Good lord that is a lot of money:
Imatinib, priced at $26,000/yr in 2001, has ⬆️ by 10%–20% annually, reaching $132,000 in 2014 & $146,000 today !! https://t.co/YqoQtg0HUB
— Alvaro Carrascal (@CarrascalAlvaro) June 1, 2016
There is no better example than imatinib for what the US does well with drugs and what it does poorly. https://t.co/nglSZcVgBQ
— Walid Gellad (@walidgellad) June 1, 2016
Situations like this for the brand name drug Gleevac are why we need to seriously rethink and revamp our intellectual property regimes.
From WBUR on the difference between the manufacturing cost of Gleevac and its list price:
For instance, the analysis figures the true cost of a year’s supply of Gleevec (generic name imatinib), used to treat certain kinds of leukemia, at $159.
But the yearly price tag for Gleevec is $106,322 in the U.S. and $31,867 in the U.K. A generic version costs about $8,000 in Brazil.
“We were quite surprised just how cheap a lot of these cancer drugs really are,” pharmacologist Andrew Hill of the University of Liverpool said in an interview. “There’s a lot of scope for prices to come down.”
There is a need for profit in order to chase the next round of success, but there is also a need for society to devote resources to other things. Somewhere between $159 and $106,322 is a better number which still gives strong incentives for new research while not choking the American economy to death. Yes, there would be losers, Wall Street would take a massive hit, Pharma C-level execs would be snorting lower quality blow off of slightly less classy hookers’ asses, but those are costs I think we should be more than willing to accept.
over_educated
These type of headlines are really misleading. While 100k+ for a single cancer drug is probably unreasonable the pricetag is not including the massive sunk costs that go into the R&D of not only the successful agents (like Gleevec) but all of the failed agents.
If society wants to bear these costs (and we do somewhat because almost all of the basic research is funded at taxpayer expense – but most of the large and expensive human clinical trials and IND enabling work are born by the company) we need to have an honest conversation about what that will mean for the ability to produce new drugs.
15-20 years of usury sucks, but it is preferable than not having the drug at all.
Baud
As someone who believes in American exceptionalism, I disagree.
If it was around in 2001, its patent should soon expire.
Joel
The C-level executives will be compensated just the same. It’s the early career researchers and entry-level technicians who will see a pay cut. They could probably do this anyways, since academia has been strangling its young for nearly a decade now.
narya
The other group that will suffer would be 340b-eligible entities. CHCs have come to depend on 340b revenue, which pretty much comes out of the pocket of insurers. If the prices drop, then the 340b reimbursement drops as well.
This is not to say that other pricing models (and other ways of funding CHCs) can’t be engineered! But not all of those inflated prices result in hookers or blow–one of the unintended side effects is actually more/better health care for people who are uninsured or underinsured.
Cermet
The sad truth is that like tRump, big Pharm are run by thieves, liars and the worst type of exploitative scum. The lie of massive development costs has been their only real cover and that fig leaf can’t cover the massive increases in these drug prices that were already profitable at a small fraction of their original cost. Maybe the same shrilling trolls as yesterday can post here again like yesterday to defend killing children, old people and all of us by stealing our life savings so CEO’s and wealthy investors get more of our shrinking assets.
Stacy
OT. NY AG Eric Schneiderman is on Morning Joe doing a complete take down of Trump for Trump University. Very thorough and easy to understand.
Roger Moore
@over_educated:
But compare the prices here and in other countries. It’s not as if the UK is getting the stuff cheap, but they’re still paying about 1/3 of what we’re paying in the US. IOW, the high prices we’re paying are subsidizing drug development for the whole world. That has to stop.
over_educated
@Roger Moore: I think this is correct. The US is subsidizing drug costs for the entire world and it is a massive free-rider problem. Everyone lauds India and Brazil but why hasn’t a new HIV drug entered the market in the past 20 years? Because there is zero economic incentive to develop such a drug because the patient population either can’t afford it or the inventor will not be able to recoup sunk costs because of production in Brazil or India.
Another Holocene Human
I see this coming with injectable testosterone, which FTMs rely on because most of us pay out of pocket. In the last decade, as the prospect of forcing employers to pay for it becomes more of a tangible reality (Title VII violation, since they pay for it for natal males, but most of them opt for expensive, under patent gels rather than inject), the AVAILABILITY has dropped and the PRICE is creeping up.
If you consider DHT, which is used to prepare pre-operative for that down-below surgery, it is no longer available in the USA at all and illegal to import. (scratch head) It’s apparently also used for a natal male problem (prostate–FTMs don’t have ’em; although we are supposed to have an analog structure taking T doesn’t turn it into a problem child) so I don’t know what they do but there is this lower concentration alcohol based preparation which of course stings like hell if you apply to genitals.
It looks like the latest HHS rule through Obamacare (thanks, Obama!) means that employers will no longer be able to fund HRT or TRT for natal males and not trans males. Trust me, they are currently paying way more for those gels that give your wife a beard than we are paying out of pocket for injectable preparations.
But just wait, as soon as most plans are picking up the cost, suddenly dirt cheapo testosterone cypionate is going to blow up in price. And trans people are a very small interest group to try to force any sort of change on Big Pharma.
(MTFs will get hit with this too but I suspect it’s the anti-androgens, like spironolactone, which are very necessary for many individuals, which will get jacked, not estrogen pills because so many natal women need them too. Currently female hormone blockers, aka puberty blockers, which are given mostly to FTM children with liberal parents, cost a frigging arm and a leg.)
Another Holocene Human
@over_educated: It would be a lot cheaper for the gooberment to fund new drug investigation (yes, raise NIH funding–a lot–and FDA, maybe they could be more involved in trials with a bigger budget–but mostly NIH, which has been shrinking in real dollars since Newtie’s Contract With America) and hold the patents, farming out production at cost plus a reasonable profit, like the old power monopolies, than to do it the current way by paying through the nose through medicare/medicaid reimbursements and the tax on employers paying the “free” rate through their healthcare plans to employees.
RSA
@over_educated:
I had the same thought. We’d want to take into account all of that. (I’ve read that on average it takes 15 years for a new drug to go through clinical trials and reach the market, for example.) Looking at manufacturing costs alone doesn’t really give us the true cost.
sdhays
I was under the impression that a majority of the money spent on cancer medication research was actually done through government grants and that most of the money these private drug companies spend is on developing the next erectile dysfunction drug or anti-depressant. Is there actually a case to be made, in this instance, that Gleevac itself spent a lot of money developing this drug?
Another Holocene Human
@Roger Moore: Is medicare making the private self insured plans ‘subsidize’ them because medicare and the VA even more so negotiate better rates? This is quite the stretch, I think.
Another Holocene Human
@sdhays: Of course not, their CEO has to deliver insaniac profits to the shareholders so they really only have so much to spend on R&D. That said, the FDA approval process is risky and costs a lot of money and isn’t necessarily funded by the government so when they cry their croco-tears they aren’t totally full of shit.
Roger Moore
@over_educated:
I think the EU, Japan, and Korea are a bigger free-rider problem than Brazil and India. Brazil and India genuinely can’t afford to pay for a lot of the drug development costs, so we simply aren’t going to get a lot of new drugs if we depend on them to pay. But the other rich, developed countries certainly can afford to pay for new drug development. That they aren’t paying as much as we are is a sign that we’re paying too much and/or they’re paying too little. I’m inclined to think that it’s more a matter of us paying too much, especially because we have stupid policies that don’t let us negotiate good prices.
sdhays
@Another Holocene Human: Thanks. Nice to know I wasn’t hallucinating.
So some kind of markup seems justified, but claiming all these massive sunk costs to justify ridiculous prices is bullshit.
over_educated
@Another Holocene Human: I will not comment on the funding this because this is actually what I do at the NIH…
A few issues here:
1. Under the current system the NIH can hold patents on drugs (see Guardasil) but are not allowed to market or sell them.
2. Any Intellectual property generated under a government grant or contract is owned by the contract holder or grantee per Bayh-Dole (there are some limited exceptions to this that require something called a Determination of Exceptional Circumstance (DEC)), the government retains a use license on all such inventions but never exercises it to market drugs.
3. Trying to force a drug company to set particular pricing is a dubious constitutional proposition because of the takings clause.
4. Companies will say they will agree to fair pricing language in public (like in front of Congress), but when you actually try to negotiate it in a an agreement will categorically refuse (I know this from personal experience). Perhaps for an also ran drug that they are no longer interested in developing but never, ever for a blockbuster.
R.Porrofatto
According to the linked article, not only is the cost $159/yr vs $146,000 wholesale price (only a 91,000 percent profit!) but generic Gleevec in the U.S. is going to be “delayed” for 6 months compared to the rest of the world, and will cost what the brand does for the next 6 months after that. Why? Well, because they can, silly!
Key phrase in this post: Wall Street would take a massive hit
Look for practically any explanation of why things suck, and you’ll eventually encounter the words “Wall Street”.
Another Holocene Human
@RSA:
This is why the patent system was invented, to provide a time to make back those R&D costs plus a profit (to provide incentive to do it again).
But it’s more complicated than that. Companies make huge profits by extending patent times by releasing AtoZ as a simple release, 7 years pass, it’s popular, okay now make it slow release, 7 more years of patent, rinse, repeat. Fucking over customers. And then go downmarket. These manufacturing companies, if they are the only provider, can pull a Shkreli and jack up prices and nobody can respond quickly because it takes lead time to start producing something. And modern medicine is SO dependent on these obscure drugs. Look at how important pharmacists have become in recent years. I always grill my pharm when I get a new scrip because they know drugs and the docs don’t! After years of anatomy and physiology they can barely squeeze much pharma in and pharma has asploded since the days of Oliver Wendell Holmes.
Another Holocene Human
@over_educated: You’re probably right it would never happen, I’m just arguing from a rational economics perspective.
Monopoly power co arrangements were and are legal on a state by state basis but I don’t know the law well enough to grok why they’re illegal when the feds do it. But, hey, Pentagon overpays on procurement too so I guess there’s precedent.
Another Holocene Human
@R.Porrofatto: 10% or 15% profits are not enough, silly! Specuvestors demand sparkles!
RSA
@Another Holocene Human:
Yes, so I’ve heard. Thanks for the examples, including cases where a manufacturer will tweak a drug in some non-essential way to get a new patent and keep prices high. I’ve also heard of drugs that have been abandoned by manufacturers because they don’t bring in enough profit. Bad for the people who need the meds to live.
The patent system seems to work okay for most physical widgets. I’m guessing that the R&D costs for drug development can be estimated, and we could think about a more direct way to balance the costs and benefits of innovation.
Benw
Woo hoo! Gleevec shout out!
Punchy
Ha ha! You’re a very funny man! As if….they wont give it a secondary use, and patent that. And reformulate it with one new excipient, and patent that. And sue every generic company that attempts a knock-off, regardless of the merits of the claim, and keep it bottled up in the courts for 5 years to maintain exclusivity.
Drug companies have insanely large legal budgets for this reason.
Roger Moore
@over_educated:
Of course the current system is something we created, so it’s something we could change if we really wanted to. Some changes I’d make if I could:
1) Fund NIH better
2) Do more of the NIH research in-house rather than farming it out to universities. This is a bigger issue, but graduate students should be in universities to learn, not to be cheap research labor. To paraphrase somebody else on this issue, PhDs should be the main product of graduate programs with research being a byproduct, not the other way around.
3) Get rid of Bayh-Dole and similar rules that give away the value of government research. Let the government keep the rights to research funded with government money.
4) Continue licensing government patents, but change the goals of the licensing from maximizing revenue to maximizing public welfare. IOW, make sure that licensees can’t charge unconscionable prices for things done with patents they’re licensing from the government. Non-exclusive licenses might be a good place to start.
Howard Beale IV
Go look at the price for clomipramine now. Years ago it was dirt cheap, and it’s a WHO essential drug for treating OCD. The cheapest is $141 for a 30-day supply; typical price is $300-450/month. 10 years ago it would be $30.
Mathguy
One item omitted from this discussion is marketing. Not nearly as important as it is with boner drugs, it still is often unnecessary overhead adding to the cost. Another issue is the actual amount of basic research drug companies do. They have cut research budgets in recent years (profits!) and most often rely on government sponsored academic research for leads on new drugs.
Joel
@sdhays: basic science is done in academia, but clinical trials require economies of scale and financial incentives (I.e. pharma companies).
Wag
@RSA:
Case in point of unnecessary tweaks to medications. Drug companies over the past 15 years have taken to releasing the active enantiomers of successful medications and attempt to extend their profit. The first when I became aware of was when Nexium was released just as Prilosec was coming off patent. Another offender is the fairly recent release of Lexapro just as Celexa was coming off patent. Both of these examples were of relatively low cost (at least as compared to Gleevac), but because of their parents drugs massive market shares, both represented huge profit centers that “needed protection”. Escitalopram and esomeprazole are two very effective marketing tools for their respective companies, but don’t offer any real additional benefit.
MazeDancer
Gleevec is also under study to help treat scleroderma, an autoimmune condition that affects skin – or any soft tissue – and creates painful hardenings. There is no good pharmaceutical treatment for scleroderma. But Gleevec showed some relief in small trials, so the larger trials are underway.
Taylor
@Roger Moore:
How do you do a PhD degree without doing research? Take some fucking courses? Do you understand what a PhD is?
Anyone but Trump
I have to weigh in, my brother was diagnosed with a GIST tumor in 2001, and Gleevac had been approved for treatment around six months before the tumor was found. At the time, the drug had been effective on average for patients, 18 months. Although it causes pain in the major muscle groups, he is still taking the drug to prevent a return of more tumors, and at one point could not afford the drug. Fortunately, the pharmaceutical company offers the drug free for hardship cases. I don’t know if he would be alive today if not for this drug.
Chip Daniels
If Walter White was even smarter he would have gone into business cooking up cancer drugs. More money, less competition.
bemused
Speaking of hot and humid places, I read recently about two of the longest lasting, about 7 hours or so, insect repellents (not containing deet) but can’t remember exactly which ones they are. A brand can have more than one formula. One had lemon-eucalyptus in name, maybe repel brand. The other was an All Terrain product. Anyone familiar with this?
Felanius Kootea
@Another Holocene Human: I thought the NIH was trying to do this through NCATS. Isn’t part of the problem that Congress has essentially cut the NIH budget and no meaningful increases are on the horizon given the composition of Congress?
TheMainGaucheofMildReason
@Another Holocene Human:
What you’re talking about here is not the patent system per se, but mechanisms created by the Hatch-Waxman Act (https://en.wikipedia.org/wiki/Drug_Price_Competition_and_Patent_Term_Restoration_Act).
Interestingly the same act did a lot of good things and a lot of bad things for drug production at the same time.
It streamlined the process for getting generic drugs approved (yes, the FDA has to approve even generic drugs in the US), by changing the burden of proof on generic manufacturers to just show that their drug was *equivalent* to the name brand. Prior to the law, many drugs went off patent without a generic being produced because the approval requirements were too onerous.
Unfortunately, the compromise struck with pharmaceutical companies was that the act ALSO included provisions for extension of patent terms based on how long the drug took to get through clinical trials. It also includes various (IMO, questionable provisions) for extending marketing exclusivity based on approval of new chemical entities involved in the formulation. But those extensions are minor (~5 years or so)
The biggest issue isn’t so much the marketing or patent exclusivities granted the drugs as the effectiveness of “evergreening” strategies, and those are mostly on the inordinate influence of medical marketing on physicians, and lack of physician awareness of evidence-based medicine particularly WRT drugs. Citalopram (the antidepressant “Celexa”) has been off patent forever, but the (almost identical) Lexapro (escitalopram, a purified active component of celexa) which has only minor advantages is STILL extensively recommended by physicians.
As long as drug companies produce trivial new versions of drugs that arent’ superior and physicians keep prescribing them…
over_educated
@Felanius Kootea: NCATS is terrific, but they lack a clinical component to their research and they are also woefully underfunded. As a result they tend to outlicense immediately upon development of a clinical candidate because it is the only path forward. If you are looking at successful NIH clinical programs the NCI is probably the exemplar, they have had a hand in almost 50% of all marketed agents and almost 75% of all combination clinical trials are sponsored by them. Unituxin is perhaps the most recent example (and resulted in a massive windfall for United Therapeutics who was granted a pediatric voucher for their registration trials that they promptly sold for 1/3 of a billion dollars….)
xenos
Living in Europe, it is amazing how cheap many drugs are. When I go in to fill a prescription I need to make sure to carry cash, as the copy can be under the €5 minimum for a debit or credit card transaction. 17% VAT is not so much fun, but it really is worth it.
Villago Delenda Est
What there is a need for is the heads of Pharma executives on pikes.
nutella
OP’s information is out of date.
Cost of one month of Gleevec in the US on a good insurance plan in 2015 and 2016 is over $19,000 per month which is over $228,000 per year.
A generic manufacturer (Sun Pharma in India) applied to make generic Gleevec in India based on Indian law which says medicines couldn’t be patented at the time Novartis had patented a trivial change to Gleevec. Novartis spent a whole lot of money fighting it for seven years in the Indian courts and lost in 2013. Sun now makes the generic and sells it in India after spending a ton of money on lawyers.
Note that due to the crappy trade deals we have imposed on the world India is no longer permitted to decide for itself whether to allow patents on medicines.
The patent on Gleevec in the US expired some time ago but Novartis had made a trivial change to the formula and patented that, too. That second patent expired January 2015 so all the patients could have switched to Sun generic then, right?
Nope, many expensive US lawyers fought it out for Novartis and Sun and eventually forced Sun to wait a year after they were legally entitled to sell the generic while Novartis continued to (illegally and immorally) hold the US market to its ridiculous price. Part of the settlement with Sun was that nobody else could get in on Sun’s deal so I presume if any other generic manufacturer wanted to make Gleevec they’d be intimidated out of trying by the cost of all the lawyers to re-litigate what has already been litigated and settled with Sun.
Sun issued its first generics in the US in February 2016.
So it’s a gross oversimplification to say that Novartis should be allowed to charge enough to cover their drug development costs. Those costs are a very small proportion of what it took to get this drug to market. They first developed it, then patented it several times, then tested it, then applied for approval from various governments. Then they got into the real expense: Hundreds, possibly thousands, of big shot lawyers in many countries to protect their profits.
Just a wild guess based on no actual data but I’m guessing that the breakdown is development 5%, regulatory approvals 10%, legal cases 40%, manufacturing costs 0.001%, profits 44.999%.
MPAVictoria
These claims of the “high cost” to develop drugs are actually industry lies. Whoever over_educated is they should be ashamed.
http://www.pharmamyths.net/files/Biosocieties_2011_Myths_of_High_Drug_Research_Costs.pdf
over_educated
@nutella: “So it’s a gross oversimplification to say that Novartis should be allowed to charge enough to cover their drug development costs. Those costs are a very small proportion of what it took to get this drug to market. They first developed it, then patented it several times, then tested it, then applied for approval from various governments. Then they got into the real expense: Hundreds, possibly thousands, of big shot lawyers in many countries to protect their profits.”
No they are really not. I think the 2.5 billion dollar amount Tufts suggested is high, but we are at least in the hundreds of millions ballpark. https://www.bostonglobe.com/business/2014/11/18/cost-bringing-prescription-drug-market-tops-billion-tufts-research-center-estimates/6mPph8maRxzcvftWjr7HUN/story.html
Now this is not to say that the price is not usurious but “taking a wild guess on how much it costs” doesn’t seem like something we should base a policy on.
Hob
@over_educated: “why hasn’t a new HIV drug entered the market in the past 20 years?”
Where are you getting this “20 years”? Twenty years would be 1996. Many HIV drugs have come to market since then.
http://www.fda.gov/ForPatients/Illness/HIVAIDS/Treatment/ucm118915.htm
over_educated
@MPAVictoria: Hi I am trying to respond to this but it keeps eating my posts. There are a couple of problems with that study, notably the cost comparison between what NIH pays and what companies pay really isn’t appropriate because one complaint university medical centers have is that the government grossly underpays for its clinical studies (to the point of a loss) and makes up the difference by charging high rates to drug companies for their studies. I’m not trying to take the drug company’s side here I am just saying the problem is more complex than just instituting price caps. Look at the generic market, there is a massive shortage of generic cancer drugs because it is not financially viable to produce them for a variety of reasons. The government could step in but that would require legislation.
@Hob: Fair enough but you don’t see the number of drugs being approved that you see in other chronic diseases (such as cancer).
BruceJ
@Roger Moore:
I invoke Inigo Montoya: “I do not think those words mean what you think they mean”.
The entire POINT of getting a PhD education is being trained to perform original research. How are you supposed to do it without, you know, *doing* it? It’s not a ‘10,000 hour’ task like hitting a little ball into a hole.