that has a monopoly because no one has developed anything close to it, partly because of Gilead's knowledge and partly due to constrictive government regulations.
I'm curious: what would be a per-unit price you would consider too high? Of course it has high R&D costs -- no one is suggesting otherwise. I'm not even sure what your point is -- that it is monopoly pricing, but because they have a competitive advantage and because they can charge a high price for it?
> what would be a per-unit price you would consider too high?
If the price is too high, then no one will purchase it. Therefore, Gilead makes no money.
Obviously, Gilead wants to make money. So they will decrease the price to attract customers, ultimately finding a ideal price that maximizes the balance between profit margin and customer volume.
There is no such thing as 'too high' of a price, as long as you make the safe assumption that companies are in fact interested in making money.
> If the price is too high, then no one will purchase it. Therefore, Gilead makes no money.
This is great in theory but is entirely inapplicable and utter non-sense in practice in a health care context, and in this instance in particular. My original commend made mention of inelasticity of demand. When people's lives are at risk, there is no demand curve and equilibrium. The price is what the supplier says it is. It has nothing to do with what the market will bear, or whatever other macro 101 theoretical framework you're applying to this reality.
It's different in almost every possible way than say, going to the grocery store and deciding if a box of cookies is too expensive for the value you're deriving, and whether this alternative or that alternative is a better value.
Maybe you don't know much about how billing and payments in the health care system works, or the exorbitant costs for things that happen in a hospital setting that are completely untethered to what anyone would be willing to pay in a normal market.
> Obviously, Gilead wants to make money. So they will decrease the price to attract customers, ultimately finding a ideal price that maximizes the balance between profit margin and customer volume.
Again, this isn't a b-school case study. Your mental model doesn't apply here.
Not sure what to make of that "93 cent" figure, but it must be marginal cost, which of course means nothing. A thumbtack costs fractions of a cent to make, but only if you have a thumbtack production line sitting around, with materials and operators ready to go.
How big are the rebates?
Often the insurers not only get the majority of the price back in kick-backs, they also have more intensive to negotiate a higher price rather than a lower price due to the the kickbacks they get on the price. If you're making more than 2/3 of the profit on a product that you're just passing on to patients, then you're happier when it's more expensive.
You can't talk about drug printning in the US without including the entire chain.
And what was the R&D cost? And what were the regulatory costs? Most medication, aside from medication that uses radioactive isotopes, is very cheap to manufacture. R&D and regulations are not cheap.
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[ 3.3 ms ] story [ 168 ms ] threadAnd I personally find it unfair to put the fault on Trump's administration ( not a fan of Trump, but I do think that these kind of article erode news source credibility that allows Trump and most virulent right wing supporter to argue that most fake-news source are biased against Trump).
The more money Gilead earns, the higher Gilead stock goes. Trump wants the stock market to go higher, so Trump wants to maximize Gilead profits.
https://en.wikipedia.org/wiki/Remdesivir#Manufacturing_and_d...
I thought the big Indian manufacturers already just-about ignored patents, these only restrict what can be shipped to the west.
It seems a little bit like producing Whisky: you can't just decide now to produce a huge batch of 12-year-old Lagavulin and have it ready next month.
I believe Gilead's target is 500,000 doses by November. In an ideal world, they'd probably want to sell doses to just about every person with COVID, but they can't, due to supply constraints.
How much did it cost to create? How many vials will be consumed? How much did others spend on failed drug development?
Drug prices have been rising out of control even for generic drugs (think epipens). It seems that competition is not driving down prices of generics. Perhaps it is time for government to break up "big parhma". Perhaps the FDA sets quality requirements so high that competitors cannot meet it, allowing that single manufacture to control prices.
The other issue is the true cost of research. The production cost is a fraction of the true cost. Research is expensive. There would be no Remdesivir if we only paid production costs. As a biomedical researcher, I am always on the fence about jumping jobs for something that will pay better. Many investors and techies vastly underestimate the cost of scientific research BY ORDERS OF MAGNITUDE.
The legal costs to defend the drug and its use in court after release can also be staggering. Most developed countries have the English Rule, which requires plaintiffs to pay the legal costs of defendants if they bring a suit and lose. The US does not.
You would need to do this testing continuously at random, so the FDA could just charge a fee for this. It would be way cheaper than full regulatory compliance.
Avoiding this situation means costly facilities with costly, inefficient but necessary regulation.
Put cameras everywhere in your lab/factory, and give the FDA inspectors 24x7 access to every feed. This is in addition to allowing onsite random inspections, of course.
I mean, as a consumer, this would make me feel warm and fuzzy about buying drugs from that company. I mean, you could even allow the public access to those feeds, as a marketing tool!
I see a few problems with this plan
1) Makers would lose interest in research of simple drugs easy to clone or, more probably,...
They would fight back introducing additives in the mix, useless except for the sake of making the recipe much more difficult to copy, or to aim for a product recognizable for the public (i.e viagra must be "blue pills" not green pills, etc, but the blue colorant is in fact useless except for marketing purposes).
2) Because an increase in additives the number of crossed interactions with other medicines would raise exponentially and would be much more complicated to predict in multiple treatments
3) Potential collateral effects and allergies could increase also.
And it creates a system prone to corruption, of course (The makers can be blackmailed by the independent lab).
I think the main bloat is likely regulatory capture - we could start with the question “why can’t I make this drug in my garage” and work through each barrier. Equipment is part of it but the time and expense of navigating extensive regulations, building relationships with bureaucratic agencies, needing legal support, and so on prevents competition. Even if it isn’t as hard as it may seem to deal with all that, the reputation of it being an insurmountable barrier is enough to discourage would-be innovators.
1) Taxpayers paid $70.5 million 2) Remdesivir was discovered through a collaboration between Gilead and US Army. 3) Remdesivir received funding from DOD and CDC (for Ebola treatment)
Are you proposing the government should have no attached requirements to qualify for subsidies?
Are you flatly against all regulation when a particular company is given tax money?
For what it's worth, the government can regulate any industry regardless of whether it is subsidized.
The price is actually set to where profit is highest, meaning it's a function of: how many people will buy at various prices and how much does it cost to produce at various quantities.
One of the strong arguments for single payer healthcare, IMHO.
A method for activating a mammalian immune system patented by fauci and others is used in this drug.
A small piece but with millions of immunizations.
[1] https://www.factcheck.org/2020/05/fauci-didnt-invent-wont-pr...
Weak, headline grabbing, agenda-setting titles are plenty to go around.
The true cost of producing a patent-protected product is hard to know as it tends to be part of confidential business information.
I think it's fair that people question the cost of monopolies since they draw their status from protections conferred by (patent) law - conferred by the people.
2) Supposedly the government could do it at cost. But where were they when it was the time to invest and invent? Billions were wasted on rescuing zombie companies.
Some time ago a friend I was travelling with had a recurrence of a skin complaint that she would usually treat with a particular product. In the UK it's an over-the-counter med, non-prescription, with a cost of about £7. We were informed in the pharmacy at (I think) a Walgreens that it would be a prescription-only med in the US, and cost $200 for the same product.
Is this because insurers can be billed?
One possible alternative to selling new, novel drugs for market prices is not having those drugs at all. We really ought to be thankful that some entities are willing to bear the billion-dollar cost of developing a new drug. https://en.wikipedia.org/wiki/Cost_of_drug_development
Drug development is probably one of the best targets for socialization. That would reduce the number of stupid, pointless drugs that get developed. How many billions have been wasted to produce ~20 different anti-depressants, none of which does more than slightly outperform placebo?
Isn't the entire point of publicly funded research to spur scientific and economic development? Are you proposing that public research should be hidden away so that private companies don't do anything useful with it?
https://truecostofhealthcare.org/wp-content/uploads/2019/03/...
https://truecostofhealthcare.org/the_pharmaceutical_industry...
And Japan and the UK and China and so on...
That's an extremely US centric view. The market in the US is inelastic and inefficient. There's a reason why the prices are so high relative to care provided in other western countries.
There's no way that a decades-old, cheap to produce tropical ointment falls under that category. If you feel that a massively high price on generics is some sort of worthwhile cross-subsidy to other things... I'm not sure I agree.
Not a lot of people are paying the list prices. Insurers separately negotiate prices and insured people often pay much less out of pocket (but sometimes not very much less). There are a lot of free/low cost prescription plans that will get you discounts -- some pharmacies will be happy to sign you up for those at the counter. Drug manufacturers generally offer rebate/discount programs to consumers for their expensive drugs in order to drive sales.
It's a mess like most of healthcare in the US. Too little price transparency, too many companies between the patient and the care, too much complexity.
The flip side is that drugs in the US are extra-expensive because the expected recuperation of R&D rests on the US market.
If the US government started doing price fixing, existing drug prices would come down, but new drugs would be less likely to be developed.
On the other hand, much of regulatory burdens that make drug development more costly are also due to the US government.
Not really for generic, over-the-counter stuff in the UK. Meds that are funded by the public purse and given out on prescription, sure. But £7 is the market price for that over the counter drug in the UK. There's no entity doing price fixing there.
If it's over-the-counter in the UK, it might also be the same brand but two different drugs.
It might also be two different drugs entirely, and you just mixed things up.
Many drugs in the UK are available “over the counter” in the UK for pennies - next time you’re in Heathrow Airport, if that ever happens again, check out a “Boots” store and you’ll find you can buy Ibuprofen for £0.25 for 24 tablets. I have never seen even a drug such as Ibuprofen for sale in the US for a price remotely comparable.
However, if a GP or secondary care doctor _prescribes_ Ibuprofen and you fulfill it via an NHS-servicing pharmacy, the price is whatever the prevailing rate of the NHS prescription charge is - currently £9.15 - though substantial discounts are available in many situations. Further, a friendly pharmacist will often advise patients not to fill the prescription at all and to buy the over-the-counter equivalent in such cases.
Also in the UK, generic drugs are issued _by default_ where possible, and only if the bioavailability of a particular medicine is important is it considered acceptable to dispense specific brands upon request.
We were quoted $200 as the on-prescription price in the US, and not available otherwise.
Please don't assume I'm confused. (I am sometimes, but please don't assume!)
No, they aren't different drugs.
Maybe it's an outlier, it's just a single data point after all. But there's no government-set price there, there's no government purchasing involved there.
Being prescription-only of course greatly limits the revenue potential, which a hypothetical competitor would have to weigh against the costly FDA approval.
The over-the-counter alternative would be Abreva, which uses Docosanol instead.
Looks like this particular med has been the subject of all sorts of market shenanigans - https://www.latimes.com/business/la-fi-lazarus-20150306-colu...
So perhaps is not going to be very representive of anything much.
The first vial cost $2,000,000,000.
Don't forget about the other drug research projects that failed and also cost billions in fruitless R&D.
Does a single drug and associated trials really cost billions to develop? That's a year's worth of pay for 10,000 scientists at 200k/year (I suspect this is a rather high rate for most phd researchers). Most research teams are < 10 people [1]. You could fund 500 large research teams working on different drugs for 2 billion for a year. Let's say just one team, that funds them for 500 years.
Obviously there are other costs (rent, equipment, materials). But where is that money going? It doesn't seem to be going towards doing the science. It's extremely difficult to find breakdowns of R+D costs - seems to be a tightly held secret at big pharma.
1. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4465944/
Then, it's still the responsibility of pharma companies to figure out how to create a compound that can then safely trigger the change of protein X -> Y
How does being funded by the taxpayers mean anything?
Why not? Corporations are still taxed on their profits.
They know people and/or insurance companies will pay for it, so why not charge whatever they want while they can?
Of course, there is a very simple way to bring down the price and reduce the overall cost burden to the economy: a price ceiling. The government could just say, "sorry, you can't bring that drug to market unless it's below X dollars".
But the Federal government has been entirely unwilling to exercise its power to enact price controls on drug companies. At the same time, other countries do this all the time, driving up the prices we pay even more. It's insane.
No, it's a classic example of a expensive product (due to R&D costs) that has a monopoly because no one has developed anything close to it, partly because of Gilead's knowledge and partly due to constrictive government regulations.
If the price is too high, then no one will purchase it. Therefore, Gilead makes no money.
Obviously, Gilead wants to make money. So they will decrease the price to attract customers, ultimately finding a ideal price that maximizes the balance between profit margin and customer volume.
There is no such thing as 'too high' of a price, as long as you make the safe assumption that companies are in fact interested in making money.
This is great in theory but is entirely inapplicable and utter non-sense in practice in a health care context, and in this instance in particular. My original commend made mention of inelasticity of demand. When people's lives are at risk, there is no demand curve and equilibrium. The price is what the supplier says it is. It has nothing to do with what the market will bear, or whatever other macro 101 theoretical framework you're applying to this reality.
It's different in almost every possible way than say, going to the grocery store and deciding if a box of cookies is too expensive for the value you're deriving, and whether this alternative or that alternative is a better value.
Maybe you don't know much about how billing and payments in the health care system works, or the exorbitant costs for things that happen in a hospital setting that are completely untethered to what anyone would be willing to pay in a normal market.
> Obviously, Gilead wants to make money. So they will decrease the price to attract customers, ultimately finding a ideal price that maximizes the balance between profit margin and customer volume.
Again, this isn't a b-school case study. Your mental model doesn't apply here.
"Remdesivir is really hard to synthesize"
https://news.ycombinator.com/item?id=22783363
Not sure what to make of that "93 cent" figure, but it must be marginal cost, which of course means nothing. A thumbtack costs fractions of a cent to make, but only if you have a thumbtack production line sitting around, with materials and operators ready to go.
You can't talk about drug printning in the US without including the entire chain.