I wonder how other countries are going to respond since the US seems to have bought up the entire global stockpile from Gilead (who are charging $390 - $520 to Americans).
[1] https://www.hindustantimes.com/india-news/india-s-hetero-pri...
[2] https://www.indiatvnews.com/business/news-covid19-drug-cipre...
Scenario A: There's a huge pandemic and massive demand, but the drug can only be sold at cost, so we break even.
Scenario B: The drug fails clinical trials. We lose a bunch of money.
Scenario C: The drug works, but no pandemic ever happens. We lose a bunch of money.
.... and then no one will develop antivirals, because on average, you can only come out behind.
As to why the government can't do everything itself, I'll quote Paul Graham on venture investing, which (like drug development) is a highly technical, winner-take-all business where most projects fail:
"Why not just have the government, or some large almost-government organization like Fannie Mae, do the venture investing instead of private funds?
I'll tell you why that wouldn't work. Because then you're asking government or almost-government employees to do the one thing they are least able to do: take risks.
As anyone who has worked for the government knows, the important thing is not to make the right choices, but to make choices that can be justified later if they fail. If there is a safe option, that's the one a bureaucrat will choose. But that is exactly the wrong way to do venture investing. The nature of the business means that you want to make terribly risky choices, if the upside looks good enough."
Expensive projects for the public good with no mandate to turn a profit.
If you're part of a government agency whose entire purpose is to develop and research new drugs, you're not going to be unduly risk averse. You're going to be doing your job, trying new things, working on getting new, effective, efficient treatments and cures developed, tested, and released to the public.
Personally, I don't know to what extent I believe that pharmaceutical companies have actively suppressed research on cures for diseases, in favour of life-long treatments, but the incentives definitely support the theory. Publicly-run pharmaceutical research would also be much more likely to do a proper, thorough investigation of the kinds of treatments that can come out of well-known natural/easily-synthesized substances (as opposed to the existing pharmaceutical industry, which is incentivized to do research into things that require more specialized expertise & equipment, so the people who want the drugs must but them from them).
Sigh
How many years of normalizing and internalizing the utter insanity that is the US medical industrial complex does it take to be able to just say that with a straight face?
I hate to tell you, but it's not better in Europe just because the racket is obfuscated by several more layers.
Here in the UK, there is exactly one layer: the NHS. It negotiates prices directly with drug suppliers, and as the sole buyer (monopsony) is able to get a great deal. It also sets the prices paid by consumers (the prescription price), which is a flat price charged for all drugs (yes really all of them) and is currently £9.15 (about 11 USD) for a prescription (i.e. a full course of multiple tablets of the drug). If you are given drugs in a hospital as part of an inpatient treatment the charge is usually nil.
Someone I know had cancer which required two years of therapy and also somehow did not hit their yearly deductible. A friend had a burnout and needed therapy over a long period of time, also very little personal costs.
This premium that I pay is more or less matched by my employer, that money goes into a fund to balance out insurers who have more risky demographic coverage. The government does offer subsidies for people who cannot afford the monthly premium, this obviously comes from taxes.
That’s pretty much it for funding the system. Personal premium + employer premium + tax subsidies for the poor. Dutch people complain about costs ‘spiraling out of control’, and it is true that over the years healthcare has gotten more expensive, but these criticisms are laughable when compared to the US.
It’s possible to fix the US healthcare system. Just pick any other western developed nation at random and do what they do. You’ll be better off.
Not a scholarly article, intentionally. I wanted to give a flavour of the existential (to our health system) nature of the problem of US style drug pricing.
There's also the small matter of pricing varying highly by country. Another more emotive example: https://www.drugwatch.com/featured/us-drug-prices-higher-vs-...
See also: https://www.drugwatch.com/featured/us-drug-prices-higher-vs-...
So actually, it is substantially better in Europe.
Other companies will be looking hungrily at these earnings and invest in developing their own antivirals---which is exactly the desired outcome.
Sure, it would be great to have this drug available to everyone right here, right now, for cheap. But investing on those terms is not very attractive; hence the drug simply wouldn't exist.
[0]: https://www.citizen.org/article/the-real-story-of-remdesivir... [1]: https://www.nytimes.com/2018/07/16/opinion/prep-hiv-aids-dru...
Imagine some drug that costs $100 million to develop and that the most it can earn in the market is $70 million at a price of $1000. Okay, but then the government thinks it's really important to provide, so it's going to subsidize the development to the tune of $40 million. The drug company could then spend $60 million for development and earn $70 million. Over the typical drug development and sales lifetime, that's actually a quite mediocre return, but let's not worry about that.
But wait, the government paid 40% of the development cost. Why the fuck should that company be able to charge $1000, they should only be able to charge 60% of that, they should charge $600. Well, then they are fucked because they are right back at the same equation for whether it is profitable to work on that drug.
In general, with a moment's thought, any intelligent person will realize that expecting discounts on products based on how much the development was subsidized by the government completely obviates the entire point of subsidies.
All this said, Pharma has abused its position and pricing power. Remdesivir is an ok but not amazing drug, and pricing it this high is bad policy. Part of what they are doing is protecting their flank. Pricing it too low would cause people to say, “see! You CAN price drugs low, let’s make you price other things lower.” This is immoral reasoning but it’s part of the logic.
Drug pricing is super complicated, it’s worth understanding more deeply. Remdesivir is a weird case, and should be viewed in a larger context. See this post as a great place to start with further links within:
https://blogs.sciencemag.org/pipeline/archives/2019/12/11/ar...
(Conflict declaration: I founded a biotech)
P.S. I worked for J&J once, seen their inefficiencies first-hand.
And how much more/less effective is Remdesivir compared to the generic Dexamethasone anti-inflammatory?
How do they reconcile this principle with the huge price difference between the USA and the rest of the world? Or between the developed world and the developing world?
I assume they are still making a profit selling doses at low costs to developing countries. If the goal is to help as many people like they say, why not extend that pricing to everyone?
It’s disappointing that taxpayers fund the development of these drugs and then get screwed by the same companies when it comes time to make a profit.
Why would you assume that, instead of assuming that the high prices in the developed world are subsidizing losses elsewhere? (Or, at least, that they are amortizing R&D costs with the prices in the developed world, and doing so allows them to make a profit selling more of it above the marginal cost of producing more.)
The US price is in practice the same - they just had to account for the always-expected discount which will push it down to the same as others.
That doesn't really matter as the Trump administration has bought essentially the whole production capacity of Remdesivir for July, August and September.
https://www.theguardian.com/us-news/2020/jun/30/us-buys-up-w...
His lifelong research led to creation of many groundbreaking drugs against HIV, hepatitis and now Covid. This humble "invisible" guy's work literally saved millions of lives and is behind many of current Gilead drugs.
See https://english.radio.cz/antonin-holy-one-countrys-most-reno...
"All descriptive printed matter, including advertising and promotional material, relating to the use of the remdesivir clearly and conspicuously shall state that: :the remdesivir have not been approved [sic] :the remdesivir have been authorized by FDA under an EUA [sic]" page 6 https://www.gilead.com/-/media/files/pdfs/remdesivir/eua-fda...
and "Remdesivir is an investigational drug that has not been approved by the FDA for any use." https://www.gilead.com/remdesivir
I was in two minds about correcting the grammar but since they are all snips from the links decided to leave as is.
[Edit to clarify] My main point was that if they were pricing generics at a reasonable price they would have been trumpeting in the same press release as this. eg. if one is so reasonable that they openly discuss it then why not the pricing of generics.
Which makes medicine so expensive that it provides no value to the many people who are in a bad position and cannot afford it. Pricing by the value something provides is only relevant for those who can afford that value in the first place (they assume you stay for the duration; you are lucky if you do not); for the rest it provides no value at all because they don't get into that position in the first place.
As I read online, the entire treatment in India is well under $100[0]. I am all for getting the R&D money back, but charging medicine based on value (who determines that value anyway; that's highly subjective) it may provide is a recipe for disaster. Especially in this case; they stand to sell 10s of millions of these vials (even though they don't really seem to 'provide value' as clearly as advertised as others have mentioned here), so the R&D/investment story is... not very good.
[0] https://www.hindustantimes.com/world-news/european-regulator...
Source: https://www.theguardian.com/us-news/2020/jun/30/us-buys-up-w...
Hopefully now that this is determined as effective the manufacturing can ramp up and the whole world can get access.
https://www.hindustantimes.com/india-news/india-s-hetero-pri...
The hard part with drugs is usually finding out if they work. This one is hard to make, but they'll figure it out.
And then each country gets to make the choice for itself of how much it loves IP law and how much it loves human life.
> In the developing world, where healthcare resources, infrastructure and economics are so different, we have entered into agreements with generic manufacturers to deliver treatment at a substantially lower cost.
I assume this means that:
1. Remdesvir is not that hard to manufacture.
2. Gilead will license the drug to 3rd party factories, so no need to manufacture them in the US.
https://www.barrons.com/news/antiviral-remdesivir-showed-no-...
Besides having to recoup the costs of development of Remdesivir, as well as the costs to trial various drugs that never make it to market, Remdesivir is currently in short supply and probably costs a significant amount to produce. It seems unreasonable to expect a good in such short supply to be sold for cheap. The overall cost of $2k isn’t prohibitively expensive such that many lives would be lost over this anyways.
But don't do the same while you are gouging consumers. In other words, don't piss on me and call it rain.
The US is so full of morons they must love being ripped off or something.
