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A million-dollar drug

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Re: A million-dollar drug

#131

Post by InTheArena »

tptacek wrote: post #35

People are fixated on the price for this drug, but the article itself is pretty clear on the rationale for the price tag: current alternative therapies have a price tag of up to $300k/yr, indefinitely. This drug is a one-time therapy. Presumably, any health system would jump at the chance to replace a $300k/yr recurring charge with a 1-time $1MM fee. But they don't. Health systems in Europe apparently refuse to pay f…

Here is the problem with this statement - it assumes that the drug is worth the maximum amount that they could extract from the customer (insurance companies, patients and governments for it). Nothing says that they couldn't sell it for less, just that they thought they could get this much for it.

Re: A million-dollar drug

#132

Post by InTheArena »

jpalomaki wrote: post #48
WhompingWindows wrote: post #36

Earlier quoted context omitted.

Interesting post. Hopefully some innovators can come through and figure out a way to make it more cheaply. Even if it's expensive now, if humans exists for 100's of years, then eventually the price will come down when this inventor is toast, right? Either that or people will figure out cheaper, DIY ways to do some of this biological manipulation.

Based on article the price is not at 1M because of high manufacturing costs, but because they want to have return on the investment made during the research and development phase.

TO be frank, it's not even that. If you read the article, they never priced it based on the what they invested in it, but rather off the the fact that they could replace something else that was expensive with it.

Re: A million-dollar drug

#133

Post by InTheArena »

cubano wrote: post #130

This article brings up a thought experiment I've been pondering for a good while now... So what would you charge for a drug that guaranteed you would live 30 extra years after you spent 20 million to develop it? For an added twist, let's say it's NOT FDA approved but you have solid clinical evidence that it's efficacy was solid and can your "street cred" (whatever that means in biotech) allows you access to the world…

This is exactly the reason we have governments. Theoretically in a liberal democracy, we don't allow people to do actions that enrich themselves at unreasonable societal cost. Allowing only the rich to have access to longer life is one of those basic things that governments are supposed to be here.

Re: A million-dollar drug

#134

Post by mrnobody_67 »

derefr wrote: post #91
rayiner wrote: post #47

Earlier quoted context omitted.

It's bad to analyze this issue through the medium of a long-form article, which wraps the story up in emotional narrative. Here is a better write-up in the MIT Technology review: https://www.technologyreview.com/s/601165/the-worlds-most-ex... . The gist of the problem is this: > The Amsterdam company spent more than $100 million testing the drug and carving a path through Europe’s medical rules and regulations, which…

The drug didn't cost $100 million to make. It cost $100 million to prove that it works in order to get it approved for sale in Europe . In a world where you could just put a drug on the market (where "the market" is, say, hospitals), the drug would have cost far less, and so the inventor would need to recoup far less. Note that I'm not arguing for complete deregulation of drug manufacturing. Testing for product integ…

The number of drugs that have gotten FDA approval at a billion+ cost only to be later rescinded is pretty massive as well... so it's not like the current system is fool-proof.

Re: A million-dollar drug

#135

Post by glass_of_water »

cubano wrote: post #130

This article brings up a thought experiment I've been pondering for a good while now... So what would you charge for a drug that guaranteed you would live 30 extra years after you spent 20 million to develop it? For an added twist, let's say it's NOT FDA approved but you have solid clinical evidence that it's efficacy was solid and can your "street cred" (whatever that means in biotech) allows you access to the world…

That's a really interesting thought experiment, and I don't really know what my answer is.

The following choices assume that more people living an extra 30 years is a good thing ethically, and that there are no devastating effects environmentally or otherwise. The following choices also assume that you'll always have a monopoly on the production of the drug.

1. Assuming that the supply is practically unlimited, an altruistic actor should probably give it away for as close to free as possible. A purely selfish actor should probably try to sell to each individual for as much as they can afford (though this can be hard pricing strategy to enact). I suppose you might actually want to charge less than that even as a purely selfish actor, since you wouldn't want to somehow destroy the world economy by making everyone really poor except for yourself (would this actually destroy the economy though? I'm not sure... probably not relevant for the purposes of this thought experiment).

2. Assuming supply is limited, a purely altruistic actor will have to choose the most fitting recipients. This is a really tough choice. How do you define the most fitting recipients? Those who are most likely to contribute to the betterment of humanity with their extra 30 years? It seems like an almost impossible task to pick out who these people would be. A purely selfish actor should charge the richest as much as they're willing to pay.

If it were me and supply were unlimited, I'd like to think that I'd sell it for as little as possible but enough to still never have to worry about money again. Making $10 million in profit would probably be more than enough (though if you can make more and still help everyone, that'd be even better). If supply were limited, I don't know what I would do.

One thing I just realized though, is that even if supply were unlimited, if you had this godly power, you might choose to withhold it those you deem unworthy, which is a whole other ethical can of worms. I'm guessing this kind of deviates from the intent of your thought experiment though.

What's your answer?

Re: A million-dollar drug

#136

Post by ctdonath »

InTheArena wrote: post #131
tptacek wrote: post #35

People are fixated on the price for this drug, but the article itself is pretty clear on the rationale for the price tag: current alternative therapies have a price tag of up to $300k/yr, indefinitely. This drug is a one-time therapy. Presumably, any health system would jump at the chance to replace a $300k/yr recurring charge with a 1-time $1MM fee. But they don't. Health systems in Europe apparently refuse to pay f…

Here is the problem with this statement - it assumes that the drug is worth the maximum amount that they could extract from the customer (insurance companies, patients and governments for it). Nothing says that they couldn't sell it for less, just that they thought they could get this much for it.

A thing is worth what another will pay for it.

Re: A million-dollar drug

#137

Post by DoreenMichele »

ctdonath wrote: post #136
InTheArena wrote: post #131

Earlier quoted context omitted.

Here is the problem with this statement - it assumes that the drug is worth the maximum amount that they could extract from the customer (insurance companies, patients and governments for it). Nothing says that they couldn't sell it for less, just that they thought they could get this much for it.

A thing is worth what another will pay for it.

"Your money or your life?" doesn't seem like a wonderfully ethical medical question when aimed at folks who probably cannot afford it even if it is a cure, adds decades to their life and you are willing to take installment payments.

Re: A million-dollar drug

#138

Post by refurb »

tptacek wrote: post #35

People are fixated on the price for this drug, but the article itself is pretty clear on the rationale for the price tag: current alternative therapies have a price tag of up to $300k/yr, indefinitely. This drug is a one-time therapy. Presumably, any health system would jump at the chance to replace a $300k/yr recurring charge with a 1-time $1MM fee. But they don't. Health systems in Europe apparently refuse to pay f…

Actually, single payers in the EU are much better equipped to pay $1M now to save $300k/yr in perpetuity. All medical spending comes from one big pile.

In the US, not people don’t stay with the same health plan for more than 2-3 years. So why would an insurance company pay $1M when they get 2-3 years of pay back, then the next insurer gets a free ride?

I know there is an MIT prof who is pushing the idea of something like a bond. Some external party pays the $1M and the insurer makes X payments until it’s paid off.

A interesting idea that even the single payers like as they have a more predictable budget.

Re: A million-dollar drug

#139

Post by Nasrudith »

simion314 wrote: post #11
apsec112 wrote: post #9

This seems bizarre to me: Van Deventer says the company never considered lowering the price. "Why would we? Pricing shouldn't be a political decision. It should be a rational decision based on merits and value." If no one will pay $1 million, your revenue is $0. Assuming the drug costs much less than $1 million to make, surely any revenue number is better than $0?

What I think is happening is that the number of affected people is so low and the cost of producing this small number is very large and the company does not want a profit but a BIG profit.

To be fair there is also a risk calculus in everything - even if completely shielded from bad drug liability the profits need to be enough to make taking the gamble repeatably sustainable. To take a deliberately extreme example companies won't try to buy out entire lotteries until the jackpot is big enough to pay off if nobody else wins (thus cutting the income percentage by N - where N is the number of winners).

Greed is a factor and a problem of course but without running the numbers it is hard to say what is the smallest acceptable profit for the outcome.

I wonder if ironically we'll eventually start to see health insurance companies cut out the middleman and do cure research directly to cut their sustained costs. A bit idyllic to hope for yet it also indicates several other problems.

Re: A million-dollar drug

#140

Post by tehwebguy »

refurb wrote: post #138
tptacek wrote: post #35

People are fixated on the price for this drug, but the article itself is pretty clear on the rationale for the price tag: current alternative therapies have a price tag of up to $300k/yr, indefinitely. This drug is a one-time therapy. Presumably, any health system would jump at the chance to replace a $300k/yr recurring charge with a 1-time $1MM fee. But they don't. Health systems in Europe apparently refuse to pay f…

Actually, single payers in the EU are much better equipped to pay $1M now to save $300k/yr in perpetuity. All medical spending comes from one big pile. In the US, not people don’t stay with the same health plan for more than 2-3 years. So why would an insurance company pay $1M when they get 2-3 years of pay back, then the next insurer gets a free ride? I know there is an MIT prof who is pushing the idea of something…

> In the US, not people don’t stay with the same health plan for more than 2-3 years. So why would an insurance company pay $1M when they get 2-3 years of pay back, then the next insurer gets a free ride?

One of the most compelling arguments for single payer which I’ve somehow never heard before now. Biding time in an effort to pass the buck should not be incentivized.

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