I’ve heard all of these arguments, and also heard them refuted.
The argument that grandma is going to die a horrible death if Weyland-Yutani Pharmaceuticals isn’t allowed to raise the price of a cheap antibiotic by 10,000% overnight certainly has its emotional impact, but do we have any actual evidence for this?
Or are we to accept on faith that the only way to get the hypothetical wonder drugs of tomorrow is to make the actual drugs of today unaffordable to thousands or millions of people who need them?
All the discussion I’ve seen so far is how to attack the problem from the supply side: Getting a competitor to enter the market and sell the drug cheaper or regulating drug prices.
How about doing something from the demand side: Give the insurance companies an anti-trust exemption to allow them to jointly negotiate a minimum price? The insurance companies could get together and let drug manufacturers bid for the right to sell a generic version of the product for a guaranteed price and the insurance companies would buy only from the winner of the auction for the next x years, regardless of how low others might sell the product.
For example, company A now sells a product for $750 a pill. No other manufacturer wants to compete because company A could drop the price to $1 a pill if they entered the market. So the insurance industry makes a deal to buy the drug only from company B for $10 a pill for the next 5 years. If buying from a single company is too risky, they could compile a list of suppliers willing to sell for a guaranteed $10 a pill.
The case of Turing Pharmaceuticals is a weird one-off profit gouging thing. He saw a loophole and grabbed it. It has nothing to do with Big Pharma and what they charge for the development of new drugs.
In general, Drug companies lower the price of drugs after the costs are paid off.
What was unclear? No company has determined it worthwhile to engage in the approval process for even the generic version of this drug so no one else is allowed to manufacture it in the US. The costs that make it not worthwhile are imposed in part by the FDA and their process for bringing old drugs into modern compliance. If the FDA allowed manufacture of this drug by new makers and reduced the approval process, there may be more than one domestic manufacturer of this drug. When other folks talk about barriers to entry in this thread and the IMHO one, those barriers are FDA barriers.
In addition, even though this drug is manufactured elsewhere in the world at dramatically lower prices, it’s not legal to import these into the US because of regulations promulgated by the FDA. It’s not like the price hikes for Daraprim are unique - this strategy of taking a drug whose user base is small and the manufacture is also small is not new.
It is a big deal. As has already been said, just because a drug is off patent doesn’t mean that directions are available for how to make it. They don’t release the recipe. They only release the rights to make it, if you can figure out how.
That requires reverse engineering the original, and then comparing it with the original in tests for equivalency. And in this case, no one can now get hold of the stuff to do that. They’ve switched from an openly available drug (walk into any drugstore and get it) to controlled distribution. You can, as a patient, only now get it from Walgreens Specialty Pharmacy. As an institution (a hospital or a researcher) you have to have an account with Daraprim Direct. How many competitors do you think they’ll approve?
A generality which is becoming less and less true. Doxycyline? Pravastatin? M-erf-ing DIGOXIN?! For goodness sakes, digoxin is so old it has whiskers, and yet they jacked the price up 1000% (from 11 cents to $1.10 per pill. That’s 1000%, right? My math, it hurts.)
Here’s what no one’s talking about: in addition to toxoplasmosis in AIDS patients, and in addition to malaria prevention and treatment (for which Pyrimethamine is on WHO’s List of Essential Medicines)…it’s alsoin clinical trials as a treatment for ALS. I bet you 1 million imaginary dollars that they are confident of getting approval for that use, and that’s why they just raised the price.
Agreed. My point is that you only need to do it once - after that the chips can be for any purpose you want. And of course the industry does just that, keeping a fab alive for many generations, first round it gets to make the processors, next round - when there is a new fab built for the next iteration, the old fab gets to make the peripheral chips and so on. Drugs are much messier. Any one individual drug production may be cheaper than a whole new fab, but will only have some elements in common with other drugs. It isn’t as if you need a different fab for a disk controller versus an ECU.
Semiconductor fabs are expensive partly because they need to be big to get the economies of scale. In principle it would be possible to build a fab with just one of each machine for each step.
Making jelly bean parts in a very old process is cheap - but so is making Aspirin or generics. The second or third part in an aggressive process isn’t that much easier than the first. There are hundreds of parameters (I collect 165 that our fab lets us see) that all interact and have to be tuned. And even during production process variations have to be monitored to prevent yield crashes. And I suspect that the yield for even expensive drugs is pretty high compared to that of large chips.
One difference though is that when you start a new design you are far more likely to get something that you can sell than when you research a new drug. That is probably where a lot of the cost comes from. I know how big processor design teams are, I don’t know how big drug design teams are.
Perhaps not fully relevant to the OP question, but some comments that are relevant to some questions/statements made in this thread.
Discovery phase research teams (that is before entry into humans) are many thousands of people in the larger Pharma companies (like 10 - 20 thousand). Of course they are looking at a wide range of possible therapeutic solutions, but even one research area will be hundreds of scientists and technicians.
Then there is the Clinical phase, entry into humans. I doubt that any processor chip has required a fully quality-controlled and legally regulated test set, using up to several thousand volunteer participants and hundreds of administering doctors. Then the project gets binned in the majority of cases.
Some on-market drugs have synthesis pathways that run for over a year. The cheap generic producers rarely get involved in very complex drug manufacture; too expensive and risky.
Note that Turing Pharma does not really qualify as “Big Pharma”. If anything the larger companies use the “halo” of producing and selling orphan drugs for reasonable prices to help them with negotiations with regulatory bodies (i.e. move faster!) for the process for a main-stream drug.
Can you show examples of this happening? Drug companies lowering the prices of drugs because the costs have been paid off, and not because of competition with another manufacturer?
The controlled distribution isn’t why there aren’t generics, there aren’t generics because despite the drug being useful for what it does, it isn’t actually used that many times per year. It’s never been worthwhile for a generic manufacturer to reverse engineer it because the market for the drug is simply too small. I don’t think there is any drug that a generic manufacturer has been unable to reverse engineer–only instead many where it just isn’t worth the cost of reverse engineering, getting approval for their version of the drug, and then building out production for the drug.
The generic companies could certainly get their hands on the drug for reverse engineering purposes if they wanted it, controlled distribution doesn’t meaningfully stop that.
There’s a business strategy we’re seeing more of where venture capital types identify drugs like this and buy out the sole producer and then jack up the prices. It wouldn’t work with drugs that are sold on vast scale.
IMO, this is a complex issue with more than one issue at the heart of it. One, you have to consider how these pharma companies affect Congress with their lobby dollars. Two, you have to consider the cost of paying out class action lawsuits when people inevitably react negatively to a drug. Practically every big pharma gets sued at some point. There are so many variables that I don’t believe the “free market” principles apply in this industry.
Legally? How? Are they going to first violate HIPAA by finding a list of patients on the drug and then knock on your door and ask you for some of your lifesaving medication every month? Is that not prescription drug diversion?
Controlled access isn’t a problem for most generic production, because most drugs aren’t controlled access.
Calling this one a “specialty drug” (which is another tactic that more-than-just-this-guy is using these days to get extra protections) is really pushing it. The media play at first was that this was only for AIDS patients with toxoplasmosis. Then it was revealed that it’s actually used not only to treat toxoplasmosis, but prevent it, in people with AIDS. Then we find out it’s one of the very few drugs approved to prevent and treat toxoplasmosis in pregnant women. Oh, and malaria prevention and treatment. Right, and also other other parasitic infections. And lookee here, they’re in clinical trials for ALS, too!
This drug is on WHO’s List of Essential Medications. It’s not nearly as small of a market as this guy wants reporters to think.
This particular drug would be trivial to synthesise and manufacture, Whynot, from a chemical point of view. It’s a simple, short route that has been reported in the literature many times - there’s no need to contemplate ‘reverse engineering’ as it would not be relevant.
That’s not always the case, though, so I don’t disagree with your point in general. Some syntheses are lengthy and complex, or involve v challenging steps where success can amount to an in-house trade secret. Not here, though.
I suspect that the value in this particular drug production isn’t the drug itself per se, but the FDA accreditations the company holds for its manufacture. As noted above, the barrier is in getting these accreditations. Even if it were table salt. Indeed I shudder to imagine the cost of getting and maintaining FDA approval for injectable saline solution if you were a new company.
One article about this issue points out that virtually everyone in America who uses Daraprim is protected from the price increase, and that the condition it treats can also be treated by a variety of newer, cheaper drugs. A 30 tablet pack of Daraprim costs £13.00 in the UK and something comparable in the rest of the EU. Who exactly is paying $750/pill for this? Can this alarming news story be explained as a desperate attempt to manipulate Turing’s stock price?
Why do you assume any of that would be necessary? It’s a well known compound for which many generics exist, they can just have someone buy it overseas, and analyze it there and transmit the data back to the United States for production. There may be regulations about shipping pills back to the United States (although I’d be surprised if there aren’t research exceptions to this as long as they aren’t intended for consumer consumption), but there’s no way to stop a company from transmitting the data.
Based on the large amount of generic pyrimethamine production all over the world I suspect a generic manufacturer in the United States actually probably already has access to information on this chemical anyway, and probably could technically produce it with no problem. The barrier to pyrimethamine production in the United States isn’t technical–they’ve been making this stuff for pennies in India for decades, it’s regulatory. The low number of doses sold per year in the United States makes it not worthwhile for another generic manufacturer to do all the work required to get it FDA recognized as “biosimilar” and all that entails.
Please cite that “controlled access” has ever stopped a generic manufacturer from getting access to a drug to reverse engineer it. Lots of medications are not widely distributed and of course require prescriptions. How do you think generic manufacturers tend to get these?
Specialty I think is a fair term for drugs that are sold in small amounts per year. While it has a lot of uses, it’s not actually used that much relative to say, a daily blood pressure pill or a cholesterol pill, or super commonly used drugs like Aspirin.
Reports are around 22,000 people per year use this drug. It’s been lamented for years that ALS doesn’t attract enough research dollars because it’s a disease that afflicts a relatively small number of people, and there are around 30,000 people living with ALS at any given time in the United States (and because of successful awareness efforts it’s a lot better known than many other diseases with a common incidence rate); so I do think it’s fair to categorize it as a small market relative to other drugs. If it was a big market there already would’ve been competitors, just like there are many competitors selling calcium channel blockers for example.
It’s not impossible. The typical use case is someone with a compromised immune system who has toxoplasmosis, if they’re on Medicare this won’t affect them because Medicare will just laugh at the price hike. Same for many of the major insurers. Basically only the uninsured would see an immediate impact, which if it’s virtually no one, then it won’t have a big impact on Turing’s revenue. Where it can help long term is the higher price can sometimes be used when negotiating prices with insurers to raise prices, but sometimes not. It will depend on the relative power of the insurer in question.
