…okay, it is a bad argument, in this case. But I can understand the reasoning.
Health care insurance is based on the principle that a small number of people need very expensive treatments while large numbers of people need little or no treatment. I.e. the costs of treating a small number of sick people are spread over a large number of healthy people.
It’s the basic argument for health insurance and universal health care, as a general principle. Of course, it’s disgusting as an excuse for price gouging.
Epinephrine is generic. Anyone in this thread is welcome to develop and sell their own version of an epi pen. Several have tried (Teva tried and failed. As did Adamis. Also, Sanofi). There’s nothing stopping you from giving it a go though. But, it’s gonna be expensive, and is going to require charging quite a bit of money to patients in order to even break even.
Not defending Mylan, as they didn’t do the development here. But, be careful about throwing out the baby with the bathwater. Drug development is very, very hard, very, very long and very, very expensive. I’m currently raising money for a drug that I’ve been developing for ten years now (currently in phase I clinical trials). It could be useful in multiple diseases, and we are figuring out how to proceed in phase II. There are diseases that are non starters because even if we can successfully treat the disease, it is impossible to recoup the investment; how am I supposed to convince investors to give me the enormous amount of money it takes to prove the drug works in those diseases in order to get FDA approval when there is negative return on investment?
I don’t have a billion dollars, and neither does my company. I work for a very small company which has precisely zero dollars in revenue per year (we currently sell nothing) and has for a long time. I need investors. No investors, no clinical trials. Investors need a return on investment. Drug development is very high risk. Investors are not going to give me the massive amount of money it takes for clinical trials as a very high risk investment for the opportunity to make 3% rate of return, or worse negative rate of return.
I truly don’t know what the solution is, and I’m not particularly fond of the process either, but some of the calls above to cap drug prices at a “reasonable” return rate would be the end my very promising program to help a whole lot of patients if we don’t define the word “reasonable”. My program is very high risk; it’s not a “me too” drug. It’s brand new biology, and therefore brand new risks. The investors that I have would pull their money tomorrow if the numbers didn’t work.
Interestingly, other businesses with high development costs manage without human sacrifice.
Also interesting, even my own small town in the north of Norway have startup biotech companies trying out new drugs.
Downright fascinating is the fact that Chimeras post above which shows R&D costs to be 7 % of Mylan Financials revenue, is about the same percentage as in the computer industry, or other high-tech business.
Does the FDA still have the fast-track approval carrot for orphan diseases? Prove it works on one that isn’t commercially viable and then use the fast-track for the same drug on a commercially viable disease.
Fast track is nice, but overrated. You get some priority with regard to setting meetings with the FDA. You may (or may not) get some acceleration to approval if (and this is a big if) there is a surrogate endpoint that is well accepted; if you claim that your drug will slow the growth of cancer, and you have a blood marker that is widely accepted to correlate with the growth of cancer, you may be able to use that rather than run the multiyear study to measure survival.
There is also orphan drug status, which similarly is nice to have, but not exactly going to save an unprofitable program.
The real benefit is that both give you the opportunity at a press release, and then the opportunity to court investors on that. Without investors, I have no way to move forward. I’m currently funded through phase II, but no further than that. My investors will wait until that data is in. If it isn’t stellar, it’s dead nomatter how much I believe in it.
Your first two points need some fleshing out, as I’m not sure I see what your saying. What businesses have even close to the high risk and high cost and long time line as drug development? What startup in Norway has figured out how to bring an unprofitable drug development program into the clinic?
Your third point is irrelevant as I not only mention that I’m not defending Mylan for specifically that reason and even bolded that part to make sure it wasn’t easy to miss.
I think much of the outrage stems from the fact that this is an old drug. The development of the autoinjector was paid for with public funds. We can’t see any changes to the autoinjector except the label design, and the company has been very vague and handwavy about what exactly their ongoing R&D costs have been, but they assure us that they’ve been, like, totes spending money on it and need to recoup it. And at the same time their CEO’s pay and their other officers’ pay increased, and EpiPen has come to make them 40% of their profit.
I’m not sure I can define “reasonable”, because I’m not a business person, so I don’t know those numbers. But this whole scenario, and the skerfuffle with Shkreli, and it’s starting again to rumble with insulin…these are unreasonable. That I can say.
The whole point of patents was to help people like yourself make back your R&D costs by having market exclusivity for 20 years. I think most of us could be persuaded to find that “reasonable.” But your colleagues decided that it wasn’t enough to make back R&D costs, they had to *maximize *profit to the point (past the point) that the market will bear, extend patents, block access to generic development even after patent expiration. And these may very well all be good business decisions, but they’re highly unsporting, and all terrible humanitarian decisions.
The drug industry as a whole, with notable exceptions that should be applauded, is like the teenager who’s been pushing his curfew and hoping Mom doesn’t notice. And she’s starting to notice. And he’s going to lose the keys to the car soon if he doesn’t shape up.
What’s making me want to barf is that, based on time-to-market, I have a strong suspicion that the hike in price was just the setup to release that “generic” version (“generic” how? all that’s different is coloring and label) which is still 3x as expensive as the original.
Is it common for the same company to have the name brand and generic drug on market? I really don’t know.
Also, for all our cries for a generic, we shouldn’t forget that generics, while generally as safe and effective as the name brand, do have drawbacks in terms of restricted legal action that can be taken against the manufacturer for problems or lack of label warnings. I’m glad we have them, but I’m afraid the emphasis on them right now may lead to another cushy loophole for the drug companies to exploit: Make an insanely expensive name brand, then an only ridiculously expensive generic, and you’ll sell more of the ones people can’t sue you for.
It’s what’s known as a “branded generic.” Companies do it all the time when the patent has expired, and especially with over-the-counter drugs. While someone might still get a prescription for, say, Allegra or Clarion or Zyrtec from their allergist so that insurance might pick up the cost or FSA can be used, you can still go buy a bottle of the stuff OTC from a number of manufacturers (but often Teva.) Tylonel is a branded generic, as is Advil, Aleve, and any other named OTC painkiller except aspirin (Bayer lost the trademark in the US in 1921 due to trademark dilution.)
Generally, it’s rarer to have the exact same dose or mechanism of action once you’ve issued the branded generic. Extended release formulas, for instance, can extend patent life as the new patent is on the formulation. Or it might be impossible to get a higher dose of something available OTC (800 mg vs 200 mg ibuprofen, for example.)
I think the drug industry as a whole has notable exceptions that should be called out. Everyone I know is in the drug industry, and everyone I know got into it to help patients.
I think the public sees the exception and sees the high profit margin on drugs that are already on the market, and yet doesn’t see it from the side that I’m sitting on right now where I have a drug that is not on the market and I need to find a way to fund it to get it to patients. If I can’t hold out the potential for high profits on the other side, nobody is going to fund my extremely high cost/high risk clinical development path.
I’ve been working on this for going on ten years now and am only in phase I. Every potential clinical development pathway is a minimum of another seven years from now before there is even the chance of revenue from this drug. And, it’s only a chance because the vast majority of drugs at this stage fail. I have no idea how much money I’ve already spent, but it’s north of 100 million already. If someone has an idea for how I can do clinical trials with no investor money or how to get investors for a high risk/high cost/low reward investment, I’m all ears.