[apsec112]

This seems bizarre to me:

Van Deventer says the company never considered lowering the price. "Why would we? Pricing shouldn't be a political decision. It should be a rational decision based on merits and value."

If no one will pay $1 million, your revenue is $0. Assuming the drug costs much less than $1 million to make, surely any revenue number is better than $0?

[wpietri]

I don't think he understands pricing at all. Market price isn't arrived at via a rational process. It's an inherently social process arrived at by negotiation between producers and consumers.

And it's especially weird that he thinks pricing shouldn't be political when his product has a government-granted monopoly and the bulk of its customers will be government-run health-care systems and government-licensed insurers.

Sure, there's a real question of how to pay for treatments for rare diseases. But the millions in development are a sunk cost. To take his ball and bat and stomp off would be disappointing in any circumstances. But when people will die because of it?

[microcolonel]

> Sure, there's a real question of how to pay for treatments for rare diseases. But the millions in development are a sunk cost. To take his ball and bat and stomp off would be disappointing in any circumstances. But when people will die because of it?

If people actually cared about treating patients, they would be crowdfunding that treatment rather than trying to fleece the people who invested man-decades of work into developing them, and who bear the mandatory cost of following these patients forever.

How about we just stop developing drugs, and live and die by the same ailments for the rest of time, as the patents expire. That would stop people from shifting the goalposts so dramatically every time somebody gets off their ass to actually produce a treatment.

The potential cost of care will continue to rise as long as we develop treatments for previously untreated or undertreated ailments; and it seems like the potential for care haunts people by giving the impression that they're being deprived of something, when the alternative is really that the treatment would not exist if insurers (government or private) would not be willing to pay something close to that much for it.

These people are dead without treatment, whether it's because of pricing (and insufficient social support [it could be literally impossible to fund all therapies of this sort for all patients]), or because the researchers were discouraged from ever developing it. The pricing is not arbitrary, so your only two options are a) don't develop it, and therefore never realize the moral hazard, or b) develop it, and market it to justify the work, so that you can do the same in the future, and treat at least some people, hopefully being able to reduce the cost of treatment in the future.

[wpietri]

Oh, you think people should get together and pay for drug development and medical treatment of people with rare diseases? Good idea. In fact, maybe we should create some sort of system where funds are collected widely and then distributed through systems that judge merit, utility, and cost effectiveness.

Oh, wait! We already did! This literally exists in most countries. In the US the government funds about half of all basic research. In many biomedical fields, that number rises to 80-90%. Treatment too is covered by "crowdfunding" through government-supported health care systems.

The guy's grumble here is that he doesn't like the system. And there are plenty of fair arguments to make there. But his complaint isn't, "We need to do better funding cures over treatments," or "The government should support rare diseases better." It's a confusion of of free-market slogans inside a context that not only has little to do with a free market, but one where he only has something to sell due to extensive government funding and a government-granted monopoly.

Free-market approaches work well when figuring out the price of beans that you buy every week at the market. They are of very narrow utility in exotic, life-critical treatments for rare diseases. I'm still all for applying them where we can. But this guy's gripe sounds more like free-market fundamentalism (or straight greed) than any thoughtful understanding of how to fund public goods.

[quotemstr]

> I don't think he understands pricing at all. Market price isn't arrived at via a rational process. It's an inherently social process arrived at by negotiation between producers and consumers.

Are you suggesting that prices don't have anything to do with scarcity and are just set arbitrarily by social forces? That doesn't seem quite right.

[wpietri]

What would make you think negotiation is arbitrary? I my experience, it's all about specifics.

I don't see a reason to think true scarcity matters at all here. The hard part about generally isn't making doses 100 through infinity. The hard part is making the first dose, and to a lesser extent the next few. This is why drugs get special patent protection. That is, artificial, government-enforced scarcity.

[maxander]

Well, yes, that’s how supply and demand (supposedly) works. The “correct” price is where the demand, at that price, equals the available supply.

If the product is scarce, that can drive up the price, but only as far as demand is willing to follow- there’s no inherent value in being scarce. “Price” is a social thing, so of course it’s determibed by social forces.

[yholio]

To illustrate your point: if I paint an unique painting of myself sitting on the toilet, that's quite a scarce item, there is only one in the world, yet, it's utterly worthless.

Purely social forces somehow came to the (in my opinion, debatable) conclusion that ladies with square faces painted by Picasso are art, while a representation of defecation by me is not.

[kentosi]

Keep in mind the scarce few people that are actually affected by this disease. No doubt that this factored heavily into the high price.

[umanwizard]

Because if you signal to health systems that you're not serious about your pricing, why should they pay you fairly in the future, rather than just stubbornly waiting for you to give up and sell at a loss?

It's basically the same reason most businesses throw product away rather than just distributing it for free.

[simion314]

What I think is happening is that the number of affected people is so low and the cost of producing this small number is very large and the company does not want a profit but a BIG profit.

[worldsayshi]

If a company does not make use of a patent they should at least loose their right to it.

[torpfactory]

Especially for lifesaving medical patents. If the drug isn’t being produced, or the price is too high (I don’t know how this would be defined), governments should be empowered to seize the IP and solicit bids to produce the invention. We move heaven and earth to save lives in natural disasters, why do we move so slowly with certain medical conditions?

[umanwizard]

Then nobody would ever bother investing in new drug development.

A better model would be for the state to fund this research and have the results be public domain.

[donarb]

Unfortunately, this happens all the time, but not for the public good. Research universities use patent portfolios to increase their revenue by licensing inventions to companies that can manufacture the product.

For example in 2014 NYU earned $214M in IP licensing and nationally led the period from 2004-2010.

[rasz]

Not nobody, just purely for profit rent seekers.

[chimeracoder]

> Not nobody, just purely for profit rent seekers.

This is not an example of "rent-seeking behavior", which is a technical term with a specific meaning. It's not merely a synonym for "profit-maximizing behavior which I don't like".

[chimeracoder]

> If a company does not make use of a patent they should at least loose their right to it.

Someone can always try and license the rights from them, if they think they can do a better job making money off of them. Problem is, I bet nobody else was interested in licensing it from them at any reasonable price, because they would have the same problem: the market just isn't there, at any price that would make it worth it to produce.

[Nasrudith]

To be fair there is also a risk calculus in everything - even if completely shielded from bad drug liability the profits need to be enough to make taking the gamble repeatably sustainable. To take a deliberately extreme example companies won't try to buy out entire lotteries until the jackpot is big enough to pay off if nobody else wins (thus cutting the income percentage by N - where N is the number of winners).

Greed is a factor and a problem of course but without running the numbers it is hard to say what is the smallest acceptable profit for the outcome.

I wonder if ironically we'll eventually start to see health insurance companies cut out the middleman and do cure research directly to cut their sustained costs. A bit idyllic to hope for yet it also indicates several other problems.