Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How India's Patent Office Destroyed Gilead's Global Game Plan

businessweek.com

Post reply on HN
Print view View original

31–40 of 73 posts

Re: How India's Patent Office Destroyed Gilead's Global Game Plan

#31

Post by chime »

shoyer wrote: post #20
girishso wrote: post #16

Earlier quoted context omitted.

I don't think companies spend as much as we believe in researching drugs. Companies spend most on advertising and incentivizing the doctors to prescribe their medicines. The book: Bad Pharma [1] is an eye opener. The drug "Sovaldi" is making them $2.8ish billion dollars per quarter, that is almost $12 billion a year. I don't believe they spent tens of billions in developing the drug. [2] 1: http://www.amazon.com/Bad-…

It's not what they spent developing Sovaldi -- it's the fortune the industry as a whole spends developing drugs that never make it to market. That said, it's quite likely true that marketing is a bigger share of costs than R&D. Pharma companies are out there to maximize revenue, just like any other corporation. It's a reflection of the poor state of regulation in the US that we pay far more of than our share (compare…

Here's the piece of the picture that everyone's missing from this particular example - an $11b acquisition [1]. Gilead bought Pharmasset for $11b. It no longer matters what it cost Pharmasset to research/test/approve/produce the medicine anymore. Certainly all of that was factored into the acquisition price but since Gilead's total cost ended up being $11b, that is what they need to recoup at the least.

There are 3.2 million hep C patients in the US [2] but most don't feel ill or even know they have hep C. If every single person buys the drug, Gilead must still sell it for at least $11b / 3.2m = $3500/person! But if only 5% buy the drug, they need to sell it for $69,000 just to break event on the acquisition without even taking any other costs into account.

This is just rough calculation to highlight that a sky high acquisition price resulted in a company demanding an equally high price per dose. Gilead paid the high price to acquire Pharmasset because they thought they could sell the drug for at such a high price per dose. If Gilead is proven right (and their stock price from $18 in 2011 to $100 in 2015 seems to reflect that indeed), then this just encourages more and more drug companies to be bought at astronomical prices.

And the worst part of this is that the very government that gave this company the right to operate a monopoly via a patent is now asking them why they're charging so much [3]. None of this happened because of some singular evil cabal. It happened due to misaligned incentives.

Government grants pay researchers, who develop medicines at paid-for-by-public-funds university labs, which sell the patents back to the researchers at fire-sale prices, who then go on to create biotech startups, which productize the research, and then sell to Fortune 100 pharmas, who can then demand almost any amount of money, which CMS will have to pay because USPTO said nobody else can sell this drug, FDA agreed that the drug works, and ACA ensures that the patients cannot be denied any drugs that work at any cost.

[1] http://en.wikipedia.org/wiki/Pharmasset [2] http://www.hhs.gov/opa/reproductive-health/stis/hepatitis-c/ [3] http://www.finance.senate.gov/imo/media/doc/Wyden-Grassley%2...

Re: How India's Patent Office Destroyed Gilead's Global Game Plan

#35

Post by eps »

girishso wrote: post #16
norikki wrote: post #11

I'm disappointed this article doesn't mention the effect this will have on future pharmaceutical investment. Companies spend billions researching and testing drugs for safety and effectiveness. Companies capable of developing successful drugs need an adequate period in which to recoup their investment and earn enough to fund new drug research. If companies know they won't have meaningful ownership over medicines they…

I don't think companies spend as much as we believe in researching drugs. Companies spend most on advertising and incentivizing the doctors to prescribe their medicines. The book: Bad Pharma [1] is an eye opener. The drug "Sovaldi" is making them $2.8ish billion dollars per quarter, that is almost $12 billion a year. I don't believe they spent tens of billions in developing the drug. [2] 1: http://www.amazon.com/Bad-…

Not every drug reasearch ends up in a commercial big bang. From what I understand very few do, so the money they bring in end up financing all of the research.

Re: How India's Patent Office Destroyed Gilead's Global Game Plan

#36

Post by okpatil »

norikki wrote: post #11

I'm disappointed this article doesn't mention the effect this will have on future pharmaceutical investment. Companies spend billions researching and testing drugs for safety and effectiveness. Companies capable of developing successful drugs need an adequate period in which to recoup their investment and earn enough to fund new drug research. If companies know they won't have meaningful ownership over medicines they…

You don't understand gravity of situation. India has third highest population of AIDS patients. Around 2.1 million people are infected[1]. That is twice the population of Cyprus. Around 170k children and adults lost their lives in 2009 [2]. India has 32.7 % of its population below poverty line [3]. That's an income below $1.25 per day. If they can't pay for the drugs doesn't make them less deserving.

And as far as drug developments go, due to GPU computing and molecular dynamics and monte carlo simulation methods, the cost of developing drugs has gone significantly down [4][5]. For starters they take a molecular structure, add or replace a functional group, and run the simulation with a particular protein structure. Drug development costs are not that high now, compared to twenty years ago. Most of the money goes in marketing.

If Government of India thinks more about it's 2.1 million than bunch of corporate companies trying to siphon money from wherever they can, then YES, they are in the right direction.

1. http://www.bmj.com/content/340/bmj.c621 2. http://www.indexmundi.com/g/g.aspx?c=in&v=37 3. http://povertydata.worldbank.org/poverty/country/IND 4. http://www.ncbi.nlm.nih.gov/pubmed/16758486 5. http://www.biomedcentral.com/1741-7007/9/71

Re: How India's Patent Office Destroyed Gilead's Global Game Plan

#37

Post by danmaz74 »

I'm all against "obvious" patents, but suing to be free to produce a product because it "also doesn't demonstrate it's significantly more effective than already known compounds" is a contradiction in terms. If the other compounds were just as good, then you wouldn't be suing to be able to produce this new one.

Re: How India's Patent Office Destroyed Gilead's Global Game Plan

#38

Post by another-one-off »

danmaz74 wrote: post #37

I'm all against "obvious" patents, but suing to be free to produce a product because it "also doesn't demonstrate it's significantly more effective than already known compounds" is a contradiction in terms. If the other compounds were just as good, then you wouldn't be suing to be able to produce this new one.

One way of looking at this is the legal system keeping a clear distinction between patents and copyright.

Re: How India's Patent Office Destroyed Gilead's Global Game Plan

#39

Post by saiya-jin »

chime wrote: post #31
shoyer wrote: post #20

Earlier quoted context omitted.

It's not what they spent developing Sovaldi -- it's the fortune the industry as a whole spends developing drugs that never make it to market. That said, it's quite likely true that marketing is a bigger share of costs than R&D. Pharma companies are out there to maximize revenue, just like any other corporation. It's a reflection of the poor state of regulation in the US that we pay far more of than our share (compare…

Here's the piece of the picture that everyone's missing from this particular example - an $11b acquisition [1]. Gilead bought Pharmasset for $11b. It no longer matters what it cost Pharmasset to research/test/approve/produce the medicine anymore. Certainly all of that was factored into the acquisition price but since Gilead's total cost ended up being $11b, that is what they need to recoup at the least. There are 3.2…

well that's nice and all, so next time CEO wants a new fleet of jet aircrafts for him, all should pay more for the medicines? Because, you know, we can?

Companies should definitely make profit, but their default modus operandi is "milk the cow as long as possible", which would directly result in many deaths... not much sympathy from the crowd there. Let's not forget simple math here - company is/was charging for medicine that doesn't cost more than few tens of bucks to produce... 69,000? Sorry, ridiculous all the way through. Don't care about research bla-bla

Just turn on that weird device that used to be called TV. During winter, 1/3 of the adds are medicines. Who pays for those adds? All those who buy medicines...

Re: How India's Patent Office Destroyed Gilead's Global Game Plan

#40

Post by Drakim »

danmaz74 wrote: post #37

I'm all against "obvious" patents, but suing to be free to produce a product because it "also doesn't demonstrate it's significantly more effective than already known compounds" is a contradiction in terms. If the other compounds were just as good, then you wouldn't be suing to be able to produce this new one.

That logic doesn't always hold up. You could make tiny tiny alterations to some plastic container, put some random bump here or there, or make the flap stick out a little more, and the plastic container might suddenly not be usable due with a third party automatic coffee maker. That's a huge effect, despite the tiny change.

But I doubt that would make that case that because of that huge effect, those random bumps and extended flap deserve patents. We are after all talking about basic shapes here, nobody should be able to patent "a round shape with a tiny bump sticking out" so that others cannot use that shape.

Post reply on HN