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Espiritus_Corvus's avatar

There is finally a cure for Hepatitis C. If you owned the rights to the drug, how would you recoup your investment? How much profit would be enough? Would you withhold it from certain victims, or would you eventually ensure widespread distribution as the people behind the Polio vaccine did?

Asked by Espiritus_Corvus (9845 points ) February 23rd, 2014

Three million Americans are infected with debilitating and always fatal Hepatitis C (As are milllions more overseas) and it has been the number one killer of health care workers in the U.S. for the past two decades. The patient suffers from fatigue, muscle pain and weakness, joint pain, intermittent fever and an impaired immune system for two or three decades before the liver finally gives out and the patient dies. However, a recently developed pharmaceutical, Sovaldi, completely cures it with 84 daily doses. Its manufacturer, Gilead Sciences, has determined that a fair U.S. price for the drug should be $1,000 per pill ($84,000 for the total treatment). Shouldn’t Gilead reduce the price once it has recouped its expensive investment, asked an NPR reporter in December? “That’s very unllikely we would do that, ” said Gilead’s Gregg Alton, but “I appreciate the thought.” (According to NPR, Gilead “developed” Sovaldi merely by buying Sovaldi’s actual developer for $11 billion. At $84,000 per patient, Gilead would “recoup” that investment from the first 150,000 customers, leaving 2.85 million more U.S. patients to pay $84,000 each, for an income of $239 billion.)

Do you have friends or family, or know any health are workers that are victims of this pernicious disease? How do you feel about all this?

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20 Answers

chyna's avatar

My sister in law died of liver failure due to Hep C in the late 90’s. I know my brother would’ve done everything in his power to have bought this medicine for his wife, but what about people that will never be able to afford it? They know there is a cure, but it’s not available to them. I would be furious and demand that the government intervene.

JLeslie's avatar

Interesting. A friend of mine works for Gilead. He’s pretty high up, but not a scientist.

I think the price and the profit you say they will make is disgusting. I think $100 a pill sounds like a high enough price to me.

Cruiser's avatar

What is not known within the context of your question is what the total R&D, trial testing and peer review investment that Gilead has made to date. Plus I am sure they are layering the pricing of their “cure” to the currents costs to treat the disease. According to one source treatments can exceed $100,000 and a liver transplant is on average $280,000 so an projected cost $84,000 for a cure without the need for invasive surgery seems like a pretty good deal.

Espiritus_Corvus's avatar

@Cruiser

The total cost to Gilead was $11 billion, which is what they paid to the real developer of the drug. At $84,000 per patient, Gilead will be able to recoup their investment with the first 150,000 patients, leaving 2.85 million more American victims scrambling to pay them $239 billion more in clear profit—this does not include the hundreds of billions more dollars in potential off shore sales to the tens of millions of Hep C victims worldwide.

JLeslie's avatar

@Cruiser A good deal compared to current treatments, but there are people who can’t afford those treatments either.

There should be a cap on how much a pharmaceutical company can charge with some sort of mathematical equation for esimated breakeven points and profits. This is ridiculous. It is unethical. The medicine will still be inaccessible to many people or put them in the poor house. If they have insurance that actually covers it, if you are in their group of insurance your premiums are higher because treatments are so expensive while pharma sits back and counts their money. I am all for making some profit, profit is a good motivator, but this is out of control.

We have such high medical costs, because we have big business looking for huge profits that cross the line in my opinion. This is health we are talking about not buying a haute couture dress.

Cruiser's avatar

@JLeslie I believe insurance would be involved and $84,000 vs a $280,000 liver transfer with the potential for complications is a good deal to them unless the ACA has exclusions for Hep C.

zenvelo's avatar

While I appreciate the general direction of this question (today on the 60th anniversary of the first mass inoculation of the Salk vaccine on 137 elementary school students), the big problem is the whacked out economics of the health and pharmaceutical industries.

This drug won’t be $84,000 out of pocket of a patient, it will eventually be covered by insurance. And insurance companies can negotiate the price of drugs. And it won’t be $1,000 a dose in many countries, because other countries won’t enforce a patent that is keeping people from getting better.

And Gilead paying 11 Billion for the company that really invented it? That’s a self imposed cost, not one that arises from the real R&D. That’s a matter of them assessing the ROI of the whole deal. In my opinion, time to tell them they guessed wrong.

JLeslie's avatar

@Cruiser If the person has insurance then it is a good deal relatively speaking to old treatment. I don’t care. Old treatmentbwas probably an inflated price also. This is the very problem wrongnwith out system. We all pay the money into the pockets of pharma because we all pay for the treatment.

I don’t care if it is the patient’s pocket or not.

When I went to get the dermotologist for a regular exam I showed her some mini small skin thingies I wanted to remove. She said it costs $90 for a laser to get rid of 15 of them and it was not covered by insurance because it is considered cosmetic. I said fine, I made an appointment for the week after. I showed up, had the laser done in a few minutes, paid my money and done. A month later I get a bill for the doctor visit and I owe $9 copay. I called and said I paid out of pocket and they reassured me they would wipe my balance off, Not to worry about the $9. I told them I am not worried about just the $9 and that they ran it through my insurance when I paid in full for the cosmetic procedure. She said it was a fee for coming in and being evaluated. I was not evaluated when I had the procedure done. Insurance fraud. I just can’t take it anymore, someone needs to crack down on the system and give a shit about what everyone pays, not just what the copay is. The Republicans and Walmart are right, the more the end consumer knows what they are paying the more we can start addressing medical fees. Right now it is just one business billing another business and another business paying the majority of the premiums. We are being robbed.

CWOTUS's avatar

I’m assuming that the $11 billion for the drug did not include a stash of millions or billions of doses of the drug. What are the production costs? I haven’t seen any discussion of that.

flip86's avatar

Many other companies will eventually create a generic form of the pill.

SavoirFaire's avatar

If the drug cost Gilead $11 billion to acquire, and if there are roughly 3 million patients within the US alone (though some say it may be nearly 4 million), then Gilead could sell each pill for $43.65 and recoup its investment. If we include an abnormally high post-development production cost, this number becomes $43.75.

But of course, the company doesn’t want to just break even; it wants to make a profit. Even if it wanted to double its investment, however, it would only need to charge $87.50 to do so. This would make the total cost of the treatment $7,350. People like nice round numbers, though, so perhaps we could forgive the company for charging $100 per pill.

(Note: thanks to various tax breaks afforded to them, the pharmaceutical industry loses around 5.6% of its profits in taxes. As such, the $100 price tag still keeps them ahead of the game. Furthermore, the calculations above only concern the US market, making everything sold outside of that market pure profit.)

@CWOTUS Production costs for drugs after the development phase are typically between three and ten cents per pill.

@flip86 The company has 12 years from patenting the drug before anyone else is allowed to sell generic versions.

jerv's avatar

Now you know why Salk gave up billions of dollars; he was in it to help humanity, not make money.

A related question; why bother with medical research at all if only the wealthy (most notably, pharmaceutical executives) ever benefit?

CWOTUS's avatar

Really, @jerv? Those people whose lives are saved derive no benefit?

SavoirFaire's avatar

@CWOTUS I think @jerv is saying that the only people whose lives are saved by extremely expensive drugs are the wealthy. Thus there are two sets of beneficiaries: wealthy pharmaceutical executives and wealthy pharmaceutical users. This could be disputed, of course, but let’s get the claim right before we dispute it.

jerv's avatar

Yep, @SavoirFaire nailed it. Insurance companies don’t really like paying for new treatments, so if you can’t pay out of pocket, you’re screwed. Last I checked, most people don’t have that sort of money kicking around, and many don’t even have the access to borrow it. Medical bills are a leading cause of bankruptcy.

So tell me, @CWOTUS, how does it help those who can’t ever afford it? What benefit would I derive from something I couldn’t get if I needed it? Or are you saying that life itself is a luxury that only the affluent deserve?

Hypocrisy_Central's avatar

If your life is worth more than $84,000 you will figure out how to pony up the money. A great opportunity for some of the self-absorb rich to exercise philanthropy.

jerv's avatar

@Hypocrisy_Central For the average American household, that’s over two years net income. Food and housing are not free; in fact, for most Americans, that’s about 75% of their income. So the only ones that can come up with that sort of money are the already-rich, and those that can live on $0 for a decade. The rest (i.e. most people saddled with that sort of medical debt) declare bankruptcy once the bill comes.

Figure out how to get a full decade of your own income within the next week without crushing yourself in debt, then I’ll believe you.

JLeslie's avatar

@Hypocrisy_Central I hope you have some sarcasm in there. It is gouging, preying on the desperate. $23.9 billion would not have been enough incentive for Gilead to make that drug? I have Christian right wing friends telling me I am a socialist and I am tired of it. I am more of a socialist than them, that’s true, but Christianity did not speak of taking advantage of our fellow man, just the opposite. I don’t see how they justify the extreme greed in their mind. I believe in capitalism, but with some integrity.

Hypocrisy_Central's avatar

@jerv So the only ones that can come up with that sort of money are the already-rich, and those that can live on $0 for a decade.
That is why I say it is an excellent opportunity for those people to exercise their philanthropy. I never said it would be easy, but if it comes to your life how much is it worth to you? People will kill other humans to protect or save the life of their child, they need to have that same mentality for themselves. You have to try with every means possible, is what I am saying.

@JLeslie It is gouging, preying on the desperate.
I did not say it was or it wasn’t.

Christianity did not speak of taking advantage of our fellow man, just the opposite.
Correct, however I don’t know if they are a Christian company or are ran by Christians so I can’t really apply Christian values to them. If they were a Christian company, or said they were,. Then I would have something to confront them on their behavior and practices.

I don’t see how they justify the extreme greed in their mind.
It is simple, they don’t see it as greed, they see it as supply and demand; they developed it, they own it, other people want their supply and they demand what they want for it. If the market thinks it is too expensive, then they don’t buy it. If enough people refuse to buy at that price, taking demand way down, then if they want to move the product, they will lower the price to what the masses want to pay, or end up with shelves and shelves of the stuff.

jerv's avatar

@Hypocrisy_Central Hence the push towards a healthcare system like the rest of the world has instead of our purely profit-driven one. Why do we pay $800 for 2 tylenol when citizens of First World nations can get heart transplants for less?

My life is worth dismantling a corrupt nation with fucked up priorities. It’s worth getting our nation to join the civilized world instead of being a rebellious outsider. It’s worth putting an end to the bullshit.

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