A lot of your concerns are address in the Wikipedia article for Orphan Drugs.
From that article, they state that there is a small increase in profitibility for Orphan Drugs as compared to the pharma industry as a whole. But it’s not very big.
One thing that makes this situation a little different from your typical Orphan Drug is that, in this case, the drug was already known to have this effect and was already known how to make at commercial scales. Also, the toxicology, etc. were already known. So, in this case, they really did have a lot of head start. That’s not typical of most Orphan Drugs.
That article on Wikipedia is very much wort a read if someone wants to understand some of the changes that are happening in Pharma these days. Orphan Drugs are meant to treat rare conditions. But, the number of rare conditions that are being discovered add up to a large chunk of the population having some ‘rare’ condition. So, the condition may be rare, but the chance of having at least one of them is going up rapidly. This, and the benefits of Orphan status are making a lot of companies look into these conditions. The really nice part of that is situation makes it a lot easier for some small company–or group of university researchers–to find a financially successful treatment. Before now, the most they could hope for was for them or their work to be bought up on speculation by a large pharma company and maybe for that company to see the drug to market.
It also touches on the governmental and public policy implications which would seem to interest you. Could you take a look at it and see if it address your concerns or if it causes you to have more or different ones?
Why aren’t the Feds making generic drugs? If a major cost to Medicare/Medicaid is paying for overpriced drugs that have been off patent for decades, it seems a no-briainer or have the pharma companies already lobbied to make that illegal?
Assuming you mean Orphan drugs like this article is mentioning, it’s probably because there are so few people effected by the condition that the amount of money saved by the even smaller portion of those with the condition who are covered by medicare/medicade would make it completely not worth the capital investment.
It would be interesting to see what the bare bones, minimal costs are to bring any drug to market. Not the R&D as such but the government mandated expenses you cannot get past to provide prescription drugs.
I suspect even aspirin would be $5/pill if it was an RX only drug.
If this is a rarely used drug then, as others have pointed out, it’s not going to attract a lot of competition that will drive down the price (that’s that nasty capitalism thing people seem to hate. A single producer isn’t capitalism.
Now where people ought to be belching smoke and fire is the mention that Medicaid/Medicare cannot by law negotiate better pricing. That’s insanity bordering on criminal conspiracy to rip off the taxpayer.
I’ve pad an absurd amount of money into Medicare over my working life and now continue to pay an obligatory sum monthly for what I consider to be very indifferent “insurance” and now I find out the people running it can’t even work on ways to make it cost efficient.
Now, to me, there is a separate moral argument about the ethics of charging sky high prices for life sustaining items as a “single source” provider. But that is not related to economic theories.
If the chemical name works out as I think it does, this does not sound like it would take a billion dollar chemical lab to produce so one is left to presume the inherent irreducible government mandated costs are why someone, say a compounding pharamicst, isn’t producing these for a buck a pill on demand.
When highschool kids can safely reproduce pharmaceuticals with basic lab equipment, it seems a stretch to make that claim. Additionally no one said they can only market those drugs to covered individuals.
You also have to consider that running at a loss is also acceptable. This would not be a profit center but rather a cost reduction move.
If one bothers to read the actual history of this specific drug, they’ll see that it’s price was its lowest after it was acquired by the current manufacturer for ~$1million. It is very very cheap to make. The price didn’t increase until the current manufacturer was aquired and the drug rebranded (no cost change). The company that bought them specifically buys up smaller pharmaceutical companies with these exclusive smaller run “orphan drugs” and jacks up the prices of their medications exponentially, it is their business model. It has nothing to do with costs increasing and everything to do with profit margins.
The industry spin you bought hook, line, and sinker, doesn’t even apply here.
The WAPO piece goes into a lot more detail about the history and drivers, there is a real reason why US pharmaceutical costs are so far out of line with most of the rest of the world, and why our pharmaceutical companies make the highest profit margins and have posted record profits every year for over a decade and a half.
Please stop watching Breaking Bad. It’s not a documentary.
Running at a loss? Many of these Orphan drugs are made by single little companies. They’re supposed to run at a loss for what reason? Why would they want to go through all that trouble?
I did read the timeline. More so, I took the time to understand it. I used it to write my post. Let’s be clear, the drug was never free. Read the press release from Taro more closely. They set up a foundation that would pay for the drug. Is was simply a way for them to accept funding from an outside agency while not accepting the money directly. Even then, there was a cost to the users of the drug. Clearly that shell game fell through and lead to the right being bought by someone with a more sustainable business plan.
According to the article, in 2001, a bottle of 100 pills cost $50. At this point it was made by Merc and was for glaucoma. That’s when other glaucoma drugs came on the market and people moved away from it. The price slowly went up to $13,650 in 2015–when Taro tried to cash out with their shell game. They failed and were aquired at which point the price continued up to $15,001.
The only thing important that happened around 2015 was that Taro went through the work to get the drug approved as a treatment for periodic paralysis. This was a non-trivial task. Even with the help of being an Orphan Drug, it’s still a large investment.
“Industry spin”? Whatever. Just learn to read and do critical analysis.
Record profits? Only if you cherry pick companies. The many companies that went out of business don’t feel so enthusiastic about the industry as you are.
Uh some Australian high schoolers were able to make the active ingredient in Daraprim that time Shkreli decided that people with AIDS can stand to have the price of it increased by 10000% for the simple reason that he wants money.
They were able to make like $40000 “worth” of it with $20 worth of ingredients. Proving that the pricing of these drugs is literally the most immoral thing ever.
I refuse to make excuses for millionaires and billionaires when they decide people should pay more or else die.
I’ve never seen the show but you should read the article LDoBe linked. Believe it or not, science isn’t movie magic and anyone can do it given the right information. That’s kind of the whole point of science.
You know I’m talking about a government pharma production facility right? The reason would be to reduce the cost to medicaid/medicare and to provide a low cost supplier of generic and orphaned drugs to the public as part of the constitutional mandate of our government to provide for the general welfare. That is why you operate without trying to profit off the illness of a citizen.
Strongbridge is nothing more than an opportunistic hyena exploiting a predatory for-profit health insurance system. The company’s exploitative business model for this drug would die a well-deserved death if the American health insurance system didn’t prioritise corporate profits over health outcomes and running businesses over practising medicine (I know, what a concept!).
What you are saying doesn’t make ends either, there’s no R&D cost and the manufacturing costs to meet the demand is tiny per pill. Volume only matters when you shift from hand to machine processing and all drugs have the volume required for nearly 100% automation; since the actual material costs are incredibly low, it’s just the initial capital for the machinery that matters at all with maybe a 5% capital value maintainence cost - and the secondhand market for these is huge.
So even if someone takes this pill 3/day they need about 1000 pills meaning the company is charging $100 per pill in the absolute best case, when making a few million pills might cost them $2-3 million a year to do it in an expensive location with high-paid labor with $7 million initial capital. They are turning a profit at that charge (including capital) after about 90 people, and after the initial capital they are making obscene revenues solely because they can.
Now you might think it’s justified for capitalists to screw over the public’s health because they are permitted to do so, but you won’t find much support here.
I think we need longitudinal data on how the paralysis, at least that born of heart strangling paranoia, will abate once users realize that the police are not coming for them and their pot and that that their parents can’t smell and will not send them away. Of course, their friends will still be conspiring against them, and their lovers laughing at them.
So? They made the active ingredient. That’s not rocket science. It’s also a tiny part of drug production.
Let’s make this clear, if it’s so easy, why aren’t more people doing it? Why isn’t there a lot of competition? Why do we keep seeing storied about drugs that are only made by one company?
@emo_pinata You’re only looking at making the pills–and you’re missing a lot of understanding of that step–but that’s not the cost that was incurrect to make this drug. The big cost here was going through the trials and regulatory approval needed to get the drug approved as a treatment for periodic parallysis.
I find it very ironic that pinata should use a straw man.
In a civilised single-payer universal system that put caps on excessive profit-taking for small-market drugs like this there would be little point in one company gaining an exclusive license that requires it carrying the cost of those (necessary) trials and approvals single-handedly. If there was no prospect for gouging, the license for a small-market drug like this would likely be made open-source and a bunch of companies could spread out the testing costs and sell it as a generic med at a reasonable profit over production and distribution (as a bonus they wouldn’t have to cover other costs like branding and marketing and hiring sexy reps to bribe physicians).
Costs are costs, but there are a lot of unneccessary and highly inefficient ones involved here. That’s before you get to the raw greed on display in the profit-taking by what is less a pharmaceutical company and more an intellectual property holding company: like Shkreli a patent trolley endangering peoples’ health.
Except that capital is already paid back, and they are stilll raising the price solely for the purpose of gouging the insurance because they can. They are saying they will be increasing profits 67% year over year because they can and no other reason. It isn’t the same company that paid for regulatory approval.
Again, they are now charging $100 per pill. There is no regulatory body demanding a small market drug cost that much, their revenue is not paying off their capital, they are literally just turning the screw on people with a rare chronic condition.
And I didn’t underestimate anything, producing this product doesn’t cost very much money even with the research needed. I left a $7 million dollar capital budget on a $1.5 million/year product, that is probably about right.
EDIT
And it’s not a strawman, even assuming they are making a “reasonable” profit and not dumping revenue into dividends you are defending a 67% price increase year over year for absolutely no reason other than a VC coming in and wanting to see returns on their investment immediately.
What part of FDA regulation raises the prices of drugs that were developed decades ago? What part of FDA regulations raises the the price of drugs that have fallen out of patent? What part of FDA regulations raises the cost of healthcare purely on the basis of revenue return? What part of FDA regulations prices medical college out of the hands of all but the wealthy and those willing and able to go hundreds of thousands of dollars into debt? What part of FDA regulations pushes the cost of healthcare per capita in the US higher than any other country, for less in return? What part of FDA regulations etc, etc, etc.
God, libertarians are like broken records, and the record player doesn’t have a needle.
