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The million-dollar drug (2018)

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Re: The million-dollar drug (2018)

#31

Post by nine_k »

joe_the_user wrote: post #10
exhilaration wrote: post #5

I'm confused, they say it was priced at $1 million because that was what they felt the drug was worth compared to the ongoing therapies needed to keep these patients alive. Ok fine. But once it became clear no one was going to pay that price, wasn't there some lower price that would still earn them a profit?

It's a matter of principle. Perverse principle but principle: "Why would we? [lower the price] Pricing shouldn't be a political decision. It should be a rational decision based on merits and values," he said. "Hundreds of millions of investor money has gone into the company, and if there is no return for those investments, there will be no new drugs because nobody's going to do that in the future, right?"" Which is t…

Buying the rights on drugs like this, and more important expensive drugs, an license them under a freedom-protecting license (similar to GPL) could be a major application of charity funds.

Re: The million-dollar drug (2018)

#32

Post by dodobirdlord »

exhilaration wrote: post #5

I'm confused, they say it was priced at $1 million because that was what they felt the drug was worth compared to the ongoing therapies needed to keep these patients alive. Ok fine. But once it became clear no one was going to pay that price, wasn't there some lower price that would still earn them a profit?

Probably not, the article mentions that the genetic mutation effects about two or three people out of a million, so that’s ~20,000 doses required to cure everyone in the world. The vast, vast majority of those people are going to be people without insurance or government provided healthcare that would ever pay enough to make a difference, so they’ve got to recoup their entire R&D expenses selling the 2,000-3,000 doses required to treat the combined population of the first world, and then maybe provide it for ~free to the rest of the world where there’s no chance of making any money anyway, as is generally the case with all expensive drugs.

If they cave and sell it at a price that doesn’t recover their R&D costs (mentioned in the article to be hundreds of millions of dollars), then that’s that, they’ve just lost all of that money. If they sit on it there’s at least a chance that someone in future might pay them for it.

Re: The million-dollar drug (2018)

#33

Post by dodobirdlord »

d136o wrote: post #12

It seems to me that it’s not just the price of a single treatment that is too high, but also that the patients are fully recovered and don’t have to pay a recurring annual subscription fee to live normal lives. Or is that too cynical?

It is in fact too cynical. The company that wanted to sell this drug isn’t the same as the companies selling recurring treatment to people with this disorder. Your cynicism has blinded you to the fact that the marketers of this drug do not have any economic motivation to do what you are suggesting. Their economic motivation is to sell the tiny number of doses required to treat everyone in the first world (2,000-3,000) at a price high enough to recover their investment and make a profit.

Re: The million-dollar drug (2018)

#34

Post by bryanrasmussen »

dodobirdlord wrote: post #32
exhilaration wrote: post #5

I'm confused, they say it was priced at $1 million because that was what they felt the drug was worth compared to the ongoing therapies needed to keep these patients alive. Ok fine. But once it became clear no one was going to pay that price, wasn't there some lower price that would still earn them a profit?

Probably not, the article mentions that the genetic mutation effects about two or three people out of a million, so that’s ~20,000 doses required to cure everyone in the world. The vast, vast majority of those people are going to be people without insurance or government provided healthcare that would ever pay enough to make a difference, so they’ve got to recoup their entire R&D expenses selling the 2,000-3,000 dose…

>If they cave and sell it at a price that doesn’t recover their R&D costs (mentioned in the article to be hundreds of millions of dollars), then that’s that, they’ve just lost all of that money. If they sit on it there’s at least a chance that someone in future might pay them for it.

sure a chance in that it is not impossible the same way that a talking centaur with the ability to blow up planets with its mind is impossible, but given what we know about economic reality it is practically impossible that the million dollars per patient will be paid.

There's a saying that one should not throw good money after bad, in this case it would seem they are refusing good money because it won't cover the bad.

Also tax writeoffs exist, so I'm not sure what that R&D actually cost them?

Re: The million-dollar drug (2018)

#35

Post by dodobirdlord »

shmerl wrote: post #28

Price should be based on cost of production, not on how often the drug is needed. So stupid not to make it available because someone was crazy to price it that high.

A drug with high cost of production that’s not needed very often will cost a lot of money per dose. The article mentions that hundreds of millions of dollars were spent on R&D and clinical trials, and maybe a couple thousand people in the first world have this disorder. Development costs have to be recouped entirely off of first world sales, since the rest of the world isn’t going to ever pay any appreciable amount of money for a drug, so even if they could sell this to everyone in their target market the breakeven cost seems like it would be about $100,000. Since they’re not going to be able to sell to everyone (there are limits on what various governments and private insurance will pay for medical treatment), and since ongoing care for this disorder costs hundreds of thousands of dollars a year, $1M/dose seems like a perfectly reasonable price.

Re: The million-dollar drug (2018)

#36

Post by EdwardDiego »

stefan_ wrote: post #16

Never mind non-practicing entities for software patents, but surely for patents on medicine keeping them valid when no one is making any is entirely bogus and not deserving of legal protection?

What does the patent cover in this instance? The very concept of patching the gene? Or is it the mechanism of doing so?

Re: The million-dollar drug (2018)

#37

Post by dodobirdlord »

bryanrasmussen wrote: post #34
dodobirdlord wrote: post #32

Earlier quoted context omitted.

Probably not, the article mentions that the genetic mutation effects about two or three people out of a million, so that’s ~20,000 doses required to cure everyone in the world. The vast, vast majority of those people are going to be people without insurance or government provided healthcare that would ever pay enough to make a difference, so they’ve got to recoup their entire R&D expenses selling the 2,000-3,000 dose…

>If they cave and sell it at a price that doesn’t recover their R&D costs (mentioned in the article to be hundreds of millions of dollars), then that’s that, they’ve just lost all of that money. If they sit on it there’s at least a chance that someone in future might pay them for it. sure a chance in that it is not impossible the same way that a talking centaur with the ability to blow up planets with its mind is imp…

> There's a saying that one should not throw good money after bad, in this case it would seem they are refusing good money because it won't cover the bad.

They are a drug development company, marketing their drugs to national government health services and private insurance companies. This is an iterative game, in game theory terms. Caving and selling at a loss just guarantees that counterparties will refuse to buy at the stated price next time too, and wait for them to cave and sell at a loss. Sitting on the drug until the parents expire and losing the entire investment rather than selling at a loss has the benefit of proving seriousness in future price negotiations.

And the article mentions that the ongoing care costs for someone with this disorder is hundreds of thousands of dollars per year. In the years since they refused the $1M price tag in an attempt to drive a hard bargain, the national governments and private insurance companies have no doubt spent more than $1M per patient they refused to buy a dose for.

Hardly seems like planet-destroying centaur levels of implausibility that they may eventually come around to the idea that $1M was actually a perfectly reasonable price, given the circumstances.

> Also tax writeoffs exist, so I'm not sure what that R&D actually cost them?

I think you have some major misunderstandings about what tax writeoffs are and how they work.

Re: The million-dollar drug (2018)

#38

Post by refurb »

d136o wrote: post #12

It seems to me that it’s not just the price of a single treatment that is too high, but also that the patients are fully recovered and don’t have to pay a recurring annual subscription fee to live normal lives. Or is that too cynical?

No, because other gene therapies like Zolgensma are priced at $2.5M for a single dose and selling quite well. There is a huge market for these types of cures.

Re: The million-dollar drug (2018)

#39

Post by refurb »

It doesn't make for a very compelling news story, but the real reason why Glybera failed is because it's not that great of a drug and it loses effect over time and you can't redose with the same AAV vector. They also relied a surrogate endpoint versus actual clinical measures (as those were to confounded by the small sample size and patient variability).

It just barely got approved by the EMA and based on feedback the company didn't bother to pursue FDA approval.

Re: The million-dollar drug (2018)

#40

Post by fxtentacle »

jagger27 wrote: post #15

I can’t imagine how hard it must be for the dozens of people out there suffering from this rare ailment knowing a perfect cure/treatment is possible but not worth it for the shareholders.

We as a society kind of do this all the time. We bail out the banks with billions, then let some poor people starve. Also in the general case, I'm quite surprised that people don't get fed up with the government acting against their interests.

Since it's a one time cure, I think the 1mio price was reasonable. At least compared to 10+ multiple day hospital visits. This was just the government fudging their negotiation.

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