Tuesday, April 8, 2014

Weird thought for the day

There's this trope that Big Pharma doesn't develop "cures" because it will ruin the market or there's not enough incentive to do so (i.e. if they can't sell lots of pills, the market won't be big enough. Here's a good example of that thinking.)

So here's Gilead's Sovaldi, which is as close to "a cure" of Hepatitis C as we've seen in a while; it sure is expensive, running about $84,000 for an entire 12-week course. Isn't this proof positive that Big Pharma will work on cures, and if it finds one, it'll just make sure that the pills are really expensive? 

8 comments:

  1. CJ,

    The Bloomberg article is pretty interesting. It shows that that Gilead is being pressured to reduce the price now or when an alternative shows up next year, no one will take the Gilead medicine at all. That's some high stakes poker.

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  2. As anti-pharmaceutical company as I am, I think its perfectly fine for the company to price the drug at a rate which the market allows. Capitalism basically works to match supply with demand at a fair price.

    Its when the market gets its hands tied due to pay-offs from the companies for legislation that favors them (eg Section D of Medicare) that I get angry. This is why I want the companies to fail, and why I'm becoming a vegan. I hope never to be the pharmaceutical companies bitch by taking 10 perscripition drugs to treat my diabetes and neuropathy.

    Plus I really like vegetables.

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  3. It's cause Vertex will have a better therapy within a year, they need to recoup their costs quickly.

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    1. Vertex will finish 4th at best in this HCV race behind Gilead, AbbVie and Merck. Given that the cure rates are all pretty much equivalent, cost will be what drives market share when they all hit the market.

      Gilead will be forced next year to lower their price simply because they'll have competition. How much remains to be seen, but there will be very intense competition to cut into their market share.

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    2. "Gilead will be forced next year to lower their price simply because they'll have competition"

      not necessarily. The drug market is not a meritocracy.

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    3. The drug market is not a meritocracy.

      http://www.gifbin.com/981986

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  4. "Capitalism basically works to match supply with demand at a fair price"

    Efficient price discovery is impossible in a monopoly, which is effectively what GILD has. To be clear, they got this monopoly because they were better at making (or at least acvuiring VRUS who really were....) HCV drugs than everyone else so far.

    Will be interesting to see what happens if Abbvie gets approval for their HCV drug in the next year or two. Economically, all else equal, they would not have to price it much below GILD's drug to get most of the market.

    Apparently the same drug is just $900 in Egypt, prompting this clever quip on Twitter from @jgreichek "Waxman should rent prison space in Egypt. Send all our infected prisoners there for a 12 week vacation."

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