DRUG DEFIES A RARE FORM OF CANCER – AND MARKET LOGIC
OF COURSE, THIS ASSUMES THAT THERE IS A “MARKET LOGIC,” A TREATISE I HAVE GRAVE DOUBTS ABOUT
We’ve all been reading and viewing about how our drug manufacturing companies (Big Pharma) have been explaining for decades now why drug prices are so expensive. Basically it’s this: our mega-drug buddies must recoup their sky-high research and development costs. That’s why. It takes years and years, decades even, and millions upon millions of dollars to discover, develop, manufacture and market a new drug and that’s why a single pill that costs me $8 a pop here in the good old U.S. of A. costs me $0.60 in India, where, by the way, it and the bulk of our drugs are actually manufactured. The price, by the way, is no conjecture. It's what I pay during my three or four month sojourn to Kochi each year. I’m assuming that the vast price differential is due to shipping costs. Of course that has to be it. Bu then maybe Pfizer should stop shipping the drugs in Emirates First Class cabin.
But in this morning’s newspaper (the solid not the electronic version) a front page article – left side headline – about one particular drug, Gleevec, that cure’s a certain type of leukemia – pretty much rips all the justifications, rationales, free market workings, excuses, and drug company reasoning to shreds. Shredded, you know, just like when that hook-up sex diary you’ve kept for years and finally decided it’s too risky to keep around any longer you shoved through the noisy portable shredder you keep under your desk.
I’m reluctant to praise the Washington Post – they are extremely and unnecessarily anti-Bernie reflecting, perhaps, the sentiments of Amazon’s Jeff Bezos, the Post’s current owner - but once again they’ve done some excellent research and discovered just how fucked up is our health care system, particularly when it comes to Big Pharma and our health and well-being. Not, of course, that this is a really big, Breathless Breaking News Headline but the thoroughness of the article is spot on. Hey, if I can fly coach, why not drugs?
By way of background, Gleevec is a drug that treats a rare form of Leukemia, chronic myeloid leukemia, that is diagnosed in an estimated 8,220 people, mainly the elderly, annually. Novartis, in developing the drug back in the late 1990’s won U.S. FDA approval in 2001, estimated that the drug would yield around $100 million in annual sales for the company. The benchmark for a successful drug among Big Pharma is around $1 billion in worldwide annual sales. But Novartis was wrong: by the end of 2003, Gleevec was Novartis’ number 2 drug reaching a billion dollars in sales and by 2015 was pulling in some $4.7 billion dollars a year.
Despite the initial low sales expectations for the drug – after all the market for chronic myeloid leukemia is small – Novartis has a blockbuster drug on its hands. How, you might ask, does a drug company earn so much money chasing such a minuscule market?
Here’s how. Given our truly fucked up health care system, Novartis can charge virtually any amount it choses and in this case they have. Back in 2003 the company “decided on” a price of $2,200 a month and kept nudging the price upwards annually, about 4% per year, more than the rate of inflation. But, as the Free Market Capitalist workings would predict, in 2006 Bristol-Myers Squibb won approval for a competitor drug, Sprycel, and Novartis countered this move by developing its own competitor to Gleevec, Tasigna. That’s right, it developed a new drug to compete with its own drug. Now one would think that given competition and the smooth workings of the marketplace, the price of the newly introduced competitors would be cheaper than the original Gleevec but in fact, in some weird economic “anomaly” in competition-rich Capitalist economic performance, both new competitors were actually pricier than their previous product with Sprycel coming in at $5,477 a month and Tasigna at $6,929 a month. Weird isn’t it that competitor drugs would actually cost more than the drug they were developed to compete with. But, of course, us mortals do not understand the mysterious workings of the free market marketplace do we?
Of course, given the strange workings of our health care system, patients didn’t pay full freight for any of these treatments, Gleevec included. Through discounts, deals with health insurance companies, and God knows what other free market workings, patients paid a median of $3,271 in 2001, but with increasing “competition” the median price had risen to $8,156 in 2014, after, let us recall, the introduction of competitor drugs to Gleevec. Now, not to point out the obvious, but this spreading of costs to non-Gleevec users (the rest of us) by having our insurance companies pay, rather than the old timey capitalistic approach of each one of us paying full freight for the goods and services we use, is a classic Socialist solution. (I can imagine any number of Big Pharma CEO’s keeling over with strokes should they read this. But they don’t.) Presumably, the increasing cost of myeloid drugs is due to the mysterious workings of the Competitive Free Market Economy we enjoy here in the United States that, naturally, we mortals simply do not understand. I guess we are just too dumb. Copays for the drug, by the way, increased from a median $16 a month in 2001 to $33 in 2014, a fairly modest increase given the mysteries of Big Pharma. Over time, Gleevec has also been approved for other uses, one of the means that drug companies “defray” their R&D and marketing costs. So what we have is basically an abomination of our much vaunted Free Market economic principles that successor drugs and generics actually cost more than the original. How odd, you might say.
But what does Gleevec actually cost to produce? Andrew Hill, senior researcher at the University of Liverpool, (UK) has calculated the cost of producing Imatinib, Gleevec’s active raw ingredient. He estimates that a year’s worth of the drug made into tablets and bottled with a 50% profit factored in, would cost no more than $216. After all, as Hill stated, “They’re just chemicals.” On the other hand, Hill is a “scientist” in one of those Socialist countries that provides universal health care, so naturally his “ calculations” are highly suspect. At least here in the Free Market Capitalist United State of Big Business America.
So the exorbitant cost of Gleevec must be due to shipping costs, at least that’s been my experience in purchasing drugs in India where virtually all of our drugs are actually manufactured where they cost anywhere from 40 times to a hundred times less than they do here in the Free Market United States of America. At least based on my personal non-scientific but real world experience.
Now, any more questions about how it is that Bernie Sanders’ campaign for the Presidency has sparked a bonfire in our capitalist nation?
NOTE: There is much more in this WAPO article that basically gives a rather chilling picture of how massively fucked up our health care system truly is.
There is no question in my mind that Bernie Sanders is definitely the Democratic candidate who understands how truly fucked up our health care system is. I don't think he will win the nomination, but let's hope that his message continues to resonate with Hillary Clinton from now until next November. We really can't go on like this.
Have a Free Market Drug Filled day!